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HomeMy WebLinkAboutC-5387(E) - Acquistition AgreementExecution Version ACQUISITION AGREEMENT BY AND AMONG CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, CITY OF NEWPORT BEACH AND TSG — PARCEL 1, LLC and UPTOWN NEWPORT JAMBOREE, LLC Dated as of March 12, 2019 US-Docs\ 105642049.5 ACQUISITION AGREEMENT Recitals A. The parties to this Acquisition Agreement (the "Agreement") are the California Statewide Communities Development Authority (the "Authority"), City of Newport Beach (the "City"), Uptown Newport Jamboree, LLC, a Delaware limited liability company and TSG — Parcel 1, LLC, a Delaware limited liability company (collectively, the "Developer"). B. The effective date of this Agreement is March 12, 2019. C. The Developer has applied for the financing of certain public capital improvements (each, as more particularly described on Exhibit A, an "Acquisition Improvement" and collectively, the "Acquisition Improvements") and certain utility undergrounding (the "Undergrounding") through the Authority. The Acquisition Improvements are to be owned and operated by the City, and the financing is to be accomplished through a Community Facilities District which will be established and administered by the Authority under and pursuant to the Mello -Roos Community Facilities Act of 1982 — California Government Code Sections 53311 and following (the "Act"). On June 26, 2018, the City adopted Resolution No. 2018-44 authorizing the Authority to form a community facilities district (the "Community Facilities District") within the territorial limits of the City to finance the Acquisition Improvements. On December 20, 2018, the Authority formed the Community Facilities District and, on the same date, a landowner election was conducted for the Community Facilities District in which all of the votes were cast unanimously in favor of conferring the Community Facilities District authority on the Authority Commission. D. The Authority intends to levy special taxes for facilities and issue bonds for the Community Facilities District, in one or more series, to fund, among other things, all or a portion of the Acquisition Improvements and to fund the Undergrounding. The portion of the proceeds of such special taxes (including prepayments) and bonds allocable to the cost of the Undergrounding and the Acquisition Improvements, together with interest earned thereon, is referred to herein as the "Available Amount". E. The Community Facilities District will provide financing for (i) the Undergrounding of the utility lines by Southern California Edison as more particularly described herein and (ii) the acquisition by the City of the Acquisition Improvements and the payment of the Acquisition Price (as defined herein) of the Acquisition Improvements from the Available Amount. Attached hereto as Exhibit A is a description of the Acquisition Improvements, which includes authorized discrete and usable portions, if any, of the Acquisition Improvements, pursuant to Section 53313.51 of the Act, to be acquired from the Developer. F. The parties anticipate that, upon completion of the Acquisition Improvements and subject to the terms and conditions of this Agreement, the City will acquire the completed Acquisition Improvements. G. In order to facilitate the Undergrounding, the City will enter into a Facilities Relocation Agreement (Relocation under SCE Tariff Rule 20B—Applicant to Install I US-DOCS\ 105642049.5 Ducts/Substructures) (the "Rule 20B Agreement") with Southern California Edison. It is the intention of the parties hereto that the Developer be obligated to pay for any costs incurred by the City under the Rule 20B Agreement and to indemnify, defend and hold the City harmless for any and all costs or liabilities to Southern California Edison in excess of the Available Amounts and amounts previously paid to the City and Southern California Edison and arising out of or relating to the Undergrounding. H. Any and all monetary obligations of the City arising out of this Agreement are the special and limited obligations of the City payable only from the Available Amount, and no other funds whatsoever of the City shall be obligated therefor under any circumstances. I. Attached to this Agreement are Exhibit A (Description of the Acquisition Improvements and the Eligible Portions thereof), Exhibit B (Disbursement Request Form for Acquisition Improvements) and Exhibit C (Bidding, Contracting and Construction Requirements for Acquisition Improvements), all of which are incorporated into this Agreement for all purposes. Agreement ARTICLE I DEFINITIONS; COMMUNITY FACILITIES DISTRICT FORMATION AND FINANCING PLAN Section 1.01. Definitions. As used herein, the following capitalized terms shall have the meanings ascribed to them below: "Acceptable Title" means title (whether a fee interest, easement or other acceptable title or property rights) free and clear of all monetary liens, encumbrances, assessments, whether any such item is recorded or unrecorded, and taxes, except (i) those items which are reasonably determined by the City Engineer or Southern California Edison, as applicable, not to interfere with the intended use and therefore are not required to be cleared from the title, and (ii) the lien of the Community Facilities District or any other community facilities district or assessment district provided that the property owned by the City is exempt from such taxation or assessment. "Acquisition and Construction Fund" means each "Uptown Newport Community Facilities District Acquisition and Construction Fund" established by the Authority pursuant to the Resolution and Section 1.03 hereof for the purpose of paying the Acquisition Price of the Acquisition Improvements. "Acquisition Improvement" means a public capital improvement described in Exhibit A hereto. "Acquisition Price" means the total amount eligible to be paid to the Developer upon acquisition of an Acquisition Improvement as provided in Section 2.03, not to exceed the Actual Cost of the Acquisition Improvement. 2 US-DOCS\105642049.5 "Actual Cost" means the total cost of an Acquisition Improvement, as documented by the Developer to the satisfaction of the City and as certified by the City Engineer in an Actual Cost Certificate including, without limitation, (a) the Developer's cost of constructing such Acquisition Improvement including grading, labor, material and equipment costs, (b) the Developer's cost of designing and engineering the Acquisition Improvement, preparing the plans and specifications and bid documents for such Acquisition Improvement, and the costs of inspection, materials testing and construction staking for such Acquisition Improvement, (c) the Developer's cost of any performance, payment and maintenance bonds and insurance, including title insurance, required hereby for such Acquisition Improvement, (d) the Developer's cost of any real property or interest therein that is either necessary for the construction of such Acquisition Improvement (e.g., temporary construction easements, haul roads, etc.), or is required to be conveyed with such Acquisition Improvement in order to convey Acceptable Title thereto to the City or its designee, (e) the Developer's cost of environmental evaluation or mitigation required for such Acquisition Improvement, (f) the amount of any fees actually paid by the Developer to governmental agencies in order to obtain permits, licenses or other necessary governmental approvals and reviews for such Acquisition Improvement, (g) the Developer's cost for construction and project management, administration and supervision services for such Acquisition Improvement, and (h) the Developer's cost for professional services related to such Acquisition Improvement, including engineering, accounting, legal, financial, appraisal and similar professional services. "Actual Cost Certificate" means a certificate prepared by the Developer detailing the Actual Cost of an Acquisition Improvement, or an Eligible Portion thereof, to be acquired hereunder, as may be revised by the City Engineer pursuant to Section 2.03. "Agreement" means this Acquisition Agreement, dated as of March 12, 2019. "Authority" means the California Statewide Communities Development Authority. "Authority Trust Agreement" means a Trust Agreement or Indenture entered into by the Authority and an Authority Trustee in connection with the issuance of bonds. "Authority Trustee" means the financial institution identified as trustee in an Authority Trust Agreement. "Available Amount" shall have the meaning assigned to the term in Recital D. "Bonds" means bonds or other indebtedness issued by the Authority that are to be repaid with Special Taxes. "City" means the City of Newport Beach, California. "City Engineer" means the Engineer of the City or his/her designee who will be responsible for administering the Undergrounding and the acquisition of the Acquisition Improvements hereunder. "Code" means the Government Code of the State of California. 3 US-DOCS\ 105642049.5 "Community Facilities District" shall have the meaning assigned to the term in Recital C. "Developer" means, collectively or severally, as appropriate, TSG — Parcel 1, LLC, a Delaware limited liability company and Uptown Newport Jamboree, LLC, a Delaware limited liability company, and their respective successors and assigns. "Disbursement Request Form" means a requisition for payment of funds from an Acquisition and Construction Fund for an Acquisition Improvement, or an Eligible Portion thereof in substantially the form contained in Exhibit B hereto. "Eligible Portion" shall have the meaning ascribed to it in Section 2.03 below. "Holdback" shall have the meaning ascribed to it in the Section 2.04(b). "Installment Payment" means an amount equal to ninety percent (90%) of the Actual Cost of an Eligible Portion. "Jazz Semiconductor" means Newport Fab LLC, a Delaware limited liability company doing business as "Jazz Semiconductor." "Project" means the development of the property in the Community Facilities District, including the design and construction of the Acquisition Improvements and the Undergrounding and the other public and private improvements to be constructed by the Developer or Southern California Edison within or in the vicinity of the Community Facilities District. "Resolution" means City of Newport Beach Resolution No. 2018-44, adopted June 26, 2018 authorizing the execution and delivery of this Agreement. "Special Taxes" means annual special taxes for facilities, and prepayments thereof, authorized by the Community Facilities District to be levied by the Commission of the Authority within the Community Facilities District. "Title Documents" means, for each Acquisition Improvement acquired hereunder or for the Undergrounding, a grant deed or similar instrument necessary to transfer title to any real property or interests therein (including easements or rights of way), or an irrevocable offer of dedication of such real property with interests therein necessary to the operation, maintenance, rehabilitation and improvement by the City of the Acquisition Improvement or Southern California Edison with respect to the Undergrounding (including, if necessary, easements for ingress and egress) and a bill of sale or similar instrument evidencing transfer of title to the Acquisition Improvement (other than said real property interests) to the City or title to Undergrounding to Southern California Edison, where applicable. "Undergrounding" means the underground relocation of overhead electrical transmission utilities operated and maintained by Southern California Edison within the vicinity of the Project. Section 1.02. Establishment of Community Facilities District. Developer has requested the City to permit the Authority to provide for financing of the Acquisition 4 US-DOCS\105642049.5 Improvements and the Undergrounding and collection of special tax through the establishment and authorization of the Community Facilities District and the City agreed by its adoption of the Resolution. The Community Facilities District was established by the Authority on December 20, 2018, and through the successful landowner election held that same day with respect to the Community Facilities District, the Commission of the Authority is authorized to levy the Special Taxes and to issue the Bonds to finance the Acquisition Improvements and the Undergrounding. Developer and the City agree to reasonably cooperate with one another and with the Authority in the completion of the financing through the issuance of the Bonds in one or more series for the Community Facilities District. Section 1.03. Deposit and Use of Available Amount. (a) Prior to the issuance of Bonds for the Community Facilities District, Special Taxes collected by the Authority (including from prepayments of Special Taxes) shall be deposited in the Acquisition and Construction Fund established by the Authority pursuant to the terms of the Resolution, and may be disbursed to pay the Acquisition Price of Acquisition Improvements or the costs of Undergrounding in accordance with Article II of this Agreement. All funds in the Acquisition and Construction Fund shall be considered a portion of the Available Amount, and upon the issuance of the Bonds the Acquisition and Construction Fund shall be transferred to the Authority Trustee to be held in accordance with the Authority Trust Agreement. (b) If not already established pursuant to the Resolution, upon the issuance of the Bonds, the Authority will cause the Authority Trustee to establish and maintain the Acquisition and Construction Fund for the purpose of holding all funds for the Acquisition Improvements or the costs of Undergrounding to be financed by the Community Facilities District. All earnings on amounts in the Acquisition and Construction Fund shall remain in the Acquisition and Construction Fund for use as provided herein and pursuant to the Authority Trust Agreement. Money in such Acquisition and Construction Fund shall be available to respond to delivery of a Disbursement Request Form and to be paid to the Developer or its designee to pay the Acquisition Price of the Acquisition Improvements or the costs of Undergrounding, as specified in Article II hereof. Upon completion of all of the Acquisition Improvements and the Undergrounding and the payment of all costs thereof, any remaining funds in the Acquisition and Construction Fund (less any amount determined by the City as necessary to reserve for claims against the account) (i) shall be applied to pay the costs of any additional Acquisition Improvements eligible for acquisition with respect to the Project, as approved by the Authority and, to the extent not so used, (ii) shall be applied by the Authority to call Bonds or to reduce Special Taxes as the Authority shall determine. Section 1.04. No City Liability; City Discretion; No Effect on Other Agreements. In no event shall any actual or alleged act by the City or any actual or alleged omission or failure to act by the City with respect to the Authority subject the City to monetary liability therefor. Further, nothing in this Agreement shall be construed as affecting the Developer's or the City's duty to perform their respective obligations under any other agreements, public improvement standards, land use regulations or subdivision requirements related to the Project, which obligations are and shall remain independent of the Developer's and the City's rights and obligations under this Agreement. 5 US-DOCS\ 105642049.5 ARTICLE II DESIGN, CONSTRUCTION AND ACQUISITION OF ACQUISITION IMPROVEMENTS Section 2.01. Letting and Administering Design Contracts. The Developer has awarded and administered, or will award and administer, engineering design contracts for the Acquisition Improvements to be acquired from Developer. All eligible expenditures of the Developer for design engineering and related costs in connection with the Acquisition Improvements (whether as an advance to the City or directly to the design consultant) shall be reimbursed at the time of acquisition of the Acquisition Improvements. The Developer shall be entitled to reimbursement for any design costs of the Acquisition Improvements only out of the Acquisition Price as provided in Section 2.03 and shall not be entitled to any payment for design costs independent of the acquisition of Acquisition Improvements. Section 2.02. Letting and Administration of Construction Contracts; Indemnification. State law requires that all Acquisition Improvements not completed prior to the formation of the Community Facilities District shall be constructed as if they were constructed under the direction and supervision, or under the authority, of the City. In order to assure compliance with those provisions, except for any contracts entered into prior to the date hereof, Developer agrees to comply with the requirements set forth in Exhibit C hereto with respect to the bidding and contracting for the construction of the Acquisition Improvements. The Developer agrees that all the contracts shall call for payment of prevailing wages as required by the Labor Code of the State of California. The Developer's indemnification obligation set forth in Section 3.01 of this Agreement shall also apply to any alleged failure to comply with the requirements of this Section, and/or applicable State laws regarding public contracting and prevailing wages. Section 2.03. Sale of Acquisition Improvements. The Developer agrees to sell to the City each Acquisition Improvement to be constructed by or on behalf of the Developer (including any rights -of -way or other easements necessary for the Acquisition Improvements, to the extent not already publicly owned), when the Acquisition Improvement is completed to the satisfaction of the City for an amount not to exceed the lesser of (i) the Available Amount from time to time or (ii) the Actual Cost of the Acquisition Improvement. Exhibit A, attached hereto and incorporated herein, contains a list of the Acquisition Improvements. Portions of an Acquisition Improvement eligible for Installment Payments prior to completion of the entire Acquisition Improvement are described as eligible, discrete and usable portions in Exhibit A (each, an "Eligible Portion"). At the time of completion of each Acquisition Improvement, or Eligible Portion thereof, the Developer shall deliver to the City Engineer a written request for acquisition, accompanied by an Actual Cost Certificate, and by executed Title Documents for the transfer of the Acquisition Improvement where necessary. In the event that the City Engineer finds that the supporting paperwork submitted by the Developer fails to demonstrate the required relationship between the subject Actual Cost and eligible work, the City Engineer shall advise the Developer that the determination of the Actual Cost (or the ineligible portion thereof) has been disallowed and shall request further documentation from the Developer. If the further documentation is still not adequate, the City Engineer may revise the Actual Cost Certificate to delete any disallowed items and the determination shall be final and conclusive. 6 US-DOCS\ 105642049.5 Certain soft costs for the Acquisition Improvements, such as civil engineering, may have been incurred pursuant to single contracts that include work relating also to the private portions of the Project. In those instances, the total costs under such contracts will be allocated to each Acquisition Improvement as approved by the City Engineer. Where a specific contract has been awarded for design or engineering work relating solely to an Acquisition Improvement, one hundred percent (100%) of the costs under the contract will be allocated to that Acquisition Improvement. Amounts allocated to an Acquisition Improvement will be further allocated among the Eligible Portions of that Acquisition Improvement, if any, in the same proportion as the amount to be reimbursed for hard costs for each Eligible Portion bears to the amount to be reimbursed for hard costs for the entire Acquisition Improvement. Costs will be allocated to each Acquisition Improvement as approved by the City Engineer. The costs of certain environmental mitigation required to mitigate impacts of the public and private portions of the Project will be allocated to each Acquisition Improvement as approved by the City Engineer. Section 2.04. Conditions Precedent to Payment of Acquisition Price. Payment to the Developer or its designee of the Acquisition Price for an Acquisition Improvement from the Acquisition and Construction Fund shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Acquisition Improvement satisfies all City regulations and ordinances and is otherwise complete and ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The City shall have paid all amounts to be due and owing pursuant to the Rule 20B Agreement between the City and Southern California Edison within the time frame specified therein for the Undergrounding and the City shall have received confirmation from Southern California Edison that they have received the same. The City's obligation to pay amounts under the Rule 20B Agreement shall be solely from the Available Amounts or other funds made available to the City by the Developer pursuant to Section 2.08 below. (b) $500,000 of proceeds from bonds issued by the Community Facilities District (the "Holdback"), will be retained in the Acquisition and Construction Fund to be used first to make any additional payments due to Southern California Edison under the Rule 20B Agreement under the Rule 20B Agreement in connection with the Undergrounding and second, upon completion of the Undergrounding and payment of all amounts related thereto, to make an additional payment to the Developer for the remainder of the Acquisition Price for such Acquisition Improvement (solely to the extent of available funds therefor). The City shall be under no obligation to direct the release of the Holdback to the Developer until it receives assurances from Southern California Edison that all amounts due under the Rule 20B Agreement have been paid. (c) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that none of the property (including any rights -of -way or other easements necessary for the operation and maintenance of the Acquisition Improvement, to the extent not already publicly owned) comprising the Acquisition Improvement is not subject to any prospective mechanics lien claim respecting the Acquisition Improvements. 7 US-DOCS\ 105642049.5 (d) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. Property shall be exempt from the special tax of the Community Facilities District upon conveyance to the City or the Developer shall prepay the special tax on the property so conveyed. (e) The Developer shall certify that it is not in default with respect to any loan secured by any interest in the Project. (f) The Developer shall have provided the City with Title Documents needed to provide the City with Acceptable Title to the site, right-of-way, or easement upon which the subject Acquisition Improvement is situated. All such Title Documents shall be in a form acceptable to the City and shall convey Acceptable Title. The Developer shall provide a policy of title insurance as of the date of transfer in a form acceptable to the City Engineer and the City Attorney insuring the City as to the interests acquired in connection with the acquisition of any interest for which such a policy of title insurance is not required by another agreement between the City and the Developer. Each title insurance policy required hereunder shall be in the amount equal to the Acquisition Price. The amount paid to the Developer or its designee upon satisfaction of the foregoing conditions precedent shall be the Acquisition Price less all Installment Payments paid previously with respect to the Acquisition Improvement less the Holdback (which shall be paid to the Developer, to the extent of funds available therefor, pursuant to the provisions of 2.04(b) and 2.06 below). (g) The City shall have been paid $30,000 from proceeds of the Bonds to cover its costs in relation to the formation of the Community Facilities District and entering into this Agreement. Section 2.05. Payment for Eligible Portions. The Developer may submit an Actual Cost Certificate to the City Engineer with respect to any Eligible Portion. Payment to the Developer or its designee from the Acquisition and Construction Fund of an Installment Payment with respect to such Eligible Portion shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Eligible Portion has been completed in accordance with the applicable plans and specifications and that the Eligible Portion satisfies all City regulations and ordinances and is otherwise complete and, where appropriate, is ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that the property (including any rights -of -way or other easements necessary for the operation and maintenance of the Eligible Portion, to the extent not already owned by the City) comprising the Eligible Portion is not subject to any prospective mechanics lien claim respecting the Eligible Portion. (b) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. 8 US-DOCS\105642049.5 (c) The Developer shall have provided the City with Title Documents needed to provide the City with title to the site, right-of-way, or easement upon which the subject Eligible Portion is situated. All such Title Documents shall be in a form acceptable to the City Engineer and shall be sufficient, upon completion of the Acquisition Improvement of which the Eligible Portion is a part, to convey Acceptable Title. (d) Payment and performance bonds, from a bonding company with an A.M. Best rating of at least "A-" or its equivalent, applying to plans and specifications for the Acquisition Improvement approved by the City, shall be in place to secure completion of the Acquisition Improvement of which the Eligible Portion is a part. Section 2.06. Disbursement Request Form/Payment of Holdback. Upon a determination by the City Engineer to pay the Acquisition Price of an Acquisition Improvement pursuant to Section 2.04 or to pay an Installment Payment for an Eligible Portion pursuant to Section 2.05, the City Engineer shall cause a Disbursement Request Form substantially in the form attached hereto as Exhibit B-1 to be submitted to the Authority and Authority Trustee, and the Authority or Authority Trustee shall make payment directly to the Developer or its designee of the amount requested from the applicable Acquisition and Construction Fund. The City and the Developer acknowledge and agree that the Authority or Authority Trustee shall make payment strictly in accordance with the Disbursement Request Form and shall not be required to determine whether or not the Acquisition Improvement or Eligible Portion has been completed or what the Actual Costs may be with respect to the Acquisition Improvement or Eligible Portion. The Authority or Authority Trustee shall be entitled to rely on the executed Disbursement Request Form on its face without any further duty of investigation. Subject to the Holdback and Section 2.08 below, in the event that the Actual Cost of an Acquisition Improvement or the Installment Payment for an Eligible Portion is in excess of the Available Amount, the Authority or Authority Trustee shall withdraw all funds remaining in the Acquisition and Construction Fund and shall transfer those amounts to the Developer or its designee. The unpaid portion of the Actual Cost shall be paid from funds that may subsequently be deposited in the Acquisition and Construction Fund from a subsequent issuance of Bonds, from prepayments of Special Taxes to be used for financing Acquisition Improvements, or from Special Tax revenues, if any of those occurs. Upon a determination by the City Engineer to pay the Acquisition Price of an Acquisition Improvement less any Holdback pursuant to Section 2.04(b) and further upon completion of the Undergrounding and payment of all amounts due and owing with respect thereto, the City Engineer shall notify the Authority Trustee and authorize the release to the Developer of all amounts previously included and approved in an executed Disbursement Request Form with respect to an Acquisition Improvement but held back by the Authority as a Holdback (but solely to the extent of any available amounts remaining in or subsequently deposited in the Acquisition and Construction Fund). Section 2.07. Limitation on Obligations. In no event shall the City be required to pay the Developer or its designee more than the amounts held in the Acquisition and Construction Fund. 9 US-DOCS\105642049.5 Section 2.08. Undergrounding of Utilities. In addition to financing the acquisition of the Acquisition Improvements, proceeds of bonds for the Community Facilities District are expected to finance the Undergrounding of certain electrical transmission facilities operated and maintained by Southern California Edison. Notwithstanding anything to the contrary herein, the City shall be entitled to directly request payment to the City (or to reimburse the Developer) pursuant to a Request to the Authority Trustee to (i) reimburse amounts the City or Developer has paid Southern California Edison or a contractor for the amount in such request, or (ii) to pay directly to Southern California Edison, the Developer or a contractor for the amount in such request. To the extent authorized by law, the City agrees to first reimburse amounts previously deposited by the Developer pursuant to the Deposit Agreement between the City of Newport Beach and TSG — Parcel 1, LLC, dated January 5, 2015, for the costs of the Undergrounding of utilities, including design and planning and any amounts deposited by Developer for materials or otherwise, from proceeds of Bonds or the Special Tax pursuant to this Section. Pursuant to the Rule 20B Agreement, Southern California Edison has estimated the costs of the Undergrounding to be performed by Southern California Edison to be $1,093,000. To the extent the actual cost of the Undergrounding exceeds $1,093,000 plus the Holdback Amount and the Developer has not reimbursed the City or paid Southern California Edison directly within 90 days of receipt of the final invoice from Southern California Edison, the Authority and the Developer shall levy special taxes up to the maximum amount permitted to reimburse the City or pay Southern California Edison directly for such costs. The Developer further agrees that it shall transfer: (i) any and all real property interests required by Southern California Edison as part of the Undergrounding to the City or Southern California Edison, as applicable, free of any encumbrances to which Southern California Edison objects, and (ii) all ducts and substructures built in connection with the Undergrounding, all in accordance with the terms of the 20B Agreement. The Developer shall be responsible for the costs of acquiring such real property interests, if necessary, and all costs of providing Acceptable Title. In addition, the Developer agrees that it shall pay any and all costs associated with the establishment of any temporary power generating facilities required in connection with the Undergrounding and the provision of power therefrom and may include such costs in costs to be paid to Southern California Edison and/or reimbursed to Developer as part of the costs of the Undergrounding from proceeds of the Bonds, to the extent amounts are available therefrom. Furthermore, the Developer acknowledges that it has reviewed all relocation plans provided by Southern California Edison and the City in connection with the Undergrounding, and further acknowledges that it is not aware of any conflicts with the plans of the Developer, or any related entity, to develop the property within the Community Facilities District. ARTICLE III MISCELLANEOUS Section 3.01. Indemnification and Hold Harmless. The Developer hereby assumes the defense of, and indemnifies and saves harmless the City, the Authority and their respective officers, directors, employees and agents, including the Authority Trustee, from and 10 US-DOCS\ 105642049.5 against (a) any amounts due and owing to Southern California Edison pursuant to the 20B Agreement executed and delivered by the City and Southern California Edison with respect to the Undergrounding, including any Income Tax Component of Contribution required to be paid by Southern California Edison, but solely to the extent not otherwise paid, funded or advanced to Southern California Edison from the proceeds of the Bonds and/or previously paid to the City and/or Southern California Edison by the Developer; (b) any claims, lawsuits or proceedings by any third parties, including, but not limited to, Jazz Semiconductor, that result or relate in any way to the Undergrounding or any disruption of electrical power related thereto or to the Rule 20B Agreement, and (c) 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 or alleged to have resulted from the acts or omissions of the Developer or its agents and employees arising out of any contract for the design, engineering and construction of the Acquisition Improvements or the Undergrounding entered into by the Developer 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 Authority's underwriter, financial advisor, appraiser, district engineer or bond counsel or regarding the Developer, its proposed developments, its property ownership and its contractual arrangements contained in the official statement relating to the Authority financing (provided that the Developer shall have been furnished a copy of the official statement and shall not have objected thereto); and provided, further, that nothing in this Section 3.01 shall limit in any manner the City's rights against any of the Developer's architects, engineers, contractors or other consultants. Except as set forth in this Section 3.01, no provision of this Agreement shall in any way limit the extent of the responsibility of the Developer for payment of damages resulting from the operations of the Developer, its agents and employees. Nothing in this Section 3.01 shall be understood or construed to mean that the Developer agrees to indemnify the City, the Authority or any of their respective officers, directors, employees or agents, for any wrongful acts or omissions to act of the Authority or its officers, employees, agents or any consultants or contractors, including the Authority Trustee, and for any wrongful acts, willful misconduct, active gross negligence or willful omissions to act of the City, or its officers, employees, agents or any consultants or contractors, including the Authority Trustee. Section 3.02. Waiver of Claims, Insurance. The Developer hereby agrees to waive any and all claims against the City arising in connection with the Undergrounding or the agreement with Southern California Edison in connection therewith, including by reason of delay by any party acting in connection with the Undergrounding. The Developer hereby agrees (i) to name or cause its contractors and subcontractors to name the City as an additional insured in connection with any of the construction contracts for the Acquisition Improvements and the Undergrounding work performed by Developers and (ii) to provide an insurance policy providing business interruption coverage in favor of Jazz Semiconductor and naming the City as an additional insured in an aggregate amount not less than $10,000,000 to cover potential losses to Jazz Semiconductor as a result of any interruption in their business due to the a loss of utility services during the Undergrounding. Section 3.03. Audit. The City shall have the right, during normal business hours and upon the giving of ten days' written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer (for which the 11 US-DOCS\ 105642049.5 Developer seeks reimbursement pursuant to this Agreement) in constructing the Acquisition Improvements. Section 3.04. Cooperation. The City and the Developer agree to cooperate with respect to the completion of the financing of the Acquisition Improvements by the Authority through the levy of the Community Facilities District Special Taxes and issuance of Bonds. The City and the Developer agree to meet in good faith to resolve any differences on future matters which are not specifically covered by this Agreement. Section 3.05. General Standard of Reasonableness. Any provision of this Agreement which requires the consent, approval or acceptance of either party hereto or any of their respective employees, officers or agents shall be deemed to require that the consent, approval or acceptance not be unreasonably withheld or delayed, unless the provision expressly incorporates a different standard. Section 3.06. Third Party Beneficiaries. The Authority and its officers, employees, agents or any consultants or contractors are expressly deemed third party beneficiaries of this Agreement with respect to the provisions of Section 3.01. It is expressly agreed that, except for the Authority with respect to the provisions of Section 3.01, there are no third party beneficiaries of this Agreement, including without limitation any owners of bonds, any of the City's or the Developer's contractors for the Acquisition Improvements and any of the City's, the Authority's or the Developer's agents and employees. Section 3.07. Conflict with Other Agreements. Nothing contained herein shall be construed as releasing the Developer or the City from any condition of development or requirement imposed by any other agreement between the City and the Developer, and, in the event of a conflicting provision, the other agreement shall prevail unless the conflicting provision is specifically waived or modified in writing by the City and the Developer. Section 3.08. Notices. All invoices for payment, reports, other communication and notices relating to this Agreement shall be mailed to: If to the City: City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Attention: City Manager If to the Authority: California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, CA 95814 Attention: Chair 12 US-DOCS\ 105642049.5 If to the Developer: Uptown Newport Jamboree, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff TSG — Parcel 1, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff With a copy to: Jackson Tidus 2030 Main Street 12th Floor Irvine, CA 92614 Attention: Gregory P. Powers, Esq. Either party may change its address by giving notice in writing to the other party. Section 3.09. 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. Section 3.10. 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. Section 3.11. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other party with the terms of this Agreement. Section 3.12. 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. Section 3.13. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. Section 3.14. Successors and Assigns. This Agreement is binding upon the heirs, assigns and successors -in -interest of the parties hereto. The Developer may not assign its rights or obligations hereunder, except to successors -in -interest to the property within the Community Facilities District, without the prior written consent of the City. 13 US-DOCS\ 105642049.5 Section 3.15. Remedies in General. It is acknowledged by the parties that the City would not have entered into this Agreement if it were to be liable in damages under or with respect to this Agreement or the application thereof, other than for the payment to the Developer of any (i) moneys owing to the Developer hereunder, or (ii) moneys paid by the Developer pursuant to the provisions hereof which are misappropriated or improperly obtained, withheld or applied by the City. Section 3.16. Non -Liability of Authority. The Authority shall not be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Agreement, except only to the extent amounts are received for the payment thereof from the Special Tax. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that the City shall not be liable in damages to the Developer, or to any assignee or transferee of the Developer other than for the payments to the Developer specified Section 3.14. Subject to the foregoing, the Developer covenants not to sue for or claim any damages for any alleged breach of, or dispute which arises out of, this Agreement. [Remainder of Page Intentionally Left Blank' 14 US-DOCS\ 105642049.5 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. ATTEST: City Clerk By: Name: Leilani I. Brown Title: City Clerk CITY OF NEWPORT BEACH By: Name: G ce K. Leung Title: ity Manager UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited liability company APPROVED AS TO FORM: CITY ATTORNEYS OFFICE By: Date: 2 /'Z / 1 1 Name Title By: G.�-.._ ( . 14 'n"''_ Aaron C. Harp, City Attomey TSG — PARCEL 1, LLC, a Delaware limited liability company By: Name Title CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory SIGNATURE PAGE - ACQUISITION AGREEMENT IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. CITY OF NEWPORT BEACH By: Authorized Officer ATTEST: City Clerk By: UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited liability company By: NameA'- G-`P.uP Title S V - �EAJ = I_aP;r\,. w i-~ TSG — PARCEL 1, LLC, a Delaware limited liability company By: .� Name 13 `,yam 6-, R o Title 5 J '1•N�v CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory S[GNATUItE PAGE - ACQUISITION AGREEMENT US-DOCS\IO564" O49.5 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. CITY OF NEWPORT BEACH By: Authorized Officer ATTEST: City Clerk By: UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited liability company By: Name Title TSG — PARCEL 1, LLC, a Delaware limited liability company By: Name Title CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY Authorized Signatory SIGNATURE PAGE — ACQUISITION AGREENIENT US-DOCS\ I (15642049 5 EXHIBIT A TO THE ACQUISITION AGREEMENT DESCRIPTION OF ACQUISITION IMPROVEMENTS, ELIGIBLE PORTIONS ACQUISITION IMPROVEMENTS Park improvements, including playground infrastructure, irrigation, landscaping, utilities, drainage and grading. A-1 US-DOCS\ 105642049.5 EXHIBIT B TO THE ACQUISITION AGREEMENT DISBURSEMENT REQUEST FORM (Acquisition Improvement or Eligible Portion) To: Wilmington Trust, National Association Attention: Fax: Phone: Re: CSCDA Community Facilities District No. 2018-03 (Uptown Newport) The undersigned, a duly authorized officer of the CITY OF NEWPORT BEACH hereby requests a withdrawal from the Uptown Newport Project Community Facilities District Acquisition and Construction Fund, as follows: Request Date: Name of Developer: [Insert Date of Request] Acquisition Price/Installment [Insert Acquisition Price/Installment Payment: Payment] Acquisition Improvements: [Insert Description of Acquisition Improvement(s)/Eligible Portion(s) from Exhibit A] Holdback Amount: [Insert Holdback Amount, if applicable] Withdrawal Amount: [Insert Acquisition Price less Holdback] Payment Instructions: [Insert Wire Instructions or Payment Address for Developer or Developer's designee as provided by the Developer] The undersigned hereby certifies as follows: The Withdrawal is being made in accordance with a permitted use of the monies pursuant to the Acquisition Agreement and the Withdrawal is not being made for the purpose of reinvestment. None of the items for which payment is requested have been reimbursed previously from the Acquisition and Construction Fund. If the Withdrawal Amount is greater than the funds held in the Acquisition and Construction Fund, the Authority Trustee is authorized to pay the amount of such funds and to pay B-1 US-DOCS\ 105642049.5 remaining amount(s) as funds are subsequently deposited in the Acquisition and Construction Fund, should that occur. [For Park Improvement Disbursements:][The amounts being disbursed pursuant to this request are being used to finance or refinance certain public infrastructure and facilities (the "Improvements"). The City will own, and for the entire useful life of such Improvements reasonably expects to own, all of such Improvements. To the extent any of such Improvements are sold to an entity that is not a state or local government agency, the City will seek the advice and approval of bond counsel to the Authority prior to any such sale. The City will not allow any of such Improvements to be used (for example, by lease or other contract) in the trade or business of any nongovernmental persons (other than in their roles as members of the general public). All of such Improvements will be used in the performance of essential governmental functions of the City or another state or local government agency. The average expected useful life of such Improvements is at least 20 years. The representations and covenants contained in this paragraph are intended to support the conclusion that the interest paid on the bonds issued to finance the Improvements is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code").] CITY OF NEWPORT BEACH By: Title: B-2 US-DOCS\ 105642049.5 EXHIBIT C TO THE ACQUISITION AGREEMENT BIDDING, CONTRACTING AND CONSTRUCTION REQUIREMENTS FOR ACQUISITION IMPROVEMENTS With respect to construction contracts awarded after approval of the Agreement, bids for construction shall be solicited from at least three (3) qualified contractors, provided at least three (3) qualified contractors are reasonably available. The Developer may also directly solicit bids. The bid package may consist of preliminary plans and specifications. The bidding response time shall be not less than ten (10) working days. An authorized representative of the City shall be provided a copy of the tabulation of bid results upon request. Contract(s) for the construction of the public Acquisition Improvements shall be awarded to the qualified contractor(s) submitting the lowest responsible bid(s), as determined by the Developer. The contractor to whom a contract is awarded shall be required to pay not less than the prevailing rates of wages pursuant to Labor Code Sections 1770, 1773 and 1773.1. A current copy of applicable wage rates shall be on file in the Office of the City Clerk, as required by Labor Code Section 1773.2. The Developer shall provide the City with certified payrolls. C-1 US-DOCS\ 105642049.5 TRANSCRIPT INDEX CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 PROCEEDINGS FOR FORMATION Community Facilities District Proceedings 1. Resolutions and Approvals of the City a. Resolution No. 2018-44 entitled, "A Resolution of the City Council of the City of Newport Beach, California (1) Authorizing the California Statewide Communities Development Authority (the "Authority") to Form a Community Facilities District within the Territorial Limits of the City Of Newport Beach to Finance Certain Public Improvements; (2) Embodying a Joint Community Facilities Agreement Setting Forth the Terms and Conditions of the Community Facilities District Financing; (3) Approving an Acquisition Agreement Among the Authority, the City and the Developer; and (4) Authorizing Staff to Cooperate with the Authority and its Consultants in Connection Therewith," adopted by the Local Agency Participant on June 26, 2018. (Bond Counsel) b. Minutes from February 12, 2019, City Council Meeting. (Local Agency Participant) 2. Resolution No. 18SCIP-110 entitled, "A Resolution Approving a Joint Community Facilities Agreement and Declaring Intention to Establish California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California, and to Levy a Special Tax Therein to Finance the Acquisition and Construction of Certain Public Capital Improvements and Certain Utility Undergrounding," adopted by the Commission of the Authority on November 15, 2018. (Bond Counsel) 3. Resolution No. 18CIP-111 entitled, "A Resolution to Incur Bonded Indebtedness to Finance the Acquisition and Construction of Certain Public Capital Improvements and Certain Utility Undergrounding for California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California and Calling for a Public Hearing" adopted by the Commission of the Authority on November 15, 2018. (Bond Counsel) 4. Boundary Map (Book 106; page 28; instrument number 2018-442520), recorded in the County of Orange on November 29, 2018. (Bond Counsel) 5. Proof of Publication of Notice of Public Hearing, published in The Orange County Register, on December 5, 2018. (Bond Counsel) 4135-8985-4490.4 6. Certificate of Mailing and Publication of Notice of Public Hearing, dated December 20, 2018. (Bond Counsel) 7. Community Facilities District Report, dated December 13, 2018. (Special Tax Consultant/Bond Counsel) 8. Certificate Regarding Preparation and Distribution of Ballot, dated December 3, 2018. (Bond Counsel) Resolutions of Formation and To Incur Bonded Indebtedness 9. Resolution No. 18SCIP-117 entitled, "A Resolution of Formation Establishing California Statewide Communities Development Authority Community Facilities District No. 2018- 03 (Uptown Newport) City of Newport Beach, County of Orange, State of California, and Providing for the Levy of a Special Tax Therein to Finance the Construction and Acquisition of Certain Public Capital Improvements and Certain Utility Undergrounding," adopted by the Commission of the Authority on December 20, 2018. (Bond Counsel) 10. Resolution No. 18SCIP-118, entitled "A Resolution Deeming it Necessary to Incur Bonded Indebtedness to Finance the Acquisition and Construction of Certain Public Capital Improvements and Certain Utility Undergrounding within California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California," adopted by the Commission of the Authority on December 20, 2018. (Bond Counsel) Resolution Calling Election 11. Resolution No. 18SCIP-119, entitled "Resolution Calling Special Mailed -Ballot Election within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California," adopted by the Commission of the Authority on December 20, 2018. (Bond Counsel) Documents Relating to the Election 12. Certificate re Receipt of Property Owner Waiver and Consent Forms with Waivers Attached, dated December 20, 2018. (Bond Counsel) a. Certificate re Registered Voters and Landowners, dated November 29, 2018. (Bond Counsel) b. Waivers and Consents. (Bond Counsel) 13. Certificate re Receipt of Executed Ballots and Declaring Election Results, dated December 20, 2018. (Bond Counsel) 14. Official Ballots. (Bond Counsel) 4135-8985-4490.4 Resolution Declaring Election Results 15. Resolution No. 18SCIP-120, entitled "Resolution Declaring Results of Special Mailed - Ballot Election within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California," adopted by the Commission of the Authority on December 20, 2018. (Bond Counsel) Notice of Special Tax 16. Notice of Special Tax Lien, California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) dated December 20, 2018, recorded in the County of Orange on January 3, 2019, as document number 2019000002327. (Bond Counsel) Ordinance Levying Special Taxes 17. Ordinance No. 18ORD-4, entitled "Ordinance Levying A Special Tax for Fiscal Year 2019-2020 and Following Fiscal Years Solely Within and Relating to California Statewide Communities Development Authority Community Facilities District No. 2018- 03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" adopted by the Commission of the Authority on January 10, 2019. (Bond Counsel) 18. Proof of Publication of Ordinance No. 18ORD-4, published in The Orange County Register on January 18, 2019. (Bond Counsel) 19. Notice to City of Newport Beach dated January 11, 2019. (Bond Counsel) BASIC LEGAL DOCUMENTS 20. Resolution No. 19SCIP-5 entitled, "Resolution Approving the Issuance of the California Statewide Communities Development Authority Community Facilities District No. 2018- 03 (Uptown Newport) Special Tax Bonds, Series 2019; Authorizing the Execution and Delivery of an Indenture Providing for the Issuance of Such Bonds; Approving a Bond Purchase Contract Providing for the Sale of Such Bonds; Approving an Official Statement; Approving a Continuing Disclosure Certificate; Authorizing the Sale of Such Bonds; and Authorizing Related Actions and the Execution of Related Documents in Connection with the Issuance, Sale and Delivery of Such Bonds," adopted by the Commission of the Authority on February 7, 2019. (Bond Counsel) 21. Indenture, dated as of March 1, 2019 (executed by the Authority and the Trustee). (Bond Counsel) 22. Tax Certificate (executed by the Authority), dated March 12, 2019. (Bond Counsel) a. Certificate of the Underwriter (executed by the Underwriter). b. Certificate of the Authority concerning Rebate (executed by the Authority). 4135-8985-4490.4 23. Acquisition Agreement, dated as of March 12, 2019 (executed by the Local Agency Participant, the Authority and the Developer). (Bond Counsel) 24. Facilities Relocation Agreement, dated as of February 12, 2019 (executed by the City and Southern California Edison). (Developer's Counsel) 25. Specimen Bonds (executed by facsimile). (Bond Counsel) SALE DOCUMENTS 26. Preliminary Official Statement, dated February 13, 2019. (Bond Counsel) 27. Bond Purchase Contract, dated February 27, 2019 (executed by the Authority and the Underwriter). (Bond Counsel) 28. Official Statement, dated February 27, 2019 (executed by the Authority). (Bond Counsel) 29. Report of Proposed Debt Issuance to California Debt Advisory Commission ("CDIAC") together with evidence of the receipt thereof, and Report of Final Sale to CDIAC. (Bond Counsel) AUTHORITY CLOSING DOCUMENTS 30. Certificate of the Authority as to Finality of Preliminary Official Statement, dated February 13, 2019 (executed by the Authority). (Bond Counsel) 31. Authority Continuing Disclosure Certificate, dated March 12, 2019 (executed by the Authority). (Bond Counsel) 32. Certificate of the Authority, together with Amended and Restated Joint Exercise of Powers Agreement (with signature page of City of Newport Beach, as local agency participant), Resolutions No. 18SCIP-110 and 18CIP-111, each adopted on November 15, 2018, Resolutions No. 18SCIP-117, 18SCIP-118, 18SCIP-119 and 18SCIP-120, each adopted on December 20, 2018, Ordinance No. 18ORD-4, adopted on January 10, 2019, Resolution No. 19R-1 adopted on January 24, 2019 and Resolution No. 19SCIP-5 adopted on February 7, 2019. (Bond Counsel) 33. Written Request of Authority as to Authentication, Registration and Delivery of Bonds (executed by the Authority). (Bond Counsel) 34. Written Order of the Authority to the Trustee, together with Costs of Issuance Account Requisition No. 1 (executed by the Authority). (Bond Counsel) 35. IRS Form 8038-G (executed by the Authority). (Bond Counsel) LOCAL AGENCY CLOSING DOCUMENTS 4135-8985-4490.4 36. Closing Certificate of the City of Newport Beach (executed by the Local Agency Participant) with attachments. (Bond Counsel) a. Exhibit A: Tax Certification of Local Agency Participant. 37. Disbursement Request Form (re Undergrounding — Southern California Edison). (Bond Counsel) 38. Disbursement Request Form (re Undergrounding —Developers). (Bond Counsel) TRUSTEE DOCUMENTS 39. Receipt for Purchase Price and Certificate of Deposit of the Trustee (executed by the Trustee). (Bond Counsel) 40. Certificate of Trustee (executed by the Trustee). (Bond Counsel) 41. Incumbency Certificate of Trustee (executed by the Trustee), together with extracts of the Articles of Association and Amended and Restated Bylaws of the Trustee. (Trustee) DEVELOPER DOCUMENTS 42. Developer Continuing Disclosure Certificate, dated March 12, 2019 (executed by TSG Parcel 1 and Uptown Newport Jamboree). (Bond Counsel) 43. Certificate of TSG Parcel 1 regarding Preliminary Official Statement (executed by TSG Parcel 1). (Underwriter's Counsel) 44. Closing Certificate of TSG Parcel 1 (executed by TSG Parcel 1). (Underwriter's Counsel) 45. Certificate of Uptown Newport Jamboree regarding Preliminary Official Statement (executed by Uptown Newport Jamboree). (Underwriter's Counsel) 46. Closing Certificate of Uptown Newport Jamboree (executed by Uptown Newport Jamboree). (Underwriter's Counsel) MISCELLANEOUS DOCUMENTS 47. Appraisal Report, dated December 22, 2018 (executed by the Appraiser). (Appraiser) 48. Certificate of Consent of Inclusion of Appraisal Report in the Preliminary Official Statement and Official Statement, dated March 12, 2019. (Bond Counsel) 49. Blanket Authority Letter of Representations. (Bond Counsel) 50. Receipt for Bonds (executed by the Underwriter). (Bond Counsel) 4135-8985-4490.4 51. Certificate of Special Tax Consultant (executed by the Special Tax Consultant). (Bond Counsel) 52. Interested Parties List. 53. Closing Memorandum. OPINIONS 54. Opinion of Trustee's Counsel. (Trustee's Counsel) 55. Opinions of Developer's Special Counsel. (Developer's Special Counsel) 56. Opinion of Underwriter's Counsel. (Underwriter's Counsel) 57. Opinion of Authority Counsel. (Bond Counsel) 58. Final Opinion of Bond Counsel. (Bond Counsel) 59. Supplemental Opinion of Bond Counsel. (Bond Counsel) 60. Reliance Letter to Trustee. (Bond Counsel) 4135-8985-4490.4 RESOLUTION NO. 2018-44 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA: (1) AUTHORIZING THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY ("AUTHORITY") TO FORM A COMMUNITY FACILITIES DISTRICT WITHIN THE TERRITORIAL LIMITS OF THE CITY OF NEWPORT BEACH TO FINANCE CERTAIN PUBLIC IMPROVEMENTS; (2) EMBODYING A JOINT COMMUNITY FACILITIES AGREEMENT SETTING FORTH THE TERMS AND CONDITIONS OF THE COMMUNITY FACILITIES DISTRICT FINANCING; (3) APPROVING AN ACQUISITION AGREEMENT AMONG THE AUTHORITY, THE CITY AND THE DEVELOPER; AND (4) AUTHORIZING STAFF TO COOPERATE WITH THE AUTHORITY AND ITS CONSULTANTS IN CONNECTION THEREWITH WHEREAS, the City of Newport Beach ("City") is a municipal corporation and charter city duly organized and existing under and by virtue of the laws of the State of California (the "State"); WHEREAS, the California Statewide Communities Development Authority (the "Authority") is a California joint -exercise of powers authority lawfully formed and operating within the State pursuant to an agreement (the "Joint Powers Agreement") entered into as of June 1, 1988 under the authority of Title 1, Division 7, Chapter 5 (commencing with Section 6500) of the California Government Code; WHEREAS, the City is a party to the Joint Powers Agreement and by virtue thereof a member (a "Program Participant") of the Authority; WHEREAS, the Joint Powers Agreement was entered into to establish the Authority as an agency authorized to issue bonds to finance projects within the territorial limits of its Program Participants; WHEREAS, the Joint Powers Agreement authorizes the Authority to undertake financing programs under any applicable provisions of State law to promote economic development, the stimulation of economic activity, and the increase of the tax base within the jurisdictional boundaries of its Program Participants; WHEREAS, the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (beginning with Section 53311) of the Government Code of the State (the "Act") is an applicable provision of State law available to, among other things, finance public improvements necessary to meet increased demands placed upon local agencies as a result of development; WHEREAS, there is a development project known as "Uptown Newport" (the "Development Project") in the City owned by TSG — Parcel 1, LLC, a Delaware limited partnership and Uptown Newport Jamboree, LLC, a Delaware limited liability company (collectively, the "Developer") and the Developer has requested the City to consider formation of a community facilities district for the Development Project under the Act; Resolution No. 2018-44 Page 2 of 8 WHEREAS, the City does not desire to allocate City resources and City staff time to the formation and administration of a community facilities district and to the issuance of bonds; WHEREAS, the Development Project will promote economic development, the stimulation of economic activity, and the increase of the tax base within the City; WHEREAS, both the Authority and the City are "local agencies" under the Act; WHEREAS, the Act permits two or more local agencies to enter into a joint community facilities agreement to exercise any power authorized by the Act; WHEREAS, the City desires to enter into such an agreement with the Authority to authorize the Authority to form a community facilities district within the territorial limits of the City to finance certain public improvements required of the Development Project; WHEREAS, a form of Acquisition Agreement (the "Acquisition Agreement") among the Authority, the City and the Developer has been presented to the City Council and is on file with the City Clerk; WHEREAS, nothing herein constitutes the City's approval of any applications, Development Project entitlements and/or permits, and such, to the extent required in the future, are subject to and contingent upon City Council approval following, to the extent applicable, environmental review in compliance with the California Environmental Quality Act; WHEREAS, nothing herein affects, without limitation, requirements for and/or compliance with any and all applicable and/or necessary improvement standards, land use requirements or subdivision requirements relating to the Development Project or any portion thereof, which obligations are and shall remain independent and subsisting; WHEREAS, all significant environmental effects for the development of the Uptown Newport Planned Community have been adequately addressed in the previously certified Environmental Impact Report No. ER2012-001 (SCH No. 2010051094) ("EIR"), which included a mitigation, monitoring and reporting program and statement of overriding considerations, and the City of Newport Beach intends to use said document for the approval of the creation of a Community Facilities District (CFD) to finance public improvements associated with the Uptown Newport Planned and its implementation. Copies of the previously prepared environmental document are available for public review and inspection at the Planning Division or at the City of Newport Beach website at www. newportbeachca.gov/cegadocuments; WHEREAS, none of the conditions described in Section 15162 of the CEQA Guidelines calling for preparation of a subsequent or supplemental EIR have occurred, and the CFD and its implementation do not require changes or additions to the EIR pursuant to Section 15164 of the CEQA Guidelines; WHEREAS, no new effects would occur, nor would a substantial increase in the severity of previously identified significant effects occur as the result of this CFD, and this CFD identifies the same previously approved project with refined detailed drawings, no increase in intensity, and no changes to the development standards; Resolution No. 2018-44 Page 3 of 8 WHEREAS, there are no additional reasonable alternatives or mitigation measures that should be considered in conjunction with the CFD or its implementation; WHEREAS, the City Council finds that judicial challenges to the City's CEQA determinations and approvals of land use projects are costly and time consuming, and project opponents often seek an award of attorneys' fees in such challenges; WHEREAS, project applicants are the primary beneficiaries of such approvals, it is appropriate that such applicants should bear the expense of defending against any such judicial challenge, and bear the responsibility for any costs, attorneys' fees and damages which may be awarded to a successful challenger; and WHEREAS, the City Council is fully advised in this matter. NOW THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1. The City hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to municipal affairs of the City and the statements, findings and determinations of the City set forth in the recitals above and in the preambles of the documents approved herein are true and correct. Section 2. This resolution shall constitute full "local approval," under Section 9 of the Joint Powers Agreement, and under the Authority's Local Goals and Policies (see below), for the Authority to undertake and conduct proceedings in accordance herewith and under the Act to form a community facilities district (the "Community Facilities District") with boundaries substantially as shown on Exhibit A, attached hereto, to designate separate improvement areas within the Community Facilities District (each, an "Improvement Area"), to authorize a special tax within each Improvement Area and to issue bonds, in one or more series on a taxable or tax exempt basis, for each Improvement Area secured by the special taxes. Section 3. The Joint Powers Agreement, together with the terms and provisions of this resolution, shall together constitute a joint community facilities agreement between the City and the Authority under the Act. As, without this resolution, the Authority has no power to conduct proceedings under the Act to form the Community Facilities District, adoption by the Commission of the Authority of the Resolution of Intention to form the Community Facilities District under the Act shall constitute acceptance of the terms hereof by the Authority. Section 4. This resolution and the agreement it embodies are determined to be beneficial to and are in the best interests of the future residents of the area within the Community Facilities District. Section 5. The City acknowledges that the Authority has adopted Local Goals and Policies as required by Section 53312.7 of the Act. The City approves the use of those Local Goals and Policies in connection with the Community Facilities District; provided that the terms of any series of bonds issued for the Community Facilities District shall not exceed the parameters listed on Exhibit D. Resolution No. 2018-44 Page 4 of 8 Section 6. Pursuant to the Act and this resolution, the Authority may conduct proceedings under the Act to form the Community Facilities District and to have it authorize the financing of the facilities set forth on Exhibit B, attached hereto. All of the facilities are facilities that have an expected useful life of five years or longer and are facilities that the City or other local public agencies, as the case may be, are authorized by law to construct, own or operate, or to which they may contribute revenue. The facilities are referred to herein as the "Improvements," and the Improvements to be owned by the City are referred to as the "City Improvements." Section 7. The City Council certifies to the Commission of the Authority that all of the City Improvements are necessary to meet increased demands placed upon the City as a result of development occurring or expected to occur within the Community Facilities District. Joint community facilities agreements with each other local agency owning Improvements (any such local agency referred to herein as an "Other Local Agency") shall each contain a certification with respect to the Improvements to be owned by the Other Local Agency equivalent to that made by the City in this paragraph. Section 8. Prior to issuance of bonds, the Authority will apply the special tax collections within each Improvement Area to fund City Improvements as provided in the Acquisition Agreement, either for the acquisition of City Improvements or for the construction of City Improvements by the City. Following the issuance of bonds of an Improvement Area, the Authority will apply the special tax collections within the Improvement Area initially as required by the documents under which any bonds are issued; and thereafter, to the extent not provided in the bond documents, to the Authority's reasonable administrative costs incurred in the administration of the Community Facilities District. The Authority will remit any special tax revenues for any Improvement Area remaining after the final retirement of all bonds for such Improvement Area to the City and to each Other Local Agency in the proportions specified in the Authority's proceedings. The City will apply any such special tax revenues it receives for authorized City Improvements and its own administrative costs only as permitted by the Act. The joint community facilities agreements with each Other Local Agency must require such Other Local Agency to apply the special tax revenues they receive for their authorized Improvements under the Community Facilities District and for their own related administrative costs only as permitted by the Act. Section 9. The Authority will administer the Community Facilities District, including employing and paying all consultants, annually levying the special tax and all aspects of paying and administering the bonds, and complying with all State and Federal requirements appertaining to the proceedings, including the requirements of the United States Internal Revenue Code. The City will cooperate fully with the Authority in respect of the requirements of the Internal Revenue Code and to the extent information is required of the City to enable the Authority to perform its disclosure and continuing disclosure obligations with respect to the bonds, although the City will not participate in nor be considered to be a participant in the proceedings respecting the Community Facilities District (other than as a party to the agreement embodied by this resolution) nor will the City be or be considered to be an issuer of the bonds or an obligated person for purposes of Rule 15c2-12. The Authority shall obtain a provision equivalent to this paragraph in the joint community facilities agreement with each Other Local Agency. Resolution No. 2018-44 Page 5 of 8 Section 10. Upon the first levy of special tax within the Community Facilities District or any Improvement Area prior to the issuance of bonds for an Improvement Area, the Authority shall establish and maintain a special fund (which may be established with a bond trustee under an indenture or trust agreement) to be known as the "Uptown Newport Project Community Facilities District, Improvement Area No. Acquisition and Construction Fund." Special taxes collected within the applicable Improvement Area prior to the issuance of bonds shall be deposited in a separate account of the Acquisition and Construction Fund for such Improvement Area. If the Authority issues bonds for the Improvement Area and bond proceeds become available to finance the Improvements, the Authority shall deposit the portion of bond proceeds which is intended to be utilized to finance the Improvements in a separate account of the Acquisition and Construction Fund for such Improvement Area. The Acquisition and Construction Fund will be available both for City Improvements and for the Improvements pertaining to each Other Local Agency. Amounts in the Acquisition and Construction Fund shall be disbursed in accordance with the provisions of the indenture or other similar document governing the bonds issued for the applicable Improvement Area, the Acquisition Agreement and/or the relevant joint community facilities agreement or acquisition agreement for any Other Local Agency. Section 11. As respects the Authority and the Other Local Agencies, the City agrees to fully administer, and to take full governmental responsibility for, the construction or acquisition of the City Improvements including but not limited to environmental review, approval of plans and specifications, bid requirements, performance and payment bond requirements, insurance requirements, contract and construction administration, staking, inspection, acquisition of necessary property interests in real or personal property, the holding back and administration of retention payments, punch list administration, and the Authority and the Other Local Agencies shall have no responsibility in that regard. The City reserves the right, as respects the Developer, to require the Developer to contract with the City to assume any portion or all of this responsibility. The Authority shall obtain a provision equivalent to this paragraph in the joint community facilities agreement with each Other Local Agency. Section 12. The City agrees to require the Developer to indemnify and to hold the Authority, its other members, and its other members' officers, agents and employees, and the Other Local Agencies and their officers, agents and employees (collectively, the "Indemnified Parties") harmless from any and all claims, suits and damages (including costs and reasonable attorneys' fees) arising out of the design, engineering, construction and installation of the City Improvements. The Authority shall obtain a provision equivalent to this paragraph in each joint community facilities agreement with each Other Local Agency naming the City and its officers, agents and employees as Indemnified Parties with respect to such Other Local Agency's Improvements. Section 13. As respects the Authority and each Other Local Agency, the City agrees — once the City Improvements are constructed according to the approved plans and specifications — to accept ownership of the City Improvements, to take maintenance responsibility for the City Improvements. Resolution No. 2018-44 Page6of8 Section 14. The City acknowledges the requirement of the Act that if the City Improvements are not completed prior to the adoption, by the Commission of the Authority, of the Resolution of Formation of the Community Facilities District, the City Improvements must be constructed as if they had been constructed under the direction and supervision, or under the authority of, the City. The City acknowledges that this means all City Improvements must be constructed under contracts that require the payment of prevailing wages as required by Section 1720 and following of the Labor Code of the State of California. The Authority makes no representation that this requirement is the only applicable legal requirement in this regard. The City reserves the right, as respects the Developer, to assign appropriate responsibility for compliance with this paragraph to the Developer. Section 15. The form of the Acquisition Agreement attached hereto as Exhibit C is hereby approved, and each of the City Manager, Assistant City Manager, or such person as the City Manager or Assistant City Manager shall designate (each, an "Authorized Officer") is authorized to execute, and deliver to the Developer, the Acquisition Agreement on behalf of the City in substantially that form, with such changes as shall be approved by the Authorized Officer after consultation with the City Attorney and the Authority's bond counsel, such approval to be conclusively evidenced by the execution and delivery thereof. Section 16. For City Improvements to be financed on an acquisition basis (that is, constructed by or on behalf of the Developer), after completion of the City Improvements and appropriate arrangements for the maintenance of the City improvements, or any discrete portion thereof as provided in Section 53313.51 of the Act and in the Acquisition Agreement, to the satisfaction of the City, and in conjunction with the City's acceptance thereof, acquisition of the City Improvements shall be undertaken as provided in the Acquisition Agreement. For City Improvements to be financed on a construction basis (that is, constructed by the City or under contract with the City), the City may request disbursement from the special tax collections for reimbursement of the City or direct payment of costs in accordance with applicable law. Section 17. The City hereby consents to the formation of the Community Facilities District in accordance with this resolution and consents to the assumption of jurisdiction by the Authority for the proceedings respecting the Community Facilities District with the understanding that the Authority will hereafter take each and every step required for or suitable for consummation of the proceedings, the levy, collection and enforcement of the special tax, and the issuance, sale, delivery and administration of the bonds, all at no cost to the City and without binding or obligating the City's general fund or taxing authority. Section 18. The terms of the Agreement embodied by this resolution may be amended by a writing duly authorized, executed and delivered by the City and the Authority, except that no amendment may be made after the issuance of the bonds by the Authority that would be detrimental to the interests of the bondholders without complying with all of the bondholder consent provisions for the amendment of the bond resolutions, bond indentures or like instruments governing the issuance, delivery and administration of all outstanding bonds. Resolution No. 2018-44 Page 7 of 8 Section 19. Except to the extent of the City's agreement to take responsibility for and ownership of the City Improvements, no person or entity, including the Developer, shall be deemed to be a third party beneficiary of this resolution, and nothing in this resolution (either express or implied) is intended to confer upon any person or entity other than the Authority and the City (and their respective successors and assigns) any rights, remedies, obligations or liabilities under or by reason of this resolution. Section 20. The City shall be identified as a third -party beneficiary of all joint community facilities agreements between the Authority and the other local agencies to the extent of the provisions whereby the Other Local Agency agree to take responsibility for and ownership of their Improvements. Section 21. This resolution shall remain in force until all bonds have been retired and the authority to levy the special tax conferred by the Community Facilities District proceedings has ended or is otherwise terminated. Section 22. The City Council hereby authorizes and directs each Authorized Officer and other appropriate City staff to cooperate with the Authority and its consultants and to do all things necessary and appropriate to carry out the intent of this resolution and the Community Facilities District financing, and to execute any and all certificates and documents in connection with the bond issuance as shall be approved by an Authorized Officer after consultation with the City Attorney and the Authority's bond counsel. Section 23. The City Council hereby approves delivery of a certified copy of this resolution to the Authority's Bond Counsel, Orrick, Herrington & Sutcliffe LLP. Section 24. The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. Section 25. If any section, subsection, sentence, clause or phrase of this resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this resolution. The City Council hereby declares that it would have passed this resolution, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. Section 26. The requirement for environmental review under the California Environmental Quality Act ("CEQA") is satisfied by the City Council's previous certification of the Uptown Newport Planned Community final EIR (SCH No. 2010051094) (Resolution No. 2013-21). The finding of this Resolution is incorporated here by reference. Section 27. This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution. Resolution No. 2018-44 Page 8 of 8 ADOPTED this 26th day of June, 2018. Marshall "P yr " Duffield Mayor ATTEST: Lei ani Brown City Clerk APPROVED AS TO FORM: CITY ATTORNEY'S OFFIC Aaron C. Harp City Attorney Attachments: Exhibit A — Community Facilities District Boundaries Exhibit B — Authorized Improvements Exhibit C — Form of Acquisition Agreement Exhibit D — Project Description and Bond Parameters EXHIBIT A COMMUNITY FACILITIES DISTRICT BOUNDARIES J C. 0L 0 0" CD Q N cu Z U} = .�., 0 o ca �� Q L CL z 0 1] EXHIBIT B AUTHORIZED IMPROVEMENTS 1. Preliminary and Incidental Expense and Appurtenant Work and Improvements Generally, for each of the following categories of public capital facilities to be acquired, constructed and installed on public property (including dedicated rights -of -way and public easements), the authorized facilities shall be deemed to include the cost and expense of mobilization, clearing, grubbing, protective fencing and erosion control, excavation, curb, gutter and sidewalks, base and finish paving, striping, traffic signage, traffic signals, streetlights, landscaping, irrigation, barricades, undergrounding of various utilities, and related appurtenant work and facilities, together with the cost and expense of engineering design, plan review, project management, construction -related surety bonds or like security instruments, construction staking and management, inspection, and any like fees and costs incidental to such acquisition, construction and installation. 2. Public Capital Improvements Undergrounding of overhead utilities. Park improvements, including but not limited to playground infrastructure, irrigation, landscaping, utilities, drainage and grading. EXHIBIT C FORM OF ACQUISITION AGREEMENT ACQUISITION AGREEMENT BY AND AMONG CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, CITY OF NEWPORT BEACH AND TSG — PARCEL 1, LLC and UPTOWN NEWPORT JAMBOREE, LLC Dated as of , 20 ACQUISITION AGREEMENT Recitals A. The parties to this Acquisition Agreement (the "Agreement") are the California Statewide Communities Development Authority (the "Authority"), City of Newport Beach, a California municipal corporation and charter city ("City"), Uptown Newport Jamboree, LLC, a Delaware limited partnership and TSG — Parcel 1, LLC, a Delaware limited liability company (collectively, the "Developer"). B. The effective date of this Agreement is , 20_ C. The Developer has applied for the financing of certain public capital improvements (each, as more particularly described on Exhibit A, an "Acquisition Improvement" and collectively, the "Acquisition Improvements") through the Authority. The Acquisition Improvements are to be owned and operated by the City, and the financing is to be accomplished through a Community Facilities District which will be established and administered by the Authority under and pursuant to the Mello -Roos Community Facilities Act of 1982 — California Government Code Sections 53311 and following (the "Act"). On [ 1, 20, the City adopted Resolution No. [ 1 authorizing the Authority to form a community facilities district (the "Community Facilities District") within the territorial limits of the City and designate improvement areas within the Community Facilities District (each, an "Improvement Area") to finance the Acquisition Improvements. On [ ], 20, the Authority formed the Community Facilities District and, on the same date, a landowner election was conducted for each Improvement Area in which all of the votes were cast unanimously in favor of conferring the Community Facilities District authority on the Authority Commission. D. The Authority intends to levy special taxes for facilities and issue bonds for each Improvement Area, in one or more series, to fund, among other things, all or a portion of the Acquisition Improvements. The portion of the proceeds of such special taxes (including prepayments) and bonds allocable to the cost of the Acquisition Improvements, together with interest earned thereon, is referred to herein as the "Available Amount". E. The Community Facilities District will provide financing for the acquisition by the City of the Acquisition Improvements and the payment of the Acquisition Price (as defined herein) of the Acquisition Improvements from the Available Amount. Attached hereto as Exhibit A is a description of the Acquisition Improvements, which includes authorized discrete and usable portions, if any, of the Acquisition Improvements, pursuant to Section 53313.51 of the Act, to be acquired from the Developer. F. The parties anticipate that, upon completion of the Acquisition Improvements and subject to the terms and conditions of this Agreement, the City will acquire the completed Acquisition Improvements. G. Any and all monetary obligations of the City arising out of this Agreement are the special and limited obligations of the City payable only from the Available Amount, and no other funds whatsoever of the City shall be obligated therefor under any circumstances. H. Attached to this Agreement are Exhibit A (Description of the Acquisition Improvements and the Eligible Portions thereof), Exhibit B (Disbursement Request Form for Acquisition Improvements) and Exhibit C (Bidding, Contracting and Construction Requirements for Acquisition Improvements), all of which are incorporated into this Agreement for all purposes. Agreement ARTICLE I DEFINITIONS; COMMUNITY FACILITIES DISTRICT FORMATION AND FINANCING PLAN Section 1.01. Definitions. As used herein, the following capitalized terms shall have the meanings ascribed to them below: "Acceptable Title" means title (whether a fee interest, easement or other acceptable title or property rights) free and clear of all monetary liens, encumbrances, assessments, whether any such item is recorded or unrecorded, and taxes, except (i) those items which are reasonably determined by the City Engineer not to interfere with the intended use and therefore are not required to be cleared from the title, and (ii) the lien of the Community Facilities District or any other community facilities district or assessment district provided that the property owned by the City is exempt from such taxation or assessment. "Acquisition and Construction Fund" means each "Uptown Newport Community Facilities District Acquisition and Construction Fund" established by the Authority pursuant to the Resolution and Section 1.03 hereof for the purpose of paying the Acquisition Price of the Acquisition Improvements. "Acquisition Improvement" means a public capital improvement described in Exhibit A hereto. "Acquisition Price" means the total amount eligible to be paid to the Developer upon acquisition of an Acquisition Improvement as provided in Section 2.03, not to exceed the Actual Cost of the Acquisition Improvement. "Actual Cost" means the total cost of an Acquisition Improvement, as documented by the Developer to the satisfaction of the City and as certified by the City Engineer in an Actual Cost Certificate including, without limitation, (a) the Developer's cost of constructing such Acquisition Improvement including grading, labor, material and equipment costs, (b) the Developer's cost of designing and engineering the Acquisition Improvement, preparing the plans and specifications and bid documents for such Acquisition Improvement, and the costs of inspection, materials testing and construction staking for such Acquisition Improvement, (c) the Developer's cost of any performance, payment and maintenance bonds and insurance, including title insurance, required hereby for such Acquisition Improvement, (d) the Developer's cost of any real property or interest therein that is either necessary for the construction of such Acquisition Improvement (e.g., temporary construction easements, haul roads, etc.), or is required to be conveyed with such Acquisition Improvement in order to convey Acceptable Title thereto to the City or its designee, (e) the Developer's cost of environmental evaluation or mitigation required for such Acquisition Improvement, (f) the amount of any fees actually paid by the Developer to governmental agencies in order to obtain permits, licenses or other necessary governmental approvals and reviews for such Acquisition Improvement, (g) the Developer's cost for construction and project management, administration and supervision services for such Acquisition Improvement, and (h) the Developer's cost for professional services related to such Acquisition Improvement, including engineering, accounting, legal, financial, appraisal and similar professional services. "Actual Cost Certificate" means a certificate prepared by the Developer detailing the Actual Cost of an Acquisition Improvement, or an Eligible Portion thereof, to be acquired hereunder, as may be revised by the City Engineer pursuant to Section 2.03. "Agreement" means this Acquisition Agreement, dated as of [ 1, 20 "Authority" means the California Statewide Communities Development Authority. "Authority Trust Agreement" means a Trust Agreement entered into by the Authority and an Authority Trustee in connection with the issuance of bonds. "Authority Trustee" means the financial institution identified as trustee in an Authority Trust Agreement. "Available Amount" shall have the meaning assigned to the term in Recital D. "Bonds" means bonds or other indebtedness issued by the Authority that is to be repaid with Special Taxes. "City" means the City of Newport Beach, California. "City Engineer" means the Engineer of the City or his/her designee who will be responsible for administering the acquisition of the Acquisition Improvements hereunder. "Code" means the Government Code of the State of California. "Community Facilities District" shall have the meaning assigned to the term in Recital C. "Developer" means, collectively or severally, as appropriate, TSG — Parcel 1, LLC, a Delaware limited partnership and Uptown Newport Jamboree, LLC, a Delaware limited liability company, and their respective successors and assigns. "Disbursement Request Form" means a requisition for payment of funds from an Acquisition and Construction Fund for an Acquisition Improvement, or an Eligible Portion thereof in substantially the form contained in Exhibit B hereto. "Eligible Portion" shall have the meaning ascribed to it in Section 2.03 below. "Improvement Area" means an improvement area of the Community Facilities District designated as such by the Authority in accordance with the Act. "Installment Payment" means an amount equal to ninety percent (90%) of the Actual Cost of an Eligible Portion. "Project" means the development of the property in the Community Facilities District, including the design and construction of the Acquisition Improvements and the other public and private improvements to be constructed by the Developer within the Community Facilities District. "Resolution" means City of Newport Beach Resolution No. j 1, adopted [ ], 20 authorizing the execution and delivery of this Agreement. "Special Taxes" means annual special taxes for facilities, and prepayments thereof, authorized by the Community Facilities District to be levied by the Commission of the Authority within each Improvement Area. "Title Documents" means, for each Acquisition Improvement acquired hereunder, a grant deed or similar instrument necessary to transfer title to any real property or interests therein (including easements or rights of way), or an irrevocable offer of dedication of such real property with interests therein necessary to the operation, maintenance, rehabilitation and improvement by the City of the Acquisition Improvement (including, if necessary, easements for ingress and egress) and a bill of sale or similar instrument evidencing transfer of title to the Acquisition Improvement (other than said real property interests) to the City, where applicable. Section 1.02. Establishment of Community Facilities District. Developer has requested the City to permit the Authority to provide for financing of the Acquisition Improvements and collection of special tax through the establishment and authorization of the Community Facilities District and the City agreed by its adoption of the Resolution. The Community Facilities District was established by the Authority on [ 1, 20 , and through the successful landowner election held that same day with respect to each Improvement Area of the Community Facilities District, the Commission of the Authority is authorized to levy the Special Taxes and to issue the Bonds to finance the Acquisition Improvements. Developer and the City agree to reasonably cooperate with one another and with the Authority in the completion of the financing through the issuance of the Bonds in one or more series for each Improvement Area. Section 1.03. Deposit and Use of Available Amount. (a) Prior to the issuance of Bonds for each Improvement Area, Special Taxes collected by the Authority (including from prepayments of Special Taxes) shall be deposited in the Acquisition and Construction Fund established by the Authority pursuant to the terms of the Resolution, and may be disbursed to pay the Acquisition Price of Acquisition Improvements in accordance with Article II of this Agreement. All funds in the Acquisition and Construction Fund shall be considered a portion of the Available Amount, and upon the issuance of the Bonds the Acquisition and Construction Fund shall be transferred to the Authority Trustee to be held in accordance with the Authority Trust Agreement. (b) If not already established pursuant to the Resolution, upon the issuance of the Bonds of an Improvement Area, the Authority will cause the Authority Trustee to establish and maintain the Acquisition and Construction Fund for the purpose of holding all funds for the Acquisition Improvements to be financed by such Improvement Area. All earnings on amounts in the Acquisition and Construction Fund shall remain in the Acquisition and Construction Fund for use as provided herein and pursuant to the Authority Trust Agreement. Money in such Acquisition and Construction Fund shall be available to respond to delivery of a Disbursement Request Form and to be paid to the Developer or its designee to pay the Acquisition Price of the Acquisition Improvements, as specified in Article II hereof. Upon completion of all of the Acquisition Improvements and the payment of all costs thereof, any remaining funds in the Acquisition and Construction Fund (less any amount determined by the City as necessary to reserve for claims against the account) (i) shall be applied to pay the costs of any additional Acquisition Improvements eligible for acquisition with respect to the Project, as approved by the Authority and, to the extent not so used, (ii) shall be applied by the Authority to call Bonds for such Improvement Area or to reduce Special Taxes for such Improvement Area as the Authority shall determine. Section 1.04. No City Liability; City Discretion; No Effect on Other Agreements. In no event shall any actual or alleged act by the City or any actual or alleged omission or failure to act by the City with respect to the Authority subject the City to monetary liability therefor. Further, nothing in this Agreement shall be construed as affecting the Developer's or the City's duty to perform their respective obligations under any other agreements, public improvement standards, land use regulations or subdivision requirements related to the Project, which obligations are and shall remain independent of the Developer's and the City's rights and obligations under this Agreement. ARTICLE II DESIGN, CONSTRUCTION AND ACQUISITION OF ACQUISITION IMPROVEMENTS Section 2.01. Letting and Administering Design Contracts. The Developer has awarded and administered, or will award and administer, engineering design contracts for the Acquisition Improvements to be acquired from Developer. All eligible expenditures of the Developer for design engineering and related costs in connection with the Acquisition Improvements (whether as an advance to the City or directly to the design consultant) shall be reimbursed at the time of acquisition of the Acquisition Improvements. The Developer shall be entitled to reimbursement for any design costs of the Acquisition Improvements only out of the Acquisition Price as provided in Section 2.03 and shall not be entitled to any payment for design costs independent of the acquisition of Acquisition Improvements. Section 2.02. Letting and Administration of Construction Contracts; Indemnification. State law requires that all Acquisition Improvements not completed prior to the formation of the Community Facilities District shall be constructed as if they were constructed under the direction and supervision, or under the authority, of the City. In order to assure compliance with those provisions, except for any contracts entered into prior to the date hereof, Developer agrees to comply with the requirements set forth in Exhibit C hereto with respect to the bidding and contracting for the construction of the Acquisition Improvements. The Developer agrees that ail the contracts shall call for payment of prevailing wages as required by the Labor Code of the State of California. The Developer's indemnification obligation set forth in Section 3.01 of this Agreement shall also apply to any alleged failure to comply with the requirements of this Section, and/or applicable State laws regarding public contracting and prevailing wages. Section 2.03. Sale of Acquisition Improvements. The Developer agrees to sell to the City each Acquisition Improvement to be constructed by or on behalf of the Developer (including any rights -of -way or other easements necessary for the Acquisition Improvements, to the extent not already publicly owned), when the Acquisition Improvement is completed to the satisfaction of the City for an amount not to exceed the lesser of (i) the Available Amount from time to time or (ii) the Actual Cost of the Acquisition Improvement. Exhibit A, attached hereto and incorporated herein, contains a list of the Acquisition Improvements. Portions of an Acquisition Improvement eligible for Installment Payments prior to completion of the entire Acquisition Improvement are described as eligible, discrete and usable portions in Exhibit A (each, an "Eligible Portion"). At the time of completion of each Acquisition Improvement, or Eligible Portion thereof, the Developer shall deliver to the City Engineer a written request for acquisition, accompanied by an Actual Cost Certificate, and by executed Title Documents for the transfer of the Acquisition Improvement where necessary. In the event that the City Engineer finds that the supporting paperwork submitted by the Developer fails to demonstrate the required relationship between the subject Actual Cost and eligible work, the City Engineer shall advise the Developer that the determination of the Actual Cost (or the ineligible portion thereof) has been disallowed and shall request further documentation from the Developer. If the further documentation is still not adequate, the City Engineer may revise the Actual Cost Certificate to delete any disallowed items and the determination shall be final and conclusive. Certain soft costs for the Acquisition Improvements, such as civil engineering, may have been incurred pursuant to single contracts that include work relating also to the private portions of the Project. In those instances, the total costs under such contracts will be allocated to each Acquisition Improvement as approved by the City Engineer. Where a specific contract has been awarded for design or engineering work relating solely to an Acquisition Improvement, one hundred percent (100%) of the costs under the contract will be allocated to that Acquisition Improvement. Amounts allocated to an Acquisition Improvement will be further allocated among the Eligible Portions of that Acquisition Improvement, if any, in the same proportion as the amount to be reimbursed for hard costs for each Eligible Portion bears to the amount to be reimbursed for hard costs for the entire Acquisition Improvement. Costs will be allocated to each Acquisition Improvement as approved by the City Engineer. The costs of certain environmental mitigation required to mitigate impacts of the public and private portions of the Project will be allocated to each Acquisition Improvement as approved by the City Engineer. Section 2.04. Conditions Precedent to Payment of Acquisition Price. Payment to the Developer or its designee of the Acquisition Price for an Acquisition Improvement from the Acquisition and Construction Fund shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Acquisition Improvement satisfies all City regulations and ordinances and is otherwise complete and ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that none of the property (including any rights -of -way or other easements necessary for the operation and maintenance of the Acquisition Improvement, to the extent not already publicly owned) comprising the Acquisition Improvement is not subject to any prospective mechanics lien claim respecting the Acquisition Improvements. (b) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. Property shall be exempt from the special tax of the Community Facilities District upon conveyance to the City or the Developer shall prepay the special tax on the property so conveyed. (c) The Developer shall certify that it is not in default with respect to any loan secured by any interest in the Project. (d) The Developer shall have provided the City with Title Documents needed to provide the City with Acceptable Title to the site, right-of-way, or easement upon which the subject Acquisition Improvement is situated. All such Title Documents shall be in a form acceptable to the City and shall convey Acceptable Title. The Developer shall provide a policy of title insurance as of the date of transfer in a form acceptable to the City Engineer and the City Attorney insuring the City as to the interests acquired in connection with the acquisition of any interest for which such a policy of title insurance is not required by another agreement between the City and the Developer. Each title insurance policy required hereunder shall be in the amount equal to the Acquisition Price. The amount paid to the Developer or its designee upon satisfaction of the foregoing conditions precedent shall be the Acquisition Price less all Installment Payments paid previously with respect to the Acquisition Improvement. Section 2.05. Payment for Eligible Portions. The Developer may submit an Actual Cost Certificate to the City Engineer with respect to any Eligible Portion. Payment to the Developer or its designee from the Acquisition and Construction Fund of an Installment Payment with respect to such Eligible Portion shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Eligible Portion has been completed in accordance with the applicable plans and specifications and that the Eligible Portion satisfies all City regulations and ordinances and is otherwise complete and, where appropriate, is ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that the property (including any rights -of -way or other easements necessary for the operation and maintenance of the Eligible Portion, to the extent not already owned by the City) comprising the Eligible Portion is not subject to any prospective mechanics lien claim respecting the Eligible Portion. (b) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. (c) The Developer shall have provided the City with Title Documents needed to provide the City with title to the site, right-of-way, or easement upon which the subject Eligible Portion is situated. All such Title Documents shall be in a form acceptable to the City Engineer and shall be sufficient, upon completion of the Acquisition Improvement of which the Eligible Portion is a part, to convey Acceptable Title. (d) Payment and performance bonds, from a bonding company with an A.M. Best rating of at least "A-" or its equivalent, applying to plans and specifications for the Acquisition Improvement approved by the City, shall be in place to secure completion of the Acquisition Improvement of which the Eligible Portion is a part. Section 2.06. Disbursement Request Form. Upon a determination by the City Engineer to pay the Acquisition Price of an Acquisition Improvement pursuant to Section 2.04 or to pay an Installment Payment for an Eligible Portion pursuant to Section 2.05, the City Engineer shall cause a Disbursement Request Form substantially in the form attached hereto as Exhibit B-1 to be submitted to the Authority and Authority Trustee, and the Authority or Authority Trustee shall make payment directly to the Developer or its designee of the amount requested from the applicable Acquisition and Construction Fund. The City and the Developer acknowledge and agree that the Authority or Authority Trustee shall make payment strictly in accordance with the Disbursement Request Form and shall not be required to determine whether or not the Acquisition Improvement or Eligible Portion has been completed or what the Actual Costs may be with respect to the Acquisition Improvement or Eligible Portion. The Authority or Authority Trustee shall be entitled to rely on the executed Disbursement Request Form on its face without any further duty of investigation. In the event that the Actual Cost of an Acquisition Improvement or the Installment Payment for an Eligible Portion is in excess of the Available Amount, the Authority or Authority Trustee shall withdraw all funds remaining in the Acquisition and Construction Fund and shall transfer those amounts to the Developer or its designee. The unpaid portion of the Actual Cost shall be paid from funds that may subsequently be deposited in the Acquisition and Construction Fund from a subsequent issuance of Bonds, from prepayments of Special Taxes to be used for financing Acquisition Improvements, or from Special Tax revenues, if any of those occurs. Section 2.07. Limitation on Obligations. In no event shall the City be required to pay the Developer or its designee more than the amounts held in the Acquisition and Construction Fund. Section 2.08. Undergroundinq of Utilities. In addition to financing the acquisition of the Acquisition Improvements, proceeds of bonds for the Community Facilities District are expected to finance the undergrounding of certain utilities owned or to be owned by Southern California Edison. Notwithstanding anything to the contrary herein, the City shall be entitled to directly request payment to the City (or to reimburse the Developer) pursuant to a Request to the Authority Trustee to (i) reimburse amounts the City has paid Southern California Edison or a contractor for the amount in such request, or (ii) to pay directly to Southern California Edison or a contractor for the amount in such request. To the extent authorized by law, the City agrees to first reimburse amounts previously deposited by the Developer pursuant to the Deposit Agreement between the City of Newport Beach and TSG — Parcel 1, LLC, dated January 5, 2015, for the costs of the undergrounding of utilities, including design and planning, from proceeds of bonds or the Special Tax pursuant to this Section. ARTICLE III MISCELLANEOUS Section 3.01. Indemnification and Hold Harmless. The Developer hereby assumes the defense of, and indemnifies and saves harmless the City, the Authority and their respective officers, directors, employees and agents, including the Authority Trustee, 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 or alleged to have resulted from the acts or omissions of the Developer or its agents and employees arising out of any contract for the design, engineering and construction of the Acquisition Improvements entered into by the Developer 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 Authority's underwriter, financial advisor, appraiser, district engineer or bond counsel or regarding the Developer, its proposed developments, its property ownership and its contractual arrangements contained in the official statement relating to the Authority financing (provided that the Developer shall have been furnished a copy of the official statement and shall not have objected thereto); and provided, further, that nothing in this Section 3.01 shall limit in any manner the City's rights against any of the Developer's architects, engineers, contractors or other consultants. Except as set forth in this Section 3.01, no provision of this Agreement shall in any way limit the extent of the responsibility of the Developer for payment of damages resulting from the operations of the Developer, its agents and employees. Nothing in this Section 3.01 shall be understood or construed to mean that the Developer agrees to indemnify the City, the Authority or any of their respective officers, directors, employees or agents, for any wrongful acts or omissions to act of the Authority or its officers, employees, agents or any consultants or contractors, including the Authority Trustee, and for any wrongful acts, willful misconduct, active negligence or omissions to act of the City, or its officers, employees, agents or any consultants or contractors, including the Authority Trustee. Section 3.02. Audit. The City shall have the right, during normal business hours and upon the giving of ten days' written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer (for which the Developer seeks reimbursement pursuant to this Agreement) in constructing the Acquisition Improvements. Section 3.03. Cooperation. The City and the Developer agree to cooperate with respect to the completion of the financing of the Acquisition Improvements by the Authority through the levy of the Community Facilities District Special Taxes and issuance of Bonds. The City and the Developer agree to meet in good faith to resolve any differences on future matters which are not specifically covered by this Agreement. Section 3.04. General Standard of Reasonableness. Any provision of this Agreement which requires the consent, approval or acceptance of either party hereto or any of their respective employees, officers or agents shall be deemed to require that the consent, approval or acceptance not be unreasonably withheld or delayed, unless the provision expressly incorporates a different standard. Section 3.05. Third Party Beneficiaries. The Authority and its officers, employees, agents or any consultants or contractors are expressly deemed third party beneficiaries of this Agreement with respect to the provisions of Section 3.01. It is expressly agreed that, except for the Authority with respect to the provisions of Section 3.01, there are no third party beneficiaries of this Agreement, including without limitation any owners of bonds, any of the City's or the Developer's contractors for the Acquisition improvements and any of the City's, the Authority's or the Developer's agents and employees. Section 3.06. Conflict with Other Agreements. Nothing contained herein shall be construed as releasing the Developer or the City from any condition of development or requirement imposed by any other agreement between the City and the Developer, and, in the event of a conflicting provision, the other agreement shall prevail unless the conflicting provision is specifically waived or modified in writing by the City and the Developer. Section 3.07. Notices. All invoices for payment, reports, other communication and notices relating to this Agreement shall be mailed to: If to the City: City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Attention: City Manager If to the Authority: California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, CA 95814 Attention: Chair If to the Developer: Uptown Newport Jamboree, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff TSG — Parcel 1, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff With a copy to: Jackson Tidus 2030 Main Street 12th Floor Irvine, CA 92614 Attention: Gregory P. Powers, Esq. Either party may change its address by giving notice in writing to the other party. Section 3.08. 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. Section 3.09. 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. Section 3.10. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other party with the terms of this Agreement. Section 3.11. 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. Section 3.12. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. Section 3.13. Successors and Assigns. This Agreement is binding upon the heirs, assigns and successors -in -interest of the parties hereto. The Developer may not assign its rights or obligations hereunder, except to successors -in -interest to the property within the Community Facilities District, without the prior written consent of the City. Section 3.14. Remedies in General. It is acknowledged by the parties that the City would not have entered into this Agreement if it were to be liable in damages under or with respect to this Agreement or the application thereof, other than for the payment to the Developer of any (i) moneys owing to the Developer hereunder, or (ii) moneys paid by the Developer pursuant to the provisions hereof which are misappropriated or improperly obtained, withheld or applied by the City. Section 3.15. Non -Liability of Authority. The Authority shall not be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Agreement, except only to the extent amounts are received for the payment thereof from the Special Tax. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that the City shall not be liable in damages to the Developer, or to any assignee or transferee of the Developer other than for the payments to the Developer specified Section 3.14. Subject to the foregoing, the Developer covenants not to sue for or claim any damages for any alleged breach of, or dispute which arises out of, this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. CITY OF NEWPORT BEACH ATTEST: By: By: Leilani I. Brown [Authorized Officer] City Clerk APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE By: Aaron C. Harp City Attorney UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited partnership By: Name Title TSG — PARCEL 1, LLC, a Delaware limited liability company By: Name Title CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory EXHIBIT A TO THE ACQUISITION AGREEMENT DESCRIPTION OF ACQUISITION IMPROVEMENTS, ELIGIBLE PORTIONS ACQUISITION IMPROVEMENTS Park improvements, including playground infrastructure, irrigation, landscaping, utilities, drainage and grading. EXHIBIT B TO THE ACQUISITION AGREEMENT DISBURSEMENT REQUEST FORM (Acquisition Improvement or Eligible Portion) To: [Authority Trustee] Attention: Fax: Phone: No. Re: CSCDA Community Facilities District No. , Improvement Area The undersigned, a duly authorized officer of the CITY OF NEWPORT BEACH hereby requests a withdrawal from the Uptown Newport Project Community Facilities District Acquisition and Construction Fund, as follows: Request Date: Name of Developer: Withdrawal Amount: Acquisition Improvements: Payment Instructions: [Insert Date of Request] [Insert Acquisition Price/Installment Payment] [Insert Description of Acquisition Improvement(s)/Eligible Portion(s) from Exhibit A] [Insert Wire Instructions or Payment Address for Developer or Developer's designee as provided by the Developer] The undersigned hereby certifies as follows: The Withdrawal is being made in accordance with a permitted use of the monies pursuant to the Acquisition Agreement and the Withdrawal is not being made for the purpose of reinvestment. None of the items for which payment is requested have been reimbursed previously from the Acquisition and Construction Fund. If the Withdrawal Amount is greater than the funds held in the Acquisition and Construction Fund, the Authority Trustee is authorized to pay the amount of such funds and to pay remaining amount(s) as funds are subsequently deposited in the Acquisition and Construction Fund, should that occur. [For Park Improvement Disbursements:][The amounts being disbursed pursuant to this request are being used to finance or refinance certain public infrastructure and facilities (the "Improvements"). The City will own, and for the entire useful life of such Improvements reasonably expects to own, all of such Improvements. To the extent any of such Improvements are sold to an entity that is not a state or local government agency, the City will seek the advice and approval of bond counsel to the Authority prior to any such sale. The City will not allow any of such Improvements to be used (for example, by lease or other contract) in the trade or business of any nongovernmental persons (other than in their roles as members of the general public). All of such Improvements will be used in the performance of essential governmental functions of the City or another state or local government agency. The average expected useful life of such Improvements is at least 20 years. The representations and covenants contained in this paragraph are intended to support the conclusion that the interest paid on the bonds issued to finance the Improvements is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code").] CITY OF NEWPORT BEACH By: Title: EXHIBIT C TO THE ACQUISITION AGREEMENT BIDDING, CONTRACTING AND CONSTRUCTION REQUIREMENTS FOR ACQUISITION IMPROVEMENTS With respect to construction contracts awarded after approval of the Agreement, bids for construction shall be solicited from at least three (3) qualified contractors, provided at least three (3) qualified contractors are reasonably available. The Developer may also directly solicit bids. The bid package may consist of preliminary plans and specifications. The bidding response time shall be not less than ten (10) working days. An authorized representative of the City shall be provided a copy of the tabulation of bid results upon request. Contract(s) for the construction of the public Acquisition Improvements shall be awarded to the qualified contractor(s) submitting the lowest responsible bid(s), as determined by the Developer. The contractor to whom a contract is awarded shall be required to pay not less than the prevailing rates of wages pursuant to Labor Code Sections 1770, 1773 and 1773.1. A current copy of applicable wage rates shall be on file in the Office of the City Clerk, as required by Labor Code Section 1773.2. The Developer shall provide the City with certified payrolls. EXHIBIT D PROJECT DESCRIPTION AND BOND PARAMETERS Project Description A. Specific Project(s) for which the Debt is Being Incurred • Park Improvements • 66-kV Undergrounding B. Not to exceed Authorized Par Amount • $8,800,000 C. Not to exceed Term of the Bonds, which will be no greater than the useful life of the project 30 years from date of issuance D. Not to exceed true interest cost • 5.75% E. Not to exceed maximum annual debt service • $900,000 F. Call provisions, including specifically identifying any deviation from a par call • Optional Call in 10 —Years at 100% of Par • Extraordinary redemption from prepayment of special taxes with not to exceed 3% premium through 10 years and then par call thereafter. G. Not to exceed underwriter's discount • 1.50% of Par Amount inclusive of underwriter's counsel fees H. List of Consultants Hired for the Issuance Orrick — Bond Counsel & Disclosure Counsel RBC Capital Markets, LLC - Underwriter David Taussig & Associates, Inc. - Special Tax Consultant STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH } } } ss. I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; the foregoing resolution, being Resolution No. 2018-44 was duly introduced before and adopted by the City Council of said City at a regular meeting of said Council held on the 26th day of June, 2018; and the same was so passed and adopted by the following vote, to wit: AYES: Council Member Herdman, Council Member Diane Dixon, Council Member Scott Peotter, Council Member Brad Avery, Mayor Duffy Duffield NAYS: None RECUSED: Council Member Kevin Muldoon, Mayor Pro Tem Will O'Neill IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 27th day of June, 2018. Leilani I. Brown City Clerk Newport Beach, California CITY OF NEWPORT BEACH City Council Minutes Study Session and Regular Meeting February 12, 2019 I. ROLL CALL - 4:00 p.m. Present: Council Member Brad Avery, Council Member Joy Brenner, Council Member Jeff Herdman, Council Member Kevin Muldoon, Mayor Pro Tem Will O'Neill, Mayor Diane Dixon Excused: Council Member Duffy Duffield II. CURRENT BUSINESS SS1. Clarification of Items on the Consent Calendar Mayor Dixon announced Item 16 (Appeal of Harbor Commission's Decision) will be moved to the Consent Calendar during the regular meeting in order to continue the Public Hearing to the March 12, 2019 City Council meeting. SS2. Beacon Bay Home Owner's Association Proposed Rate Change to Current Lease Community Development Director Jurjis and Real Property Administrator Whitlinger utilized a PowerPoint presentation to display a map of the Beacon Bay properties, where they are situated in uplands and tidelands areas, to discuss the State Lands Commission's responsibilities relative to Beacon Bay, Beacon Bay's history, amendments to the Beacon Bay lease, the transfer process, rent calculation examples, the current and past lease version, revenues collected, the home owners' proposed rent structures, the home owners' revenue modeling, Keyser Marston Associate's (KMA) revenue modeling, staff and the State Lands Commission's concerns, and possible next steps, and reported the home owners provided staff with a market analysis, not an appraisal report. Council Member Muldoon suggested continuing discussions with the home owners and State Lands Commission and indicated that conducting an appraisal may be justified. Mayor Pro Tem O'Neil received information from Community Development Director Jurjis regarding what is happening in Lake Tahoe and believed something is needed to reconcile the home owners' and KMA's calculations. He suggested forming a Finance Committee subcommittee consisting of three of the citizen members to 1) reconcile the calculations, 2) if no appraisal is conducted, come back to the City Council with an analysis, 3) if the subcommittee is able to reconcile the calculations, provide a recommendation as to whether an appraisal is needed, and 4) if the community association pays for the appraisal, have the subcommittee review the appraisal and make recommendations to Council regarding rent terms. Jim Helfrich, President of the Beacon Bay Community Association, agreed with the suggestion to form a Finance Committee subcommittee in order to reach a solution, but believed their information meets the State Lands Commission's requirements and will not result in a revenue reduction for the City. He indicated that, although properties are split between uplands and tidelands, the association agrees that everyone should pay the same rate. He indicated the association would like the opportunity to meet with the subcommittee. Drew Lawler, referenced a handout, reviewed their market value analysis, what they believe they should be charged, how the change would be phased in, noted the taxes they pay for their property, believed the lease already contains an inflation protection provision, and compared the lease rates of their properties compared to the Basin Marine Shipyard. Volume 64 - Page 28 City of Newport Beach Study Session and Regular Meeting February 12, 2019 Discussion ensued relative to the need to determine if the State Lands Commission requires the City to charge fair market value or a different amount following additional study, and if an appraisal is required versus a professional rent study. City Attorney Harp pointed out the State Lands Commission will also need to approve the lease agreement. In response to Jim Mosher's question, Community Development Director Jurjis indicated $10,000 has been expended for KMA's service. Council Member Muldoon expressed support for forming the subcommittee and suggested the City ask the State Lands Commission if the revenue modeling is acceptable in order to avoid additional costs and delays. There was unanimous consensus to move forward with a Finance Committee subcommittee. SS3. Overview of City Trees Public Works Director Webb, Deputy Public Works Director Martin, and City Arborist Pekar, utilized a PowerPoint presentation to review City tree statistics, provide information regarding maintenance and pruning, service request examples, crew rental, palm skinning, additional and necessary tree maintenance duties, tree planting, City Council policies and ordinances, examples of standard trees, special landscape trees, dedicated trees, and neighborhood trees, described problem trees, criteria for removing standard trees, emergency removals due to wind and/or rain storms, reforestation of City trees, tree trimming standards, supplemental tree trimming, encroachment and construction permits/projects, and examples of approved removals and replacements. City Manager Leung indicated that a presentation regarding herbicide use will be coming before Council the second meeting in March. In response to Council questions, Deputy Public Works Director Martin and City Arborist Pekar confirmed the applicant pays all costs related to the removal or reforestation of special trees and City tree removal due to view impacts, reported the draft policy related to dedicating trees and benches is being reviewed by a Parks, Beaches & Recreation Commission subcommittee, discussed the efforts to rebuild the City's tree inventory, confirmed the division also conducts tree education at schools, explained the benefits of allowing a variety of trees for each street, and encouraged everyone to review the full presentation. III. PUBLIC COMMENTS Caroline Taylor, Chrissie Emmel, Bill Applegate and Dave Grant discussed and provided handouts to express their concerns regarding the Newport Beach Aquatic Center's (NAC) current board members, financial mismanagement and misuse of restricted fundraising money, and asked Council to conduct an investigation into the situation since the NAC is located on City -owned property. Jim Mosher expressed concern regarding recent requests before the Zoning Administrator that are not constructing houses on stilts and referenced Item 3 (Floodplain Management) on tonight's agenda. Community Development Director Jurjis reported the maps do not go into effect until March 2019. City Attorney Harp reported the City Council would adjourn to Closed Session to discuss the items listed in the Closed Session agenda and read the titles. Regarding Closed Session Item IV.B and out of an abundance of caution, Council Member Brenner recused herself based on potential effects on a family member and City Manager Leung recused herself due to potential impacts on her personal finances. IV. CLOSED SESSION A. CONFERENCE WITH LABOR NEGOTIATORS (Government Code § 54957.6): 1 matter Volume 64 - Page 29 City of Newport Beach Study Session and Regular Meeting February 12, 2019 Agency Designated Representatives: Grace K. Leung, City Manager, Carol Jacobs, Assistant City Manager, Barbara Salvini, Human Resources Director, and Peter Brown; Labor Negotiators. Employee Organizations: Newport Beach Lifeguard Management Association (NBLMA); Newport Beach City Employees Association (NBCEA); Newport Beach Police Management Association (NBPMA); Newport Beach Professional and Technical Employees Association (NBPTEA); and Part Time Employees Association of Newport Beach (PTEANB). B. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION — INITIATION OF LITIGATION (Government Code § 54956.9(d)(4): 1 matter C. CONFERENCE WITH LEGAL COUNSEL EXISTING LITIGATION (Government Code § 54956.9(d)(1)): 1 matter Maury Friedson v. City of Newport Beach, et al. Mediation — Case No. 30-2018-01000354-CU-PO-CJC Claim No.: 20170000144 D. CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code § 54956.8): 1 matter Property Address: 406, 408, 410 South Bay Front, Balboa Island Agency Negotiator: Grace Leung, City Manager, Seimone Jurjis, Community Development Department Director and Lauren Whitlinger, Real Property Administrator Negotiating Parties: Seymour Beek Under Negotiation: Price and terms of payment V. RECESSED - 5:47 p.m. VI. RECONVENED AT 7:00 P.M. FOR REGULAR MEETING VII. ROLL CALL Present: Council Member Brad Avery, Council Member Joy Brenner, Council Member Jeff Herdman, Council Member Kevin Muldoon, Mayor Pro Tem Will O'Neill, Mayor Diane Dixon Excused: Council Member Duffy Duffield VIII. CLOSED SESSION REPORT Regarding Closed Session Item IV.B, City Attorney Harp stated that, as the owner and lessor of the property, the City is concerned about the allegations raised against the management of the Newport Aquatic Center (NAC) and reported the City will be contacting the NAC board to discuss each concern and the terms of the ground lease. IX. INVOCATION - Pastor Phil Eyskens, Lighthouse of Costa Mesa Church of the Nazarene X. PLEDGE OF ALLEGIANCE - Council Member Avery XI. NOTICE TO THE PUBLIC XII. CITY COUNCIL ANNOUNCEMENTS AND ORAL REPORTS FROM CITY COUNCIL ON COMMITTEE ACTIVITIES Volume 64 - Page 30 City of Newport Beach Study Session and Regular Meeting February 12, 2019 Council Member Avery: • Utilized slides to announce that the Newport Heights neighborhood meeting has been rescheduled to March 6, 2019, at 6:00 p.m. in the Newport Theater Arts Center, discuss his time with his Newport Harbor High School mentee, Landon Searcy, and announce Steve Smith's 100th birthday Council Member Muldoon: • Requested a future agenda item to look at alternative options to using pesticides Council Member Brenner: • Utilized a slide to announce a community meeting on February 13, 2019 at 6:30 p.m. at the Community Youth Center to discuss Grant Howald Park improvements • Attended the League of California Cities newly -elected officials training session, an Association of California Cities - Orange County (ACC-OC) meeting, a Toll Roads meeting, the Planning Session, a luncheon with Congressman Rouda, and a Corona del Mar Residents Association board meeting • Toured the Utilities Yard Council Member Herdman: • Utilized a slide to display the Pelican Hill magazine which included an article about the City's sculpture garden • Attended a meeting with Assemblywoman Petrie -Norris, the Newport Beach Chamber of Commerce boat parade awards dinner, a meeting to discuss Balboa Island's infrastructure, the Salvation Army ribbon cutting ceremony for a homeless facility in Tustin Ranch, the Water Quality/Coastal Tidelands Committee meeting, the Mayor's Dinner, and the Tim Tebow Foundation's Night to Shine event • Requested a future agenda item to discuss election reform Mayor Pro Tem O'Neill: • Attended the Newport Beach Foundation's Distinguished Citizens graduation, the County's Point - in -Time count, the Newport Beach Chamber of Commerce boat parade awards dinner, City Manager Leung's Wake Up Newport presentation, Newport Beach Fire Department's pinning ceremony, Judge Colover's reception, and a Government Finance Officers Association (GFOA) meeting • Utilized a slide to highlight the lifeguard tryouts held on February 10, 2019 Mayor Dixon: • Utilized slides to announce the General Plan Update Community Meeting on February 13, 2019, at 6:00 p.m. at Marina Park, City Council, announced City Council. and Planning Commission meeting videos can be viewed on www.newportbeachca.gov/calendar, and reported on an emergency sewer and roadway repair on Clubhouse Drive and an emergency water main break on Jamboree Road and Bayside Drive • Attended the National Conference of Mayors conference in Washington DC, the Community Emergency Response Team's (CERT) annual banquet, the Newport Beach Foundation's Distinguished Citizens graduation, the Planning Session, a meeting with Congressman Rouda regarding airport and dredging issues, her Town Hall meeting, the Mayor's Dinner, and a meeting with the Coasters XIII. MATTERS WHICH COUNCIL MEMBERS HAVE ASKED TO BE PLACED ON A FUTURE AGENDA • Increasing buildable square footage for cottage within the City to discourage tearing them down (Herdman) The City Council unanimously concurred to place the matter on a future agenda. • Investigating the Newport Aquatic Center (NAC) (Brenner) Council Member Brenner requested to pull the item due to Closed Session Item IV.B. Volume 64 - Page 31 City of Newport Beach Study Session and Regular Meeting February 12, 2019 XIV. PUBLIC COMMENTS ON CONSENT CALENDAR Without objection, Mayor Dixon moved Item 16 (Appeal of Harbor Commission's Decision) to Consent Calendar so the public hearing could be continued to the March 12, 2019 City Council meeting. XV. CONSENT CALENDAR READING OF MINUTES AND ORDINANCES 1. Minutes for the January 22, 2019 City Council Meeting [100-2019] Waive reading of subject minutes, approve as written, and order filed. Council Member Muldoon abstained on Item 1 since he was not present at the meeting. 2. Reading of Ordinances Waive reading in full of all ordinances under consideration, and direct the City Clerk to read by title only. ORDINANCE FOR INTRODUCTION 3. Pulled from the Consent Calendar ORDINANCES FOR ADOPTION 4. Second Reading and Adoption of Ordinances Updating Regulations Regarding Accessory Dwelling Units (PA2018-099) [100-2019] a) Find this project statutorily exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15282(h) of the CEQA Guidelines, which states that the adoption of an ordinance regarding second units to implement the provisions of Sections 65852.1 and 65852.2 of the Government Code are exempt from the requirements of CEQA; b) Conduct second reading and adopt Ordinance No. 2018-14, An Ordinance of the City Council of the City of Newport Beach, California, Amending Title 20 of the Newport Beach Municipal Code and Adopting Zoning Code Amendment No. CA2018-003 to Implement Recisions to State Law Relating to Accessory Dwelling Units (PA2018-099); and c) Conduct second reading and adopt Ordinance No. 2019-1, An Ordinance of the City Council of the City of Newport Beach, California, Amending Title 21 of the Newport Beach Municipal Code and Adopting Local Coastal Program Amendment No. LC2017-003, as Modified by the California Coastal Commission (Accepting Their Suggested Modifications), Implementing New State Law Requirements Relating to Accessory Dwelling Units (PA2018-099). Council Member Avery recused himself on Item 4 due to real property interest conflicts. RESOLUTIONS FOR ADOPTION 5. Resolution No. 2019-10: Adopting a Memorandum of Understanding with the Newport Beach Police Management Association (C-2932) [38/100-2019] a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) Adopt Resolution No. 2019-10, A Resolution of the City Council of the City of Newport Beach, California, Adopting a Memorandum of Understanding Between the City of Newport Beach and the Newport Beach Police Management Association; and c) Approve Budget Amendment No. 19BA-029 appropriating $69,409.42 to salary and benefit accounts from unappropriated General Fund surplus fund balance for the remainder of Fiscal Year (FY) 2018/19, representing the first three months of the three-year, three-month NBPMA contract. Volume 64 - Page 32 City of Newport Beach Study Session and Regular Meeting February 12, 2019 Council Member Brenner abstained on Item 5 since she was not part of the negotiations. 6. Resolution No. 2019-11: Revised City Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28 [100-2019] a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; and b) Adopt Resolution No. 2019-11, A Resolution of the City Council of the City of Newport Beach, California, Adopting Revised City Council Policies F-3, F-4, F-7, F-8, F-11, F-13, F-14, F-15, F-25 and F-28. 7. Resolution No. 2019-12: Formation of a City Council Aviation Ad Hoc Committee to Review the Roles & Responsibilities of the Aviation Committee [100-2019] a) Determine this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because this action will not result in a physical change to the environment, directly or indirectly; b) Adopt Resolution No. 2019-12, A Resolution of the City Council of the City of Newport Beach, California, Creating a City Council Aviation Ad Hoc Committee to Review the Structure, Membership, Roles and Responsibilities of the Aviation Committee; and c) Confirm the appointment of Mayor Diane Dixon, Council Member Jeff Herdman and Council Member Kevin Muldoon to the Aviation Ad Hoc Committee. CONTRACTS AND AGREEMENTS 8. Newport Beach Police Facility Remodel — Notice of Completion for Contract No. 7261-1 (17F12) [38/100-2019] a) Find this project exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15301 Class 1 (maintenance of existing facilities involving no expansion of an existing use) of the CEQA Guidelines, because this project has no potential to have a significant effect on the environment; b) Accept the completed work and authorize the City Clerk to file a Notice of Completion for the project; c) Authorize the City Clerk to release the Labor and Materials Bond 65 days after the Notice of Completion has been recorded in accordance with applicable portions of the Civil Code; and d) Release the Faithful Performance Bond one year after acceptance by the City Council. 9. Uptown Newport Facilities Relocation and Acquisition Agreements [C-5387(D) and C-5387(E)] [38/100-2019] a) Determine that none of the conditions described in Section 15162 of the California Environmental Quality Act ("CEQA") Guidelines calling for preparation of a subsequent or supplemental EIR have occurred, that no changes or additions to the previously certified Environmental Impact Report No. ER2012-001 (SCH No. 20010051094) ("EIR") are required; and further, the action is also exempt pursuant to Section 15302(d) of the CEQA Guidelines (conversion of overhead electric utility distribution system facilities to underground including connection to existing overhead electric utility distribution lines where the surface is restored to the condition existing prior to the undergrounding); direct City staff to file a Notice of Exemption; b) Approve the Facilities Relocation Agreement with SCE and authorize the City Manager to execute the Agreement; and c) Approve the revised Acquisition Agreement between the Authority, the City and the Developer, and authorize the City Manager to execute the agreement with any changes as may be deemed necessary by the City Attorney. Mayor Pro Tem O'Neill recused himself from Item 9 due to his membership in the Pacific Club and Council Member Muldoon recused himself on Item 9 due to real property interest conflicts. Volume 64 - Page 33 City of Newport Beach Study Session and Regular Meeting February 12, 2019 10. Approval of a Purchase Agreement with US Digital Designs, Inc. for the Purchase of a Fire Station Alerting System for the New Corona del Mar Fire Station No. 5 (C-8583-1) [38/100-2019] a) Find this project exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15302(c) (replacement of existing public facilities involving negligible or no expansion of capacity) of the CEQA Guidelines, because this project has no potential to have a significant effect on the environment; b) Approve the purchase of the Phoenix G2 Fire Station Alerting system from US Digital Designs, Inc. at a not -to -exceed cost of $115,013.39; and c) Approve and authorize the City Manager and City Clerk to sign the Purchase Agreement with US Digital Designs, Inc. for this purchase. Council Member Muldoon recused himself on Item 10 due to business interest conflicts. 11. Contract with Arts Orange County to Manage Phase IV of the Sculpture Exhibition in Civic Center Park (C-8463-2) [38/100-2019] a) Determine that the action is exempt from the California Environmental Quality Act CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because it will not result in a physical change to the environment, directly or indirectly; and b) Approve a contract with Arts Orange County for project management of Phase IV of the Sculpture Exhibition in Civic Center Park for a total amount not to exceed $ 84,711, and authorize the Mayor and City Clerk to sign the agreement. MISCELLANEOUS 12. Planning Commission Agenda and Action Report for the January 31, 2019 Special Meeting [100-2019] Receive and file. 13. Pulled from the Consent Calendar 16. 2888 Bayshore Drive (Newport Marina) - Appeal of Harbor Commission's Decision [100- 2019] Continue the public hearing to the March 12, 2019 City Council meeting. Motion by Mayor Pro Tem O'Neill, seconded by Council Member Herdman, to approve the Consent Calendar, except for the items removed (Items 3 and 13); and noting the abstention by Council Member Muldoon on Item 1, abstention by Council Member Brenner on Item 5, recusal by Council Member Avery on Item 4, and recusals by Council Member Muldoon and Mayor Pro Tem O'Neill on Item 9. The motion carried by the following roll call vote: Ayes: Council Member Brenner, Council Member Herdman, Council Member Muldoon, Council Member Avery, Mayor Pro Tem O'Neill, Mayor Dixon Absent: Council Member Duffield XVI. ITEMS REMOVED FROM THE CONSENT CALENDAR 3. Introduction of an Ordinance Amending Newport Beach Municipal Code Chapter 15.50 - Floodplain Management [100-2019] City Clerk Brown recused herself due to real property interest conflicts. City Attorney Harp announced, since Council Members Avery, Duffield, Herdman and Muldoon have conflicts, the Council Members in attendance will be drawing playing cards to determine which Council Member will be requalified to participate in this matter until its conclusion. Council Member Muldoon was requalified. Volume 64 - Page 34 City of Newport Beach Study Session and Regular Meeting February 12, 2019 Motion by Mayor Pro Tem O'Neill, seconded by Council Member Brenner, to a) find this action exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly; and b) introduce Ordinance No. 2019-2, An Ordinance of the City Council of the City of Newport Beach, California, Amending Section 15.05.090 of Chapter 15.05, Adding a Section to Chapter 15.50 and Amending Certain Sections of Chapter 15.50 of Title 15 of the Newport Beach Municipal Code Related to Floodplain Management, and pass to second reading on February 26, 2019. The motion carried by the following roll call vote: Ayes: Council Member Brenner, Council Member Muldoon, Mayor Pro Tem O'Neill, Mayor Dixon Absent: Council Member Duffield Recused: Council Member Herdman, Council Member Avery 13. Confirmation of Appointments to the General Plan Update Steering Committee [24/100- 20191 Council Members Herdman expressed support for the Steering Committee nominees and hoped the General Plan Advisory Committee will represent a broad spectrum of the community. Council Member Brenner discussed the ad hoc review committee process, highlighted the expertise of the applicants, expressed support for the nominees, and noted the remaining applicants will be considered to serve on the General Plan Advisory Committee. Mayor Dixon assured everyone that the Steering Committee's work will be open and transparent, highlighted their scope and provided an overview of the nominees' history with the City. She thanked Mayor Pro Tem O'Neill and Council Member Brenner for being on the ad hoc review committee and thanked the community for their continued interest. Susan Skinner expressed her reasons Council should not appoint Ed Selich and Larry Tucker to the Steering Committee, and displayed the referendum petition from 2016. Linda Watkins requested Council reconsider the appointments. Lynn Lorenz suggested appointing Tim Stoaks to the Steering Committee. Sandra Ayres suggested changing the makeup of Steering Committee so it represents other areas of the City and requested Council take more time in making this decision. Motion by Council Member Brenner, seconded by Council Member Herdman, to a) determine that the action is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because it will not result in a physical change to the environment, directly or indirectly; b) confirm Mayor Diane B. Dixon's appointments of Nancy Gardner (Chair), Ed Selich, Debbie Stevens, Larry Tucker and Paul Watkins to fill the seats on the General Plan Update Steering Committee; and c) direct staff to come back with a resolution that amends the makeup of the Steering Committee to have seven (7) members. The motion carried by the following roll call vote: Ayes: Council Member Brenner, Council Member Herdman, Council Member Muldoon, Council Member Avery, Mayor Pro Tem O'Neill, Mayor Dixon Absent: Council Member Duffield Volume 64 - Page 35 City of Newport Beach Study Session and Regular Meeting February 12, 2019 XVII. PUBLIC COMMENTS ON NON -AGENDA ITEMS City Attorney Harp highlighted his previous Closed Session Report for Pat Rolfus, Jim Warmington, Jr. and Susan Skinner who expressed support for moving forward with the NAC investigation. Tom Holton took issue with a citation he received relative to using his garage for storage and requested to meet with City Attorney Harp and Community Development Director Jurjis. Lanae O'Shields, Southern California Gas Company Public Affairs Manager, discussed the benefits of natural gas and cautioned everyone to pay attention to any proposed energy policies. Peggy Palmer expressed concerns and requested assistance relative to dealerships conducting test drives in the Newport Heights neighborhoods. Ryan Farsai discussed the Tax Cuts and Jobs Act signed by President Trump and its opportunity zones. Charles Klobe asked if accessory dwelling units count toward the City's Regional Housing Needs Assessment (RHNA) count. XVIII. PUBLIC HEARINGS 14. Consideration of Planning and Land Use Entitlements for Harbor Pointe Senior Living, Located at 101 Bayview Place (PA2015-210) [100-2019J Community Development Director Jurjis, Principal Planner Ramirez, and Associate Planner Zdeba utilized a PowerPoint presentation to display the project site (former Kitayama site), discuss the proposed project, required entitlements, the development agreement, paths of travel, elevations, the environmental review, traffic analysis, mitigation, the land use change, Charter Section 423, provided a summary, and review the approvals by the Planning Commission and the Airport Land Use Commission. In response to Council questions, Community Development Director Jurjis and Associate Planner Zdeba discussed the pedestrian walkway, the procedure for trash pick-up, the access points for emergency vehicles, staff, and visitors, the use of the development agreement funds to purchase an ambulance, highlighted the allowable zoning for the site, and believed the zoning change from CO-G to PI has never occurred in the City before. Carol McDermott, representing Centerpointe Senior Living, utilized a PowerPoint presentation to discuss the need for senior care facilities, explain State licensing for Residential Care Facility for the Elderly (RCFE), highlight the proposed General Plan Amendment, review previous changes to the Bayview Planned Community, and discuss the project site, landscape plan, project improvements, open space, project evolution, project renderings, community engagement, environmental assessment, project benefits, and activities at the facility. She highlighted the review and approvals by the Planning Commission and the Airport Land Use Commission. In response to Council questions, Ms. McDermott reported trash will be picked up once a week, the area is only accessible to refuse trucks and is enclosed, they worked with the City relative to traffic circulation and are willing to install a security gate so no other vehicle traffic is permitted other than for emergencies and trash pickup. She indicated other deliveries will occur in the roundabout twice a week. Mayor Dixon opened the public hearing. Patti Lampman, Board Member of the Baycrest Court Homeowners Association, asked Council to protect their property rights and noted trash pickup for Kitayama occurred on Bristol Street and were also open for lunch, not just dinner. Volume 64 - Page 36 City of Newport Beach Study Session and Regular Meeting February 12, 2019 Kirk Snyder, President of the Baycrest Court and Bayview Court Homeowners Associations, explained why they believe the City cannot change zoning in Area 5 and the project should be denied, expressed concerns regarding their property rights, and also expressed disappointment with their discussions with the applicant. Robert Attyah expressed the importance for senior citizens to have assisted living in the city they currently live in, expressed support for the project, and stated he would move his mother to this facility when completed. Norma Yacoub expressed opposition to the project and concerns regarding the parking plan, believed there would not be enough parking spaces which will impact the community. Rhonda Watkins believed the site would be better used for restaurant use, explained why she feels the environment is not conducive for assisted living/memory care, and suggested having this area reviewed during the General Plan Update process. Tom Dallape indicated he took a parent to a memory care facility and expressed support for having more options for this type of care in the community. Dave O'Keefe noted trash is collected on Wednesdays at 9:00 a.m., he lives closest to the proposed facility, the applicants have already scaled down the project, he had an uncle who had Alzheimer but they were not able to find assisted living for him in the City, and expressed support for the project. Mike Smith asked if Council read all the written comments in the staff report, questioned how parking onsite will be enforced, requested Condition of Approval No. 33 be amended to read, "...shall be notified of and must comply with...", and asked when the City will start obtaining the ambulance and staff for Fire Station 7. In response to the public comments, Community Development Director Jurjis and Principal Planner Ramirez reported written comments were provided to Council, any changes to the Conditions of Approval need Council approval, highlighted a potential timeline for project development, ambulance procurement, and fire station staffing, and indicated the facility does not count toward the RHNA count since the residents are considered independent dwelling units. Ms. McDermott reviewed the methodology behind the parking plan, noted the architect specializes in senior care facilities, added the use permit requires all construction workers to park onsite or be delivered to the site, and reviewed security measures for the residents. Doug Pancake, architect, provided his background, discussed how parking and staffing issues will be managed, and believed the project has more than adequate parking. Hearing no further testimony, Mayor Dixon closed the public hearing. In response to Mayor Pro Tem O'Neill's question regarding potential legal challenges, City Attorney Harp indicated he reviewed the attorneys' information and believed it is defensible if Council approved the project. In response to Council Member Avery's question, Ms. McDermott believed the residents are concerned about the effect of the project on their property values, but indicated the applicants believe there will be no reduction in property values due to the quality of architecture, quiet population, conditions of approval, and compatibility. Mr. Snyder clarified the residents' concerns are not just with property values, but believed the facility does not fit in with the the fabric of their neighborhood and takes away from their quality of life, indicated they prefer the site be used for at least one restaurant, and requested zoning not be changed and this go through the General Plan Update process. Council Member Brenner described her experiences with having her mother at Crown Cove in Corona del Mar and the secured section for the Alzheimer residents. Volume 64 - Page 37 City of Newport Beach Study Session and Regular Meeting February 12, 2019 Mayor Pro Tem O'Neill pointed out the City normally does not get the opportunity to look at projects that decrease traffic and believed, as the community ages, the City needs senior facilities. Motion by Mayor Pro Tem O'Neill, seconded by Council Member Muldoon, to a) adopt Resolution No. 2019-13, A Resolution of the City Council of the City of Newport Beach, California, Certifying Environmental Impact Report No. ER2018-001, Making Facts and Findings, and Approving a Mitigation Monitoring and Reporting Program in Accordance with the California Environmental Quality Act for the Harbor Pointe Senior Living Project - A Senior Convalescent and Congregate Care Facility Located at 101 Bayview Place (PA2015-210); b) adopt Resolution No. 2019- 14, A Resolution of the City Council of the City of Newport Beach, California, Approving General Plan Amendment No. GP2015-004 to Change the Land Use Designation from General Commercial (CO=G) to Private Institutional (PI) for the Harbor Pointe Senior Living Project - A Senior Convalescent and Congregate Care Facility Located at 101 Bayview Place (PA2015-210); c) waive full reading, direct the City Clerk to read by title only, introduce Ordinance No. 2019-3, An Ordinance of the City Council of the City of Newport Beach, California, Adopting Planned Community Development Plan Amendment No. PD2015-005 Amending Area 5 of the Bayview Planned Community (PC-32) for the Harbor Pointe Senior Living Project - A Senior Convalescent and Congregate Care Facility Located at 101 Bayview Place (PA2015-210), and pass to second reading on February 26, 2019; d) adopt Resolution No. 2019-15, A Resolution of the City Council of the City of Newport Beach, California, Approving Major Site Development Review No. SD2015-007, and Conditional Use Permit No. UP2015-047 for the Harbor Pointe Senior Living Project - A Senior Convalescent and Congregate Care Facility Located at 101 Bayview Place (PA2015-210); and e) waive full reading, direct the City Clerk to read by title only, introduce Ordinance No. 2019-4, An Ordinance of the City Council of the City of Newport Beach, California, Approving Development Agreement No. DA2018-006 for the Harbor Pointe Senior Living Project - A Senior Convalescent and Congregate Care Facility Located at 101 Bayview Place (PA2015-210), and pass to second reading on February 26, 2019. The motion carried by the following roll call vote: Ayes: Council Member Brenner, Council Member Herdman, Council Member Muldoon, Mayor Pro Tem O'Neill, Mayor Dixon Nays: Council Member Avery Absent: Council Member Duffield 15. Introduction of an Ordinance Amending the City's Local Coastal Program for Consistency (LC2017-002) [100-2019] Mayor Dixon opened the public hearing. Hearing no testimony, she closed the public hearing. Motion by Mayor Pro Tem O'Neill, seconded by Council Member Herdman, to a) find the action statutorily exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15265(a)(1) of the California Code of Regulations, Title 14, and Chapter 3 of the Coastal Act. Section 15265(a)(1), which exempts local governments from the requirements of preparing an environmental impact report or otherwise complying with CEQA in connection with the adoption of a Local Coastal Program; b) adopt Resolution No. 2019-16, A Resolution of the City Council of the City of Newport Beach, California, Amending Policy 4.4.2-1 of City of Newport Beach Local Coastal Program Coastal Land Use Plan to Approve Local Coastal Program Amendment No. LC2017-002, as Modified by the California Coastal Commission; and c) waive full reading, direct the City Clerk to read by title only, introduce Ordinance No. 2019-5, An Ordinance of the City Council of the City of Newport Beach, California, Amending Title 21 of the Newport Beach Municipal Code to Approve Local Coastal Program Amendment No. LC2017-002, as Modified by the California Coastal Commission, and pass to second reading on February 26, 2019. The motion carried by the following roll call vote: Volume 64 - Page 38 City of Newport Beach Study Session and Regular Meeting February 12, 2019 Ayes: Council Member Brenner, Council Member Herdman, Council Member Muldoon, Council Member Avery, Mayor Pro Tem O'Neill, Mayor Dixon Absent: Council Member Duffield 16. 2888 Bayshore Drive (Newport Marina) - Appeal of Harbor Commission's Decision [100- 2019] The item was moved to the Consent Calendar so the public hearing could be continued to the March 12, 2019 City Council meeting. XIX. CURRENT BUSINESS 17. Consideration of a Master License Agreement with New Cingular Wireless PCS, LLC (AT&T) for Siting of Small Cell Telecommunication Facilities on City -Owned Light Standards (C-8584-1) [38/100-2019] Council Member Muldoon recused himself due to business interest conflicts. Community Development Director Jurjis and Real Property Administrator Whitlinger utilized a PowerPoint presentation to discuss the purpose of small cells, describe macro and micro cells, the placement of small cells on City -owned streetlight poles, proposed small cell designs, the Federal Communications Commission's (FCC) declaratory rule and order, proposed small cell rates, the license agreement terms, and public benefit. In response to Council concerns and questions, Community Development Director Jurjis and Real Property Administrator Whitlinger indicated AT&T's designs are similar to the designs approved in the Verizon agreement and will be included in the AT&T agreement, pointed out AT&T has been working with the City on the designs even though the FCC no longer allows local entities to impose design regulations, there is pending litigation relative to FCC's deregulations, and the City can send an opposition letter regarding the bill that allowed the FCC's deregulations. Mayor Pro Tem O'Neill recused himself since his firm represents Ericsson who is an AT&T consultant. Cory Autrey, Wireless Policy Group, utilized a PowerPoint presentation to discuss the benefits to using small cell, the growth of wireless -only use, and ways to increase wireless network capacity, display a map of proposed small cell locations and design samples, and highlight the timeline. He indicated AT&T is aware of the challenges on Balboa Island and Lido Isle due to their shorter light poles. Jim Miller took issue with the proposal and term of the agreement, discussed lawsuits related to the FCC deregulation, and expressed concerns with the placement of the poles and the negative effects 5G may have on people. Jim Mosher believed Council has not directed staff to enter into a master license agreement with any carrier, questioned the small cell rate, disagreed with this proposal being exempt from needing a Coastal Development Permit, and asked if the City would be able to provide this infrastructure better than utilizing private providers. In response to Council questions, City Attorney Harp, Community Development Director Jurjis and City Manager Leung clarified that the City can regulate design, as long as it is reasonable and not burdensome, reported the City is doing this by including the designs in the agreement, and confirmed that any future requests will be handled in the same manner. Motion by Council Member Brenner, seconded by Mayor Dixon, to continue the item to a future meeting. Volume 64 - Page 39 City of Newport Beach Study Session and Regular Meeting February 12, 2019 Mr. Autrey reiterated that AT&T has been working with staff for a while and reached this point prior to the January 14, 2019 deadline in light of the FCC order, AT&T agreed to pay the City's market rate for two years, and the documented designs can be considered the preapproved design. He reviewed the lifespan of the agreement, indicated there would be about 45 poles, expressed concerns that, if the item is postponed, AT&T may want to revisit the terms and only have the option to use FCC's proposed rate, and requested approval so AT&T can move forward with the permitting process. Dan Vozenilek, AT&T Area Manager, noted that every pole location will be going through the City's public process, the letter of intent expires tomorrow, discussed the pricing, and indicated a ten year agreement is needed due to the investment AT&T will be making into the project. In response to Council questions, Community Development Director Jurjis and City Attorney Harp reviewed the potential revenue at the City's rate, but clarified the FCC rate may be raised if it is a reasonable and justified amount. Further, the agreement includes a provision to negotiate the rate in good faith if the FCC order is overruled and includes a provision that waives claims regarding the rates. Council Member Brenner withdrew her previous motion. Motion by Council Member Avery, seconded by Mayor Dixon, to a) find this activity categorically exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15303 (New Construction or Conversion of Small Structures) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because this project has no potential to have a significant effect on the environment; b) approve a waiver of City Council Policy F-7 and L-23 based on findings contained in this staff report and Agreement, and due to the Federal Communications Commission Declaratory Ruling and Third Report and Order (WT Docket No. 17-79 and WC Docket No. 17-84), which impose certain limits on state and local governments' ability to regulate the deployment of small cell telecommunications facilities. The Declaratory Rule and Order limits the type and amount of fees the City can collect for private use of public property; and c) authorize the City Manager and City Clerk to execute a Master License Agreement for the Use of City -Owned Streetlights for Telecommunication Facilities with New Cingular Wireless PCS, LLC, in a form substantially similar to the agreement attached to the staff report. The motion carried by the following roll call vote: Ayes: Council Member Brenner, Council Member Herdman, Council Member Avery, Mayor Dixon Recused: Council Member Muldoon, Mayor Pro Tem O'Neill Absent: Council Member Duffield XX. MOTION FOR RECONSIDERATION - None XXI. ADJOURNMENT - 10:53 p.m. The agenda and amended agenda were posted on the City's website and on the City Hall electronic bulletin board located in the entrance of the City Council Chambers at 100 Civic Center Drive on February 7, 2019, at 4:00 p.m. ,e,,W PO0 0`. ' F IQ n Leilani I. Brown, City Clerk °l.gLiFO Volume 64 - Page 40 Diane B. Dixon, Mayor RESOLUTION NO. 18SCIP-110 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY A RESOLUTION APPROVING A JOINT COMMUNITY FACILITIES AGREEMENT ANp DECLARING INTENTION TO ESTABLISH CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE 0 CALIFORNIA, AND TO LEVY A SPECIAL TAX THEREIN TO FINANCE TH ACQUISITION AND CONSTRUCTION OF CERTAIN PUBLIC CAPITAL IMPROVEMENTS AND CERTAIN UTILITY UNDERGROUNDING WHEREAS, the Commission (the "Commission") of the California Statewide Communities Development Authority (the "Authority") has duly considered the advisability and necessity of establishing a community facilities district within the jurisdictional boundaries of t e City of Newport Beach (the "Local Agency") to be designated and known as "California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California" (the "Community Facilities District"), and levying a special tax therein to finance the acquisition and construction of certain public capital improvements (the "Improvements") and certain utility undergroundirg (the "Undergrounding"), under and pursuant to the terms and provisions of the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (beginning wi h Section 53311) of the Government Code of the State of California (the "Act"); and WHEREAS, the Improvements and Undergrounding will assist in mitigating the impact on the need for public facilities occasioned by new development that has occurred or is expected to occur within the boundaries of the Community Facilities District and in mitigating visual blight; and WHEREAS, the Commission has reviewed the resolution of the Local Agency (the "Local Agency Resolution") attached hereto as Exhibit A and incorporated herein by referenc; and WHEREAS, the Local Agency Resolution describes the project within the proposed Community Facilities District and approves a joint community facilities agreement and 'r the authority of Section 53316.2 of the Act and the form of such joint community faciliti s agreement is embodied in such Local Agency Resolution; and WHEREAS, the Local Agency Resolution embodies a joint community facilities agreement and further provides that the adoption of a Resolution of Intention for the Community Facilities District by the Commission will act as an acceptance, by the Authority, of the terms of the joint community facilities agreement embodied in the Local Agency Resolution; and WHEREAS, there has been filed with the Commission a map entitled "Proposed Boundaries of California Statewide Communities Development Authority Community Facilities 4159-3584-7960.2 District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" (the "Boundary Map"); and WHEREAS, the Commission has determined that the establishment of the Community Facilities District is consistent with and follows the local goals and policies concerning the use of the Act that have been adopted by the Commission and are now in effect; and WHEREAS, Section 53314.9 of the Act further provides that the legislative body may enter into an agreement, by resolution, with the person or entity advancing the funds, to repay all or a portion of the funds advanced, as determined by the legislative body, with or without interest, under all the following conditions: (a) the proposal to repay the funds is included in both the resolution of intention to establish a community facilities district adopted pursuant to Section 53321 of the Act and in the resolution of formation to establish a community facilities district pursuant to Section 53325.1 of the Act, (b) any proposed special tax is approved by the qualified electors of the community facilities district pursuant to the Act, and (c) any agreement shall specify that if the qualified electors of the community facilities district do not approve the proposed special tax, the local agency shall return any funds which have not been committed for any authorized purpose by the time of the election to the person or entity advancing the funds; and WHEREAS, the Authority, TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC (together with TSG-Parcel 1, LLC, the "Developers") of the property within the proposed Community Facilities District, entered into a Deposit and Reimbursement Agreement, dated August 29, 2017 (the "Deposit Agreement"), that provides for the advancement of funds by the Developers to be used to pay costs incurred in connection with the establishment of the Community Facilities District and the issuance of special tax bonds thereby, and provides for the reimbursement to the Developers of such funds advanced, without interest, from the proceeds of any such bonds issued by the Community Facilities District; and WHEREAS, the Commission desires to include in this Resolution, in accordance with Section 53314.9 of the Act, the proposal to repay funds pursuant to the Deposit Agreement; and WHEREAS, the Commission is fully advised in this matter; NOW THEREFORE, BE IT RESOLVED by the Commission of the California Statewide Communities Development Authority, as follows: Section 1. The above recitals are true and correct, and the Commission so finds and determines. Section 2. It is the intention of the Commission, and the Commission hereby proposes, to establish the Community Facilities District. By adopting this Resolution of Intention, the Commission hereby accepts and agrees to the joint community facilities agreement embodied in the Local Agency Resolution. The Commission finds and determines that this resolution and the agreement it embodies is beneficial to the residents of the Local Agency and are in the best interests of the residents and customers of the Local Agency and of the future residents of the area within the Community Facilities District. 2 4159-3584-7960.2 Section 3. The boundaries of the territory proposed for inclusion in the Community Facilities District are more particularly described and shown on the Boundary Map now on file in the office of the Secretary, which map is hereby approved by the Commission. A reduced copy of the Boundary Map is marked Exhibit B and is attached hereto, and by this reference is incorporated herein and made a part of this Resolution. The Commission finds that the Boundary Map is in the form and contains the matters prescribed by Section 3110 of the California Streets and Highways Code and directs the Secretary or the Assistant to the Secretary to certify the adoption of this Resolution on the face of the Boundary Map. The Authority's special tax consultant is hereby authorized and directed to record a copy of the Boundary Map with the County Recorder of Orange County in accordance with the provisions of Section 3111 of the California Streets and Highways Code. Section 4. It is the intention of the Commission to finance the Improvements and Undergrounding described in the Local Agency Resolution and more particularly described in Exhibit C. All of the Improvements and the Undergrounding have an estimated useful life of five (5) years or longer. They are public facilities that the Local Agency or another governmental entity is authorized by law to construct, own or operate, or to which they may contribute revenue, and that are necessary to meet increased demands placed upon the Local Agency or upon other local government agencies as a result of development occurring and anticipated to occur within the Community Facilities District. The Improvements and Undergrounding need not be physically located within the Community Facilities District. Section 5. The cost of financing the Improvements and the Undergrounding includes incidental expenses comprising the costs of engineering, planning, design, construction staking, materials testing and coordination of the Improvements and the Undergrounding, together with the costs of environmental evaluations thereof, and all costs associated with the creation of the Community Facilities District, the issuance of any bonds, the determination of the amount of any special taxes or the collection or payment of any special taxes and costs otherwise incurred in order to carry out the authorized purposes of the Community Facilities District, together with any other expenses incidental to the Improvements and Undergrounding. A representative list of incidental expenses proposed to be incurred are set forth on Exhibit D attached hereto, which by this reference is incorporated herein and made a part of this Resolution. Section 7. It is the intention of the Commission that, except where funds are otherwise available, a special tax shall be annually levied within the Community Facilities District sufficient to finance the Improvements and Undergrounding, including but not limited to the payment of interest on and principal of any bonds to be issued to finance the Improvements and Undergrounding; the repayment of funds advanced by the Local Agency or the Developers for the Community Facilities District and including the repayment under any acquisition, deposit or other agreement (which shall not constitute a debt or liability of the Authority) of advances of funds or reimbursement for the lesser of the value or cost or work in -kind provided by any person for the Community Facilities District. Section 8. Upon recordation of a Notice of Special Tax Lien pursuant to Section 3114.5 of the California Streets and Highways Code, a continuing lien to secure each levy of the special tax shall attach to all nonexempt real property within the Community Facilities District, and this lien shall continue in force and effect until the special tax obligation is prepaid 3 4159-3584-7960.2 and permanently satisfied and the lien is cancelled in accordance with law, or until levy of the special tax by the Authority ceases. Section 9. It is the intention of the Commission that the proposed special tax will be collected through the regular Orange County secured property tax bills, and will be subject to the same enforcement mechanism, and the same penalties and interest for late payment, as regular ad valorem property taxes; however, the Commission reserves the right to utilize any other lawful means of billing, collecting and enforcing the special tax, including direct billing, supplemental billing, and, when lawfully available, judicial foreclosure of the special tax lien. Section 10. The rate and method of apportionment of the special tax (the "RMA"), including the maximum annual special tax for the Community Facilities District, is set forth in Exhibit E, attached hereto, which by this reference is incorporated herein and made a part of this Resolution. The RMA provides sufficient detail to allow each landowner or resident within the Community Facilities District to estimate the maximum amount that such person will have to pay, and specifies the conditions under which the obligation to pay the special tax may be prepaid and permanently satisfied. As required by the Act: (1) the maximum authorized special tax for financing the acquisition and construction of the Improvements and the financing of the Undergrounding that may be levied against any parcel of land used for private residential purposes (which use commences no later than the date on which an occupancy permit for private residential use is issued) is specified as a dollar amount and shall not increase by more than two percent (2%) per year; (2) the special tax shall not be levied for Improvements and Undergrounding against such property after the time stated in Exhibit E; and (3) under no circumstances shall the special tax be increased on private residential property, as a consequence of delinquency or default by the owners of any other parcel or parcels of land within the Community Facilities District, by more than ten per cent (10%) above the level that would have been levied had there been no delinquencies. Section 11. Should any property subject to the special tax be acquired by a public agency and then leased for private purposes, it is the intention of the Commission, pursuant to Section 53340.1 of the California Government Code, to levy the special tax on the leasehold or possessory interests in property owned by a public agency (which property is otherwise exempt from the special tax), to be payable by the owner of the leasehold or possessory interests in such property. Section 12. It is the intention of the Commission, pursuant to Section 53325.7 of the California Government Code, to establish the initial appropriations limit, as defined by subdivision (h) of Section 8 of Article XIIIB of the California Constitution, for the Community Facilities District in the amount of $850,000. Section 13. Notice is given that Thursday, the 20th day of December, 2018, at the hour of 2:00 o'clock P.M., at the offices of the California State Association of Counties, at 1100 K Street, Sacramento, California 95814, has been fixed by the Commission as the date, time and place for a public hearing to be held by the Commission to consider the establishment of the Community. Facilities District, the proposed rate, method of apportionment and manner of collection of the special tax and all other matters as set forth in this Resolution. At the public hearing, any persons interested, including all taxpayers, property owners and registered voters within the Community Facilities District, may appear and be heard, and the testimony of all 4 4159-3584-7960.2 interested persons or taxpayers for or against the establishment of the Community Facilities District and the levy of the special tax, the extent of the Community Facilities District, the financing of the Improvements or Undergrounding, the establishment of the appropriations limits, or on any other matters set forth herein, will be heard and considered. Section 14. Any protests to the proposals in this Resolution may be made orally or in writing by any interested persons or taxpayers, except that any protests pertaining to the regularity or sufficiency of these proceedings shall be in writing and shall clearly set forth the irregularities and defects to which objection is made. The Commission may waive any irregularities in the form or content of any written protest and at the public hearing may correct minor defects in the proceedings. All written protests not presented in person by the protester at the public hearing must be filed with the Commission at or before the time fixed for the public hearing in order to be received and considered. Any written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Section 15. Written protests by a majority of the registered voters residing and registered within the Community Facilities District (if at least six such voters so protest), or by the owners of a majority of the land area within the Community Facilities District not exempt from the proposed special tax will require suspension of these proceedings for at least one year. If such protests are directed only against certain elements of the proposed Improvements or Undergrounding, or the special tax of the Community Facilities District or the other proposals contained in this Resolution, only those elements need be excluded from the proceedings. Section 16. The public hearing may be continued from time to time, but shall be completed within thirty (30) days from the date of the initial date set for such public hearing, except that if the Commission finds that the complexity of the Community Facilities District or the need for public participation requires additional time, the public hearing may be continued from time to time for a period not to exceed six (6) months from the date of the initial date set for such public hearing. Section 17. The Commission may at the public hearing modify this Resolution by eliminating any element of the Improvements or Undergrounding, or by changing the method of apportionment of the special tax for the Community Facilities District so as to reduce the maximum special tax for all or a portion of the owners of property within the Community Facilities District or by removing any territory from the Community Facilities District; except that if the Commission proposes to modify this Resolution in a way that will increase the probable (as distinct from the maximum, which may not be increased) special tax to be paid by the owner of any lot or parcel of land in the Community Facilities District, the Commission shall direct that a report be prepared that includes a brief analysis of the impact of the proposed modifications on the probable special tax to be paid by the owners of such lots or parcels of land in the Community Facilities District, and the Commission shall receive and consider the report before approving any such modifications or any resolution forming the Community Facilities District which includes such modifications. Section 18. At the conclusion of the public hearing, the Commission may abandon these proceedings or may, after passing upon all protests, determine to proceed with establishing the Community Facilities District. If the Commission determines at the conclusion 5 4159-3584-7960.2 of the public hearing to proceed with the establishment of the Community Facilities District, it expects that the proposed voting procedure will be by landowners of the Community Facilities District voting in accordance with the Act, as the Commission is informed that during the 90 days prior to the date set for the hearing, there have been zero registered voters residing within the Community Facilities District. The Commission will require this information to be confirmed before ordering the election. Section 19. The Authority's special tax consultant, David Taussig & Associates, in consultation with and on behalf of the County, is hereby requested to study the Community Facilities District and, at or before the time of the public hearing, to cause to be prepared and filed with the Commission a report which shall contain a brief description of the facilities by type which in its opinion will be required to adequately meet the needs of the new development which has occurred and/or is expected to occur within the Community Facilities District, together with estimates of the cost of financing the Improvements and Undergrounding and the incidental expenses related thereto. The report shall, upon its presentation, be submitted to the Commission for review, shall be available for inspection by the public, and shall be made a part of the record of the public hearing. Section 20. To the extent the Improvements will not be constructed by the Local Agency, in the opinion of the Commission, the public interest will not be served by allowing the property owners in the Community Facilities District to intervene in a public bidding process pursuant to Section 53329.5(a) of the Act. Section 21. Notice of the time and place of the public hearing shall be given by Bond Counsel in the following manner: (a) A Notice of Public Hearing in the form provided by the Act shall be published once in a newspaper of general circulation published in the area of the Community Facilities District, pursuant to Section 6061 of the Government Code of the State of California and shall be completed at least seven (7) days prior to the date set for such public hearing; and (b) A Notice of Public Hearing in the form provided by the Act shall be mailed, first class postage prepaid, to each owner of land, and to each registered voter residing, within the boundaries of the Community Facilities District (to property owners at their addresses as shown on the last equalized assessment roll, or as otherwise known to Bond Counsel). The mailing shall be completed at least fifteen (15) days prior to the date set for the public hearing. Section 22. The Developers have heretofore advanced certain funds, and may advance additional funds, which have been or may be used to pay costs incurred in connection with the establishment of the Community Facilities District and the issuance of special tax bonds thereby. The Commission proposes to repay all or a portion of such funds expended for such purpose, solely from the proceeds of such bonds, pursuant to the Deposit Agreement. The Deposit Agreement is hereby incorporated herein as though set forth in full herein. Section 23. This Resolution shall take effect immediately upon its adoption. 6 4159-3584-7960.2 PASSED AND ADOPTED by the California Statewide Communities Development Authority this 15th day of November, 2018. I, the undersigned, a duly appointed and qualified Authorized Signatory of the Commission of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of said Authority at a duly called meeting of the Commission of said Authority held in accordance with law on November 15, 2018. B 7 ed Signatory California Statewide Communities Development Authority 4159-3584-7960.2 EXHIBIT A LOCAL AGENCY RESOLUTION 4159-3584-7960.2 RESOLUTION NO. 2018-44 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA: (1) AUTHORIZING THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY ("AUTHORITY") TO FORM A COMMUNITY FACILITIES DISTRICT WITHIN THE TERRITORIAL LIMITS OF THE CITY OF NEWPORT BEACH TO FINANCE CERTAIN PUBLIC IMPROVEMENTS; (2) EMBODYING A JOINT COMMUNITY FACILITIES AGREEMENT SETTING FORTH THE TERMS AND CONDITIONS OF THE COMMUNITY FACILITIES DISTRICT FINANCING; (3) APPROVING AN ACQUISITION AGREEMENT AMONG THE AUTHORITY, THE CITY AND THE DEVELOPER; AND (4) AUTHORIZING STAFF TO COOPERATE WITH THE AUTHORITY AND ITS CONSULTANTS IN CONNECTION THEREWITH WHEREAS, the City of Newport Beach ("City") is a municipal corporation and charter city duly organized and existing under and by virtue of the laws of the State of California (the "State"); WHEREAS, the California Statewide Communities Development Authority (the "Authority") is a California joint -exercise of powers authority lawfully formed and operating within the State pursuant to an agreement (the "Joint Powers Agreement") entered into as of June 1, 1988 under the authority of Title 1, Division 7, Chapter 5 (commencing with Section 6500) of the California Government Code; WHEREAS, the City is a party to the Joint Powers Agreement and by virtue thereof a member (a "Program Participant") of the Authority; WHEREAS, the Joint Powers Agreement was entered into to establish the Authority as an agency authorized to issue bonds to finance projects within the territorial limits of its Program Participants; WHEREAS, the Joint Powers Agreement authorizes the Authority to undertake financing programs under any applicable provisions of State law to promote economic development, the stimulation of economic activity, and the increase of the tax base within the jurisdictional boundaries of its Program Participants; WHEREAS, the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (beginning with Section 53311) of the Government Code of the State (the "Act") is an applicable provision of State law available to, among other things, finance public improvements necessary to meet increased demands placed upon local agencies as a result of development; WHEREAS, there is a development project known as "Uptown Newport" (the "Development Project") in the City owned by TSG — Parcel 1, LLC, a Delaware limited partnership and Uptown Newport Jamboree, LLC, a Delaware limited liability company (collectively, the "Developer") and the Developer has requested the City to consider formation of a community facilities district for the Development Project under the Act; Resolution No. 2018-44 Page 2 of 8 WHEREAS, the City does not desire to allocate City resources and City staff time to the formation and administration of a community facilities district and to the issuance of bonds; WHEREAS, the Development Project will promote economic development, the stimulation of economic activity, and the increase of the tax base within the City; WHEREAS, both the Authority and the City are "local agencies" under the Act; WHEREAS, the Act permits two or more local agencies to enter into a joint community facilities agreement to exercise any power authorized by the Act; WHEREAS, the City desires to enter into such an agreement with the Authority to authorize the Authority to form a community facilities district within the territorial limits of the City to finance certain public improvements required of the Development Project; WHEREAS, a form of Acquisition Agreement (the "Acquisition Agreement") among the Authority, the City and the Developer has been presented to the City Council and is on file with the City Clerk; WHEREAS, nothing herein constitutes the City's approval of any applications, Development Project entitlements and/or permits, and such, to the extent required in the future, are subject to and contingent upon City Council approval following, to the extent applicable, environmental review in compliance with the California Environmental Quality Act; WHEREAS, nothing herein affects, without limitation, requirements for and/or compliance with any and all applicable and/or necessary improvement standards, land use requirements or subdivision requirements relating to the Development Project or any portion thereof, which obligations are and shall remain independent and subsisting; WHEREAS, all significant environmental effects for the development of the Uptown Newport Planned Community have been adequately addressed in the previously certified Environmental Impact Report No. ER2012-001 (SCH No. 2010051094) ("EIR"), which included a mitigation, monitoring and reporting program and statement of overriding considerations, and the City of Newport Beach intends to use said document for the approval of the creation of a Community Facilities District (CFD) to finance public improvements associated with the Uptown Newport Planned and its implementation. Copies of the previously prepared environmental document are available for public review and inspection at the Planning Division or at the City of Newport Beach website at wvvw.newportbeachca.goviceqadocuments; WHEREAS, none of the conditions described in Section 15162 of the CEQA Guidelines calling for preparation of a subsequent or supplemental EIR have occurred, and the CFD and its implementation do not require changes or additions to the EIR pursuant to Section 15164 of the CEQA Guidelines; WHEREAS, no new effects would occur, nor would a substantial increase in the severity of previously identified significant effects occur as the result of this CFD, and this CFD identifies the same previously approved project with refined detailed drawings, no increase in intensity, and no changes to the development standards; Resolution No. 2018-44 Page 3 of 8 WHEREAS, there are no additional reasonable alternatives or mitigation measures that should be considered in conjunction with the CFD or its implementation; WHEREAS, the City Council finds that judicial challenges to the City's CEQA determinations and approvals of land use projects are costly and time consuming, and project opponents often seek an award of attorneysfees in such challenges; WHEREAS, project applicants are the primary beneficiaries of such approvals, it is appropriate that such applicants should bear the expense of defending against any such judicial challenge, and bear the responsibility for any costs, attorneys' fees and damages which may be awarded to a successful challenger; and WHEREAS, the City Council is fully advised in this matter. NOW THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1. The City hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to municipal affairs of the City and the statements, findings and determinations of the City set forth in the recitals above and in the preambles of the documents approved herein are true and correct. Section 2. This resolution shall constitute full "local approval," under Section 9 of the Joint Powers Agreement, and under the Authority's Local Goals and Policies (see below), for the Authority to undertake and conduct proceedings in accordance herewith and under the Act to form a community facilities district (the "Community Facilities District") with boundaries substantially as shown on Exhibit A, attached hereto, to designate separate improvement areas within the Community Facilities District (each, an "Improvement Area"), to authorize a special tax within each Improvement Area and to issue bonds, in one or more series on a taxable or tax exempt basis, for each Improvement Area secured by the special taxes. Section 3. The Joint Powers Agreement, together with the terms and provisions of this resolution, shall together constitute a joint community facilities agreement between the City and the Authority under the Act. As, without this resolution, the Authority has no power to conduct proceedings under the Act to form the Community Facilities District, adoption by the Commission of the Authority of the Resolution of Intention to form the Community Facilities District under the Act shalt constitute acceptance of the terms hereof by the Authority. Section 4. This resolution and the agreement it embodies are determined to be beneficial to and are in the best interests of the future residents of the area within the Community Facilities District. Section 5. The City acknowledges that the Authority has adopted Local Goals and Policies as required by Section 53312.7 of the Act. The City approves the use of those Local Goals and Policies in connection with the Community Facilities District; provided that the terms of any series of bonds issued for the Community Facilities District shall not exceed the parameters listed on Exhibit D. Resolution No. 2018-44 Page 4 of 8 Section 6. Pursuant to the Act and this resolution, the Authority may conduct proceedings under the Act to form the Community Facilities District and to have it authorize the financing of the facilities set forth on Exhibit B, attached hereto. All of the facilities are facilities that have an expected useful life of five years or longer and are facilities that the City or other local public agencies, as the case may be, are authorized by law to construct, own or operate, or to which they may contribute revenue. The facilities are referred to herein as the "Improvements," and the Improvements to be owned by the City are referred to as the "City Improvements." Section 7. The City Council certifies to the Commission of the Authority that all of the City Improvements are necessary to meet increased demands placed upon the City as a result of development occurring or expected to occur within the Community Facilities District. Joint community facilities agreements with each other local agency owning Improvements (any such local agency referred to herein as an "Other Local Agency") shall each contain a certification with respect to the Improvements to be owned by the Other Local Agency equivalent to that made by the City in this paragraph, Section 8. Prior to issuance of bonds, the Authority will apply the special tax collections within each Improvement Area to fund City Improvements as provided in the Acquisition Agreement, either for the acquisition of City Improvements or for the construction of City Improvements by the City. Following the issuance of bonds of an Improvement Area, the Authority will apply the special tax collections within the Improvement Area initially as required by the documents under which any bonds are issued; and thereafter, to the extent not provided in the bond documents, to the Authority's reasonable administrative costs incurred in the administration of the Community Facilities District. The Authority will remit any special tax revenues for any Improvement Area remaining after the final retirement of all bonds for such Improvement Area to the City and to each Other Local Agency in the proportions specified in the Authority's proceedings. The City will apply any such special tax revenues it receives for authorized City Improvements and its own administrative costs only as permitted by the Act. The joint community facilities agreements with each Other Local Agency must require such Other Local Agency to apply the special tax revenues they receive for their authorized Improvements under the Community Facilities District and for their own related administrative costs only as permitted by the Act. Section 9. The Authority will administer the Community Facilities District, including employing and paying all consultants, annually levying the special tax and all aspects of paying and administering the bonds, and complying with all State and Federal requirements appertaining to the proceedings, including the requirements of the United States Internal Revenue Code. The City will cooperate fully with the Authority in respect of the requirements of the Internal Revenue Code and to the extent information is required of the City to enable the Authority to perform its disclosure and continuing disclosure obligations with respect to the bonds, although the City will not participate in nor be considered to be a participant in the proceedings respecting the Community Facilities District (other than as a party to the agreement embodied by this resolution) nor will the City be or be considered to be an issuer of the bonds or an obligated person for purposes of Rule 15c2-12. The Authority shall obtain a provision equivalent to this paragraph in the joint community facilities agreement with each Other Local Agency. Resolution No. 2018-44 Page 5 of 8 Section 10. Upon the first levy of special tax within the Community Facilities District or any Improvement Area prior to the issuance of bonds for an Improvement Area, the Authority shall establish and maintain a special fund (which may be established with a bond trustee under an indenture or trust agreement) to be known as the "Uptown Newport Project Community Facilities District, Improvement Area No. Acquisition and Construction Fund." Special taxes collected within the applicable Improvement Area prior to the issuance of bonds shall be deposited in a separate account of the Acquisition and Construction Fund for such Improvement Area. If the Authority issues bonds for the Improvement Area and bond proceeds become available to finance the Improvements, the Authority shall deposit the portion of bond proceeds which is intended to be utilized to finance the Improvements in a separate account of the Acquisition and Construction Fund for such Improvement Area. The Acquisition and Construction Fund will be available both for City Improvements and for the Improvements pertaining to each Other Local Agency. Amounts in the Acquisition and Construction Fund shall be disbursed in accordance with the provisions of the indenture or other similar document governing the bonds issued for the applicable Improvement Area, the Acquisition Agreement and/or the relevant joint community facilities agreement or acquisition agreement for any Other Local Agency. Section 11. As respects the Authority and the Other Local Agencies, the City agrees to fully administer, and to take full governmental responsibility for, the construction or acquisition of the City Improvements including but not limited to environmental review, approval of plans and specifications, bid requirements, performance and payment bond requirements, insurance requirements, contract and construction administration, staking, inspection, acquisition of necessary property interests in real or personal property, the holding back and administration of retention payments, punch list administration, and the Authority and the Other Local Agencies shall have no responsibility in that regard. The City reserves the right, as respects the Developer, to require the Developer to contract with the City to assume any portion or all of this responsibility. The Authority shall obtain a provision equivalent to this paragraph in the joint community facilities agreement with each Other Local Agency. Section 12. The City agrees to require the Developer to indemnify and to hold the Authority, its other members, and its other members' officers, agents and employees, and the Other Local Agencies and their officers, agents and employees (collectively, the "Indemnified Parties") harmless from any and all claims, suits and damages (including costs and reasonable attorneys' fees) arising out of the design, engineering, construction and installation of the City Improvements. The Authority shall obtain a provision equivalent to this paragraph in each joint community facilities agreement with each Other Local Agency naming the City and its officers, agents and employees as Indemnified Parties with respect to such Other Local Agency's Improvements. Section 13. As respects the Authority and each Other Local Agency, the City agrees — once the City Improvements are constructed according to the approved plans and specifications — to accept ownership of the City Improvements, to take maintenance responsibility for the City Improvements. Resolution No. 2018-44 Page 6 of 8 Section 14. The City acknowledges the requirement of the Act that if the City Improvements are not completed prior to the adoption, by the Commission of the Authority, of the Resolution of Formation of the Community Facilities District, the City Improvements must be constructed as if they had been constructed under the direction and supervision, or under the authority of, the City. The City acknowledges that this means all City improvements must be constructed under contracts that require the payment of prevailing wages as required by Section 1720 and following of the Labor Code of the State of California. The Authority makes no representation that this requirement is the only applicable legal requirement in this regard. The City reserves the right, as respects the Developer, to assign appropriate responsibility for compliance with this paragraph to the Developer. Section 15. The form of the Acquisition Agreement attached hereto as Exhibit C is hereby approved, and each of the City Manager, Assistant City Manager, or such person as the City Manager or Assistant City Manager shall designate (each, an "Authorized Officer") is authorized to execute, and deliver to the Developer, the Acquisition Agreement on behalf of the City in substantially that form, with such changes as shall be approved by the Authorized Officer after consultation with the City Attorney and the Authority's bond counsel, such approval to be conclusively evidenced by the execution and delivery thereof. Section 16. For City Improvements to be financed on an acquisition basis (that is, constructed by or on behalf of the Developer), after completion of the City Improvements and appropriate arrangements for the maintenance of the City Improvements, or any discrete portion thereof as provided in Section 53313.51 of the Act and in the Acquisition Agreement, to the satisfaction of the City, and in conjunction with the City's acceptance thereof, acquisition of the City Improvements shall be undertaken as provided in the Acquisition Agreement. For City improvements to be financed on a construction basis (that is, constructed by the City or under contract with the City), the City may request disbursement from the special tax collections for reimbursement of the City or direct payment of costs in accordance with applicable law. Section 17. The City hereby consents to the formation of the Community Facilities District in accordance with this resolution and consents to the assumption of jurisdiction by the Authority for the proceedings respecting the Community Facilities District with the understanding that the Authority will hereafter take each and every step required for or suitable for consummation of the proceedings, the levy, collection and enforcement of the special tax, and the issuance, sale, delivery and administration of the bonds, all at no cost to the City and without binding or obligating the City's general fund or taxing authority. Section 18. The terms of the Agreement embodied by this resolution may be amended by a writing duly authorized, executed and delivered by the City and the Authority, except that no amendment may be made after the issuance of the bonds by the Authority that would be detrimental to the interests of the bondholders without complying with all of the bondholder consent provisions for the amendment of the bond resolutions, bond indentures or like instruments governing the issuance, delivery and administration of all outstanding bonds. Resolution No. 2018-44 Page 7 of 8 Section 19. Except to the extent of the City's agreement to take responsibility for and ownership of the City Improvements, no person or entity, including the Developer, shall be deemed to be a third party beneficiary of this resolution, and nothing in this resolution (either express or implied) is intended to confer upon any person or entity other than the Authority and the City (and their respective successors and assigns) any rights, remedies, obligations or liabilities under or by reason of this resolution. Section 20. The City shall be identified as a third -party beneficiary of all joint community facilities agreements between the Authority and the other local agencies to the extent of the provisions whereby the Other Local Agency agree to take responsibility for and ownership of their Improvements. Section 21. This resolution shall remain in force until all bonds have been retired and the authority to levy the special tax conferred by the Community Facilities District proceedings has ended or is otherwise terminated. Section 22. The City Council hereby authorizes and directs each Authorized Officer and other appropriate City staff to cooperate with the Authority and its consultants and to do all things necessary and appropriate to carry out the intent of this resolution and the Community Facilities District financing, and to execute any and all certificates and documents in connection with the bond issuance as shall be approved by an Authorized Officer after consultation with the City Attorney and the Authority's bond counsel. Section 23. The City Council hereby approves delivery of a certified copy of this resolution to the Authority's Bond Counsel, Orrick, Herrington & Sutcliffe LLP. Section 24. The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. Section 25. If any section, subsection, sentence, clause or phrase of this resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this resolution. The City Council hereby declares that it would have passed this resolution, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. Section 26. The requirement for environmental review under the California Environmental Quality Act ("CEQA") is satisfied by the City Council's previous certification of the Uptown Newport Planned Community final EIR (SCH No. 2010051094) (Resolution No. 2013-21). The finding of this Resolution is incorporated here by reference. Section 27. This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution. Resolution No. 2018-44 Page 8 of 8 ADOPTED this 26th day of June, 2018. Marshall " y" Duffield Mayor ATTEST: Leirani F. Brown City Clerk APPROVED AS TO FORM: CITY ATTORNEY'S OFFIC Aaron C. Harp City Attorney Attachments: Exhibit A — Community Facilities District Boundaries Exhibit B — Authorized Improvements Exhibit C — Form of Acquisition Agreement Exhibit D — Project Description and Bond Parameters EXHIBIT A COMMUNITY FACILITIES DISTRICT BOUNDARIES ( D LLS Ho818 J 11= EXHIBIT B AUTHORIZED IMPROVEMENTS 1. Preliminary and Incidental Expense and Appurtenant Work and Improvements Generally, for each of the following categories of public capital facilities to be acquired, constructed and installed on public property (including dedicated rights -of -way and public easements), the authorized facilities shall be deemed to include the cost and expense of mobilization, clearing, grubbing, protective fencing and erosion control, excavation, curb, gutter and sidewalks, base and finish paving, striping, traffic signage, traffic signals, streetlights, landscaping, irrigation, barricades, undergrounding of various utilities, and related appurtenant work and facilities, together with the cost and expense of engineering design, plan review, project management, construction -related surety bonds or like security instruments, construction staking and management, inspection, and any like fees and costs incidental to such acquisition, construction and installation. 2. Public Capital Improvements Undergrounding of overhead utilities. Park improvements, including but not limited to playground infrastructure, irrigation, landscaping, utilities, drainage and grading. EXHIBIT C FORM OF ACQUISITION AGREEMENT ACQUISITION AGREEMENT BY AND AMONG CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, CITY OF NEWPORT BEACH AND TSG — PARCEL 1, LLC and UPTOWN NEWPORT JAMBOREE, LLC Dated as of , 20 ACQUISITION AGREEMENT Recitals A. The parties to this Acquisition Agreement (the "Agreement") are the California Statewide Communities Development Authority (the "Authority"), City of Newport Beach, a California municipal corporation and charter city ("City"), Uptown Newport Jamboree, LLC, a Delaware limited partnership and TSG — Parcel 1, LLC, a Delaware limited liability company (collectively, the "Developer"). B. The effective date of this Agreement is , 20_. C. The Developer has applied for the financing of certain public capital improvements (each, as more particularly described on Exhibit A, an "Acquisition Improvement" and collectively, the "Acquisition Improvements") through the Authority. The Acquisition Improvements are to be owned and operated by the City, and the financing is to be accomplished through a Community Facilities District which will be established and administered by the Authority under and pursuant to the Mello -Roos Community Facilities Act of 1982 — California Government Code Sections 53311 and following (the "Act"). On [ ], 20_, the City adopted Resolution No. [ 1 authorizing the Authority to form a community facilities district (the "Community Facilities District") within the territorial limits of the City and designate improvement areas within the Community Facilities District (each, an "Improvement Area") to finance the Acquisition Improvements. On [ 1, 20_, the Authority formed the Community Facilities District and, on the same date, a landowner election was conducted for each Improvement Area in which all of the votes were cast unanimously in favor of conferring the Community Facilities District authority on the Authority Commission. D. The Authority intends to levy special taxes for facilities and issue bonds for each Improvement Area, in one or more series, to fund, among other things, all or a portion of the Acquisition Improvements. The portion of the proceeds of such special taxes (including prepayments) and bonds allocable to the cost of the Acquisition Improvements, together with interest earned thereon, is referred to herein as the "Available Amount". E. The Community Facilities District will provide financing for the acquisition by the City of the Acquisition Improvements and the payment of the Acquisition Price (as defined herein) of the Acquisition Improvements from the Available Amount. Attached hereto as Exhibit A is a description of the Acquisition Improvements, which includes authorized discrete and usable portions, if any, of the Acquisition Improvements, pursuant to Section 53313.51 of the Act, to be acquired from the Developer. F. The parties anticipate that, upon completion of the Acquisition Improvements and subject to the terms and conditions of this Agreement, the City will acquire the completed Acquisition Improvements. G. Any and all monetary obligations of the City arising out of this Agreement are the special and limited obligations of the City payable only from the Available Amount, and no other funds whatsoever of the City shall be obligated therefor under any circumstances. H. Attached to this Agreement are Exhibit A (Description of the Acquisition Improvements and the Eligible Portions thereof), Exhibit B (Disbursement Request Form for •Acquisition Improvements) and Exhibit C (Bidding, Contracting and Construction Requirements for Acquisition Improvements), all of which are incorporated into this Agreement for all purposes. Agreement ARTICLE I DEFINITIONS; COMMUNITY FACILITIES DISTRICT FORMATION AND FINANCING PLAN Section 1.01. Definitions. As used herein, the following capitalized terms shall have the meanings ascribed to them below: "Acceptable Title" means title (whether a fee interest, easement or other acceptable title or property rights) free and clear of all monetary liens, encumbrances, assessments, whether any such item is recorded or unrecorded, and taxes, except (i) those items which are reasonably determined by the City Engineer not to interfere with the intended use and therefore are not required to be cleared from the title, and (ii) the lien of the Community Facilities District or any other community facilities district or assessment district provided that the property owned by the City is exempt from such taxation or assessment. "Acquisition and Construction Fund" means each "Uptown Newport Community Facilities District Acquisition and Construction Fund" established by the Authority pursuant to the Resolution and Section 1.03 hereof for the purpose of paying the Acquisition Price of the Acquisition Improvements. "Acquisition Improvement" means a public capital improvement described in Exhibit A hereto. "Acquisition Price" means the total amount eligible to be paid to the Developer upon acquisition of an Acquisition Improvement as provided in Section 2.03, not to exceed the Actual Cost of the Acquisition Improvement. "Actual Cost" means the total cost of an Acquisition Improvement, as documented by the Developer to the satisfaction of the City and as certified by the City Engineer in an Actual Cost Certificate including, without limitation, (a) the Developer's cost of constructing such Acquisition Improvement including grading, labor, material and equipment costs, (b) the Developer's cost of designing and engineering the Acquisition Improvement, preparing the plans and specifications and bid documents for such Acquisition Improvement, and the costs of inspection, materials testing and construction staking for such Acquisition Improvement, (c) the Developer's cost of any performance, payment and maintenance bonds and insurance, including title insurance, required hereby for such Acquisition Improvement, (d) the Developer's cost of any real property or interest therein that is either necessary for the construction of such Acquisition Improvement (e.g., temporary construction easements, haul roads, etc.), or is required to be conveyed with such Acquisition Improvement in order to convey Acceptable Title thereto to the City or its designee, (e) the Developer's cost of environmental evaluation or mitigation required for such Acquisition Improvement, (f) the amount of any fees actually paid by the Developer to governmental agencies in order to obtain permits, licenses or other necessary governmental approvals and reviews for such Acquisition Improvement, (g) the Developer's cost for construction and project management, administration and supervision services for such Acquisition Improvement, and (h) the Developer's cost for professional services related to such Acquisition Improvement, including engineering, accounting, legal, financial, appraisal and similar professional services. "Actual Cost Certificate" means a certificate prepared by the Developer detailing the Actual Cost of an Acquisition Improvement, or an Eligible Portion thereof, to be acquired hereunder, as may be revised by the City Engineer pursuant to Section 2.03. "Agreement" means this Acquisition Agreement, dated as of [ 1, 20 "Authority" means the California Statewide Communities Development Authority. "Authority Trust Agreement" means a Trust Agreement entered into by the Authority and an Authority Trustee in connection with the issuance of bonds. "Authority Trustee" means the financial institution identified as trustee in an Authority Trust Agreement. "Available Amount" shall have the meaning assigned to the term in Recital D. "Bonds" means bonds or other indebtedness issued by the Authority that is to be repaid with Special Taxes. "City" means the City of Newport Beach, California. "City Engineer" means the Engineer of the City or his/her designee who will be responsible for administering the acquisition of the Acquisition Improvements hereunder. "Code" means the Government Code of the State of California. "Community Facilities District" shall have the meaning assigned to the term in Recital C. "Developer" means, collectively or severally, as appropriate, TSG — Parcel 1, LLC, a Delaware limited partnership and Uptown Newport Jamboree, LLC, a Delaware limited liability company, and their respective successors and assigns. "Disbursement Request Form" means a requisition for payment of funds from an Acquisition and Construction Fund for an Acquisition Improvement, or an Eligible Portion thereof in substantially the form contained in Exhibit B hereto. "Eligible Portion" shall have the meaning ascribed to it in Section 2.03 below. "Improvement Area" means an improvement area of the Community Facilities District designated as such by the Authority in accordance with the Act. "Installment Payment" means an amount equal to ninety percent (90%) of the Actual Cost of an Eligible Portion. "Project" means the development of the property in the Community Facilities District, including the design and construction of the Acquisition Improvements and the other public and private improvements to be constructed by the Developer within the Community Facilities District. "Resolution" means City of Newport Beach Resolution No. f j, adopted ), 20 authorizing the execution and delivery of this Agreement. "Special Taxes" means annual special taxes for facilities, and prepayments thereof, authorized by the Community Facilities District to be levied by the Commission of the Authority within each Improvement Area. "Title Documents" means, for each Acquisition Improvement acquired hereunder, a grant deed or similar instrument necessary to transfer title to any real property or interests therein (including easements or rights of way), or an irrevocable offer of dedication of such real property with interests therein necessary to the operation, maintenance, rehabilitation and improvement by the City of the Acquisition Improvement (including, if necessary, easements for ingress and egress) and a bill of sale or similar instrument evidencing transfer of title to the Acquisition Improvement (other than said real property interests) to the City, where applicable. Section 1.02. Establishment of Community Facilities District. Developer has requested the City to permit the Authority to provide for financing of the Acquisition Improvements and collection of special tax through the establishment and authorization of the Community Facilities District and the City agreed by its adoption of the Resolution. The Community Facilities District was established by the Authority on f 1, 20_, and through the successful landowner election held that same day with respect to each Improvement Area of the Community Facilities District, the Commission of the Authority is authorized to levy the Special Taxes and to issue the Bonds to finance the Acquisition Improvements. Developer and the City agree to reasonably cooperate with one another and with the Authority in the completion of the financing through the issuance of the Bonds in one or more series for each Improvement Area. Section 1.03. Deposit and Use of Available Amount. (a) Prior to the issuance of Bonds for each Improvement Area, Special Taxes collected by the Authority (including from prepayments of Special Taxes) shall be deposited in the Acquisition and Construction Fund established by the Authority pursuant to the terms of the Resolution, and may be disbursed to pay the Acquisition Price of Acquisition Improvements in accordance with Article II of this Agreement. All funds in the Acquisition and Construction Fund shall be considered a portion of the Available Amount, and upon the issuance of the Bonds the Acquisition and Construction Fund shall be transferred to the Authority Trustee to be held in accordance with the Authority Trust Agreement. (b) If not already established pursuant to the Resolution, upon the issuance of the Bonds of an Improvement Area, the Authority will cause the Authority Trustee to establish and maintain the Acquisition and Construction Fund for the purpose of holding all funds for the Acquisition Improvements to be financed by such Improvement Area. All earnings on amounts in the Acquisition and Construction Fund shall remain in the Acquisition and Construction Fund for use as provided herein and pursuant to the Authority Trust Agreement. Money in such Acquisition and Construction Fund shall be available to respond to delivery of a Disbursement Request Form and to be paid to the Developer or its designee to pay the Acquisition Price of the Acquisition Improvements, as specified in Article II hereof. Upon completion of all of the Acquisition Improvements and the payment of all costs thereof, any remaining funds in the Acquisition and Construction Fund (less any amount determined by the City as necessary to reserve for claims against the account) (i) shall be applied to pay the costs of any additional Acquisition Improvements eligible for acquisition with respect to the Project, as approved by the Authority and, to the extent not so used, (ii) shall be applied by the Authority to call Bonds for such Improvement Area or to reduce Special Taxes for such Improvement Area as the Authority shall determine. Section 1.04. No City Liability; City Discretion; No Effect on Other Agreements. In no event shall any actual or alleged act by the City or any actual or alleged omission or failure to act by the City with respect to the Authority subject the City to monetary liability therefor. Further, nothing in this Agreement shall be construed as affecting the Developer's or the City's duty to perform their respective obligations under any other agreements, public improvement standards, land use regulations or subdivision requirements related to the Project, which obligations are and shall remain independent of the Developer's and the City's rights and obligations under this Agreement. ARTICLE II DESIGN, CONSTRUCTION AND ACQUISITION OF ACQUISITION IMPROVEMENTS Section 2.01. Letting and Administering Design Contracts. The Developer has awarded and administered, or will award and administer, engineering design contracts for the Acquisition Improvements to be acquired from Developer. All eligible expenditures of the Developer for design engineering and related costs in connection with the Acquisition Improvements (whether as an advance to the City or directly to the design consultant) shall be reimbursed at the time of acquisition of the Acquisition Improvements. The Developer shall be entitled to reimbursement for any design costs of the Acquisition Improvements only out of the Acquisition Price as provided in Section 2.03 and shall not be entitled to any payment for design costs independent of the acquisition of Acquisition Improvements. Section 2.02. Letting and Administration of Construction Contracts; Indemnification. State law requires that all Acquisition Improvements not completed prior to the formation of the Community Facilities District shall be constructed as if they were constructed under the direction and supervision, or under the authority, of the City. In order to assure compliance with those provisions, except for any contracts entered into prior to the date hereof, Developer agrees to comply with the requirements set forth in Exhibit C hereto with respect to the bidding and contracting for the construction of the Acquisition Improvements. The Developer agrees that all the contracts shall call for payment of prevailing wages as required by the Labor Code of the State of California. The Developer's indemnification obligation set forth in Section 3.01 of this Agreement shall also apply to any alleged failure to comply with the requirements of this Section, and/or applicable State laws regarding public contracting and prevailing wages. Section 2.03. Sale of Acquisition Improvements. The Developer agrees to sell to the City each Acquisition Improvement to be constructed by or on behalf of the Developer (including any rights -of -way or other easements necessary for the Acquisition Improvements, to the extent not already publicly owned), when the Acquisition Improvement is completed to the satisfaction of the City for an amount not to exceed the lesser of (i) the Available Amount from time to time or (ii) the Actual Cost of the Acquisition Improvement. Exhibit A, attached hereto and incorporated herein, contains a list of the Acquisition Improvements. Portions of an Acquisition Improvement eligible for Installment Payments prior to completion of the entire Acquisition Improvement are described as eligible, discrete and usable portions in Exhibit A (each, an "Eligible Portion"). At the time of completion of each Acquisition Improvement, or Eligible Portion thereof, the Developer shall deliver to the City Engineer a written request for acquisition, accompanied by an Actual Cost Certificate, and by executed Title Documents for the transfer of the Acquisition Improvement where necessary. In the event that the City Engineer finds that the supporting paperwork submitted by the Developer fails to demonstrate the required relationship between the subject Actual Cost and eligible work, the City Engineer shall advise the Developer that the determination of the Actual Cost (or the ineligible portion thereof) has been disallowed and shall request further documentation from the Developer. If the further documentation is still not adequate, the City Engineer may revise the Actual Cost Certificate to delete any disallowed items and the determination shall be final and conclusive. Certain soft costs for the Acquisition Improvements, such as civil engineering, may have been incurred pursuant to single contracts that include work relating also to the private portions of the Project. In those instances, the total costs under such contracts will be allocated to each Acquisition Improvement as approved by the City Engineer. Where a specific contract has been awarded for design or engineering work relating solely to an Acquisition Improvement, one hundred percent (100%) of the costs under the contract will be allocated to that Acquisition Improvement. Amounts allocated to an Acquisition Improvement will be further allocated among the Eligible Portions of that Acquisition Improvement, if any, in the same proportion as the amount to be reimbursed for hard costs for each Eligible Portion bears to the amount to be reimbursed for hard costs for the entire Acquisition Improvement. Costs will be allocated to each Acquisition Improvement as approved by the City Engineer. The costs of certain environmental mitigation required to mitigate impacts of the public and private portions of the Project will be allocated to each Acquisition Improvement as approved by the City Engineer. Section 2.04. Conditions Precedent to Payment of Acquisition Price. Payment to the Developer or its designee of the Acquisition Price for an Acquisition Improvement from the Acquisition and Construction Fund shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Acquisition Improvement satisfies all City regulations and ordinances and is otherwise complete and ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that none of the property (including any rights -of -way or other easements necessary for the operation and maintenance of the Acquisition Improvement, to the extent not already publicly owned) comprising the Acquisition Improvement is not subject to any prospective mechanics lien claim respecting the Acquisition Improvements. (b) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. Property shall be exempt from the special tax of the Community Facilities District upon conveyance to the City or the Developer shall prepay the special tax on the property so conveyed. (c) The Developer shall certify that it is not in default with respect to any loan secured by any interest in the Project. (d) The Developer shall have provided the City with Title Documents needed to provide the City with Acceptable Title to the site, right-of-way, or easement upon which the subject Acquisition Improvement is situated. All such Title Documents shall be in a form acceptable to the City and shall convey Acceptable Title. The Developer shall provide a policy of title insurance as of the date of transfer in a form acceptable to the City Engineer and the City Attorney insuring the City as to the interests acquired in connection with the acquisition of any interest for which such a policy of title insurance is not required by another agreement between the City and the Developer. Each title insurance policy required hereunder shall be in the amount equal to the Acquisition Price. The amount paid to the Developer or its designee upon satisfaction of the foregoing conditions precedent shall be the Acquisition Price less all Installment Payments paid previously with respect to the Acquisition Improvement. Section 2.05. Payment for Eligible Portions. The Developer may submit an Actual Cost Certificate to the City Engineer with respect to any Eligible Portion. Payment to the Developer or its designee from the Acquisition and Construction Fund of an Installment Payment with respect to such Eligible Portion shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Eligible Portion has been completed in accordance with the applicable plans and specifications and that the Eligible Portion satisfies all City regulations and ordinances and is otherwise complete and, where appropriate, is ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that the property (including any rights -of -way or other easements necessary for the operation and maintenance of the Eligible Portion, to the extent not already owned by the City) comprising the Eligible Portion is not subject to any prospective mechanics lien claim respecting the Eligible Portion. (b) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. (c) The Developer shall have provided the City with Title Documents needed to provide the City with title to the site, right-of-way, or easement upon which the subject Eligible Portion is situated. All such Title Documents shall be in a form acceptable to the City Engineer and shall be sufficient, upon completion of the Acquisition Improvement of which the Eligible Portion is a part, to convey Acceptable Title. (d) Payment and performance bonds, from a bonding company with an A.M. Best rating of at least "A-" or its equivalent, applying to plans and specifications for the Acquisition Improvement approved by the City, shall be in place to secure completion of the Acquisition Improvement of which the Eligible Portion is a part. Section 2.06. Disbursement Request Form. Upon a determination by the City Engineer to pay the Acquisition Price of an Acquisition Improvement pursuant to Section 2.04 or to pay an Installment Payment for an Eligible Portion pursuant to Section 2.05, the City Engineer shall cause a Disbursement Request Form substantially in the form attached hereto as Exhibit B-1 to be submitted to the Authority and Authority Trustee, and the Authority or Authority Trustee shall make payment directly to the Developer or its designee of the amount requested from the applicable Acquisition and Construction Fund. The City and the Developer acknowledge and agree that the Authority or Authority Trustee shall make payment strictly in accordance with the Disbursement Request Form and shall not be required to determine whether or not the Acquisition Improvement or Eligible Portion has been completed or what the Actual Costs may be with respect to the Acquisition Improvement or Eligible Portion. The Authority or Authority Trustee shall be entitled to rely on the executed Disbursement Request Form on its face without any further duty of investigation. In the event that the Actual Cost of an Acquisition Improvement or the Installment Payment for an Eligible Portion is in excess of the Available Amount, the Authority or Authority Trustee shall withdraw all funds remaining in the Acquisition and Construction Fund and shall transfer those amounts to the Developer or its designee. The unpaid portion of the Actual Cost shall be paid from funds that may subsequently be deposited in the Acquisition and Construction Fund from a subsequent issuance of Bonds, from prepayments of Special Taxes to be used for financing Acquisition Improvements, or from Special Tax revenues, if any of those occurs. Section 2.07. Limitation on Obligations. In no event shall the City be required to pay the Developer or its designee more than the amounts held in the Acquisition and Construction Fund. Section 2.08. Undergroundind of Utilities. In addition to financing the acquisition of the Acquisition Improvements, proceeds of bonds for the Community Facilities District are expected to finance the undergrounding of certain utilities owned or to be owned by Southern California Edison. Notwithstanding anything to the contrary herein, the City shall be entitled to directly request payment to the City (or to reimburse the Developer) pursuant to a Request to the Authority Trustee to (i) reimburse amounts the City has paid Southern California Edison or a contractor for the amount in such request, or (ii) to pay directly to Southern California Edison or a contractor for the amount in such request. To the extent authorized by law, the City agrees to first reimburse amounts previously deposited by the Developer pursuant to the Deposit Agreement between the City of Newport Beach and TSG — Parcel 1, LLC, dated January 5, 2015, for the costs of the undergrounding of utilities, including design and planning, from proceeds of bonds or the Special Tax pursuant to this Section. ARTICLE III MISCELLANEOUS Section 3.01. Indemnification and Hold Harmless. The Developer hereby assumes the defense of, and indemnifies and saves harmless the City, the Authority and their respective officers, directors, employees and agents, including the Authority Trustee, 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 or alleged to have resulted from the acts or omissions of the Developer or its agents and employees arising out of any contract for the design, engineering and construction of the Acquisition Improvements entered into by the Developer 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 Authority's underwriter, financial advisor, appraiser, district engineer or bond counsel or regarding the Developer, its proposed developments, its property ownership and its contractual arrangements contained in the official statement relating to the Authority financing (provided that the Developer shall have been furnished a copy of the official statement and shall not have objected thereto); and provided, further, that nothing in this Section 3.01 shall limit in any manner the City's rights against any of the Developer's architects, engineers, contractors or other consultants. Except as set forth in this Section 3.01, no provision of this Agreement shall in any way limit the extent of the responsibility of the Developer for payment of damages resulting from the operations of the Developer, its agents and employees. Nothing in this Section 3.01 shall be understood or construed to mean that the Developer agrees to indemnify the City, the Authority or any of their respective officers, directors, employees or agents, for any wrongful acts or omissions to act of the Authority or its officers, employees, agents or any consultants or contractors, including the Authority Trustee, and for any wrongful acts, willful misconduct, active negligence or omissions to act of the City, or its officers, employees, agents or any consultants or contractors, including the Authority Trustee. Section 3.02. Audit. The City shall have the right, during normal business hours and upon the giving of ten days' written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer (for which the Developer seeks reimbursement pursuant to this Agreement) in constructing the Acquisition Improvements. Section 3.03. Cooperation. The City and the Developer agree to cooperate with respect to the completion of the financing of the Acquisition Improvements by the Authority through the levy of the Community Facilities District Special Taxes and issuance of Bonds. The City and the Developer agree to meet in good faith to resolve any differences on future matters which are not specifically covered by this Agreement. Section 3.04. General Standard of Reasonableness. Any provision of this Agreement which requires the consent, approval or acceptance of either party hereto or any of their respective employees, officers or agents shall be deemed to require that the consent, approval or acceptance not be unreasonably withheld or delayed, unless the provision expressly incorporates a different standard. Section 3.05. Third Party Beneficiaries. The Authority and its officers, employees, agents or any consultants or contractors are expressly deemed third party beneficiaries of this Agreement with respect to the provisions of Section 3.01. It is expressly agreed that, except for the Authority with respect to the provisions of Section 3.01, there are no third party beneficiaries of this Agreement, including without limitation any owners of bonds, any of the City's or the Developer's contractors for the Acquisition Improvements and any of the City's, the Authority's or the Developer's agents and employees. Section 3.06. Conflict with Other Aoreements. Nothing contained herein shall be construed as releasing the Developer or the City from any condition of development or requirement imposed by any other agreement between the City and the Developer, and, in the event of a conflicting provision, the other agreement shall prevail unless the conflicting provision is specifically waived or modified in writing by the City and the Developer. Section 3.07. Notices. All invoices for payment, reports, other communication and notices relating to this Agreement shall be mailed to: If to the City: City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 - Attention: City Manager If to the Authority: California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, CA 95814 Attention: Chair If to the Developer: Uptown Newport Jamboree, LLC c/o Shopoff Realty Investments, LP 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff TSG — Parcel 1, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff With a copy to: Jackson Tidus 2030 Main Street 12th Floor Irvine, CA 92614 Attention: Gregory P. Powers, Esq. Either party may change its address by giving notice in writing to the other party. Section 3.08. 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. Section 3.09. 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. Section 3.10. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other party with the terms of this Agreement. Section 3.11. 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. Section 3.12. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. Section 3.13. Successors and Assiqns. This Agreement is binding upon the heirs, assigns and successors -in -interest of the parties hereto. The Developer may not assign its rights or obligations hereunder, except to successors -in -interest to the property within the Community Facilities District, without the prior written consent of the City. Section 3.14. Remedies in General. It is acknowledged by the parties that the City would not have entered into this Agreement if it were to be liable in damages under or with respect to this Agreement or the application thereof, other than for the payment to the Developer of any (i) moneys owing to the Developer hereunder, or (ii) moneys paid by the Developer pursuant to the provisions hereof which are misappropriated or improperly obtained, withheld or applied by the City. Section 3.15. Non -Liability of Authority. The Authority shall not be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Agreement, except only to the extent amounts are received for the payment thereof from the Special Tax. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that the City shall not be liable in damages to the Developer, or to any assignee or transferee of the Developer other than for the payments to the Developer specified Section 3.14. Subject to the foregoing, the Developer covenants not to sue for or claim any damages for any alleged breach of, or dispute which arises out of, this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. CITY OF NEWPORT BEACH ATTEST: By: By: Leilani I. Brown [Authorized Officer] City Clerk APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE By: Aaron C. Harp City Attorney UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited partnership By: Name Title TSG — PARCEL 1, LLC, a Delaware limited liability company By: Name Title CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory EXHIBIT A TO THE ACQUISITION AGREEMENT DESCRIPTION OF ACQUISITION IMPROVEMENTS, ELIGIBLE PORTIONS ACQUISITION IMPROVEMENTS Park improvements, including playground infrastructure, irrigation, landscaping, utilities, drainage and grading. EXHIBIT B TO THE ACQUISITION AGREEMENT DISBURSEMENT REQUEST FORM (Acquisition Improvement or Eligible Portion) To: [Authority Trustee] Attention: Fax: Phone: No. Re: CSCDA Community Facilities District No. , Improvement Area The undersigned, a duly authorized officer of the CITY OF NEWPORT BEACH hereby requests a withdrawal from the Uptown Newport Project Community Facilities' District Acquisition and Construction Fund, as follows Request Date: Name of Developer: Withdrawal Amount: Acquisition Improvements: Payment Instructions: [Insert Date of Request] [Insert Acquisition Price/Installment Payment] [Insert Description of Acquisition Improvement(s)/Eligible Portion(s) from Exhibit A] [Insert Wire Instructions or Payment Address for Developer or Developer's designee as provided by the Developer] The undersigned hereby certifies as follows: The Withdrawal is being made in accordance with a permitted use of the monies pursuant to the Acquisition Agreement and the Withdrawal is not being made for the purpose of reinvestment. None of the items for which payment is requested have been reimbursed previously from the Acquisition and Construction Fund. If the Withdrawal Amount is greater than the funds held in the Acquisition and Construction Fund, the Authority Trustee is authorized to pay the amount of such funds and to pay remaining amount(s) as funds are subsequently deposited in the Acquisition and Construction Fund, should that occur. [For Park Improvement Disbursements:][The amounts being disbursed pursuant to this request are being used to finance or refinance certain public infrastructure and facilities (the "Improvements"). The City will own, and for the entire useful life of such Improvements reasonably expects to own, all of such Improvements. To the extent any of such Improvements are sold to an entity that is not a state or local government agency, the City will seek the advice and approval of bond counsel to the Authority prior to any such sale. The City will not allow any of such Improvements to be used (for example, by lease or other contract) in the trade or business of any nongovernmental persons (other than in their roles as members of the general public). All of such Improvements will be used in the performance of essential governmental functions of the City or another state or local government agency. The average expected useful life of such Improvements is at least 20 years. The representations and covenants contained in this paragraph are intended to support the conclusion that the interest paid on the bonds issued to finance the Improvements is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code").] CITY OF NEWPORT BEACH By: Title: EXHIBIT C TO THE ACQUISITION AGREEMENT BIDDING, CONTRACTING AND CONSTRUCTION REQUIREMENTS FOR ACQUISITION IMPROVEMENTS With respect to construction contracts awarded after approval of the Agreement, bids for construction shall be solicited from at least three (3) qualified contractors, provided at least three (3) qualified contractors are reasonably available. The Developer may also directly solicit bids. The bid package may consist of preliminary plans and specifications. The bidding response time shall be not Tess than ten (10) working days. An authorized representative of the City shall be provided a copy of the tabulation of bid results upon request. Contract(s) for the construction of the public Acquisition Improvements shall be awarded to the qualified contractor(s) submitting the lowest responsible bid(s), as determined by the Developer. The contractor to whom a contract is awarded shall be required to pay not less than the prevailing rates of wages pursuant to Labor Code Sections 1770, 1773 and 1773.1. A current copy of applicable wage rates shall be on file in the Office of the City Clerk, as required by Labor Code Section 1773.2. The Developer shall provide the City with certified payrolls. EXHIBIT D PROJECT DESCRIPTION AND BOND PARAMETERS Project Description A. Specific Project(s) for which the Debt is Being Incurred • Park Improvements • 66-kV Undergrounding B. Not to exceed Authorized Par Amount • $8,800,000 C. Not to exceed Term of the Bonds, which will be no greater than the useful life of the project 30 years from date of issuance D. Not to exceed true interest cost • 5.75% E. Not to exceed maximum annual debt service • $900,000 F. Call provisions, including specifically identifying any deviation from a par call • Optional Call in 10 —Years at 100% of Par • Extraordinary redemption from prepayment of special taxes with not to exceed 3% premium through 10 years and then par call thereafter. G. Not to exceed underwriter's discount • 1.50% of Par Amount inclusive of underwriter's counsel fees H. List of Consultants Hired for the Issuance Orrick — Bond Counsel & Disclosure Counsel RBC Capital Markets, LLC - Underwriter David Taussig & Associates, Inc. - Special Tax Consultant STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH } } } ss. I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; the foregoing resolution, being Resolution No. 2018-44 was duly introduced before and adopted by the City Council of said City at a regular meeting of said Council held on the 26111 day of June, 2018; and the same was so passed and adopted by the following vote, to wit: AYES: Council Member Herdman, Council Member Diane Dixon, Council Member Scott Peotter, Council Member Brad Avery, Mayor Duffy Duffield NAYS: None RECUSED: Council Member Kevin Muldoon, Mayor Pro Tem Will O'Neill IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 27th day of June, 2018. Leilani '1. Brown City Clerk Newport Beach, California EXHIBIT B BOUNDARY MAP 4159-3584-7960.2 SHEET 1 OF 1 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA 445-134-22 445.13 - For particulars of lines and dhmenslons, reference Is made to the parcels maps of e Orange Count' Assessor, California, and to Traci map No. 17763 recorded on June 19. ,) 2015 as instrument No. 201500320061 at Pages 17 through 23 In Book 937 of maps in the office of the County Recorder of Orange County. California_ LEGEND Prornsed Boundaries of Cafihrnia Statewide Communities Development Authority Community Facilities District No. 2018.03 (Uptown Newport), City of Newport Beach, County of Orange, Cahlonia Parcel Line Tax Zone 1 Tax Zane 2 445.13n-ran Assessor Parcel Number (1) Filed In the office of the Secretary of Cahfomlo Statewide Communities D Authority this _ day of 2018. Secretary, California Statewide Communities Development Authority elopment (2) 1 hereby certify that the within map showing proposed boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018.03 (Uptown Newport), City of Newport Beach, County of Orange, State of California, was approved by the Commission of the California Statewide Communities Development Authority at a regular meeting thereof, held on this day of 2018, by Its resolution No. Secretary, California Statewide Communities Development Authority (3) Filed this day of 2018, at the hour of o'clock m., in Book of flaps of Assessment and Community Facilities Districts at page and as Instrument No. in the office of the County Recorder of Orange County, State o1 California, Hugh Nguyen Clerk -Recorder, County of Orange By Deputy Fee EXHIBIT C AUTHORIZED IMPROVEMENTS AND UTILITY UNDERGROUNDING 1. Preliminary and Incidental Expense and Appurtenant Work and Improvements Generally, for each of the following categories of public capital facilities to be acquired, constructed and installed on public property (including dedicated rights -of -way and public easements), the authorized facilities shall be deemed to include the cost and expense of mobilization, clearing, grubbing, protective fencing and erosion control, excavation, curb, gutter and sidewalks, base and finish paving, striping, traffic signage, traffic signals, streetlights, landscaping, irrigation, barricades, undergrounding of various utilities, and related appurtenant work and facilities, together with the cost and expense of engineering design, plan review, project management, construction -related surety bonds or like security instruments, construction staking and management, inspection, and any like fees and costs incidental to such acquisition, construction and installation. 2. Public Capital Improvements Undergrounding of overhead utilities. Park improvements, including but not limited to playground infrastructure, irrigation, landscaping, utilities, drainage and grading. 4159-3584-7960.2 EXHIBIT D CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA REPRESENTATIVE LISTING OF INCIDENTAL EXPENSES AND BOND ISSUANCE COSTS It is anticipated that the following incidental expenses may be incurred in the proposed legal proceedings for formation of the Community Facilities District, construction and environmental remediation and related bond financing and will be payable from proceeds of the Bonds or directly from the proceeds of the Special Tax within the Community Facilities District: • Special tax consultant services • Authority, County staff review, oversight and administrative services • Bond Counsel and Disclosure Counsel services • Financial advisor services • Special tax administrator services • Appraiser/Market absorption consultant services • Initial bond transfer agent, fiscal agent, registrar and paying agent services, and rebate calculation service set up charge • Bond printing and Preliminary Official Statement and Official Statement printing and mailing • Publishing, mailing and posting of notices • Recording fees • Underwriter's discount • Bond reserve fund • Capitalized interest • Governmental notification and filing fees • Credit enhancement costs • Rating agency fees • Continuing disclosure services • Arbitrage rebate services • Other post -issuance tax compliance services The expenses of certain recurring services pertaining to the Community Facilities District may be included in each annual special tax levy, and these expenses are described in the definition of the term "Administrative Expenses" as set forth in the Rate and Method of Apportionment for the Community Facilities District attached hereafter as Exhibit E. The foregoing enumeration shall not be regarded as exclusive and shall be deemed to include any other incidental expenses of a like nature which may be incurred from time to time with respect to the Community Facilities District. 4159-3584-7960.2 EXHIBIT E RATE AND METHOD OF APPORTIONMENT 4159-3584-7960.2 RATE AND METHOD OF APPORTIONMENT CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of CSCDA Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California ("CFD No. 2018-03") and collected each Fiscal Year commencing in Fiscal Year 2019-2020, in an amount deteuinined by the CSCDA Program Manager, through the application of the Rate and Method of Apportionment as described below. All Taxable Property in CFD No. 2018-03, 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 The terms hereinafter set forth have the following meanings: "Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final subdivision map, parcel map, condominium plan, record of survey, or other recorded County parcel map. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 2018-03 including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax Levy collection schedules (whether by the CSCDA Program Manager or designee thereof or both); the costs of collecting the Special Tax Levies (whether by the County or otherwise); the costs of remitting the Special Tax Levies to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to CSCDA, CFD No. 2018-03, or any designee thereof of complying with arbitrage rebate requirements, or responding to questions from the Securities and Exchange Commission or Internal Revenue Service pertaining to any CFD No. 2018-03 Bonds or any audit of any CFD No. 2018-03 Bonds by the Securities and Exchange Commission or Internal Revenue Service; the costs to CSCDA, CFD No. 2018-03, the Trustee or any designee thereof of complying with CSCDA, CFD No. 2018-03, or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax Levy disclosure statements and responding to public inquiries regarding the Special Tax Levies; the costs to CSCDA, CFD No. 2018-03, or any designee thereof related to an appeal of the levy or application of the Special Tax; the costs associated with the release of funds from an escrow account; and CSCDA's annual administration fees and third California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 1 party expenses. Administrative Expenses shall also include amounts estimated or advanced by CSCDA or CFD No. 2018-03 for any other administrative purposes of CFD No. 2018-03, including, but not limited to, attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tax Levies. "Apartment Floor Area" means all of the square footage of living area within the perimeter of the Apartment Property, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Apartment Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the Building Division of the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Apartment Property. "Apartment Property" means an Assessor's Parcel of Developed Property on which all or any portion of a structure or structures with multiple Apaitrnent Units are located, and such Apartment Units are offered for rent and are not available for sale to individual owners. If Apaitiuent Property is subsequently reclassified as Residential Property, Special Taxes levied on such reclassified Assessor's Parcels shall be modified to match those of Residential Property. "Apartment Unit" means one (1) for -rent residential unit on Apartment Property. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C.a.(2), below. "Authorized Facilities" means the facilities authorized to be financed by CFD No. 2018-03. "Backup Special Tax" means the Backup Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.a.(3), below. "Building Permit" means a permit issued by the City or other governmental agency for the construction of a residential or non-residential building on an Assessor's Parcel. "Buildout" means, for CFD No. 2018-03, that all expected Building Pei nits for Residential Property, Apartment Property, and Non -Residential Property to be constructed within CFD No. 2018-03 have been issued, as determined by the CSCDA Program Manager. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 2 "CFD No. 2018-03" means California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California. "CFD No. 2018-03 Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one (1) or more series, authorized by CFD No. 2018-03 under the Act and issued by CSCDA and secured by the Special Taxes. "City" means the City of Newport Beach. "Commission" means the governing board of CSCDA. "County" means the County of Orange. "CSCDA" means the California Statewide Communities Development Authority. "CSCDA Program Manager" means the program manager for CSCDA, or its designee. "Developed Property" means, for each Fiscal Year, all Taxable Property in Tax Zone 1 and Tax Zone 2, for which a Building Permit for new construction was issued after January 1, 2018 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied. For purposes of this Rate and Method of Apportionment, any Developed Property for which Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area is removed, shall be considered Developed Property under the previously assigned Land Use Class with the previously assigned I'I Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area, until a new Building Permit is issued, and a new Land Use Class and Special Tax can be assigned. Notwithstanding the above, a reclassification shall not occur, unless the CSCDA Program Manager determines that the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after such reclassification, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds is each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. "Developer" means TSG-Parcel 1, LLC or Uptown Newport Jamboree, LLC and its successors and assigns. The teiiii "successors" does not refer to the successors to all or any portion of the property within CFD No. 2018-03 unless the new property owner receives an assignment of the Developer's rights and obligations described in an assignment agreement or similar agreement. "Dwelling Unit" means one (1) for -sale residential unit of any configuration, including, but not limited to, a single family attached or detached dwelling, condominium, mobile home, or otherwise, but excluding Apartment Units on Apaitiiient Property. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 3 "Final Mapped Property" means, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, and Taxable Public Property, located in a Final Subdivision as of January 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied, but no earlier than January 1, 2018. "Final Subdivision" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, approved by the County 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, in either case, creates individual lots for which Building Permits may be issued without further subdivision. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution, or other instrument pursuant to which CFD No. 2018-03 Bonds are issued, as modified, amended, and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the land use classes listed in Table 1 below. "Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C.a.1 below, that can be levied by CSCDA in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Non -Residential Floor Area" means the total gross building square footage of non- residential property lying within an Assessor's Parcel for which one (1) or more non- residential Building Permits have been issued. Such square footage shall be measured from outside wall to outside wall, exclusive of overhangs, porches, patios, carports, or similar spaces attached to the building but generally open on at least two (2) sides, as determined by reference to the Building Permit(s) issued for that Assessor's Parcel, or if these are not available, as otherwise determined by the CSCDA Program Manager. "Non -Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit permitting the construction of one (1) or more non-residential units or facilities has been issued by the City or other governmental agency. "Outstanding Bonds" means all CFD No. 2018-03 Bonds which remain outstanding under the Indenture. "Property Owner Association Property" means, for each Fiscal Year (i) any property within the boundaries of CFD No. 2018-03 that was owned by a property owner association, including any master or sub -association, as of January 1 of the prior Fiscal Year, (ii) any property located in a Final Subdivision that was recorded as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determined from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street, or (iii) any property which, as of the May 1 California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 4 preceding the Fiscal Year for which the Special Tax is being levied, has been conveyed to a property owner's association, including any master or sub -association, provided evidence of such conveyance is submitted to the CSCDA Program Manager by May 1 preceding the Fiscal Year for which the Special Tax is being levied. The total number of acres to be classified as Property Owner Association Property or Public Property, shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax Levy within Tax Zone 1 and Tax Zone 2, to the Assigned Special Tax or the Maximum Special Tax of the respective Tax Zone, is equal for all Assessor's Parcels of Developed Property. For Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property categories, "Proportionately" means that the ratio of the actual Special Tax Levy per Acre within Tax Zone 1 and Tax Zone 2, to the Maximum Special Tax per Acre of their respective Land Use Class and Tax Zone, is equal. "Public Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2018-03 that, as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied, was (i) owned by, irrevocably offered, or dedicated to the federal government, the State, the County, the City, or any local government or other public agency, provided that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use; or (ii) encumbered by a public utility easement making impractical its use for any purpose other than that set forth in the easement. The total number of acres to be classified as Property Owner Association Property or Public Property shall not exceed 12.88 acres, as described in Section E of this Rate and Method of Apportionment. "Rate and Method of Apportionment" means this Rate and Method of Apportionment for CFD No. 2018-03. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the City, or other applicable City depaihnient, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Dwelling Unit. "Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued by the Building Division of the City for purposes of constructing one (1) or more Dwelling Units. Residential Property does not include Apartment Property for purposes of this Rate and Method of Apportionment. "Special Tax" or "Special Taxes" means the special tax to be levied in each Fiscal Year to fund the Special Tax Requirement for Facilities. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 5 "Special Tax Levy" or "Special Tax Levies" means the Special Tax to be levied in each Fiscal Year on Assessor's Parcel of Taxable Property to fund the Special Tax Requirement for Facilities, as applicable. "Special Tax Requirement" means that amount of Special Taxes required, if any, in any Fiscal Year for CFD No. 2018-03 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the CFD No. 2018-03 Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2018-03 Bonds; (iii) pay all or a portion of the Administrative Expenses as determined by the CSCDA Program Manager; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of Authorized Facilities to the extent that the inclusion of such amount does not increase the Special Tax Levy on Undeveloped Property; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax Levy, as determined by the CSCDA Program Manager pursuant to the Indenture. "State" means the State of California. "Tax Zone" means one of the two (2) mutually exclusive geographic areas defined below and identified in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 1" means the geographic area specifically identified as Zone 1 in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 2" means the geographic area specifically identified as Zone 2 in Attachment 1 of this Rate and Method of Apportionment. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2018-03 that are not exempt Property Owner Association Property or exempt Public Property or other property exempted pursuant to Section E herein. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E herein. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E herein. "Total Floor Area" means the sum of the Residential Floor Area, Apaitinent Floor Area, and the Non- Residential Floor Area located on an Assessor's Parcel. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, or Taxable Public Property. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 6 B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2018-03 shall be classified as Developed Property, Final Mapped Property, Undeveloped Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, or Taxable Public Property and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D below. C. MAXIMUM SPECIAL TAX RATE a. Developed Property (1) Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax and (ii) the amount derived by application of the Backup Special Tax. (2) Assigned Special Tax Residential Property shall be assigned to Land Use Classes 1 and 2 as listed in Table 1 below based on the description associated with each Dwelling Unit or Apartment Unit and its determined Tax Zone. Non -Residential Property shall be assigned to Land Use Class 3 as listed in Table 1 below based on the description associated with square feet of Non -Residential Floor Area and it's determined Tax Zone. The Assigned Special Tax that shall be levied in Fiscal Year 2019-2020 for each Assessor's Parcel classified as Developed Property is shown on the following page in Table 1. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 7 TABLE 1 Assigned Special Tax for Developed Property CFD No. 2018-03 Fiscal Year 2019-2020 AND USE 1 2 3 Residential Property Apartment Property Non -Residential Property GNED PECIAL TAX ZONE 1 $771 per Dwelling Unit $0 per Apaitalent Unit $5.35 per Square Foot of Non -Residential Floor Area ASSIGNED SPECIAL TAX ZONE 2 $979 per Dwelling Unit $284 per Apailnient Unit $5.35 per Square Foot of Non -Residential Floor Area (3) Backup Special Tax The Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $50,028 per Acre of the Assessor's Parcel. If a Final Subdivision includes Assessor's Parcels of Taxable Property for which Building Permits have been issued, exclusive of Taxable Property Owner Association Property and Taxable Public Property, then the Backup Special Tax for each residential Dwelling Unit shall be calculated according to the following formula: Residential Dwelling Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Residential Floor Area/(Total Floor Area)) / Number of residential Dwelling Units) In this case, the Backup Special Tax for each Apaitinent Unit shall be calculated according to the following formula: Apartment Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Apartment Floor Area/(Total Floor Area)) / Number of Apartment Units) Finally, the Backup Special Tax for each square foot of Non -Residential Floor Area shall be calculated according to the following formula: Non -Residential Square Foot Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Non -Residential Floor Area/(Total Floor Area)) / Non -Residential Floor Area) California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 8 Furthermore, all Assessor's Parcels within CFD No. 2018-03 shall be relieved simultaneously and permanently from the obligation to pay and disclose the Backup Special Tax if the CSCDA Program Manager calculates that (i) the annual debt service required for the Outstanding Bonds, when compared to the Assigned Special Tax that shall be levied against all Assessor's Parcels of Developed Property in CFD No. 2018-03, results in 110% debt service coverage (i.e., the Assigned Special Tax that shall be levied against all Developed Property in CFD No. 2018-03 in each remaining Fiscal Year based on the then existing development is at least equal to the sum of (a) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (b) the Administrative Expenses as defined in Section A herein), or (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it shall not issue any additional CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Assigned Special Tax in CFD No. 2018-03. (4) Increase in the Assigned Special Tax and Backup Special Tax On each July 1, commencing on July 1, 2020, the Assigned Special Tax and the Backup Special Tax shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. (5) Multiple Land Use Classes In some instances, an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Special Tax levied on an Assessor's Parcel shall be the sum of the Special Tax for all Land Use Classes located on that Assessor's Parcel. Furthermore, if only a portion of Building Permits have been issued on an Assessor's Parcel, the remaining portion of the Assessor's Parcel shall be considered Final Mapped Property. The CSCDA Program Manager's allocation to each type of property shall be final. b. Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property (1) Maximum Special Tax The Fiscal Year 2019-2020 Maximum Special Tax for each Assessor's Parcel of Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be $50,028 per Acre. (2) Increase in the Maximum Special Tax On each July 1, commencing on July 1, 2020, the Maximum Special Tax for Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property within each respective Tax Zone, shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 9 D. Commencing with Fiscal Year 2019-2020 and for each following Fiscal Year, the CSCDA Program Manager shall determine the Special Tax Requirement and shall (i) levy 100% of the Assigned Special Taxes on Developed Property, and (ii) levy the remaining Special Taxes as prioritized below until the total Special Taxes levied equal the. Special Tax Requirement. The Special Taxes shall be levied in each Fiscal Year as follows: 1. Annual Levy First: The Special Tax shall be levied on each Assessor's Parcel of Residential Property and Apartment Property, within all Tax Zones, in an amount equal to 100% of the applicable Assigned Special Tax for Residential Property and Apaituient Property respectively. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied on each Assessor's Parcel of Non -Residential Property, within all Tax Zones, until (i) the total Special Tax levied under the first two steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Non -Residential Property equals 100% of the applicable Assigned Special Tax, whichever comes first. Third: If additional monies are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Final Mapped Property, within all Tax Zones, until (i) the total Special Tax levied under the first three steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Final Mapped Property equals 100% of the applicable Maximum Special Tax, whichever comes first. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, within all Tax Zones, until (i) the total Special Tax levied under the first four steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Undeveloped Property equals 100% of the applicable Maximum Special Tax, whichever occurs first. Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property for which the Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to 100% of the Maximum Special Tax for each such Assessor's Parcel of Developed Property, within all Tax Zones, until (i) the total Special Tax levied under the first five steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Developed Property equals 100% of the Maximum Special Tax for Developed Property, whichever occurs first. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 10 Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property, within all Tax Zones, until (i) the total Special Tax levied under the first six steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Property Owner Association Property equals 100% of the Maximum Special Tax for Property Owner Association Property, whichever occurs first. Seventh: If additional monies are needed to satisfy the Special Tax Requirement after the first six steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property, within all Tax Zones, until (i) the total Special Tax levied under the first seven steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Public Property equals 100% of the Maximum Special Tax for Taxable Public Property, whichever occurs first. Notwithstanding the above, the CSCDA Program Manager or its designee may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax in the first step (above), when (i) CSCDA is no longer required to levy the Special Tax beyond the first step (above) in order to meet the Special Tax Requirement; and (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it will not issue any additional CFD No. 2018-03 Bonds (except refunding bonds), to be supported by the Special Tax. E. EXEMPTIONS No Special Tax shall be levied on Public Property or Property Owner Association Property in CFD No. 2018-03 provided that no such exemption shall reduce the total Acreage of Taxable Property to less than 12.88 Acres. Tax-exempt status shall be assigned by the CSCDA Program Manager in the chronological order in which property in CFD No. 2018-03 becomes Public Property or Property Owner Association Property. However, should an Assessor's Parcel of Public Property or Property Owner Association Property no longer be classified as tax-exempt, it will, from that point forward, be subject to the Special Tax. Furthermore, any Assessor's Parcel designated as Public Property or Property Owner Association Property that cannot be exempt from the Special Tax because such exemption would reduce the Acreage of all Taxable Property within CFD No. 2018-03 to less than 12.88 Acres shall be designated as Taxable Public Property or Taxable Property Owner Association Property. Prior to sixty (60) days before the issuance of a first series of CFD No. 2018-03 Bonds, the CSCDA Program Manager may increase or decrease the final number of minimum taxable Acres in CFD No. 2018-03 to better reflect the actual tax-exempt acreage within CFD No. 2018-03. However, notwithstanding the above, the final number of taxable Acres in CFD No. 2018-03 shall not be decreased if it causes an increase in the Special Tax levied on any existing Assessor's Parcel of Developed Property. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 11 F. REVIEW/APPEAL PROCESS Any taxpayer may file a written appeal of the Special Tax on his/her property with CSCDA, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CSCDA Program Manager or its designee shall review the appeal, meet with the appellant if the CSCDA Program Manager deems necessary, and advise the appellant of its determination within sixty (60) days after receipt of the appeal. If the CSCDA Program Manager agrees with the appellant, the CSCDA Program Manager shall make a recommendation to CSCDA to eliminate or reduce the Special Tax on the appellant's property or to provide a refund to appellant. The approval of CSCDA or its designee must be obtained prior to any such elimination or reduction. If the CSCDA Program Manager disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has thirty (30) days in which to appeal to CSCDA by filing a written notice of appeal with the CSCDA Program Manager, provided that the appellant is current in his/her payments of the Special Taxes. The second appeal must specify the reasons for the appellant's disagreement with the CSCDA Program Manager's determination. The CSCDA Program Manager shall schedule the appeal to be heard before CSCDA within sixty (60) days after receipt of the second appeal. Interpretations may be made by CSCDA, without Resolution or Ordinance of the Commission, for purposes of clarifying any vagueness or ambiguity as it relates to the Special Taxes, the Rate and Method of Apportionment, Land Use Classes, or any other definition applicable to CFD No. 2018-03. Without Commission approval, the CSCDA Program Manager may make minor, non - substantive administrative and technical changes to the provisions of this document that do not materially affect the rate, method of apportionment, and manner of collection of the Special Tax for purposes of administrative efficiency or convenience or to comply with new applicable federal, state, or local law. G. MANNER OF COLLECTION The Special Tax Levy will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2018-03 may directly bill the Special Tax Levy, may collect Special Tax Levies 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. H. PREPAYMENT OF SPECIAL TAX Under this Rate and Method of Apportionment, an Assessor's Parcel within CFD No. 2018-03 is permitted to prepay the Special Tax. The obligation of the owner of an Assessor's Parcel to pay the Special Tax may be fully or partially prepaid and permanently satisfied as described herein, California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 12, provided that a prepayment may be made only for Assessor's Parcels of Developed Property, or for an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2019, and only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CSCDA Program Manager with written notice of intent to prepay. Within thirty (30) days of receipt of such written notice, the CSCDA Program Manager shall notify such owner of the Special Tax Prepayment Amount (defined below) for such Assessor's Parcel. The CSCDA Program Manager may charge such owner a reasonable fee for providing this service. If there are Outstanding Bonds, prepayment must be made not less than thirty (30) days prior to a date that notice of redemption of CFD No. 2018-03 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The following additional definitions apply to this Section H: "CFD Public Facilities Costs" means either $7,500,000 in 2018 dollars, which shall increase by the Construction Inflation Index on July 1, 2019, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CSCDA Program Manager as sufficient to provide funding for the Authorized Facilities under the authorized bonding program for CFD No. 2018- 03, or (ii) shall be determined by CSCDA concurrently with a covenant that it shall not issue any more CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Special Tax levy under this Rate and Method of Apportionment. "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 month of December in 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 CSCDA Program Manager 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 Costs minus (i) costs of Authorized Facilities previously paid from the Improvement Fund, (ii) monies currently on deposit in the Improvement Fund available to pay costs of Authorized Facilities, (iii) monies currently on deposit in an escrow fund established pursuant to the Indenture and expected to be available to fund Authorized Facilities and (iv) the amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of these funds. "Improvement Fund" means a fund or account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct Authorized Facilities. "Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 13 1. Prepayment in Full The Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Equals Special Tax Prepayment Amount As of the proposed date of prepayment, the Special Tax Prepayment Amount shall be calculated according to the following paragraphs: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2018, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the Building Permit which has already been issued for such Assessor's Parcel. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Tax levy for CFD No. 2018-03 based on the Assigned Special Tax for Developed Property which could be levied on all expected development assuming Buildout of CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the total estimated Backup Special Taxes at Buildout for the entire CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be redeemed (the "Bond Redemption Amount"). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Previously Issued Bonds to be redeemed (the "Redemption Premium"). 6. Compute the current Future Facilities Costs. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 14 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Previously Issued Bonds. 9. Determine the Special Tax levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 10. Compute the minimum amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of the Special Tax Prepayment Amount, less any interest earnings attributed to the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount"). 12. The administrative fees and expenses of CFD No. 2018-03 are as calculated by the CSCDA Program Manager and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 2018-03 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% of the reserve requirement (as defined in the Indenture). 14. If any capitalized interest for the Previously Issued 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 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment date (the "Capitalized Interest Credit"). 15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11, and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Special Tax Prepayment Amount"). California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 15 2. Prepayment in Part The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP = (PE — A) x F + A. These terms have the following meaning: PP = the partial prepayment PE = the Special Tax Prepayment Amount calculated according to Section H.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. A = the Administration Fees and Expenses from Section H.1. The owner of any Assessor's Parcel who desires such prepayment shall notify the CSCDA Program Manager of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. With respect to any Assessor's Parcel that is partially prepaid, CSCDA shall (i) distribute the funds remitted to it according to Section H.3, and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D. 3. General Provisions Applicable to the Prepayment of Special Tax (a). Use of the Special Tax Prepayment Amount The Special Tax Prepayment Amount, less the Administrative Fees and Expenses calculated according to Sections H.1 and H.2 which shall be retained by CFD No. 2018- 03, and less the Future Facilities Amount calculated according to Section H.1 which shall be deposited into the Improvement Fund, shall be deposited into specific funds established under the Indenture, to fully or partially redeem as many Outstanding Bonds as possible, and, if amounts are less than $5,000, to make debt service payments on the Outstanding Bonds (collectively designated as the "Bond Retirement Funds"). (b). Full Prepayment of Special Tax Upon confirmation of the payment of the current Fiscal Year's entire Special Tax obligation, the CSCDA Program Manager may remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 16 Assessor's Parcel that is prepaid in accordance with Section H.1, the CSCDA Program Manager shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, and the obligation to pay the Special Tax for such Assessor's Parcel shall cease. (c). Partial Prepayment of Special Tax With respect to any Assessor's Parcel that is partially prepaid, the CSCDA Program Manager shall (i) distribute or cause to be distributed the funds remitted to it according to Section H.2. and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's parcel, equal to the outstanding percentage (1.00 — F) of the Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D herein. (d). Pebt Service Coverage Notwithstanding the foregoing, no prepayment of the Special Tax shall be allowed unless the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after the proposed prepayment, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. I. TERM OF SPECIAL TAX The Special Tax shall be levied until the final series of CFD No. 2018-03 Bonds have matured, provided that the Special Tax shall not be levied after Fiscal Year 2069-2070. The Special Taxes will cease to be levied in an earlier Fiscal Year if the CSCDA Program Manager has determined that all required interest and principal payments on the CFD No. 2018-03 Bonds have been paid and CSCDA has covenanted that it will not issue any more CFD No. 2018-03 Bonds (other than refunding Bonds) to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 17 ATTACHMENT 1 PROPOSED BOUNDARIES & IDENTIFICATION OF TAX ZONES OF CFD NO. 2018-03 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA For particulars of lines and dimensions. reference Is made to the parcels maps of the Orange County Assessor, California, and to Tract map No. 17763 recorded on June 19. 2015 as Instrument No. 201500320061 at Pages 17 through 23 In Book 937 of maps in the office of the County Recorder of Orange County. California. LEGEND Proposed Boundaries of Cahtornia Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newpon Beach. County of Orange, Cabin -la Parcel Line Tax Zone 1 Tax Zone 2 445-13n-nn Assessor Parcel Number rx.r.aA+n.a.,14.,. (1) Filed In the office of the Secretary of California Statewide Communities Development Authority this _ day of , 2018. Secretary, California Statewide Communities Development Authority (2) I hereby certify that the within map showing proposed boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018.03 (Uptown Newport), City of Newport Beach, County of Orange, State of California, was approved by the Commission of the California Statewide Communities Development Authority at a regular meeting thereof, held on this day of 2018, by Its resolution No. Secretary, California Statewide Communities Development Authority (3) Filed this day of 2018, at the hour of o'clock _ m., in Book of Maps of Assessment and Community Facllities Districts at page artd as Instrument No. to the office of the County Recorder of Orange County, State of California. Hugh Nguyen Clerk -Recorder, County of Orange By Fee Deputy RESOLUTION NO. 18SCIP-111 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY A RESOLUTION TO INCUR BONDED INDEBTEDNESS TO FINANCE THE ACQUISITION AND CONSTRUCTION OF CERTAIN PUBLIC CAPITAL IMPROVEMENTS AND CERTAIN UTILITY UNDERGROUNDING FOR CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA AND CALLING FOR A PUBLIC HEARING WHEREAS, the Commission (the "Commission") of the California Statewide Communities Development Authority (the "Authority") has duly adopted its Resolution No. 18SCIP-110 (the "Resolution of Intention") this date, wherein it declared its intention to establish a community facilities district under and pursuant to the terms and provisions of the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (commencing with Section 53311) of the Government Code of the State of California (the "Act"), to be known and designated as "California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" (the "Community Facilities District"), and to levy a special tax therein to finance the acquisition and construction of certain public capital improvements (the "Improvements") and certain utility undergrounding (the "Undergrounding"), that will assist in mitigating the impact on the need for public facilities occasioned by new development that has occurred or is expected to occur within the boundaries of the Community Facilities District; and WHEREAS, the Commission is fully advised in this matter; NOW THEREFORE, BE IT RESOLVED by the Commission of the California Statewide Communities Development Authority, as follows: Section 1. The above recitals are true and correct, and the Commission so finds and determines. Section 2. The Commission hereby declares that the public convenience and necessity require that a bonded indebtedness be incurred to finance the Improvements and Undergrounding. The cost of the Improvements and Undergrounding includes incidental expenses for the Improvements and Undergrounding comprising the costs of planning and designing the Improvements and Undergrounding, together with the costs of environmental evaluations thereof, and all costs associated with the creation of the Community Facilities District, the issuance of bonds, the determination of the amount of any special taxes or the collection or payment of any special taxes and costs otherwise incurred in order to carry out the authorized purposes of the Community Facilities District, together with any other expenses incidental to the Improvements and Undergrounding. 4145-0952-2456.2 Section 3. Bonds may be issued on behalf of the Community Facilities District in one or more series, but the amount of the aggregate bonded indebtedness to be incurred to finance the Improvements and Undergrounding shall not exceed eight million eight hundred thousand dollars ($8,800,000), which amount includes all costs and estimated costs incidental to, or connected with, the accomplishment of the purpose for which the bonded indebtedness is proposed to be incurred, including, but not limited to, the estimated costs of acquisition of land, rights -of -way, capacity or connection fees, satisfaction of contractual obligations relating to expenses or the advancement of funds for expenses existing at the time the bonds are issued pursuant to the Act, architectural, engineering, inspection, legal, fiscal, and financial consultant fees, bond and other reserve funds, discount fees, interest on any bonds of the Community Facilities District estimated to be due and payable within two (2) years of issuance of the bonds, election costs, and all costs of issuance of the bonds, including, but not limited to, underwriter's discount, fees for bond counsel, costs of obtaining credit ratings, bond insurance premiums, fees for letters of credit, and other credit enhancement costs, and printing costs. Section 4. Notice is given that Thursday, the 20th day of December, 2018, at the hour of 2:00 o'clock P.M., at the offices of the California State Association of Counties, at 1100 K Street, Sacramento, California 95814, has been fixed by the Commission as the time and place for a public hearing to be held by the Commission to consider the incurring of the bonded indebtedness to finance the Improvements and Undergrounding. At the public hearing, any persons interested, including all taxpayers, property owners and registered voters (of which there are none) within the Community Facilities District, may appear and be heard on the proposed debt issuance or on any other matters set forth herein, and they may present any matters relating to the necessity for incurring the bonded indebtedness to finance the Improvements and Undergrounding to be secured by a special tax to be levied within the Community Facilities District. Section 5. Notice of the time and place of the public hearing shall be given by Bond Counsel in the following manner: (a) A Notice of Public Hearing in the form provided by the Act shall be published once in a newspaper of general circulation circulated within the area of the Community Facilities District. The publication shall be made pursuant to Section 6061 of the Government Code of the State of California and shall be completed at least seven (7) days prior to the date set for such public hearing; and (b) A Notice of Public Hearing in the form provided by the Act shall be mailed, first class postage prepaid, to each owner of land, and to each registered voter residing, within the boundaries of the Community Facilities District (to property owners at their addresses as shown on the last equalized assessment roll, or as otherwise known to Bond Counsel). The mailing shall be completed at least fifteen (15) days prior to the date set for the public hearing. Section 6. It is the intention of the Commission that any bonds issued shall be callable (may be redeemed prior to their maturity dates) in accordance with the teiiiis of the Act. Section 7. This resolution shall take effect immediately upon its passage. 2 4145-0952-2456.2 PASSED AND ADOPTED by the California Statewide Communities Development Authority this 15th day of November, 2018. I, the undersigned, a duly appointed and qualified Authorized Signatory of the Commission of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of said Authority at a duly called meeting of the Commission of said Authority held in accordance with law on November 15, 2018. B 4145-0952-2456.2 3 ized Signatory California Statewide Communities Development Authority 104) SHEET 1 OF 1 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA 445-134-17 445-134- 445-134-29 • gima • 22Nr 445 133-07 For particulars of lines and dimensions, reference is made to the parcels maps of the Orange County Assessor, California, and to Tract map No. 17763 recorded on June 19, 2015 as instrument No. 201500320061 at Pages 17 through 23 in Book 937 of maps in the office of the County Recorder of Orange County, California. LEGEND Proposed Boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, California Parcel Line Tax Zone 1 Tax Zone 2 445-13n-nn Assessor Parcel Number PREPARED BY DAVID TAUSSIG AND ASSOCIATES, INC. (1) Filed in the office of the Secretary of California Statewide Communities Development Authority this 15t" day of /JaJe..400e.r , 2018. Secrets '"'o -'a Statewide Communities Development Authority (2) I hereby certify that the within map showing proposed boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California, was approved by the Commission of the California Statewide Communities Development Authority at a regular meeting thereof, held on this 15t" day of /1/4) akie..."4ocr , 2018, by its resolution No. 18SC,1P -1 tv Secretary, r" .ten'- " tatewide Communities Development Authority R �� ;ems �� s y C ,, , 2M�- Snarl MmdnirM r O-CV EW pmcnvr A1/4-nioec . (3) Filed this 2?+}) day of &ode , 2018, at the hour of 1 O. I b o'clock / -m. in Book 010 of Maps of Assessment and Community Facilities Districts at page r+ and as Instrument No. 00"8- y'125 20 in the office of the County Recorder of Orange County, State of California. Hugh Nguyen Clerk -Recorder, County of Orange By attut- S Fee 6 . o-o Deputy The Orange County Register 2190 S. Towne Centre Place Suite 100 Anaheim, CA 92806 714-796-2209 5222770 ORRICK PUBLIC FINANCE ATTN: LAUREN HERRERA 405 HOWARD STREET SAN FRANCISCO, CA 94105 FILE NO. Uptown Newport CFD AFFIDAVIT OF PUBLICATION STATE OF CALIFORNIA, County of Orange SS. I am a citizen of the United States and a resident of the County aforesaid; I am over the age of eighteen years, and not a party to or interested in the above entitled matter. I am the principal clerk of The Orange County Register, a newspaper of general circulation, published in the city of Santa Ana, County of Orange, and which newspaper has been adjudged to be a newspaper of general circulation by the Superior Court of the County of Orange, State of California, under the date of November 19, 1905, Case No. A-21046, that the notice, of which the annexed is a true printed copy, has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to wit: 12/05/2018 I certify (or declare) under the penalty of perjury under the laws of the State of California that the foregoing is true and correct: Executed at Anaheim, Orange County, California, on Date: December 05, 2018. Signature PROOF OF PUBLICATION Legal No. 0011209311 NOTICE OF PUBLIC HEARING R EGA RDING THE FORMATION OF CALI FO RN IA STAT EWI D E COMMUNITIES DEVELOPMENT AUTHORITV COMMUNITY FACILITIES DISTRICT NO.2018.44 (UPTOWN I1EWPORT). CITY OF N EWFOf1T BEACH, COUNTY OF OR AN G E, STATE OF CALIFORNIA, AND THE LEVY OF A SPECIALTAX THEREIN Thursday, Degember 2b 2018 ai 2_Co p-m- ul the offices of the California State Assoc lotion of Counties, 1144 K Street. Sacramento. California 9$01I NOTICE IS HEREBY GIVEN Ihal en November 15, 2O181, the Commission (the'Commission') of the California Statewide COmmunilitS DevelCOMent Aulllorily {rlre'Aulh0rtlr) dull+ (Welted its Resolution No. 1E51'IP-114 {Ihe'Resoluiien of Intenlionl wherein It declared Ile Imenllon, pursuant to lolnt community facilities agreement with the City of Newport Bea (the 'Local Apency), to form otommvaily fottidieS dfsrriel within the tcrriroritl I ImfrS Of flit City of Nempart each to be known as 'California Statewide Communities Detainment Minority Community Facilities District No. 201E1413 (Upionm Newport), Ci1v of Newport Beach, County of °name. Slate ofCa]ifarnier (the 'C2mmunitr FOOililieSDiS1rid 10 levy a special tax within the Community Facilities District, and la finance the acquisition and construction of certain public capital improvements to be owned by ttie Local Animus, (the 'Improvement;') and Certain Utility kirglergret,indirr4 10 be Owned by Southern California Edison (the 'Under9reunding'}_ Oil November 15.2018, the[ammisslan also adopted Its Resolution No. 1SSCIP-111 (the 'Resolution to Incur Bonded Indebtedness') wherein it declared its irienhipn to incur bonded indebledme$S in a principal omOvmt e01 to exceed eight million eight hundred thousand dollars [$9,80(1,0X) la finance me Improvements and Underground) all under and pursuant to the terms aid provisions et the 'Melia Roos Community Facilities Act of 1U2e' being CFtopler 2-5 Part 1, piyigien , -rifle 5 of the Government Dode of the Slate of California, commencing with Section {the 'Act %. This Notice canlpirlt C brief Slrrnrnary .f the proppgo] emFwdied in the Resolution of Intention and me Resign/Ion la Incur Bonded Indebtedness (collectively, the 'Proposal% bait Tau are referred to the Autherily`5 ROShcorton of Inrerlli0i and its RCShcvri0n 10 Incur Sonata 1114ebredrless 0n fik with the AoFForiIy far the definitive description cif the Proposal, Including a description or the Improvements and UnderBrounding, a list of Incidental expellees and 4ond iSSUanCe COS1S and the rale and method Of opPOrtiOpmcn1 Of MC proposed special tau for the Community Facil i1 Tee District. The Proposal consists of the authorization of (1) the special tax w ithin 1ho COmmvnily Fa0ilirieS DiS1rict hd ftllanet the Improvements and VMergrgyntling, {2j the isgy Tote of bonds to finance the Improvements and Underg rounding. and (1) the establishment of the Initial annual appraprfatlans limit for the Community Fatililits LiStriet in 1h0 arndunl of 5854,000 for the 2018-2614 Fiegal Year. In order to confer the authority upon the Authority 10 levy the special lax and to issue the baps, a public hearirq muss be held on the Proposal, ttte Authority must determine to fgrm the Community Facilities Dislrlctr and the qualified electors within me Community Facilities District must approve the Proposal by a Iwo -thirds vote, A$ the Community Faciliries District is uninhabited, or intobileci by fewer than 12 registered voters, the qualified electors are, urrss44ant to the Act, the owners o1 property within the Community Facilities District. THIS 15 THE tJOTICE OFTHE PUBLIC HEARING. Thepublic hearing will be held Thursday, the 201.h day of DeCember, 2C111y 01 the hour of 2-00 0`Clock P,M. at the Offices Of the California State Asexiatlon a] Counties, 1140 K Street, Sacramento, Callfo nfa95t14. At the public he0rinci, ony personInterested, incluOing all taxpaye properly owners and registered voters within the Communl Faellilfes District, may appear and be heard, and the oral or wrl fen 105fimbony of all interested caroms Or taxpayers for or O0OinOF the estoblishmeh1 of lne COmmUnily. Facilirie8 District and the levy of the special taxi the extent of the Community Facilities District the financing al the Improvements or Ondergraunding. ar the authorization la issue the bonds, or the establishment of the oppreprieiipng limilg, or om anv other matters contained in the Proposair will be heard andconsidered. Any prOTc1It t0 the Prrqeernatal may be maddyere, exte Orally Or ion rohnts wriltpu by Mai any n ertalning to the regularitytor eosuffic sufficiency the proceedings shall be In writing and shall clearly set forth the Irrepulorltles and defects to whith enoetlien is made. The Comm itSien may waive any irreoulari• tie$ in the Term or Cent1n1 eF aria written protest and 01 the public hearing may correct minor defects In the proceedings_ All written protests not presented in person by the protestor at the public hearing shall be filed with the Seerelary of lho Authority at or Were the time fixed for the 11uJb1ic IY$aring in order 10 be heOteiVed and eonsidered. Any written protest may be wllhdrawn In writing al any time before the conclusion of the public hearing. Written pro] tg by a mai0.'lly of the regi$le voter residing dna registered within me Community Facilities District (if at least six such voters protest). ar by the owners of a maiarily of the land area within the Community Facilities District not 0tfertloi from the proposed special tau, will require suspension of These proceedings Tar at least one year. If such protests are directed only against certain elements of the proposed Improvements. Underground' rig or special Idx Of the C4rrlmuniIM FOCilitieS District, Only. Those eleraenl$ need be excluded Vain the -proceedings. The Authority`sspecial lox colwulianir in consultation with and on behalf Of the Local Agency, hers studied the Community Fa'ililie3 District and will provide, a] ar before the lime of the public nearing, a report which will contain a brief description of the Improvements and Undcreroundino by lvnt which in lhoir opinion will be required Ia o deawlel y. meal the needs Or the nen Aevela:wren? expected 10 occur w ithin the Community. Facilities District, lagelher with estimates of the cast of financing the acquisition and construction of the Imarowoments and tImbergrficlndil.g, and an a1Iirnnt0 of iho incidental expense$ rooted thereto. The regerl will be ovallilble for Inspeclian by the public, and will became a part or the record of me Fi....il.�. r.LP1-12/15/16 1 NVI1IIL IIC'1]I 111%1.VCIt1111•IIt b.1VVIV IX UIICLItu IV IJVTIV IVVSSIyr Saetial Tax Concur and at CM) 9551500. Doled! December 5r201S. California Sforcwide Communities Dcvclapinont Aulhoriiv Publish! Orange County RegIcier December Se -arm 11109311 r.LP1-12/15/16 2 CERTIFICATE OF MAILING AND PUBLICATION OF NOTICE OF PUBLIC HEARING CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA The undersigned declares: 1. On December 3, 2018, the undersigned caused to be mailed, pursuant to the Mello - Roos Community Facilities Act of 1982 (the "Act") and on behalf of the Secretary of the California Statewide Communities Development Authority (the "Authority"), by prepaid Federal Express via next -day service, a copy of the "Notice of Public Hearing" on the Resolution of Intention and the Resolution to Incur Bonded Indebtedness with respect to the formation of a community facilities district and the levy a special tax in the proposed California Statewide Communities Development Authority Community Facilities District No. 2018- 03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "Community Facilities District"), a copy of which Notice of Public Hearing is attached hereto as Exhibit I. The Notice was mailed to the owners of real property within the proposed Community Facilities District, in accordance with the names and addresses of the property owners as shown on the Assessor's last equalized roll, or as known to the undersigned, as follows: Owners: TSG-Parcel 1, LLC Uptown Newport Jamboree, LLC Address: Shopoff Realty Investments, L.P. 2 Park Plaza, Suite 700 Irvine, CA 92614 2. Pursuant to the Act and on behalf of the Secretary of the Authority, the undersigned caused to be published a Notice of Public Hearing, on December 5, 2018, in the Orange County Register, a newspaper of general circulation in the area of the proposed Community Facilities District. A copy of the affidavit of publication is attached hereto as Exhibit II and made a part hereof. Date: December 20, 2018. ORRICK, HERRINGTON & SUTCLIFFE LLP By: Besorah Won 4150-6872-9369.1 EXHIBIT I NOTICE OF PUBLIC HEARING [ATTACHED] I-1 4150-6872-9369.1 NOTICE OF PUBLIC HEARING REGARDING THE FORMATION OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AND THE LEVY OF A SPECIAL TAX THEREIN Thursday, December 20, 2018 at 2:00 p.m. at the offices of the California State Association of Counties, 1100 K Street, Sacramento, California 95814 NOTICE IS HEREBY GIVEN that on November 15, 2018, the Commission (the "Commission") of the California Statewide Communities Development Authority (the "Authority") duly adopted its Resolution No. 18SCIP-110 (the "Resolution of Intention") wherein it declared its intention, pursuant to a joint community facilities agreement with the City of Newport Beach (the "Local Agency"), to form a community facilities district within the territorial limits of the City of Newport Beach, to be known as "California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" (the "Community Facilities District"), to levy a special tax within the Community Facilities District, and to finance the acquisition and construction of certain public capital improvements to be owned by the Local Agency (the "Improvements") and certain utility undergrounding to be owned by Southern California Edison (the "Undergrounding"). On November 15, 2018, the Commission also adopted its Resolution No. 18SCIP-111 (the "Resolution to Incur Bonded Indebtedness") wherein it declared its intention to incur bonded indebtedness in a principal amount not to exceed eight million eight hundred thousand dollars ($8,800,000) to finance the Improvements and Undergrounding, all under and pursuant to the terms and provisions of the "Mello Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California, commencing with Section 53311 (the "Act"). This Notice contains a brief summary of the proposal embodied in the Resolution of Intention and the Resolution to Incur Bonded Indebtedness (collectively, the "Proposal"), but you are referred to the Authority's Resolution of Intention and its Resolution to Incur Bonded Indebtedness on file with the Authority for the definitive description of the Proposal, including a description of the Improvements and Undergrounding, a list of incidental expenses and bond issuance costs and the rate and method of apportionment of the proposed special tax for the Community Facilities District. The Proposal consists of the authorization of (1) the special tax within the Community Facilities District to finance the Improvements and Undergrounding, (2) the issuance of bonds to finance the Improvements and Undergrounding, and (3) the establishment of the initial annual appropriations limit for the Community Facilities District in the amount of $850,000 for the 2018- 2019 Fiscal Year. In order to confer the authority upon the Authority to levy the special tax and to issue the bonds, a public hearing must be held on the Proposal, the Authority must determine to form the 4139-2897-9224.2 Community Facilities District, and the qualified electors within the Community Facilities District must approve the Proposal by a two-thirds vote. As the Community Facilities District is uninhabited, or inhabited by fewer than 12 registered voters, the qualified electors are, pursuant to the Act, the owners of property within the Community Facilities District. THIS IS THE NOTICE OF THE PUBLIC HEARING. The public hearing will be held Thursday, the 20th day of December, 2018, at the hour of 2:00 o'clock P.M., at the offices of the California State Association of Counties, 1100 K Street, Sacramento, California 95814. At the public hearing, any persons interested, including all taxpayers, property owners and registered voters within the Community Facilities District, may appear and be heard, and the oral or written testimony of all interested persons or taxpayers for or against the establishment of the Community Facilities District and the levy of the special tax, the extent of the Community Facilities District, the financing of the Improvements or Undergrounding, or the authorization to issue the bonds, or the establishment of the appropriations limits, or on any other matters contained in the Proposal, will be heard and considered. Any protests to the Proposal may be made orally or in writing by any interested persons or taxpayers, except that any protests pertaining to the regularity or sufficiency of the proceedings shall be in writing and shall clearly set forth the irregularities and defects to which objection is made. The Commission may waive any irregularities in the form or content of any written protest and at the public hearing may correct minor defects in the proceedings. All written protests not presented in person by the protester at the public hearing shall be filed with the Secretary of the Authority at or before the time fixed for the public hearing in order to be received and considered. Any written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Written protests by a majority of the registered voters residing and registered within the Community Facilities District (if at least six such voters protest), or by the owners of a majority of the land area within the Community Facilities District not exempt from the proposed special tax, will require suspension of these proceedings for at least one year. If such protests are directed only against certain elements of the proposed Improvements, Undergrounding or special tax of the Community Facilities District, only those elements need be excluded from the proceedings. The Authority's special tax consultant, in consultation with and on behalf of the Local Agency, has studied the Community Facilities District and will provide, at or before the time of the public hearing, a report which will contain a brief description of the Improvements and Undergrounding by type which in their opinion will be required to adequately meet the needs of the new development expected to occur within the Community Facilities District, together with estimates of the cost of financing the acquisition and construction of the Improvements and Undergrounding, and an estimate of the incidental expenses related thereto. The report will be available for inspection by the public, and will become a part of the record of the public hearing. Questions should be directed to David Taussig, Special Tax Consultant, at (949) 955-1500. Dated: December 5, 2018. California Statewide Communities Development Authority 2 4139-2897-9224.2 EXHIBIT H AFFIDAVIT OF PUBLICATION [ATTACHED] 4150-6872-9369.1 The Orange County Register 2190 S. Towne Centre Place Suite 100 Anaheim, CA 92806 714-796-2209 5222770 ORRICK PUBLIC FINANCE ATTN: LAUREN HERRERA 405 HOWARD STREET SAN FRANCISCO, CA 94105 FILE NO. Uptown Newport CFD AFFIDAVIT OF PUBLICATION STATE OF CALIFORNIA, County of Orange SS. I am a citizen of the United States and a resident of the County aforesaid; I am over the age of eighteen years, and not a party to or interested in the above entitled matter. I am the principal clerk of The Orange County Register, a newspaper of general circulation, published in the city of Santa Ana, County of Orange, and which newspaper has been adjudged to be a newspaper of general circulation by the Superior Court of the County of Orange, State of California, under the date of November 19, 1905, Case No. A-21046, that the notice, of which the annexed is a true printed copy, has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to wit: 12/05/2018 I certify (or declare) under the penalty of perjury under the laws of the State of California that the foregoing is true and correct: Executed at Anaheim, Orange County, California, on Date: December 05, 2018. Signature PROOF OF PUBLICATION Legal No. 0011209311 NOTICE OF PUBLIC HEARING R EGA RDING THE FORMATION OF CALI FO RN IA STAT EWI D E COMMUNITIES DEVELOPMENT AUTHORITV COMMUNITY FACILITIES DISTRICT NO.2018.44 (UPTOWN I1EWPORT), CITY OF N EWPOf1T BEACH, COUNTY OF OR AN G E, STATE OF CALIFORNIA, AND THE LEVY OF A SPECIALTAX THEREIN Thurslttr, December 2b 2018 pi 2_0o p-m- ul the offices of the California State Assoc lotion of Counties, 1144 K Street. Sacrament. California 9$011 NOTICE IS HEREBY GIVEN Ihal on November 15, 2O181, the Commission (the'Commission') of the California Statewide COmmunilies DevelCilelerit Aulhorily (rlhe'Aufherilr) QUIP odogled its Resolution No. 1E51'IP-114 {Ihe'Resoluiian of Ilhtenliorri wherein It declared 115 Imenllon, pursuant to lolnt community facilities agreement with the City of Newport Bea (the 'Lacaf Aoency). to form onOmmvaily foeil'riet th 1riGI within the tcrriroripl !Mfrs Of the City of Newport each to be known as 'California Statewide Communities f]eveloement Minority Community Facilities District No. 201E1413 (Upiohm Newport), City of Newport Beach, County of Ordro Slate Of Ca]ifarnier (the'C2mmunitr Fdcililies DiS1rieh. 10 levy a special R1x within the Community Facilities District, and la finance the acquisition and construction of certain public capital improvements to be owned by ttie Local Agency (the 'Improvements) and Certain Uri lily Orriergraihelirrg 10 be Owned by Southern California Edison (the 'Ungergreunding•}_ Oil November 15.2018, the[ammisslan also adopted Its Resolution No. 1SSCIP-111 (the 'Resolution to Incur Bonded Indebtedness') wherein it declared its irllenripn to OW Welded indebledme$S in a principal OmOvrit 1101 to exceed eight million eight hundred thousand dollars Cse,a0n,00+Xr la finance me Improvements and Underground) all under and pursuant to the terms and previsions et the 'Melia Roos Community Facilities Act pl 1U2.' being CFtopler 2-5 Port 1, Division , Title 5 of the Government Dode of the Slate of Ca]IF:InIc commencing with Sectionth3T311 {Ma 'Act %. This Notice canlpirlt C brief 3leramory .f the prOppgo] emFwdied in the Resolution of Intention and me Resolution la Incur Bonded Indebtedness (collectiraly, the 'Proposal% hut Tau are referred to the Authorilv0 RCSdtoriOrl Of Inremlien and its Reelvti0n 10 Incur Bonded 1114ebreeiness Om fik with the AoFFooriry for the definitive description of the Proposal, Including a nescrlpltoe of the Improvements and Undergrounding, a list of incidental expenses and hand iSSUanee 01S1S and the rale and method Of opPOrti0pmenl Of MC proposed special tau f e the Community Facil i1 ies District. The Proposal corrslsts ad the authorization of (1) the special tax eilhif the C0mmalnily Fa0ilirieS DiSirict f0 fimanco the Improvements cod VAidergrwnding, (2) the isgyange of Gourds to finance the Improvements and Undergroundingg, and (1) the establishment of the Initial annual appraprfatlar,s limit for the Cammuniir Facilities LiStriet fn 1h0 amdunl of 5854,000 far the 2018-2614 Fiegal Year. in order lo confer tine authonly upon the Authority 10 levy the *pedal lax and to issue the bonds, a public hearino must be held on the Proposal, ttte Authority mutt determine to form the Community Facilities Dielrlct, and the qualified electors within me Community Facilities District must approve the Proposal by a two-thirds vote. A$ the Community Facilites District is uninhabited, or in/whiled bl fewer than 12 registered voters, the qualified electors are, urrss44amt to the Act, the owners 01 property within the Community Facilities District. THIS 15 THE NOTICE OFTHE PUBLIC HEARING. Thepublic hearing will be held Thursday, the 20th day of D ember, 10.10-, 01 the hour of 2-00 o`{Iock P,11A„ at the offices of the California State A§sxclatIon a] Counties, 1100 K Street, Sacramento, Callfarnie 95t14. At the public heorinci, ony remits.rrrere5Fed, incluOino all taxpaye lwoperlyy owners and registered voters within the Communl Faellilfes District, may appear and be heard, and the oral or wri rem Testimony of all interested persons 0r laxparcrs der or o510inst the esloblishmehl of lire CommUnily Focilirie8 District and the levy of the special taxi the extent of the Community Fucilllies District the financing al the Improvements or Undergraunding. ar the authorization la issue the bends, or the establishment of rho oppreprieiitnt limilg, or an any other mutters contained in the Proposal, will be heard andconsidered. Any proiasrs to the Pr0q0rrpaSal mar he madeyere, exOrally Or ion rohnts wrilipn by lhal any aertalning to the egularityt0r arsuffic sufficiency the proceedings shall be In writing and shall clearly set forth the Irregularities and defects fa whith 0bjeelien is made. The Comm itSien may waive any irreoulari• tie$ in the form pr Cent0n1 of and written Edotett aim a1 the public hearing may correct mtrmr defects In the proceedings- All written protests not presented in person by the protester at the public hearing shall be filed with the Seerelary of lho Authority at or before the time fixed for 1he I1uJb1ic IY$Orirg in Order 10 be recei,i0d and oien$idered. Any written protest may be wllhdrawn in writing al any time before the conclusion of the public hearing. Written pro] to by a mai0rily of the rFeggi$le voter resioing and registered within me Community Facilities District (if at least six such voters protest). ar by the owners of a maiariiy of the land area within the Community FOCilifies Digiri01 nOi etefl 1 Frtrrl the proposed special to will require suspension of These proceedings Tar at least one year. If such protests are directed only against certain elements of the proposed Improvements. Unldergraunding or special lax Of the CerrlmumiIM FOoilirieg DiStricl, Only 1110Se eierrheni$ need ke excluded tram the proceedings. The Authorityrsspecial lox colwullant in consultation with and an behalf Of the Loco] Aoemc1, hog studied the Community F0Cililie3 District and will provide, a] ar before the lime of the public hearing. a report which will caetaln a brief description of the Improvements and Underervundina by type which incehya�Iir opinion will be reavired lo odeawlel y meet the meads or n the Aevela:men? expected 10 Occur within the Community Facilities District, together with estimates of the cast ei financing the acquisition and construction of the Imoravomenls and UlhdergrOcindirm, and an a1Iimate of lho incidental expense$ related thereto. The eemrl will be orooil0Dle for Inspection by the public, and will become a part or the record al the Fi....il.�. r.LP1-12/15/16 1 NVI1IIL IIC'1]I 111%1.VCIt1111•IIt b.1VVIV IX UIICLItu IV IJVTIV IVVSSIyr Saetial Tax Concur and at CM) 9551500. Doled! December 5r201S. California Sforcwide Communities Dcvclapinont Aulhoriiv Publish! Orange County RegIcier December Se -arm 11109311 r.LP1-12/15/16 2 DAVID TAUSSIG Associates, Inc. Public Finance Public Private Partnerships Urban Economics Clean Energy Bonds COMMUNITY FACILITIES DISTRICT REPORT California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) December 11, 2018 Newport Beach San Jose San Francisco Riverside Dallas Houston COMMUNITY FACILITIES DISTRICT REPORT MELLO-ROOS COMMUNITY FACILITIES ACT OF 1982 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT No. 2018-03 (UPTOWN NEWPORT) Prepared for CSCDA 1700 North Broadway, Suite 405 Walnut Creek, CA 94596 Prepared by DAVID TAUSSIG & ASSOCIATES, INC. 100 West San Fernando, Suite 430 San Jose, CA 95113 I) 14DAVID TAUSSIG & ASSOCIATES Public Finance and Urban Economics TABLE OF CONTENTS Section Pa2e I. INTRODUCTION 1 II. PROJECT DESCRIPTION 3 III. DESCRIPTION AND ESTIMATED COST OF PUBLIC FACILITIES 4 A. Description of Public Facilities 4 B. Estimated Cost of Public Facilities 5 IV. BONDED INDEBTEDNESS AND INCIDENTAL EXPENSES 6 A. Projected Bond Sales 6 B. Incidental Bond Issuance Expenses to be Included in the Proposed Bonded Indebtedness 6 C. Incidental Expenses to be Included in the Annual Levy of Special Taxes 6 V. RATE AND METHOD OF APPORTIONMENT 7 A. Explanation for Special Tax Apportionment 7 B. Maximum Special Tax 8 C. Accuracy of Information 8 VI. BOUNDARIES OF COMMUNITY FACILITIES DISTRICT 9 VII. GENERAL TERMS AND CONDITIONS 10 A. Substitution of Facilities 10 B. Appeals and Interpretations 10 C. Prepayment of Special Tax 10 ATTACHMENTS Attachment A Rate and Method of Apportionment Attachment B CFD No. 2018-03 (Uptown Newport) Boundary Map I) FtDAVID TAUSSIG & ASSOCIATES Public Finance and Urban Economics I. INTRODUCTION WHEREAS, the California Statewide Communities Development Authority ("CSCDA") duly adopted its Resolution No. 18SCIP-110 (the "Resolution of Intention") on November 15, 2018 wherein the Commission (the "Commission") declared its intention to and proposed to establish a community facilities district within the jurisdictional boundaries of the City of Newport Beach, in Orange County, California, to be designated and known as "the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport)" (the "Community Facilities District"), under and pursuant to the terms and provisions of the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (beginning with Section 53311) of the Government Code of the State of California (the "Act"); and WHEREAS, the Commission has determined that the establishment of the Community Facilities District and is consistent with and follows the local goals and policies concerning the use of the Act that have been adopted by the City of Newport Beach, as modified from time to time; and WHEREAS, the proposed boundaries of the Community Facilities District are shown on the boundary map entitled "Proposed Boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" (the "Boundary Map") as shown in Attachment B; and WHEREAS, the Commission has duly considered the advisability and necessity of levying a special tax to finance (i) the acquisition and construction of certain public capital facilities to be owned by the City, and (ii) certain utility undergrounding; and WHEREAS, the public facilities and utility undergrounding described in the previous paragraph are referred to herein as the "Facilities" and "Undergrounding," respectively, and are set forth in the Resolution of Intention; WHEREAS, Exhibit E to the Resolution of Intention, and incorporated therein by reference, is the rate and method of apportionment of the Special Tax ("RMA"); directs: WHEREAS, the Resolution of Intention, Resolution 18SCIP-110, in its Section 19, The Authority's special tax consultant, David Taussig & Associates, in consultation with and on behalf of the City, is hereby requested to study the Community Facilities District and, at or before the time of the public hearing, to cause to be prepared and filed with the Commission a report which shall contain a brief description of the facilities by type which in its opinion will be required to adequately meet the needs of the new development which has occurred and/or is expected to occur within the Community Facilities District, together with estimates of the cost of financing the Facilities and Undergrounding and the incidental expenses related thereto. The report shall, upon its presentation, be submitted to the Commission for review, shall be available for inspection by the public, and shall be made a part of the record of the public hearing. California Statewide Communities Development Authority December 11, 2018 Community Facilities District No. 2018-03 (Uptown Newport) Page 1 Ja DAVID TAUSSIG �J & ASSOCIATES Pub Finance and Urban Economics NOW, THEREFORE, David Taussig & Associates, Inc. does hereby submit the Report. California Statewide Communities Development Authority December 11, 2018 Community Facilities District No. 2018-03 (Uptown Newport) Page 2 I) FtDAVID TAUSSIG & ASSOCIATES Public Finance and Urban Economics II. PROJECT DESCRIPTION CFD No. 2018-03 (Uptown Newport) encompasses approximately 25.04 gross acres of land in the City of Newport Beach, and the project site is located on Jamboree Road and bounded by Birch Street and MacArthur Boulevard. At buildout, it is currently expected that CFD No. 2018-03 (Uptown Newport), in its entirety, will consist of approximately 472 condos, 314 apartments, and 11,500 square feet of commercial uses. California Statewide Communities Development Authority December 11, 2018 Community Facilities District No. 2018-03 (Uptown Newport) Page 3 I) FtDAVID TAUSSIG & ASSOCIATES Public Finance and Urban Economics III. DESCRIPTION AND ESTIMATED COST OF PUBLIC FACILITIES A community facilities district may provide for the purchase, construction, expansion, or rehabilitation of any real or tangible property, including public facilities and infrastructure improvements, with an estimated useful life of five (5) years or longer, which is necessary to meet increased demands placed upon local agencies as a result of development or rehabilitation occurring within the community facilities district. In addition, a community facilities district may pay in full all amounts necessary to eliminate any fixed special assessment liens or to pay, repay, or defease any obligation to pay for any indebtedness secured by any tax, fee, charge, or assessment levied within the area of the community facilities district. A. Description of Public Facilities The type of public facilities proposed to be eligible for funding by CFD No. 2018-03 (Uptown Newport), as identified in the Resolution of Intention, shall consist of those items listed below. It is intended that CFD No. 2018-03 (Uptown Newport) will be authorized to finance all or a portion of the costs of any of the following improvements to be owned by CFD No. 2018-03 (Uptown Newport): 1. Public Facilities: Public Capital Improvements include: a. Undergrounding of overhead utilities ("Undergrounding"). b. Park Improvements, including but not limited to playground infrastructure, irrigation, landscaping, utilities, drainage and grading ("Facilities"). Generally, for each of the above categories of public capital facilities to be acquired, constructed and installed on public property (including dedicated rights -of -way and public easements), the authorized facilities shall be deemed to include the cost and expense of mobilization, clearing, grubbing, protective fencing and erosion control, excavation, curb, gutter and sidewalks, base and finish paving, striping, traffic signage, traffic signals, streetlights, landscaping, irrigation, barricades, undergrounding of various utilities, and related appurtenant work and facilities, together with the cost and expense of engineering design, plan review, project management, construction -related surety bonds or like security instruments, construction staking and management, inspection, and any like fees and costs incidental to such acquisition, construction and installation. 2. Incidental Expenses It is anticipated that the following incidental expenses may be incurred in the proposed legal proceedings for formation of the Community Facilities District, construction and environmental remediation and related bond financing and will be payable from proceeds of the Bonds or directly from the proceeds of the Special Tax within the Community Facilities District: California Statewide Communities Development Authority December 11, 2018 Community Facilities District No. 2018-03 (Uptown Newport) Page 4 I) FtDAVID TAUSSIG & ASSOCIATES Public Finance and Urban Economics a. Special Tax Consultant services b. City staff review, oversight, and administrative services c. Bond Counsel and Disclosure Counsel services d. Financial Advisor services e. Special Tax administrator services f. Appraiser/Market absorption consultant services g. Initial bond transfer agent, fiscal agent, registrar and paying agent services, and rebate calculation service set up charge h. Bond printing and Preliminary Official Statement and Official Statement printing and mailing i. Publishing, mailing, and posting of notices j. Recording fees k. Underwriter's discount 1. Bond reserve fund m. Capitalized interest n. Governmental notification and filing fees o. Credit enhancement costs p. Rating agency fees q. Continuing disclosure services r. Arbitrage rebate services s. Other post -issuance tax compliance services The expenses of certain recurring services pertaining to the Community Facilities District may be included in each annual special tax levy, and these expenses are described in the definition of the term "Administrative Expenses" as set forth in the Rate and Method of Apportionment for the Community Facilities District attached hereafter as Attachment A. The foregoing enumeration shall not be regarded as exclusive and shall be deemed to include any other incidental expenses of a like nature which may be incurred from time to time with respect to the Community Facilities District. B. Estimated Costs of Public Facilities CFD No. 2018-03 (Uptown Newport) is expected to issue one (1) series of bonds to finance the construction, acquisition, expansion, improvement, or rehabilitation of the proposed Facilities and Undergrounding. The total amount of construction proceeds generated from bonds is projected to be approximately $7.4 million. This amount is an estimate and subject to change, depending on the interest rates of the bonds, the costs of issuance of the bonds, and other factors to be determined at the time the bonds are issued. California Statewide Communities Development Authority December 11, 2018 Community Facilities District No. 2018-03 (Uptown Newport) Page 5 I) FtDAVID TAUSSIG & ASSOCIATES Public Finance and Urban Economics IV. BONDED INDEBTEDNESS AND INCIDENTAL EXPENSES A. Projected Bond Sales The maximum authorized bonded indebtedness for CFD No. 2018-03 (Uptown Newport) is $8,800,000. It is anticipated that CSCDA will sell one (1) series of bonds authorized by CFD No. 2018-03 (Uptown Newport). B. Incidental Bond Issuance Expenses to be Included in the Proposed Bonded Indebtedness Pursuant to Section 53345.3 of the Act, bonded indebtedness may include all costs and estimated costs incidental to, or connected with, the accomplishment of the purpose for which the proposed debt is to be incurred, including, but not limited to, the estimated costs of construction or acquisition of buildings, or both; acquisition of land, rights -of -way, water, sewer, or other capacity or connection fees, satisfaction of contractual obligations relating to expenses or the advancement of funds for expenses existing at the time the bonds are issued, architectural, engineering, structural, geotechnical, inspection, legal, fiscal, and financial consultant fees; bond and other reserve funds; discount fees; interest on any bonds of the district estimated to be due and payable within two (2) years of issuance of the bonds; election costs; and all costs of issuance of the bonds, including, but not limited to, fees for Bond Counsel and Special Tax Consultant, costs of obtaining credit ratings, bond insurance premiums, fees for letters of credit, and other credit enhancement costs, and printing costs. For the future bonds proposed to be issued by CFD No. 2018-03 (Uptown Newport), the reserve fund is estimated at approximately nine percent (9.00%) of the principal amount of the bonds, capitalized interest is estimated at approximately seven and a half percent (7.50%) of the principal amount of the bonds, and all other incidental bond issuance expenses are estimated at approximately four and a half percent (4.50%) of the principal amount of the bonds. Actual bond issue assumptions will vary from the above estimates. C. Incidental Expenses to be Included in the Annual Levy of Special Taxes Pursuant to Section 53340 of the Act, the proceeds of any special tax may only be used to pay, in whole or part, the cost of providing public facilities, services and incidental expenses. As defined by the Act, incidental expenses include, but are not limited to, the cost of planning and designing public facilities to be financed, including the cost of environmental evaluations of those public facilities; the costs associated with the creation of the district, issuance of bonds, determination of the amount of taxes, collection of taxes, payment of taxes, or costs otherwise incurred in order to carry out the authorized purposes of the district; any other expenses incidental to the construction, completion, and inspection of the authorized work; and the costs associated with the retirement of existing bonded indebtedness. While the actual cost of administering CFD No. 2018-03 (Uptown Newport) may vary, it is anticipated that the amount of Special Taxes which can be collected will be sufficient to fund at least $30,000 in annual administrative expenses. California Statewide Communities Development Authority December 11, 2018 Community Facilities District No. 2018-03 (Uptown Newport) Page 6 I) FtDAVID TAUSSIG & ASSOCIATES Public Finance and Urban Economics V. RATE AND METHOD OF APPORTIONMENT All of the property located within CFD No. 2018-03 (Uptown Newport), unless exempted by law or by the Rate and Method of Apportionment, shall be taxed for the purpose of providing necessary public facilities to serve CFD No. 2018-03 (Uptown Newport). Pursuant to Section 53325.3 of the Act, the tax imposed "is a special tax and not a special assessment, and there is no requirement that the tax be apportioned on the basis of benefit to any property." The special tax "may be based on benefit received by parcels of real property, the costs of making authorized facilities available to each parcel, or other reasonable basis as determined by the legislative body," although the special tax may not be apportioned on an ad valorem basis pursuant to Article XIIIA of the California Constitution. As shown in Attachment A, the Rate and Method of Apportionment provides information sufficient to allow each property owner within CFD No. 2018-03 (Uptown Newport) to estimate the maximum annual Special Tax he or she will be required to pay. Sections A and B, below, provide additional information on the Rate and Method of Apportionment for CFD No. 2018-03 (Uptown Newport). A. Explanation for Special Tax Apportionment When a community facilities district is formed, a special tax may be levied on each parcel of taxable property within the community facilities district to pay for the construction, acquisition, and rehabilitation of public facilities, to pay for authorized services or to repay bonded indebtedness, or other related expenses incurred by a community facilities district. This special tax must be apportioned in a reasonable manner; however, the tax may not be apportioned on an ad valorem basis. The Act does not require that special taxes be apportioned to individual parcels based on benefit received. However, in order to ensure fairness and equity, benefit principles have been incorporated in establishing the Special Tax rates for CFD No. 2018-03 (Uptown Newport). The major assumption inherent in the Special Tax rates set forth in the Rate and Method of Apportionment is that the level of benefit received from the proposed public facilities is a function of land use and/or product type. For example, in measuring average weekday vehicle trip -ends, the Institute of Transportation Engineer's Trip Generation manual identifies land use as the primary determinant of trip -end magnitude. Larger residential dwelling units typically generate a greater number of trip -ends than do smaller residential dwelling units, and therefore will tend to receive more benefit from road grading, road landscaping and road improvements. Sewer treatment costs are typically based on plant capacity to treat biochemical oxygen demand ("BOD"), suspended solids ("SS"), and the flow rate. Other variables for water and sewer requirements include storage and fire flow requirements, as well as the number of bathrooms and fixture units in the home and the population of the household, which tends to vary directly with the size of a dwelling unit. California Statewide Communities Development Authority December 11, 2018 Community Facilities District No. 2018-03 (Uptown Newport) Page 7 I) FtDAVID TAUSSIG & ASSOCIATES Public Finance and Urban Economics Drainage and flood control requirements generally vary with the amount of impervious ground cover per parcel. It follows that larger lots have more impervious ground cover which will thus create more drainage flows than that of smaller lots, and commercial lots will have more impervious ground cover (e.g., parking areas) than residential lots. In addition, larger buildings typically generate a greater number of "person hours," or the number of hours per week that residents associated with a specific type of land use could potentially use park, trail or recreational facilities. No Special Tax shall be levied on Public Property and Property Owner Association Property in CFD No. 2018-03 provided that no such exemption shall reduce the total Acreage of Taxable Property to less than 12.88 Acres. Based on the types of public facilities that are proposed for CFD No. 2018-03 (Uptown Newport) and the factors described above, the Special Taxes assigned to Developed Properties are generally proportionate to the relative benefits received by them, and, accordingly, the Special Taxes in CFD No. 2018-03 (Uptown Newport) can be considered fair and reasonable. B. Maximum Special Tax Table 1 of the RMA (Attachments A), lists the Fiscal Year 2018-2019 Maximum Special Tax A and Maximum Special Tax B that may be levied against Developed Property within CFD No. 2018-03 (Uptown Newport) to fund the Special Tax Requirements. The Maximum Special Tax A and Maximum Special Tax B for Developed Property are subject to annual escalation. The Fiscal Year 2018-2019 Maximum Special Tax A for each Assessor's Parcel of Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be $50,028 per Acre and is subject to annual escalation. C. Accuracy of Information In order to establish the Maximum Special Tax rates for CFD No. 2018-03 (Uptown Newport) as set forth in the Rate and Method of Apportionment, David Taussig & Associates, Inc. has relied on information regarding land -use types, geographic location, and Taxable Property provided to it by others. David Taussig & Associates, Inc. has not independently verified such data and disclaims responsibility for the impact of inaccurate data, if any, on the Rate and Method of Apportionment for CFD No. 2018-03 (Uptown Newport), including the inability to meet the financial obligations within CFD No. 2018- 03 (Uptown Newport). California Statewide Communities Development Authority December 11, 2018 Community Facilities District No. 2018-03 (Uptown Newport) Page 8 DAVID TAUSSIG iJ -IS ASSOCIATES Public Finance and Urban Economics VI. BOUNDARIES OF COMMUNITY FACILITIES DISTRICT The boundaries of CFD No. 2018-03 (Uptown Newport) include all land on which the Special Taxes may be levied. A reduced scale map showing the boundaries of CFD No. 2018-03 (Uptown Newport) is provided as Attachment B. The full-scale map is on file with the Orange County Recorder's Office and was recorded on November 27, 2018 at 10:16 am in the Orange County Recorder's Office at Book 106 of Maps of Assessment and Community Facilities Districts at Page 28 (Instrument No. 2018-442520), and there has been no change in the boundaries of the Community Facilities District since its formation, nor is any contemplated here. California Statewide Communities Development Authority December 11, 2018 Community Facilities District No. 2018-03 (Uptown Newport) Page 9 I) FtDAVID TAUSSIG & ASSOCIATES Public Finance and Urban Economics VII. GENERAL TERMS AND CONDITIONS A. Substitution of Facilities The descriptions of the Facilities, as set forth herein, are general in their nature. The City will determine the final nature, location, and costs of improvements and facilities upon the preparation of final plans and specifications. The final plans may show substitutes, in lieu of modifications to the proposed work in order to accomplish the work of improvement, and any such substitution shall not be a change or modification in the proceedings as long as the public facilities provide a service substantially similar to that as set forth in this Report. B. Appeals and Interpretations Pursuant to Section F of the Rate and Method of Apportionment for CFD No. 2018-03 (Uptown Newport), any landowner or resident who feels that the amount of the Special Tax levied on his Assessor's Parcel is in error may submit a written appeal to the CFD Administrator or its designee. The CFD Administrator shall review the appeal and if the CFD Administrator concurs, the amount of the Special Tax levied shall be appropriately modified through an adjustment to the Special Tax levy in the following Fiscal Year. Interpretations may be made by CSCDA by ordinance or resolution for purposes of clarifying any vagueness or ambiguity in the Rate and Method of Apportionment for CFD No. 2018-03 (Uptown Newport). C. Prepayment of Special Tax The Special Tax applicable to an Assessor's Parcel in CFD No. 2018-03 (Uptown Newport) may be prepaid according to the prepayment provisions identified in Section H of the Rate and Method of Apportionment for CFD No. 2018-03 (Uptown Newport). California Statewide Communities Development Authority December 11, 2018 Community Facilities District No. 2018-03 (Uptown Newport) Page 10 ATTACHMENT A COMMUNITY FACILITIES DISTRICT NO. 2018-03 OF THE CITY OF NEWPORT BEACH (UPTOWN NEWPORT) RATE AND METHOD OF APPORTIONMENT RATE AND METHOD OF APPORTIONMENT CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of CSCDA Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California ("CFD No. 2018-03") and collected each Fiscal Year commencing in Fiscal Year 2019-2020, in an amount determined by the CSCDA Program Manager, through the application of the Rate and Method of Apportionment as described below. All Taxable Property in CFD No. 2018-03, 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 The terms hereinafter set forth have the following meanings: "Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final subdivision map, parcel map, condominium plan, record of survey, or other recorded County parcel map. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 2018-03 including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax Levy collection schedules (whether by the CSCDA Program Manager or designee thereof or both); the costs of collecting the Special Tax Levies (whether by the County or otherwise); the costs of remitting the Special Tax Levies to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to CSCDA, CFD No. 2018-03, or any designee thereof of complying with arbitrage rebate requirements, or responding to questions from the Securities and Exchange Commission or Internal Revenue Service pertaining to any CFD No. 2018-03 Bonds or any audit of any CFD No. 2018-03 Bonds by the Securities and Exchange Commission or Internal Revenue Service; the costs to CSCDA, CFD No. 2018-03, the Trustee or any designee thereof of complying with CSCDA, CFD No. 2018-03, or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax Levy disclosure statements and responding to public inquiries regarding the Special Tax Levies; the costs to CSCDA, CFD No. 2018-03, or any designee thereof related to an appeal of the levy or application of the Special Tax; the costs associated with the release of funds from an escrow account; and CSCDA's annual administration fees and third California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 1 party expenses. Administrative Expenses shall also include amounts estimated or advanced by CSCDA or CFD No. 2018-03 for any other administrative purposes of CFD No. 2018-03, including, but not limited to, attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tax Levies. "Apartment Floor Area" means all of the square footage of living area within the perimeter of the Apartment Property, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Apartment Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the Building Division of the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Apartment Property. "Apartment Property" means an Assessor's Parcel of Developed Property on which all or any portion of a structure or structures with multiple Apartment Units are located, and such Apartment Units are offered for rent and are not available for sale to individual owners. If Apartment Property is subsequently reclassified as Residential Property, Special Taxes levied on such reclassified Assessor's Parcels shall be modified to match those of Residential Property. "Apartment Unit" means one (1) for -rent residential unit on Apartment Property. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C.a.(2), below. "Authorized Facilities" means the facilities authorized to be financed by CFD No. 2018-03. "Backup Special Tax" means the Backup Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.a.(3), below. "Building Permit" means a permit issued by the City or other governmental agency for the construction of a residential or non-residential building on an Assessor's Parcel. "Buildout" means, for CFD No. 2018-03, that all expected Building Permits for Residential Property, Apartment Property, and Non -Residential Property to be constructed within CFD No. 2018-03 have been issued, as determined by the CSCDA Program Manager. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 2 "CFD No. 2018-03" means California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California. "CFD No. 2018-03 Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one (1) or more series, authorized by CFD No. 2018-03 under the Act and issued by CSCDA and secured by the Special Taxes. "City" means the City of Newport Beach. "Commission" means the governing board of CSCDA. "County" means the County of Orange. "CSCDA" means the California Statewide Communities Development Authority. "CSCDA Program Manager" means the program manager for CSCDA, or its designee. "Developed Property" means, for each Fiscal Year, all Taxable Property in Tax Zone 1 and Tax Zone 2, for which a Building Permit for new construction was issued after January 1, 2018 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied. For purposes of this Rate and Method of Apportionment, any Developed Property for which Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area is removed, shall be considered Developed Property under the previously assigned Land Use Class with the previously assigned Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area, until a new Building Permit is issued, and a new Land Use Class and Special Tax can be assigned. Notwithstanding the above, a reclassification shall not occur, unless the CSCDA Program Manager determines that the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after such reclassification, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds is each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. "Developer" means TSG-Parcel 1, LLC or Uptown Newport Jamboree, LLC and its successors and assigns. The term "successors" does not refer to the successors to all or any portion of the property within CFD No. 2018-03 unless the new property owner receives an assignment of the Developer's rights and obligations described in an assignment agreement or similar agreement. "Dwelling Unit" means one (1) for -sale residential unit of any configuration, including, but not limited to, a single family attached or detached dwelling, condominium, mobile home, or otherwise, but excluding Apai tiiient Units on Apartment Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 3 "Final Mapped Property" means, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, and Taxable Public Property, located in a Final Subdivision as of January 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied, but no earlier than January 1, 2018. "Final Subdivision" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, approved by the County 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, in either case, creates individual lots for which Building Permits may be issued without further subdivision. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution, or other instrument pursuant to which CFD No. 2018-03 Bonds are issued, as modified, amended, and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the land use classes listed in Table 1 below. "Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C.a.1 below, that can be levied by CSCDA in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Non -Residential Floor Area" means the total gross building square footage of non- residential property lying within an Assessor's Parcel for which one (1) or more non- residential Building Permits have been issued. Such square footage shall be measured from outside wall to outside wall, exclusive of overhangs, porches, patios, carports, or similar spaces attached to the building but generally open on at least two (2) sides, as determined by reference to the Building Permit(s) issued for that Assessor's Parcel, or if these are not available, as otherwise determined by the CSCDA Program Manager. "Non -Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit permitting the construction of one (1) or more non-residential units or facilities has been issued by the City or other governmental agency. "Outstanding Bonds" means all CFD No. 2018-03 Bonds which remain outstanding under the Indenture. "Property Owner Association Property" means, for each Fiscal Year (i) any property within the boundaries of CFD No. 2018-03 that was owned by a property owner association, including any master or sub -association, as of January 1 of the prior Fiscal Year, (ii) any property located in a Final Subdivision that was recorded as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determined from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street, or (iii) any property which, as of the May 1 California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 4 preceding the Fiscal Year for which the Special Tax is being levied, has been conveyed to a property owner's association, including any master or sub -association, provided evidence of such conveyance is submitted to the CSCDA Program Manager by May 1 preceding the Fiscal Year for which the Special Tax is being levied. The total number of acres to be classified as Property Owner Association Property or Public Property, shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax Levy within Tax Zone 1 and Tax Zone 2, to the Assigned Special Tax or the Maximum Special Tax of the respective Tax Zone, is equal for all Assessor's Parcels of Developed Property. For Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property categories, "Proportionately" means that the ratio of the actual Special Tax Levy per Acre within Tax Zone 1 and Tax Zone 2, to the Maximum Special Tax per Acre of their respective Land Use Class and Tax Zone, is equal. "Public Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2018-03 that, as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied, was (i) owned by, irrevocably offered, or dedicated to the federal government, the State, the County, the City, or any local government or other public agency, provided that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use; or (ii) encumbered by a public utility easement making impractical its use for any purpose other than that set forth in the easement. The total number of acres to be classified as Property Owner Association Property or Public Property shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Rate and Method of Apportionment" means this Rate and Method of Apportionment for CFD No. 2018-03. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Dwelling Unit. "Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued by the Building Division of the City for purposes of constructing one (1) or more Dwelling Units. Residential Property does not include Apartment Property for purposes of this Rate and Method of Apportionment. "Special Tax" or "Special Taxes" means the special tax to be levied in each Fiscal Year to fund the Special Tax Requirement for Facilities. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 5 "Special Tax Levy" or "Special Tax Levies" means the Special Tax to be levied in each Fiscal Year on Assessor's Parcel of Taxable Property to fund the Special Tax Requirement for Facilities, as applicable. "Special Tax Requirement" means that amount of Special Taxes required, if any, in any Fiscal Year for CFD No. 2018-03 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the CFD No. 2018-03 Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2018-03 Bonds; (iii) pay all or a portion of the Administrative Expenses as determined by the CSCDA Program Manager; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of Authorized Facilities to the extent that the inclusion of such amount does not increase the Special Tax Levy on Undeveloped Property; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax Levy, as determined by the CSCDA Program Manager pursuant to the Indenture. "State" means the State of California. "Tax Zone" means one of the two (2) mutually exclusive geographic areas defined below and identified in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 1" means the geographic area specifically identified as Zone 1 in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 2" means the geographic area specifically identified as Zone 2 in Attachment 1 of this Rate and Method of Apportionment. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2018-03 that are not exempt Property Owner Association Property or exempt Public Property or other property exempted pursuant to Section E herein. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E herein. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E herein. "Total Floor Area" means the sum of the Residential Floor Area, Apartment Floor Area, and the Non- Residential Floor Area located on an Assessor's Parcel. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, or Taxable Public Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 6 B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2018-03 shall be classified as Developed Property, Final Mapped Property, Undeveloped Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, or Taxable Public Property and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D below. C. MAXIMUM SPECIAL TAX RATE a. Developed Property (1) Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax and (ii) the amount derived by application of the Backup Special Tax. (2) Assigned Special Tax Residential Property shall be assigned to Land Use Classes 1 and 2 as listed in Table 1 below based on the description associated with each Dwelling Unit or Apartment Unit and its determined Tax Zone. Non -Residential Property shall be assigned to Land Use Class 3 as listed in Table 1 below based on the description associated with square feet of Non -Residential Floor Area and it's determined Tax Zone. The Assigned Special Tax that shall be levied in Fiscal Year 2019-2020 for each Assessor's Parcel classified as Developed Property is shown on the following page in Table 1. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 7 TABLE 1 Assigned Special Tax for Developed Property CFD No. 2018-03 Fiscal Year 2019-2020 LAND USE CLAS 1 ESCRIPTION ASSIGNED SPECIAL TAX • ` - ASSIGNED SPECIAL TAX h. 1 Residential Property $750 per Dwelling Unit $950 per Dwelling Unit 2 Apartment Property $0 per Apartment Unit $260 per Apartment Unit 3 Non -Residential Property $5.35 per Square Foot of Non -Residential Floor Area $5.35 per Square Foot of Non -Residential Floor Area (3) Backup Special Tax The Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $50,028 per Acre of the Assessor's Parcel. If a Final Subdivision includes Assessor's Parcels of Taxable Property for which Building Permits have been issued, exclusive of Taxable Property Owner Association Property and Taxable Public Property, then the Backup Special Tax for each residential Dwelling Unit shall be calculated according to the following formula: Residential Dwelling Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Residential Floor Area/(Total Floor Area)) / Number of residential Dwelling Units) In this case, the Backup Special Tax for each Apartment Unit shall be calculated according to the following formula: Apartment Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Apartment Floor Area/(Total Floor Area)) / Number of Apartment Units) Finally, the Backup Special Tax for each square foot of Non -Residential Floor Area shall be calculated according to the following formula: Non -Residential Square Foot Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Non -Residential Floor Area/(Total Floor Area)) / Non -Residential Floor Area) California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 8 Furthermore, all Assessor's Parcels within CFD No. 2018-03 shall be relieved simultaneously and permanently from the obligation to pay and disclose the Backup Special Tax if the CSCDA Program Manager calculates that (i) the annual debt service required for the Outstanding Bonds, when compared to the Assigned Special Tax that shall be levied against all Assessor's Parcels of Developed Property in CFD No. 2018-03, results in 110% debt service coverage (i.e., the Assigned Special Tax that shall be levied against all Developed Property in CFD No. 2018-03 in each remaining Fiscal Year based on the then existing development is at least equal to the sum of (a) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (b) the Administrative Expenses as defined in Section A herein), or (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it shall not issue any additional CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Assigned Special Tax in CFD No. 2018-03. (4) Increase in the Assigned Special Tax and Backup Special Tax On each July 1, commencing on July 1, 2020, the Assigned Special Tax and the Backup Special Tax shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. (5) Multiple Land Use Classes In some instances, an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Special Tax levied on an Assessor's Parcel shall be the sum of the Special Tax for all Land Use Classes located on that Assessor's Parcel. Furthermore, if only a portion of Building Permits have been issued on an Assessor's Parcel, the remaining portion of the Assessor's Parcel shall be considered Final Mapped Property. The CSCDA Program Manager's allocation to each type of property shall be final. b. Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property (1) Maximum Special Tax The Fiscal Year 2019-2020 Maximum Special Tax for each Assessor's Parcel of Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be $50,028 per Acre. (2) Increase in the Maximum Special Tax On each July 1, commencing on July 1, 2020, the Maximum Special Tax for Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property within each respective Tax Zone, shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 9 D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2019-2020 and for each following Fiscal Year, the CSCDA Program Manager shall determine the Special Tax Requirement and shall (i) levy 100% of the Assigned Special Taxes on Developed Property, and (ii) levy the remaining Special Taxes as prioritized below until the total Special Taxes levied equal the Special Tax Requirement. The Special Taxes shall be levied in each Fiscal Year as follows: 1. Annual Levy First: The Special Tax shall be levied on each Assessor's Parcel of Residential Property and Apaitiiient Property, within all Tax Zones, in an amount equal to 100% of the applicable Assigned Special Tax for Residential Property and Apartment Property respectively. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied on each Assessor's Parcel of Non -Residential Property, within all Tax Zones, until (i) the total Special Tax levied under the first two steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Non -Residential Property equals 100% of the applicable Assigned Special Tax, whichever comes first. Third: If additional monies are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Final Mapped Property, within all Tax Zones, until (i) the total Special Tax levied under the first three steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Final Mapped Property equals 100% of the applicable Maximum Special Tax, whichever comes first. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, within all Tax Zones, until (i) the total Special Tax levied under the first four steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Undeveloped Property equals 100% of the applicable Maximum Special Tax, whichever occurs first. Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property for which the Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to 100% of the Maximum Special Tax for each such Assessor's Parcel of Developed Property, within all Tax Zones, until (i) the total Special Tax levied under the first five steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Developed Property equals 100% of the Maximum Special Tax for Developed Property, whichever occurs first. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 10 Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property, within all Tax Zones, until (i) the total Special Tax levied under the first six steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Property Owner Association Property equals 100% of the Maximum Special Tax for Property Owner Association Property, whichever occurs first. Seventh: If additional monies are needed to satisfy the Special Tax Requirement after the first six steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property, within all Tax Zones, until (i) the total Special Tax levied under the first seven steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Public Property equals 100% of the Maximum Special Tax for Taxable Public Property, whichever occurs first. Notwithstanding the above, the CSCDA Program Manager or its designee may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax in the first step (above), when (i) CSCDA is no longer required to levy the Special Tax beyond the first step (above) in order to meet the Special Tax Requirement; and (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it will not issue any additional CFD No. 2018-03 Bonds (except refunding bonds), to be supported by the Special Tax. E. EXEMPTIONS No Special Tax shall be levied on Public Property or Property Owner Association Property in CFD No. 2018-03 provided that no such exemption shall reduce the total Acreage of Taxable Property to less than 12.88 Acres. Tax-exempt status shall be assigned by the CSCDA Program Manager in the chronological order in which property in CFD No. 2018-03 becomes Public Property or Property Owner Association Property. However, should an Assessor's Parcel of Public Property or Property Owner Association Property no longer be classified as tax-exempt, it will, from that point forward, be subject to the Special Tax. Furthermore, any Assessor's Parcel designated as Public Property or Property Owner Association Property that cannot be exempt from the Special Tax because such exemption would reduce the Acreage of all Taxable Property within CFD No. 2018-03 to less than 12.88 Acres shall be designated as Taxable Public Property or Taxable Property Owner Association Property. Prior to sixty (60) days before the issuance of a first series of CFD No. 2018-03 Bonds, the CSCDA Program Manager may increase or decrease the final number of minimum taxable Acres in CFD No. 2018-03 to better reflect the actual tax-exempt acreage within CFD No. 2018-03. However, notwithstanding the above, the final number of taxable Acres in CFD No. 2018-03 shall not be decreased if it causes an increase in the Special Tax levied on any existing Assessor's Parcel of Developed Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 11 F. REVIEW/APPEAL PROCESS Any taxpayer may file a written appeal of the Special Tax on his/her property with CSCDA, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CSCDA Program Manager or its designee shall review the appeal, meet with the appellant if the CSCDA Program Manager deems necessary, and advise the appellant of its determination within sixty (60) days after receipt of the appeal. If the CSCDA Program Manager agrees with the appellant, the CSCDA Program Manager shall make a recommendation to CSCDA to eliminate or reduce the Special Tax on the appellant's property or to provide a refund to appellant. The approval of CSCDA or its designee must be obtained prior to any such elimination or reduction. If the CSCDA Program Manager disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has thirty (30) days in which to appeal to CSCDA by filing a written notice of appeal with the CSCDA Program Manager, provided that the appellant is current in his/her payments of the Special Taxes. The second appeal must specify the reasons for the appellant's disagreement with the CSCDA Program Manager's determination. The CSCDA Program Manager shall schedule the appeal to be heard before CSCDA within sixty (60) days after receipt of the second appeal. Interpretations may be made by CSCDA, without Resolution or Ordinance of the Commission, for purposes of clarifying any vagueness or ambiguity as it relates to the Special Taxes, the Rate and Method of Apportionment, Land Use Classes, or any other definition applicable to CFD No. 2018-03. Without Commission approval, the CSCDA Program Manager may make minor, non - substantive administrative and technical changes to the provisions of this document that do not materially affect the rate, method of apportionment, and manner of collection of the Special Tax for purposes of administrative efficiency or convenience or to comply with new applicable federal, state, or local law. G. MANNER OF COLLECTION The Special Tax Levy will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2018-03 may directly bill the Special Tax Levy, may collect Special Tax Levies 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. H. PREPAYMENT OF SPECIAL TAX Under this Rate and Method of Apportionment, an Assessor's Parcel within CFD No. 2018-03 is permitted to prepay the Special Tax. The obligation of the owner of an Assessor's Parcel to pay the Special Tax may be fully or partially prepaid and permanently satisfied as described herein, California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 12 provided that a prepayment may be made only for Assessor's Parcels of Developed Property, or for an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2019, and only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CSCDA Program Manager with written notice of intent to prepay. Within thirty (30) days of receipt of such written notice, the CSCDA Program Manager shall notify such owner of the Special Tax Prepayment Amount (defined below) for such Assessor's Parcel. The CSCDA Program Manager may charge such owner a reasonable fee for providing this service. If there are Outstanding Bonds, prepayment must be made not less than thirty (30) days prior to a date that notice of redemption of CFD No. 2018-03 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The following additional definitions apply to this Section H: "CFD Public Facilities Costs" means either $7,500,000 in 2018 dollars, which shall increase by the Construction Inflation Index on July 1, 2019, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CSCDA Program Manager as sufficient to provide funding for the Authorized Facilities under the authorized bonding program for CFD No. 2018- 03, or (ii) shall be determined by CSCDA concurrently with a covenant that it shall not issue any more CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Special Tax levy under this Rate and Method of Apportionment. "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 month of December in 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 CSCDA Program Manager 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 Costs minus (i) costs of Authorized Facilities previously paid from the Improvement Fund, (ii) monies currently on deposit in the Improvement Fund available to pay costs of Authorized Facilities, (iii) monies currently on deposit in an escrow fund established pursuant to the Indenture and expected to be available to fund Authorized Facilities and (iv) the amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of these funds. "Improvement Fund" means a fund or account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct Authorized Facilities. "Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 13 1. Prepayment in Full The Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Equals Special Tax Prepayment Amount As of the proposed date of prepayment, the Special Tax Prepayment Amount shall be calculated according to the following paragraphs: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2018, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the Building Permit which has already been issued for such Assessor's Parcel. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Tax levy for CFD No. 2018-03 based on the Assigned Special Tax for Developed Property which could be levied on all expected development assuming Buildout of CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the total estimated Backup Special Taxes at Buildout for the entire CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be redeemed (the "Bond Redemption Amount"). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Previously Issued Bonds to be redeemed (the "Redemption Premium"). 6. Compute the current Future Facilities Costs. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 14 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Previously Issued Bonds. 9. Determine the Special Tax levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 10. Compute the minimum amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of the Special Tax Prepayment Amount, less any interest earnings attributed to the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount"). 12. The administrative fees and expenses of CFD No. 2018-03 are as calculated by the CSCDA Program Manager and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 2018-03 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% of the reserve requirement (as defined in the Indenture). 14. If any capitalized interest for the Previously Issued 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 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment date (the "Capitalized Interest Credit"). 15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11, and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Special Tax Prepayment Amount"). California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 15 2. Prepayment in Part The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP = (PE — A) x F + A. These terms have the following meaning: PP = the partial prepayment PE = the Special Tax Prepayment Amount calculated according to Section H.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. A = the Administration Fees and Expenses from Section H.1. The owner of any Assessor's Parcel who desires such prepayment shall notify the CSCDA Program Manager of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. With respect to any Assessor's Parcel that is partially prepaid, CSCDA shall (i) distribute the funds remitted to it according to Section H.3, and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D. 3. General Provisions Applicable to the Prepayment of Special Tax (a). Use of the Special Tax Prepayment Amount The Special Tax Prepayment Amount, less the Administrative Fees and Expenses calculated according to Sections H.1 and H.2 which shall be retained by CFD No. 2018- 03, and less the Future Facilities Amount calculated according to Section H.1 which shall be deposited into the Improvement Fund, shall be deposited into specific funds established under the Indenture, to fully or partially redeem as many Outstanding Bonds as possible, and, if amounts are less than $5,000, to make debt service payments on the Outstanding Bonds (collectively designated as the "Bond Retirement Funds"). (b). Full Prepayment of Special Tax Upon confirmation of the payment of the current Fiscal Year's entire Special Tax obligation, the CSCDA Program Manager may remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 16 Assessor's Parcel that is prepaid in accordance with Section H.1, the CSCDA Program Manager shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, and the obligation to pay the Special Tax for such Assessor's Parcel shall cease. (c). Partial Prepayment of Special Tax With respect to any Assessor's Parcel that is partially prepaid, the CSCDA Program Manager shall (i) distribute or cause to be distributed the funds remitted to it according to Section H.2. and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's parcel, equal to the outstanding percentage (1.00 — F) of the Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D herein. (d). Debt Service Coverage Notwithstanding the foregoing, no prepayment of the Special Tax shall be allowed unless the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after the proposed prepayment, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. I. TERM OF SPECIAL TAX The Special Tax shall be levied until the final series of CFD No. 2018-03 Bonds have matured, provided that the Special Tax shall not be levied after Fiscal Year 2069-2070. The Special Taxes will cease to be levied in an earlier Fiscal Year if the CSCDA Program Manager has determined that all required interest and principal payments on the CFD No. 2018-03 Bonds have been paid and CSCDA has covenanted that it will not issue any more CFD No. 2018-03 Bonds (other than refunding Bonds) to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 17 ATTACHMENT 1 PROPOSED BOUNDARIES & IDENTIFICATION OF TAX ZONES OF CFD NO. 2018-03 SHEET 1 OF 1 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA For particulars of lines and dimensions. reference is made to the parcels maps of the Orange County Assessor. California. and to Tract map No. 17763 recorded on June 19, 2015 as insvument No. 201500320061 at Pages 17 through 23 in Book 937 of maps in the office of the County Recorder of Orange County, California. LEGEND Proposed Boundaries of Califomia Statewide Communities Development • Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, California 11111111 Parcel Line Tax Zone 1 Tax Zone 2 445-13n-nn Assessor Parcel Number F .EPA0.ED BY WIYID TA U9510 ANO AiSOC IATE9% INC. (1) Filed in the office of the Secretary of California Statewide Communities Development Authority this day of , 2018. Secretary, California Statewide Communities Development Authority (2) I hereby certify that the within map showing proposed boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport). City of Newport Beach. County of Orange, Stale of California, was approved by the Commission of the California Statewide Communities Development Authority at a regular meeting thereof. held on this day of , 2018, by its resolution No. Secretary, California Statewide Communities Development Authority (3) Filed this day of 2018, at the hour of o'clock _ m., in Book of Maps of Assessment. and Community Facilities Districts at page and as Instrument No. in the office of the County Recorder of Orange County. State of California_ Hugh Nguyen Clerk -Recorder, County of Orange By Deputy Fee ATTACHMENT B COMMUNITY FACILITIES DISTRICT NO. 2018-03 OF THE CITY OF NEWPOR BEACH (UPTOWN NEWPORT) BOUNDARY MAP 104) SHEET 1 OF 1 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA 445-134-17 445-134- 445-134-29 • gima • 22Nr 445 133-07 For particulars of lines and dimensions, reference is made to the parcels maps of the Orange County Assessor, California, and to Tract map No. 17763 recorded on June 19, 2015 as instrument No. 201500320061 at Pages 17 through 23 in Book 937 of maps in the office of the County Recorder of Orange County, California. LEGEND Proposed Boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, California Parcel Line Tax Zone 1 Tax Zone 2 445-13n-nn Assessor Parcel Number PREPARED BY DAVID TAUSSIG AND ASSOCIATES, INC. (1) Filed in the office of the Secretary of California Statewide Communities Development Authority this 15t" day of /JaJe..400e.r , 2018. Secrets '"'o -'a Statewide Communities Development Authority (2) I hereby certify that the within map showing proposed boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California, was approved by the Commission of the California Statewide Communities Development Authority at a regular meeting thereof, held on this 15t" day of /1/4) akie..."4ocr , 2018, by its resolution No. 18SC,1P -1 tv Secretary, r" .ten'- " tatewide Communities Development Authority R �� ;ems �� s y C ,, , 2M�- Snarl MmdnirM r O-CV EW pmcnvr A1/4-nioec . (3) Filed this 2?+}) day of &ode , 2018, at the hour of 1 O. I b o'clock / -m. in Book 010 of Maps of Assessment and Community Facilities Districts at page r+ and as Instrument No. 00"8- y'125 20 in the office of the County Recorder of Orange County, State of California. Hugh Nguyen Clerk -Recorder, County of Orange By attut- S Fee 6 . o-o Deputy DAVID TAUSSIG I j PI &ASSOCIATES Public Finance Public Private Partnerships Urban Economics Clean Energy Bonds 100 West San Fernando Suite 430 San Jose, CA 95113 Phone (800) 969-4382 CERTIFICATE RE PREPARATION AND DISTRIBUTION OF BALLOT CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA The forms of ballot in respect of the special mailed -ballot elections to be held by the Commission of the California Statewide Communities Development Authority (the "Authority") on Thursday, December 20, 2018, for its Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "District"), were prepared by Orrick, Herrington & Sutcliffe LLP, as Bond Counsel. The undersigned hereby certifies that, on behalf of the Secretary of the Authority, the undersigned complied with the requirements for delivering the ballot for the special mailed - ballot election by delivering on December 3, 2018, by prepaid Federal Express, via next day service, to the landowners qualified to vote in the District at the special mailed -ballot elections, its ballots. The ballots were each sent to the landowners at the following address: Shopoff Realty Investments, L.P. 2 Park Plaza, Suite 700 Irvine, CA 92614 The undersigned hereby certifies that attached hereto, marked Exhibit A, are the true and correct copies of the ballots, in the forms delivered to the landowners. Dated: December 3, 2018 ORRICK, HERRINGTON & SUTCLIFFE LLP By: 4127-0366-6201.2 EXHIBIT A FORM OF SPECIAL ELECTION BALLOT A-1 4127-0366-6201.2 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA SPECIAL ELECTION BALLOT (Mailed -Ballot Election) This ballot is for the use of the authorized representative of the following owner of land within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "Community Facilities District"): Name of Landowner TSG-Parcel 1, LLC Number of Acres Owned Total Votes 2.61 3 According to the provisions of the Mello -Roos Community Facilities Act of 1982, and resolutions of the Commission (the "Commission") of the California Statewide Communities Development Authority (the "CSCDA"), the above -named Landowner is entitled to cast the number of votes shown above under the heading "Total Votes," representing the total votes for the property owned by the Landowner. In order to be counted, this ballot must be executed and certified below and be returned, by mail or in person, to the CSCDA Secretary, c/o Besorah Won, Esq., Orrick, Herrington & Sutcliffe LLP, 777 S. Figueroa Street, Suite 3200, Los Angeles, CA 90017, prior to 2:00 p.m. on Thursday, December 20, 2018. Mailing by that time will not be sufficient. This ballot must be received by the time stated in order to be counted. 4160-8275-4584 AN "X" OR OTHER MARK WILL CAST ALL VOTES ASSIGNED TO THIS BALLOT. BALLOT MEASURE Shall the Commission (the "Commission") of the California Statewide Communities Development Authority, by and through its Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "District"), be authorized to annually levy a special tax within the District to finance the acquisition and construction of certain public capital improvements (the "Improvements") and certain utility undergrounding (the "Undergrounding"), and be authorized to incur debt in the principal amount of not to exceed eight million eight hundred thousand dollars ($8,800,000) to pay for the Improvements and Undergrounding, including the payment, using the proceeds of the special tax collections, of principal of and interest on the debt and including the repayment of funds advanced for the authorized purposes of the Community Facilities District all as described in the Commission's Resolution of Formation and in the Commission's Resolution Deeming it Necessary to Incur Bonded Indebtedness, both adopted December 20, 2018; and shall the fiscal year 2018-19 appropriations limit for the District be established in the amount of eight hundred fifty thousand dollars ($850,000)? MARK "YES" OR "NO" WITH AN "X": YES NO 4160-8275-4584 Certification for Special Election Ballot The undersigned declares under penalty of perjury under the laws of the State of California that such person is the authorized representatives of the above -named Landowner and is legally authorized and entitled to cast this ballot on behalf of the above -named Landowner and to bind the Landowner thereby, and that this ballot is signed by the undersigned as of the date set forth below. Date: TSG-Parcel 1, LLC, a Delaware limited liability company By: Name: Title: [SIGNATURE TO BE NOTARIZED] 4160-8275-4584 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA SPECIAL ELECTION BALLOT (Mailed -Ballot Election) This ballot is for the use of the authorized representative of the following owner of land within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "Community Facilities District"): Name of Landowner Uptown Newport Jamboree, LLC Number of Acres Owned Total Votes 13.19 14 According to the provisions of the Mello -Roos Community Facilities Act of 1982, and resolutions of the Commission (the "Commission") of the California Statewide Communities Development Authority (the "CSCDA"), the above -named Landowner is entitled to cast the number of votes shown above under the heading "Total Votes," representing the total votes for the property owned by the Landowner. In order to be counted, this ballot must be executed and certified below and be returned, by mail or in person, to the CSCDA Secretary, c/o Besorah Won, Esq., Orrick, Herrington & Sutcliffe LLP, 777 S. Figueroa Street, Suite 3200, Los Angeles, CA 90017, prior to 2:00 p.m. on Thursday, December 20, 2018. Mailing by that time will not be sufficient. This ballot must be received by the time stated in order to be counted. 4160-8275-4584 AN "X" OR OTHER MARK WILL CAST ALL VOTES ASSIGNED TO THIS BALLOT. BALLOT MEASURE Shall the Commission (the "Commission") of the California Statewide Communities Development Authority, by and through its Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "District"), be authorized to annually levy a special tax within the District to finance the acquisition and construction of certain public capital improvements (the "Improvements") and certain utility undergrounding (the "Undergrounding"), and be authorized to incur debt in the principal amount of not to exceed eight million eight hundred thousand dollars ($8,800,000) to pay for the Improvements and Undergrounding, including the payment, using the proceeds of the special tax collections, of principal of and interest on the debt and including the repayment of funds advanced for the authorized purposes of the Community Facilities District all as described in the Commission's Resolution of Formation and in the Commission's Resolution Deeming it Necessary to Incur Bonded Indebtedness, both adopted December 20, 2018; and shall the fiscal year 2018-19 appropriations limit for the District be established in the amount of eight hundred fifty thousand dollars ($850,000)? MARK "YES" OR "NO" WITH AN "X": YES NO 4160-8275-4584 Certification for Special Election Ballot The undersigned declares under penalty of perjury under the laws of the State of California that such person is the authorized representatives of the above -named Landowner and is legally authorized and entitled to cast this ballot on behalf of the above -named Landowner and to bind the Landowner thereby, and that this ballot is signed by the undersigned as of the date set forth below. Date: Uptown Newport Jamboree, LLC, a Delaware limited liability company By: Name: Title: [SIGNATURE TO BE NOTARIZED] 4160-8275-4584 RESOLUTION NO. 18 SCIP-117 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY A RESOLUTION OF FORMATION ESTABLISHING CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FA CIL.ITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AND PROVIDING FOR THE LEVY OF A SPECIAL TAX THEREIN TO FINANCE THE CONSTRUCTION AND ACQUISITION OF CERTAIN PUBLIC CAPITAL IMPROVEMENTS AND CERTAIN UTILITY UNDERGROUNDING WHEREAS, the Commission (the "Commission") of the California Statewide Communities Development Authority (the "Authority") duly adopted its Resolution No. 18SCIP- 110 (the "Resolution of Intention") on November 15, 2018 wherein the Commission declared its intention to and proposed to establish a community facilities district within the jurisdictional boundaries of the City of Newport Beach (the "Local Agency"), to be designated and known as "California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, .County of Orange, State of California" (the "Community Facilities District"), to authorize levying a special tax therein to finance the acquisition and construction of certain public capital improvements (the "Improvements") and certain utility undergrounding (the "Undergrounding"), all under and pursuant to the terms and provisions of the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (beginning with Section 53311) of the Government Code of the State of California (the "Act"); and WHEREAS, the resolution of the Local Agency approving formation of the Community Facilities District and the joint community facilities agreement with the Authority are attached as Exhibit A to the Resolution of Intention and incorporated therein by reference and such resolution is incorporated herein by reference (the "Local Agency Resolution"); and WHEREAS, the Local Agency Resolution describes the project within the proposed Community Facilities District and approves a joint community facilities agreement under the authority of Section 53316.2 of the Act and the forms of such joint community facilities agreements are attached to or embodied in such Local Agency Resolution; and WHEREAS, the City of Newport Beach's Local Agency Resolution embodies a joint community facilities agreement and further provides that the adoption of a Resolution of Intention for the Community Facilities District by the Commission will act as an acceptance, by the Authority, of the terms of the joint community facilities agreement embodied in the City of Newport Beach's Local Agency Resolution; and WHEREAS, the Resolution of Intention fixed a time and place for a public protest hearing (the "Public Hearing") to be held by the Commission to consider the establishment of the Community Facilities District, the authorization of the special tax to be levied and collected within the Community Facilities District (the "Special Tax"), the proposed rate, method of apportionment and manner of collection of the Special Tax; the Improvements and the Undergrounding proposed 1 4125-9421-9801.3 to be authorized to be paid for with the proceeds of the Special Tax collections, the establishment of an appropriations limit for the Community Facilities District, and all other matters set forth in the Resolution of Intention; and WHEREAS, in the Resolution of Intention the Commission approved the boundary map, as provided for and described in California Streets and Highways Code Section 3110, entitled "Proposed Pounrlaries of (�'alifom a State 1,Nide communities rleVelnnment ❑ utl�nrity (-'nmmunity • •t7�vOS %_4 ._ t,L..i..a..a..w of vu••iva aa.0 .2 cuw rr fl4 communities ua.a(1S_ L., r i.. �+l.+.i1%..c( rz u�i.v..LJ V+(aajAauaaa(-y Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" (the "Proposed Boundary Map"), which Proposed Boundary Map was recorded on November 27, 2018, in the Book of Maps of Assessment and Community Facilities Districts maintained by the County Recorder of the County of Orange in Book 106 at Page 28, and as Instrument No. 2018-442520; and WHEREAS, Exhibit E to the Resolution of Intention, and incorporated therein by reference, is the rate and method of apportionment of the Special Tax for the Community Facilities District (the "Initial RMA"); and WHEREAS, the Commission now desires to amend and restate the Initial RMA to reduce the maximum special taxes for residential property; and WHEREAS, there has been submitted to the Commission an amended and restated rate and method of apportionment of the Special Tax for the Community Facilities District (the "Amended RMA"); and WHEREAS, pursuant to the Resolution of Intention, the Authority's special tax consultant, David Taussig & Associates (the "Special Tax Consultant"), on behalf of the City, submitted a report (the "Hearing Report") to the Commission on the need for and estimated cost of the proposed Improvements and the Undergrounding to be financed; and WHEREAS, the Commission has reviewed the Hearing Report, and it is incorporated herein by this reference and made a part of the record of the Public Hearing; and WHEREAS, pursuant to the Resolution of Intention, the Public Hearing was set by the Commission for Thursday, the 20th day of December, 2018, at the hour of 2:00 o'clock P.M., at the offices of the California State Association of Counties, 1100 K Street, Sacramento, California 95814 (the "Public Hearing"); and WHEREAS, Bond Counsel has filed a certificate with the Commission establishing that proper and timely notice of the Public Hearing was published in the Orange County Register and that proper and timely notice was mailed to the landowners within the Community Facilities District; and WHEREAS, at or shortly after the time set forth in the Notice of Public Hearing, the Commission held the Public Hearing at the place designated to consider the establishment of the Community Facilities District, the proposed rate, method of apportionment and manner of collection of the Special Tax, the Improvements and the Undergrounding proposed to be financed, the establishment of the appropriations limit, and all other matters set forth in the Resolution of Intention; and 2 4125-9421-9801.3 WHEREAS, at the Public Hearing all persons interested, including all taxpayers, property owners and registered voters within the Community Facilities District were given an opportunity to appear and to be heard, and the testimony of all interested persons and all taxpayers, property owners and registered voters for or against the establishment of the Community Facilities District and the levy of the special tax, the extent of the Community Facilities District, the financing of the Improvements and the Undergrounding, the establishment of the appropriations limits, or any other matters set forth in the Resolution or intention, was Heard and considered; and WHEREAS, all registered voters residing within the boundaries of the proposed Community Facilities District, if any, and all owners of land within the boundaries of the proposed Community Facilities District that would not be exempt from the proposed levy of Special Tax, were allowed to submit written protests to any aspect of the proposals contained in the Resolution of Intention, and permitted to withdraw their protests prior to the close of the Public Hearing; and WHEREAS, the Commission is fully advised in this matter; NOW THEREFORE, BE IT RESOLVED by the Commission of the California Statewide Communities Development Authority, as follows: Section 1. The above recitals are true and correct, and the Commission so finds and determines. Section 2. Except to the extent inconsistent with this Resolution, the Resolution of Intention is reaffirmed, and its provisions and findings are, to that same extent, incorporated herein by this reference. Section 3. The Commission finds and determines that as of the close of the Public Hearing, written protests, if any, to the establishment of the Community Facilities District, or to the levy of the Special Tax, or to the extent of the Community Facilities District, or to the acquisition and construction of any of the Improvements or the Undergrounding described in the Resolution of Intention, or to the establishment of the appropriations limit for the Community Facilities District, or to any other matters contained in the Resolution of Intention, were submitted by less than 50 percent of the registered voters, or by less than six of the registered voters, if any, residing within the Community Facilities District. Similarly, the Commission finds that at the close of the Public Hearing, such written protests, if any, were submitted by the owners of less than one-half of the area of land in the territory proposed to be included in the Community Facilities District and not exempt from the Special Tax. Thus, the Commission finds that it is not precluded, by the Act, from proceeding further in this matter. The Commission hereby further orders and determines that all protests to the establishment of the Community Facilities District, or the levy of the Special Tax proposed to be levied therein, or the extent of the Community Facilities District, or the acquisition and construction of any of the described Improvements or the Undergrounding, or the establishment of the appropriations limit for the Community Facilities District, that may have been submitted, have been considered and are hereby overruled. Section 4. The Improvements and the Undergrounding authorized to be financed by and through the Community Facilities District are those identified in each Local Agency Resolution and more particularly described on Exhibit C attached to the Resolution of 3 4125-9421-9801.3 Intention, which by this reference is incorporated herein and made a part of this Resolution. All of the Improvements and the Undergrounding to be financed have an estimated useful life of five (5) years or longer, and are public facilities that a Local Agency or another governmental entity is authorized by law to construct, own or operate, or to which they may contribute revenue, and that are necessary to meet increased demands placed upon the Local Agencies or upon other local government agencies as a result of development occurring and anticipated to occur within the Facilities Th Improvements n the Undergrounding be financed need Community r aCAlltleS District. The liIlpro vt:i LleIILJ and to v�. financed need not be physically located within the Community Facilities District. Section 5. The cost of financing the Improvements and the Undergrounding includes incidental expenses comprising the costs of engineering, planning, design, construction staking, materials testing and coordination of the Improvements and the Undergrounding, together with the costs of environmental evaluations thereof, and all costs associated with the creation of the Community Facilities District, the issuance of any bonds, the determination of the amount of any special taxes or the collection or payment of any special taxes and costs otherwise incurred in order to carry out the authorized purposes of the Community Facilities District, together with any other expenses incidental to the Improvements and the Undergrounding. A representative list of incidental expenses proposed to be incurred are set forth on Exhibit D attached to the Resolution of Intention, which by this reference is incorporated herein and made a part of this Resolution. Section 6. The Amended RMA for the Community Facilities District, including the maximum annual special tax, shall be as set forth in Exhibit A attached hereto and is incorporated herein and made a part hereof. The Amended RMA provides sufficient detail to allow each landowner or resident within the Community Facilities District to estimate the maximum amount that such person will have to pay, and specifies the conditions under which the obligation to pay the special tax may be prepaid and permanently satisfied. The Amended RMA does not increase the probable special tax described in the Initial RMA to be paid by any landowner or resident within the Community Facilities District and, therefore, the Hearing Report does not include a brief analysis of the impact of the proposed modifications on the probable special tax to be paid by any owners of such lots or parcels of land in the Community Facilities District pursuant Section 17 of the Resolution of Intention to Section 1 1 of the of Intention. Vll. As required by the Act: (1) the maximum authorized special tax for financing the acquisition and construction of the Improvements and the Undergrounding that may be levied against any parcel of land used for private residential purposes (which use commences no later than the date on which an occupancy permit for private residential use is issued) is specified as a dollar amount and shall not increase by more than two percent (2%) per year; (2) the special tax shall not be levied for Improvements and the Undergrounding against such property after the time stated in the Amended RMA; and (3) under no circumstances shall the special tax be increased on private residential property, as a consequence of delinquency or default by the owners of any other parcel or parcels of land within the Community Facilities District, by more than ten per cent (1 a%) above the level that would have been levied had there been no delinquencies. Section 7. If the election referred to in Section 12 hereof results in the approval of the ballot measure described herein, then upon recordation of a Notice of Special Tax Lien within the Community Facilities District pursuant to Section 3I 14.5 of the Streets and Highways Code of the State of California, a continuing lien to secure each levy of the Special Tax (as defined 4 4125-9421-9801.3 in the Amended RMA) shall attach to all nonexempt real property in the Community Facilities District, which lien shall continue in force and effect until the Special Tax obligation is prepaid and permanently satisfied and the lien cancelled in accordance with law or until collection of the Special Tax by the Commission ceases and a Notice of Cessation of Special Tax is recorded in accordance with Section 53330.5 of the Act. Section 8. If the election referred to in Section 12 hereof results in the approval of the ballot measure described herein, then except where funds are otherwise available, the Special Tax shall be annually levied within the Community Facilities District in an amount sufficient to finance the Improvements and the Undergrounding, including but not limited to the payment of interest on and principal of any bonds to be issued to finance the Improvements and the Undergrounding; the making of lease payments for any public facilities (whether in conjunction with the issuance of certificates of participation or not); and the repayment of funds advanced by the City or the developers for the Community Facilities District and including the repayment under any acquisition, deposit, or other agreement (which shall not constitute a debt or liability of the Authority) of advances of funds or reimbursement for the lesser of the value or cost of work in - kind provided by any person for the Community Facilities District; shall be annually levied within the Community Facilities District. Section 9. If the election referred to in Section 12 hereof results in the approval of the ballot measure described herein, then the Special Tax will be collected through the regular City of Newport Beach, County of Orange secured property tax bills, and will be subject to the same enforcement mechanism, and the same penalties and interest for late payment, as regular ad valorem property taxes; however, the Commission reserves the right to utilize any other lawful means of billing, collecting and enforcing the Special Tax, including direct billing, supplemental billing, and, when lawfully available, judicial foreclosure of the Special Tax lien. Section 10. Should any property subject to the Special Tax be acquired by a public agency and then leased for private purposes, the Commission, pursuant to Section 53340.1 of the Act, will levy the Special Tax on the leasehold or possessory interests in property owned by a public agency (which property is otherwise exempt from the Special Tax), to be payable by the owner of the leasehold or possessory interests in such property. Section 11. The Commission, pursuant to Section 53325.7 of the Act, hereby establishes the initial appropriations limit (fiscal year 2018-2019), as defined by subdivision (h) of Section 8 of Article XIIIB of the California Constitution, for the Community Facilities District in the amount of $850,000, subject to voter approval. Section 12. The Commission will submit the authorization of this Resolution to the qualified electors of the Community Facilities District in a special mailed -ballot election. Based on findings to be formally made by the Commission in a Resolution to be adopted this date Calling a Special Mailed -Ballot Election within the Community Facilities District, to which reference is made for further particulars, the qualified electors of the Community Facilities District are the landowners owning property that will not be exempt from the Special Tax within the Community Facilities District, in accordance with Section 53326(b) of the Act. 5 4125-9421-9801.3 Section 13. In the opinion of the Commission, the public interest will not be served by allowing the property owners in the Community Facilities District to intervene in a public bidding process pursuant to Section 53329.5(a) of the Act. Section 14. The firm of David Taussig & Associates, 100 West San Fernando Street, Suite 430, San Jose, California 95113, telephone (949) 955-1500, will be responsible for annually preparing, or causing to be prepared, the roll of Special Tax levies on the parcels within the Community Facilities District identified by Orange County Assessor's parcel numbers, and will be responsible for estimating future Special Tax levies pursuant to Section 53340.2 of the Act. Section 15. The Commission finds and determines that all proceedings conducted and approved by the Commission with respect to the establishment of the Community Facilities District, up to and including the adoption of this Resolution, and the other Resolutions adopted this date in connection with the Community Facilities District, are valid and in conformity with the requirements of the Act, and this determination is final and conclusive for all purposes and is binding upon all persons. Accordingly, the Commission finds, determines and orders that the Community Facilities District is hereby established with all of the authorities described and set forth in this Resolution, the exercise of which is subject only to the election. Section 16. This resolution shall take effect immediately upon its adoption. 6 4125-9421-9801.3 PASSED AND ADOPTED by the California Statewide Communities Development Authority this 20th day of December, 2018. I, the undersigned, a duly appointed and qualified Authorized Signatory ❑f the Commission of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of said Authority at a duly called meeting of the Commission of said Authority held in accordance with law on December 20, 2018. 7 B thorized Signatory California Statewide Communities Development Authority 4125-9421-9801.3 EXHIBIT A AMENDED AND RESTATEID RATE AND METHOD OF APPORTIONMENT A- I 4125-9421-9801.3 RATE AND METHOD OF APPORTIONMENT CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of CSCDA Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California ("CFD No. 2018-03") and collected each Fiscal Year commencing in Fiscal Year 2019-2020, in an amount determined by the CSCDA Program Manager, through the application of the Rate and Method of Apportionment as described below. All Taxable Property in CFD No. 2018-03, 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 The terms hereinafter set forth have the following meanings: "Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final subdivision map, parcel map, condominium plan, record of survey, or other recorded County parcel map. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 2018-03 including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax Levy collection schedules (whether by the CSCDA Program Manager or designee thereof or both); the costs of collecting the Special Tax Levies (whether by the County or otherwise); the costs of remitting the Special Tax Levies to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to CSCDA, CFD No. 2018-03, or any designee thereof of complying with arbitrage rebate requirements, or responding to questions from the Securities and Exchange Commission or Internal Revenue Service pertaining to any CFD No. 2018-03 Bonds or any audit of any CFD No. 2018-03 Bonds by the Securities and Exchange Commission or Internal Revenue Service; the costs to CSCDA, CFD No. 2018-03, the Trustee or any designee thereof of complying with CSCDA, CFD No. 2018-03, or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax Levy disclosure statements and responding to public inquiries regarding the Special Tax Levies; the costs to CSCDA, CFD No. 2018-03, or any designee thereof related to an appeal of the levy or application of the Special Tax; the costs associated with the release of funds from an escrow account; and CSCDA's annual administration fees and third California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 1 party expenses. Administrative Expenses shall also include amounts estimated or advanced by CSCDA or CFD No. 2018-03 for any other administrative purposes of CFD No. 2018-03, including, but not limited to, attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tax Levies. "Apartment Floor Area" means all of the square footage of living area within the perimeter of the Apartment Property, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Apartment Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the Building Division of the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Apartment Property. "Apartment Property" means an Assessor's Parcel of Developed Property on which all or any portion of a structure or structures with multiple Apartment Units are located, and such Apartment Units are offered for rent and are not available for sale to individual owners. If Apartment Property is subsequently reclassified as Residential Property, Special Taxes levied on such reclassified Assessor's Parcels shall be modified to match those of Residential Property. "Apartment Unit" means one (1) for -rent residential unit on Apartment Property. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C.a.(2), below. "Authorized Facilities" means the facilities authorized to be financed by CFD No. 2018-03. "Backup Special Tax" means the Backup Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.a.(3), below. "Building Permit" means a permit issued by the City or other governmental agency for the construction of a residential or non-residential building on an Assessor's Parcel. "Buildout" means, for CFD No. 2018-03, that all expected Building Permits for Residential Property, Apartment Property, and Non -Residential Property to be constructed within CFD No. 2018-03 have been issued, as determined by the CSCDA Program Manager. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 2 "CFD No. 2018-03" means California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California. "CFD No. 2018-03 Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one (1) or more series, authorized by CFD No. 2018-03 under the Act and issued by CSCDA and secured by the Special Taxes. "City" means the City of Newport Beach. "Commission" means the governing board of CSCDA. "County" means the County of Orange. "CSCDA" means the California Statewide Communities Development Authority. "CSCDA Program Manager" means the program manager for CSCDA, or its designee. "Developed Property" means, for each Fiscal Year, all Taxable Property in Tax Zone 1 and Tax Zone 2, for which a Building Permit for new construction was issued after January 1, 2018 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied. For purposes of this Rate and Method of Apportionment, any Developed Property for which Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area is removed, shall be considered Developed Property under the previously assigned Land Use Class with the previously assigned Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area, until a new Building Permit is issued, and a new Land Use Class and Special Tax can be assigned. Notwithstanding the above, a reclassification shall not occur, unless the CSCDA Program Manager determines that the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after such reclassification, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds is each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. "Developer" means TSG-Parcel 1, LLC or Uptown Newport Jamboree, LLC and its successors and assigns. The term "successors" does not refer to the successors to all or any portion of the property within CFD No. 2018-03 unless the new property owner receives an assignment of the Developer's rights and obligations described in an assignment agreement or similar agreement. "Dwelling Unit" means one (1) for -sale residential unit of any configuration, including, but not limited to, a single family attached or detached dwelling, condominium, mobile home, or otherwise, but excluding Apartment Units on Apartment Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 3 "Final Mapped Property" means, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, and Taxable Public Property, located in a Final Subdivision as of January 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied, but no earlier than January 1, 2018. "Final Subdivision" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, approved by the County 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, in either case, creates individual lots for which Building Permits may be issued without further subdivision. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution, or other instrument pursuant to which CFD No. 2018-03 Bonds are issued, as modified, amended, and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the land use classes listed in Table 1 below. "Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C.a.1 below, that can be levied by CSCDA in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Non -Residential Floor Area" means the total gross building square footage of non- residential property lying within an Assessor's Parcel for which one (1) or more non- residential Building Permits have been issued. Such square footage shall be measured from outside wall to outside wall, exclusive of overhangs, porches, patios, carports, or similar spaces attached to the building but generally open on at least two (2) sides, as determined by reference to the Building Permit(s) issued for that Assessor's Parcel, or if these are not available, as otherwise determined by the CSCDA Program Manager. "Non -Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit permitting the construction of one (1) or more non-residential units or facilities has been issued by the City or other governmental agency. "Outstanding Bonds" means all CFD No. 2018-03 Bonds which remain outstanding under the Indenture. "Property Owner Association Property" means, for each Fiscal Year (i) any property within the boundaries of CFD No. 2018-03 that was owned by a property owner association, including any master or sub -association, as of January 1 of the prior Fiscal Year, (ii) any property located in a Final Subdivision that was recorded as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determined from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street, or (iii) any property which, as of the May 1 California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 4 preceding the Fiscal Year for which the Special Tax is being levied, has been conveyed to a property owner's association, including any master or sub -association, provided evidence of such conveyance is submitted to the CSCDA Program Manager by May 1 preceding the Fiscal Year for which the Special Tax is being levied. The total number of acres to be classified as Property Owner Association Property or Public Property, shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax Levy within Tax Zone 1 and Tax Zone 2, to the Assigned Special Tax or the Maximum Special Tax of the respective Tax Zone, is equal for all Assessor's Parcels of Developed Property. For Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property categories, "Proportionately" means that the ratio of the actual Special Tax Levy per Acre within Tax Zone 1 and Tax Zone 2, to the Maximum Special Tax per Acre of their respective Land Use Class and Tax Zone, is equal. "Public Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2018-03 that, as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied, was (i) owned by, irrevocably offered, or dedicated to the federal government, the State, the County, the City, or any local government or other public agency, provided that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use; or (ii) encumbered by a public utility easement making impractical its use for any purpose other than that set forth in the easement. The total number of acres to be classified as Property Owner Association Property or Public Property shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Rate and Method of Apportionment" means this Rate and Method of Apportionment for CFD No. 2018-03. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Dwelling Unit. "Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued by the Building Division of the City for purposes of constructing one (1) or more Dwelling Units. Residential Property does not include Apartment Property for purposes of this Rate and Method of Apportionment. "Special Tax" or "Special Taxes" means the special tax to be levied in each Fiscal Year to fund the Special Tax Requirement for Facilities. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 5 "Special Tax Levy" or "Special Tax Levies" means the Special Tax to be levied in each Fiscal Year on Assessor's Parcel of Taxable Property to fund the Special Tax Requirement for Facilities, as applicable. "Special Tax Requirement" means that amount of Special Taxes required, if any, in any Fiscal Year for CFD No. 2018-03 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the CFD No. 2018-03 Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2018-03 Bonds; (iii) pay all or a portion of the Administrative Expenses as determined by the CSCDA Program Manager; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of Authorized Facilities to the extent that the inclusion of such amount does not increase the Special Tax Levy on Undeveloped Property; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax Levy, as determined by the CSCDA Program Manager pursuant to the Indenture. "State" means the State of California. "Tax Zone" means one of the two (2) mutually exclusive geographic areas defined below and identified in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 1" means the geographic area specifically identified as Zone 1 in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 2" means the geographic area specifically identified as Zone 2 in Attachment 1 of this Rate and Method of Apportionment. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2018-03 that are not exempt Property Owner Association Property or exempt Public Property or other property exempted pursuant to Section E herein. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E herein. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E herein. "Total Floor Area" means the sum of the Residential Floor Area, Apartment Floor Area, and the Non- Residential Floor Area located on an Assessor's Parcel. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, or Taxable Public Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 6 B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2018-03 shall be classified as Developed Property, Final Mapped Property, Undeveloped Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, or Taxable Public Property and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D below. C. MAXIMUM SPECIAL TAX RATE a. Developed Property (1) Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax and (ii) the amount derived by application of the Backup Special Tax. (2) Assigned Special Tax Residential Property shall be assigned to Land Use Classes 1 and 2 as listed in Table 1 below based on the description associated with each Dwelling Unit or Apartment Unit and its determined Tax Zone. Non -Residential Property shall be assigned to Land Use Class 3 as listed in Table 1 below based on the description associated with square feet of Non -Residential Floor Area and it's determined Tax Zone. The Assigned Special Tax that shall be levied in Fiscal Year 2019-2020 for each Assessor's Parcel classified as Developed Property is shown on the following page in Table 1. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 7 TABLE 1 Assigned Special Tax for Developed Property CFD No. 2018-03 Fiscal Year 2019-2020 LAND USE CLASS 1 2 3 I)ESCRIP'I'ION Residential Property Apartment Property Non -Residential Property ASSIGNED SPECIAL TAX ZONE 1 $750 per Dwelling Unit $0 per Apartment Unit $5.35 per Square Foot of Non -Residential Floor Area ASSIGNED SPECIAL TAX ZONE 2 $950 per Dwelling Unit $260 per Apartment Unit $5.35 per Square Foot of Non -Residential Floor Area (3) Backup Special Tax The Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $50,028 per Acre of the Assessor's Parcel. If a Final Subdivision includes Assessor's Parcels of Taxable Property for which Building Permits have been issued, exclusive of Taxable Property Owner Association Property and Taxable Public Property, then the Backup Special Tax for each residential Dwelling Unit shall be calculated according to the following formula: Residential Dwelling Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Residential Floor Area/(Total Floor Area)) / Number of residential Dwelling Units) In this case, the Backup Special Tax for each Apartment Unit shall be calculated according to the following formula: Apartment Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Apartment Floor Area/(Total Floor Area)) / Number of Apartment Units) Finally, the Backup Special Tax for each square foot of Non -Residential Floor Area shall be calculated according to the following formula: Non -Residential Square Foot Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Non -Residential Floor Area/(Total Floor Area)) / Non -Residential Floor Area) California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 8 Furthermore, all Assessor's Parcels within CFD No. 2018-03 shall be relieved simultaneously and permanently from the obligation to pay and disclose the Backup Special Tax if the CSCDA Program Manager calculates that (i) the annual debt service required for the Outstanding Bonds, when compared to the Assigned Special Tax that shall be levied against all Assessor's Parcels of Developed Property in CFD No. 2018-03, results in 110% debt service coverage (i.e., the Assigned Special Tax that shall be levied against all Developed Property in CFD No. 2018-03 in each remaining Fiscal Year based on the then existing development is at least equal to the sum of (a) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (b) the Administrative Expenses as defined in Section A herein), or (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it shall not issue any additional CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Assigned Special Tax in CFD No. 2018-03. (4) Increase in the Assigned Special Tax and Backup Special Tax On each July 1, commencing on July 1, 2020, the Assigned Special Tax and the Backup Special Tax shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. (5) Multiple Land Use Classes In some instances, an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Special Tax levied on an Assessor's Parcel shall be the sum of the Special Tax for all Land Use Classes located on that Assessor's Parcel. Furthermore, if only a portion of Building Permits have been issued on an Assessor's Parcel, the remaining portion of the Assessor's Parcel shall be considered Final Mapped Property. The CSCDA Program Manager's allocation to each type of property shall be final. b. Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property (1) Maximum Special Tax The Fiscal Year 2019-2020 Maximum Special Tax for each Assessor's Parcel of Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be $50,028 per Acre. (2) Increase in the Maximum Special Tax On each July 1, commencing on July 1, 2020, the Maximum Special Tax for Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property within each respective Tax Zone, shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 9 D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2019-2020 and for each following Fiscal Year, the CSCDA Program Manager shall determine the Special Tax Requirement and shall (i) levy 100% of the Assigned Special Taxes on Developed Property, and (ii) levy the remaining Special Taxes as prioritized below until the total Special Taxes levied equal the Special Tax Requirement. The Special Taxes shall be levied in each Fiscal Year as follows: 1. Annual Levy First: The Special Tax shall be levied on each Assessor's Parcel of Residential Property and Apartment Property, within all Tax Zones, in an amount equal to 100% of the applicable Assigned Special Tax for Residential Property and Apartment Property respectively. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied on each Assessor's Parcel of Non -Residential Property, within all Tax Zones, until (i) the total Special Tax levied under the first two steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Non -Residential Property equals 100% of the applicable Assigned Special Tax, whichever comes first. Third: If additional monies are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Final Mapped Property, within all Tax Zones, until (i) the total Special Tax levied under the first three steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Final Mapped Property equals 100% of the applicable Maximum Special Tax, whichever comes first. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, within all Tax Zones, until (i) the total Special Tax levied under the first four steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Undeveloped Property equals 100% of the applicable Maximum Special Tax, whichever occurs first. Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property for which the Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to 100% of the Maximum Special Tax for each such Assessor's Parcel of Developed Property, within all Tax Zones, until (i) the total Special Tax levied under the first five steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Developed Property equals 100% of the Maximum Special Tax for Developed Property, whichever occurs first. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 10 Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property, within all Tax Zones, until (i) the total Special Tax levied under the first six steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Property Owner Association Property equals 100% of the Maximum Special Tax for Property Owner Association Property, whichever occurs first. Seventh: If additional monies are needed to satisfy the Special Tax Requirement after the first six steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property, within all Tax Zones, until (i) the total Special Tax levied under the first seven steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Public Property equals 100% of the Maximum Special Tax for Taxable Public Property, whichever occurs first. Notwithstanding the above, the CSCDA Program Manager or its designee may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax in the first step (above), when (i) CSCDA is no longer required to levy the Special Tax beyond the first step (above) in order to meet the Special Tax Requirement; and (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it will not issue any additional CFD No. 2018-03 Bonds (except refunding bonds), to be supported by the Special Tax. E. EXEMPTIONS No Special Tax shall be levied on Public Property or Property Owner Association Property in CFD No. 2018-03 provided that no such exemption shall reduce the total Acreage of Taxable Property to less than 12.88 Acres. Tax-exempt status shall be assigned by the CSCDA Program Manager in the chronological order in which property in CFD No. 2018-03 becomes Public Property or Property Owner Association Property. However, should an Assessor's Parcel of Public Property or Property Owner Association Property no longer be classified as tax-exempt, it will, from that point forward, be subject to the Special Tax. Furthermore, any Assessor's Parcel designated as Public Property or Property Owner Association Property that cannot be exempt from the Special Tax because such exemption would reduce the Acreage of all Taxable Property within CFD No. 2018-03 to less than 12.88 Acres shall be designated as Taxable Public Property or Taxable Property Owner Association Property. Prior to sixty (60) days before the issuance of a first series of CFD No. 2018-03 Bonds, the CSCDA Program Manager may increase or decrease the final number of minimum taxable Acres in CFD No. 2018-03 to better reflect the actual tax-exempt acreage within CFD No. 2018-03. However, notwithstanding the above, the final number of taxable Acres in CFD No. 2018-03 shall not be decreased if it causes an increase in the Special Tax levied on any existing Assessor's Parcel of Developed Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 11 F. REVIEW/APPEAL PROCESS Any taxpayer may file a written appeal of the Special Tax on his/her property with CSCDA, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CSCDA Program Manager or its designee shall review the appeal, meet with the appellant if the CSCDA Program Manager deems necessary, and advise the appellant of its determination within sixty (60) days after receipt of the appeal. If the CSCDA Program Manager agrees with the appellant, the CSCDA Program Manager shall make a recommendation to CSCDA to eliminate or reduce the Special Tax on the appellant's property or to provide a refund to appellant. The approval of CSCDA or its designee must be obtained prior to any such elimination or reduction. If the CSCDA Program Manager disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has thirty (30) days in which to appeal to CSCDA by filing a written notice of appeal with the CSCDA Program Manager, provided that the appellant is current in his/her payments of the Special Taxes. The second appeal must specify the reasons for the appellant's disagreement with the CSCDA Program Manager's determination. The CSCDA Program Manager shall schedule the appeal to be heard before CSCDA within sixty (60) days after receipt of the second appeal. Interpretations may be made by CSCDA, without Resolution or Ordinance of the Commission, for purposes of clarifying any vagueness or ambiguity as it relates to the Special Taxes, the Rate and Method of Apportionment, Land Use Classes, or any other definition applicable to CFD No. 2018-03. Without Commission approval, the CSCDA Program Manager may make minor, non - substantive administrative and technical changes to the provisions of this document that do not materially affect the rate, method of apportionment, and manner of collection of the Special Tax for purposes of administrative efficiency or convenience or to comply with new applicable federal, state, or local law. G. MANNER OF COLLECTION The Special Tax Levy will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2018-03 may directly bill the Special Tax Levy, may collect Special Tax Levies 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. H. PREPAYMENT OF SPECIAL TAX Under this Rate and Method of Apportionment, an Assessor's Parcel within CFD No. 2018-03 is permitted to prepay the Special Tax. The obligation of the owner of an Assessor's Parcel to pay the Special Tax may be fully or partially prepaid and permanently satisfied as described herein, California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 12 provided that a prepayment may be made only for Assessor's Parcels of Developed Property, or for an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2019, and only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CSCDA Program Manager with written notice of intent to prepay. Within thirty (30) days of receipt of such written notice, the CSCDA Program Manager shall notify such owner of the Special Tax Prepayment Amount (defined below) for such Assessor's Parcel. The CSCDA Program Manager may charge such owner a reasonable fee for providing this service. If there are Outstanding Bonds, prepayment must be made not less than thirty (30) days prior to a date that notice of redemption of CFD No. 2018-03 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The following additional definitions apply to this Section H: "CFD Public Facilities Costs" means either $7,500,000 in 2018 dollars, which shall increase by the Construction Inflation Index on July 1, 2019, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CSCDA Program Manager as sufficient to provide funding for the Authorized Facilities under the authorized bonding program for CFD No. 2018- 03, or (ii) shall be determined by CSCDA concurrently with a covenant that it shall not issue any more CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Special Tax levy under this Rate and Method of Apportionment. "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 month of December in 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 CSCDA Program Manager 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 Costs minus (i) costs of Authorized Facilities previously paid from the Improvement Fund, (ii) monies currently on deposit in the Improvement Fund available to pay costs of Authorized Facilities, (iii) monies currently on deposit in an escrow fund established pursuant to the Indenture and expected to be available to fund Authorized Facilities and (iv) the amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of these funds. "Improvement Fund" means a fund or account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct Authorized Facilities. "Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 13 1. Prepayment in Full The Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Equals Special Tax Prepayment Amount As of the proposed date of prepayment, the Special Tax Prepayment Amount shall be calculated according to the following paragraphs: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2018, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the Building Permit which has already been issued for such Assessor's Parcel. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Tax levy for CFD No. 2018-03 based on the Assigned Special Tax for Developed Property which could be levied on all expected development assuming Buildout of CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the total estimated Backup Special Taxes at Buildout for the entire CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be redeemed (the "Bond Redemption Amount"). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Previously Issued Bonds to be redeemed (the "Redemption Premium"). 6. Compute the current Future Facilities Costs. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 14 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Previously Issued Bonds. 9. Determine the Special Tax levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 10. Compute the minimum amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of the Special Tax Prepayment Amount, less any interest earnings attributed to the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount"). 12. The administrative fees and expenses of CFD No. 2018-03 are as calculated by the CSCDA Program Manager and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 2018-03 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% of the reserve requirement (as defined in the Indenture). 14. If any capitalized interest for the Previously Issued 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 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment date (the "Capitalized Interest Credit"). 15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11, and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Special Tax Prepayment Amount"). California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 15 2. Prepayment in Part The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP = (PE — A) x F + A. These terms have the following meaning: PP = the partial prepayment PE = the Special Tax Prepayment Amount calculated according to Section H.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. A = the Administration Fees and Expenses from Section H.1. The owner of' any Assessor's Parcel who desires such prepayment shall notify the CSCDA Program Manager of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. With respect to any Assessor's Parcel that is partially prepaid, CSCDA shall (i) distribute the funds remitted to it according to Section H.3, and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D. 3. General Provisions Applicable to the Prepayment of Special Tax (a). Use of the Special Tax Prepayment Amount The Special Tax Prepayment Amount, less the Administrative Fees and Expenses calculated according to Sections H.1 and H.2 which shall be retained by CFD No. 2018- 03, and less the Future Facilities Amount calculated according to Section H.1 which shall be deposited into the Improvement Fund, shall be deposited into specific funds established under the Indenture, to fully or partially redeem as many Outstanding Bonds as possible, and, if amounts are less than $5,000, to make debt service payments on the Outstanding Bonds (collectively designated as the "Bond Retirement Funds"). (b). Full Prepayment of Special Tax Upon confirmation of the payment of the current Fiscal Year's entire Special Tax obligation, the CSCDA Program Manager may remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 16 Assessor's Parcel that is prepaid in accordance with Section H.1, the CSCDA Program Manager shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, and the obligation to pay the Special Tax for such Assessor's Parcel shall cease. (c). Partial Prepayment of Special Tax With respect to any Assessor's Parcel that is partially prepaid, the CSCDA Program Manager shall (i) distribute or cause to be distributed the funds remitted to it according to Section H.2. and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's parcel, equal to the outstanding percentage (1.00 — F) of the Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D herein. (d). Debt Service Coverage Notwithstanding the foregoing, no prepayment of the Special Tax shall be allowed unless the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after the proposed prepayment, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. I. TERM OF SPECIAL TAX, The Special Tax shall be levied until the final series of CFD No. 2018-03 Bonds have matured, provided that the Special Tax shall not be levied after Fiscal Year 2069-2070. The Special Taxes will cease to be levied in an earlier Fiscal Year if the CSCDA Program Manager has determined that all required interest and principal payments on the CFD No. 2018-03 Bonds have been paid and CSCDA has covenanted that it will not issue any more CFD No. 2018-03 Bonds (other than refunding Bonds) to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 17 ATTACHMENT 1 PROPOSED BOUNDARIES & IDENTIFICATION OF TAX ZONES OF CFD NO. 2018-03 Z CO W C • N O oo = Z 400 n� LU W 0 4( (. ▪ Z < G ▪ p COZ O Giu �tAa~ • U. m• Z2ZLL• LL =Zp() 2�Zw• LJJLL W .0 2J O Z O O U Q O. a Z U W a2 a 0 cc LL J a 0 NV)113V)4 MacARTKUR 0 0 w UJ J 0 2 = � O� is Mk! • • ■ ■ • • 446-13n-nn Assessor Par FAtRCHLD RESOLUTION NO. 18SCIP-118 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY A RESOLUTION DEEMING IT NECESSARY TO INCUR BONDED INDEBTEDNESS TO FINANCE THE ACQUISITION AND CONSTRUCTION OF CERTAIN PUBLIC CAPITAL IMPROVEMENTS AND CERTAIN UTILITY UNDERGROUNDING WITHIN CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA WHEREAS, the Commission (the "Commission") of the California Statewide Communities Development Authority (the "Authority") duly adopted its Resolution No. 18SCIP- 110 (the "Resolution of Intention") on November 15, 2018 wherein it declared its intention to establish a community facilities district within the jurisdictional boundaries of the City of Newport Beach (the "Local Agency"), under and pursuant to the terms and provisions of the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (commencing with Section 53311) of the Government Code of the State of California (the "Act"), to be known and designated as "California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" (the "Community Facilities District") therein, and to levy a special tax (the "Special Tax") therein to finance, among other things, the acquisition and construction of certain public capital improvements (the "Improvements," as that term is defined in the Resolution of Intention) and certain utility undergrounding (the "Undergrounding," as that term is defined in the Resolution of Intention) that will assist in mitigating the impact on the need for public facilities occasioned by new development that has occurred or is expected to occur within the boundaries of the Community Facilities District; and WHEREAS, the Commission also adopted Resolution No. 18SCIP-111 (the "Resolution to Incur Bonded Indebtedness") on November 15, 2018, declaring its intention to incur a bonded indebtedness in the principal amount of not to exceed eight million eight hundred thousand dollars (S8,800,000) for the Community Facilities District, to finance the acquisition and construction of the Improvements and the Undergrounding described in the Resolution of Intention; and WHEREAS, the Resolution to Incur Bonded Indebtedness fixed a time and place for a public protest hearing (the "Public Hearing") to be held by the Commission to consider incurring the proposed debt and to consider any other matters set forth in the Resolution to Incur Bonded Indebtedness; and WHEREAS, the Resolution to Incur Bonded Indebtedness directed the Authority's Bond Counsel to prepare, mail and publish a Notice of Public Hearing in accordance with the requirements of the Act; and WHEREAS, Bond Counsel has filed a certificate with the Authority Secretary that the Notice of Public Hearing was properly prepared, mailed and published in accordance with the 4133-7265-7433.2 requirements of the Act (the "Certificate of Mailing and Publication of Notice of Public Hearing"); and WHEREAS, the Public Hearing was held by the Commission on Thursday, the 20th day of December, 2018, at the hour of 2:00 o'clock P.M., at the offices of the California State Association of Counties, at 1100 K Street, Sacramento, California 95814. At the Public Hearing the Commission considered the amount and the term of the hnnrlc nrnnnced to he allthnri7M by the Community Facilities District, and all other matters set forth in the Resolution to Incur Bonded Indebtedness; and at the Public Hearing all persons interested, including all taxpayers, property owners and registered voters within the Community Facilities District, were given an opportunity to appear and to be heard on, and they were permitted to present any matters relating to, the necessity for incurring the bonded indebtedness to finance the costs of the acquisition and construction of the Improvements and the Undergrounding described in the Resolution of Intention; and the testimony of all interested persons and all taxpayers, property owners and registered voters for or against the authorization to issue bonds of the Community Facilities District or any other matters set forth in the Resolution to Incur Bonded Indebtedness, was heard and considered; and WHEREAS, all registered voters residing within the boundaries of the proposed Community Facilities District, if any, and all owners of land within the boundaries of the proposed Community Facilities District that would not be exempt from the proposed levy of Special Tax, were allowed to submit written protests against incurring the proposed bonded indebtedness and any aspect of the proposals contained in the Resolution to Incur Bonded Indebtedness, and permitted to withdraw their protests prior to the close of the Public Hearing; and WHEREAS, the Commission has adopted on this date its Resolution No. 18SCIP-117 establishing the Community Facilities District (the "Resolution of Formation") which sets forth the Special Tax to be authorized within the Community Facilities District and the Improvements and the Undergrounding that may be financed with the proceeds of the Special Tax collections; and WHEREAS, the Commission is fully advised in this matter; NOW THEREFORE, BE IT RESOLVED by the Commission of the California Statewide Communities Development Authority, as follows: Section 1. The above recitals are true and correct, and the Commission so finds and determines. Section 2. The Commission accepts the Certificate of Mailing and Publication of Notice of Public Hearing and finds, based thereon, that proper notice of the Public Hearing have been given in accordance with the Act, and that the Public Hearing was conducted with proper and legal notices in all respects. Section 3. The Commission finds and determines that at the close of the Public Hearing, written protests, if any, against incurring the proposed bonded indebtedness and any aspect of the proposals contained in the Resolution to Incur Bonded Indebtedness, were submitted by less than 50 percent of the registered voters, or by less than six of the registered voters, if any, 2 4133-7265-7433.2 residing within the Community Facilities District. Similarly, the Commission finds that at the close of the Public Hearing, such written protests, if any, were submitted by the owners of less than one-half of the area of land in the territory proposed to be included in the Community Facilities District and not exempt from the Special Tax. Thus, the Commission finds that it is not precluded, by the Act, from proceeding further in this matter. The Commission hereby further orders and determines that all protests against incurring the proposed bonded indebtedness and any aspect of the proposals container] in the Resolution to Incuur nonrlar1 Indebtedness that may have aspect of Lafv proposals container] in the to Incur 1�Vlaµyµ ;11L;y V«+�LLA4J.7 that 1i1CIJ have been submitted, have been considered and are hereby overruled. Section 4. The Commission hereby declares that the public convenience and necessity require that a bonded indebtedness be incurred to finance the acquisition and construction of the Improvements and the Undergrounding described in the Resolution of Formation. The authorization to finance the acquisition and construction of the Improvements and the Undergrounding includes incidental expenses for the Improvements and the Undergrounding comprising the costs of planning and designing the Improvements and the Undergrounding, together with the costs of environmental evaluations thereof, and all costs associated with the creation of the Community Facilities District, the issuance of debt (as that term is defined in the Act, "Debt") in one or more series, the determination of the amount of any Special Taxes or the collection or payment of any Special Taxes and costs otherwise incurred in order to carry out the authorized purposes of the Community Facilities District, together with any other expenses incidental to the acquisition and construction of the Improvements and the Undergrounding. Such costs and expenses are further described in Exhibit D to the Resolution of Intention. Section 5. The whole of the territory within the Community Facilities District will be benefited by the Debt and will be subject to the Special Tax to pay for the Debt. Section 5. The amount of the proposed Debt to be incurred in one or more series to finance the acquisition and construction of the Improvements and the Undergrounding shall not exceed in the aggregate eight million eight hundred thousand dollars ($8,800,000), which amount may include all costs and estimated costs incidental to, or connected with, the accomplishment of the purpose for which the Debt is proposed to be incurred, including, but not limited to, the estimated costs of acquisition of land, rights -of -way, capacity or connection fees, satisfaction of contractual obligations relating to expenses or the advancement of funds for expenses existing at the time the Debt is issued pursuant to the Act, architectural, engineering, inspection, legal, fiscal, and financial consultant fees, bond and other reserve funds, discount fees, interest on any Debt of the Community Facilities District estimated to be due and payable within two (2) years of issuance, election costs, and all costs of issuance of the Debt, including, but not limited to, underwriter's discount fees for bond counsel, costs of obtaining credit ratings, bond insurance premiums, fees for letters of credit, and other credit enhancement costs, and printing costs. Section 7. The maximum term of any series of Debt shall not exceed thirty (30) years from the date of its issuance. Section 8. The maximum annual rate or rates of interest to be paid on any series of Debt shall not exceed twelve percent (12%) per annum, payable at least annually the first year and semiannually thereafter. 3 4133-7265-7433.2 Section 9. Pursuant to Section 53353.5 of the Act, the authority to levy the Special Tax to finance the Improvements and the Undergrounding, the question of setting the appropriations limit for the Community Facilities District, and the question whether the Community Facilities District will be authorized to incur Debt shall be combined into a single ballot question, and submitted to the qualified electors of the Community Facilities District at a special mailed -ballot election with ballots to be delivered to the Authority Secretary no later than "):On n m nn fl' mher 7f 7C11 R. If nrinr to that timw the Authority Carretaru shall have receiver' ....._. t... ._.�. .............. �.., �..... .. t...a �.. �.�...< <.��..... «�., r ....�....,...J v..v...� .J shall have v receive,' �.0 all of the eligible ballots to be cast, pursuant to Section 53351(j) of the Act, the Authority Secretary will at that time declare the election closed. Section 10. The election shall be conducted in accordance with the Commission's Resolution No. I8SCIP-119 Calling Special Mailed -Ballot Election, to be adopted this date, to which reference is made for further particulars. Section 11. If the ballot proposition receives the approval of two-thirds (2/3) or more of the votes cast on the proposition, the Debt may be issued and sold in one or more series for the purpose for which it was authorized, and the Debt (except where funds are otherwise available) shall be paid exclusively from the annual levy of the Special Tax and is not and shall not be secured by any other taxing power or funds of the Authority of the Local Agency. Section 12. It is the intention of the Commission that any Debt issued shall be callable (may be redeemed prior to their maturity dates) in accordance with the terms of the Act. Section 13. This Resolution shall take effect immediately upon its passage. 4133-7265-7433.2 PASSED AND ADOPTED by the California Statewide Communities Development Authority this 20th day of December, 2018. I, the undersigned, a duly appointed and qualified Authorized Signatory of the Commission of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of said Authority at a duly called meeting of the Commission of said Authority held in accordance with Taw nn December 20, 2018. By: 5 9 Autho ► ed Signatory California Statewide Communities Development Authority 4133-7265-7433.2 RESOLUTION NO. 18SCIP-119 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY RESOLUTION CALLING SPECIAL MAILED -BALLOT ELECTION WITHIN THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA WHEREAS, the Commission (the "Commission") of the California Statewide Communities Development Authority (the "Authority"), on November 15, 2018, adopted its Resolution No. 18SCIP-110 (the "Resolution of Intention") and its Resolution No. 18SCIP-111 (the "Resolution to Incur Bonded Indebtedness") thereby initiating proceedings to establish a community facilities district within the jurisdictional boundaries of the City of Newport Beach (the "Local Agency"), under and pursuant to the terms and provisions of the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (commencing with Section 53311) of the Government Code of the State of California (the "Act"), to be known and designated as "California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" (the "Community Facilities District"); and WHEREAS, both the Resolution of Intention and the Resolution to Incur Bonded Indebtedness set public protest hearings to be held concurrently on December 20, 2018 (the "Public Hearing"); and WHEREAS, on December 20, 2018, at the time and place specified in the Notice of Public Hearing, the Public Hearing was held by the Commission, and at the close of the Public Hearing, the Commission determined that there was no majority protest under Section 53324 of the Act; and WHEREAS, at the conclusion of the Public Hearing, the Commission adopted its Resolution No. 18SCIP-117 establishing the Community Facilities District (the "Resolution of Formation") pursuant to Section 53325.1 of the Act, and its Resolution No. 18SCIP-118 Deeming it Necessary to Incur Bonded Indebtedness (the "Resolution Deeming it Necessary to Incur Bonded Indebtedness") pursuant to Section 53351 of the Act; and WHEREAS, in order to proceed with the levy of the special tax and establishment of an appropriations limitation for the Community Facilities District, as provided by the Resolution of Formation, and with the incurring of indebtedness as provided by the Resolution Deeming it Necessary to Incur Bonded Indebtedness, the three matters must be submitted to an election of the qualified electors of the Community Facilities District; and WHEREAS, the three ballot questions just described may be combined into a single ballot measure pursuant to Section 53353.5 of the Act, as provided in the form of special election ballot attached hereto as Exhibit A and by this reference incorporated herein; and 4128-8546-2809.2 WHEREAS, a Certificate Re Registered Voters and Landowners (the "Certificate Re Landowners") has been filed with the Authority Secretary (the "Secretary") and submitted to the Commission, certifying that as of November 13, 2018, there were no registered voters within the territory of the Community Facilities District; and WHEREAS, a Certificate Re Receipt of Property Owner Waiver and Consent Forms (the "Certificate Re Waivers"), has been submitted by the Assistant to the Secretary (the "Assistant to the Secretary"), stating that each Landowner, or an authorized representative of each Landowner, has filed with the Secretary a properly executed Waiver and Consent (as defined below) in the form attached hereto as Exhibit B, and by this reference incorporated herein; and WHEREAS, the Commission is fully advised in this matter; NOW THEREFORE, BE IT RESOLVED by the Commission of the California Statewide Communities Development Authority, as follows: Section 1. The above recitals are true and correct, and the Commission so finds and determines. Section 2. The Commission accepts the Certificate Re Landowners heretofore filed in these proceedings and finds, in accordance therewith, that during the ninety days just past there have been days when there were no registered voters residing within the boundaries of the Community Facilities District. Accordingly, under Section 53326(b) of the Act, the qualified electors of the Community Facilities District for the proposed special election shall be the owners of land within the Community Facilities District. Section 3. The Commission further finds and determines that the owners of land within the Community Facilities District (the "Landowners") are the landowners set forth in the attachment to the Certificate Re Landowners and that the attachment correctly sets forth the amount of property owned by each Landowner and the number of votes to which each Landowner is entitled pursuant to Section 53326(b) of the Act, being the number of acres owned rounded up to the next whole acre. Section 4. The Commission hereby approves the form of "Waiver and Consent Shortening Time Periods and Waiving Various Requirements for Conducting a Mailed -Ballot Election" (the "Waiver and Consent") by which the time limits and related requirements respecting preparation and distribution of election materials are waived, a copy of which is attached hereto as Exhibit B. The Commission hereby finds that the rights, procedures and time periods therein waived are solely for the protection of the qualified electors and may be waived by the qualified electors under Sections 53326(a) and 53327(h) of the Act and under other provisions of law dealing with waiver generally, and that the Waiver and Consent constitutes a full and knowing waiver, by any qualified elector who has executed the form, of those rights, procedures and time periods. Section S. The Commission further finds and determines, based on a Certificate Re Waivers, provided this date by the Assistant to the Secretary, that each Landowner, or an authorized representative of each Landowner, has filed with the Secretary a properly executed Waiver and Consent. The Commission therefore is establishing the procedures and time periods for this special mailed -ballot election without regard to statutory schedules. 2 4128-8546-28O9.2 Section 6. Pursuant to Sections 53326 and 53351 of the Act, the Commission hereby calls an election, to be held and conducted forthwith upon adoption of this Resolution, and sets December 20, 2018, as the election date. Pursuant to Section 53326 of the Act, the election shall be conducted by mailed ballot; provided that personal service of the respective ballots to authorized representatives of each Landowner is permitted under the terms of the Waiver and Consent forms on file with the Secretary and shall therefore be permitted. Bond Counsel is directed either mail or make al of the ballots, in the of the attached Exhibit to personal service of the form Vi LiaV attached LALI4 VLL A, to each Landowner or, if one has been appointed pursuant to a Waiver and Consent, to the Landowner's authorized representative. Section 7. The proposition to be submitted to the qualified electors of the Community Facilities District shall be as set forth in the form of special election ballot attached hereto as Exhibit A. Section 8. The Secretary is hereby designated as the official to conduct the special mailed -ballot election pursuant to the Act and California Elections Code Sections 307 and 320 and the following provisions: (a) The special election shall be held and conducted, and the votes canvassed and the returns made, and the results determined, as provided herein; and in all particulars not prescribed by this Resolution the special election shall be held and conducted and the votes received and canvassed in the manner provided by law for the holding of special elections consistent with the Act. (b) All Landowners within the Community Facilities District as of the close of the Public Hearing shall be qualified to vote upon the proposition to be submitted at the special election. (c) The special election shall be conducted as a mailed -ballot election, in accordance with the provisions of the Act and the proceedings of the Commission, and there shall be no polling places for the special election. All ballots shall be delivered or mailed by Bond Counsel to the Landowners, and all voted ballots are required to be received by the Secretary not later than 2:00 o'clock P.M. on the day of the election in order to be counted. However, if at any time the Secretary determines that all votes have been cast, the Secretary shall immediately declare the election closed. (d) Each voter desiring to vote in favor of the proposition to be submitted at the special election shall mark a cross (x) or similar mark in the blank space opposite the word "YES" on the ballot to the right of the proposition; and each voter desiring to vote against the proposition shall mark a cross (x) or similar mark in the blank space opposite the word "NO" on the ballot to the right of the proposition. The cross (x) or similar mark may be marked with either pen or pencil. (e) The Secretary shall commence the canvass of the returns of the special election, and report the returns to the Commission no later than the Commission meeting of December 20, 2018. 3 4128-8546-2809.2 (fj The Commission may thereupon declare the results of the special election, and shall cause to be spread upon its minutes a statement of the results of the special election as ascertained by the canvass. Section 9. This Resolution shall take effect immediately upon its passage. 4 4128-8546-2809.2 PASSED AND ADOPTED by the California Statewide Communities Development Authority this 20th day of December, 2018. I, the undersigned, a duly appointed and qualified Authorized Signatory of the Commission of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of said Authority at a dilly rallprl mpptina of the !-'nmmiccinn rf eairl intlinrity bald in arrnrrianra xmith laUxi on December 20, 2018. By: Au orized Signatory California Statewide Communities Development Authority 5 4128.8546-2809.2 EXHIBIT A FORM OF SPECIAL ELECTION BALLOT A-1 4128-8546-2809.2 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA SPECIAL ELECTION BALLOT (Mailed -Ballot Election) This ballot is for the use of the authorized representative of the following owner of land within the California Statewide Communities Development Authority Community Facilities District No_ 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "Community Facilities District"): Name of Landowner Number of Acres Owned Total Votes According to the provisions of the Mello -Roos Community Facilities Act of 1982, and resolutions of the Commission (the "Commission") of the California Statewide Communities Development Authority (the "CSCDA"), the above -named Landowner is entitled to cast the number of votes shown above under the heading "Total Votes," representing the total votes for the property owned by the Landowner. In order to be counted, this ballot must be executed and certified below and be returned, by mail or in person, to the CSCDA Secretary, c/o Besorah Won, Esq., Orrick, Herrington & Sutcliffe LLP, 777 S. Figueroa Street, Suite 3200, Los Angeles, CA 90017, prior to 2:00 p.m. on Thursday, December 20, 2018. Mailing by that time will not be sufficient. This ballot must be received by the time stated in order to be counted. AN "X" OR OTHER MARK WILL CAST ALL VOTES ASSIGNED TO THIS BALLOT. BALLOT MEASURE MARK "YES" OR "NO" WITH AN "X": Shall the Commission (the "Commission") of the California Statewide Communities Development Authority, by and through its Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "District"), be authorized to annually levy a special tax within the District to finance the acquisition and construction of certain public capital improvements (the "Improvements") and certain utility undergrounding (the "Undergrounding"), and be authorized to incur debt in the principal amount of not to exceed eight million eight hundred thousand dollars ($8,800,000) to pay for the Improvements and Undergrounding, including the payment, using the proceeds of A-2 YES NO 4128-8546-2809.2 the special tax collections, of principal of and interest on the debt and including the repayment of funds advanced for the authorized purposes of the Community Facilities District all as described in the Commission's Resolution of Formation and in the Commission's Resolution Deeming it Necessary to Incur Bonded Indebtedness, both adopted December 20, 2018; and shall the fiscal 201 Q 1 n ti ., 1:....:t for the District be 11Jl..ai year G�J1C7-17 appropriations V11J limit 1V1 L11G LJ1JL1LL4 established in the amount of eight hundred fifty thousand dollars ($850,000)? Certification for Special Election Ballot The undersigned declares under penalty of perjury under the laws of the State of California that such person is the authorized representatives of the above -named Landowner and is legally authorized and entitled to cast this ballot on behalf of the above -named Landowner and to bind the Landowner thereby, and that this ballot is signed by the undersigned as of the date set forth below. Date: [PROPERTY OWNER], a [DESCRIPTION] By: Name: Title: [SIGNATURE TO BE NOTARIZED] A-3 4128-8546-2809.2 EXHIBIT 13 FORM OF WAIVER AND CONSENT WAIVER AND CONSENT SHORTENING TIME PERIODS AND WAIVING VARIOUS R 1~ QT T1P FMF1\?TS FnR CONnr TCTINr: A MAPEED-u e LLnT Er ECTInNI CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO.2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA [PROPERTY OWNER] (the "Owner") is the owner of the real property listed by Assessor's Parcel Number ("APN") on Exhibit 1 attached hereto (the "Property"), which is within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "Community Facilities District"). The Owner understands that a special mailed -ballot, landowner election will be held to determine whether the authority to levy an annual special tax on property within Community Facilities District, including the above -numbered parcels, to fund the acquisition and construction of certain public capital improvements and certain utility undergrounding, and to incur indebtedness to be secured and repaid by the special tax, and to establish an appropriations limit for the Community Facilities District, all as set forth in two resolutions related to the Community Facilities District to be considered by the Commission of the California Statewide Communities Development Authority on December 20, 2018 (the Resolution of Formation and the Resolution Deeming it Necessary to Incur Bonded Indebtedness), will be conferred upon that Commission. The Owner requests that the election be conducted at the earliest possible date. The Owner is the entity legally entitled and authorized to cast the ballot attributable to the above -referenced parcels in the landowner, mailed -ballot election. The Owner hereby waives any and all minimum time periods relative to the election pursuant to Government Code Section 53326(a). The Owner hereby waives the preparation and distribution of an impartial analysis of the ballot measure, as well as arguments in favor and against, under the authority of Government Code Section 53327(b). The Owner hereby waives the requirement to publish notice of the election under Government Code Section 53352. The Owner hereby waives the requirements regarding the time to mail ballots to the qualified electors under Elections Code Section 4101, and agrees that either mailed service or personal service of the ballot will be sufficient. B-1 4128-8546-2809.2 The Owner hereby waives the requirements regarding identification envelopes for the return of mailed ballots contained in Government Code Section 53327.5. The Owner hereby waives any and all defects in notice or procedure in the conduct of the election, whether known or unknown (except the right to vote and to have the ballots fairly counted), and states that the election is being expedited, pursuant to this Waiver and Consent, at the nartimilar instanr.P and rinii t of the nwnPr. The Owner hereby consents to the levy and collection of the special tax on the above - referenced parcels in accordance with the rate and method of apportionment attached as an exhibit to the Resolution of Formation of Community Facilities District and hereby waives any and all rights to challenge the inclusion of the above -referenced parcels in Community Facilities District. Finally, the Owner will execute the ballot and cast the votes assigned to the above -listed property. The undersigned declares under penalty of perjury under the laws of the State of California that such person is properly authorized to execute this Waiver and Consent and to bind the Owner thereby, and that the statements contained herein are true and correct and that this Waiver and Consent is signed by the undersigned as of the date set forth below. Date: [PROPERTY OWNER], a [DESCRIPTION] By: Name: Title: [SIGNATURE TO BE NOTARIZED] B-2 4128-8546-2809.2 CERTIFICATE RE RECEIPT OF PROPERTY OWNER WAIVER AND CONSENT FORMS CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA I, Norman Coppinger, Assistant to the Secretary and Authorized Signatory of the California Statewide Communities Development Authority (the "Authority") hereby certify: Attached hereto is a Certificate Re Registered Voters and Landowners (the "Certificate re Landowners") executed by David Taussig, President, David Taussig & Associates, Inc. Attached to the Certificate re Landowners is a listing of all of the owners of land (each, a "Landowner") contained within the boundaries of the above -captioned community facilities district (the "Community Facilities District"). I have received, and there are attached hereto, signed and dated forms from each and every Landowner from the Community Facilities District entitled "Waiver and Consent Shortening Time Periods and Waiving Various Requirements for Conducting a Mailed -Ballot Election." 4124-5154-9209.1 I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this declaration is executed on. December 20, 2018. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY 2 ppinger Assistant to the Secretary 4124-5154-9209.1 WAIVER AND CONSENT SHORTENING TIME PERIODS AND WAIVING VARIOUS REQUIREMENTS FOR CONDUCTING A MAILED -BALLOT ELECTION CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA TSG-Parcel 1, LLC, a Delaware limited liability company (the "Owner") is the owner of the real property listed by Assessor's Parcel Number ("APN") on Exhibit 1 attached hereto (the "Property"), which is within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California ("Community Facilities District"). The Owner understands that a special mailed -ballot, landowner election will be held to determine whether the authority to levy an annual special tax on property within the Community Facilities District, including the Property, to fund the acquisition and construction of certain public capital improvements and certain utility undergrounding, and to incur indebtedness to be secured and repaid by the special tax, and to establish an appropriations limit for the Community Facilities District, all as set forth in two resolutions related to the Community Facilities District to be considered by the Commission of the California Statewide Communities Development Authority on December 20, 2018 (the Resolution of Formation and the Resolution Deeming it Necessary to Incur Bonded Indebtedness), will be conferred upon that Commission. The Owner requests that the election be conducted at the earliest possible date. The Owner is the entity legally entitled and authorized to cast the ballot attributable to the Property in the landowner, mailed -ballot election. The Owner hereby waives any and all minimum time periods relative to the election pursuant to Government Code Section 53326(a). The Owner hereby waives the preparation and distribution of an impartial analysis of the ballot measure, as well as arguments in favor and against, under the authority of Government Code Section 53327(b). The Owner hereby waives the requirement to publish notice of the election under Government Code Section 53352. The Owner hereby waives the requirements regarding the time to mail ballots to the qualified electors under Elections Code Section 4101, and agrees that either mailed service or personal service of the ballot will be sufficient. The Owner hereby waives the requirements regarding identification envelopes for the return of mailed ballots contained in Government Code Section 53327.5. The Owner hereby waives any and all defects in notice or procedure in the conduct of the election, whether known or unknown (except the right to vote and to have the ballots fairly 4127-1230-3640.2 counted), and states that the election is being expedited, pursuant to this Waiver and Consent, at the particular instance and request of the Owner. The Owner hereby consents to the levy and collection of the special tax on the Property in accordance with the rate and method of apportionment attached as an exhibit to the Resolution of Formation of the Community Facilities District and hereby waives any and all rights to challenge the inclusion of the Property in the Community Facilities District. Finally, the Owner will execute the ballot and cast the votes assigned to the Property. The undersigned declares under penalty of perjury under the laws of the State of California that such person is properly authorized to execute this Waiver and Consent and to bind the Owner thereby, and that the statements contained herein are true and correct and that this Waiver and Consent is signed by the undersigned as of the date set forth below. Date: ) 2 • `? • / [SIGNATURE TO BE NOTARIZED] TSG-Parcel 1, LLC, a Delaware limited liability company By: Nam:�NN i"�. 2+q.47r~.40.7 Title: ZerZ /G l%r& x O 4/7 2 4127-1230-3640.2 ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of Orange ) On December 4, 2018 before me, Terri Hovdestad, Notary Public (insert name and title of the officer) personally appeared John M. Santry , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand a offi Signature (Seal) TERRI HOVDESTAD Notary Public - California Orange County Commission # 2244544 My Comm. Expires Jun 28, 2022 EXHIBIT 1 APNs for Subject Property 445-134-17 445-134-22 4127-1230-3640.2 CERTIFICATE RE REGISTERED VOTERS AND LANDOWNERS CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA I, David Taussig, the undersigned, hereby certify and declare: I have reviewed and am familiar with the map entitled "Proposed Boundaries of California. Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City ofNewport Beach, County of Orange, State of California" (the "Proposed Boundary Map") approved by Resolution No. 18SC1P-110 (Resolution of Intention) adopted by the. Commission (the "Commission") of the California Statewide Communities Development Authority (the "Authority") on November 15, 2018, the property situated within the boundary shown on the Boundary Map the "Subject Property"). I have examined the records of the Orange County Assessor and such other information as I deemed necessary, and have determined that the owners of the Subject Property are as shown on Exhibit A attached hereto. Based on a letter from the County of Orange Registrar of Voters delivered November 13, 2018, I have determined that there are no registered voters residing within the territory of the Subject Property. According to information in my possession respecting the Subject Property which 1 believe to be correct, the parcels of the Subject Property have the acreages shown on Exhibit. A. I certify the foregoing to be true and correct as of November 2 , 2018. David T.. ssig 'reside David Taus ' . & Asso 4.124-4662.0.696 EXHIBIT A LANDOWNER ASSESSOR'S PARCEL NUMBERS TOTAL ACREAGE TSG-Parcel 1, LLC 445-134-17 2.61. 445-134-22 Uptown Newport 445-133-07 13.19 Jamboree. LLC 445-134-29 A-1 4124-4662,0696 WAIVER AND CONSENT SHORTENING TIME PERIODS AND WAIVING VARIOUS REQUIREMENTS FOR CONDUCTING A MAILED -BALLOT ELECTION CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA TSG-Parcel 1, LLC, a Delaware limited liability company (the "Owner") is the owner of the real property listed by Assessor's Parcel Number ("APN") on Exhibit 1 attached hereto (the "Property"), which is within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California ("Community Facilities District"). The Owner understands that a special mailed -ballot, landowner election will be held to determine whether the authority to levy an annual special tax on property within the Community Facilities District, including the Property, to fund the acquisition and construction of certain public capital improvements and certain utility undergrounding, and to incur indebtedness to be secured and repaid by the special tax, and to establish an appropriations limit for the Community Facilities District, all as set forth in two resolutions related to the Community Facilities District to be considered by the Commission of the California Statewide Communities Development Authority on December 20, 2018 (the Resolution of Formation and the Resolution Deeming it Necessary to Incur Bonded Indebtedness), will be conferred upon that Commission. The Owner requests that the election be conducted at the earliest possible date. The Owner is the entity legally entitled and authorized to cast the ballot attributable to the Property in the landowner, mailed -ballot election. The Owner hereby waives any and all minimum time periods relative to the election pursuant to Government Code Section 53326(a). The Owner hereby waives the preparation and distribution of an impartial analysis of the ballot measure, as well as arguments in favor and against, under the authority of Government Code Section 53327(b). The Owner hereby waives the requirement to publish notice of the election under Government Code Section 53352. The Owner hereby waives the requirements regarding the time to mail ballots to the qualified electors under Elections Code Section 4101, and agrees that either mailed service or personal service of the ballot will be sufficient. The Owner hereby waives the requirements regarding identification envelopes for the return of mailed ballots contained in Government Code Section 53327.5. The Owner hereby waives any and all defects in notice or procedure in the conduct of the election, whether known or unknown (except the right to vote and to have the ballots fairly 4127-1230-3640.2 counted), and states that the election is being expedited, pursuant to this Waiver and Consent, at the particular instance and request of the Owner. The Owner hereby consents to the levy and collection of the special tax on the Property in accordance with the rate and method of apportionment attached as an exhibit to the Resolution of Formation of the Community Facilities District and hereby waives any and all rights to challenge the inclusion of the Property in the Community Facilities District. Finally, the Owner will execute the ballot and cast the votes assigned to the Property. The undersigned declares under penalty of perjury under the laws of the State of California that such person is properly authorized to execute this Waiver and Consent and to bind the Owner thereby, and that the statements contained herein are true and correct and that this Waiver and Consent is signed by the undersigned as of the date set forth below. Date: ) 2 • `? • / [SIGNATURE TO BE NOTARIZED] TSG-Parcel 1, LLC, a Delaware limited liability company By: Nam:�NN i"�. 2+q.47r~.40.7 Title: ZerZ /G l%r& x O 4/7 2 4127-1230-3640.2 ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of Orange ) On December 4, 2018 before me, Terri Hovdestad, Notary Public (insert name and title of the officer) personally appeared John M. Santry , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand a offi Signature (Seal) TERRI HOVDESTAD Notary Public - California Orange County Commission # 2244544 My Comm. Expires Jun 28, 2022 EXHIBIT 1 APNs for Subject Property 445-134-17 445-134-22 4127-1230-3640.2 CERTIFICATE RE RECEIPT OF EXECUTED BALLOTS AND DECLARING ELECTION RESULTS CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO.2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA I, Norman Coppinger, Assistant to the Secretary and Authorized Signatory of the California Statewide Communities Development Authority (the "Authority") hereby certify: I have reviewed and executed "Certificate re Receipt of Property Owner Waiver and Consent Forms" (the "Certificate re Waivers"). Attached thereto was a Certificate re Registered Voters and Landowners (the "Certificate re: Landowners"). Attached to the Certificate re Landowners was a listing of all of the owners of land (each, a "Landowner"), and the size of the parcels (each, a "Parcel"), contained within the boundaries of the above -captioned community facilities district (the "Community Facilities District"). I have caused to be distributed election ballots, in the form approved by the Commission of the Authority, to each Landowner. Prior to their distribution, each ballot had the name of the Landowner entitled to cast it printed or written on the ballot, and the number of votes to be cast by the ballot written or printed thereon according to the formula of one vote for each acre or portion of an acre within the Community Facilities District owned by the Landowner, rounded up to the next whole number, all as specified in Section 53326(b) of the Government Code of the State of California. The time for the return of executed ballots has now passed, and I have received and counted all properly executed ballots. Each properly executed ballot has been marked to show how the votes assigned to the ballot have been cast, and the ballot has been dated and signed under penalty of perjury by the Landowner or by a person certifying that he is the person appointed to cast the ballot for the Landowner as shown on the Waiver and Consent form attached to the Certificate re Waivers. I have personally reviewed the ballots to confirm that they were properly marked and signed, and I have counted the votes cast and hereby certify the result of that count to be: Total votes that could be cast: 17 Votes cast "Yes": 17 Votes cast "No": 0 4156-5974-8505.2 Based upon the foregoing, the percentage of votes cast "Yes" out of all votes that were cast is 100%. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this declaration is executed on December 20, 2018. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY 2 pinger Assistant fo the Secretary 4156-8974-85052 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA SPECIAL ELECTION BALLOT (Mailed -Ballot Election) This ballot is for the use of the authorized representative of the following owner of land within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "Community Facilities District"): Name of Landowner TSG-Parcel 1, LLC Number of Acres Owned Total Votes 2.61 3 According to the provisions of the Mello -Roos Community Facilities Act of 1982, and resolutions of the Commission (the "Commission") of the California Statewide Communities Development Authority (the "CSCDA"), the above -named Landowner is entitled to cast the number of votes shown above under the heading "Total Votes," representing the total votes for the property owned by the Landowner. In order to be counted, this ballot must be executed and certified below and be returned, by mail or in person, to the CSCDA Secretary, c/o Besorah Won, Esq., Orrick, Herrington & Sutcliffe LLP, 777 S. Figueroa Street, Suite 3200, Los Angeles, CA 90017, prior to 2:00 p.m. on Thursday, December 20, 2018. Mailing by that time will not be sufficient. This ballot must be received by the time stated in order to be counted. 4160-8275-4584 AN "X" OR OTHER MARK WILL CAST ALL VOTES ASSIGNED TO THIS BALLOT. BALLOT MEASURE Shall the Commission (the "Commission") of the California Statewide Communities Development Authority, by and through its Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "District"), be authorized to annually levy a special tax within the District to finance the acquisition and construction of certain public capital improvements (the "Improvements") and certain utility undergrounding (the "Undergrounding"), and be authorized to incur debt in the principal amount of not to exceed eight million eight hundred thousand dollars ($8,800,000) to pay for the Improvements and Undergrounding, including the payment, using the proceeds of the special tax collections, of principal of and interest on the debt and including the repayment of funds advanced for the authorized purposes of the Community Facilities District all as described in the Commission's Resolution of Formation and in the Commission's Resolution Deeming it Necessary to Incur Bonded Indebtedness, both adopted December 20, 2018; and shall the fiscal year 2018-19 appropriations limit for the District be established in the amount of eight hundred fifty thousand dollars ($850,000)? MARK "YES" OR "NO" WITH AN "X": YES NO 4160-8275-4584 Certification for Special Election Ballot The undersigned declares under penalty of perjury under the laws of the State of California that such person is the authorized representatives of the above -named Landowner and is legally authorized and entitled to cast this ballot on behalf of the above -named Landowner and to bind the Landowner thereby, and that this ballot is signed by the undersigned as of the date set forth below. Date: [SIGNATURE TO BE NOTARIZED] TSG-Parcel 1, LLC, a Delaware limited liability company By: Nam: ,} M. S� Title: 1ECLI'7X-4/6 ! iE AszEk4:7- 4160-8275-4584 ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California County of Orange ) On December 4, 2018 before me, Terri Hovdestad, Notary Public (insert name and title of the officer) personally appeared John M. Santry who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. I %�l Si. . ure �,A,II��I► (Seal) TERRI HOVDESTAD Notary Public - California Orange County Commission # 2244544 My Comm. Expires Jun 28, 2022 RESOLUTION NO. 18SCIP-120 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY RESOLUTION DECLARING RESULTS OF SPECIAL MAILED -BALLOT ELECTION WITHIN THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA WHEREAS, the Commission (the "Commission") of the California Statewide Communities Development Authority (the "Authority") has conducted proceedings under and pursuant to the terms and provisions of the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (beginning with Section 53311) of the Government Code of the State of California (the "Act"), to form its California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "Community Facilities District"), to authorize a special tax to finance the acquisition or construction of certain facilities (the "Improvements") and certain utility undergrounding (the "Undergrounding"), to authorize the issuance of debt to finance the Improvements and the Undergrounding, and to establish the appropriations limit for the Community Facilities District, all as set forth in the Commission's Resolution No. 18SCIP-117 (Resolution of Formation) and Resolution No. 18SCIP-118 (Resolution Deeming it Necessary to Incur Bonded Indebtedness), both adopted on December 20, 2018 (collectively, the "Formation Resolutions"); and WHEREAS, in order to confer upon the Commission the authority contained in the Formation Resolutions, a two-thirds approving vote by the qualified electors within the Community Facilities District is required; and WHEREAS, a special, mailed -ballot election has been conducted pursuant to the Commission's Resolution No. 18SCIP-119 (Resolution Calling Special Election), adopted December 20, 2018, to which reference is made for further particulars; and WHEREAS, a Certificate of Bond Counsel re: Preparation and Distribution of Ballots has been filed with the Secretary of the Authority (the "Secretary"); and WHEREAS, the Assistant to the Secretary has filed with the Commission a Certificate re: Receipt of Executed Ballots and Declaring Election Results (the "Certificate of Election Results"), dated December 20, 2018, and indicating that all ballots cast in the special, mailed -ballot election were cast in favor of the ballot proposition; and WHEREAS, the Commission has received, reviewed and hereby accepts the Certificate of Election Results; and WHEREAS, the Commission is fully advised in this matter; NOW THEREFORE, BE IT RESOLVED by the Commission of the California Statewide Communities Development Authority, as follows: 4147-8207-4649.2 Section 1. The above recitals are true and correct, and the Commission so finds and determines. Section 2. The Commission hereby finds and determines and declares that the ballot measure submitted to the qualified electors of the Community Facilities District has been passed and approved by those qualified electors in accordance with Sections 53328(a) and 53355 of the Act. Section 3. The Commission hereby authorizes and directs Bond Counsel to cause a Notice of Special Tax Lien to be prepared and to be recorded with the County Recorder of the County of Orange in accordance with the provisions of Section 3114.5 of the Streets and Highways Code and Section 53328.3 of the Act. The Notice of Special Tax Lien shall be recorded in the County Recorder's office within fifteen days of today's date. Section 4. This Resolution shall take effect immediately upon its passage. 2 4147-8207-4649.2 PASSED AND ADOPTED by the California Statewide Communities Development Authority this 20th day of December, 2018. I, the undersigned, a duly appointed and qualified Authorized Signatory of the Commission of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of said Authority at a duly called meeting of the Commission of said Authority in arrordanre with law nn December 20, 2018. By: uthorized Signatory California Statewide Communities Development Authority 3 4147-8207-4649.2 RECORDING REQUESTED BY AND WHEN RECORDED, PLEASE RETURN TO: TIM SNELLINGS, Secretary California Statewide Communities Development c/o David Taussig & Associates, Inc. 100 West San Fernando Street, Suite 430 San Jose, CA 95113 Attention: Nathan Perez . Recorded in Official Records, Orange County Hugh Nguyen, Clerk -Recorder III'IH!11111111 1111 11 1181,00 $ R 0 0 1 0 5 6 4 1 9 8$ 2019000002327 3:11 pm 01103/19 65 401 NO3 25 0.00 0.00 0.00 0.00 72.00 0.00 0.000.000.00 3.00 Authority SPACE ABOVE THIS LINE FOR RECORDER'S USE NOTICE OF SPECIAL TAX LIEN CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA Pursuant to the requirements of Section 3114.5 of the Streets and Highways Code and Section 53328.3 of the Government Code, a part of the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State. of California (the. "Act"), the undersigned, as an authorized signatory pursuant to a resolution adopted by the California Statewide Communities Development Authority (the "Authority"), hereby gives notice that a lien is hereby imposed upon the parcels listed in Exhibit A attached hereto to secure payment of a special tax which the Authority is authorized to levy. The special tax secured by this hen is authorized to be levied for the purpose of financing the authorized improvements and undergrounding described in Exhibit B attached hereto (the "Improvements" and "Undergrounding") including paying principal and interest on Debt, as that term is defined m the Act, the proceeds of which are used to finance a portion of the cost and expense of the Improvements and Undergrounding. The special tax is authorized to be levied within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "Community Facilities District"), which has been officially formed, and the lien of the special tax is a continuing hen which shall secure each annual levy of the special tax and which shall continue in force and effect until the special tax obligation is prepaid, permanently satisfied, or canceled in accordance with law or until the special tax ceases to be levied and a notice of cessation of special tax is. recorded in accordance with Section 53330.5 of the Government Code. The rate, method of apportionment, and manner of collection of the authorized special tax for the Community Facilities District is shown on Exhibit C attached hereto. The conditions under which the obligation to pay the special tax may be prepaid and permanently satisfied and the hen of the special tax canceled and the procedures for calculating the amount required for prepayment of the special tax are set forth in Section H. of Exhibit C. 4132-O39O-2233.1 rh Notice is further given that upon the recording of this notice in the office of the Orange County Recorder, the obligation to pay the special tax levy shall become a lien upon all nonexempt real property within the Community Facilities District in accordance with Section 3115.5 of the Streets and Highways Code. Reference is made to the Proposed Boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the `Boundary Map"), recorded on November 27, 2018, in Book 106 of Maps of Assessment and Community Facilities Districts, at Page 28, and as Instrument No. 2018-442520, in the office of the County Recorder of the County of Orange, State of California, which map is now the final boundary map for of the Community Facilities District. All of the property which is subject to this special tax lien is situated within the boundary of the Community Facilities District as shown on the Boundary Map. For further information concerning the current and estimated future special tax liability of owners or purchasers of real property within the Community Facilities District and subject to this special tax lien, interested persons should contact the Special Tax Consultant, David Taussig & Associates, 100 West San Fernando Street, Suite 430, San Jose, California 95113, telephone (949) 955-1500. DATED: December 20, 2018 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY Name: Norman Coppinger Title: Authorized Signatory 2 4132-0390-2233.1 CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. STATE OF CALIFORNIA COUNTY OF SACRAMENTO On December `:, 2018 before me, a Notary Public, personally appeared Norman Coppinger et • Vrrv� who proved to me on the basis of satisfactory evidence to be the person(s) whose names-)-is/are subscribed to the In instrument and acknowledged to me that he/the/they executed the same irOisf their authorized capacity.(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the persons) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand lnd official seal. 9 SENDY G. YOUNG Notary Public - California Sacramento County Commission # 2192294 My Comm. Expires Apr 17, 2021 Signature of Notary Public Place Notary Seal Above 4155-7608-9103.2 EXHIBIT A LIST OF PARCELS SUBJECT TO THE SPECIAL TAX CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO.201.8-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA APN Landowner 445-134-17 TSG-Parcel 1, LLC 445-134-22 TSG-Parcel 1, LLC 445-133-07 Uptown Newport Jamboree, LLC 445-134-29 Uptown Newport Jamboree, LLC A-1 4132-0390-2233.1 EXHIBIT B AUTHORIZED IMPROVEMENTS AND UNDERGROUNDING 1;. Preliminary and Incidental Expense and. Appurtenant. Work. and Improvements Generally, for each of the following categories of public capital facilities to be acquired, constructed and installed on public property (including dedicated rights -of -way and public easements), the authorized facilities shall be deemed to include the cost and expense of mobilization, clearing, grubbing, protective fencing and erosion control, excavation, curb, gutter and sidewalks, base and finish paving, striping, traffic signage, traffic signals, streetlights, landscaping, irrigation, barricades, undergrounding of various utilities, and related appurtenant work and facilities, together with the cost and expense of engineering design, plan review, project management, construction -related surety bonds or like security instruments, construction staking and management, inspection, and any like fees and costs incidental to such acquisition, construction and installation. 2. Public Capital Improvements Undergrounding of overhead utilities. Park improvements, including but not limited to playground infrastructure, irrigation, landscaping, utilities, drainage and grading. B-1 4132-0390-2233.1 EXHIBIT C RATE AND METHOD OF APPORTIONMENT C-1 4132-0390-2233.1. RATE AND METHOD OF APPORTIONMENT CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES ,DISTRICT NO.2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of CSCDA Community Facilities District. No.. 20.18-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California ("CFD No. 2018-03") and collected each Fiscal Year commencing in Fiscal Year 2019-2020, in an amount determined by the CSCDA Program Manager; through the application of the Rate and Method of Apportionment as described below. All Taxable Property in CFD No. 2018-03, 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 The terms hereinafter set forth have the following meanings: "Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final subdivision map, parcel map, condominium plan, record of survey, or other recorded County parcel map. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division .2 of Title 5 of the Government .Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 2018-03. including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax Levy collection schedules (whether by the CSCDA Program Manager or designee thereof or both); the costs of collecting the Special Tax Levies (whether by the County or otherwise); the costs of remitting the Special Tax Levies to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to CSCDA, CFD No. 2018-03, or any designee thereof of complying with arbitrage rebate requirements, or responding to questions from the Securities and Exchange Commission or Internal Revenue Service pertaining to any CFD No. 2018-03 Bonds or any audit of any CFD No. 2018-03 Bonds by the Securities and Exchange Commission or Internal Revenue Service; the costs to CSCDA, CFD No. 2018-03, the Trustee or any designee thereof of complying with CSCDA, CFD No. 2018-03, or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax Levy disclosure statements and responding to public inquiries regarding the Special Tax Levies; the costs to CSCDA, CFD No. 2018-03, or any designee thereof related to an appeal of the levy or application of the Special Tax; the costs associated with the release of funds from an escrow account; and CSCDA's annual administration fees and third California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 1 party expenses. Administrative Expenses shall also include amounts estimated or advanced by CSCDA or CFD No. 2018-03 for any other administrative purposes of CFD No. 2018-03, including, but not limited to, attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tax Levies. "Apartment Floor Area" means all of the square footage of living area within the perimeter .of the Apartment Property, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Apartment Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor.'s Parcel and/or as set forth in the appropriate records kept by the Building Division of the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Apartment Property. "Apartment Property" means an Assessor's Parcel of Developed Property on which all or any portion of a structure or structures with multiple Apartment. Units are located, and such Apartment Units are offered for rent and are not available for sale to individual owners. If Apartment Property is subsequently reclassified as Residential Property, Special Taxes levied on such reclassified Assessor's Parcels shall be modified to match those of Residential Property. "Apartment Unit" means one (1) for -rent residential unit on Apartment Property. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special. Tax" means the Special. Tax for each Land Use Class of Developed Property, as determined in accordance with Section C.a.(2), below. "Authorized Facilities" means the facilities authorized to be financed by CFD No. 2018-03. "Backup Special Tax" means the Backup Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.a.(3), below. "Building Permit" means a permit issued by the City or other governmental agency for the construction of a residential or non-residential building on an Assessor's Parcel.. "Buildout" means, for CFD No. 2018-03, that all expected Building Permits for Residential Property, Apaitt;ient Property, and Non -Residential Property to be constructed within CFD No. 2018-03 have been issued, as determined by the CSCDA Program Manager. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 2 "CFD No. 2018-03" means California• Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California. "CFD No. 2018-03 Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one (1) or more series, authorized by CFD No. 2018-03 under the Act and issued by CSCDA and secured by the Special Taxes. "City" means the City of Newport Beach. "Commission" means the governing board of CSCDA. "County" means the County of Orange. "CSCDA" means the California Statewide Communities Development Authority. "CSCDA Program Manager" means the program manager for CSCDA, or its designee. "Developed Property" means, for each Fiscal Year, all Taxable Property in Tax. Zone 1 and Tax Zone 2, for which a Building Permit for new construction was issued after January 1, 2018 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied. For purposes of this Rate and Method of Apportionment, any Developed Property for which Residential Floor Area, Apartment Floor Area, or Non-Resideiitial Floor Area is removed, shall be considered Developed Property under the previously assigned Land Use Class with the previously assigned Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area, untila ne.w Building Permit is issued, and a new Land Use Class and Special Tax can b.e assigned. Notwithstanding the above, a reclassification shall not occur, unless the CSCDA Program Manager determines that the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after such reclassification, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds is each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. "Developer" means TSG-Parcel 1, LLC or Uptown Newport Jamboree, LLC and its successors and assigns. The term "successors" does not refer to the successors to all or any portion of the property within CFD No. 2018-03 unless the new property owner receives an assignment of the Developer's rights and obligations described in an assignment agreement or similar agreement. "Dwelling Unit" means one (1) for -sale residential unit of any configuration, including, but not limited to, a single family attached or detached dwelling, condominium, mobile home, or otherwise, but excluding Apartment Units on Apartment. Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 3 "Final Mapped Property" means, for each Fiscal Year, all Taxable Property, exclusive. of Developed Property, Apartment Property, .Non -Residential Property, Taxable Property Owner Association Property, and Taxable Public Property, located in a Final Subdivision as of January 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied, but no earlier than January .1, 20.18. "Final Subdivision" .means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, approved by the County 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, in either case, creates individual lots for which Building Permits may be issued without further subdivision. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution, or other instrument pursuant to which CFD No. 2018-03 Bonds are issued, as modified, amended, and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the land use classes listed in Table 1 below. "Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C.a.1 below, that can be levied by CSCDA in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Non -Residential Floor Area" means the total gross building square footage of non- residential property lying within an Assessor's Parcel for which one (1) or more non- residential Building Permits have been issued. Such square footage shall be measured from outside wall to outside wall, exclusive of overhangs, porches, patios, carports, or. similar spaces attached to the building but generally open on at least two (2) sides, as determined by reference to the Building Perrnit(s) issued for that Assessor's Parcel, or if these are not available, as otherwise. determined by the CSCDA Program Manager. "Non -Residential Property" means all Assessor's .Parcels of Developed Property for which a Building Permit permitting the construction of one (1) or more non-residential units or facilities has been issued by the City or other governmental agency. "Outstanding Bonds" means all CFD No. 2018-03 Bonds which remain outstanding under the indenture. "Property Owner Association Property" means, for each Fiscal Year (i) any property within the boundaries of CFD No. 2018-03 that was owned by a .property owner association, including any master or sub -association, as of January 1 of the prior Fiscal Year, (ii) any property located in a Final Subdivision that was recorded as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determined from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street, or (iii) any property which, as of the May 1 California Statewide Communities Development Authority December 7,2018 CFD No. 2018-03 (Uptown Newport) Page 4 preceding the Fiscal Year for which the Special Tax is being levied, has been conveyed to a property owner's association, including any master or sub -association, provided evidence of such conveyance is submitted to the CSCDA Program Manager :by May 1 preceding the Fiscal Year for which the Special Tax is being levied. The total number of acres to be classified as Property Owner Association Property or Public Property, shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Proportionately" means, for Developed Property; that the ratio of the actual Special Tax Levy within Tax Zone 1 and Tax Zone 2, to the Assigned Special Tax or the Maximum Special Tax of the respective Tax Zone, is equal for all Assessor's Parcels of Developed Property. For Final Mapped. Property, Undeveloped Property,Taxable Property Owner Association Property, and Taxable Public Property categories, "Proportionately" means that the ratio of the actual Special Tax Levy per Acre within Tax Zone 1 and Tax Zone 2, to the Maximum Special Tax per Acre of their respective Land Use Class and Tax Zone, is equal. "Public Property" means, for .each Fiscal Year, any property within the boundaries of CFD No. 2018-03 that, as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied, was (i) owned by, irrevocably offered, or dedicated to the federal government, the State, the County, the City, or any local government or other public agency, provided that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use; or (ii) encumbered by a public utility easement making impractical its use for any purpose other than that set forth in the easement. The total number of acres to be classified as Property Owner Association Property or Public Property shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Rate and Method of Apportionment" means this Rate and Method of Apportionment for CFD No. 2018-03. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area for an Assessor's Parcel shall be as set forth .in the Building Permit(s) issued for. such Assessor's Parcel and/or as set forth in the appropriate records kept by the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Dwelling Unit. "Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued by the Building Division o.f the City for purposes of constructing one (1) or more Dwelling Units. Residential Property does not include Apartment Property for purposes of this Rate and Method of Apportionment. "Special Tax" or "Special Taxes" means the special tax to be levied in each Fiscal Year to fund the Special Tax Requirement for Facilities. California Statewide Communities Development Authority December. 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 5 "Special Tax Levy" or "Special Tax Levies" means the Special Tax to be levied in each Fiscal Year on Assessor's Parcel of Taxable Property to fund the Special Tax Requirement for Facilities, as applicable. "Special Tax Requirement" means that amount of .Special Taxes required, if any, in any Fiscal Year for CFD No. 2018-03 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the CFD No. 2018-03 Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2018-03 Bonds; (iii) pay all or a portion of the. Administrative Expenses as determined by the CSCDA Program Manager; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of Authorized Facilities to the extent that the inclusion of such amount does not increase the Special Tax Levy on Undeveloped Property; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax Levy, as determined by the CSCDA Program Manager pursuant to the Indenture. "State" means the. State of California. "Tax Zone" means one of the two (2) mutuaIly exclusive geographic areas defined below and identified in Attachment 1 ofthis Rate and Method of Apportionment. "Tax Zone 1" means the geographic area specifically identified as Zone 1 in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 2" means the geographic area specifically identified as Zone 2 in Attachment 1 of this Rate and Method of Apportionment. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2018-03 that are not exempt Property Owner Association Property or exempt Public Property or other property exempted pursuant to Section E herein. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E herein, "Taxable Public Property" means all Assessor's Parcels of Public Property that are not. exempt pursuant to Section E herein. "Total Floor Area" means the sum of the Residential. Floor Area, Apat Intent Floor Area, and. the Non- Residential Floor Area located on. an Assessor's Parcel. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, or Taxable Public Property. California. Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 6 B. ASSIGNMENT TO LAND USE CATEGORIE Each Fiscal Year, all Taxable Property within CFD No. 2018-03 shall be classified as Developed Property, Final Mapped Property, Undeveloped Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, or Taxable Public Property and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D below. C. MAXIMUM SPECIAL TAX RATE a. Developed. Property (I) Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax and (ii) the amount derived by application of the Backup Special Tax. (2) .Assigned Special Tax Residential Property shall be assigned to Land Use Classes 1 and 2 as listed in Table 1 below based an the description associated with each Dwelling Unit or Apartment Unit and its determined Tax Zone. Non -Residential. Property shall be assigned to Land Use Class 3 as listed in Table I below based on the description associated with square feet of Non -Residential Floor Area and it's determined Tax Zone. The Assigned. Special Tax that shall be levied .in Fiscal Year 2019-2020 for each Assessor's Parcel classified as Developed Property is shown on the following page in Table 1. California Statewide Communities Development Authority CFD No. 2018-03 (Uptown Newport) December 7, 2018 Page 7 TABLE 1 Assigned Special Tax for Developed Property CFD No. 2018-03 Fiscal Year 2019-2020 S 0, 1 Residential Property $750 per Dwelling Unit $950 per Dwelling Unit 2 Apaitcuent Property $0 per Apartment Unit $260 per Apartment Unit 3 Non -Residential Property $5.35 per Square Foot of Non -Residential Floor Area $5.35 per Square. Foot of Non -Residential Floor Area (3) Backup Special Tax The Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $5.0,028 per Acre of the Assessor's Parcel. If a Final Subdivision includes Assessor's Parcels of Taxable Property for which Building Permits have been issued, exclusive of Taxable Property Owner Association Property and Taxable Public Property, then the Backup Special Tax for each residential Dwelling Unit shall be calculated according to the following formula: Residential Dwelling Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Residential Floor Area/(Total. Floor Area)) / Number of residential Dwelling Units) In this case, the Backup Special Tax for each Apartment Unit shall be calculated according to the following formula: Apartment Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Apartment Floor Area/(Total Floor Area)) / Number of Apartment: Units) Finally, the Backup Special Tax for each square foot of Non Residential Floor Area shall be calculated according to the following formula: Non -Residential. Square Foot Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Non -Residential Floor Area/(Total Floor Area)) / Non -Residential Floor Area) California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 8 Furthermore, all Assessor's .Parcels within CFD No. 2018-03 shall be relieved simultaneously and permanently from the obligation to pay and disclose the Backup Special Tax if the CSCDA Program Manager calculates that (i) the annual debt service required for the Outstanding Bonds, when compared to the Assigned Special Tax that shall be levied against all Assessor's Parcels of Developed Property in CFD No_ 2018-03, results in 110% debt service coverage (i.e., the Assigned Special Tax that shall be levied against all Developed Property in CFD No. 2018-03 in each remaining Fiscal Year based on the then existing development is at least equal to the sum of (a) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in .each corresponding Fiscal Year, and (b) the Administrative Expenses as defined in. Section A herein), or (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it shall not issue any additional CFD No.. 2018-03 Bonds (except refunding bonds) to be supported by the Assigned Special Tax in CFD No. 2018-03. (4) Increase in the Assigned Special Tax and Backup Special Tax On each July I , commencing on July 1, 2020, the Assigned Special Tax and the Backup Special Tax shall be increased by an amount equal to two percent (2.00%) of the amount in effect. for the previous Fiscal Year. (5) Multiple Land Use Classes In some instances, an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Special Tax levied on an Assessor's Parcel shall be the sum of the Special Tax for all Land Use Classes located on that. Assessor's Parcel. Furthermore, if only a portion of Building Permits have been issued on an Assessor's Parcel, the remaining portion of the Assessor's Parcel, shall be considered Final Mapped Property. The CSCDA Program Manager's allocation to each type of property shall be final, b. Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property (1) Maximum Special Tax The Fiscal Year 2019-2020 Maximum Special Tax for each Assessor's Parcel of Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be $50,028 per Acre. (2) Increase in the Maximum. Special Tax On each July 1, commencing on July 1; 2020, the Maximum Special Tax for Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property within each respective Tax Zone, shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page.9 D. METHOD OQ,APPORTIONMENT OF THE SPECIAL TAN Commencing with Fiscal Year 2019-2020 and for each following Fiscal Year, the CSCDA Program Manager shall determine the Special Tax Requirement and shall (i) levy 100% of the Assigned. Special Taxes on Developed Property, and (ii) levy the remaining Special Taxes as prioritized below until the total Special Taxes levied equal the Special Tax Requirement. The Special Taxes shall be levied in each Fiscal Year as follows: 1. Annual Levy First: The Special Tax shall be levied on each Assessor's Parcel of Residential Property and Apartment. Property, within all Tax Zones, in an amount equal to 100% of the applicable Assigned Special Tax for Residential Property and Apartment Property respectively. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied on each Assessor's Parcel of Non -Residential Property, within all Tax Zones, until (i) the total Special Tax levied under the first two steps listed in this Section D equals the Special Tax Requirement, or (ii) the. Special Tax levied on Non -Residential Property .equals 100% of the applicable Assigned Special Tax, whichever comes first. Third: If additional monies are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Final Mapped Property, within all Tax Zones, until (i) the total Special Tax .levied under the first three steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Final Mapped Property equals 100% of the applicable Maximum Special Tax, whichever comes first. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special. Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, within all Tax Zones, until (i) the total Special Tax levied under the first four steps listed in this Section. D equals the Special Tax Requirement, or (ii) the. Special Tax levied on Undeveloped Property equals 100% of the applicable Maximum Special Tax, whichever occurs first. Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property for which the Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to 100% of the Maximum Special Tax for each such Assessor's Parcel of Developed Property, within all Tax Zones, until (i) the total Special Tax levied under the first five steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Developed Property equals 100% of the Maximum Special Tax for Developed Property, whichever occurs first. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 10 Sixth:. If additional monies areneeded to satisfy the Special Tax Requirement after the first five steps have beencompleted, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property, within all Tax Zones, until (i) the total Special Tax levied under the first six steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Property Owner Association Property equals 100% of the Maximum Special Tax for Property Owner Association Property, whichever occurs first. Seventh: If additional monies areneeded to satisfy the Special Tax Requirement after the first six steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property, within all Tax Zones, until (i) the total Special Tax levied under the first seven steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Public Property equals 100% of the Maximum Special Tax for Taxable Public Property, whichever occurs first. Notwithstanding the above, the CSCDA Program Manager or its designee may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax in the first step (above), when (i) CSCDA is no longer required to levy the Special Tax beyond the first step (above) in order to meet the Special Tax Requirement; and (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it will not issue any additional CFD No. 2018-03 Bonds (except refunding bonds), to be supported by the Special Tax. E. EXEMPTIONS No Special. Tax shall be levied on Public Property or Property Owner Association Property in CFD No. 2018-03 provided that no such exemption shall reduce the total Acreage of Taxable Property to less than 12.88 Acres. Tax-exempt status shall be assigned by the CSCDA Program Manager in the chronological order in which property in CFD No. 20.18-03 becomes Public Property or Property Owner Association Property. However, should an Assessor's Parcel of Public Property or Property Owner Association Property no longer be classified as tax-exempt, it will, from that point forward, be subject to the Special Tax. Furthermore, any Assessor's Parcel designated as Public Property or Property Owner Association Property that cannot be exempt from the Special Tax because such exemption would reduce the Acreage of all Taxable Property within CFD No. 2018-03 to less than 12.88 Acres shall be designated as Taxable Public Property or Taxable Property Owner Association Property. Prior to sixty (60) days before the issuance of a first series of CFD No. 20.18-03 Bonds, the CSCDA Program Manager may increase or decrease the final number of minimum taxable Acres in CFD No. 2018-03 to better reflect the actual tax-exemptacreage within CFD No. 2018-03. However, notwithstanding theabove, the final number of taxable Acres in CFD No. 2018-03 shall not be decreased if it causes an increase in the Special Tax levied on any existing Assessor's Parcel of Developed Property.. California :Stateivirle Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 11 F. REVIEW/APPEAL PROCESS Any taxpayer may file a written appeal of the Special Tax on his/her property with CSCDA, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made.. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CSCDA Program Manager or its designee shall review the appeal, meet with the appellant if the CSCDA Program Manager deems necessary, and advise the appellant of its determination within sixty (60) days after receipt of the appeal. If the CSCDA Program Manager agrees with the appellant, the CSCDA Program Manager shall make a recommendation. to CSCDA to eliminate or reduce the Special Tax on the appellant's property or to provide a refund to appellant. The approval of CSCDA or its designee must be obtained prior to any such elimination or reduction.. If the CSCDA Program Manager disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has thirty (30) days in which to appeal to CSCDA. by filing a written notice of appeal with the CSCDA Program Manager, provided that the appellant is current in his/her payments of the Special Taxes. The second appeal must specify the reasons for the appellant's disagreement with the CSCDA Program Manager's determination. The CSCDA Program Manager shall schedule the appeal to be heard before CSCDA within sixty (60) days after receipt of the second appeal. Interpretations may be made by CSCDA, without Resolution or Ordinance of the Commission, for purposes of clarifying any vagueness or ambiguity as it relates to the Special Taxes, the Rate and Method of Apportionment, Land Use Classes, or any other definition applicable to CFD No. 2018-03. Without Commission approval, the CSCDA Program Manager may make minor, non - substantive administrative and technical changes to the provisions of this document that do not materially affect the rate, method of apportionment, and manner of collection of the Special Tax for purposes of administrative efficiency or convenience or to comply with new applicable federal, state, or local law. G. MANNER OF COLLECTION The Special Tax Levy will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that. CFD No. 2018-03 may directly bill the Special Tax Levy, may collect Special Tax Levies 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. H. PREPAYMENT OF SPECIAL TAX Under this Rate and Method of Apportionment, an Assessor's Parcel within CFD No. 2018-03 is permitted to prepay the Special Tax. The obligation of the owner of an Assessor's Parcel to pay the Special. Tax may be fully or partially prepaid and permanently satisfied as described herein, California Statewide Communities Development Authority CFD No. 2018-03 (Uptown Newport) December 7, 2018 Page 12 provided that a prepayment may be made only for Assessor's Parcels of Developed Property, or for an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2019, and only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's .Parcel intending to prepay the Special Tax obligation shall provide the CSCDA Program Manager with written notice of intent to prepay. Within thirty (30) days of receipt of such written notice, the CSCDA Program Manager shall notify such owner of the Special Tax Prepayment Amount (defined below) for such Assessor's Parcel. The CSCDA Program Manager may charge such owner a reasonable fee for providing this service. If there are Outstanding Bonds, prepayment must be made not less than thirty (30) days prior to a date that notice of redemption of CFD No. 2018-03 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The following additional definitions apply to this Section H: "CFD Public Facilities Costs" means either $7,500,000 in 2018 dollars, which shall increase by the Construction Inflation Index on July 1, 2019, and on each July 1 thereafter, or such lower number as (i) shall be detemrined by the CSCDA .Program Manager as sufficient to provide funding for the Authorized Facilities under the authorized bonding program for CFD No. 2018- 03, or (ii) shall be determined by CSCDA concurrently with a covenant that it shall not issue any more CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Special Tax levy under this Rate and Method of Apportionment. "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 month of December in 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 CSCDA Program Manager 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 Costs minus (i) costs of Authorized Facilities previously paid from the Improvement Fund, (ii) monies currently on deposit in the Improvement Fund available to pay costs of Authorized Facilities, (iii) monies currently on deposit in an escrow fund established pursuant to the Indenture and expected to be available to fund Authorized Facilities and (iv) the amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of these funds. "Improvement Fund" means a fund or account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct Authorized Facilities. "Previously Issued Bonds" means, for any .Fiscal Year, all Outstanding Bonds that are outstanding under the Indenture after the first interest and/or principal payment date following. the current Fiscal Year. California StatewideCommunities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 13 1.. Prepayment in Full The Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Equals Special Tax Prepayment Amount As of the proposed. date of prepayment, the Special Tax Prepayment Amount shall be calculated according to the following paragraphs: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2018, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the Building Permit which has already been issued for such Assessor's Parcel. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Tax levy for CFD No. 2018-03 based on the Assigned Special Tax for Developed Property which could be levied on all expected development assuming Buildout .of CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the total estimated Backup Special Taxes at Buildout for the entire CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the. larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be redeemed (the "Bond Redemption Amount"). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Previously Issued Bonds to be redeemed (the "Redemption Premium"). b. Compute the current Future Facilities Costs. California Statewide Communities Development Authority .December 7,.2018 CFD No. 2018-03 (Uptown Newport) Page 14 7. Multiply the larger quotientcomputed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"). 8. Compute the amount .needed to pay interest on the Bond Reden-nption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Previously Issued Bonds. 9. Determine the Special Tax levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 10. Compute the minimum amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of the Special Tax Prepayment Amount, less any interest earnings attributed to the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 andsubtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount"). 12. The administrative fees and expenses of CFD No. 2018.03 are as calculated by the CSCDA Program Manager and includethe costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 2018-03 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 13. The reserve fund credit (the "Reserve. Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the: Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on theprepayment date, but in no event shall such amount. be less than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% of the: reserve requirement (as defined in the Indenture). 14. If any capitalized interest for the Previously Issued. 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 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment date (the "Capitalized Interest Credit"). 15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11, and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Special Tax Prepayment Amount"). California Statewide Communities Dei'etopment Authority December 7, 2018 CFD No. 2018-03 (Upton', Newport) Page 15 2. Prepayment in Part The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP = (PE A) x F A. These terms have the following. meaning: PP = the partial prepayment PE = the Special Tax Prepayment Amount calculated according to Section H.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. A = the Administration Fees and Expenses from Section H.1. The owner of any Assessor's Parcel who desires such prepayment shall notify the CSCDA Program Manager of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. With respect to any Assessor's Parcel that is partially prepaid, CSCDA shall (i) distribute the funds remitted to it according to Section H.3, and (ii) indicate in the records of CFD No, 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D. 3. General Provisions Applicable to the Prepayment of Special Tax (a). Use of the Special Tax Prepayment Amount The Special Tax Prepayment Amount, less the Administrative Fees and Expenses calculated according to Sections H.1 and H.2 which shall be retained by CFD No. 2018- 03, and less the Future Facilities Amount calculated according to Section H.1 which shall be deposited into the Improvement Fund, shall be deposited into specific funds established under the Indenture, to fully or partially redeem as many Outstanding Bonds as possible, and, if amounts are less than $5,000, to make debt service payments on the Outstanding Bonds (collectively designated as the "Bond Retirement Funds"). (b.). Full Prepayment of Special Tax Upon confirmation of the payment of the current Fiscal Year's entire Special Tax obligation, the CSCDA Program Manager may remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 16 Assessor's Parcel that is prepaid in accordance with Section H.1, the CSCDA Program Manager shall cause a suitable notice to be recorded in compliance with the Act, to indicate: the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, and the obligation to pay the Special Tax for such Assessor's Parcel shall cease. (c). Partial Prenavment of Snecial Tax With respect to any Assessor's Parcel that is partially prepaid, the CSCDA Program Manager shall (i) distribute or cause to be distributed the funds remitted to it according to Section H.2. and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's parcel, equal to the outstanding percentage (1.00 -- F) of the .Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D herein. (d). pebt Service Coverage Notwithstanding the foregoing, no prepayment of the Special Tax shall be allowed unless the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after the proposed prepayment, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in .Section :A herein. I. TERM OF SPECIAL TAN The Special Tax shall be levied until the final series of CFD No. 2018-03 Bonds have matured, provided. that the Special Tax shall not be levied after Fiscal Year 2069-2070, The Special Taxes will cease to be levied in an earlier Fiscal Year if the CSCDA Program Manager has determined that all required interest and principal payments on the CFD No. 2018-03 Bonds have been paid and CSCDA has covenanted that it will not issue any more. CFD No. 2018-03 Bonds (other than refunding Bonds) to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. California Statewide Communities Development Authority December 7, 2018 CFD: No. 2018-03 (Uptown Newport) page 17 ATTACHMENT 1 PROPOSED BOUNDARIES & IDENTIFICATION OF TAX ZONES OF CFD NO. 2018-03 SHEET 1 OF 1 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 l (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA \\-\\// '"--"\\\N\ 7 Fut panicu[arx ur Goes and tkme>ksiors: referents Is made to the parcels nape of the Orange County Assessor. Caf�onua. and to Tract map No. 177e3�eeorded on June %P. 2315 as inslruntent No. 201506320961 at Pam 17 through 23 to Book 937 or maps in the affix of l the County Rnoorder of Oro o County-.Ctddwnia, LEGEND P spored Boundaries o£ Co11 n i Statewide Comm. ales Devatopmeni Authority Community Fwrities Otsoict tlo. '2[718-03(Uptown Newpot). City e!No pgrt Saach. County of Omega. Gagon.fla Parcel tine Tax Zana 1 Tax Zona 2 445.13n•nn AscesnnrParcel Number icrzviu.,-:.•.rzer�.LtL-t. __ piss=� (1) Filed in theoffice of the Scorelnry of Caliti nia Statewide Communitlaa Development Auhority this day of„„•,_,.W...„.,.,..-..�..,,„�., 2018. Secretary, California Statewide Comrnunities 0evclopmentAuthorety (2I.harelly may that the within map showing proposed ha .l lardes or Cohfamia Statewide Cummurltles. Development Authority Community Facilities Distract No. 201B-03 (Uptown Newport}. City of Newport Beach, County Di Orange, Stale of California. was approved by the Commission -of the Coi0ornla Stateosltfe Communities Devetop tentAtithaedy a! a regtiIat tfcee ing thereof, bald on this . day day at 2018 by its resolution No. Secrelary, Caitomia Statewide Coa aides Dei+etopment Authority. (3) ;fed this day of 2098, at the hour of___ o'clock m, to Bode _ of Maps of A.sossmenY and Community Facilities Dlotricls-at page and as lnstrument et the affix of hhe County Recerdorof Oraog0 County, State at California. Hugh Nguyen Clerk -Recorder, County of iDrange BY Deputy Fee ORDINANCE NO. 18ORD-4 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY ORDINANCE LEVYING A SPECIAL TAX FOR FISCAL YEAR 2019-2020 AND FOLLOWING FISCAL YEARS SOLELY WITHIN AND RELATING TO THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA BE IT ENACTED BY THE COMMISSION OF THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY: SECTION 1. Pursuant to California Government Code Sections 53316 and 53340, and in accordance with the amended and restated Rate and Method of Apportionment (the "RMA"), as set forth in Exhibit A of Resolution No. 18SCIP-117 (the "Resolution ofFormation") adopted December 20, 2018, with respect to the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "Community Facilities District"), a special tax is hereby levied on all taxable parcels within the Community Facilities District for the 2019-2020 fiscal year and for all subsequent fiscal years in the amount determined by the Community Facilities District in accordance with the RMA, until collection of the Special Tax by the Commission ceases and a Notice of Cessation of Special Tax is recorded in accordance with Section 53330.5 of the Act, provided that this amount may in any fiscal year be levied at a lesser amount by resolution of the Commission. SECTION 2. The Authority's special tax consultant, currently David Taussig & Associates, Inc., 100 West San Fernando Street, Suite 430, San Jose, CA 95113, telephone (949) 955-1500, is authorized and directed, with the aid of the appropriate officers and agents of the Authority, to determine each year, without further action of the Commission, the appropriate amount of the Special Tax (pursuant to, and as that term is defined in, the Resolution of Formation) to be levied for the Community Facilities District, to prepare the annual Special Tax roll in accordance with the RMA, and to present the roll to the Commission for consideration. SECTION 3. Upon approval by the Commission, whether as submitted or as modified by the Commission, the special tax consultant is authorized and directed, without further action of the Commission, to provide all necessary and appropriate information to the Orange County Auditor in proper form, and in proper time, necessary to effect the correct and timely billing and collection of the Special Tax on the secured property tax roll of the County; provided, that as stated in the Resolution of Formation and in Section 53340 of the California Government Code, the Commission has reserved the right to utilize any method of collecting the Special Tax which it shall, from time to time, determine to be in the best interests of the Authority, including but not limited to, direct billing by the Authority to the property owners, supplemental billing and, under the circumstances provided by law, judicial foreclosure, all or any of which the Commission may implement in its discretion by resolution. 4143-2574-7481.3 SECTION 4. The appropriate officers and agents of the Authority are authorized to make adjustments to the Special Tax roll prior to the final posting of the Special Tax to the Orange County tax roll each fiscal year, as may be necessary to achieve a correct match of the Special Tax levy with the assessor's parcel numbers finally utilized by the Orange County Auditor in sending out property tax bills. SECTION 5. The Authority agrees that, in the event the Special Tax is collected on the secured tax roll of Orange County, the County may charge its reasonable and agreed charges for collecting the Special Tax as allowed by law, prior to remitting the Special Tax collections to the Authority. SECTION 6. Taxpayers claiming that the amount of the Special Tax on their property is not correct are referred to Section F of the RMA for the proper claims procedure. SECTION 7. If for any cause any portion of this Ordinance is found to be invalid, or if the Special Tax is found inapplicable to any particular parcel by a court of competent jurisdiction, the balance of this Ordinance, and the application of the Special Tax to all other parcels, shall not be affected. SECTION 8. This Ordinance shall take effect and be in force thirty (30) days after its final passage; and before the expiration of fifteen (15) days after its passage a summary of the same shall be published, with the names of the members voting for and against the same, at least once in a newspaper of general circulation published and circulated in the area of the Community Facilities District. 2 4143-2574-7481.3 1, the undersigned, the duly appointed and qualified representative of the Commission of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing ordinance was first read at a regular meeting of the Commission on December 20, 2018, and was duly passed and adopted by the Commission of the Authority at a duly called meeting of the Commission of the Authority held in accordance with law on January 10, 2019. AYES: Larry Combs, Kevin O'Rourke, Tim Snellings, Brian Moura, Dan Mierzwa, Jordan Kaufman, Marcia Raines NOES: ABSENT: ABSTAIN: 4143-2574-7481.3 3 Signatory California Statewide Communities Development Authority AFFIDAVIT OF PUBLICATION STATE OF CALIFORNIA, ) ) ss. County of Orange ) I am a citizen of the United States and a resident of the County aforesaid; I am over the age of eighteen years, and not a party to or interested in the above entitled matter. I am the principal clerk of The Orange County Register, a newspaper of general circulation, published in the city of Santa Ana, County of Orange, and which news- paper has been adjudged to be a newspaper of general circulation by the Superior Court of the County of Orange, State of California, under the date of November 19, 1905, Case No. A-21046, that the notice, of which the annexed is a true printed copy, has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to wit: January 18, 2019 "I certify (or declare) under the penalty of perjury under the laws of the State of California that the foregoing is true and correct": Executed at Santa Ana, Orange County, California, on Dated: January 18, 2019 Signature: Sandra Caos The Orange County Register 2190 S. Towne Centre Place Anaheim, CA 92806 (714) 796-2209 ORDINANCE NO.18ORD-4 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY ORDINANCE LEVYING A SPECIAL TAX FOR FISCAL YEAR 2019-2020 AND FOLLOWING FISCAL YEARS SOLELY WITHIN AND RELATING TO THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO.2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OFCALIFORgNIA ECALIFORNIA SECTION 1. Pursuant to California Government Code Sec- tions 53316 and 53340, and In accordance with the amended and restated Rate and Method of ApportionMent (the'RMA•), as set forth In Exhibit A of Resolution No. 18$CIP-117 (the •Resolution of F rma- tion') adopted December 20, 2018, with respect to the alifornla tate- wide Communities Development Aut �rriyty Community Fac Iities District ofi Orang2018-03 e State of Califoorrn a (then'com'community Newport Beach, eesaCoue- trict), a sppecial tax is hhere y I vied on all taxable paYrcceelsiiwithinfthe ll ubo(cl�elmlgytuent Facilities yea In District levied determined b I the Community Special Taxtby�the Commission with annd a Notic1ecollection oflCes ationtof Special Tax Is recorded In accordance with Section 533305 of the Act, provided that this amount ma91n any fiscal year be levied at a lesser amount by resolution of the Commission. rreendn DSECTIQQN 2. The Authority's special fax consultant, cur - Street, Suite 430, San Jose, CA 95113,51telephone (949) est 955-l�Fp�p,, is a thorized and directed, with the aid of the appropriate officers and agents of the Authority,�oto determine each year, withouut furtherfpac- (ipu�rsuant too and asstbat terappropriate is definedeInrthe amount of off Forma- tion) to be Ievied r the Community Facilities Dirict, to prepare annual the roll Special e ie Cl t x rollflTION 3. In for accordance eeawitth the RMA, and to pres- ent mission, whether aas submistted or modified rby ecten the Commiroval by ssione , f he spndfltfa conn- mission, to provide pu necessary and appropriate information to the Orange County Auditor in proper {o�rm, and inn proper time, necessary to effect the correct and and tiimely billing and Qcolljectioonn0atdh Special as on In the Resolutiof Formationaoaaaf nd In Section 53340 of t t Caw fornia .Government Code the Commission has reserved the right to utilize to time deteerrmn a to bbeirinn the best interesTts off the Auth shall, in in- cluding owners, supplemental billing and by the Authority to pro- videdy byplew, ludmentdclats foreclosure, discretion )Blond e, allror any of which the Commission SECTION 4. The appropriate officers and agents of the Au- thority are authorized to make adlustments to the Special Tax roll roll eachtfiscal year posting may be he Special Tanecessary M the achieve correct Cmattch of the Special Tax levy with the assessor's parcel numbers finally uti- lized by the Orange County Auditor in sending out property perty fax bilis. Special Tax Iss collected onON wthe secured faxroroll of 0raenge Couunty, the County SSppec al T charge a reasonablellowd Iand o°to remittingthethe�Special Taxax collections to the Authority. F SECTION 4. Taxpayers claiming that the amount of Special —tax on their proper �s not correct are referred to Section the of the RMA for the proper cla ms procedure. SECTION 7. If for any cause any portion of this Ordinance is found to be Invalid, or If the Special Tax Is found inapplicable to any particular parcel by a court of competent lurisdiction the bal- ance of this Ordinance and the application of the Special fax to all other parcels, shall not be affected SECTION 8. This Ordinance shall take effect and be In force thirty (33 days after its final passage; and before the expira- tion he published, with days nameests the members votinng for and agaainst the same, at least once in a newspaper of general circulation publish- ed and circulated in the area of the Community Facilities District. the o� gf the duly • • p • Statewide representa- tive Commission_ DO the California CE CERTIFY thhat Communities he oa regular meeting of the osregoiiingnor- ion of De- cember 20 or 18 at ndinance was first d d as duly passed meetan oaddopptCd by fheocom the Au- thority held in accordance with law on January 10,n28011.9. AYES: Larry Mierrzzwa, Jordan O'Rourke, Kaufman, i arcia Raines rian Moura, NOES: ABSENT: :ABSTAIN: By: l's Iorman wingerAuthor zed Signatory California lopment Statewide Publish: Orange County Register January 18, 2019 11223940 January 11, 2019 RETURN RECEIPT REQUESTED City Clerk City of Newport Beach P.O. Box 1768 Newport Beach, CA 92658 Orrick Orrick, Herrington & Sutcliffe LLP The Orrick Building 405 Howard Street San Francisco, CA 94105-2669 +1 415 773 5700 orrick.com Jaileez Campos E jaileezcampos@orrick.com D +1 415 773 5788 F +1 415 773 5759 Re: California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California To whom it may concern: Pursuant to Section 53315.6 of the Community Facilities District Act of 1982 (the "Act"), when any proceeding is initiated under the Act by a legislative body other than that of a city or county, a copy of the resolution of intention to form a community facilities district shall be transmitted to the legislative body of the city if the land to be assessed lies within the corporate limits of such city. Accordingly, transmitted herewith is a copy of a resolution adopted by the Commission of the California Statewide Communities Development Authority on November 15, 2018, stating its intention to form a community facilities district proposed to be named "California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" (the "Community Facilities District"). The land to be assessed in the Community Facilities District lies within the corporate limits of the City of Newport Beach. If you have any questions, please do not hesitate to call the undersigned. Sincerely, Jaileez C mpos Practice Assistant Enclosure 4145-8582-9913 RESOLUTION NO. 18SCIP-110 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY A RESOLUTION APPROVING A JOINT COMMUNITY FACILITIES AGREEMENT ANp DECLARING INTENTION TO ESTABLISH CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE O CALIFORNIA, AND TO LEVY A SPECIAL TAX THEREIN TO FINANCE T ACQUISITION AND CONSTRUCTION OF CERTAIN PUBLIC CAPITAL IMPROVEMENI}S AND CERTAIN UTILITY UNDERGROUNDING WHEREAS, the Commission (the "Commission") of the California Statewi e Communities Development Authority (the "Authority") has duly considered the advisability d necessity of establishing a community facilities district within the jurisdictional boundaries of t e City of Newport Beach (the "Local Agency") to be designated and known as "California Statewi e Communities Development Authority Community Facilities District No. 2018-03 (Upto Newport) City of Newport Beach, %County of Orange, State of California" (the "Communii!y Facilities District"), and levying a special tax therein to finance the acquisition and construction of certain public capital improvements (the "Improvements") and certain utility undergrounds g (the "Undergrounding"), under and pursuant to the terms and provisions of the "Mello-Ro s Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (beginning wi h Section 53311) of the Government Code of the State of California (the "Act"); and WHEREAS, the Improvements and Undergrounding will assist in mitigating tF e impact on the need for public facilities occasioned by new development that has occurred or is • expected to occur within the boundaries of the Community Facilities District and in mitigahgg visual blight; and WHEREAS, the Commission has reviewed the resolution of the Local Agency (tl "Local Agency Resolution") attached hereto as Exhibit A and incorporated herein by referenc and WHEREAS, the Local Agency Resolution describes the project within the proposed Community Facilities District and approves a joint community facilities agreement and r the authority of Section 53316.2 of the Act and the form of such joint community faciliti s agreement is embodied in such Local Agency Resolution; and WHEREAS, the Local Agency Resolution embodies a joint community facilities agreement and further provides that the adoption of a Resolution of Intention for the Community Facilities District by the Commission will act as an acceptance, by the Authority, of the terms of the joint community facilities agreement embodied in the Local Agency Resolution; and WHEREAS, there has been filed with the Commission a map entitled "Proposed Boundaries of California Statewide Communities Development Authority Community Facilities 4159-3584-7960.2 District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" (the "Boundary Map"); and WHEREAS, the Commission has determined that the establishment of the Community Facilities District is consistent with and follows the local goals and policies concerning the use of the Act that have been adopted by the Commission and are now in effect; and WHEREAS, Section 53314.9 of the Act further provides that the legislative body may enter into an agreement, by resolution, with the person or entity advancing the funds, to repay all or a portion of the funds advanced, as determined by the legislative body, with or without interest, under all the following conditions: (a) the proposal to repay the funds is included in both the resolution of intention to establish a community facilities district adopted pursuant to Section 53321 of the Act and in the resolution of formation to establish a community facilities district pursuant to Section 53325.1 of the Act, (b) any proposed special tax is approved by the qualified electors of the community facilities district pursuant to the Act, and (c) any agreement shall specify that if the qualified electors of the community facilities district do not approve the proposed special tax, the local agency shall return any funds which have not been committed for any authorized purpose by the time of the election to the person or entity advancing the funds; and WHEREAS, the Authority, TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC (together with TSG-Parcel 1, LLC, the "Developers") of the property within the proposed Community Facilities District, entered into a Deposit and Reimbursement Agreement, dated August 29, 2017 (the "Deposit Agreement"), that provides for the advancement of funds by the Developers to be used to pay costs incurred in connection with the establishment of the Community Facilities District and the issuance of special tax bonds thereby, and provides for the reimbursement to the Developers of such funds advanced, without interest, from the proceeds of any such bonds issued by the Community Facilities District; and WHEREAS, the Commission desires to include in this Resolution, in accordance with Section 53314.9 of the Act, the proposal to repay funds pursuant to the Deposit Agreement; and WHEREAS, the Commission is fully advised in this matter; NOW THEREFORE, BE IT RESOLVED by the Commission of the California Statewide Communities Development Authority, as follows: Section 1. The above recitals are true and correct, and the Commission so finds and determines. Section 2. It is the intention of the Commission, and the Commission hereby proposes, to establish the Community Facilities District. By adopting this Resolution of Intention, the Commission hereby accepts and agrees to the joint community facilities agreement embodied in the Local Agency Resolution, The Commission finds and determines that this resolution and the agreement it embodies is beneficial to the residents of the Local Agency and are in the best interests of the residents and customers of the Local Agency and of the future residents of the area within the Community Facilities District. 2 4159-3584-7960.2 Section 3. The boundaries of the territory proposed for inclusion in the Community Facilities District are more particularly described and shown on the Boundary Map now on file in the office of the Secretary, which map is hereby approved by the Commission. A reduced copy of the Boundary Map is marked Exhibit B and is attached hereto, and by this reference is incorporated herein and made a part of this Resolution. The Commission finds that the Boundary Map is in the form and contains the matters prescribed by Section 3110 of the California Streets and Highways Code and directs the Secretary or the Assistant to the Secretary to certify the adoption of this Resolution on the face of the Boundary Map. The Authority's special tax consultant is hereby authorized and directed to record a copy of the Boundary Map with the County Recorder of Orange County in accordance with the provisions of Section 3111 of the California Streets and Highways Code. Section 4. It is the intention of the Commission to finance the Improvements and Undergrounding described in the Local Agency Resolution and more particularly described in Exhibit C. All of the Improvements and the Undergrounding have an estimated useful life of five (5) years or longer. They are public facilities that the Local Agency or another governmental entity is authorized by law to construct, own or operate, or to which they may contribute revenue, and that are necessary to meet increased demands placed upon the Local Agency or upon other local government agencies as a result of development occurring and anticipated to occur within the Community Facilities District. The Improvements and Undergrounding need not be physically located within the Community Facilities District. Section 5. The cost of financing the Improvements and the Undergrounding includes incidental expenses comprising the costs of engineering, planning, design, construction staking, materials testing and coordination of the Improvements and the Undergrounding, together with the costs of environmental evaluations thereof, and all costs associated with the creation of the Community Facilities District, the issuance of any bonds, the determination of the amount of any special taxes or the collection or payment of any special taxes and costs otherwise incurred in order to carry out the authorized purposes of the Community Facilities District, together with any other expenses incidental to the Improvements and Undergrounding. A representative list of incidental expenses proposed to be incurred are set forth on Exhibit D attached hereto, which by this reference is incorporated herein and made a part of this Resolution. Section 7. It is the intention of the Commission that, except where funds are otherwise available, a special tax shall be annually levied within the Community Facilities District sufficient to finance the Improvements and Undergrounding, including but not limited to the payment of interest on and principal of any bonds to be issued to finance the Improvements and Undergrounding; the repayment of funds advanced by the Local Agency or the Developers for the Community Facilities District and including the repayment under any acquisition, deposit or other agreement (which shall not constitute a debt or liability of the Authority) of advances of funds or reimbursement for the lesser of the value or cost or work in -kind provided by any person for the Community Facilities District. Section 8. Upon recordation of a Notice of Special Tax Lien pursuant to Section 3114.5 of the California Streets and Highways Code, a continuing lien to secure each levy of the special tax shall attach to all nonexempt real property within the Community Facilities District, and this lien shall continue in force and effect until the special tax obligation is prepaid 3 4159-3584-7960.2 and permanently satisfied and the lien is cancelled in accordance with law, or until levy of the special tax by the Authority ceases. Section 9. It is the intention of the Commission that the proposed special tax will be collected through the regular Orange County secured property tax bills, and will be subject to the same enforcement mechanism, and the same penalties and interest for late payment, as regular ad valorem property taxes; however, the Commission reserves the right to utilize any other lawful means of billing, collecting and enforcing the special tax, including direct billing, supplemental billing, and, when lawfully available, judicial foreclosure of the special tax lien. Section 10. The rate and method of apportionment of the special tax (the "RMA"), including the maximum annual special tax for the Community Facilities District, is set forth in Exhibit E, attached hereto, which by this reference is incorporated herein and made a part of this Resolution. The RMA provides sufficient detail to allow each landowner or resident within the Community Facilities District to estimate the maximum amount that such person will have to pay, and specifies the conditions under which the obligation to pay the special tax may be prepaid and permanently satisfied. As required by the Act: (1) the maximum authorized special tax for financing the acquisition and construction of the Improvements and the financing of the Undergrounding that may be levied against any parcel of land used for private residential purposes (which use commences no later than the date on which an occupancy permit for private residential use is issued) is specified as a dollar amount and shall not increase by more than two percent (2%) per year; (2) the special tax shall not be levied for Improvements and Undergrounding against such property after the time stated in Exhibit E; and (3) under no circumstances shall the special tax be increased on private residential property, as a consequence of delinquency or default by the owners of any other parcel or parcels of land within the Community Facilities District, by more than ten per cent (10%) above the level that would have been levied had there been no delinquencies. Section 11. Should any property subject to the special tax be acquired by a public agency and then leased for private purposes, it is the intention of the Commission, pursuant to Section 53340.1 of the California Government Code, to levy the special tax on the leasehold or possessory interests in property owned by a public agency (which property is otherwise exempt from the special tax), to be payable by the owner of the leasehold or possessory interests in such property. Section 12. It is the intention of the Commission, pursuant to Section 53325.7 of the California Government Code, to establish the initial appropriations limit, as defined by subdivision (h) of Section 8 of Article XIIIB of the California Constitution, for the Community Facilities District in the amount of $850,000. Section 13. Notice is given that Thursday, the 20th day of December, 2018, at the hour of 2:00 o'clock P.M., at the offices of the California State Association of Counties, at 1100 K Street, Sacramento, California 95814, has been fixed by the Commission as the date, time and place for a public hearing to be held by the Commission to consider the establishment of the Community Facilities District, the proposed rate, method of apportionment and manner of collection of the special tax and all other matters as set forth in this Resolution. At the public hearing, any persons interested, including all taxpayers, property owners and registered voters within the Community Facilities District, may appear and be heard, and the testimony of all 4 4159-3584-7960.2 interested persons or taxpayers for or against the establishment of the Community Facilities District and the levy of the special tax, the extent of the Community Facilities District, the financing of the Improvements or Undergrounding, the establishment of the appropriations limits, or on any other matters set forth herein, will be heard and considered. Section 14. Any protests to the proposals in this Resolution may be made orally or in writing by any interested persons or taxpayers, except that any protests pertaining to the regularity or sufficiency of these proceedings shall be in writing and shall clearly set forth the irregularities and defects to which objection is made. The Commission may waive any irregularities in the form or content of any written protest and at the public hearing may correct minor defects in the proceedings. All written protests not presented in person by the protester at the public hearing must be filed with the Commission at or before the time fixed for the public hearing in order to be received and considered. Any written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Section 15. Written protests by a majority of the registered voters residing and registered within the Community Facilities District (if at least six such voters so protest), or by the owners of a majority of the land area within the Community Facilities District not exempt from the proposed special tax will require suspension of these proceedings for at least one year. If such protests are directed only against certain elements of the proposed Improvements or Undergrounding, or the special tax of the Community Facilities District or the other proposals contained in this Resolution, only those elements need be excluded from the proceedings. Section 16. The public hearing may be continued from time to time, but shall be completed within thirty (30) days from the date of the initial date set for such public hearing, except that if the Commission finds that the complexity of the Community Facilities District or the need for public participation requires additional time, the public hearing may be continued from time to time for a period not to exceed six (6) months from the date of the initial date set for such public hearing. Section 17. The Commission may at the public hearing modify this Resolution by eliminating any element of the Improvements or Undergrounding, or by changing the method of apportionment of the special tax for the Community Facilities District so as to reduce the maximum special tax for all or a portion of the owners of property within the Community Facilities District or by removing any territory from the Community Facilities District; except that if the Commission proposes to modify this Resolution in a way that will increase the probable (as distinct from the maximum, which may not be increased) special tax to be paid by the owner of any lot or parcel of land in the Community Facilities District, the Commission shall direct that a report be prepared that includes a brief analysis of the impact of the proposed modifications on the probable special tax to be paid by the owners of such lots or parcels of land in the Community Facilities District, and the Commission shall receive and consider the report before approving any such modifications or any resolution forming the Community Facilities District which includes such modifications. Section 18. At the conclusion of the public hearing, the Commission may abandon these proceedings or may, after passing upon all protests, determine to proceed with establishing the Community Facilities District. If the Commission determines at the conclusion 5 4159-3584-7960.2 of the public hearing to proceed with the establishment of the Community Facilities District, it expects that the proposed voting procedure will be by landowners of the Community Facilities District voting in accordance with the Act, as the Commission is informed that during the 90 days prior to the date set for the hearing, there have been zero registered voters residing within the Community Facilities District. The Commission will require this information to be confirmed before ordering the election. Section 19. The Authority's special tax consultant, David Taussig & Associates, in consultation with and on behalf of the County, is hereby requested to study the Community Facilities District and, at or before the time of the public hearing, to cause to be prepared and filed with the Commission a report which shall contain a brief description of the facilities by type which in its opinion will be required to adequately meet the needs of the new development which has occurred and/or is expected to occur within the Community Facilities District, together with estimates of the cost of financing the Improvements and Undergrounding and the incidental expenses related thereto. The report shall, upon its presentation, be submitted to the Commission for review, shall be available for inspection by the public, and shall be made a part of the record of the public hearing. Section 20. To the extent the Improvements will not be constructed by the Local Agency, in the opinion of the Commission, the public interest will not be served by allowing the property owners in the Community Facilities District to intervene in a public bidding process pursuant to Section 53329.5(a) of the Act. Section 21. Notice of the time and place of the public hearing shall be given by Bond Counsel in the following manner: (a) A Notice of Public Hearing in the form provided by the Act shall be published once in a newspaper of general circulation published in the area of the Community Facilities District, pursuant to Section 6061 of the Government Code of the State of California and shall be completed at least seven (7) days prior to the date set for such public hearing; and (b) A Notice of Public Hearing in the form provided by the Act shall be mailed, first class postage prepaid, to each owner of land, and to each registered voter residing, within the boundaries of the Community Facilities District (to property owners at their addresses as shown on the last equalized assessment roll, or as otherwise known to Bond Counsel). The mailing shall be completed at least fifteen (15) days prior to the date set for the public hearing. Section 22. The Developers have heretofore advanced certain funds, and may advance additional funds, which have been or may be used to pay costs incurred in connection with the establishment of the Community Facilities District and the issuance of special tax bonds thereby. The Commission proposes to repay all or a portion of such funds expended for such purpose, solely from the proceeds of such bonds, pursuant to the Deposit Agreement. The Deposit Agreement is hereby incorporated herein as though set forth in full herein. Section 23. This Resolution shall take effect immediately upon its adoption. 6 4159-3584-7960.2 PASSED AND ADOPTED by the California Statewide Communities Development Authority this 15th day of November, 2018. I, the undersigned, a duly appointed and qualified Authorized Signatory of the Commission of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of said Authority at a duly called meeting of the Commission of said Authority held in accordance with law on November 15, 2018. B 7 4159-3584-7960 2 ed Signatory California Statewide Communities Development Authority EXHIBIT A LOCAL AGENCY RESOLUTION 4159-3584-7960.2 RESOLUTION NO. 2018-44 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA: (1) AUTHORIZING THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY ("AUTHORITY") TO FORM A COMMUNITY FACILITIES DISTRICT WITHIN THE TERRITORIAL LIMITS OF THE CITY OF NEWPORT BEACH TO FINANCE CERTAIN PUBLIC IMPROVEMENTS; (2) EMBODYING A JOINT COMMUNITY FACILITIES AGREEMENT SETTING FORTH THE TERMS AND CONDITIONS OF THE COMMUNITY FACILITIES DISTRICT FINANCING; (3) APPROVING AN ACQUISITION AGREEMENT AMONG THE AUTHORITY, THE CITY AND THE DEVELOPER; AND (4) AUTHORIZING STAFF TO COOPERATE WITH THE AUTHORITY AND ITS CONSULTANTS IN CONNECTION THEREWITH WHEREAS, the City of Newport Beach ("City") is a municipal corporation and charter city duly organized and existing under and by virtue of the laws of the State of California (the "State"); WHEREAS, the California Statewide Communities Development Authority (the "Authority") is a California joint -exercise of powers authority lawfully formed and operating within the State pursuant to an agreement (the "Joint Powers Agreement") entered into as of June 1, 1988 under the authority of Title 1, Division 7, Chapter 5 (commencing with Section 6500) of the California Government Code; WHEREAS, the City is a party to the Joint Powers Agreement and by virtue thereof a member (a "Program Participant") of the Authority; WHEREAS, the Joint Powers Agreement was entered into to establish the Authority as an agency authorized to issue bonds to finance projects within the territorial limits of its Program Participants; WHEREAS, the Joint Powers Agreement authorizes the Authority to undertake financing programs under any applicable provisions of State law to promote economic development, the stimulation of economic activity, and the increase of the tax base within the jurisdictional boundaries of its Program Participants; WHEREAS, the "Mello -Roos Community Facilities Act of 1982," being Chapter 2.5, Part 1, Division 2, Title 5 (beginning with Section 53311) of the Government Code of the State (the "Act") is an applicable provision of State law available to, among other things, finance public improvements necessary to meet increased demands placed upon local agencies as a result of development; WHEREAS, there is a development project known as "Uptown Newport" (the "Development Project") in the City owned by TSG — Parcel 1, LLC, a Delaware limited partnership and Uptown Newport Jamboree, LLC, a Delaware limited liability company (collectively, the "Developer") and the Developer has requested the City to consider formation of a community facilities district for the Development Project under the Act; Resolution No. 2018-44 Page 2 of 8 WHEREAS, the City does not desire to allocate City resources and City staff time to the formation and administration of a community facilities district and to the issuance of bonds; WHEREAS, the Development Project will promote economic development, the stimulation of economic activity, and the increase of the tax base within the City; WHEREAS, both the Authority and the City are "local agencies" under the Act; WHEREAS, the Act permits two or more local agencies to enter into a joint community facilities agreement to exercise any power authorized by the Act; WHEREAS, the City desires to enter into such an agreement with the Authority to authorize the Authority to form a community facilities district within the territorial limits of the City to finance certain public improvements required of the Development Project; WHEREAS, a form of Acquisition Agreement (the "Acquisition Agreement") among the Authority, the City and the Developer has been presented to the City Council and is on file with the City Clerk; WHEREAS, nothing herein constitutes the City's approval of any applications, Development Project entitlements and/or permits, and such, to the extent required in the future, are subject to and contingent upon City Council approval following, to the extent applicable, environmental review in compliance with the California Environmental Quality Act; WHEREAS, nothing herein affects, without limitation, requirements for and/or compliance with any and all applicable and/or necessary improvement standards, land use requirements or subdivision requirements relating to the Development Project or any portion thereof, which obligations are and shall remain independent and subsisting; WHEREAS, all significant environmental effects for the development of the Uptown Newport Planned Community have been adequately addressed in the previously certified Environmental Impact Report No. ER2012-001 (SCH No. 2010051094) ("EIR"), which included a mitigation, monitoring and reporting program and statement of overriding considerations, and the City of Newport Beach intends to use said document for the approval of the creation of a Community Facilities District (CFD) to finance public improvements associated with the Uptown Newport Planned and its implementation. Copies of the previously prepared environmental document are available for public review and inspection at the Planning Division or at the City of Newport Beach website at www. newportbeachca.gov/cegadocuments; WHEREAS, none of the conditions described in Section 15162 of the CEQA Guidelines calling for preparation of a subsequent or supplemental EIR have occurred, and the CFD and its implementation do not require changes or additions to the EIR pursuant to Section 15164 of the CEQA Guidelines; WHEREAS, no new effects would occur, nor would a substantial increase in the severity of previously identified significant effects occur as the result of this CFD, and this CFD identifies the same previously approved project with refined detailed drawings, no increase in intensity, and no changes to the development standards; Resolution No. 2018-44 Page 3 of 8 WHEREAS, there are no additional reasonable alternatives or mitigation measures that should be considered in conjunction With the CFD or its implementation; WHEREAS, the City Council finds that judicial challenges to the City's CEQA determinations and approvals of land use projects are costly and time consuming, and project opponents often seek an award of attorneys' fees in such challenges; WHEREAS, project applicants are the primary beneficiaries of such approvals, it is appropriate that such applicants should bear the expense of defending against any such judicial challenge, and bear the responsibility for any costs, attorneys' fees and damages which may be awarded to a successful challenger; and WHEREAS, the City Council is fully advised in this matter. NOW THEREFORE, the City Council of the City of Newport Beach resolves as follows: Section 1. The City hereby specifically finds and declares that the actions authorized hereby constitute and are with respect to municipal affairs of the City and the statements, findings and determinations of the City set forth in the recitals above and in the preambles of the documents approved herein are true and correct. Section 2. This resolution shall constitute full "local approval," under Section 9 of the Joint Powers Agreement, and under the Authority's Local Goals and Policies (see below), for the Authority to undertake and conduct proceedings in accordance herewith and under the Act to form a community facilities district (the "Community Facilities District") with boundaries substantially as shown on Exhibit A, attached hereto, to designate separate improvement areas within the Community Facilities District (each, an "Improvement Area"), to authorize a special tax within each Improvement Area and to issue bonds, in one or more series on a taxable or tax exempt basis, for each Improvement Area secured by the special taxes. Section 3. The Joint Powers Agreement, together with the terms and provisions of this resolution, shall together constitute a joint community facilities agreement between the City and the Authority under the Act. As, without this resolution, the Authority has no power to conduct proceedings under the Act to form the Community Facilities District, adoption by the Commission of the Authority of the Resolution of Intention to form the Community Facilities District under the Act shall constitute acceptance of the terms hereof by the Authority. Section 4. This resolution and the agreement it embodies are determined to be beneficial to and are in the best interests of the future residents of the area within the Community Facilities District. Section 5. The City acknowledges that the Authority has adopted Local Goals and Policies as required by Section 53312.7 of the Act. The City approves the use of those Local Goals and Policies in connection with the Community Facilities District; provided that the terms of any series of bonds issued for the Community Facilities District shall not exceed the parameters listed on Exhibit D. Resolution No. 2018-44 Page 4 of 8 Section 6. Pursuant to the Act and this resolution, the Authority may conduct proceedings under the Act to form the Community Facilities District and to have it authorize the financing of the facilities set forth on Exhibit B, attached hereto. All of the facilities are facilities that have an expected useful life of five years or longer and are facilities that the City or other local public agencies, as the case may be, are authorized by law to construct, own or operate, or to which they may contribute revenue. The facilities are referred to herein as the "Improvements," and the Improvements to be owned by the City are referred to as the "City Improvements." Section 7. The City Council certifies to the Commission of the Authority that all of the City Improvements are necessary to meet increased demands placed upon the City as a result of development occurring or expected to occur within the Community Facilities District. Joint community facilities agreements with each other local agency owning Improvements (any such local agency referred to herein as an "Other Local Agency") shall each contain a certification with respect to the Improvements to be owned by the Other Local Agency equivalent to that made by the City in this paragraph. Section 8. Prior to issuance of bonds, the Authority will apply the special tax collections within each Improvement Area to fund City Improvements as provided in the Acquisition Agreement, either for the acquisition of City Improvements or for the construction of City Improvements by the City. Following the issuance of bonds of an Improvement Area, the Authority will apply the special tax collections within the Improvement Area initially as required by the documents under which any bonds are issued; and thereafter, to the extent not provided in the bond documents, to the Authority's reasonable administrative costs incurred in the administration of the Community Facilities District. The Authority will remit any special tax revenues for any Improvement Area remaining after the final retirement of all bonds for such Improvement Area to the City and to each Other Local Agency in the proportions specified in the Authority's proceedings. The City will apply any such special tax revenues it receives for authorized City Improvements and its own administrative costs only as permitted by the Act. The joint community facilities agreements with each Other Local Agency must require such Other Local Agency to apply the special tax revenues they receive for their authorized Improvements under the Community Facilities District and for their own related administrative costs only as permitted by the Act. Section 9. The Authority will administer the Community Facilities District, including employing and paying all consultants, annually levying the special tax and all aspects of paying and administering the bonds, and complying with all State and Federal requirements appertaining to the proceedings, including the requirements of the United States Internal Revenue Code. The City will cooperate fully with the Authority in respect of the requirements of the Internal Revenue Code and to the extent information is required of the City to enable the Authority to perform its disclosure and continuing disclosure obligations with respect to the bonds, although the City will not participate in nor be considered to be a participant in the proceedings respecting the Community Facilities District (other than as a party to the agreement embodied by this resolution) nor will the City be or be considered to be an issuer of the bonds or an obligated person for purposes of Rule 15c2-12. The Authority shall obtain a provision equivalent to this paragraph in the joint community facilities agreement with each Other Local Agency. Resolution No. 2018-44 Page 5 of 8 Section 10. Upon the first levy of special tax within the Community Facilities District or any Improvement Area prior to the issuance of bonds for an Improvement Area, the Authority shall establish and maintain a special fund (which may be established with a bond trustee under an indenture or trust agreement) to be known as the "Uptown Newport Project Community Facilities District, Improvement Area No. _ Acquisition and Construction Fund." Special taxes collected within the applicable Improvement Area prior to the issuance of bonds shall be deposited in a separate account of the Acquisition and Construction Fund for such Improvement Area. If the Authority issues bonds for the Improvement Area and bond proceeds become available to finance the Improvements, the Authority shall deposit the portion of bond proceeds which is intended to be utilized to finance the Improvements in a separate account of the Acquisition and Construction Fund for such Improvement Area. The Acquisition and Construction Fund will be available both for City Improvements and for the Improvements pertaining to each Other Local Agency. Amounts in the Acquisition and Construction Fund shall be disbursed in accordance with the provisions of the indenture or other similar document governing the bonds issued for the applicable Improvement Area, the Acquisition Agreement and/or the relevant joint community facilities agreement or acquisition agreement for any Other Local Agency. Section 11. As respects the Authority and the Other Local Agencies, the City agrees to fully administer, and to take full governmental responsibility for, the construction or acquisition of the City Improvements including but not limited to environmental review, approval of plans and specifications, bid requirements, performance and payment bond requirements, insurance requirements, contract and construction administration, staking, inspection, acquisition of necessary property interests in real or personal property, the holding back and administration of retention payments, punch list administration, and the Authority and the Other Local Agencies shall have no responsibility in that regard. The City reserves the right, as respects the Developer, to require the Developer to contract with the City to assume any portion or all of this responsibility. The Authority shall obtain a provision equivalent to this paragraph in the joint community facilities agreement with each Other Local Agency. Section 12. The City agrees to require the Developer to indemnify and to hold the Authority, its other members, and its other members' officers, agents and employees, and the Other Local Agencies and their officers, agents and employees (collectively, the "Indemnified Parties") harmless from any and all claims, suits and damages (including costs and reasonable attorneys' fees) arising out of the design, engineering, construction and installation of the City Improvements. The Authority shall obtain a provision equivalent to this paragraph in each joint community facilities agreement with each Other Local Agency naming the City and its officers, agents and employees as Indemnified Parties with respect to such Other Local Agency's Improvements. Section 13. As respects the Authority and each Other Local Agency, the City agrees — once the City Improvements are constructed according to the approved plans and specifications — to accept ownership of the City Improvements, to take maintenance responsibility for the City Improvements. Resolution No. 2018-44 Page 6 of 8 Section 14. The City acknowledges the requirement of the Act that if the City Improvements are not completed prior to the adoption, by the Commission of the Authority, of the Resolution of Formation of the Community Facilities District, the City Improvements must be constructed as if they had been constructed under the direction and supervision, or under the authority of, the City. The City acknowledges that this means all City Improvements must be constructed under contracts that require the payment of prevailing wages as required by Section 1720 and following of the Labor Code of the State of California. The Authority makes no representation that this requirement is the only applicable legal requirement in this regard. The City reserves the right, as respects the Developer, to assign appropriate responsibility for compliance with this paragraph to the Developer. Section 15. The form of the Acquisition Agreement attached hereto as Exhibit C is hereby approved, and each of the City Manager, Assistant City Manager, or such person as the City Manager or Assistant City Manager shall designate (each, an "Authorized Officer") is authorized to execute, and deliver to the Developer, the Acquisition Agreement on behalf of the City in substantially that form, with such changes as shall be approved by the Authorized Officer after consultation with the City Attorney and the Authority's bond counsel, such approval to be conclusively evidenced by the execution and delivery thereof. Section 16. For City Improvements to be financed on an acquisition basis (that is, constructed by or on behalf of the Developer), after completion of the City Improvements and appropriate arrangements for the maintenance of the City Improvements, or any discrete portion thereof as provided in Section 53313.51 of the Act and in the Acquisition Agreement, to the satisfaction of the City, and in conjunction with the City's acceptance thereof, acquisition of the City Improvements shall be undertaken as provided in the Acquisition Agreement. For City Improvements to be financed on a construction basis (that is, constructed by the City or under contract with the City), the City may request disbursement from the special tax collections for reimbursement of the City or direct payment of costs in accordance with applicable law. Section 17. The City hereby consents to the formation of the Community Facilities District in accordance with this resolution and consents to the assumption of jurisdiction by the Authority for the proceedings respecting the Community Facilities District with the understanding that the Authority will hereafter take each and every step required for or suitable for consummation of the proceedings, the levy, collection and enforcement of the special tax, and the issuance, sale, delivery and administration of the bonds, all at no cost to the City and without binding or obligating the City's general fund or taxing authority. Section 18. The terms of the Agreement embodied by this resolution may be amended by a writing duly authorized, executed and delivered by the City and the Authority, except that no amendment may be made after the issuance of the bonds by the Authority that would be detrimental to the interests of the bondholders without complying with all of the bondholder consent provisions for the amendment of the bond resolutions, bond indentures or like instruments governing the issuance, delivery and administration of all outstanding bonds. Resolution No. 2018-44 Page 7 of 8 Section 19. Except to the extent of the City's agreement to take responsibility for and ownership of the City Improvements, no person or entity, including the Developer, shall be deemed to be a third party beneficiary of this resolution, and nothing in this resolution (either express or implied) is intended to confer upon any person or entity other than the Authority and the City (and their respective successors and assigns) any rights, remedies, obligations or liabilities under or by reason of this resolution. Section 20. The City shall be identified as a third -party beneficiary of all joint community facilities agreements between the Authority and the other local agencies to the extent of the provisions whereby the Other Local Agency agree to take responsibility for and ownership of their Improvements. Section 21. This resolution shall remain in force until all bonds have been retired and the authority to levy the special tax conferred by the Community Facilities District proceedings has ended or is otherwise terminated. Section 22. The City Council hereby authorizes and directs each Authorized Officer and other appropriate City staff to cooperate with the Authority and its consultants and to do all things necessary and appropriate to carry out the intent of this resolution and the Community Facilities District financing, and to execute any and all certificates and documents in connection with the bond issuance as shall be approved by an Authorized Officer after consultation with the City Attorney and the Authority's bond counsel. Section 23. The City Council hereby approves delivery of a certified copy of this resolution to the Authority's Bond Counsel, Orrick, Herrington & Sutcliffe LLP. Section 24. The recitals provided in this resolution are true and correct and are incorporated into the operative part of this resolution. Section 25. If any section, subsection, sentence, clause or phrase of this resolution is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this resolution. The City Council hereby declares that it would have passed this resolution, and each section, subsection, sentence, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid or unconstitutional. Section 26. The requirement for environmental review under the California Environmental Quality Act ("CEQA") is satisfied by the City Council's previous certification of the Uptown Newport Planned Community final EIR (SCH No. 2010051094) (Resolution No. 2013-21). The finding of this Resolution is incorporated here by reference. Section 27. This resolution shall take effect immediately upon its adoption by the City Council, and the City Clerk shall certify the vote adopting the resolution. ADOPTED this 26th day of June, 2018. ATTEST: APPROVED AS TO FORM: CITY ATTORNEY'S OFFICF Aaron C. Harp City Attorney Attachments: Resolution No. 2018-44 Page8of8 Marshall "1(' " Duffield Mayor Exhibit A — Community Facilities District Boundaries Exhibit B — Authorized Improvements Exhibit C — Form of Acquisition Agreement Exhibit D — Project Description and Bond Parameters EXHIBIT A COMMUNITY FACILITIES DISTRICT BOUNDARIES . - •••••-„t"-• -;,1! r ." KO ,8 I 8 •:-• L. • .4,1 ilFra711 • • '. f • • • Lii • '1 •••• ;7. . • •*,:c.1 • g EXHIBIT B AUTHORIZED IMPROVEMENTS 1. Preliminary and Incidental Expense and Appurtenant Work and Improvements Generally, for each of the following categories of public capital facilities to be acquired, constructed and installed on public property (including dedicated rights -of -way and public easements), the authorized facilities shall be deemed to include the cost and expense of mobilization, clearing, grubbing, protective fencing and erosion control, excavation, curb, gutter and sidewalks, base and finish paving, striping, traffic signage, traffic signals, streetlights, landscaping, irrigation, barricades, undergrounding of various utilities, and related appurtenant work and facilities, together with the cost and expense of engineering design, plan review, project management, construction -related surety bonds or like security instruments, construction staking and management, inspection, and any like fees and costs incidental to such acquisition, construction and installation. 2. Public Capital Improvements Undergrounding of overhead utilities. Park improvements, including but not limited to playground infrastructure, irrigation, landscaping, utilities, drainage and grading. EXHIBIT C FORM OF ACQUISITION AGREEMENT ACQUISITION AGREEMENT BY AND AMONG CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, CITY OF NEWPORT BEACH AND TSG — PARCEL 1, LLC and UPTOWN NEWPORT JAMBOREE, LLC Dated as of , 20_ ACQUISITION AGREEMENT Recitals A. The parties to this Acquisition Agreement (the "Agreement") are the California Statewide Communities Development Authority (the "Authority"), City of Newport Beach, a California municipal corporation and charter city ("City"), Uptown Newport Jamboree, LLC, a Delaware limited partnership and TSG — Parcel 1, LLC, a Delaware limited liability company (collectively, the "Developer"). B. The effective date of this Agreement is , 20_. C. The Developer has applied for the financing of certain public capital improvements (each, as more particularly described on Exhibit A, an "Acquisition Improvement" and collectively, the "Acquisition Improvements") through the Authority. The Acquisition Improvements are to be owned and operated by the City, and the financing is to be accomplished through a Community Facilities District which will be established and administered by the Authority under and pursuant to the Mello -Roos Community Facilities Act of 1982 — California Government Code Sections 53311 and following (the "Act"). On j ], 20, the City adopted Resolution No. ( 1 authorizing the Authority to form a community facilities district (the "Community Facilities District") within the territorial limits of the City and designate improvement areas within the Community Facilities District (each, an "Improvement Area") to finance the Acquisition Improvements. On [ ], 20_, the Authority formed the Community Facilities District and, on the same date, a landowner election was conducted for each Improvement Area in which all of the votes were cast unanimously in favor of conferring the Community Facilities District authority on the Authority Commission. D. The Authority intends to levy special taxes for facilities and issue bonds for each Improvement Area, in one or more series, to fund, among other things, all or a portion of the Acquisition Improvements. The portion of the proceeds of such special taxes (including prepayments) and bonds allocable to the cost of the Acquisition Improvements, together with interest earned thereon, is referred to herein as the "Available Amount". E. The Community Facilities District will provide financing for the acquisition by the City of the Acquisition Improvements and the payment of the Acquisition Price (as defined herein) of the Acquisition Improvements from the Available Amount. Attached hereto as Exhibit A is a description of the Acquisition Improvements, which includes authorized discrete and usable portions, if any, of the Acquisition Improvements, pursuant to Section 53313.51 of the Act, to be acquired from the Developer. F. The parties anticipate that, upon completion of the Acquisition Improvements and subject to the terms and conditions of this Agreement, the City will acquire the completed Acquisition Improvements. G. Any and all monetary obligations of the City arising out of this Agreement are the special and limited obligations of the City payable only from the Available Amount, and no other funds whatsoever of the City shall be obligated therefor under any circumstances. H. Attached to this Agreement are Exhibit A (Description of the Acquisition Improvements and the Eligible Portions thereof), Exhibit B (Disbursement Request Form for Acquisition Improvements) and Exhibit C (Bidding, Contracting and Construction Requirements for Acquisition Improvements), all of which are incorporated into this Agreement for all purposes. Agreement ARTICLE I DEFINITIONS; COMMUNITY FACILITIES DISTRICT FORMATION AND FINANCING PLAN Section 1.01. Definitions. As used herein, the following capitalized terms shall have the meanings ascribed to them below: "Acceptable Title" means title (whether a fee interest, easement or other acceptable title or property rights) free and clear of all monetary liens, encumbrances, assessments, whether any such item is recorded or unrecorded, and taxes, except (i) those items which are reasonably determined by the City Engineer not to interfere with the intended use and therefore are not required to be cleared from the title, and (ii) the lien of the Community Facilities District or any other community facilities district or assessment district provided that the property owned by the City is exempt from such taxation or assessment. "Acquisition and Construction Fund" means each "Uptown Newport Community Facilities District Acquisition and Construction Fund" established by the Authority pursuant to the Resolution and Section 1.03 hereof for the purpose of paying the Acquisition Price of the Acquisition Improvements. "Acquisition Improvement" means a public capital improvement described in Exhibit A hereto. "Acquisition Price" means the total amount eligible to be paid to the Developer upon acquisition of an Acquisition Improvement as provided in Section 2.03, not to exceed the Actual Cost of the Acquisition Improvement. "Actual Cost" means the total cost of an Acquisition Improvement, as documented by the Developer to the satisfaction of the City and as certified by the City Engineer in an Actual Cost Certificate including, without limitation, (a) the Developer's cost of constructing such Acquisition Improvement including grading, labor, material and equipment costs, (b) the Developer's cost of designing and engineering the Acquisition Improvement, preparing the plans and specifications and bid documents for such Acquisition Improvement, and the costs of inspection, materials testing and construction staking for such Acquisition Improvement, (c) the Developer's cost of any performance, payment and maintenance bonds and insurance, including title insurance, required hereby for such Acquisition Improvement, (d) the Developer's cost of any real property or interest therein that is either necessary for the construction of such Acquisition Improvement (e.g., temporary construction easements, haul roads, etc.), or is required to be conveyed with such Acquisition Improvement in order to convey Acceptable Title thereto to the City or its designee, (e) the Developer's cost of environmental evaluation or mitigation required for such Acquisition Improvement, (f) the amount of any fees actually paid by the Developer to governmental agencies in order to obtain permits, licenses or other necessary governmental approvals and reviews for such Acquisition Improvement, (g) the Developer's cost for construction and project management, administration and supervision services for such Acquisition Improvement, and (h) the Developer's cost for professional services related to such Acquisition Improvement, including engineering, accounting, legal, financial, appraisal and similar professional services. "Actual Cost Certificate" means a certificate prepared by the Developer detailing the Actual Cost of an Acquisition Improvement, or an Eligible Portion thereof, to be acquired hereunder, as may be revised by the City Engineer pursuant to Section 2.03. 20 "Agreement" means this Acquisition Agreement, dated as of [ j, "Authority" means the California Statewide Communities Development Authority. "Authority Trust Agreement" means a Trust Agreement entered into by the Authority and an Authority Trustee in connection with the issuance of bonds. "Authority Trustee" means the financial institution identified as trustee in an Authority Trust Agreement. "Available Amount" shall have the meaning assigned to the term in Recital D. "Bonds" means bonds or other indebtedness issued by the Authority that is to be repaid with Special Taxes. "City" means the City of Newport Beach, California. "City Engineer" means the Engineer of the City or his/her designee who will be responsible for administering the acquisition of the Acquisition Improvements hereunder. "Code" means the Government Code of the State of California. "Community Facilities District" shall have the meaning assigned to the term in Recital C. "Developer" means, collectively or severally, as appropriate, TSG — Parcel 1, LLC, a Delaware limited partnership and Uptown Newport Jamboree, LLC, a Delaware limited liability company, and their respective successors and assigns. "Disbursement Request Form" means a requisition for payment of funds from an Acquisition and Construction Fund for an Acquisition Improvement, or an Eligible Portion thereof in substantially the form contained in Exhibit B hereto. "Eligible Portion" shall have the meaning ascribed to it in Section 2.03 below. "Improvement Area" means an improvement area of the Community Facilities District designated as such by the Authority in accordance with the Act. "Installment Payment" means an amount equal to ninety percent (90%) of the Actual Cost of an Eligible Portion. "Project" means the development of the property in the Community Facilities District, including the design and construction of the Acquisition Improvements and the other public and private improvements to be constructed by the Developer within the Community Facilities District. "Resolution" means City of Newport Beach Resolution No. f j, adopted [ ), 20 authorizing the execution and delivery of this Agreement. "Special Taxes" means annual special taxes for facilities, and prepayments thereof, authorized by the Community Facilities District to be levied by the Commission of the Authority within each Improvement Area. "Title Documents" means, for each Acquisition Improvement acquired hereunder, a grant deed or similar instrument necessary to transfer title to any real property or interests therein (including easements or rights of way), or an irrevocable offer of dedication of such real property with interests therein necessary to the operation, maintenance, rehabilitation and improvement by the City of the Acquisition Improvement (including, if necessary, easements for ingress and egress) and a bill of sale or similar instrument evidencing transfer of title to the Acquisition Improvement (other than said real property interests) to the City, where applicable. Section 1.02. Establishment of Community Facilities District. Developer has requested the City to permit the Authority to provide for financing of the Acquisition Improvements and collection of special tax through the establishment and authorization of the Community Facilities District and the City agreed by its adoption of the Resolution. The Community Facilities District was established by the Authority on [ ], 20_, and through the successful landowner election held that same day with respect to each Improvement Area of the Community Facilities District, the Commission of the Authority is authorized to levy the Special Taxes and to issue the Bonds to finance the Acquisition Improvements. Developer and the City agree to reasonably cooperate with one another and with the Authority in the completion of the financing through the issuance of the Bonds in one or more series for each Improvement Area. Section 1.03. Deposit and Use of Available Amount. (a) Prior to the issuance of Bonds for each Improvement Area, Special Taxes collected by the Authority (including from prepayments of Special Taxes) shall be deposited in the Acquisition and Construction Fund established by the Authority pursuant to the terms of the Resolution, and may be disbursed to pay the Acquisition Price of Acquisition Improvements in accordance with Article II of this Agreement. All funds in the Acquisition and Construction Fund shall be considered a portion of the Available Amount, and upon the issuance of the Bonds the Acquisition and Construction Fund shall be transferred to the Authority Trustee to be held in accordance with the Authority Trust Agreement. (b) If not already established pursuant to the Resolution, upon the issuance of the Bonds of an Improvement Area, the Authority will cause the Authority Trustee to establish and maintain the Acquisition and Construction Fund for the purpose of holding all funds for the Acquisition Improvements to be financed by such Improvement Area. All earnings on amounts in the Acquisition and Construction Fund shall remain in the Acquisition and Construction Fund for use as provided herein and pursuant to the Authority Trust Agreement. Money in such Acquisition and Construction Fund shall be available to respond to delivery of a Disbursement Request Form and to be paid to the Developer or its designee to pay the Acquisition Price of the Acquisition Improvements, as specified in Article II hereof. Upon completion of all of the Acquisition Improvements and the payment of all costs thereof, any remaining funds in the Acquisition and Construction Fund (less any amount determined by the City as necessary to reserve for claims against the account) (i) shall be applied to pay the costs of any additional Acquisition Improvements eligible for acquisition with respect to the Project, as approved by the Authority and, to the extent not so used, (ii) shall be applied by the Authority to call Bonds for such Improvement Area or to reduce Special Taxes for such Improvement Area as the Authority shall determine. Section 1.04. No City Liability; City Discretion; No Effect on Other Agreements. In no event shall any actual or alleged act by the City or any actual or alleged omission or failure to act by the City with respect to the Authority subject the City to monetary liability therefor. Further, nothing in this Agreement shall be construed as affecting the Developer's or the City's duty to perform their respective obligations under any other agreements, public improvement standards, land use regulations or subdivision requirements related to the Project, which obligations are and shall remain independent of the Developer's and the City's rights and obligations under this Agreement. ARTICLE II DESIGN, CONSTRUCTION AND ACQUISITION OF ACQUISITION IMPROVEMENTS Section 2.01. Letting and Administering Design Contracts. The Developer has awarded and administered, or will award and administer, engineering design contracts for the Acquisition Improvements to be acquired from Developer. All eligible expenditures of the Developer for design engineering and related costs in connection with the Acquisition Improvements (whether as an advance to the City or directly to the design consultant) shall be reimbursed at the time of acquisition of the Acquisition Improvements. The Developer shall be entitled to reimbursement for any design costs of the Acquisition Improvements only out of the Acquisition Price as provided in Section 2.03 and shall not be entitled to any payment for design costs independent of the acquisition of Acquisition Improvements. Section 2.02. Letting and Administration of Construction Contracts; Indemnification. State law requires that all Acquisition Improvements not completed prior to the formation of the Community Facilities District shall be constructed as if they were constructed under the direction and supervision, or under the authority, of the City. In order to assure compliance with those provisions, except for any contracts entered into prior to the date hereof, Developer agrees to comply with the requirements set forth in Exhibit C hereto with respect to the bidding and contracting for the construction of the Acquisition Improvements. The Developer agrees that all the contracts shall call for payment of prevailing wages as required by the Labor Code of the State of California. The Developer's indemnification obligation set forth in Section 3.01 of this Agreement shall also apply to any alleged failure to comply with the requirements of this Section, and/or applicable State laws regarding public contracting and prevailing wages. Section 2.03. Sale of Acquisition Improvements. The Developer agrees to sell to the City each Acquisition Improvement to be constructed by or on behalf of the Developer (including any rights -of -way or other easements necessary for the Acquisition Improvements, to the extent not already publicly owned), when the Acquisition Improvement is completed to the satisfaction of the City for an amount not to exceed the lesser of (i) the Available Amount from time to time or (ii) the Actual Cost of the Acquisition Improvement. Exhibit A, attached hereto and incorporated herein, contains a list of the Acquisition Improvements. Portions of an Acquisition Improvement eligible for Installment Payments prior to completion of the entire Acquisition Improvement are described as eligible, discrete and usable portions in Exhibit A (each, an "Eligible Portion"). At the time of completion of each Acquisition Improvement, or Eligible Portion thereof, the Developer shall deliver to the City Engineer a written request for acquisition, accompanied by an Actual Cost Certificate, and by executed Title Documents for the transfer of the Acquisition Improvement where necessary. In the event that the City Engineer finds that the supporting paperwork submitted by the Developer fails to demonstrate the required relationship between the subject Actual Cost and eligible work, the City Engineer shall advise the Developer that the determination of the Actual Cost (or the ineligible portion thereof) has been disallowed and shall request further documentation from the Developer. If the further documentation is still not adequate, the City Engineer may revise the Actual Cost Certificate to delete any disallowed items and the determination shall be final and conclusive. Certain soft costs for the Acquisition Improvements, such as civil engineering, may have been incurred pursuant to single contracts that include work relating also to the private portions of the Project. In those instances, the total costs under such contracts will be allocated to each Acquisition Improvement as approved by the City Engineer. Where a specific contract has been awarded for design or engineering work relating solely to an Acquisition Improvement, one hundred percent (100%) of the costs under the contract will be allocated to that Acquisition Improvement. Amounts allocated to an Acquisition Improvement will be further allocated among the Eligible Portions of that Acquisition Improvement, if any, in the same proportion as the amount to be reimbursed for hard costs for each Eligible Portion bears to the amount to be reimbursed for hard costs for the entire Acquisition Improvement. Costs will be allocated to each Acquisition Improvement as approved by the City Engineer. The costs of certain environmental mitigation required to mitigate impacts of the public and private portions of the Project will be allocated to each Acquisition Improvement as approved by the City Engineer. Section 2.04. Conditions Precedent to Payment of Acquisition Price. Payment to the Developer or its designee of the Acquisition Price for an Acquisition Improvement from the Acquisition and Construction Fund shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Acquisition Improvement satisfies all City regulations and ordinances and is otherwise complete and ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that none of the property (including any rights -of -way or other easements necessary for the operation and maintenance of the Acquisition Improvement, to the extent not already publicly owned) comprising the Acquisition Improvement is not subject to any prospective mechanics lien claim respecting the Acquisition Improvements. (b) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. Property shall be exempt from the special tax of the Community Facilities District upon conveyance to the City or the Developer shall prepay the special tax on the property so conveyed. (c) The Developer shall certify that it is not in default with respect to any loan secured by any interest in the Project. (d) The Developer shall have provided the City with Title Documents needed to provide the City with Acceptable Title to the site, right-of-way, or easement upon which the subject Acquisition Improvement is situated. All such Title Documents shall be in a form acceptable to the City and shall convey Acceptable Title. The Developer shall provide a policy of title insurance as of the date of transfer in a form acceptable to the City Engineer and the City Attorney insuring the City as to the interests acquired in connection with the acquisition of any interest for which such a policy of title insurance is not required by another agreement between the City and the Developer. Each title insurance policy required hereunder shall be in the amount equal to the Acquisition Price. The amount paid to the Developer or its designee upon satisfaction of the foregoing conditions precedent shall be the Acquisition Price Tess all Installment Payments paid previously with respect to the Acquisition Improvement. Section 2.05. Payment for Eligible Portions. The Developer may submit an Actual Cost Certificate to the City Engineer with respect to any Eligible Portion. Payment to the Developer or its designee from the Acquisition and Construction Fund of an Installment Payment with respect to such Eligible Portion shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Eligible Portion has been completed in accordance with the applicable plans and specifications and that the Eligible Portion satisfies all City regulations and ordinances and is otherwise complete and, where appropriate, is ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that the property (including any rights -of -way or other easements necessary for the operation and maintenance of the Eligible Portion, to the extent not already owned by the City) comprising the Eligible Portion is not subject to any prospective mechanics lien claim respecting the Eligible Portion. (b) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. (c) The Developer shall have provided the City with Title Documents needed to provide the City with title to the site, right-of-way, or easement upon which the subject Eligible Portion is situated. All such Title Documents shall be in a form acceptable to the City Engineer and shall be sufficient, upon completion of the Acquisition Improvement of which the Eligible Portion is a part, to convey Acceptable Title. (d) Payment and performance bonds, from a bonding company with an A.M. Best rating of at least "A-" or its equivalent, applying to plans and specifications for the Acquisition Improvement approved by the City, shall be in place to secure completion of the Acquisition Improvement of which the Eligible Portion is a part. Section 2.06. Disbursement Request Form. Upon a determination by the City Engineer to pay the Acquisition Price of an Acquisition Improvement pursuant to Section 2.04 or to pay an Installment Payment for an Eligible Portion pursuant to Section 2.05, the City Engineer shall cause a Disbursement Request Form substantially in the form attached hereto as Exhibit B-1 to be submitted to the Authority and Authority Trustee, and the Authority or Authority Trustee shall make payment directly to the Developer or its designee of the amount requested from the applicable Acquisition and Construction Fund. The City and the Developer acknowledge and agree that the Authority or Authority Trustee shall make payment strictly in accordance with the Disbursement Request Form and shall not be required to determine whether or not the Acquisition Improvement or Eligible Portion has been completed or what the Actual Costs may be with respect to the Acquisition Improvement or Eligible Portion. The Authority or Authority Trustee shall be entitled to rely on the executed Disbursement Request Form on its face without any further duty of investigation. In the event that the Actual Cost of an Acquisition Improvement or the Installment Payment for an Eligible Portion is in excess of the Available Amount, the Authority or Authority Trustee shall withdraw all funds remaining in the Acquisition and Construction Fund and shall transfer those amounts to the Developer or its designee. The unpaid portion of the Actual Cost shall be paid from funds that may subsequently be deposited in the Acquisition and Construction Fund from a subsequent issuance of Bonds, from prepayments of Special Taxes to be used for financing Acquisition Improvements, or from Special Tax revenues, if any of those occurs. Section 2.07. Limitation on Obligations. In no event shall the City be required to pay the Developer or its designee more than the amounts held in the Acquisition and Construction Fund. Section 2.08. Undergroundinq of Utilities. In addition to financing the acquisition of the Acquisition Improvements, proceeds of bonds for the Community Facilities District are expected to finance the undergrounding of certain utilities owned or to be owned by Southern California Edison. Notwithstanding anything to the contrary herein, the City shall be entitled to directly request payment to the City (or to reimburse the Developer) pursuant to a Request to the Authority Trustee to (i) reimburse amounts the City has paid Southern California Edison or a contractor for the amount in such request, or (ii) to pay directly to Southern California Edison or a contractor for the amount in such request. To the extent authorized by law, the City agrees to first reimburse amounts previously deposited by the Developer pursuant to the Deposit Agreement between the City of Newport Beach and TSG — Parcel 1, LLC, dated January 5, 2015, for the costs of the undergrounding of utilities, including design and planning, from proceeds of bonds or the Special Tax pursuant to this Section. ARTICLE III MISCELLANEOUS Section 3.01. Indemnification and Hold Harmless. The Developer hereby assumes the defense of, and indemnifies and saves harmless the City, the Authority and their respective officers, directors, employees and agents, including the Authority Trustee, 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 or alleged to have resulted from the acts or omissions of the Developer or its agents and employees arising out of any contract for the design, engineering and construction of the Acquisition Improvements entered into by the Developer 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 Authority's underwriter, financial advisor, appraiser, district engineer or bond counsel or regarding the Developer, its proposed developments, its property ownership and its contractual arrangements contained in the official statement relating to the Authority financing (provided that the Developer shall have been furnished a copy of the official statement and shall not have objected thereto); and provided, further, that nothing in this Section 3.01 shall limit in any manner the City's rights against any of the Developer's architects, engineers, contractors or other consultants. Except as set forth in this Section 3.01, no provision of this Agreement shall in any way limit the extent of the responsibility of the Developer for payment of damages resulting from the operations of the Developer, its agents and employees. Nothing in this Section 3.01 shall be understood or construed to mean that the Developer agrees to indemnify the City, the Authority or any of their respective officers, directors, employees or agents, for any wrongful acts or omissions to act of the Authority or its officers, employees, agents or any consultants or contractors, including the Authority Trustee, and for any wrongful acts, willful misconduct, active negligence or omissions to act of the City, or its officers, employees, agents or any consultants or contractors, including the Authority Trustee. Section 3.02. Audit. The City shall have the right, during normal business hours and upon the giving of ten days' written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer (for which the Developer seeks reimbursement pursuant to this Agreement) in constructing the Acquisition Improvements. Section 3.03. Cooperation. The City and the Developer agree to cooperate with respect to the completion of the financing of the Acquisition Improvements by the Authority through the levy of the Community Facilities District Special Taxes and issuance of Bonds. The City and the Developer agree to meet in good faith to resolve any differences on future matters which are not specifically covered by this Agreement. Section 3.04. General Standard of Reasonableness. Any provision of this Agreement which requires the consent, approval or acceptance of either party hereto or any of their respective employees, officers or agents shall be deemed to require that the consent, approval or acceptance not be unreasonably withheld or delayed, unless the provision expressly incorporates a different standard. Section 3.05. Third Party Beneficiaries. The Authority and its officers, employees, agents or any consultants or contractors are expressly deemed third party beneficiaries of this Agreement with respect to the provisions of Section 3.01. It is expressly agreed that, except for the Authority with respect to the provisions of Section 3.01, there are no third party beneficiaries of this Agreement, including without limitation any owners of bonds, any of the City's or the Developer's contractors for the Acquisition Improvements and any of the City's, the Authority's or the Developer's agents and employees. Section 3.06. Conflict with Other Agreements. Nothing contained herein shall be construed as releasing the Developer or the City from any condition of development or requirement imposed by any other agreement between the City and the Developer, and, in the event of a conflicting provision, the other agreement shall prevail unless the conflicting provision is specifically waived or modified in writing by the City and the Developer. Section 3.07. Notices. All invoices for payment, reports, other communication and notices relating to this Agreement shall be mailed to: If to the City: City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Attention: City Manager If to the Authority: California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, CA 95814 Attention: Chair If to the Developer: Uptown Newport Jamboree, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff TSG — Parcel 1, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff With a copy to: Jackson Tidus 2030 Main Street 12th Floor Irvine, CA 92614 Attention: Gregory P. Powers, Esq. Either party may change its address by giving notice in writing to the other party. Section 3.08. 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. Section 3.09. 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. Section 3.10. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other party with the terms of this Agreement. Section 3.11. 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. Section 3.12. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. Section 3.13. Successors and Assigns. This Agreement is binding upon the heirs, assigns and successors -in -interest of the parties hereto. The Developer may not assign its rights or obligations hereunder, except to successors -in -interest to the property within the Community Facilities District, without the prior written consent of the City. Section 3.14. Remedies in General. It is acknowledged by the parties that the City would not have entered into this Agreement if it were to be liable in damages under or with respect to this Agreement or the application thereof, other than for the payment to the Developer of any (i) moneys owing to the Developer hereunder, or (ii) moneys paid by the Developer pursuant to the provisions hereof which are misappropriated or improperly obtained, withheld or applied by the City. Section 3.15. Non -Liability of Authority. The Authority shall not be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Agreement, except only to the extent amounts are received for the payment thereof from the Special Tax. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that the City shall not be liable in damages to the Developer, or to any assignee or transferee of the Developer other than for the payments to the Developer specified Section 3.14. Subject to the foregoing, the Developer covenants not to sue for or claim any damages for any alleged breach of, or dispute which arises out of, this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. CITY OF NEWPORT BEACH ATTEST: By: By: Leilani I. Brown [Authorized Officer] City Clerk APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE By: Aaron C. Harp City Attorney UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited partnership By: Name Title TSG — PARCEL 1, LLC, a Delaware limited liability company By: Name Title CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory EXHIBIT A TO THE ACQUISITION AGREEMENT DESCRIPTION OF ACQUISITION IMPROVEMENTS, ELIGIBLE PORTIONS ACQUISITION IMPROVEMENTS Park improvements, including playground infrastructure, irrigation, landscaping, utilities, drainage and grading. EXHIBIT B TO THE ACQUISITION AGREEMENT DISBURSEMENT REQUEST FORM (Acquisition Improvement or Eligible Portion) To: [Authority Trustee] Attention. Fax: Phone: No. Re: CSCDA Community Facilities District No. , Improvement Area The undersigned, a duly authorized officer of the CITY OF NEWPORT BEACH hereby requests a withdrawal from the Uptown Newport Project Community Facilities District Acquisition and Construction Fund, as follows: Request Date: Name of Developer: Withdrawal Amount: Acquisition Improvements: Payment Instructions: [Insert Date of Request] [Insert Acquisition Price/Installment Payment] [Insert Description of Acquisition Improvement(s)/Eligible Portion(s) from Exhibit A] [Insert Wire Instructions or Payment Address for Developer or Developer's designee as provided by the Developer] The undersigned hereby certifies as follows: The Withdrawal is being made in accordance with a permitted use of the monies pursuant to the Acquisition Agreement and the Withdrawal is not being made for the purpose of reinvestment. None of the items for which payment is requested have been reimbursed previously from the Acquisition and Construction Fund. If the Withdrawal Amount is greater than the funds held in the Acquisition and Construction Fund, the Authority Trustee is authorized to pay the amount of such funds and to pay remaining amount(s) as funds are subsequently deposited in the Acquisition and Construction Fund, should that occur. [For Park Improvement Disbursements:][The amounts being disbursed pursuant to this request are being used to finance or refinance certain public infrastructure and facilities (the "Improvements"). The City will own, and for the entire useful life of such Improvements reasonably expects to own, all of such Improvements. To the extent any of such Improvements are sold to an entity that is not a state or local government agency, the City will seek the advice and approval of bond counsel to the Authority prior to any such sale. The City will not allow any of such Improvements to be used (for example, by lease or other contract) in the trade or business of any nongovernmental persons (other than in their roles as members of the general public). All of such Improvements will be used in the performance of essential governmental functions of the City or another state or local government agency. The average expected useful life of such Improvements is at least 20 years. The representations and covenants contained in this paragraph are intended to support the conclusion that the interest paid on the bonds issued to finance the Improvements is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code").] CITY OF NEWPORT BEACH By: Title: EXHIBIT C TO THE ACQUISITION AGREEMENT BIDDING, CONTRACTING AND CONSTRUCTION REQUIREMENTS FOR ACQUISITION IMPROVEMENTS With respect to construction contracts awarded after approval of the Agreement, bids for construction shall be solicited from at least three (3) qualified contractors, provided at least three (3) qualified contractors are reasonably available. The Developer may also directly solicit bids. The bid package may consist of preliminary plans and specifications. The bidding response time shall be not less than ten (10) working days. An authorized representative of the City shall be provided a copy of the tabulation of bid results upon request. Contract(s) for the construction of the public Acquisition Improvements shall be awarded to the qualified contractor(s) submitting the lowest responsible bid(s), as determined by the Developer. The contractor to whom a contract is awarded shall be required to pay not less than the prevailing rates of wages pursuant to Labor Code Sections 1770, 1773 and 1773.1. A current copy of applicable wage rates shall be on file in the Office of the City Clerk, as required by Labor Code Section 1773.2. The Developer shall provide the City with certified payrolls. EXHIBIT D PROJECT DESCRIPTION AND BOND PARAMETERS Project Description A. Specific Project(s) for which the Debt is Being Incurred • Park Improvements 66-kV Undergrounding B. Not to exceed Authorized Par Amount • $8,800,000 C. Not to exceed Term of the Bonds, which will be no greater than the useful life of the project 30 years from date of issuance D. Not to exceed true interest cost • 5.75% E. Not to exceed maximum annual debt service • $900,000 F. CaII provisions, including specifically identifying any deviation from a par call • Optional Call in 10 —Years at 100% of Par • Extraordinary redemption from prepayment of special taxes with not to exceed 3% premium through 10 years and then par call thereafter. G. Not to exceed underwriter's discount 1.50% of Par Amount inclusive of underwriter's counsel fees H. List of Consultants Hired for the Issuance Orrick — Bond Counsel & Disclosure Counsel RBC Capital Markets, LLC - Underwriter • David Taussig & Associates, Inc. - Special Tax Consultant STATE OF CALIFORNIA COUNTY OF ORANGE CITY OF NEWPORT BEACH } } } ss. I, Leilani I. Brown, City Clerk of the City of Newport Beach, California, do hereby certify that the whole number of members of the City Council is seven; the foregoing resolution, being Resolution No. 2018-44 was duly introduced before and adopted by the City Council of said City at a regular meeting of said Council held on the 26'h day of June, 2018; and the same was so passed and adopted by the following vote, to wit: AYES: Council Member Herdman, Council Member Diane Dixon, Council Member Scott Peotter, Council Member Brad Avery, Mayor Duffy Duffield NAYS: None RECUSED: Council Member Kevin Muldoon, Mayor Pro Tem Will O'Neill IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed the official seal of said City this 27'h day of June, 2018. ihotA,_, Leilanil. Brown City Clerk Newport Beach, California EXHIBIT B BOUNDARY MAP 4159-3584-7960 2 SHEET 1 OF 1 ------\\Ni CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) / CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA PROPOSED BOUNDARIES OF z For particulars of linos and &mansions. reference Is mode to the parcels maps of Me Orange County Assessor. Caitarnia. and to Tract map No. 17763 recorded on June 19. / 2015 as Instrument No 201500320061 at Pages I7 thiouph23 In book 937 of maps in the officeof the cf e County Recorder Orange County, California LEGEND 11111111 Proposed Boundaries of C lderas Statewide Commun0les Development Authority Community Facilities Dispkt No 2018-03 (Uptown Newport), City of Newport Beath. County of Orono°. California Parcel Una Tax Zone 1 Tax Zone 2 445-13n-m Assessor Parcel Number ra „r ..n.... MI% (1) Filed In the office of the Secretary of California Statewide Communities Development Authority this _ day of 2018 Secretary, California Statewide Communities Development Authority (2) 1 hereby certify that the within map showing proposed boundados of California Statewide Communities Dewdopment Authority Community Facilities DlsUt t No. 2018-03 (Uplawn Newport), City of Newport Beach, County of Orange. Sate of California, was approved by the Commission mission of the California Statewide Cc.nmtmhies Development Authority et a regular meeting thereof, held on this day of 2018. by its resoludcn No. Secretory, California Statewide Communities Development Authority (3) FJed this day of 2018, at the hour of o'clock _ m., in Book of Maps of Assessment and Community Facilities Districts at page and as Instrument No. m the office of the County Recorder of Orange County, State of California. Hugh Nguyen Clerk -Recorder, County of Orange By Fee Deputy EXHIBIT C AUTHORIZED IMPROVEMENTS AND UTILITY UNDERGROUNDING 1. Preliminary and Incidental Expense and Appurtenant Work and Improvements Generally, for each of the following categories of public capital facilities to be acquired, constructed and installed on public property (including dedicated rights -of -way and public easements), the authorized facilities shall be deemed to include the cost and expense of mobilization, clearing, grubbing, protective fencing and erosion control, excavation, curb, gutter and sidewalks, base and finish paving, striping, traffic signage, traffic signals, streetlights, landscaping, irrigation, barricades, undergrounding of various utilities, and related appurtenant work and facilities, together with the cost and expense of engineering design, plan review, project management, construction -related surety bonds or like security instruments, construction staking and management, inspection, and any like fees and costs incidental to such acquisition, construction and installation. 2. Public Capital Improvements Undergrounding of overhead utilities. Park improvements, including but not limited to playground infrastructure, irrigation, landscaping, utilities, drainage and grading. 4159-3584-7960.2 EXHIBIT D CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT), CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA REPRESENTATIVE LISTING OF INCIDENTAL EXPENSES AND BOND ISSUANCE COSTS It is anticipated that the following incidental expenses may be incurred in the proposed legal proceedings for formation of the Community Facilities District, construction and environmental remediation and related bond financing and will be payable from proceeds of the Bonds or directly from the proceeds of the Special Tax within the Community Facilities District: • Special tax consultant services • Authority, County staff review, oversight and administrative services • Bond Counsel and Disclosure Counsel services • Financial advisor services • Special tax administrator services • Appraiser/Market absorption consultant services • Initial bond transfer agent, fiscal agent, registrar and paying agent services, and rebate calculation service set up charge • Bond printing and Preliminary Official Statement and Official Statement printing and mailing • Publishing, mailing and posting of notices • Recording fees • Underwriter's discount • Bond reserve fund • Capitalized interest • Governmental notification and filing fees • Credit enhancement costs • Rating agency fees • Continuing disclosure services • Arbitrage rebate services • Other post -issuance tax compliance services The expenses of certain recurring services pertaining to the Community Facilities District may be included in each annual special tax levy, and these expenses are described in the definition of the term "Administrative Expenses" as set forth in the Rate and Method of Apportionment for the Community Facilities District attached hereafter as Exhibit E. The foregoing enumeration shall not be regarded as exclusive and shall be deemed to include any other incidental expenses of a like nature which may be incurred from time to time with respect to the Community Facilities District. 4159-3584-7960.2 EXHIBIT E RATE AND METHOD OF APPORTIONMENT 4159-3584-7960.2 RATE AND METHOD OF APPORTIONMENT CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of CSCDA Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California ("CFD No. 2018-03") and collected each Fiscal Year commencing in Fiscal Year 2019-2020, in an amount determined by the CSCDA Program Manager, through the application of the Rate and Method of Apportionment as described below. All Taxable Property in CFD No. 2018-03, 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. pEFTNITIONS The terms hereinafter set forth have the following meanings: "Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final subdivision map, parcel map, condominium plan, record of survey, or other recorded County parcel map. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 2018-03 including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax Levy collection schedules (whether by the CSCDA Program Manager or designee thereof or both); the costs of collecting the Special Tax Levies (whether by the County or otherwise); the costs of remitting the Special Tax Levies to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to CSCDA, CFD No. 2018-03, or any designee thereof of complying with arbitrage rebate requirements, or responding to questions from the Securities and Exchange Commission or Internal Revenue Service pertaining to any CFD No. 2018-03 Bonds or any audit of any CFD No. 2018-03 Bonds by the Securities and Exchange Commission or Internal Revenue Service; the costs to CSCDA, CFD No. 2018-03, the Trustee or any designee thereof of complying with CSCDA, CFD No. 2018-03, or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax Levy disclosure statements and responding to public inquiries regarding the Special Tax Levies; the costs to CSCDA, CFD No. 2018-03, or any designee thereof related to an appeal of the levy or application of the Special Tax; the costs associated with the release of funds from an escrow account; and CSCDA's annual administration fees and third California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 1 party expenses. Administrative Expenses shall also include amounts estimated or advanced by CSCDA or CFD No. 2018-03 for any other administrative purposes of CFD No. 2018-03, including, but not limited to, attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tax Levies. "Apartment Floor Area" means all of the square footage of living area within the perimeter of the Apartment Property, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Apartment Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the Building Division of the City, or other applicable City department, as determined by the CSCDA Program Manager. Such •determination shall be final following the issuance of a certificate of occupancy for the Apartment Property. "Apartment Property" means an Assessor's Parcel of Developed Property on which all or any portion of a structure or structures with multiple Apartment Units are located, and such Apartment Units are offered for rent and are not available for sale to individual owners. If Apartment Property is subsequently reclassified as Residential Property, Special Taxes levied on such reclassified Assessor's Parcels shall be modified to match those of Residential Property. "Apartment Unit" means one (1) for -rent residential unit on Apartment Property. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C.a.(2), below. "Authorized Facilities" means the facilities authorized to be financed by CFD No. 2018-03. "Backup Special Tax" means the Backup Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.a.(3), below. "Building Permit" means a permit issued by the City or other governmental agency for the construction of a residential or non-residential building on an Assessor's Parcel. "Buildout" means, for CFD No. 2018-03, that all expected Building Permits for Residential Property, Apartment Property, and Non -Residential Property to be constructed within CFD No. 2018-03 have been issued, as determined by the CSCDA Program Manager. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 2 "CFD No. 2018-03" means California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California. "CFD No. 2018-03 Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one (1) or more series, authorized by CFD No. 2018-03 under the Act and issued by CSCDA and secured by the Special Taxes. "City" means the City of Newport Beach. "Commission" means the governing board of CSCDA. "County" means the County of Orange. "CSCDA" means the California Statewide Communities Development Authority. "CSCDA Program Manager" means the program manager for CSCDA, or its designee. "Developed Property" means, for each Fiscal Year, all Taxable Property in Tax Zone 1 and Tax Zone 2, for which a Building Permit for new construction was issued after January 1, 2018 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied. For purposes of this Rate and Method of Apportionment, any Developed Property for which Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area is removed, shall be considered Developed Property under the previously assigned Land Use Class with the previously assigned Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area, until a new Building Permit is issued, and a new Land Use Class and Special Tax can be assigned. Notwithstanding the above, a reclassification shall not occur, unless the CSCDA Program Manager determines that the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after such reclassification, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds is each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. "Developer" means TSG-Parcel 1, LLC or Uptown Newport Jamboree, LLC and its successors and assigns. The term "successors" does not refer to the successors to all or any portion of the property within CFD No. 2018-03 unless the new property owner receives an assignment of the Developer's rights and obligations described in an assignment agreement or similar agreement. "Dwelling Unit" means one (1) for -sale residential unit of any configuration, including, but not limited to, a single family attached or detached dwelling, condominium, mobile home, or otherwise, but excluding Apartment Units on Apartment Property. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 3 "Final Mapped Property" means, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, and Taxable Public Property, located in a Final Subdivision as of January 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied, but no earlier than January 1, 2018. "Final Subdivision" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, approved by the County 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, in either case, creates individual lots for which Building Permits may be issued without further subdivision. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution, or other instrument pursuant to which CFD No. 2018-03 Bonds are issued, as modified, amended, and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the land use classes listed in Table 1 below. "Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C.a.1 below, that can be levied by CSCDA in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Non -Residential Floor Area" means the total gross building square footage of non- residential property lying within an Assessor's Parcel for which one (1) or more non- residential Building Permits have been issued. Such square footage shall be measured from outside wall to outside wall, exclusive of overhangs, porches, patios, carports, or similar spaces attached to the building but generally open on at least two (2) sides, as determined by reference to the Building Permit(s) issued for that Assessor's Parcel, or if these are not available, as otherwise determined by the CSCDA Program Manager. "Non -Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit permitting the construction of one (1) or more non-residential units or facilities has been issued by the City or other governmental agency. "Outstanding Bonds" means all CFD No. 2018-03 Bonds which remain outstanding under the Indenture. "Property Owner Association Property" means, for each Fiscal Year (i) any property within the boundaries of CFD No. 2018-03 that was owned by a property owner association, including any master or sub -association, as of January 1 of the prior Fiscal Year, (ii) any property located in a Final Subdivision that was recorded as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determined from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street, or (iii) any property which, as of the May 1 California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 4 preceding the Fiscal Year for which the Special Tax is being levied, has been conveyed to a property owner's association, including any master or sub -association, provided evidence of such conveyance is submitted to the CSCDA Program Manager by May 1 preceding the Fiscal Year for which the Special Tax is being levied. The total number of acres to be classified as Property Owner Association Property or Public Property, shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax Levy within Tax Zone 1 and Tax Zone 2, to the Assigned Special Tax or the Maximum Special Tax of the respective Tax Zone, is equal for all Assessor's Parcels of Developed Property. For Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property categories, "Proportionately" means that the ratio of the actual Special Tax Levy per Acre within Tax Zone 1 and Tax Zone 2, to the Maximum Special Tax per Acre of their respective Land Use Class and Tax Zone, is equal. "Public Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2018-03 that, as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied, was (i) owned by, irrevocably offered, or dedicated to the federal government, the State, the County, the City, or any local government or other public agency, provided that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use; or (ii) encumbered by a public utility easement making impractical its use for any purpose other than that set forth in the easement. The total number of acres to be classified as Property Owner Association Property or Public Property shall not exceed 12.88 acres, as described in Section E of this Rate and Method of Apportionment. "Rate and Method of Apportionment" means this Rate and Method of Apportionment for CFD No. 2018-03. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Dwelling Unit. "Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued by the Building Division of the City for purposes of constructing one (1) or more Dwelling Units. Residential Property does not include Apartment Property for purposes of this Rate and Method of Apportionment. "Special Tax" or "Special Taxes" means the special tax to be levied in each Fiscal Year to fund the Special Tax Requirement for Facilities. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 5 "Special Tax Levy" or "Special Tax Levies" means the Special Tax to be levied in each Fiscal Year on Assessor's Parcel of Taxable Property to fund the Special Tax Requirement for Facilities, as applicable. "Special Tax Requirement" means that amount of Special Taxes required, if any, in any Fiscal Year for CFD No. 2018-03 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the CFD No. 2018-03 Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2018-03 Bonds; (iii) pay all or a portion of the Administrative Expenses as determined by the CSCDA Program Manager; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of Authorized Facilities to the extent that the inclusion of such amount does not increase the Special Tax Levy on Undeveloped Property; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax Levy, as determined by the CSCDA Program Manager pursuant to the Indenture. "State" means the State of California. "Tax Zone" means one of the two (2) mutually exclusive geographic areas defined below and identified in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 1" means the geographic area specifically identified as Zone 1 in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 2" means the geographic area specifically identified as Zone 2 in Attachment 1 of this Rate and Method of Apportionment. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2018-03 that are not exempt Property Owner Association Property or exempt Public Property or other property exempted pursuant to Section E herein. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E herein. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E herein. "Total Floor Area" means the sum of the Residential Floor Area, Apartment Floor Area, and the Non- Residential Floor Area located on an Assessor's Parcel. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, or Taxable Public Property. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 6 B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2018-03 shall be classified as Developed Property, Final Mapped Property, Undeveloped Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, or Taxable Public Property and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D below. C. MAXIMUM SPECIAL TAX RATE a. Developed Property (1) Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax and (ii) the amount derived by application of the Backup Special Tax. (2) Assigned Special Tax Residential Property shall be assigned to Land Use Classes 1 and 2 as listed in Table 1 below based on the description associated with each Dwelling Unit or Apartment Unit and its determined Tax Zone. Non -Residential Property shall be assigned to Land Use Class 3 as listed in Table 1 below based on the description associated with square feet of Non -Residential Floor Area and it's determined Tax Zone. The Assigned Special Tax that shall be levied in Fiscal Year 2019-2020 for each Assessor's Parcel classified as Developed Property is shown on the following page in Table 1. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 7 TABLE 1 Assigned Special Tax for Developed Property CFD No. 2018-03 Fiscal Year 2019-2020 LAND USE DESCRIPTION CLASS 1 2 3 Residential Property Apartment Property Non -Residential Property ASSIGNED SPECIAL TAX ZONE 1 $771 per Dwelling Unit $0 per Apartment Unit $5.35 per Square Foot of Non -Residential Floor Area ASSIGNED SPECIAL TAX ZONE 2 $979 per Dwelling Unit $284 per Apartment Unit $5.35 per Square Foot of Non -Residential Floor Area (3) Backup Special Tax The Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $50,028 per Acre of the Assessor's Parcel. If a Final Subdivision includes Assessor's Parcels of Taxable Property for which Building Permits have been issued, exclusive of Taxable Property Owner Association Property and Taxable Public Property, then the Backup Special Tax for each residential Dwelling Unit shall be calculated according to the following formula: Residential Dwelling Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Residential Floor Area/(Total Floor Area)) / Number of residential Dwelling Units) In this case, the Backup Special Tax for each Apartment Unit shall be calculated according to the following formula: Apartment Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Apartment Floor Area/(Total Floor Area)) / Number of Apartment Units) Finally, the Backup Special Tax for each square foot of Non -Residential Floor Area shall be calculated according to the following formula: Non -Residential Square Foot Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Non -Residential Floor Area/(Total Floor Area)) / Non -Residential Floor Area) California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 8 Furthermore, all Assessor's Parcels within CFD No. 2018-03 shall be relieved simultaneously and permanently from the obligation to pay and disclose the Backup Special Tax if the CSCDA Program Manager calculates that (i) the annual debt service required for the Outstanding Bonds, when compared to the Assigned Special Tax that shall be levied against all Assessor's Parcels of Developed Property in CFD No. 2018-03, results in 110% debt service coverage (i.e., the Assigned Special Tax that shall be levied against all Developed Property in CFD No. 2018-03 in each remaining Fiscal Year based on the then existing development is at least equal to the sum of (a) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (b) the Administrative Expenses as defined in Section A herein), or (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it shall not issue any additional CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Assigned Special Tax in CFD No. 2018-03. (4) Increase in the Assigned Special Tax and Backup Special Tax On each July 1, commencing on July 1, 2020, the Assigned Special Tax and the Backup Special Tax shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. (5) Multiple Land Use Classes In some instances, an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Special Tax levied on an Assessor's Parcel shall be the sum of the Special Tax for all Land Use Classes located on that Assessor's Parcel. Furthermore, if only a portion of Building Permits have been issued on an Assessor's Parcel, the remaining portion of the Assessor's Parcel shall be considered Final Mapped Property. The CSCDA Program Manager's allocation to each type of property shall be final. b. Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property (1) Maximum Special Tax The Fiscal Year 2019-2020 Maximum Special Tax for each Assessor's Parcel of Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be $50,028 per Acre. (2) Increase in the Maximum Special Tax On each July 1, commencing on July 1, 2020, the Maximum Special Tax for Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property within each respective Tax Zone, shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 9 D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2019-2020 and for each following Fiscal Year, the CSCDA Program Manager shall determine the Special Tax Requirement and shall (i) levy 100% of the Assigned Special Taxes on Developed Property, and (ii) levy the remaining Special Taxes as prioritized below until the total Special Taxes levied equal the • Special Tax Requirement. The Special Taxes shall be levied in each Fiscal Year as follows: 1. Annual Levy First: The Special Tax shall be levied on each Assessor's Parcel of Residential Property and Apartment Property, within all Tax Zones, in an amount equal to 100% of the applicable Assigned Special Tax for Residential Property and Apartment Property respectively. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied on each Assessor's Parcel of Non -Residential Property, within all Tax Zones, until (i) the total Special Tax levied under the first two steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Non -Residential Property equals 100% of the applicable Assigned Special Tax, whichever comes first. Third: If additional monies are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Final Mapped Property, within all Tax Zones, until (i) the total Special Tax levied under the first three steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Final Mapped Property equals 100% of the applicable Maximum Special Tax, whichever comes first. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, within all Tax Zones, until (i) the total Special Tax levied under the first four steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Undeveloped Property equals 100% of the applicable Maximum Special Tax, whichever occurs first. Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property for which the Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to 100% of the Maximum Special Tax for each such Assessor's Parcel of Developed Property, within all Tax Zones, until (i) the total Special Tax levied under the first five steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Developed Property equals 100% of the Maximum Special Tax for Developed Property, whichever occurs first. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 10 Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property, within all Tax Zones, until (i) the total Special Tax levied under the first six steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Property Owner Association Property equals 100% of the Maximum Special Tax for Property Owner Association Property, whichever occurs first. Seventh: If additional monies are needed to satisfy the Special Tax Requirement after the first six steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property, within all Tax Zones, until (i) the total Special Tax levied under the first seven steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Public Property equals 100% of the Maximum Special Tax for Taxable Public Property, whichever occurs first. Notwithstanding the above, the CSCDA Program Manager or its designee may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax in the first step (above), when (i) CSCDA is no longer required to levy the Special Tax beyond the first step (above) in order to meet the Special Tax Requirement; and (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it will not issue any additional CFD No. 2018-03 Bonds (except refunding bonds), to be supported by the Special Tax. E. EXEMPTIONS No Special Tax shall be levied on Public Property or Property Owner Association Property in CFD No. 2018-03 provided that no such exemption shall reduce the total Acreage of Taxable Property to less than 12.88 Acres. Tax-exempt status shall be assigned by the CSCDA Program Manager in the chronological order in which property in CFD No. 2018-03 becomes Public Property or Property Owner Association Property. However, should an Assessor's Parcel of Public Property or Property Owner Association Property no longer be classified as tax-exempt, it will, from that point forward, be subject to the Special Tax. Furthermore, any Assessor's Parcel designated as Public Property or Property Owner Association Property that cannot be exempt from the Special Tax because such exemption would reduce the Acreage of all Taxable Property within CFD No. 2018-03 to less than 12.88 Acres shall be designated as Taxable Public Property or Taxable Property Owner Association Property. Prior to sixty (60) days before the issuance of a first series of CFD No. 2018-03 Bonds, the CSCDA Program Manager may increase or decrease the final number of minimum taxable Acres in CFD No. 2018-03 to better reflect the actual tax-exempt acreage within CFD No. 2018-03. However, notwithstanding the above, the final number of taxable Acres in CFD No. 2018-03 shall not be decreased if it causes an increase in the Special Tax levied on any existing Assessor's Parcel of Developed Property. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) page 11 F. REVIEW/APPEAL PROCESS Any taxpayer may file a written appeal of the Special Tax on his/her property with CSCDA, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CSCDA Program Manager or its designee shall review the appeal, meet with the appellant if the CSCDA Program Manager deems necessary, and advise the appellant of its determination within sixty (60) days after receipt of the appeal. If the CSCDA Program Manager agrees with the appellant, the CSCDA Program Manager shall make a recommendation to CSCDA to eliminate or reduce the Special Tax on the appellant's property or to provide a refund to appellant. The approval of CSCDA or its designee must be obtained prior to any such elimination or reduction. If the CSCDA Program Manager disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has thirty (30) days in which to appeal to CSCDA by filing a written notice of appeal with the CSCDA Program Manager, provided that the appellant is current in his/her payments of the Special Taxes. The second appeal must specify the reasons for the appellant's disagreement with the CSCDA Program Manager's determination. The CSCDA Program Manager shall schedule the appeal to be heard before CSCDA within sixty (60) days after receipt of the second appeal. Interpretations may be made by CSCDA, without Resolution or Ordinance of the Commission, for purposes of clarifying any vagueness or ambiguity as it relates to the Special Taxes, the Rate and Method of Apportionment, Land Use Classes, or any other definition applicable to CFD No. 2018-03. Without Commission approval, the CSCDA Program Manager may make minor, non - substantive administrative and technical changes to the provisions of this document that do not materially affect the rate, method of apportionment, and manner of collection of the Special Tax for purposes of administrative efficiency or convenience or to comply with new applicable federal, state, or local law. G. MANNER OF COLLECTION The Special Tax Levy will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2018-03 may directly bill the Special Tax Levy, may collect Special Tax Levies 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. H. PREPAYMENT OF SPECIAL TAX Under this Rate and Method of Apportionment, an Assessor's Parcel within CFD No. 2018-03 is permitted to prepay the Special Tax. The obligation of the owner of an Assessor's Parcel to pay the Special Tax may be fully or partially prepaid and permanently satisfied as described herein, California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 12 provided that a prepayment may be made only for Assessor's Parcels of Developed Property, or for an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2019, and only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CSCDA Program Manager with written notice of intent to prepay. Within thirty (30) days of receipt of such written notice, the CSCDA Program Manager shall notify such owner of the Special Tax Prepayment Amount (defined below) for such Assessor's Parcel. The CSCDA Program Manager may charge such owner a reasonable fee for providing this service. If there are Outstanding Bonds, prepayment must be made not less than thirty (30) days prior to a date that notice of redemption of CFD No. 2018-03 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The following additional definitions apply to this Section H: "CFD Public Facilities Costs" means either $7,500,000 in 2018 dollars, which shall increase by the Construction Inflation Index on July 1, 2019, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CSCDA Program Manager as sufficient to provide funding for the Authorized Facilities under the authorized bonding program for CFD No. 2018- 03, or (ii) shall be determined by CSCDA concurrently with a covenant that it shall not issue any more CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Special Tax levy under this Rate and Method of Apportionment. "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 month of December in 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 CSCDA Program Manager 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 Costs minus (i) costs of Authorized Facilities previously paid from the Improvement Fund, (ii) monies currently on deposit in the Improvement Fund available to pay costs of Authorized Facilities, (iii) monies currently on deposit in an escrow fund established pursuant to the Indenture and expected to be available to fund Authorized Facilities and (iv) the amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of these funds. "Improvement Fund" means a fund or account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct Authorized Facilities. "Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 13 1. Prepayment in Full The Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Equals Special Tax Prepayment Amount As of the proposed date of prepayment, the Special Tax Prepayment Amount shall be calculated according to the following paragraphs: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2018, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the Building Permit which has already been issued for such Assessor's Parcel. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Tax levy for CFD No. 2018-03 based on the Assigned Special Tax for Developed Property which could be levied on all expected development assuming Buildout of CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the total estimated Backup Special Taxes at Buildout for the entire CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be redeemed (the "Bond Redemption Amount"). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Previously Issued Bonds to be redeemed (the "Redemption Premium"). 6. Compute the current Future Facilities Costs. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 14 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Previously Issued Bonds. 9. Determine the Special Tax levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 10. Compute the minimum amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of the Special Tax Prepayment Amount, less any interest earnings attributed to the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount"). 12. The administrative fees and expenses of CFD No. 2018-03 are as calculated by the CSCDA Program Manager and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 2018-03 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% of the reserve requirement (as defined in the Indenture). 14. If any capitalized interest for the Previously Issued 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 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment date (the "Capitalized Interest Credit"). 15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11, and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Special Tax Prepayment Amount"). California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 15 2. Prepayment in Part The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP = (PE — A) x F + A. These terms have the following meaning: PP = the partial prepayment PE = the Special Tax Prepayment Amount calculated according to Section H.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. A = the Administration Fees and Expenses from Section H.1. The owner of any Assessor's Parcel who desires such prepayment shall notify the CSCDA Program Manager of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. With respect to any Assessor's Parcel that is partially prepaid, CSCDA shall (i) distribute the funds remitted to it according to Section H.3, and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D. 3. General Provisions Applicable to the Prepayment of Special Tax (a). Use of the Special Tax Prepayment Amount The Special Tax Prepayment Amount, less the Administrative Fees and Expenses calculated according to Sections H.1 and H.2 which shall be retained by CFD No. 2018- 03, and less the Future Facilities Amount calculated according to Section H.1 which shall be deposited into the Improvement Fund, shall be deposited into specific funds established under the Indenture, to fully or partially redeem as many Outstanding Bonds as possible, and, if amounts are less than $5,000, to make debt service payments on the Outstanding Bonds (collectively designated as the "Bond Retirement Funds"). (b). Full Prepayment of Special Tag Upon confirmation of the payment of the current Fiscal Year's entire Special Tax obligation, the CSCDA Program Manager may remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 16 Assessor's Parcel that is prepaid in accordance with Section H.1, the CSCDA Program Manager shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, and the obligation to pay the Special Tax for such Assessor's Parcel shall cease. (c). Partial Preoavment of Special Tax With respect to any Assessor's Parcel that is partially prepaid, the CSCDA Program Manager shall (i) distribute or cause to be distributed the funds remitted to it according to Section H.2. and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's parcel, equal to the outstanding percentage (1.00 — F) of the Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D herein. (d). Debt Service Coverage Notwithstanding the foregoing, no prepayment of the Special Tax shall be allowed unless the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after the proposed prepayment, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. I. TERM OF SPECIAL TAN The Special Tax shall be levied until the final series of CFD No. 2018-03 Bonds have matured, provided that the Special Tax shall not be levied after Fiscal Year 2069-2070. The Special Taxes will cease to be levied in an earlier Fiscal Year if the CSCDA Program Manager has determined that all required interest and principal payments on the CFD No. 2018-03 Bonds have been paid and CSCDA has covenanted that it will not issue any more CFD No. 2018-03 Bonds (other than refunding Bonds) to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. California Statewide Communities Development Authority November 8, 2018 CFD No. 2018-03 (Uptown Newport) Page 17 ATTACHMENT 1 PROPOSED BOUNDARIES & IDENTIFICATION OF TAX ZONES OF CFD NO. 2018-03 SHEET 1 OF 1 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA For particulars of fines and dmenslons. nderence Is made to die parcels mops or the Orange County Assessor. CoFfow a, and to Tract mao No. 17763 retarded on June 19. 2016 as Instrument No. 201500320061 at Pagos 17 through 23 In Book 937 of mope in the office of the County Recorder of Orange County. Cal lomia LEGEND Propw.ed Boundaries of California Statewide Communities Development Authority Community Facilities Dlstrkl No 2016-03 (Uptown Newport), City of Newport Beath. County of Orange, Calf/aim Parcel Une ITax Zone I Tax Zone 2 445-13n-nn Assessor Parcel Number 11111111 r..rmo.r e..m ru w. ,w,... war. N (1) Fried In the office of INc Secretary e► California Statewide Communities Development Authority (his _ day of , 2018. Secretary, California Statewide Communities Development Authority (2) I hereby codify that the within map showing proposed boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, Slate of California, was approved by the Commission of the California Statewide Conmunit,es Development Authority at a regular meeUng thereof, held on this day of 2018. by Its resolution No Secretory, Calfomla Statewide Communises Development Authority (3) Filed this day of 2018, at the hour of o'clock _ m., in Bock of Maps of Assessment and Community Facilities Disukis at page and as Instrument No. in the office of the County Recorder of Orange County, Slate of California. Hugh Nguyen Clerk -Recorder. County of Orange By Deputy Fee PSIShip - UPS Label Page 1 of 2 w 0 o. co 00 L N UF. d 0 0 W � pq z><0u,x0 121 �tJNUaz 5. TRACKING #: 1Z 817 221 13 9755 3525 BILLING: P/P da N O p, V 0 N VI Cti 00 ZZ u u s. CZ FOLD on this line and place in shipping pouch with bar code and delivery address visible 1. Fold the first printed page in half and use as the shipping label. 2. Place the label in a waybill pouch and affix it to your shipment so that the barcode portion of the label can be read and scanned. 3. Keep the second page as a receipt for your records. The receipt contains information useful for tracking your package. https://cloud.psship.com/index.php 1/11/2019 PSJShip - UPS Label Page 2 of 2 �?psship A a ■ package id 0376225 ship date Fri, Jan 11 2019 to CITY CLERK CITY CLERK City of Newport Beach P.O. Box 1768 Newport Beach, CA 92658-8915 United States 7073151494 residential address No return label No notification type Delivery notification recipients jaileezcampos@orrick... from Jaileez Campos (018285) Orrick Herrington & Sutcliffe LLP The Orrick Building 405 Howard Street San Francisco, CA 94105 US 415/773-5788 billing California Statewide...velop- Statewide Communitie...e Pro (0040929-000317) Uptown Newport cfd operator Jaileez Campos 415/773-5788 jaileezcampos@orrick.com create time 01/11/19, 9:38AM vendor UPS tracking number 1Z8172211397553525 service UPS Next Day Air Saver® packaging UPS Letter courtesy quote 7.50 Quote may not reflect all accessorial charges, and may not reflect your account based discounts https://cloud.psship.com/index.php 1/11/2019 RESOLUTION NO. 19SCIP-5 RESOLUTION APPROVING THE ISSUANCE OF THE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019; AUTHORIZING THE EXECUTION AND DELIVERY OF AN INDENTURE PROVIDING FOR THE ISSUANCE OF SUCH BONDS; APPROVING A BOND PURCHASE CONTRACT PROVIDING FOR THE SALE OF SUCH BONDS; APPROVING AN OFFICIAL STATEMENT; APPROVING A CONTINUING DISCLOSURE CERTIFICATE; AUTHORIZING THE SALE OF SUCH BONDS; AND AUTHORIZING RELATED ACTIONS AND THE EXECUTION OF RELATED DOCUMENTS IN CONNECTION WITH THE ISSUANCE, SALE AND DELIVERY OF SUCH BONDS WHEREAS, the Commission (the "Commission") of the California Statewide Communities Development Authority (the "Authority") has determined to issue not to exceed $8,800,000 principal amount of its California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"); and WHEREAS, there has been made available to the Commission a fort, of the Indenture (the "Indenture") providing for the issuance of the Bonds; and WHEREAS, the Commission has carefully considered the terms and conditions of the Indenture; and WHEREAS, RBC Capital Markets, LLC (the "Underwriter") has proposed to submit an offer to purchase the Bonds pursuant to a Bond Purchase Contract (the "Purchase Contract") in substantially the form made available to the Commission; and WHEREAS, the Commission has considered carefully the terms and conditions of the Purchase Contract, and has determined that a private sale of the Bonds to the Underwriter in accordance with the Purchase Contract would result in a lower overall cost to the Authority; and WHEREAS, the Authority has caused to be prepared an Official Statement in preliminary form relating to the Bonds, a copy of which has been made available to the Commission; and WHEREAS, the Authority has caused to be prepared a Continuing Disclosure Certificate (the "Continuing Disclosure Certificate") for the purpose of making undertakings to provide certain annual financial information and notice of certain enumerated events as required by Securities Exchange Commission Rule 15c2-12(b)(5) (the "Rule"); WHEREAS, Government Code Section 5852.1 requires that the Commission of the Authority obtain from an underwriter, financial adviser or private lender and disclose, prior to authorization of the issuance of bonds with a term of greater than 13 months, good faith estimates of the following information in a meeting open to the public: (a) the true interest cost of the bonds, (b) the sum of all fees and charges paid to third parties with respect to the bonds, (c) the amount of proceeds of the bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the bonds, and (d) the sum 4144-8I03-964I.3 total of all debt service payments on the bonds calculated to the final maturity of the bonds plus the fees and charges paid to third parties not paid with the proceeds of the bonds; and WHEREAS, in compliance with Government Code Section 5852.1, the Commission of the Authority has obtained from RBC Capital Markets, LLC, the underwriter, the required good faith estimates and such estimates have been disclosed at this meeting; and NOW THEREFORE, BE IT RESOLVED by the Commission of the California Statewide Communities Development Authority, as follows: Section 1. The Commission finds and determines that the foregoing recitals are true and correct. Section 2. Pursuant to the Act and the Indenture, the Authority is hereby authorized to issue its revenue bonds designated as the "California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019" in an aggregate principal amount not to exceed eight million eight hundred thousand dollars ($8,800,000). The Bonds shall be issued and secured in accordance with the terms of, and shall be in the form or forms set forth in, the Indenture as made available to the Commission. The Bonds shall be executed on behalf of the Authority by the manual or facsimile signature of the Chair of the Authority or the manual signature of any member of the Commission of the Authority or their administrative delegatees duly authorized pursuant to a resolution of the Authority (each, an "Authorized Signatory"), and attested by the manual or facsimile signature of the Secretary of the Authority or the Assistant to the Secretary of the Authority or the manual signature of any Authorized Signatory. Section 3. The Indenture providing for the issuance of the Bonds, in substantially the form made available to the Commission, is hereby approved for execution by the Authority, and any Authorized Signatory is hereby authorized and directed, for and on behalf of the Authority to execute the Indenture in substantially said form, with such changes or additions as any member of the Commission with the advice of counsel to the Authority may approve, such approval to be conclusively evidenced by the execution and delivery of the Indenture. The dated date, maturity date or dates, interest rate or rates, interest payment dates, denominations, forms, registration privileges, manner of execution, place or places of payment, terms of redemption and other terms of the Bonds shall be as provided in the Indenture, as finally executed. Section 4. The Purchase Contract providing for the sale of the Bonds, in substantially the form made available to the Commission, is hereby approved for execution by the Authority, and any Authorized Signatory is hereby authorized and directed to execute the Purchase Contract in substantially said form, with such changes or additions thereto as any member of the Commission with the advice of counsel to the Authority may approve, such approval to be conclusively evidenced by the execution and delivery of the Purchase Contract, and the Secretary is hereby authorized and directed to deliver the Purchase Contract; provided, that, (i) the true interest cost on the Bonds shall not exceed 5.75%; (ii) the final maturity of the Bonds shall not be later than September 1, 2049; (iii) the underwriter's discount shall not exceed 1.50% of the principal amount of the Bonds, inclusive of Underwriter counsel fees; and (iv) the Bonds shall be subject to optional call in ten years from their date of issuance at par and subject to extraordinary 2 4144-8103-9641.3 optional redemption at a premium no greater than 3% through ten years and without premium thereafter. Section 5. The Official Statement in preliminary form (the "Preliminary Official Statement") relating to the Bonds, in substantially the form made available to the Commission, is hereby approved, and any Authorized Signatory is hereby authorized and directed to certify to the Underwriter that the Preliminary Official Statement is deemed to be final as of its date, except for certain final pricing and related information permitted to be omitted in accordance with the Rule, and the Underwriter is hereby authorized and directed to distribute or cause the distribution of copies of the Preliminary Official Statement to prospective purchasers of the Bonds, and any Authorized Signatory is hereby authorized to execute and deliver an Official Statement in final form (the "Final Official Statement") relating to the Bonds in substantially the form of the Preliminary Official Statement, which Final Official Statement shall include final pricing and related information and other changes, as any member of the Commission with the advice of counsel to the Authority may approve, such approval to be conclusively evidenced by such execution and delivery of the Final Official Statement, and the Underwriter is hereby authorized and directed to distribute or cause the distribution of copies of the Final Official Statement to all purchasers of the Bonds. Section 6. The form and substance of the Continuing Disclosure Certificate is hereby approved. Any Authorized Signatory is hereby authorized and directed to execute and deliver the Continuing Disclosure Certificate in substantially the form made available to the Commission, with such changes or additions, as any member of the Commission with the advice of counsel to the Authority may approve, such approval to be conclusively evidenced by such execution and delivery. Section 7. The Chair, Vice Chair, Secretary, Treasurer, any other members of the Commission and other appropriate officers and agents of the Authority, including the Authorized Signatories are hereby authorized and directed, jointly and severally, to do all things and to execute and deliver all documents and contracts they deem necessary or advisable for consummating the sale, execution, and delivery of the Bonds and otherwise to carry out, give effect to, and comply with the terms and intent of this Resolution, the Indenture, the Bonds, the Purchase Contract, the Continuing Disclosure Certificate, the Preliminary Official Statement, and the Official Statement. All such actions previously taken by the Authorized Signatories are hereby ratified, confirmed, and approved. Section 8. This Resolution shall take effect immediately upon its adoption. 3 4144-8103-9641.3 PASSED AND ADOPTED by the California Statewide Communities Development Authority this 7th day of February, 2019. I, the undersigned, a duly appointed and qualified Authorized Signatory of the Commission of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of said Authority at a duly called and noticed meeting of the Commission of said Authority held in accordance with law on February 7, 2019. B ed Signatory California Statewide Communities Development Authority 0 4 4144-8103-9641.3 EXECUTION VERSION CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY and WILMINGTON TRUST, NATIONAL ASSOCIATION as Trustee INDENTURE Dated as of March 1, 2019 Relating to the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 4161-7770-1401.4 TABLE OF CONTENTS SECTION 2.01. SECTION 2.02. SECTION 2.03. SECTION 2.04. SECTION 2.05. SECTION 2.06. SECTION 2.07. SECTION 2.08. SECTION 2.09. SECTION 2.10. SECTION 2.11. SECTION 2.12. SECTION 2.13. SECTION 2.14. SECTION 3.01. SECTION 3.02. SECTION 3.03. SECTION 3.04. SECTION 1.01. SECTION 1.02. Page ARTICLE I DEFINITIONS; EQUAL SECURITY Definitions 2 Equal Security 11 ARTICLE II AUTHORIZATION AND ISSUANCE OF THE SERIES 2019 BONDS AND GENERAL PROVISIONS FOR THE BONDS Authorization and Purpose of Series 2019 Bonds. 12 Denominations of Bonds 12 Certain Provisions of the Bonds 12 Date and Maturity Dates of and Interest Rates on and Mandatory Sinking Account Payments for the Series 2019 Bonds; Establishment of 2039 Sinking Account and 2048 Sinking Account in the Redemption Fund for the Series 2019 Bonds 14 Redemption of Series 2019 Bonds 16 Form of Series 2019 Bonds 17 Execution of Bonds 17 Transfer and Exchange of Bonds 18 Mutilated, Destroyed, Stolen or Lost Bonds 18 Temporary Bonds 19 Use of Depository for Bonds. 19 Conditions to Issuance of Refunding Bonds 20 Procedure for Issuance of Refunding Bonds 22 No Issuance of Obligations Other Than Refunding Bonds 23 ARTICLE III REDEMPTION OF BONDS Privilege of Redemption of Bonds 23 Selection of Bonds for Redemption 23 Notice of Redemption of Bonds 24 Effect of Redemption of Bonds; Partial Redemption 25 ARTICLE IV BOND PROCEEDS SECTION 4.01. Application of Proceeds of Sale of Series 2019 Bonds 25 i 4161-7770-1401.4 SECTION 4.02. SECTION 4.03. SECTION 4.04. SECTION 5.01. SECTION 5.02. SECTION 5.03. SECTION 5.04. SECTION 5.05. SECTION 5.06. SECTION 5.07. SECTION 6.01. SECTION 6.02. SECTION 6.03. SECTION 6.04. SECTION 6.05. SECTION 6.06. SECTION 6.07. SECTION 6.08. SECTION 6.09. SECTION 6.10. SECTION 6.11. SECTION 7.01. SECTION 7.02. SECTION 7.03. TABLE OF CONTENTS (continued) Page Reserve Fund 26 Costs of Issuance Account 26 Acquisition and Construction Fund 26 ARTICLE V SPECIAL TAX REVENUES Deposit of Special Tax Revenues in the Special Tax Fund 27 Allocation of Money in the Special Tax Fund 28 Redemption Fund 28 Expense Fund 29 Reserve Fund 30 Surplus to Acquisition Subaccount of the Acquisition and Construction Fund 30 Prepayment Fund 30 ARTICLE VI COVENANTS OF THE AUTHORITY Punctual Payment and Performance 31 Against Indebtedness and Encumbrances 31 Against Federal Income Taxation 31 Payment of Claims 32 Expense Budgets 32 Accounting Records; Financial Statements and Other Reports 32 Protection of Security and Rights of Holders 33 Levy and Collection of the Special Tax 33 Foreclosure of Special Tax Liens 34 Continuing Disclosure Certificate 34 Further Assurances 34 ARTICLE VII THE TRUSTEE The Trustee 34 Liability of the Trustee 36 Notice to the Trustee 37 ii 4161-7770-1401.4 TABLE OF CONTENTS (continued) Page ARTICLE VIII AMENDMENT OF OR SUPPLEMENT TO THE INDENTURE SECTION 8.01. Amendment or Supplement by Consent of Holders 38 SECTION 8.02. Amendment or Supplement Without Consent of Holders 38 SECTION 8.03. Disqualified Bonds 39 SECTION 8.04. Endorsement or Replacement of Bonds After Amendment or Supplement 39 SECTION 8.05. Amendment or Supplement by Mutual Consent 39 ARTICLE IX EVENTS OF DEFAULT AND REMEDIES OF HOLDERS SECTION 9.01. Events of Default; Remedies of Holders 39 SECTION 9.02. Non -waiver 40 SECTION 9.03. Remedies Not Exclusive 40 ARTICLE X DEFEASANCE SECTION 10.01. Discharge of the Bonds 41 SECTION 10.02. Unclaimed Money 42 ARTICLE XI MISCELLANEOUS SECTION 11.01. Liability of Authority Limited to Special Tax Revenues 42 SECTION 11.02. Benefits of the Indenture Limited to Certain Parties 43 SECTION 11.03. Successor Is Deemed Included in All References to Predecessor 43 SECTION 11.04. Execution of Documents by Holders 43 SECTION 11.05. Deposit and Investment of Moneys in Funds 43 SECTION 11.06. Waiver of Personal Liability 44 SECTION 11.07. Acquisition of Bonds by Authority 44 SECTION 11.08. Content of Certificates and Reports 44 SECTION 11.09. Notice by Mail 45 SECTION 11.10. Maintenance of Funds 45 SECTION 11.11. Article and Section Headings, Gender and Reference 45 SECTION 11.12. Partial Invalidity 45 SECTION 11.13. Execution in Counterparts 46 4161-7770-1401.4 TABLE OF CONTENTS (continued) Page SECTION 11.14. Governing Law 46 SECTION 11.15. Notices 46 SECTION 11.16. Effective Date of the Indenture 47 EXHIBIT A FORMS OF BOND, TRUSTEE'S CERTIFICATE OF AUTHENTICATION AND ASSIGNMENT A-1 EXHIBIT B DISBURSEMENT REQUEST FORM (For Acquisitions) B- 1 (For Reimbursement of Construction Advances for Undergrounding) B- 13 EXHIBIT C RATE AND METHOD OF APPORTIONMENT C-1 iv 4161-7770-1401.4 INDENTURE This Indenture (the "Indenture") is made and entered into as of March 1, 2019, by and between the CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, a public entity of the State of California (the "Authority"), and WILMINGTON TRUST, NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America and authorized to accept and execute trusts of the character herein set forth, as trustee (the "Trustee"); WITNESSETH: WHEREAS, on December 20, 2018, the Authority duly adopted its Resolution No. 18SCIP-117, establishing the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) (the "Community Facilities District") for the purpose of financing the acquisition and construction of certain public facilities in and for the Community Facilities District; and WHEREAS, at an election in the Community Facilities District that was held on December 20, 2018, the qualified electors of the Community Facilities District duly authorized the issuance of bonds in the aggregate principal amount of not to exceed eight million eight hundred thousand dollars ($8,800,000) for such purpose; and WHEREAS, the Authority has determined to issue the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), Special Tax Bonds, Series 2019 (the "Bonds") in the aggregate principal amount of eight million three hundred thousand dollars ($8,300,000) pursuant to and secured by this Indenture; and WHEREAS, all things necessary to cause the Bonds, when executed by the Authority and authenticated by the Trustee and delivered as provided herein, to be legal special tax obligations of the Authority, enforceable in accordance with their terms, and to constitute this Indenture a valid agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery hereof and the execution and delivery of the Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE, THE INDENTURE WITNESSETH, that in order to secure the payment of the interest on and principal of and redemption premiums, if any, on all Bonds at any time issued and outstanding hereunder according to their tenor, and to secure the observance and performance of all the agreements, conditions, covenants and terms therein and herein set forth, and to declare the conditions and terms upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual agreements and covenants herein contained and of the purchase and acceptance of the Bonds by the respective owners thereof from time to time, and for other valuable consideration, the receipt of which is hereby acknowledged, the Authority does hereby agree and covenant with the Trustee, for the benefit of the respective owners from time to time of the Bonds, as follows: 4161-7770-1401.4 ARTICLE I DEFINITIONS; EQUAL SECURITY SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes hereof and of any Supplemental Indenture and of the Bonds and of any certificate, opinion, report, request or other document mentioned herein or therein have the meanings defined herein. The following definitions shall be equally applicable to both the singular and plural forms of any of the terms defined herein. Acquisition Agreement "Acquisition Agreement" means that certain Acquisition Agreement dated as of March 12, 2019, between City of Newport Beach and TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC, as the same may be further amended from time to time in accordance with its terms. Acquisition and Construction Fund "Acquisition and Construction Fund" means the "CSCDA/Uptown Newport Community Facilities District Acquisition and Construction Fund" established pursuant to Section 4.04 and maintained by the Trustee. Administrative Expenses "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of the Community Facilities District: the costs of computing the Special Tax and preparing the annual Special Tax collection schedules; the costs of remitting the Special Tax to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the Authority or any designee thereof of complying with arbitrage rebate requirements; the costs to the Authority or any designee thereof of complying with disclosure requirements associated with applicable federal and state securities laws and of the Law; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Tax; the costs of the Authority or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from an escrow account; and the Authority's annual administration fees and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the Authority for any other administrative purposes of the Community Facilities District, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tax. Authority "Authority" means the California Statewide Communities Development Authority. 2 4161-7770-1401.4 Authorized Signatory "Authorized Signatory" means any member of the Commission of the Authority and any other person as may be designated and authorized to sign on behalf of the Authority pursuant to a resolution adopted thereby. Average Annual Debt Service "Average Annual Debt Service" means the average over all Bond Years of the annual debt service from the date of the Bonds to their maturity, including: (1) the principal amount of all such Outstanding 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 such Bonds Outstanding in such Bond Year assuming such Bonds are retired as scheduled. Bond Year "Bond Year" means the period from September 2 through the following September 1. Bonds, Serial Bonds, Term Bonds "Bonds" means the eight million three hundred thousand dollars ($8,300,000) principal amount of special tax bonds of the Authority at any time Outstanding hereunder or under any Supplemental Indenture that are executed, issued and delivered in accordance with Section 2.01(a) and the other provisions hereof or of any Supplemental Indenture and that were authorized at the special election held in the Community Facilities District on December 20, 2018. "Serial Bonds" means the Bonds for which no Mandatory Sinking Account Payments are established. "Term Bonds" means the Bonds which are redeemable or payable on or before their specified maturity date or dates from the Mandatory Sinking Account Payments established for the purpose of redeeming or paying such Bonds on or before their specified maturity date or dates. Capitalized Interest Account "Capitalized Interest Account" means the account of that name in the Redemption Fund established pursuant to Section 5.03 and maintained by the Trustee. 3 4161-7770-1401.4 Certificate of the Authority "Certificate of the Authority" means an instrument in writing signed by an Authorized Signatory. Certificate of the City "Certificate of the City" means an instrument in writing signed by an officer of the City or such officer's designee. City "City" means the City of Newport Beach, California. Closing Date "Closing Date" means, with respect to the Series 2019 Bonds, the date upon which the Series 2019 Bonds are delivered and, with respect to any Refunding Bonds, will have the meaning given to such term in the Supplemental Indenture providing for the issuance of such Refunding Bonds. Code "Code" means the Internal Revenue Code of 1986 and the regulations issued thereunder from time to time, and in this regard reference to any particular Section of the Code shall include reference to any successor to such Section of the Code. Commission "Commission" means the governing board of the Authority. Community Facilities District "Community Facilities District" means the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), a community facilities district duly organized by the Authority and existing in the County of Orange under and by virtue of the Law. Costs of Issuance "Costs of Issuance" means all costs and expenses payable by or reimbursable to the Authority that are related to the formation of the Community Facilities District or the authorization, sale, execution, authentication, or initial delivery of Bonds, including costs of preparation and reproduction of documents, rating agency fees (if any), filing fees, fees, and charges of the Trustee (including fees and expenses of its counsel), legal fees and charges and fees and charges of other consultants and professionals, together with all costs for the preparation of Bonds, and any other cost or expense in connection with the formation of the Community 4 4161-7770-1401.4 Facilities District or the authorization, sale, execution, authentication, or initial delivery of Bonds. Costs of Issuance Account "Costs of Issuance Account" means the CSCDA/Uptown Newport Community Facilities District Costs of Issuance Account established pursuant to Section 4.03 and maintained by the Trustee. Debt Service "Debt Service" means, for any period, the sum of (1) the interest payable during such period on all Outstanding Bonds, assuming that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds are redeemed or paid as scheduled at the times of and in amounts equal to the sum of all Mandatory Sinking Account Payments (but excluding the amount of any such interest funded from the proceeds of the sale of Bonds or investment earnings thereon), plus (2) the principal amount of all Outstanding Serial Bonds maturing by their terms in such period, plus (3) the aggregate amount of all Mandatory Sinking Account Payments required to be deposited in all Sinking Accounts in such period. For purposes of any test for the issuance of Bonds to refund Outstanding Bonds, Debt Service shall be deemed to include Debt Service on the proposed refunding Bonds but shall not include Debt Service on any Bonds proposed to be defeased concurrently. Developer "Developer" means, collectively, TSG-Parcel 1, LLC, a Delaware limited liability company and Uptown Newport Jamboree, LLC, a Delaware Limited Partnership. Event of Default "Event of Default" means an event described as such in Section 9.01. Expense Fund "Expense Fund" means the CSCDA/Uptown Newport Community Facilities District Expense Fund established pursuant to Section 5.04 and maintained by the Trustee. Federal Securities "Federal Securities" means (a) any securities now or hereafter authorized both the interest on and principal of which are guaranteed by the full faith and credit of the United States of America, and (b) any of the following obligations of federal agencies not guaranteed by the United States of America: (1) participation certificates or senior debt obligations of the Federal Home Loan Mortgage Corporation, (2) bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act and bonds of any federal home loan bank established under such act, and (3) stocks, bonds, debentures, participations and other obligations of or issued by the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National Mortgage Association or the Federal Home 5 4161-7770-1401.4 Loan Mortgage Corporation, as and to the extent that such securities or obligations are eligible for the legal investment of Authority funds, together with any repurchase agreements which are secured by any of such securities or obligations that (a) have a fair market value (determined at least daily) at least equal to one hundred two percent (102%) of the amount invested in the repurchase agreement, (b) are in the possession of the Trustee or a third party acting solely as agent for the Trustee who holds a perfected first lien therein, and (c) are free from all third party claims. Fiscal Year "Fiscal Year" means the twelve-month period terminating on June 30 of each year, or any other annual accounting period hereafter selected and designated by the Authority as its Fiscal Year in accordance with applicable law. Generally Accepted Accounting Principles "Generally Accepted Accounting Principles" means the uniform accounting and reporting procedures set forth in publications of the American Institute of Certified Public Accountants or its successor, or by any other generally accepted authority on such procedures, and includes, as applicable, the standards set forth by the Governmental Accounting Standards Board or its successor. Holder "Holder" means any person who shall be the registered owner of any Outstanding Bond, as shown on the registration books maintained by the Trustee pursuant to Section 2.08. Improvements "Improvements" means the public capital improvements and utility undergrounding authorized to be financed by the Community Facilities District, and to which the Community Facilities District is authorized to contribute, as more particularly described in the Resolution of Formation. Indenture "Indenture" means this Indenture and all Supplemental Indentures. Independent Certified Public Accountant "Independent Certified Public Accountant" means any certified public accountant or firm of such accountants duly licensed and entitled to practice and of recognized national reputation as a verification agent, appointed and paid by the Authority, and who, or each of whom: (1) is in fact independent and not under the domination of the Authority; 6 4161-7770-1401.4 (2) does not have a substantial financial interest, direct or indirect, in the operations of the Authority; and (3) is not connected with the Authority as an officer or employee of the Authority, but who may be regularly retained to audit the accounting records of and make reports thereon to the Authority. Interest Payment Date "Interest Payment Date" means March 1 and September 1 of each year, commencing September 1, 2019, as well as any date on which the Bonds are redeemed prior to their maturity. Law "Law" means the Mello -Roos Community Facilities Act of 1982, as amended (being Sections 53311 et seq. of the Government Code of the State of California) and all laws amendatory thereof or supplemental thereto. Legal Investments "Legal Investments" means any securities in which funds of the Authority may be legally invested in accordance with the applicable law in effect at the time of such investment and in accordance with the then current investment policy of the Authority as determined by the Commission, including without limitation the California Asset Management Program pooled investment fund. Lien Amount "Lien Amount" means, with respect to any parcel subject to the lien of the Special Tax, the sum of (A) the aggregate principal amount of the Bonds attributable to such parcel plus (B) the aggregate principal amount of bonds, notes or other evidences of indebtedness other than the Bonds then outstanding and payable from assessments or reassessments to be levied on such parcel, plus (C) a portion of the aggregate principal amount of bonds, notes or other evidences of indebtedness issued under the Law and payable at least partially from special taxes to be levied on the parcel (except to the extent such special taxes are made expressly subordinate to the special taxes securing Bonds) (the "Other Mello -Roos Bonds") equal to the aggregate principal amount of the Other Mello -Roos Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other Mello -Roos Bonds on the parcel and the denominator of which is the total amount of special taxes levied for the Other Mello -Roos Bonds on all parcels of land securing the Other Mello -Roos Bonds (such fraction to be determined based upon the maximum special taxes which could be levied the year in which maximum annual debt service on the Other Mello -Roos Bonds occurs), based upon information from the most recent available fiscal year. 7 4161-7770-1401.4 Mandatory Sinking Account Payments "Mandatory Sinking Account Payments" means the payments required hereby and by all Supplemental Indentures to be deposited in all Sinking Accounts established for the payment of all Term Bonds. Maximum Annual Debt Service "Maximum Annual Debt Service" means the maximum sum obtained for any Bond Year prior to the final maturity of Bonds by totaling the following for each Bond Year: (1) The amount of all such Outstanding Bonds payable in such Bond Year; (2) The principal amount of any such Bonds scheduled to be called and redeemed in such Bond Year; and (3) The interest payable on the aggregate principal amount of such Outstanding Bonds in such Bond Year if such Outstanding Bonds are retired as scheduled. Moody's "Moody's" means Moody's Investors Service, Inc., a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors or assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the Authority. Opinion of Counsel "Opinion of Counsel" means a written opinion of counsel retained or employed by the Authority. Outstanding "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 8.03) all Bonds except: (1) Bonds cancelled and destroyed by the Trustee or delivered to the Trustee for cancellation and destruction; (2) Bonds paid or deemed to have been paid within the meaning of Section 10.01; and (3) Bonds in lieu of or in substitution for which other Bonds shall have been executed by the Authority and authenticated and delivered by the Trustee pursuant to Section 2.09. 8 4161-7770-1401.4 Park Improvement Subaccount "Park Improvement Subaccount" means the subaccount by that name in the Acquisition and Construction Fund and established pursuant to Section 4.04(a) hereof. Prepayment Fund "Prepayment Fund" means the CSCDA/Uptown Newport Community Facilities District Prepayment Fund established pursuant to Section 5.07 and maintained by the Trustee. Principal Corporate Trust Office "Principal Corporate Trust Office" means the corporate trust office of the original Trustee in Los Angeles or San Francisco, California, at which at any particular time corporate trust business shall be administered, or such other office as it shall designate; and any such office designated by any successor Trustee, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business shall be conducted. Rate and Method "Rate and Method" means the "Rate and Method of Apportionment California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport)" adopted by the Commission as part of the Resolution of Formation and attached hereto as Exhibit C, as the same may be amended from time to time. Rebate Fund "Rebate Fund" means the CSCDA/Uptown Newport Community Facilities District Rebate Fund established pursuant to Section 6.03 (to be maintained by the Treasurer of the Authority). Redemption Fund "Redemption Fund" means the CSCDA/Uptown Newport Community Facilities District Redemption Fund established pursuant to Section 5.03 and maintained by the Trustee. Refunding Bonds "Refunding Bonds" means Bonds other than the Series 2019 Bonds that are issued pursuant to Sections 2.12 and 2.13. Required Bond Reserve "Required Bond Reserve" means, as of any date of calculation, an amount equal to the lesser of (a) Maximum Annual Debt Service, (b) 10% of the proceeds (within the meaning of Section 148 of the Code) of such Bonds, or (c) 125% of Average Annual Debt Service; 9 4161-7770-1401.4 provided that upon the issuance of any Series of Refunding Bonds, the Required Bond Reserve shall not be required to be funded or increased by an amount greater than 10% of the proceeds of that Series. Reserve Fund "Reserve Fund" means the CSCDA/Uptown Newport Community Facilities District Reserve Fund established pursuant to Section 4.02 and maintained by the Trustee. Resolution of Formation "Resolution of Formation" means Resolution No. 18SCIP-117, adopted by the Commission on December 20, 2018. Series "Series" means all Bonds of like designation authenticated and delivered on original issuance at the same time pursuant to this Indenture or a Supplemental Indenture and any Bond or Bonds thereafter delivered in lieu of or as substitution for any of such Bonds pursuant to this Indenture. Sinking Account "Sinking Account" means the accounts referred to by that name in the Redemption Fund established pursuant to Section 5.03. Special Tax "Special Tax" means the special tax levied within the Community Facilities District to fund the Special Tax Requirement. Special Tax Fund "Special Tax Fund" means the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Fund established pursuant to Section 5.01 and maintained by the Trustee. Special Tax Requirement "Special Tax Requirement" has the meaning given in the Rate and Method. Special Tax Revenues "Special Tax Revenues" means the proceeds of the Special Tax received by or on behalf of the Community Facilities District, including any prepayments thereof, interest and penalties thereon, and proceeds of the redemption or sale of property sold as a result of the foreclosure of the lien of the Special Tax, which shall be limited to the amount of said lien and interest and penalties thereon. 10 4161-7770-1401.4 Standard & Poor's "Standard & Poor's" means S&P Global Ratings, a business of Standard & Poor's Financial Services LLC, a corporation duly organized and existing under and by virtue of the laws of the State of New York, and its successors and assigns, or, if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency selected by the Authority. Supplemental Indenture "Supplemental Indenture" means any indenture then in full force and effect that has been made and entered into by the Authority and the Trustee, amendatory of or supplemental hereto; but only to the extent that such Supplemental Indenture is specifically authorized hereunder. Tax Certificate "Tax Certificate" means each certificate delivered upon the issuance of Bonds relating to Section 148 of the Code. Taxable Property "Taxable Property" has the meaning given in the Rate and Method. Trustee "Trustee" means Wilmington Trust, National Association, a national banking association duly organized and existing under and by virtue of the laws of the United States of America and authorized to accept and execute trusts of the character herein set forth, at its Principal Corporate Trust Office, or any other bank, national banking association or trust company having a corporate trust office in Los Angeles or San Francisco, California, which may at any time be substituted in its place as provided in Section 7.01 at its Principal Corporate Trust Office. Undergrounding Subaccount "Undergrounding Subaccount" means the subaccount by that name in the Acquisition and Construction Fund and established pursuant to Section 4.04(a) hereof. Written Request of the Authority "Written Request of the Authority" means an instrument in writing signed by an Authorized Signatory. SECTION 1.02. Equal Security. In consideration of the acceptance of the Bonds by the Holders thereof, the Indenture shall be deemed to be and shall constitute a contract between the Authority and the Holders from time to time to secure the full and final payment of the interest on and principal of and redemption premiums, if any, on all Bonds which may from 11 4161-7770-1401.4 time to time be authorized, sold, executed, authenticated and delivered hereunder, subject to the agreements, conditions, covenants and terms contained herein; and all agreements, conditions, covenants and terms contained herein required to be observed or performed by or on behalf of the Authority shall be for the equal and proportionate benefit, security and protection of all Holders without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number thereof or the time of execution, authentication or delivery thereof or otherwise for any cause whatsoever, except as expressly provided herein or therein. ARTICLE II AUTHORIZATION AND ISSUANCE OF THE SERIES 2019 BONDS AND GENERAL PROVISIONS FOR THE BONDS SECTION 2.01. Authorization and Purpose of Series 2019 Bonds. (a) The Commission has reviewed all proceedings heretofore taken relative to the authorization of the Series 2019 Bonds and has found, as a result of such review, and hereby finds and determines that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of the Series 2019 Bonds do exist, have happened and have been performed in due time, form and manner as required by the Law, and the Authority is now authorized, pursuant to each and every requirement of the Law and hereof, to issue the Series 2019 Bonds in the aggregate principal amount of eight million three hundred thousand dollars ($8,300,000) in the form and manner provided herein. The Series 2019 Bonds shall be entitled to the benefit, protection and security of the provisions hereof, shall be designated as the "California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019," shall be issued by the Authority under and pursuant to the Law and under and pursuant hereto. The Series 2019 Bonds may contain or have endorsed thereon such other descriptive provisions, specifications and words not inconsistent with the provisions hereof as may be desirable or necessary to comply with custom or the rules of any securities exchange or commission or brokerage board or otherwise as may be determined by the Authority prior to the delivery thereof. (b) The purpose for which the Bonds are to be issued is to provide funds to finance the Improvements. SECTION 2.02. Denominations of Bonds. Unless otherwise provided in a Supplemental Indenture providing for the issuance of Refunding Bonds, the Bonds shall be issued as fully registered Bonds in denominations of five thousand dollars ($5,000) or any integral multiple of five thousand dollars ($5,000) (not exceeding the principal amount of Bonds maturing at any one time). SECTION 2.03. Certain Provisions of the Bonds. 12 4161-7770-1401.4 (a) The interest on and principal of and redemption premiums, if any, on the Bonds shall be payable in lawful money of the United States of America at the Principal Corporate Trust Office of the Trustee. (b) Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (i) it is authenticated on a day during the period from the sixteenth (16th) day of the calendar month next preceding an Interest Payment Date to such Interest Payment Date, both days inclusive, in which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated on a day on or before the fifteenth (15th) day of the month preceding the first Interest Payment Date, in which event it shall bear interest from its date; provided, that if at the time of authentication of any Bond interest is then in default on the Bond, the Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment of interest on the Bond. Payment of interest on the Bonds due on or before the maturity or prior redemption thereof shall be made only to the Holder whose name appears in the registration books required to be kept by the Trustee pursuant to Section 2.08 at the close of business as of the 15th day of the calendar month preceding the month in which the applicable Interest Payment Date falls, such interest to be paid by check mailed by first class mail on each such Interest Payment Date to such registered owner at his address as it appears on such books, except that in the case of a Holder of one million dollars ($1,000,000) or more in principal amount of Bonds then Outstanding, payment shall be made at such Holder's option by wire transfer on any Interest Payment Date of immediately available funds to an account in a bank or trust company or savings bank that is a member of the Federal Reserve System and that is located in the United States of America according to written instructions provided by such Holder to the Trustee at least fifteen (15) days before each such Interest Payment Date. Payment of the principal of and redemption premiums, if any, on the Bonds shall be made only to the Holder whose name appears in the registration books required to be kept by the Trustee pursuant to Section 2.08, such principal and redemption premiums, if any, to be paid only on the surrender of the Bonds at the Principal Corporate Trust Office of the Trustee at maturity or on redemption prior to maturity. All such payments of interest and principal and redemption premium, if any, on any Bond shall be valid and effectual to satisfy and discharge the liability on such Bond to the extent of the sum or sums so paid. (c) The Bonds shall recite in substance that the interest on and principal of and redemption premiums, if any, on the Bonds are payable solely from the Special Tax Revenues, and that the Authority is not obligated to pay the Bonds except from the Special Tax Revenues; that the general funds and assets of the Authority are not liable and the full faith and credit of the Authority is not pledged for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, and that no tax or assessment other than the Special Tax shall ever be levied or collected to pay the interest on or principal of or redemption premiums, if any, on the Bonds; that the Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any of the property of the Authority or any of its income or receipts except the money so pledged in the Special Tax Fund; and that neither the payment of the interest on or principal of or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the Authority. (d) From and after the issuance of the Bonds the findings and determinations of the Commission related to the Bonds shall be conclusive evidence of the existence of the facts 13 4161-7770-1401.4 so found and determined in any action or proceeding in any court in which the validity of such Bonds is at issue, and no bona fide purchaser of any of such Bonds shall be required to see to the existence of any fact or to the performance of any condition or to the taking of any proceeding required prior to such issuance or to the application of the purchase price paid for such Bonds. The validity of the issuance of the Bonds shall not be dependent on or affected in any way by (i) any proceedings taken by the City for the acquisition or construction of any Improvements, or (ii) any contracts made by the City in connection therewith, or (iii) the failure to complete the acquisition or construction of any Improvements. The recital contained in the Bonds that the Bonds are issued under and pursuant to the Law and under and pursuant hereto shall be conclusive evidence of their validity and of the regularity of their issuance and all Bonds shall be incontestable from and after their issuance. The Bonds shall be deemed to be issued, within the meaning hereof, whenever the definitive Bonds (or any temporary Bonds exchangeable therefor) have been delivered to the purchaser thereof and the purchase price thereof received. SECTION 2.04. Date and Maturity Dates of and Interest Rates on and Mandatory Sinking Account Payments for the Series 2019 Bonds; Establishment of 2039 Sinking Account and 2048 Sinking Account in the Redemption Fund for the Series 2019 Bonds. (a) The Series 2019 Bonds shall be dated the Closing Date. The Series 2019 Bonds shall mature on the dates and in the principal amounts and shall bear interest, payable on each Interest Payment Date therefor, at the rates per annum as set forth in the following schedule: Maturity Date Principal Interest (September 1) Amount Rate 2039* 2048* * Term Bonds. $3,295,000 5,005,000 5.00% 5.00 (b) A 2039 Sinking Account (the "2039 Sinking Account") is hereby established in the Redemption Fund for the 2039 Mandatory Sinking Account Payments (the "2039 Mandatory Sinking Account Payments") for the mandatory redemption and payment of the Series 2019 Bonds maturing on September 1, 2039 (the "2039 Term Bonds"), which payments shall become due on the dates and in the amounts as set forth in the following schedule (except that if any Series 2019 Bonds maturing on September 1, 2039, shall have been redeemed pursuant to Section 2.05(b) and/or Section 2.05(c), the amounts of the 2039 Mandatory Sinking Account Payments shall be reduced proportionately by the principal amount of all such Series 2019 Bonds so redeemed), namely: 14 4161-7770-1401.4 Mandatory Sinking Account Payment Date (September 1) Minimum Sinking Account Payments 2021 $30,000 2022 40,000 2023 55,000 2024 65,000 2025 80,000 2026 95,000 2027 105,000 2028 125,000 2029 140,000 2030 155,000 2031 175,000 2032 195,000 2033 215,000 2034 240,000 2035 265,000 2036 290,000 2037 315,000 2038 340,000 2039* 370,000 * Maturity Date. All such 2039 Mandatory Sinking Account Payments shall be deposited in the 2039 Sinking Account, which account the Trustee hereby agrees to maintain so long as any of the Series 2019 Bonds maturing on September 1, 2039 are Outstanding. All money in the 2039 Sinking Account shall be used and withdrawn by the Trustee at any time upon receipt of a Written Request of the Authority for the purchase of the Series 2019 Bonds maturing on September 1, 2039 at public or private sale as and when and at such prices (including brokerage and other charges) as the Authority may in its discretion determine, but not to exceed the principal amount of such Series 2019 Bonds. All money in the 2039 Sinking Account on September 1 of each year, beginning on September 1, 2039 shall be used and withdrawn by the Trustee on such September 1 for the mandatory redemption or payment of the Series 2019 Bonds maturing on September 1, 2039, and the Trustee hereby agrees and covenants with the Holders of the Series 2019 Bonds to call and redeem in accordance with Article III of this Indenture or pay such Series 2019 Bonds from the 2039 Mandatory Sinking Account Payments deposited in the 2039 Sinking Account pursuant to this paragraph whenever on September 1 of any year there is money in the 2039 Sinking Account available for such purpose. (c) A 2048 Sinking Account (the "2048 Sinking Account") is hereby established in the Redemption Fund for the 2039 Mandatory Sinking Account Payments (the "2048 Mandatory Sinking Account Payments") for the mandatory redemption and payment of the Series 2019 Bonds maturing on September 1, 2048 (the "2048 Term Bonds"), which payments shall become due on the dates and in the amounts as set forth in the following schedule (except that if any Series 2019 Bonds maturing on September 1, 2048, shall have been redeemed 15 4161-7770-1401.4 pursuant to Section 2.05(b) and/or Section 2.05(c), the amounts of the 2048 Mandatory Sinking Account Payments shall be reduced proportionately by the principal amount of all such Series 2019 Bonds so redeemed), namely: Mandatory Sinking Account Payment Date (September 1) Minimum Sinking Account Payments 2040 $405,000 2041 435,000 2042 470,000 2043 510,000 2044 550,000 2045 590,000 2046 635,000 2047 680,000 2048* 730,000 * Maturity Date. All such 2048 Mandatory Sinking Account Payments shall be deposited in the 2048 Sinking Account, which account the Trustee hereby agrees to maintain so long as any of the Series 2019 Bonds maturing on September 1, 2048 are Outstanding. All money in the 2048 Sinking Account shall be used and withdrawn by the Trustee at any time upon receipt of a Written Request of the Authority for the purchase of the Series 2019 Bonds maturing on September 1, 2048 at public or private sale as and when and at such prices (including brokerage and other charges) as the Authority may in its discretion determine, but not to exceed the principal amount of such Series 2019 Bonds. All money in the 2048 Sinking Account on September 1 of each year, beginning on September 1, 2048 shall be used and withdrawn by the Trustee on such September 1 for the mandatory redemption or payment of the Series 2019 Bonds maturing on September 1, 2048, and the Trustee hereby agrees and covenants with the Holders of the Series 2019 Bonds to call and redeem in accordance with Article III of this Indenture or pay such Series 2019 Bonds from the 2048 Mandatory Sinking Account Payments deposited in the 2048 Sinking Account pursuant to this paragraph whenever on September 1 of any year there is money in the 2048 Sinking Account available for such purpose. In the event of a redemption pursuant to Section 2.05(b) and/or Section 2.05(c), the Authority shall provide the Trustee with a revised sinking fund schedule giving effect to the redemption so completed. SECTION 2.05. Redemption of Series 2019 Bonds. (a) The Series 2019 Bonds maturing on September 1, 2039 and September 1, 2048, are subject to mandatory redemption by the Authority prior to their maturity date in part on any September 1 on and after September 1, 2039 and September 1, 2048, respectively, in each case solely from money derived by the Authority from the 2039 Mandatory Sinking Account Payments deposited in the 2039 Sinking Account, and from the 2048 Mandatory Sinking Account Payments deposited in the 2048 Sinking Account pursuant to Sections 2.04(b) and 16 4161-7770-1401.4 2.04(c), respectively, upon mailed notice as provided herein, at the principal amount thereof together with accrued interest thereon to the date fixed for redemption. (b) The Series 2019 Bonds are subject to extraordinary redemption by the Authority prior to their respective maturity dates as a whole or in part on any Interest Payment Date solely from money derived by the Authority from prepayments of the Special Tax under the Law, upon mailed notice as provided herein, at the following redemption prices (computed upon the principal amount of the Bonds or portions thereof called for redemption) together with accrued interest to the date fixed for redemption, as follows: 102% Any Interest Payment Date on and after September 1, 2019 through March 1, 2027 101 % Any Interest Payment Date on and after September 1, 2027 through March 1, 2028 100% September 1, 2028 and any Interest Payment Date thereafter (c) The Series 2019 Bonds are subject to optional redemption by the Authority prior to their respective maturity dates as a whole or in part on any date on or after September 1, 2028, from money derived by the Authority from any source other than Mandatory Sinking Account Payments or prepayments of the Special Tax, at the principal amount of the Series 2019 Bonds or portions thereof called for redemption, together with accrued interest to the date fixed for redemption, without premium. SECTION 2.06. Form of Series 2019 Bonds. The Series 2019 Bonds and the authentication endorsement and the form of assignment to appear thereon shall be substantially in the forms set forth in Exhibit A hereto. SECTION 2.07. Execution of Bonds. The Bonds shall be executed on behalf of the Authority by the manual or facsimile signature of the Chair of the Authority or the manual signature of any Authorized Signatory, and attested by the manual or facsimile signature of the Secretary of the Authority or the Assistant to the Secretary of the Authority or the manual signature of any Authorized Signatory. The Bonds shall then be delivered to the Trustee for authentication by it. In case any officer of the Authority or Authorized Signatory who shall have signed or attested any of the Bonds shall cease to be such officer or Authorized Signatory before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee or issued by the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Authority as though those who signed and attested the same had continued to be such officers of the Authority or Authorized Signatory, and also any Bond may be signed and attested on behalf of the Authority by such persons as at the actual date of execution of such Bond shall be the proper officers of the Authority or Authorized Signatory although at the nominal date of such Bond any such person shall not have been such officers of the Authority or Authorized Signatory. Only those Bonds that bear thereon a certificate of authentication manually executed by the Trustee shall be entitled to any benefit, protection or security under the Indenture or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evidence that 17 4161-7770-1401.4 the Bonds so authenticated have been duly authorized, sold, executed, authenticated and delivered under the Indenture and are entitled to the benefits of the Indenture. SECTION 2.08. Transfer and Exchange of Bonds. The Trustee shall keep at its Principal Corporate Trust Office sufficient books for the transfer and exchange of the Bonds, which books shall at all times during normal business hours with reasonable prior notice be open to inspection by the Authority or by any Holder. Any Bond may, in accordance with its terms, be transferred or exchanged on such books by the person in whose name it is registered, in person or by his duly authorized attorney, upon payment by the Holder requesting such transfer or exchange of any tax or other governmental charge required to be paid with respect to such transfer or exchange and upon surrender of such Bond for cancellation accompanied by delivery of a duly executed written instrument of transfer or exchange in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the Authority shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds of the same maturity date and of authorized denominations for the same aggregate principal amount, except that neither the Authority nor the Trustee shall be required (i) to transfer or exchange any Bonds during the fifteen -day period prior to the selection of any Bonds for redemption under Article III, or (ii) to transfer or exchange any Bond which has been selected for redemption in whole or in part, except the unredeemed portion of such Bond selected for redemption in part, from and after the day that such Bond has been selected for redemption in whole or in part under Article III. SECTION 2.09. Mutilated, Destroyed, Stolen or Lost Bonds. In case any Bond shall become mutilated in respect of the body of such Bond or shall be believed by the Authority to have been destroyed, stolen or lost, upon proof of ownership satisfactory to the Authority and the Trustee and upon the surrender of such mutilated Bond at the Principal Corporate Trust Office of the Trustee, or upon the receipt of evidence satisfactory to the Authority and the Trustee of such destruction, theft or loss and upon receipt of indemnity satisfactory to the Authority and the Trustee, and also upon payment of all Administrative Expenses incurred by the Authority and the Trustee related to the replacement of any Bond so mutilated, destroyed, stolen or lost, the Authority shall execute and the Trustee shall authenticate and deliver at its Principal Corporate Trust Office a new Bond or Bonds of the same maturity date for the same aggregate principal amount in authorized denominations of like tenor and date and bearing such numbers and notations as the Trustee shall determine in exchange and substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution for the Bond so destroyed, stolen or lost. If any such destroyed, stolen or lost Bond shall have matured or shall have been called for redemption, payment of the amount due thereon may be made by the Trustee upon receipt of like proof, indemnity and payment of Administrative Expenses. Any replacement Bonds issued pursuant to this Section shall be entitled to equal and proportionate benefits with all other Bonds issued hereunder, and the Authority and the Trustee shall not be required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued hereunder or for the purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and the replacement Bond shall be treated as one and the same. 18 4161-7770-1401.4 SECTION 2.10. Temporal Bonds. Any Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds shall be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Authority, shall be issued in fully registered form, shall contain such reference to any of the provisions hereof as may be appropriate and shall be executed by the Authority upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds, it shall execute and furnish definitive Bonds without delay, and thereupon the temporary Bonds may be surrendered in exchange therefor at the Principal Corporate Trust Office of the Trustee, and the Trustee shall deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations of the same maturity date or dates, and until so exchanged, the temporary Bonds shall be entitled to the same benefits as definitive Bonds issued hereunder. SECTION 2.11. Use of Depository for Bonds. (a) The Depository Trust Company, in New York, New York, is hereby appointed depository for the Bonds, and the Bonds shall be initially registered in the name of "Cede & Co.," as nominee of The Depository Trust Company, and shall be initially issued as one Bond for each of the maturities in the principal amounts set forth herein, and registered ownership of the Bonds, or any portion thereof, may not thereafter be transferred except: (i) To any successor of Cede & Co., as nominee of The Depository Trust Company, or its nominee, or to any substitute depository designated pursuant to clause (ii) of this Section (a "Substitute Depository"); provided, that any successor of Cede & Co., as nominee of The Depository Trust Company, or any Substitute Depository, shall be qualified under any applicable laws to provide the services proposed to be provided by it; (ii) To any Substitute Depository not objected to by the Trustee, upon (1) the resignation of The Depository Trust Company or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the Authority to substitute another depository for The Depository Trust Company or its successor because The Depository Trust Company or its successor (or any Substitute Depository or its successor) is no longer able to carry out its functions as depository; provided, that any such Substitute Depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (iii) To any person as provided below, upon (1) the resignation of The Depository Trust Company or its successor (or any Substitute Depository or its successor) from its functions as depository, or (2) a determination by the Authority to remove The Depository Trust Company or its successor (or any Substitute Depository or its successor) from its functions as depository. (b) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection (a) hereof, upon receipt of the Bonds by the Trustee, together with a Written Request of the Authority to the Trustee, a new Bond for each maturity date of the Bonds shall be 19 4161-7770-1401.4 executed by the Authority and authenticated and delivered by the Trustee in the aggregate principal amount of the Bonds so received, in such denominations and registered in the name of such successor or such Substitute Depository, or their nominees, as the case may be, all as specified in such Written Request of the Authority. In the case of any transfer pursuant to clause (iii) of subsection (a) hereof, upon receipt of the Bonds by the Trustee, together with a Written Request of the Authority to the Trustee, a new Bond or Bonds for each maturity date of the Bonds shall be executed by the Authority and authenticated and delivered by the Trustee in the aggregate principal amount of the Bonds so received, in such denominations and registered in the names of such persons as are requested in such Written Request of the Authority, subject to the limitations of Section 2.02, and thereafter, the Bonds shall be transferred pursuant to Section 2.08; provided, that the Trustee shall not be required to deliver such new Bonds on a date prior to sixty (60) days after receipt of such Written Request of the Authority. (c) The Authority and the Trustee shall be entitled to treat the person in whose name any Bond is registered as the owner thereof for all purposes hereof and any applicable laws, notwithstanding any notice to the contrary received by the Authority or the Trustee; and the Authority and the Trustee shall have no responsibility for transmitting payments to, communication with, notifying, or otherwise dealing with any beneficial owners of the Bonds, and neither the Authority nor the Trustee shall have any responsibility or obligation, legal or otherwise, to the beneficial owners or to any other party, including The Depository Trust Company or its successor (or any Substitute Depository or its successor), except to The Depository Trust Company or its successor (or any Substitute Depository or its successor) as a Holder of the Bonds. (d) So long as any Bonds are registered in the name of Cede & Co. or its registered assigns, the Authority and the Trustee shall cooperate with Cede & Co., as sole Holder, or its registered assigns, in effecting payment of the interest on and principal of and redemption premiums, if any, on such Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made immediately available on the date they are due. SECTION 2.12. Conditions to Issuance of Refunding Bonds. In addition to the Series 2019 Bonds issued pursuant to the preceding sections of this Article II, the Authority may at any time issue a Series of Bonds payable from the Special Tax Revenues as provided herein on a parity with all other Bonds theretofore or thereafter issued hereunder for the purpose of refunding the Bonds or refunding any Refunding Bonds, but only subject to the following conditions, which are hereby made conditions precedent to the issuance of such Series of Bonds (a) The issuance of such Series of Bonds shall have been authorized pursuant to and in accordance with the terms of the Law and pursuant hereto and shall have been provided for by a Supplemental Indenture in accordance therewith and herewith which shall specify (or provide for the determination of) the following: (i) The purpose for which such Series of Bonds is to be issued; provided, that the proceeds of sale of such Series of Bonds shall be applied solely for the purpose of providing funds to refund outstanding Bonds or Refunding Bonds, including the incidental Administrative Expenses related thereto; 20 4161-7770-1401.4 (ii) The principal amount and designation of such Series of Bonds and the authorized denomination or denominations of the Bonds of such Series of Bonds; (iii) The date, the maturity date or dates, the Interest Payment Dates and the dates on which Mandatory Sinking Account Payments, if any, are due for such Series of Bonds; provided, that (i) the Serial Bonds of such Series shall be payable as to principal on September 1 of each year in which principal of such Series of Bonds becomes due, and the Term Bonds of such Series shall be subject to mandatory redemption or payment on September 1 of each year in which Mandatory Sinking Account Payments for the Term Bonds of such Series become due; (ii) the Bonds of such Series shall be payable as to interest semiannually on March 1 and September 1 of each year or annually on March 1 or September 1 of each year, except that the first installment or installments of interest may be payable on either the March 1 or the September 1 date following their date and shall be for a period of not longer than twelve (12) months; (iii) all Bonds of such Series of like maturity shall be identical in all respects, except as to number, denomination, interest rate or redemption provisions, and (iv) serial maturities of the Serial Bonds of such Series or Mandatory Sinking Account Payments for the Term Bonds of such Series, or any combination thereof, shall be established to provide for the redemption or payment of the Bonds of such Series on or before their respective maturity dates; (iv) The redemption premiums and redemption terms, if any, for such Series of Bonds; (v) The form of the Bonds of such Series; (vi) The amount, if any, to be deposited from the proceeds of sale of such Series of Bonds in the Redemption Fund, and provisions concerning the use of such deposit to pay interest on the Bonds of such Series; (vii) The amount to be deposited from the proceeds of sale of such Series of Bonds in the Reserve Fund; provided, that the Reserve Fund shall be increased at the time that such Series of Bonds becomes Outstanding to an amount at least equal to the Required Bond Reserve; (viii) The amount to be deposited from the proceeds of sale of such Series of Bonds in the Acquisition and Construction Fund; (ix) The amount to be deposited from the proceeds of sale of such Series of Bonds in the Expense Fund; (x) The amount to be deposited from the proceeds of sale of such Series of Bonds in the separate account for such Series of Bonds established and maintained in the Costs of Issuance Account; and 21 4161-7770-1401.4 (xi) Such other provisions that are appropriate or necessary and are not inconsistent with the provisions hereof or of the Rate and Method; (b) The Authority shall be in compliance with all agreements, conditions, covenants and terms contained herein and in all Supplemental Indentures required to be observed or performed by it, and no default hereunder shall have occurred and shall be then continuing; (c) The Special Tax Revenues available to the Authority if the Special Tax were to be levied and collected at the maximum rate and amount in accordance with the Rate and Method on all Taxable Property (as defined in the Rate and Method) during each Fiscal Year that any Bonds will be Outstanding (excluding the estimated Special Tax Revenues from any Taxable Property then delinquent in the payment of any Special Tax) would produce a sum equal to at least one hundred ten percent (110%) of the annual Debt Service during the Bond Year which begins in such Fiscal Year, as shown by a certificate of an Independent Certified Public Accountant or nationally recognized, independent municipal finance consultant on file with the Trustee; (d) The aggregate Value -to -Lien Ratio of all Taxable Property (excluding any Taxable Property then delinquent in the payment of any Special Tax) shall be at least 4:1; and for the purposes of this paragraph of this section, the term "Value" means either the current assessed valuation of the Taxable Property or the appraised value of the Taxable Property determined by an MAI appraiser, and the term "Value -to -Lien Ratio" means the ratio of the Value of all Taxable Property to the aggregate principal amount of all Bonds and Refunding Bonds that will be Outstanding after the issuance of such Series of Bonds plus the aggregate principal amount of all other assessment bonds and bonds issued under the Law reasonably allocable to the Taxable Property; and (e) Notwithstanding the limitations contained in paragraphs (c) and (d) of this section, nothing contained herein shall limit the issuance of any Series of Bonds hereunder if after the issuance and delivery of such Series of Bonds theretofore issued hereunder will be Outstanding, and nothing contained herein shall limit the issuance of any Series of Bonds hereunder if after the issuance and delivery of such Series of Bonds the annual Debt Service on all Bonds and Refunding Bonds to be Outstanding after the issuance of such Series of Bonds in each Bond Year thereafter shall not be increased by reason of the issuance of such Series of Bonds. So long as any Bonds remain Outstanding, the Authority may not issue any obligations payable from Special Tax Revenues on parity with the Bonds except as Refunding Bonds. The Authority may at any time, or from time to time, issue evidences of indebtedness for any lawful purpose of the Community Facilities District so long as any payments due thereunder shall be subordinate in all respects to the use of the Special Tax Revenues as described herein. SECTION 2.13. Procedure for Issuance of Refunding Bonds. At any time after the sale of any Series of Bonds in accordance with the Law, such Series of Bonds shall be executed by the Authority and shall be delivered to the Trustee and thereupon shall be authenticated and delivered by the Trustee, but only upon receipt by the Trustee of the following documents or money: 22 4161-7770-1401.4 (a) A certified copy of the Supplemental Indenture authorizing the issuance of such Series of Bonds; (b) A Written Request of the Authority as to the delivery of such Series of Bonds; (c) An Opinion of Counsel to the effect that (i) the Supplemental Indenture has been duly executed and delivered by and constitutes the valid and binding obligation of the Authority; (ii) the Bonds of such Series are valid and binding special tax obligations of the Authority; and (iii) the issuance of the Bonds of such Series will not, in and of itself, result in the inclusion in gross income under the Code of interest on any Bonds previously issued hereunder; in each case subject to such exceptions, qualifications and limitations as are customary for such opinions. (d) A Certificate of the Authority containing such statements as may be reasonably necessary to show compliance of such Series of Bonds with the conditions contained in Section 2.12; (e) The proceeds of sale of such Series of Bonds; and (f) Such further documents or money as are required by the provisions hereof or of the Supplemental Indenture authorizing the issuance of such Series of Bonds. SECTION 2.14. No Issuance of Obligations Other Than Refunding Bonds. So long as any Bonds remain Outstanding, the Authority shall not issue any obligations payable from Special Tax Revenues on parity with the Bonds except pursuant to Sections 2.13 and 2.14 hereof. The Authority may at any time, or from time to time, issue evidences of indebtedness for any lawful purpose of the Community Facilities District so long as any payments due thereunder shall be subordinate in all respects to the use of the Special Tax Revenues as provided herein. ARTICLE III REDEMPTION OF BONDS SECTION 3.01. Privilege of Redemption of Bonds. Any Bonds subject to redemption prior to maturity pursuant hereto shall be redeemable, upon notice being given as provided in this article, at such times, upon payment of such redemption premiums, if any, and upon such terms (in addition to and consistent with the terms contained in this article) as may be specified herein or in the Supplemental Indenture authorizing the issuance of the Bonds; provided, that redemption of Bonds other than from Mandatory Sinking Account Payments or from the application of refunding bond proceeds shall be made only from and to the extent of funds on deposit with the Trustee and available for such purpose on the date such notice is given subject to Section 3.03. SECTION 3.02. Selection of Bonds for Redemption. Unless otherwise specified in a Supplemental Indenture providing for the issuance of Refunding Bonds, if less than all the Outstanding Bonds of a Series are to be redeemed at any one time pursuant to Section 2.05(b) or 2.05(c) hereof, the Authority shall select the maturity dates from which such 23 4161-7770-1401.4 Series of Bonds shall be redeemed, and if less than all the Outstanding Bonds of a Series of any one maturity date are to be redeemed at any one time, the Authority shall notify the Trustee in writing at least forty-five (45) days prior to the date fixed for redemption and the Trustee shall select the Bonds of such Series or the portions thereof of such maturity date to be redeemed in integral multiples of five thousand dollars ($5,000) by lot in any manner that it deems appropriate. SECTION 3.03. Notice of Redemption of Bonds. The Trustee shall mail by first class mail a notice of redemption, not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption, and otherwise pursuant to Section 11.09, to the respective Holders of all Bonds selected for redemption in whole or in part and to all securities depositories and securities information services selected by the Authority to comply with custom or the rules of any securities exchange or commission or brokerage board or otherwise as may be determined by the Authority in its sole discretion and to the original underwriter of the Bonds, but neither failure to receive any such mailed notice nor any immaterial defect contained therein shall affect the sufficiency or validity of any such proceedings for redemption. Such notice shall state the date of such notice, the Bonds to be redeemed, the date of issue of such Bonds, the redemption date, the redemption price, the place of redemption (including the name and appropriate address of the Trustee), the CUSIP number of the maturity or maturities and, if less than all of any such maturity, the numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed, and shall give notice that further interest on such Bonds or the portions thereof to be redeemed will not accrue from and after the redemption date, and shall require that such Bonds be then surrendered for redemption at the Principal Corporate Trust Office of the Trustee so designated; provided, that neither the Authority nor the Trustee shall have any responsibility for any defect in the CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Authority nor the Trustee shall be liable for any inaccuracy in such numbers. If any Bond so chosen for redemption shall not be redeemable in whole, such notice shall also state that such Bond is to be redeemed in part only and that upon presentation of such Bond for redemption there will be issued in lieu of the unredeemed portion of principal thereof a new Bond or Bonds of the same maturity date of authorized denominations equal in aggregate principal amount to such unredeemed portion. Upon written direction of the Authority received prior to the date fixed for the redemption of Bonds pursuant to Section 3.04, the Trustee shall rescind, cancel and annul such redemption by giving notice of such rescission, cancellation and annulment to the same persons and in the same manner as the original notice of redemption. Upon written direction of the Authority received at least five (5) days prior to the date fixed for the redemption of Bonds pursuant to Section 3.04, the Trustee shall promptly rescind, cancel and annul such redemption by giving notice of such rescission, cancellation and annulment to the same persons and in the same manner as the original notice of redemption. With respect to any notice of redemption of Bonds delivered pursuant to this Section 3.03 with respect to any notice of optional or extraordinary redemption of Bonds, unless, upon the giving of such notice, such Bonds are deemed to have been paid within the meaning of 24 4161-7770-1401.4 Article X hereof, such notice shall state that such redemption shall be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of amounts sufficient to pay the principal of, and premium, if any, and interest on, such Bonds to be redeemed, and that if such amounts shall not have been so received the notice shall be of no force and effect and the Authority shall not be required to redeem such Bonds. In the event that any such notice of redemption contains such a condition and such amounts are not so received, the redemption shall not be made and the Trustee shall within a reasonable time thereafter give notice to the Holders to the effect that such amounts were not so received and such redemption was not made, such notice to be given by the Trustee in the manner in which the notice of redemption was given. Such failure to redeem such Bonds shall not constitute a default under the Indenture. SECTION 3.04. Effect of Redemption of Bonds; Partial Redemption. If notice of redemption has been duly given as aforesaid, and has not been rescinded as aforesaid, and money for the payment of the principal of and redemption premiums, if any, on, together with interest to the date fixed for redemption on, the Bonds or portions thereof so called for redemption is held by the Trustee, then on the date fixed for redemption designated in such notice such Bonds or such portions thereof shall become due and payable, and from and after the date so designated interest on the Bonds or such portions thereof so called for redemption shall cease to accrue and the Holders of such Bonds shall have no rights in respect thereof except to receive payment of the principal and the redemption premiums, if any, thereon and the interest accrued thereon to the date fixed for redemption. Such Bonds are required to be surrendered on the date fixed for redemption at the address or addresses of the Trustee so designated. If any Bond chosen for redemption will not be redeemable in whole, upon presentation of such Bond for redemption there will be issued in lieu of the unredeemed portion of principal thereof a new Bond or Bonds of the same maturity date, of authorized denominations equal in aggregate principal amount to such unredeemed portion. ARTICLE IV BOND PROCEEDS SECTION 4.01. Application of Proceeds of Sale of Series 2019 Bonds. Upon the receipt of payment of the proceeds of sale of the Series 2019 Bonds when the same shall have been duly sold by the Authority, the Trustee shall set aside and deposit the proceeds of sale of the Series 2019 Bonds in the following accounts and funds (or in a temporary account or fund in its books used to facilitate such deposits and transfers) in the following order: (a) The Trustee shall deposit in the Reserve Fund a sum of $730,314.47, which is equal to the Required Bond Reserve as of the Closing Date; (b) The Trustee shall deposit in the Capitalized Interest Account of the Redemption Fund the sum of $817,319.44, representing capitalized interest on the Series 2019 Bonds through March 1, 2021; (c) The Trustee shall deposit in the Costs of Issuance Account the sum of $274,815.82; 25 4161-7770-1401.4 (d) The Trustee shall deposit in the Expense Fund the sum of $52,000.00, to be applied pursuant to Section 5.04 hereof; (e) The Trustee shall deposit in the Park Improvement Subaccount of the Acquisition and Construction Fund the sum of $4,845,714.60, to be applied pursuant to Section 4.04 hereof; (f) The Trustee shall deposit in the Undergrounding Subaccount of the Acquisition and Construction Fund the sum of $1,994,808.07, to be applied pursuant to Section 4.04 hereof. The Trustee may establish temporary funds or accounts in its records to facilitate such deposits and transfers. SECTION 4.02. Reserve Fund. The Trustee shall establish and maintain a fund to be known as the "CSCDA/Uptown Newport Community Facilities District Reserve Fund," (the "Reserve Fund") into which shall be deposited an amount equal to the Required Bond Reserve. Subject to Section 5.05, moneys in the Reserve Fund shall be used solely for the purpose of paying the principal of and interest on the Bonds in the event that the moneys in the Redemption Fund are insufficient therefor, and for that purpose the Trustee shall withdraw from the Reserve Fund, for deposit in the Redemption Fund, moneys necessary for such purpose. Amounts in the Reserve Fund shall only be withdrawn to pay principal and interest on the Bonds; provided, that if the amount on deposit in the Reserve Fund is less than the Required Bond Reserve, the Trustee shall notify the Authority of the amount needed to replenish the Reserve Fund to the Required Bond Reserve and the Authority shall collect the deficiency by including it in the next annual Special Tax levy, to the extent permitted by law and as necessary. SECTION 4.03. Costs of Issuance Account. The Trustee shall establish and maintain an account to be known as the "CSCDA/Uptown Newport Community Facilities District Costs of Issuance Account," (the "Costs of Issuance Account") into which account shall be deposited the amount shown above. All money in the Costs of Issuance Account shall be applied by the Trustee in the manner provided by law for payment of Costs of Issuance as directed by the Written Request of the Authority, each of which shall be separately numbered as "Requisition No. _, " and each of which shall state (i) the amount, purpose and payee of the disbursement, together with the wire instructions or payee address, (ii) that the disbursement is a proper charge against the Costs of Issuance Account as provided in the Indenture and (iii) that the disbursement has not previously been paid from the Costs of Issuance Account; provided, that any money remaining in the Costs of Issuance Account after the completion of the payment of the Costs of Issuance (but, with respect to the Series 2019 Bonds, not later than the date that is six months after the Closing Date for the Series 2019 Bonds) shall be withdrawn by the Trustee from the Costs of Issuance Account and deposited by the Trustee in the Special Tax Fund, and the Costs of Issuance Account shall be closed. Any Supplemental Indenture may reopen or create a new Costs of Issuance Account with respect to Refunding Bonds. SECTION 4.04. Acquisition and Construction Fund. 26 4161-7770-1401.4 (a) The Trustee shall establish and maintain a fund to be known as the "CSCDA/Uptown Newport Community Facilities District Acquisition and Construction Fund" (the "Acquisition and Construction Fund"), and within the Acquisition and Construction Fund, the Park Improvement Subaccount and Undergrounding Subaccount; into which fund and account shall be deposited the amounts required to be deposited therein by the provisions hereof. All money in the Acquisition and Construction Fund shall be applied by the Trustee in accordance with subsection (b) below for financing the acquisition and construction of the Improvements (or for making reimbursements to the Developer for such costs theretofore paid by it), including payment of costs incidental to or connected with financing such acquisition and construction, or for the payment of development fees, or for the repayment of funds advanced to or for the Community Facilities District, not to exceed the amount on deposit in the Acquisition and Construction Fund. (b) Amounts in the Acquisition and Construction Fund shall be applied by the Trustee as directed in a Disbursement Request, substantially in one of the forms attached hereto as Exhibit B. Moneys in the Acquisition and Construction Fund may be transferred between subaccounts in the Acquisition and Construction Fund at any time upon receipt by the Trustee of a request of the City in writing or delivered by electronic means to the Trustee. Any amount remaining in any subaccount of the Acquisition and Construction Fund after the completion of its purpose, which completion shall be conclusively evidenced by a Certificate of the City, shall be transferred by the Trustee to the Special Tax Fund, except that any amounts remaining in the Acquisition and Construction Fund after all Series 2019 Bonds and all Refunding Bonds have been paid and retired shall be deposited in the Expense Fund. ARTICLE V SPECIAL TAX REVENUES SECTION 5.01. Deposit of Special Tax Revenues in the Special Tax Fund. (a) The Trustee shall establish and maintain a fund to be known as the "CSCDA/Uptown Newport Community Facilities District Special Tax Fund" (the "Special Tax Fund"), which fund shall be held and maintained in trust hereunder by the Trustee, and the Authority agrees and covenants that all Special Tax Revenues (including any prepayments thereof and including any amounts, net of any costs of collection and enforcement, received as a result of foreclosure of the lien securing the Special Tax or other actions by the Authority to collect delinquent Special Tax), when and as received, shall be immediately transferred to the Trustee, and the Trustee agrees and covenants to deposit all such transfers in the Special Tax Fund, and all money in the Special Tax Fund shall be disbursed, allocated and applied solely to the uses and purposes hereinafter set forth in Section 5.02. (b) Except for money held in the Acquisition and Construction Fund, the Prepayment Fund, the Expense Fund and the Rebate Fund, all of the Special Tax Revenues, all funds and accounts established to hold Special Tax Revenues hereunder, and any investment earnings thereon, are hereby pledged to, and shall constitute a trust fund for, the payment of the principal of and interest on the Bonds. So long as the principal of and interest on the Bonds remains unpaid, the Special Tax Revenues, the funds and accounts established to hold Special 27 4161-7770-1401.4 Tax Revenues hereunder, and any investment earnings thereon shall not be used for any other purpose, except as otherwise permitted by the Indenture, and shall be held in trust for the benefit of the owners of the Bonds and shall be applied pursuant to the Indenture. The Prepayment Fund is pledged for the payment of principal and redemption premiums, if any, on the Bonds in accordance with Section 5.07; but is pledged to pay interest on the Bonds only to the extent of accrued interest included in the calculations of the prepayment amounts under the Rate and Method and in accordance with Section 5.07. SECTION 5.02. Allocation of Money in the Special Tax Fund. All prepayments of the Special Tax shall be immediately deposited by the Trustee in the Prepayment Fund. All other money in the Special Tax Fund shall be set aside by the Trustee in the following respective funds in the following order of priority, and all money in each fund shall be applied, used and withdrawn only for the purposes hereinafter authorized in this section, namely: (1) Redemption Fund, (2) Expense Fund, (3) Reserve Fund, and (4) Acquisition and Construction Fund. SECTION 5.03. Redemption Fund. (a) The Trustee shall establish and maintain a fund to be known as the "CSCDA/Uptown Newport Community Facilities District Redemption Fund" (the "Redemption Fund"), and within the Redemption Fund, the 2039 Sinking Account and the 2048 Sinking Account (which shall be administered as specified in Section 2.04) and the Capitalized Interest Account. (b) Moneys in the Capitalized Interest Account shall be transferred by the Trustee and deposited in the Redemption Fund and shall be applied to pay interest on the Bonds in accordance with the following schedule (or to pay accrued interest on any Bonds purchased or redeemed prior to maturity): On or before the following Interest Payment Dates Amount September 1, 2019 $194,819.44 March 1, 2020 207,500.00 September 1, 2020 207,500.00 March 1, 2021 207,500.00 (c) On or before each March 1 and September 1, the Trustee shall, from the money in the Special Tax Fund, deposit into the Redemption Fund an amount of money equal to the aggregate amount of interest becoming due and payable on all Outstanding Bonds on such dates, except no such transfer need be made to the extent amounts have previously been deposited in the Redemption Fund and set aside therein for the payment of such interest, including without limitation sale proceeds of Bonds deposited in such fund from the Capitalized 28 4161-7770-1401.4 Interest Account pursuant to subsection (b) for such purpose. On or before September 1 of each year, commencing with the first September 1 on which principal is due on any of the Bonds, the Trustee shall, from the then remaining money in the Special Tax Fund, deposit into the Redemption Fund an amount of money equal to the aggregate amount of principal becoming due and payable on all Outstanding Serial Bonds on such date plus the aggregate of the Mandatory Sinking Account Payments required by the Indenture and by all Supplemental Indentures to be made on such date into the Sinking Accounts; provided, that all of the aforesaid Mandatory Sinking Account Payments shall be made without priority of the payment of any one Mandatory Sinking Account Payment over the payment of any other Mandatory Sinking Account Payment, and in the event that the money in the Redemption Fund on any September 1 is not equal to the amount of principal to become due and payable on the Outstanding Serial Bonds on such September 1 plus the principal of and redemption premiums, if any, on the Outstanding Term Bonds required to be redeemed or paid at maturity on such September 1, then such money shall be applied pro rata in such proportion as such Serial Bonds and the portion of such Term Bonds then required to be redeemed or paid at maturity shall bear to each other, after first deducting for such purposes for such Term Bonds any of such Term Bonds as shall have been redeemed or purchased during the twelve-month period ending on such September 1 and commencing on the immediately preceding September 2. (d) No deposit need be made into the Redemption Fund if the amount of money contained therein is at least equal to the amount required by the terms of subsection (c) to be deposited therein at the times and in the amounts provided herein. (e) All money in the Redemption Fund shall be used and withdrawn by the Trustee solely to pay the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity) plus the principal of the Bonds as they shall mature or upon the prior redemption thereof, except that any money in any Sinking Account shall be used only to purchase or redeem or retire the Term Bonds for which such Sinking Account was established as provided in the Indenture or in any Supplemental Indenture. SECTION 5.04. Expense Fund. The Trustee shall establish and maintain a fund to be known as the "CSCDA/Uptown Newport Community Facilities District Expense Fund" (the "Expense Fund"). On or before each March 1 and September 1, the Trustee shall, from the then remaining money in the Special Tax Fund after transfers made pursuant to Section 5.03, transfer to and deposit in the Expense Fund a sum equal to the amount required by the Authority for the payment of budgeted Administrative Expenses during the six-month period beginning on such date (and required by the Authority to reimburse it for the payment of unbudgeted Administrative Expenses during the prior six-month period) as shown in a Certificate of the Authority. All money in the Expense Fund shall be used and withdrawn by the Trustee only to pay budgeted Administrative Expenses as provided herein (or to reimburse the Authority for the payment of unbudgeted Administrative Expenses as provided herein). Amounts in the Expense Fund shall be applied by the Trustee solely as directed in a Written Request of the Authority, each of which shall be separately numbered as "Requisition No. ," and each of which shall state (i) the amount, purpose and payee of the disbursement, together with the wire instructions or payee address, (ii) that the disbursement is a proper charge against 29 4161-7770-1401.4 the Expense Fund as provided in the Indenture and (iii) that the disbursement has not previously been paid from the Expense Fund. SECTION 5.05. Reserve Fund. With respect to the Reserve Fund established pursuant to Section 4.02 hereof, the Trustee shall, on or before the first (1st) day in September in each year, from the then remaining money in the Special Tax Fund, after deposits made pursuant to Sections 5.03 and 5.04, deposit into the Reserve Fund the amount of money that is required to restore the Reserve Fund to an amount equal to the Required Bond Reserve; and for this purpose all investments in the Reserve Fund shall be valued on or before September 1 of each year at the face value thereof if such investments mature within twelve (12) months from the date of valuation, or if such investments mature more than twelve (12) months after the date of valuation, at the price at which such investments are redeemable by the holder at his option, if so redeemable, or if not so redeemable, at the lesser of (i) the cost of such investments, or (ii) the market value of such investments, and in making any valuations hereunder, the Trustee may use and rely on computerized securities pricing services that may be available to it, including those available through its regular accounting system; provided, that no deposit need be made into the Reserve Fund if the amount contained therein is at least equal to the Required Bond Reserve. All money in the Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on or principal of the Bonds in the event there is insufficient money in the Redemption Fund available for this purpose; provided, that if as a result of any of the foregoing valuations it is determined that the amount of money in the Reserve Fund exceeds the Required Bond Reserve, the Trustee shall withdraw the amount of money representing such excess from such fund and shall deposit such amount of money in the Redemption Fund; and provided further, that money in the Reserve Fund may be used, together with any other moneys available therefor, for the payment, defeasance or redemption of all or a portion of the Bonds then Outstanding as long as, in the case of the payment, defeasance or redemption of a portion of the Bonds then Outstanding, the amount on deposit in the Reserve Fund immediately subsequent to such partial payment, defeasance or redemption shall equal the Required Bond Reserve for all Bonds to be Outstanding immediately subsequent to such partial payment, defeasance or redemption. SECTION 5.06. Surplus to Credit Special Tax. All money remaining in the Special Tax Fund on September 1 of each year, after transferring all of the sums required to be transferred on or prior to such date by the foregoing provisions of this Article V, shall be applied by the Trustee as a credit against Special Tax collections in the following year. SECTION 5.07. Prepayment Fund. The Trustee shall establish and maintain a fund to be known as the "CSCDA/Uptown Newport Community Facilities District Prepayment Fund" (the "Prepayment Fund"). The Prepayment Fund shall receive funds as provided in Section 5.02. All money in the Prepayment Fund constituting the proceeds of prepayments of the Special Tax shall be used to redeem Bonds as provided in Section 2.05(b). Any amounts remaining in the Prepayment Fund after all Series 2019 Bonds and all Refunding Bonds have been paid and retired shall be deposited in the Expense Fund. 30 4161-7770-1401.4 ARTICLE VI COVENANTS OF THE AUTHORITY SECTION 6.01. Punctual Payment and Performance. The Authority will punctually pay the interest on and principal of and redemption premium, if any, to become due on every Bond issued hereunder in strict conformity with the terms of the Law and hereof and of the Bonds, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein and in the Bonds required to be observed and performed by it. SECTION 6.02. Against Indebtedness and Encumbrances. The Authority will not issue any evidences of indebtedness payable from the Special Tax Revenues except as provided herein, and will not create, nor permit the creation of, any pledge, lien, charge or other encumbrance upon any money in the Special Tax Fund other than as provided herein; provided, that the Authority may at any time, or from time to time, issue evidences of indebtedness for any lawful purpose of the Community Facilities District so long as any payments due thereunder shall be subordinate in all respects to the use of the Special Tax Revenues as provided herein. SECTION 6.03. Against Federal Income Taxation. (a) The Authority will not take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, and specifically the Authority will not directly or indirectly use or make any use of the proceeds of the Bonds or any other funds of the Authority or take or omit to take any action that would cause the Bonds to be "arbitrage bonds" subject to federal income taxation by reason of Section 148 of the Code or "private activity bonds" subject to federal income taxation by reason of Section 141(a) of the Code or obligations subject to federal income taxation because they are "federally guaranteed" as provided in Section 149(b) of the Code; and to that end the Authority, with respect to the proceeds of the Bonds and such other funds, will comply with all requirements of such sections of the Code; provided, that if the Authority shall obtain an opinion of nationally recognized bond counsel to the effect that any action required under this Section is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, the Authority may rely conclusively on such opinion in complying with the provisions hereof. In the event that at any time the Authority is of the opinion that for purposes of this Section it is necessary to restrict or limit the yield on the investment of any money held by the Treasurer of the Authority or the Trustee hereunder or otherwise the Authority shall so instruct the Treasurer of the Authority or the Trustee, as the case may be, in writing, and the Treasurer of the Authority or the Trustee, as the case may be, shall take such action as may be necessary in accordance with such instructions. (b) Without limiting the generality of the foregoing, the Authority will pay from time to time all amounts required to be rebated to the United States of America pursuant to Section 148(f) of the Code and all regulations of the United States Department of the Treasury issued thereunder to the extent that such regulations are, at the time, applicable and in effect, which obligation shall survive payment in full or defeasance of the Bonds, and to that end, there is hereby established in the treasury of the Authority a fund to be known as the 31 4161-7770-1401.4 "CSCDA/Uptown Newport Community Facilities District Rebate Fund" (the "Rebate Fund") to be held in trust and administered by the Treasurer of the Authority. The Authority will comply with the provisions of the Tax Certificate with respect to making deposits in the Rebate Fund, and all money held in the Rebate Fund is pledged to provide payments to the United States of America as provided herein and in the Tax Certificate and no other person shall have claim to such money except as provided in the Tax Certificate. The Trustee may rely conclusively upon the Authority's determinations, calculations and certifications required by this Section. The Trustee shall have no responsibility to independently make any calculation or determination or to review the Authority's calculations hereunder. (c) The provisions of this Section 6.03 shall survive the defeasance of the Bonds. SECTION 6.04. Payment of Claims. The Authority will pay and discharge any and all lawful claims which, if unpaid, might become payable from the Special Tax Revenues or any part thereof or upon any funds in the hands of the Trustee allocated to the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, or which might impair the security of the Bonds. SECTION 6.05. Expense Budgets. The Authority will, on or before September 2 in each year, prepare and approve a budget setting forth the estimated Administrative Expenses for the period from such September 2 through the next succeeding September 1. Any budget approved in accordance with this Section may be amended at any time. SECTION 6.06. Accounting Records; Financial Statements and Other Reports. (a) The Authority will keep, and pursuant to this provision hereby requires the Trustee to keep, appropriate accounting records in which complete and correct entries shall be made of all transactions relating to the receipt, investment, disbursement, allocation and application of the Special Tax Revenues and of the proceeds of the Bonds, which accounting records shall at all times during business hours with reasonable prior notice be subject to the inspection of any Holder (or his representative authorized in writing) and (upon the prior written consent of the Authority) of any investment banker, security dealer or other person interested in the Bonds. (b) The Authority will prepare annually, no later than January 1, a summary report showing in reasonable detail the proceeds of the Special Tax levied and collected and the Administrative Expenses for the preceding Fiscal Year and containing a general statement of the physical condition of the Improvements. The Authority will furnish a copy of such summary report without charge to any Holder (or his representative authorized in writing) and to any investment banker, security dealer or other person interested in the Bonds requesting a copy thereof. (c) The Authority will prepare annually not later than October 30 of each year, commencing October 30, 2020, and file with the California Debt and Investment Advisory 32 4161-7770-1401.4 Commission by mail, postage prepaid, all necessary information required to be filed under the Law (see Section 53359.5), including: (1) The principal amount of the Outstanding Bonds; (2) The balance in the Reserve Fund; (3) The balance in the Capitalized Interest Account, if any; (4) The number of parcels securing the Bonds which are delinquent with respect to their Special Tax payments, the amount that each delinquent parcel is delinquent, the total amount of Special Tax due on the delinquent parcels, the length of time that each delinquent parcel has been delinquent, when foreclosure was commenced for each delinquent parcel, the total number of foreclosure parcels for each date specified, and the total amount of tax due on the foreclosure parcels for each date specified; (5) The balance in the Acquisition and Construction Fund; (6) The assessed value of all parcels subject to the levy of the Special Tax to repay the Bonds, as shown on the most recent equalized assessment roll, the date of assessed value reported, and that the information comes from the County Assessor's Office of the County of Orange; (7) The total amount of Special Tax due, the total amount of unpaid Special Tax, and whether the Special Tax is paid under the County's Teeter Plan; and (8) Contact information for the Authority official providing the information. Additionally, the Authority will notify the California Debt and Investment Advisory Commission by mail, postage prepaid, within ten (10) days if the Authority or the Trustee fails to pay any interest on or principal of any of the Bonds on any scheduled payment date. SECTION 6.07. Protection of Security and Rights of Holders. The Authority will preserve and protect the security of the Bonds and the rights of the Holders and will warrant and defend their rights against all claims and demands of all persons. SECTION 6.08. Levy and Collection of the Special Tax. The Authority, so long as any Bonds are Outstanding, will annually levy the Special Tax, against all Taxable Property in the Community Facilities District and make provision for the collection of the Special Tax, in amounts which will be sufficient, after making reasonable allowances for contingencies and errors in the estimates, to yield proceeds equal to the amounts required for compliance with the agreements, conditions, covenants and terms contained herein, and which in any event will be sufficient to pay the interest on and principal of and all Mandatory Sinking Account Payments for and redemption premiums, if any, on the Bonds as they become due and payable and to pay all current Administrative Expenses as they become due and payable in accordance with the provisions and terms hereof. The Special Tax shall be collected in the same manner as ordinary ad valorem property taxes are collected and, except as otherwise provided in 33 4161-7770-1401.4 Section 6.09 and in the Law, shall be subject to the same penalties and the same collection procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes. SECTION 6.09. Foreclosure of Special Tax Liens. On or before October 1 of each year, the Authority shall review the public records of the County of Orange relating to the collection of the Special Tax in the Community Facilities District in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and on the basis of such review the Authority shall, not later than December 1 of such year, institute foreclosure proceedings as authorized by the Law (a) against any single parcel within the Community Facilities District with aggregate delinquent Special Taxes (including prior years) of $5,000 or more in any year in which such Special Tax payments were due, (b) against all parcels owned within the Community Facilities District by any single owner with delinquent Special Taxes in the aggregate amount (including prior years) of $5,000 or more, and (c) against all parcels with delinquent Special Tax payments regardless of their delinquent amount in any fiscal year in which it receives Special Tax payments in an amount which is less than 95% of the total Special Tax levy, and will diligently prosecute and pursue the foreclosure proceedings to judgment and sale; provided that any actions taken to enforce delinquent Special Tax liens shall be taken only consistent with Sections 53356.1 through 53356.7, both inclusive, of the Law. SECTION 6.10. Continuing Disclosure Certificate. The Authority will comply with and carry out all of the provisions of the Continuing Disclosure Certificate executed by the Authority and dated the date of the execution, authentication and initial delivery of any Series of Bonds issued hereunder, as originally executed and as it may be amended from time to time in accordance with the terms thereof, and notwithstanding any other provision hereof, failure of the Authority to comply with such Continuing Disclosure Certificate shall not be considered a default hereunder; provided, that any Holder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Authority to comply with its obligations under this section. SECTION 6.11. Further Assurances. The Authority will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Holders of the rights and benefits provided herein. ARTICLE VII THE TRUSTEE SECTION 7.01. The Trustee. Wilmington Trust, National Association at its Principal Corporate Trust Office is hereby appointed Trustee for the purpose of receiving all money which the Authority is required to transfer to it hereunder and for applying and using such money as provided herein for the purpose of paying the interest on and principal of and redemption premiums, if any, on the Bonds. The Authority agrees that it will at all times maintain a Trustee having a corporate trust office in Los Angeles or San Francisco, California. 34 4161-7770-1401.4 The Authority may remove the Trustee initially appointed and any successor thereto and may appoint a successor or successors thereto by an instrument in writing; provided, that any such successor shall be a bank, national banking association or trust company doing business and having a corporate trust office in Los Angeles or San Francisco, California, having a combined capital (exclusive of borrowed capital) and surplus of at least fifty million dollars ($50,000,000) and subject to supervision or examination by a federal or state banking authority. If such bank, national banking association or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this Section the combined capital and surplus of such bank, national banking association or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the Authority and by giving notice of such resignation by mail pursuant to Section 11.09 to the Holders, and upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee by an instrument in writing having the qualifications required hereby. Any resignation or removal of a Trustee and appointment of a successor Trustee shall become effective only upon the acceptance of appointment by the successor Trustee. If within thirty (30) days after notice of the removal or resignation of the Trustee no successor Trustee shall have been appointed by the Authority and shall have accepted such appointment, the removed or resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, which court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by law, appoint a successor Trustee having the qualifications required hereby. The Trustee is hereby authorized to pay interest on the Bonds due on or before the maturity or prior redemption thereof to the Holders as their names appear, at the close of business as of the fifteenth day of the calendar month preceding the calendar month in which the applicable Interest Payment Date falls, on the registration books required to be kept by it pursuant to Section 2.08 as the registered owners thereof, such interest to be paid as provided in Section 2.03(b), and to pay to the Holders the principal of and redemption premiums, if any, on the Bonds upon presentation and surrender of the Bonds to the Trustee at maturity or on redemption prior to maturity. The Trustee shall cancel and destroy all Bonds paid by it at maturity or on redemption prior to maturity and all Bonds surrendered to it by the Authority, and shall deliver to the Authority a certificate of such destruction, and the Trustee shall keep accurate records of all Bonds cancelled and destroyed by it hereunder. All money held by or on behalf of the Trustee for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, whether at maturity or upon prior redemption, shall be held in trust for the account of the Holders thereof, and the Trustee shall not be required to pay Holders or the Authority any interest on, or be liable to the Authority, the Holders or any other person for any interest earned on, any money so held. The Authority shall from time to time, subject to any agreement between the Authority and the Trustee then in force, pay the Trustee compensation for its services, reimburse the Trustee for all its advances and expenditures, including but not limited to advances to and fees and Administrative Expenses by independent accountants, counsel and engineers or other experts employed by it in the exercise and performance of its rights and obligations hereunder, and indemnify and save the Trustee harmless against loss, Administrative Expenses, costs, claims and liabilities (including without limitation those of its attorneys and agents) not arising 35 4161-7770-1401.4 from its own negligence or willful misconduct which it may incur in the exercise and performance of its rights and obligations hereunder, which obligation shall survive the resignation or removal of any Trustee or the defeasance of the Bonds. SECTION 7.02. Liability of the Trustee. The recitals of facts, agreements and covenants contained herein and in the Bonds shall be taken as statements, agreements and covenants of the Authority, and the Trustee does not assume any responsibility for the correctness of the same and does not make any representation as to the sufficiency or validity thereof or of the Bonds or of the Special Tax, or as to the financial or technical feasibility of the Improvements, and shall not incur any responsibility in respect thereof other than in connection with the rights and obligations expressly assigned to or imposed upon it herein or in the Bonds, and shall not be liable in connection with the performance of its duties hereunder except for its own negligence or willful misconduct. The Trustee shall not be liable for any error of judgment made in good faith, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts, and no provision hereof shall require the Trustee to expend or risk its own funds or otherwise incur any liability for the performance of its duties hereunder, or in the exercise of any of its rights or powers hereunder. The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents, or receivers, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder, but the Trustee shall not be answerable for the negligence or misconduct of any such attorney, agent, receiver or certified public accountant selected by it with due care. The Trustee shall perform only those duties expressly set forth in the Indenture and no implied duties or obligations shall be read into the Indenture against the Trustee. The Trustee shall not have any responsibility with respect to any information, statement or recital contained in any official statement, offering memorandum or any other disclosure material prepared or distributed by the Authority with respect to any of the Bonds. The Trustee agrees to accept and act upon instructions or directions pursuant to this Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods, provided, however, that, the Trustee shall have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate shall be amended and replaced whenever a person is to be added or deleted from the listing. If the Authority or the City elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee's understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Authority and the City agree to assume all risks arising out of the use of such electronic methods to submit instructions and 36 4161-7770-1401.4 directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties. 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 be limited to acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences. 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, provided such company shall be eligible under Section 7.01 shall be the successor to such Trustee without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding. The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its negligence or willful misconduct. The Trustee shall hold any financial statements of the Authority solely as an accommodation to the Bondholders and shall have no duty or obligation to review such financial statements. The Trustee shall not be responsible for or accountable to anyone for the subsequent use or application of any moneys which shall be released or withdrawn in accordance with the provisions hereof. SECTION 7.03. Notice to the Trustee. The Trustee shall be protected in acting upon any Bond, Certificate of the Authority, consent, notice, opinion, report, resolution, Written Request of the Authority or other document or paper believed by it to be genuine and to have been signed or presented by the proper party or parties. Each such Bond, Certificate of the Authority, consent, notice, opinion, report, resolution, Written Request of the Authority or other document or paper shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. The Trustee may consult with counsel, including, without limitation, counsel to the Authority, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection with respect to any action taken or suffered hereunder in good faith and in accordance therewith. Whenever in the administration of its rights and obligations hereunder the Trustee shall deem it necessary or desirable that a matter be established or proved prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively established or proved by a Certificate of the Authority, which shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, and on which the Trustee may conclusively rely, but in its discretion the Trustee may, in 37 4161-7770-1401.4 lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable. ARTICLE VIII AMENDMENT OF OR SUPPLEMENT TO THE INDENTURE SECTION 8.01. Amendment or Supplement by Consent of Holders. The Indenture and the rights and obligations of the Authority and of the Holders may be amended or supplemented at any time by the execution and delivery of a Supplemental Indenture by the Authority and the Trustee, which Supplemental Indenture shall become binding when the written consents of the Holders of sixty percent (60%) or more in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.03, are filed with the Trustee. No such amendment or supplement shall (1) extend the maturity of or reduce the interest rate on or otherwise alter or impair the obligation of the Authority to pay the interest on or principal of or Mandatory Sinking Account Payment for or redemption premium, if any, on any Bond at the time and place and at the rate and in the currency and from the funds provided herein without the express written consent of the Holder of such Bond, or (2) permit the issuance by the Authority of any other obligations payable from the Special Tax Revenues except as provided herein, or jeopardize the ability of the Authority to levy and collect the Special Tax, or (3) reduce the percentage of Bonds required for the written consent to any such amendment or supplement, or (4) modify any rights or obligations of the Trustee without its prior written assent thereto. SECTION 8.02. Amendment or Supplement Without Consent of Holders. The Indenture and the rights and obligations of the Authority and of the Holders may also be amended or supplemented at any time by the execution and delivery of a Supplemental Indenture by the Authority and the Trustee, which Supplemental Indenture shall become binding upon execution without the prior written consent of any Holders, but only to the extent permitted by law and after receiving an approving Opinion of Counsel and only for any one or more of the following purposes: (a) To add to the agreements and covenants required herein to be performed by the Authority other agreements and covenants thereafter to be performed by the Authority which shall not (in the opinion of the Authority) adversely affect the interests of the Holders, or to surrender any right or power reserved herein to or conferred herein upon the Authority which shall not (in the opinion of the Authority) adversely affect the interests of the Holders; (b) To make such provisions for the purpose of curing any ambiguity or of curing, correcting or supplementing any defective provision contained herein or in regard to questions arising hereunder which the Authority may deem desirable or necessary and not inconsistent herewith and which shall not (in the opinion of the Authority) adversely affect the interests of the Holders; (c) To authorize the issuance under and subject to the Law of any Refunding Bonds for any of the Bonds and to provide the conditions and terms under which such Refunding Bonds may be issued subject to Section 2.13; 38 4161-7770-1401.4 (d) To make such additions, deletions or modifications as may be necessary or appropriate to insure exclusion from gross income for purposes of federal income taxation of the interest on the Bonds; (e) To make such additions, deletions or modifications as may be necessary or appropriate to maintain any then current rating on the Bonds; or (f) To make such additions, deletions or modifications as may be necessary or appropriate to effectuate amendments to the Rate and Method in the form attached hereto as Exhibit C. SECTION 8.03. Disqualified Bonds. Bonds owned or held for the account of the Authority shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Bonds provided for in this Article or in Article IX, and shall not be entitled to consent to or take any other action provided for in this Article or in Article IX. Upon request of the Trustee, the Authority shall specify in a certificate to the Trustee those Bonds disqualified pursuant to this Section and the Trustee may conclusively rely on such certificate. SECTION 8.04. Endorsement or Replacement of Bonds After Amendment or Supplement. After the effective date of any action taken as hereinabove provided, the Authority may determine that the Bonds may bear a notation by endorsement in form approved by it as to such action, and in that case upon demand of the Holder of any Bond Outstanding on such effective date and presentation of his Bond for such purpose at the Principal Corporate Trust Office of the Trustee a suitable notation as to such action shall be made on such Bond. If the Authority shall so determine, new Bonds so modified as, in the opinion of the Authority, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Holder of any Bond Outstanding on such effective date such new Bonds shall, upon surrender of such Outstanding Bonds, be exchanged at the Principal Corporate Trust Office of the Trustee, without cost to each Holder, for Bonds then Outstanding. SECTION 8.05. Amendment or Supplement by Mutual Consent. The provisions of this Article shall not prevent any Holder from accepting any amendment or supplement as to any particular Bonds held by him; provided, that due notation thereof is made on such Bonds. ARTICLE IX EVENTS OF DEFAULT AND REMEDIES OF HOLDERS SECTION 9.01. Events of Default; Remedies of Holders. If one or more of the following events (herein "Events of Default") shall happen, that is to say - (a) if default shall be made by the Authority in the due and punctual payment of any interest on or principal of or Mandatory Sinking Account Payment for any of the Bonds when and as the same shall become due and payable; or 39 4161-7770-1401.4 (b) if default shall be made by the Authority in the observance or performance of any of the other agreements or covenants contained herein required to be observed or performed by it, and such default shall have continued for a period of thirty (30) days after the Authority shall have been given notice in writing of such default by the Trustee; then in each and every such case during the continuance of such Event of Default any Holder shall have the right for the equal benefit and protection of all Holders similarly situated: (c) by mandamus or other suit or proceeding at law or in equity to enforce his rights against the Authority, its Commission, or any of the officers or employees of the Authority, and to compel the Authority, its Commission, or any such officers or employees to perform and carry out their duties under the Law and the agreements and covenants with the Holders contained herein; (d) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Holders; or (e) by suit in equity upon the nonpayment of the Bonds to require the Authority, its Commission or its officers and employees to account as the trustee of an express trust. SECTION 9.02. Non -waiver. Nothing in this Article or in any other provision herein or in the Bonds shall affect or impair the obligation of the Authority, which is absolute and unconditional, to pay the interest on and principal of and redemption premiums, if any, on the Bonds to the respective Holders of the Bonds at the respective dates of maturity or upon redemption prior to maturity as provided herein from the Special Tax Revenues and the other funds as provided herein, or shall affect or impair the right of such Holders, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein and in the Bonds. A waiver of any default or breach of duty or contract by any Holder shall not affect any subsequent default or breach of duty or contract and shall not impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by any Holder to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right and remedy conferred upon the Holders by the Law or hereby may be enforced and exercised from time to time and as often as shall be deemed expedient by the Holders. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to any Holder, the Authority and such Holder shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. SECTION 9.03. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Holders is intended to be exclusive of any other remedy, and 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 40 4161-7770-1401.4 without exhausting and without regard to any other remedy conferred by the Law or any other law. ARTICLE X DEFEASANCE SECTION 10.01. Discharge of the Bonds. (a) If the Authority shall pay or cause to be paid or there shall otherwise be paid to the Holders of all Outstanding Bonds the interest thereon and the principal thereof and the redemption premiums, if any, thereon at the times and in the manner stipulated therein and herein, then all agreements, covenants and other obligations of the Authority to the Holders of such Bonds hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Authority all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall deposit in accordance with a written direction of the Authority all money or securities held by it pursuant hereto which are not required for the payment of the interest on and principal of and redemption premiums, if any, on the Bonds. (b) Any Outstanding Bonds shall on the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this Section if there shall be on deposit with the Trustee money which is sufficient to pay the interest due on such Bonds on such date and the principal and redemption premiums, if any, due on such Bonds on such date. (c) Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed in subsection (a) of this Section if (1) in case any of the Bonds are to be redeemed on any date prior to their maturity date, the Authority shall have irrevocably instructed the Trustee to mail pursuant to Section 11.09 a notice of redemption to the respective Holders of all such Outstanding Bonds, (2) there shall have been deposited with an escrow agent or the Trustee either (i) money in an amount which shall be sufficient or (ii) as evidenced by a report of an Independent Certified Public Accountant or nationally recognized, independent municipal finance consultant, on file with the Authority and the Trustee, Federal Securities which are not subject to redemption except by the holder thereof prior to maturity (including any Federal Securities issued or held in book -entry form on the books of the Department of the Treasury of the United States of America) or municipal obligations which have been defeased with Federal Securities and which are rated in the highest rating category by either Moody's or Standard & Poor's, the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with such escrow agent or the Trustee at the same time, shall be sufficient 41 4161-7770-1401.4 to pay when due the interest to become due on such Bonds on and prior to the maturity dates or redemption dates thereof, as the case may be, and the principal of and redemption premiums, if any, on such Bonds on and prior to the maturity dates or the redemption dates thereof, as the case may be, and (3) in the event such Bonds are not by their terms subject to redemption within the next succeeding ninety (90) days, the Authority shall have agreed to mail pursuant to Section 11.09 a notice to the Holders of such Bonds that the deposit required by clause (2) above has been made with such escrow agent or the Trustee and that such Bonds are deemed to have been paid in accordance with this Section and stating the maturity dates or redemption dates, as the case may be, upon which money is to be available for the payment of the principal of and redemption premiums, if any, on such Bonds. SECTION 10.02. Unclaimed Money. Anything contained herein to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Bonds or any interest thereon which remains unclaimed for two (2) years after the date when such Bonds or interest thereon have become due and payable, either at their stated maturity dates or by call for redemption prior to maturity, if such money was held by the Trustee on such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when such Bonds or interest thereon became due and payable, shall be repaid by the Trustee to the Authority as its absolute property free from trust for use in accordance with the Law, and the Trustee shall thereupon be released and discharged with respect thereto and the Holders shall look only to the Authority for the payment of such Bonds and interest thereon; provided, that before the Trustee shall be required to make any such repayment the Authority shall mail pursuant to Section 11.09 a notice to the Holders of all Outstanding Bonds and to such securities depositories and securities information services selected by it pursuant to Section 3.03 that such money remains unclaimed and that after a date named in such notice, which date shall not be less than thirty (30) days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the Authority. ARTICLE XI MISCELLANEOUS SECTION 11.01. Liability of Authority Limited to Special Tax Revenues. Notwithstanding anything contained herein, the Authority shall not be required to advance any money derived from any source of income other than the Special Tax Revenues and the other funds as provided herein for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds. The Bonds are special tax obligations of the Authority and the interest on and principal of and redemption premiums, if any, on the Bonds are payable solely from the Special Tax Revenues and such other funds, and the Authority is not obligated to pay them except from the Special Tax Revenues and such other funds. The general funds and assets of the Authority are not liable and the full faith and credit of the Authority is not pledged for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, and no tax or assessment other than the Special Tax shall ever be levied or collected to pay the interest on or principal of or redemption premiums, if any, on the Bonds. The Bonds are not secured by a legal 42 4161-7770-1401.4 or equitable pledge of or charge, lien or encumbrance upon any property of the Authority or any of its income or receipts except the Special Tax Revenues and such other funds as provided in the Indenture, and neither the payment of the interest on or principal of or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the Authority. The Bonds do not constitute an indebtedness of the Authority within the meaning of any constitutional or statutory debt limitation or restriction, and neither the Commission nor the Authority nor any officer or employee thereof shall be liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds otherwise than from the Special Tax Revenues and the other funds as provided herein. SECTION 11.02. Benefits of the Indenture Limited to Certain Parties. Nothing contained herein, express or implied, is intended to give to any person other than the Authority, the Trustee and the Holders any right, remedy or claim under or by reason hereof, and any agreement or covenant required herein to be performed by or on behalf of the Authority or any officer or employee thereof shall be for the sole and exclusive benefit of the Trustee and the Holders. SECTION 11.03. Successor Is Deemed Included in All References to Predecessor. Whenever either the Authority or any officer or employee thereof is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions with respect to the administration, control and management of the affairs of the Authority that are presently vested in the Authority or such officer or employee, and all agreements and covenants required herein to be performed by or on behalf of the Authority or any officer or employee thereof shall bind and inure to the benefit of the respective successors thereof whether so expressed or not. SECTION 11.04. Execution of Documents by Holders. Any declaration, request or other instrument which is permitted or required herein to be executed by Holders may be in one or more instruments of similar tenor, and may be executed by Holders in person or by their attorneys duly authorized in writing. The fact and date of the execution by any Holder or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness to such execution duly sworn to before such notary public or other officer. The ownership of Bonds and the amount, maturity, number and date of holding the same shall be proved by the registration books required to be kept by the Trustee pursuant to Section 2.08. Any declaration, request or other instrument or writing of the Holder of any Bond shall bind all future Holders of such Bond with respect to anything done or suffered to be done by the Authority in good faith and in accordance therewith. SECTION 11.05. Deposit and Investment of Moneys in Funds. All money held by the Trustee in any fund established herein shall be deposited by the Trustee in Legal Investments at the written direction of the Authority, and shall be secured at all times by such obligations as are required by law to the fullest extent required by law. All money held by the 43 4161-7770-1401.4 Trustee in the Redemption Fund, Expense Fund and Acquisition and Construction Fund shall be invested by the Trustee in Legal Investments upon the written direction of the Authority. In the absence of a written investment direction of the Authority, the Trustee shall invest such moneys in a taxable money market portfolio composed of or fully secured by U.S. government securities; provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a written direction of the Authority specifying a specific money market fund and, if no such written direction of the Authority is so received, the Trustee shall hold such moneys uninvested. The Trustee may rely upon any investment direction from the Authority as a certification to the Trustee that such investment constitutes a Legal Investment. The Trustee (or any of its affiliates) may act as principal or agent or as sponsor, advisor or manager in connection with the making of any investment by the Trustee hereunder and may impose its customary charges therefor, and the Trustee shall not be responsible for any loss suffered in connection with any investment made in accordance herewith. The Authority acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority the right to receive brokerage confirmations of security transactions as they occur, the Authority specifically waives receipt of such confirmations to the extent permitted by law; provided, that the Trustee will furnish the Authority periodic cash transaction statements which include details for all investment transactions made by the Trustee hereunder. All interest received on any such money so deposited or invested shall (subject to the requirements of Section 5.05 and Section 6.03) be retained within the fund from which the deposit or investment was made, and all losses on any such money so deposited or invested shall be borne by the fund from which the deposit or investment was made. SECTION 11.06. Waiver of Personal Liability. No member of the Authority Commission or officer or employee of the Authority shall be individually or personally liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, but nothing herein contained shall relieve any member of the Authority Commission or officer or employee of the Authority from the performance of any official duty provided hereby or by the Law or by any other applicable provisions of law. SECTION 11.07. Acquisition of Bonds by Authority. All Bonds acquired by the Authority, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation and destruction by it. SECTION 11.08. Content of Certificates and Reports. Every certificate or report with respect to compliance with an agreement, condition, covenant or term provided herein shall include (a) a statement that the person or persons making or giving such certificate or report have read such agreement, condition, covenant or term and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the opinion contained in such certificate or report is based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such agreement, condition, covenant or term has been complied with; and 44 4161-7770-1401.4 (d) a statement as to whether, in the opinion of the signers, such agreement, condition, covenant or term has been complied with. Any such certificate made or given by an officer of the Authority may be based, insofar as it relates to legal matters, upon a representation made in an Opinion of Counsel unless such officer knows that the representation with respect to the matters upon which his certificate may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Any such Opinion of Counsel may be based, insofar as it relates to factual matters information with respect to which is in the possession of the Authority, upon a representation by an officer or officers of the Authority unless the counsel giving such Opinion of Counsel knows that the representation with respect to the matters upon which his representation may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. SECTION 11.09. Notice by Mail. Any notice required to be given by mail to any Holders or to any securities depositories or securities information services shall be given by mailing a copy of such notice, first class postage prepaid, to such Holders at their addresses appearing in the books required to be kept by the Trustee pursuant to the provisions of Section 2.08 or to such securities depositories or securities information services not less than thirty (30) days nor more than sixty (60) days following the action or prior to the event concerning which notice thereof is required to be given; provided, that neither failure to receive any such notice nor any immaterial defect contained therein shall affect the sufficiency or validity of the proceedings taken in connection with the action or the event concerning which such notice was given. SECTION 11.10. Maintenance of Funds. Any fund required herein to be established and maintained by the Trustee may be maintained by the Trustee in its accounting records in its customary manner either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any financial reports or statements with respect thereto, be treated either as an account or as a fund; but all such accounting records with respect to all such accounts and funds shall at all times be maintained by the Trustee in accordance with corporate trust industry standards and with due regard for the protection of the security of the Bonds and the rights of the Holders. SECTION 11.11. Article and Section Headings, Gender and Reference. The headings or titles of the several articles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the construction, effect or meaning thereof, and words of any gender shall be deemed and construed to include all genders. All references herein to "Articles," "Sections" and other subdivisions are to the corresponding articles, sections or subdivisions hereof; and the words "hereby," "herein," "hereof," "hereto," "herewith" and "hereunder" and other words of similar import refer to the Indenture as a whole and not to any particular article, Section or subdivision hereof. SECTION 11.12. Partial Invalidity. If any one or more of the agreements, conditions, covenants or terms or portions hereof required to be observed or performed by the Authority or the Trustee should be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or such term or terms or such portions 45 4161-7770-1401.4 thereof shall be null and void and shall be deemed separable from the remaining agreements, conditions, covenants or terms or portions hereof and shall in no way affect the validity hereof or of the Bonds; and the Holders shall retain all the rights and benefits accorded to them under the Law or any other applicable provisions of law. The Authority hereby declares that it would have executed the Indenture and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more of the articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION 11.13. Execution in Counterparts. The Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. SECTION 11.14. Governing Law. The Indenture shall be governed by and construed and interpreted in accordance with the laws of the State of California. SECTION 11.15. Notices. All written notices to be given hereunder shall be given by first class mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely: If to the Authority: If to the Trustee: If to the City: California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, CA 94596 Attention: Chair Wilmington Trust, National Association 650 Town Center Drive, Suite 600 Costa Mesa, CA 92626 Attention: Corporate Trust City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Attention. Finance Director 46 4161-7770-1401.4 If to the Developer: Uptown Newport Jamboree, LLC c/o Shopoff Realty Investments, L.P. 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff TSG — Parcel 1, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff With a copy to: Jackson Tidus 2030 Main Street 12th Floor Irvine, CA 92614 Attention: Gregory P. Powers, Esq. SECTION 11.16. Effective Date of the Indenture. The Indenture shall take effect from and after its execution and delivery. 47 4161-7770-1401.4 IN WITNESS WHEREOF, the California Statewide Communities Development Authority has caused the Indenture to be signed in its name by an Authorized Signatory, and Wilmington Trust, National Association, as Trustee, in token of its acceptance of the trusts created hereunder, has caused the Indenture to be signed in its corporate name by its officer thereunto duly authorized and attested by one of its authorized officers, all as of the date and year first above written. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By [Signature Page — Indenture] 4J61-777[).1401 uthorized Signatory WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee By Authorized Signatory [Signature Page — Indenture] 4161-7770-1401 EXHIBIT A FORMS OF BOND, TRUSTEE'S CERTIFICATE OF AUTHENTICATION AND ASSIGNMENT [FORM OF BOND] No. $ UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (Uptown Newport) SPECIAL TAX BONDS, SERIES 2019 Interest Rate Maturity Date Bond Date CUSIP September 1, , 2019 13077E REGISTERED OWNER: Cede & Co. PRINCIPAL AMOUNT: DOLLARS The California Statewide Communities Development Authority, a public entity of the State of California (the "Authority"), for value received, hereby promises to pay (but only out of the Special Tax Revenues hereinafter referred to and certain other funds as described herein) to the registered owner set forth above on the maturity date set forth above (subject to any right of prior redemption hereinafter provided for) the principal amount set forth above, together with interest thereon computed on the basis of a 360-day year of twelve (12) 30-day calendar months from the Interest Payment Date next preceding the date of authentication of this Bond, unless (i) this Bond is authenticated on a day during the period from the sixteenth (16th) day of the calendar month next preceding an Interest Payment Date to such Interest Payment Date, both days inclusive, in which event it shall bear interest from such Interest Payment Date, or (ii) it is authenticated on a day on or before the fifteenth (15th) day of the month preceding the first Interest Payment Date, in which event it shall bear interest from the Bond Date shown above until the principal hereof shall have been paid, at the interest rate per annum set forth above, payable semiannually on March 1 and September 1 in each year, commencing on September 1, 2019. The interest on and principal of and redemption premium, if any, on this Bond are payable in lawful money of the United States of America at the Principal Corporate Trust Office (as that term is defined in the Indenture hereinafter referred to, and herein the "Principal Corporate Trust Office") of Wilmington Trust, National Association, as trustee for the Bonds, or any other bank or trust company at its principal corporate trust office which may at any time be substituted in its A-1 4161-7770-1401.4 place as provided in the Indenture hereinafter referred to (the "Trustee"). The interest on this Bond due on or before the maturity or prior redemption hereof shall be payable only to the person whose name appears in the registration books required to be kept by the Trustee as the registered owner hereof at the close of business as of the fifteenth (15th) day of the calendar month preceding the month in which the applicable Interest Payment Date falls, such interest to be paid by check mailed by first class mail on each such Interest Payment Date to such registered owner at his address as it appears on such books, except that in the case of a registered owner of one million dollars ($1,000,000) or more in principal amount of Bonds then outstanding, payment shall be made at such owner's option by wire transfer on each such Interest Payment Date of immediately available funds to an account in a bank or trust company or savings bank that is a member of the Federal Reserve System and that is located in the United States of America according to written instructions provided by such owner to the Trustee at least fifteen (15) days before such Interest Payment Date. The principal of and redemption premium, if any, on this Bond shall be payable only to the person whose name appears in such registration books as the registered owner hereof, such principal and redemption premium, if any, to be paid only on the surrender of this Bond at the Principal Corporate Trust Office of the Trustee at maturity or on redemption prior to maturity. This Bond is one of a duly authorized issue of Bonds in the aggregate principal amount of eight million three hundred thousand dollars ($8,300,000) issued by the Authority by and through its California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), designated the "California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), Special Tax Bonds, Series 2019" (the "Bonds"), which Bonds are issued pursuant to the Mello -Roos Community Facilities Act of 1982, as amended (being Sections 53311 et seq. of the Government Code of the State of California) and all laws amendatory thereof or supplemental thereto (the "Law") and under and pursuant to the provisions of an Indenture, dated as of March 1, 2019 (the "Indenture") between the Authority and Wilmington Trust, National Association, as Trustee, all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, denominations, maturities, interest rates or redemption provisions). All Bonds, including this Bond, are equally and ratably secured in accordance with the terms and conditions of the Indenture (copies of which are on file at the office of the Secretary of the Authority and at the above -mentioned office of the Trustee), and reference is hereby made to the Law and to the Indenture and any and all amendments thereof and supplements thereto for a description of the terms on which the Bonds are issued and for the rights of the registered owners of the Bonds; and all the terms of the Law and the Indenture are hereby incorporated herein and constitute a contract between the Authority and the registered owner from time to time of this Bond, to all the provisions of which the registered owner of this Bond, by his acceptance hereof, agrees and consents; and each subsequent registered owner hereof shall have recourse to all the provisions of the Law and the Indenture and shall be bound by all the terms and conditions thereof. The Bonds are issued to provide funds to finance Uptown Newport public facilities to meet increased demands placed on Uptown Newport and other local agencies as the result of development expected to occur within the Community Facilities District. The Bonds are special tax obligations of the Authority and the interest on and principal of and redemption premiums, if any, on the Bonds are payable solely from the Special Tax Revenues (as that term is defined in the Indenture, and herein the "Special Tax Revenues") and certain other funds, as A-2 4161-7770-1401.4 provided in the Indenture, and the Authority is not obligated to pay them except from the Special Tax Revenues and such other funds as so provided. The general funds and assets of the Authority are not liable and the full faith and credit of the Authority is not pledged for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, and no tax or assessment other than the Special Tax (as that term is defined in the Indenture, and herein the "Special Tax") shall ever be levied or collected to pay the interest on or principal of or redemption premiums, if any, on the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the Authority or any of its income or receipts except the Special Tax Revenues and such other funds, as provided in the Indenture, and neither the payment of the interest on or principal of or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the Authority. The Bonds are subject to optional, extraordinary and mandatory redemption by the Authority prior to their respective maturity dates as a whole or in part on the dates, at the prices and subject to the terms provided in the Indenture. If less than all outstanding Bonds are to be redeemed at the option of the Authority at any one time, the Authority shall select the maturity dates from which the Bonds shall be redeemed, and if less than all the outstanding Bonds of any one maturity date are to be redeemed at any one time, the Trustee shall select the Bonds or portions thereof of such maturity date to be redeemed in integral multiples of five thousand dollars ($5,000) by lot in any manner that it deems appropriate. Notice of redemption of this Bond or any portion hereof shall be mailed by the Trustee not less than thirty (30) days nor more than sixty (60) days before the redemption date by first class mail to the registered owner hereof and to those securities depositories and securities information services selected by the Authority in accordance with the Indenture and to the original underwriter of the Bonds, but neither failure to receive any such mailed notice nor any immaterial defect contained therein shall affect the sufficiency or validity of such proceedings for redemption. If notice of redemption has been duly given as aforesaid, then this Bond or the portion thereof to be redeemed shall, on the redemption date designated in such notice, become due and payable at the above -described redemption price; and from and after the date so designated interest on this Bond or the portion thereof to be redeemed shall cease to accrue and the registered owner of this Bond shall have no rights in respect hereof except to receive payment of the redemption price of this Bond. If this Bond will not be redeemable in whole, upon presentation of this Bond for redemption there will be issued in lieu of the unredeemed portion of principal thereof a new Bond or Bonds of the same maturity date, of authorized denominations equal in aggregate principal amount to such unredeemed portion. Upon written direction of the Authority, the Trustee shall rescind, cancel and annul such redemption by giving notice of such rescission, cancellation and annulment to the same persons and in the same manner as the original notice of redemption. The Authority has covenanted that, so long as any Bonds are outstanding, it will annually levy the Special Tax against all Taxable Property (as that term is defined in the Indenture) in the Community Facilities District and make provision for the collection of the Special Tax in amounts which will be sufficient, after making reasonable allowances for contingencies and errors in the estimates, to yield proceeds equal to the amounts required for A-3 4161-7770-1401.4 compliance with the agreements, conditions, covenants and terms contained in the Indenture, and which in any event will be sufficient to pay the interest on and principal of and all Mandatory Sinking Account Payments for and redemption premiums, if any, on the Bonds as they become due and payable and to pay all current Administrative Expenses (as that term is defined in the Indenture) as they become due and payable in accordance with the provisions and terms of the Indenture. The Bonds are issuable in the form of fully registered Bonds in the denomination of five thousand dollars ($5,000) or any integral multiple of five thousand dollars ($5,000) (not exceeding the principal amount of Bonds maturing at any one time). The registered owner of any Bond or Bonds may surrender the same (together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney) in exchange for an equal aggregate principal amount of Bonds of the same maturity date of any other authorized denominations in the manner, subject to the conditions and upon payment of the charges provided in the Indenture. The registration of this Bond is transferable on the registration books kept by the Trustee by the registered owner hereof or by his duly authorized attorney upon surrender of this Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney, and thereupon a new Bond or Bonds of the same maturity date of authorized denominations in the same aggregate principal amount will be issued to the transferee in exchange therefor in the manner, subject to the conditions and terms and upon payment of the charges provided in the Indenture. The Authority and the Trustee may deem and treat the person in whose name this Bond is registered as the absolute owner hereof for the purpose of receiving payment of, or on account of, the interest hereon, the principal hereof, and redemption premium, if any, hereon and for all other purposes. The rights and obligations of the Authority and of the registered owners of the Bonds may be amended at any time in the manner, to the extent and upon the terms provided in the Indenture, and in certain circumstances without the consent of such registered owners, but no such amendment shall (1) extend the maturity of this Bond or reduce the interest rate hereon or otherwise alter or impair the obligation of the Authority to pay the interest hereon or principal hereof or any Mandatory Sinking Account Payment or redemption premium, if any, hereon at the time and place and at the rate and in the currency and from the funds provided herein without the express written consent of the registered owner of this Bond, or (2) jeopardize the ability of the Authority to levy and collect the Special Tax, or (3) reduce the percentage of Bonds required for the written consent to an amendment of the Indenture, or (4) modify any rights or obligations of the Trustee without its prior written assent thereto; all as more fully set forth in the Indenture. The Bonds do not constitute an indebtedness of the Authority within the meaning of any constitutional or statutory debt limitation or restriction, and neither the Authority nor any officer or employee thereof shall be liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds other than from the Special Tax Revenues and such other funds as may be pledged therefor, as provided in the Indenture. A-4 4161-7770-1401.4 This Bond shall not be entitled to any benefits under the Indenture or become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been manually signed by an authorized signatory of the Trustee. It is hereby certified that all acts, conditions and things required by law to exist, to have happened and to have been 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 obligations of the Authority by and through its Community Facilities District, does not exceed any limit prescribed by the laws of the State of California and is not in excess of the principal amount of the Bonds permitted to be issued under the Indenture. IN WITNESS WHEREOF, the California Statewide Communities Development Authority has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of the Chair of the Authority and attested by the manual or facsimile signature of the Secretary of the Authority, and has caused this Bond to be dated as of the Bond Date set forth above. Attest: Secretary CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By Chair A-5 4161-7770-1401.4 [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION TO APPEAR ON BONDS] This is one of the Bonds described in the within -mentioned Indenture which has been authenticated on WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee By Authorized Signatory A-6 4161-7770-1401.4 [FORM OF ASSIGNMENT TO APPEAR ON BONDS] For value received the undersigned do(es) hereby sell, assign and transfer unto the within Bond and do(es) hereby irrevocably constitute and appoint attorney to transfer the same on the bond register of the Trustee, with full power of substitution in the premises. Dated: SIGNATURE GUARANTEED BY: Note: The signature(s) to 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, and the signature(s) must be guaranteed by an eligible guarantor institution. Social Security Number, Taxpayer Identification Number or other identifying number of Assignee: A-7 4161-7770-1401.4 To: EXHIBIT B DISBURSEMENT REQUEST FORM (FOR ACQUISITIONS) Wilmington Trust, National Association (the "Trustee") Attention: Jeanie Mar Fax: 714-384-4153 Phone: 714-384-4151 Email: jmar@wilmingtontrust.com Re: CSCDA Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 The undersigned, a duly authorized officer of the City of Newport Beach (the "City") hereby requests a withdrawal from the Uptown Newport Community Facilities District Acquisition and Construction Fund, as follows: Request Date: [Insert Date of Request] Name of Developer: Withdrawal Amount: [Insert Acquisition Price/Installment Payment] Acquisition Improvements: [Insert Description of Acquisition Improvement(s) /Eligible Portion(s)] Payment Instructions: [Insert Wire Instructions or Payment Address for Developer or Developer's designee as provided by the Developer] The undersigned hereby certifies as follows: The withdrawal is being made in accordance with a permitted use of the monies pursuant to the Acquisition Agreement among the California Statewide Communities Development Authority, the City, TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC and the withdrawal is not being made for the purpose of reinvestment. None of the items for which payment is requested have been reimbursed previously from the Acquisition and Construction Fund. B-1 4161-7770-1401.4 If the Withdrawal Amount is greater than the funds held in the Park Improvement Subaccount of the Acquisition and Construction Fund, the Trustee is authorized to pay the amount of such funds and to pay remaining amount(s) as funds are subsequently deposited in the Park Improvement Subaccount of the Acquisition and Construction Fund, should that occur. [For Park Improvement Disbursements:][The amounts being disbursed pursuant to this request are being used to finance or refinance certain public infrastructure and facilities (the "Improvements"). The City will own, and for the entire useful life of such Improvements reasonably expects to own, all of such Improvements. To the extent any of such Improvements are sold to an entity that is not a state or local government agency, the City will seek the advice and approval of bond counsel to the Authority prior to any such sale. The City will not allow any of such Improvements to be used (for example, by lease or other contract) in the trade or business of any nongovernmental persons (other than in their roles as members of the general public). All of such Improvements will be used in the performance of essential governmental functions of the City or another state or local government agency. The average expected useful life of such Improvements is at least 20 years. The representations and covenants contained in this paragraph are intended to support the conclusion that the interest paid on the bonds issued to finance the Improvements is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code").] CITY OF NEWPORT BEACH By: Title: B-2 4161-7770-1401.4 DISBURSEMENT REQUEST FORM (FOR REIMBURSEMENT OF CONSTRUCTION ADVANCES FOR UNDERGROUNDING) To: Wilmington Trust, National Association (the "Trustee") Attention: Jeanie Mar Fax: 714-384-4153 Phone: 714-384-4151 Email: jmar@wilmingtontrust.com Re: CSCDA Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 The undersigned, a duly authorized officer of the City of Newport Beach (the "City") hereby requests withdrawals from the Undergrounding Subaccount of the CSCDA/Uptown Newport Community Facilities District Acquisition and Construction Fund (the "Acquisition and Construction Fund") held pursuant to the Indenture, dated as of March 1, 2019 (the "Indenture") between the California Statewide Communities Development Authority (the "Authority") and Wilmington Trust, National Association, as Trustee, as follows: Request Date: [Insert Date of Request] Name of Developer: [Developer to be Reimbursed] Withdrawal Amount: [Insert Amount] Description: [Insert Description] Payment Instructions: [Insert Wire Instructions or Payment Address for Developer or Developer's designee as provided by the Developer] The undersigned hereby certifies as follows: The withdrawal is being made in accordance with a permitted use of the monies pursuant to the Indenture and the Acquisition Agreement among the Authority, the City, TSG- Parcel 1, LLC and Uptown Newport Jamboree, LLC and the withdrawal is not being made for the purpose of reinvestment. None of the items for which payment is requested have been reimbursed previously from the Acquisition and Construction Fund. B-3 4161-7770-1401.4 If the Withdrawal Amount is greater than the funds held in the Undergrounding Subaccount of the Acquisition and Construction Fund, the Trustee is authorized to pay the amount of such funds and to pay remaining amount(s) as funds are subsequently deposited in the Undergrounding Subaccount of the Acquisition and Construction Fund, should that occur. CITY OF NEWPORT BEACH B-4 Authorized Officer 4161-7770-1401.4 EXHIBIT C RATE AND METHOD OF APPORTIONMENT C-1 4161-7770-1401.4 RATE AND METHOD OF APPORTIONMENT CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of CSCDA Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California ("CFD No. 2018-03") and collected each Fiscal Year commencing in Fiscal Year 2019-2020, in an amount determined by the CSCDA Program Manager, through the application of the Rate and Method of Apportionment as described below. All Taxable Property in CFD No. 2018-03, 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 The terms hereinafter set forth have the following meanings: "Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final subdivision map, parcel map, condominium plan, record of survey, or other recorded County parcel map. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 2018-03 including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax Levy collection schedules (whether by the CSCDA Program Manager or designee thereof or both); the costs of collecting the Special Tax Levies (whether by the County or otherwise); the costs of remitting the Special Tax Levies to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to CSCDA, CFD No. 2018-03, or any designee thereof of complying with arbitrage rebate requirements, or responding to questions from the Securities and Exchange Commission or Internal Revenue Service pertaining to any CFD No. 2018-03 Bonds or any audit of any CFD No. 2018-03 Bonds by the Securities and Exchange Commission or Internal Revenue Service; the costs to CSCDA, CFD No. 2018-03, the Trustee or any designee thereof of complying with CSCDA, CFD No. 2018-03, or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax Levy disclosure statements and responding to public inquiries regarding the Special Tax Levies; the costs to CSCDA, CFD No. 2018-03, or any designee thereof related to an appeal of the levy or application of the Special Tax; the costs associated with the release of funds from an escrow account; and CSCDA's annual administration fees and third California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 1 party expenses. Administrative Expenses shall also include amounts estimated or advanced by CSCDA or CFD No. 2018-03 for any other administrative purposes of CFD No. 2018-03, including, but not limited to, attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tax Levies. "Apartment Floor Area" means all of the square footage of living area within the perimeter of the Apartment Property, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Apartment Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the Building Division of the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Apartment Property. "Apartment Property" means an Assessor's Parcel of Developed Property on which all or any portion of a structure or structures with multiple Apartment Units are located, and such Apartment Units are offered for rent and are not available for sale to individual owners. If Apartment Property is subsequently reclassified as Residential Property, Special Taxes levied on such reclassified Assessor's Parcels shall be modified to match those of Residential Property. "Apartment Unit" means one (1) for -rent residential unit on Apartment Property. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C.a.(2), below. "Authorized Facilities" means the facilities authorized to be financed by CFD No. 2018-03. "Backup Special Tax" means the Backup Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.a.(3), below. "Building Permit" means a permit issued by the City or other governmental agency for the construction of a residential or non-residential building on an Assessor's Parcel. "Buildout" means, for CFD No. 2018-03, that all expected Building Permits for Residential Property, Apartment Property, and Non -Residential Property to be constructed within CFD No. 2018-03 have been issued, as determined by the CSCDA Program Manager. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 2 "CFD No. 2018-03" means California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California. "CFD No. 2018-03 Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one (1) or more series, authorized by CFD No. 2018-03 under the Act and issued by CSCDA and secured by the Special Taxes. "City" means the City of Newport Beach. "Commission" means the governing board of CSCDA. "County" means the County of Orange. "CSCDA" means the California Statewide Communities Development Authority. "CSCDA Program Manager" means the program manager for CSCDA, or its designee. "Developed Property" means, for each Fiscal Year, all Taxable Property in Tax Zone 1 and Tax Zone 2, for which a Building Permit for new construction was issued after January 1, 2018 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied. For purposes of this Rate and Method of Apportionment, any Developed Property for which Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area is removed, shall be considered Developed Property under the previously assigned Land Use Class with the previously assigned Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area, until a new Building Permit is issued, and a new Land Use Class and Special Tax can be assigned. Notwithstanding the above, a reclassification shall not occur, unless the CSCDA Program Manager determines that the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after such reclassification, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds is each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. "Developer" means TSG-Parcel 1, LLC or Uptown Newport Jamboree, LLC and its successors and assigns. The term "successors" does not refer to the successors to all or any portion of the property within CFD No. 2018-03 unless the new property owner receives an assignment of the Developer's rights and obligations described in an assignment agreement or similar agreement. "Dwelling Unit" means one (1) for -sale residential unit of any configuration, including, but not limited to, a single family attached or detached dwelling, condominium, mobile home, or otherwise, but excluding Apai tiiient Units on Apartment Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 3 "Final Mapped Property" means, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, and Taxable Public Property, located in a Final Subdivision as of January 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied, but no earlier than January 1, 2018. "Final Subdivision" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, approved by the County 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, in either case, creates individual lots for which Building Permits may be issued without further subdivision. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution, or other instrument pursuant to which CFD No. 2018-03 Bonds are issued, as modified, amended, and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the land use classes listed in Table 1 below. "Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C.a.1 below, that can be levied by CSCDA in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Non -Residential Floor Area" means the total gross building square footage of non- residential property lying within an Assessor's Parcel for which one (1) or more non- residential Building Permits have been issued. Such square footage shall be measured from outside wall to outside wall, exclusive of overhangs, porches, patios, carports, or similar spaces attached to the building but generally open on at least two (2) sides, as determined by reference to the Building Permit(s) issued for that Assessor's Parcel, or if these are not available, as otherwise determined by the CSCDA Program Manager. "Non -Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit permitting the construction of one (1) or more non-residential units or facilities has been issued by the City or other governmental agency. "Outstanding Bonds" means all CFD No. 2018-03 Bonds which remain outstanding under the Indenture. "Property Owner Association Property" means, for each Fiscal Year (i) any property within the boundaries of CFD No. 2018-03 that was owned by a property owner association, including any master or sub -association, as of January 1 of the prior Fiscal Year, (ii) any property located in a Final Subdivision that was recorded as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determined from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street, or (iii) any property which, as of the May 1 California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 4 preceding the Fiscal Year for which the Special Tax is being levied, has been conveyed to a property owner's association, including any master or sub -association, provided evidence of such conveyance is submitted to the CSCDA Program Manager by May 1 preceding the Fiscal Year for which the Special Tax is being levied. The total number of acres to be classified as Property Owner Association Property or Public Property, shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax Levy within Tax Zone 1 and Tax Zone 2, to the Assigned Special Tax or the Maximum Special Tax of the respective Tax Zone, is equal for all Assessor's Parcels of Developed Property. For Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property categories, "Proportionately" means that the ratio of the actual Special Tax Levy per Acre within Tax Zone 1 and Tax Zone 2, to the Maximum Special Tax per Acre of their respective Land Use Class and Tax Zone, is equal. "Public Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2018-03 that, as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied, was (i) owned by, irrevocably offered, or dedicated to the federal government, the State, the County, the City, or any local government or other public agency, provided that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use; or (ii) encumbered by a public utility easement making impractical its use for any purpose other than that set forth in the easement. The total number of acres to be classified as Property Owner Association Property or Public Property shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Rate and Method of Apportionment" means this Rate and Method of Apportionment for CFD No. 2018-03. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Dwelling Unit. "Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued by the Building Division of the City for purposes of constructing one (1) or more Dwelling Units. Residential Property does not include Apartment Property for purposes of this Rate and Method of Apportionment. "Special Tax" or "Special Taxes" means the special tax to be levied in each Fiscal Year to fund the Special Tax Requirement for Facilities. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 5 "Special Tax Levy" or "Special Tax Levies" means the Special Tax to be levied in each Fiscal Year on Assessor's Parcel of Taxable Property to fund the Special Tax Requirement for Facilities, as applicable. "Special Tax Requirement" means that amount of Special Taxes required, if any, in any Fiscal Year for CFD No. 2018-03 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the CFD No. 2018-03 Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2018-03 Bonds; (iii) pay all or a portion of the Administrative Expenses as determined by the CSCDA Program Manager; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of Authorized Facilities to the extent that the inclusion of such amount does not increase the Special Tax Levy on Undeveloped Property; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax Levy, as determined by the CSCDA Program Manager pursuant to the Indenture. "State" means the State of California. "Tax Zone" means one of the two (2) mutually exclusive geographic areas defined below and identified in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 1" means the geographic area specifically identified as Zone 1 in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 2" means the geographic area specifically identified as Zone 2 in Attachment 1 of this Rate and Method of Apportionment. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2018-03 that are not exempt Property Owner Association Property or exempt Public Property or other property exempted pursuant to Section E herein. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E herein. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E herein. "Total Floor Area" means the sum of the Residential Floor Area, Apartment Floor Area, and the Non- Residential Floor Area located on an Assessor's Parcel. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, or Taxable Public Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 6 B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2018-03 shall be classified as Developed Property, Final Mapped Property, Undeveloped Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, or Taxable Public Property and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D below. C. MAXIMUM SPECIAL TAX RATE a. Developed Property (1) Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax and (ii) the amount derived by application of the Backup Special Tax. (2) Assigned Special Tax Residential Property shall be assigned to Land Use Classes 1 and 2 as listed in Table 1 below based on the description associated with each Dwelling Unit or Apartment Unit and its determined Tax Zone. Non -Residential Property shall be assigned to Land Use Class 3 as listed in Table 1 below based on the description associated with square feet of Non -Residential Floor Area and it's determined Tax Zone. The Assigned Special Tax that shall be levied in Fiscal Year 2019-2020 for each Assessor's Parcel classified as Developed Property is shown on the following page in Table 1. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 7 TABLE 1 Assigned Special Tax for Developed Property CFD No. 2018-03 Fiscal Year 2019-2020 LAND USE CLAS 1 ESCRIPTION ASSIGNED SPECIAL TAX • ` - ASSIGNED SPECIAL TAX h. 1 Residential Property $750 per Dwelling Unit $950 per Dwelling Unit 2 Apartment Property $0 per Apartment Unit $260 per Apartment Unit 3 Non -Residential Property $5.35 per Square Foot of Non -Residential Floor Area $5.35 per Square Foot of Non -Residential Floor Area (3) Backup Special Tax The Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $50,028 per Acre of the Assessor's Parcel. If a Final Subdivision includes Assessor's Parcels of Taxable Property for which Building Permits have been issued, exclusive of Taxable Property Owner Association Property and Taxable Public Property, then the Backup Special Tax for each residential Dwelling Unit shall be calculated according to the following formula: Residential Dwelling Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Residential Floor Area/(Total Floor Area)) / Number of residential Dwelling Units) In this case, the Backup Special Tax for each Apartment Unit shall be calculated according to the following formula: Apartment Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Apartment Floor Area/(Total Floor Area)) / Number of Apartment Units) Finally, the Backup Special Tax for each square foot of Non -Residential Floor Area shall be calculated according to the following formula: Non -Residential Square Foot Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Non -Residential Floor Area/(Total Floor Area)) / Non -Residential Floor Area) California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 8 Furthermore, all Assessor's Parcels within CFD No. 2018-03 shall be relieved simultaneously and permanently from the obligation to pay and disclose the Backup Special Tax if the CSCDA Program Manager calculates that (i) the annual debt service required for the Outstanding Bonds, when compared to the Assigned Special Tax that shall be levied against all Assessor's Parcels of Developed Property in CFD No. 2018-03, results in 110% debt service coverage (i.e., the Assigned Special Tax that shall be levied against all Developed Property in CFD No. 2018-03 in each remaining Fiscal Year based on the then existing development is at least equal to the sum of (a) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (b) the Administrative Expenses as defined in Section A herein), or (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it shall not issue any additional CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Assigned Special Tax in CFD No. 2018-03. (4) Increase in the Assigned Special Tax and Backup Special Tax On each July 1, commencing on July 1, 2020, the Assigned Special Tax and the Backup Special Tax shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. (5) Multiple Land Use Classes In some instances, an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Special Tax levied on an Assessor's Parcel shall be the sum of the Special Tax for all Land Use Classes located on that Assessor's Parcel. Furthermore, if only a portion of Building Permits have been issued on an Assessor's Parcel, the remaining portion of the Assessor's Parcel shall be considered Final Mapped Property. The CSCDA Program Manager's allocation to each type of property shall be final. b. Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property (1) Maximum Special Tax The Fiscal Year 2019-2020 Maximum Special Tax for each Assessor's Parcel of Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be $50,028 per Acre. (2) Increase in the Maximum Special Tax On each July 1, commencing on July 1, 2020, the Maximum Special Tax for Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property within each respective Tax Zone, shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 9 D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2019-2020 and for each following Fiscal Year, the CSCDA Program Manager shall determine the Special Tax Requirement and shall (i) levy 100% of the Assigned Special Taxes on Developed Property, and (ii) levy the remaining Special Taxes as prioritized below until the total Special Taxes levied equal the Special Tax Requirement. The Special Taxes shall be levied in each Fiscal Year as follows: 1. Annual Levy First: The Special Tax shall be levied on each Assessor's Parcel of Residential Property and Apaitiiient Property, within all Tax Zones, in an amount equal to 100% of the applicable Assigned Special Tax for Residential Property and Apartment Property respectively. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied on each Assessor's Parcel of Non -Residential Property, within all Tax Zones, until (i) the total Special Tax levied under the first two steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Non -Residential Property equals 100% of the applicable Assigned Special Tax, whichever comes first. Third: If additional monies are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Final Mapped Property, within all Tax Zones, until (i) the total Special Tax levied under the first three steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Final Mapped Property equals 100% of the applicable Maximum Special Tax, whichever comes first. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, within all Tax Zones, until (i) the total Special Tax levied under the first four steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Undeveloped Property equals 100% of the applicable Maximum Special Tax, whichever occurs first. Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property for which the Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to 100% of the Maximum Special Tax for each such Assessor's Parcel of Developed Property, within all Tax Zones, until (i) the total Special Tax levied under the first five steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Developed Property equals 100% of the Maximum Special Tax for Developed Property, whichever occurs first. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 10 Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property, within all Tax Zones, until (i) the total Special Tax levied under the first six steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Property Owner Association Property equals 100% of the Maximum Special Tax for Property Owner Association Property, whichever occurs first. Seventh: If additional monies are needed to satisfy the Special Tax Requirement after the first six steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property, within all Tax Zones, until (i) the total Special Tax levied under the first seven steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Public Property equals 100% of the Maximum Special Tax for Taxable Public Property, whichever occurs first. Notwithstanding the above, the CSCDA Program Manager or its designee may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax in the first step (above), when (i) CSCDA is no longer required to levy the Special Tax beyond the first step (above) in order to meet the Special Tax Requirement; and (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it will not issue any additional CFD No. 2018-03 Bonds (except refunding bonds), to be supported by the Special Tax. E. EXEMPTIONS No Special Tax shall be levied on Public Property or Property Owner Association Property in CFD No. 2018-03 provided that no such exemption shall reduce the total Acreage of Taxable Property to less than 12.88 Acres. Tax-exempt status shall be assigned by the CSCDA Program Manager in the chronological order in which property in CFD No. 2018-03 becomes Public Property or Property Owner Association Property. However, should an Assessor's Parcel of Public Property or Property Owner Association Property no longer be classified as tax-exempt, it will, from that point forward, be subject to the Special Tax. Furthermore, any Assessor's Parcel designated as Public Property or Property Owner Association Property that cannot be exempt from the Special Tax because such exemption would reduce the Acreage of all Taxable Property within CFD No. 2018-03 to less than 12.88 Acres shall be designated as Taxable Public Property or Taxable Property Owner Association Property. Prior to sixty (60) days before the issuance of a first series of CFD No. 2018-03 Bonds, the CSCDA Program Manager may increase or decrease the final number of minimum taxable Acres in CFD No. 2018-03 to better reflect the actual tax-exempt acreage within CFD No. 2018-03. However, notwithstanding the above, the final number of taxable Acres in CFD No. 2018-03 shall not be decreased if it causes an increase in the Special Tax levied on any existing Assessor's Parcel of Developed Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 11 F. REVIEW/APPEAL PROCESS Any taxpayer may file a written appeal of the Special Tax on his/her property with CSCDA, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CSCDA Program Manager or its designee shall review the appeal, meet with the appellant if the CSCDA Program Manager deems necessary, and advise the appellant of its determination within sixty (60) days after receipt of the appeal. If the CSCDA Program Manager agrees with the appellant, the CSCDA Program Manager shall make a recommendation to CSCDA to eliminate or reduce the Special Tax on the appellant's property or to provide a refund to appellant. The approval of CSCDA or its designee must be obtained prior to any such elimination or reduction. If the CSCDA Program Manager disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has thirty (30) days in which to appeal to CSCDA by filing a written notice of appeal with the CSCDA Program Manager, provided that the appellant is current in his/her payments of the Special Taxes. The second appeal must specify the reasons for the appellant's disagreement with the CSCDA Program Manager's determination. The CSCDA Program Manager shall schedule the appeal to be heard before CSCDA within sixty (60) days after receipt of the second appeal. Interpretations may be made by CSCDA, without Resolution or Ordinance of the Commission, for purposes of clarifying any vagueness or ambiguity as it relates to the Special Taxes, the Rate and Method of Apportionment, Land Use Classes, or any other definition applicable to CFD No. 2018-03. Without Commission approval, the CSCDA Program Manager may make minor, non - substantive administrative and technical changes to the provisions of this document that do not materially affect the rate, method of apportionment, and manner of collection of the Special Tax for purposes of administrative efficiency or convenience or to comply with new applicable federal, state, or local law. G. MANNER OF COLLECTION The Special Tax Levy will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2018-03 may directly bill the Special Tax Levy, may collect Special Tax Levies 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. H. PREPAYMENT OF SPECIAL TAX Under this Rate and Method of Apportionment, an Assessor's Parcel within CFD No. 2018-03 is permitted to prepay the Special Tax. The obligation of the owner of an Assessor's Parcel to pay the Special Tax may be fully or partially prepaid and permanently satisfied as described herein, California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 12 provided that a prepayment may be made only for Assessor's Parcels of Developed Property, or for an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2019, and only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CSCDA Program Manager with written notice of intent to prepay. Within thirty (30) days of receipt of such written notice, the CSCDA Program Manager shall notify such owner of the Special Tax Prepayment Amount (defined below) for such Assessor's Parcel. The CSCDA Program Manager may charge such owner a reasonable fee for providing this service. If there are Outstanding Bonds, prepayment must be made not less than thirty (30) days prior to a date that notice of redemption of CFD No. 2018-03 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The following additional definitions apply to this Section H: "CFD Public Facilities Costs" means either $7,500,000 in 2018 dollars, which shall increase by the Construction Inflation Index on July 1, 2019, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CSCDA Program Manager as sufficient to provide funding for the Authorized Facilities under the authorized bonding program for CFD No. 2018- 03, or (ii) shall be determined by CSCDA concurrently with a covenant that it shall not issue any more CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Special Tax levy under this Rate and Method of Apportionment. "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 month of December in 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 CSCDA Program Manager 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 Costs minus (i) costs of Authorized Facilities previously paid from the Improvement Fund, (ii) monies currently on deposit in the Improvement Fund available to pay costs of Authorized Facilities, (iii) monies currently on deposit in an escrow fund established pursuant to the Indenture and expected to be available to fund Authorized Facilities and (iv) the amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of these funds. "Improvement Fund" means a fund or account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct Authorized Facilities. "Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 13 1. Prepayment in Full The Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Equals Special Tax Prepayment Amount As of the proposed date of prepayment, the Special Tax Prepayment Amount shall be calculated according to the following paragraphs: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2018, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the Building Permit which has already been issued for such Assessor's Parcel. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Tax levy for CFD No. 2018-03 based on the Assigned Special Tax for Developed Property which could be levied on all expected development assuming Buildout of CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the total estimated Backup Special Taxes at Buildout for the entire CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be redeemed (the "Bond Redemption Amount"). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Previously Issued Bonds to be redeemed (the "Redemption Premium"). 6. Compute the current Future Facilities Costs. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 14 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Previously Issued Bonds. 9. Determine the Special Tax levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 10. Compute the minimum amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of the Special Tax Prepayment Amount, less any interest earnings attributed to the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount"). 12. The administrative fees and expenses of CFD No. 2018-03 are as calculated by the CSCDA Program Manager and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 2018-03 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% of the reserve requirement (as defined in the Indenture). 14. If any capitalized interest for the Previously Issued 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 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment date (the "Capitalized Interest Credit"). 15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11, and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Special Tax Prepayment Amount"). California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 15 2. Prepayment in Part The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP = (PE — A) x F + A. These terms have the following meaning: PP = the partial prepayment PE = the Special Tax Prepayment Amount calculated according to Section H.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. A = the Administration Fees and Expenses from Section H.1. The owner of any Assessor's Parcel who desires such prepayment shall notify the CSCDA Program Manager of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. With respect to any Assessor's Parcel that is partially prepaid, CSCDA shall (i) distribute the funds remitted to it according to Section H.3, and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D. 3. General Provisions Applicable to the Prepayment of Special Tax (a). Use of the Special Tax Prepayment Amount The Special Tax Prepayment Amount, less the Administrative Fees and Expenses calculated according to Sections H.1 and H.2 which shall be retained by CFD No. 2018- 03, and less the Future Facilities Amount calculated according to Section H.1 which shall be deposited into the Improvement Fund, shall be deposited into specific funds established under the Indenture, to fully or partially redeem as many Outstanding Bonds as possible, and, if amounts are less than $5,000, to make debt service payments on the Outstanding Bonds (collectively designated as the "Bond Retirement Funds"). (b). Full Prepayment of Special Tax Upon confirmation of the payment of the current Fiscal Year's entire Special Tax obligation, the CSCDA Program Manager may remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 16 Assessor's Parcel that is prepaid in accordance with Section H.1, the CSCDA Program Manager shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, and the obligation to pay the Special Tax for such Assessor's Parcel shall cease. (c). Partial Prepayment of Special Tax With respect to any Assessor's Parcel that is partially prepaid, the CSCDA Program Manager shall (i) distribute or cause to be distributed the funds remitted to it according to Section H.2. and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's parcel, equal to the outstanding percentage (1.00 — F) of the Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D herein. (d). Debt Service Coverage Notwithstanding the foregoing, no prepayment of the Special Tax shall be allowed unless the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after the proposed prepayment, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. I. TERM OF SPECIAL TAX The Special Tax shall be levied until the final series of CFD No. 2018-03 Bonds have matured, provided that the Special Tax shall not be levied after Fiscal Year 2069-2070. The Special Taxes will cease to be levied in an earlier Fiscal Year if the CSCDA Program Manager has determined that all required interest and principal payments on the CFD No. 2018-03 Bonds have been paid and CSCDA has covenanted that it will not issue any more CFD No. 2018-03 Bonds (other than refunding Bonds) to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 17 ATTACHMENT 1 PROPOSED BOUNDARIES & IDENTIFICATION OF TAX ZONES OF CFD NO. 2018-03 SHEET 1 OF 1 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA For particulars of lines and dimensions. reference is made to the parcels maps of the Orange County Assessor. California. and to Tract map No. 17763 recorded on June 19, 2015 as insvument No. 201500320061 at Pages 17 through 23 in Book 937 of maps in the office of the County Recorder of Orange County, California. LEGEND Proposed Boundaries of Califomia Statewide Communities Development • Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, California 11111111 Parcel Line Tax Zone 1 Tax Zone 2 445-13n-nn Assessor Parcel Number F .EPA0.ED BY WIYID TA U9510 ANO AiSOC IATE9% INC. (1) Filed in the office of the Secretary of California Statewide Communities Development Authority this day of , 2018. Secretary, California Statewide Communities Development Authority (2) I hereby certify that the within map showing proposed boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport). City of Newport Beach. County of Orange, Stale of California, was approved by the Commission of the California Statewide Communities Development Authority at a regular meeting thereof. held on this day of , 2018, by its resolution No. Secretary, California Statewide Communities Development Authority (3) Filed this day of 2018, at the hour of o'clock _ m., in Book of Maps of Assessment. and Community Facilities Districts at page and as Instrument No. in the office of the County Recorder of Orange County. State of California_ Hugh Nguyen Clerk -Recorder, County of Orange By Deputy Fee EXECUTION VERSION TAX CERTIFICATE March 12, 2019 $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 4156-9865-2694.2 I. IN GENERAL; DEFINITIONS 1 1.1 The Issuer 1 1.2 Delivery 1 1.3 Purpose 1 1.4 Purpose of Tax Certificate 1 1.5 One Issue 1 1.6 Definitions 2 1.7 Reliance 4 II. GENERAL TAX LIMITATIONS 4 2.1 Cross Reference 4 2.2 Governmental Bond Status 5 2.3 Registered Form 6 2.4 No Federal Guarantee 6 2.5 Information Reporting 6 2.6 No Pooling 6 2.7 No Hedge Bonds 6 2.8 No Refunding 6 2.9 No Imputed Proceeds 6 2.10 Change in Use 7 III. ARBITRAGE 7 3.1 Reasonable Expectations; Reliance on Others 7 3.2 Offering Price 7 3.3 Sale Proceeds 7 3.4 Investment Proceeds 7 3.5 Funds and Accounts 8 3.6 No Other Replacement Proceeds 8 3.7 Expenditure of Gross Proceeds 8 3.8 No Overissuance 9 3.9 Three -Year Temporary Period 9 3.10 Special Tax Fund 9 3.11 Expense Fund 9 3.12 Reserve Fund 10 3.13 Rebate Fund 10 i 4156-9865-2694.1 3.14 Redemption Fund 10 3.15 Yield 10 3.16 No Qualified Guarantee 11 3.17 No Qualified Hedges 11 3.18 Yield Restriction 11 3.19 No Abusive Arbitrage Device 11 3.20 No Expected Sale 11 IV. REBATE 11 4.1 Undertakings 11 4.2 Rebate Fund 12 4.3 Recordkeeping 12 4.4 Exception to Rebate Requirement -Debt Service Fund 12 4.5 Rebate Requirement Calculation and Payment 13 4.6 Prohibited Investments and Dispositions 14 4.7 Segregation of Proceeds 16 4.8 Filing Requirements 16 4.9 Survival of Defeasance 16 4.10 Satisfaction of Obligation 17 V. OTHER MATTERS 17 5.1 Expectations 17 5.2 Retention of Records 17 5.3 Amendments 18 EXHIBIT A — CERTIFICATE OF UNDERWRITER A-1 EXHIBIT B — CERTIFICATE REGARDING ARBITRAGE REBATE B-1 ii 4156-9865-2694.1 TAX CERTIFICATE The California Statewide Communities Development Authority (the "Authority") hereby makes the following representations of facts and expectations and covenants to comply with the requirements of this Tax Certificate in connection with the $8,300,000 aggregate principal amount of its California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), Special Tax Bonds, Series 2019 (the "Bonds"). These representations and covenants are in part made pursuant to Treasury Regulations Section 1.148- 2(b)(2) and Section 6.03 of the Indenture, dated as of March 1, 2019 (the "Indenture"), between the Authority and Wilmington Trust, National Association, and capitalized terms used but not otherwise defined herein shall have the respective meanings set forth in the Indenture. I. IN GENERAL; DEFINITIONS 1.1 The Issuer. The Issuer is a joint exercise of powers authority established pursuant to a Joint Exercise of Powers Agreement, dated June 1, 1988 entered into among a number of California counties, cities and special districts, pursuant to Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code and the laws of the State of California. The Issuer is issuing the Bonds as a constituted authority, on behalf of one of more political subdivisions including the City of Newport Beach (the "City"), located within the County of Orange, California. 1.2 Delivery. The Bonds are being delivered to RBC Capital Markets, LLC (the "Underwriter") on the date hereof. 1.3 Purpose. The Bonds are being executed and delivered pursuant to the Indenture to (a) finance the acquisition of public capital improvements and the undergrounding of certain existing electrical transmission lines within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) (the "District"), (b) make a deposit to the Reserve Fund, (c) capitalize interest on the Bonds through March 1, 2021 and (d) pay certain costs of issuing the Bonds. 1.4 Purpose of Tax Certificate. The Authority is delivering this Tax Certificate to Orrick, Herrington & Sutcliffe LLP, as bond counsel ("Bond Counsel"), with the understanding that Bond Counsel will rely in part upon this Tax Certificate in rendering their opinion that interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Code. 1.5 One Issue. All of the Bonds were sold to the Underwriter on February 27, 2019 (the "Sale Date"), pursuant to the same plan of financing. All of the Bonds are expected to be paid out of substantially the same source of funds. No other governmental obligations that are expected to be paid out of substantially the same source of funds as the Bonds were or are to be sold within the 31-day period beginning 15 days before the Sale Date pursuant to the same plan of financing as the Bonds. 4156-9865-2694.1 1.6 Definitions. Unless the context otherwise requires, the following capitalized terms have the following meanings for purposes of this Tax Certificate: "Adjusted Gross Proceeds" means Gross Proceeds, adjusted as set forth in Treasury Regulations Section 1.148-7(c)(3). Thus, Adjusted Gross Proceeds generally means Gross Proceeds less the amounts held in Bona Fide Debt Service Funds and the Reserve Fund (excluding any Restricted Amount held in the Reserve Fund). "Available Construction Proceeds " means all Sale Proceeds (reduced by costs of issuing the Bonds financed from such Sale Proceeds and by the amount of Sale Proceeds deposited in the Reserve Fund), plus all Investment Proceeds earned or reasonably expected to be earned thereon, plus Investment Proceeds earned or reasonably expected to be earned on amounts held in the Reserve Fund before the earlier of two years after the Closing Date or substantial completion of Project construction. "Bona Fide Debt Service Funds" means those funds and accounts (or portions of those funds and accounts) identified in Section 3.10.3 of this Tax Certificate. "Bond Year" means the period beginning on the Closing Date and ending on March 12, 2020 (or such earlier date selected by the Authority pursuant to Treasury Regulations Section 1.148-1(b)), and each successive one-year period thereafter. The last Bond Year will end on the last day on which any of the Bonds are outstanding for federal income tax purposes. "Closing Date" means the date of this Tax Certificate. "Code" means the Internal Revenue Code of 1986 and the applicable Treasury Regulations promulgated thereunder. "District" has the meaning defined in Section 1.3 and means the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), County of Orange, State of California. "Governmental Unit" means any State or political subdivision of a State, but excludes the United States and its agencies and instrumentalities. "Gross Proceeds" has the meaning used in Treasury Regulations Section 1.148-1(b), and generally means all proceeds derived from or relating to the Bonds, including Proceeds and Replacement Proceeds. "Investment Proceeds" means the earnings from investing and reinvesting the Sale Proceeds and from investing and reinvesting such earnings. "Investment Property" means any security or obligation, any annuity contract or other investment type property, but does not include a tax-exempt obligation unless such obligation is a "specified private activity bond" within the meaning of Section 57(a)(5)(C) of the Code). "Minor Portion" means the amount of up to $100,000 of the Gross Proceeds that is invested in higher yielding investments under Section 148(e) of the Code. 2 4156-9865-2694.1 "Net Sale Proceeds" means the Sale Proceeds, minus the amount of Sale Proceeds held in the Reserve Fund and any amount invested as part of the Minor Portion. "Nongovernmental Person" means any person or entity other than a Governmental Unit. "Nonpurpose Investment" means any Investment Property in which Gross Proceeds are invested. "Opinion of Counsel" means an approving written opinion of nationally recognized bond counsel. "Other Replacement Proceeds" shall have the meaning set forth in Section 1.148-1(c)(4) of the Treasury Regulations. Other Replacement Proceeds arise to the extent that the Authority reasonably expects as of the Closing Date that the term of the Bonds is longer than is reasonably necessary for the governmental purpose of the Bonds and that there will be available amounts created (within the meaning of Treasury Regulation Section 1.148-6(d)(3)(iii)) during the period that the Bonds remain outstanding longer than necessary. Other Replacement Proceeds do not arise for the portion of the Bonds that is to be used to (i) finance restricted working capital expenditures (within the meaning of Treasury Regulation Section 1.148-1(b)) if that portion of the Bonds is not outstanding longer than two years, (ii) finance or refinance the portion of the Bonds that is to be used to finance or refinance capital projects (within the meaning of Treasury Regulation Section 1.148-1(b)) if that portion of the Bonds does not exceed 120 percent of the average reasonably expected life of the financed capital projects, and (iii) refund a prior issue, provided that the weighted average maturity of such refunding issue does not exceed the remaining weighted average maturity of the prior issue and the issue of which the prior issue is a part satisfies Sections 1.148-1(c)(4)(i)(B)(1) or 1.148-1(c)(4)(i)(B)(2) of the Treasury Regulations. "Pledge Fund" shall have the meaning set forth in Section 1.148-1(c)(3) of the Treasury Regulations, and generally means any amount that is directly or indirectly pledged to pay principal or interest on the Bonds. A Pledge Fund need not be cast in any particular form but must provide a reasonable assurance to the bondholders that such amounts will be available to pay principal or interest on the Bonds in the event that the Authority encounters financial difficulties. An amount is also treated as pledged to pay principal or interest on the Bonds if it is held under an agreement to maintain the amount at a particular level for the direct or indirect benefit of the bondholders, however, such amount will not be treated as pledged if (i) the Authority or a substantial beneficiary of the Bonds may grant rights in the amount that are superior to the rights of the bondholders, or (ii) the amount is not in excess of the purpose for which it was established, the required level is tested no more frequently than every six (6) months, and the amount may be spent without any substantial restriction other than a requirement to replenish the amount by the next testing date. "Preliminary Expenditures" means architectural, engineering, surveying, soil testing, costs of issuing the Bonds, and similar costs paid with respect to the Project in an aggregate amount not exceeding $1,767,894.48 (20% of the issue price of the Bonds). However, Preliminary Expenditures do not include land acquisition, site preparation or similar costs incident to the commencement of construction. 3 4156-9865-2694.1 "Proceeds" means any Sale Proceeds and Investment Proceeds, other than amounts actually or constructively received with respect to a purpose investment that are properly allocable to the immaterially higher yield under Section 1.148-2(d) of the Treasury Regulations or to qualified administrative costs recoverable under Section 1.148-5(e) of the Treasury Regulations. "Rebate Requirement" means the amount of rebatable arbitrage computed by or on behalf of the Authority as of the last day of any Bond Year pursuant to Treasury Regulations Section 1.148-3. "Replacement Proceeds" shall have the meaning set forth in Section 1.148-1(c)(1) of the Treasury Regulations and generally means any sinking fund, Pledge Fund or Other Replacement Proceeds to the extent that those funds or accounts are derived by or derived from a substantial beneficiary of the Bonds. A substantial beneficiary of the Bonds includes the Authority and the State of California. Replacement Proceeds include any amounts expected to be used to pay debt service on the Bonds. "Restricted Amounts" means amounts deposited in the Reserve Fund which exceed the least of (i) 10% of the original principal amount of the Bonds, (ii) maximum annual debt service on the Bonds payable in the current or any future Bond Year, or (iii) 125% of average annual debt service payable in the current and in all future Bond Years on the Bonds. "Sale Proceeds" means the amount of $8,839,472.40 representing the par amount of the Bonds of $8,300,000, plus net original issue premium of $539,472.40. "Special Tax Revenues" means amounts derived from the annual special tax (the "Special Tax") levied on all real property within the District subject to the Special Tax and the proceeds, if any, from the sale of such property for delinquency of such Special Tax. "Tax Certificate" means this Tax Certificate. "Yield" means that discount rate described in Section 3.15 of this Tax Certificate. 1.7 Reliance. With respect to certain matters contained in this Tax Certificate, the Authority specifically relies upon the representations of the Underwriter contained in Exhibit A hereto, and representations of the City contained in the Tax Certifications of Local Agency attached to the Closing Certificate of the City. The Authority is not aware of any facts or circumstances that would cause it to question the accuracy or reasonableness of any representation made in this Tax Certificate or in any exhibit hereto. II. GENERAL TAX LIMITATIONS 2.1 Cross Reference. Part III below refers to the expectations and limitations relating to arbitrage; part IV refers to the expectations and limitations relating to rebate. 4 4156-9865-2694.1 2.2 Governmental Bond Status. Proceeds of the Bonds will be used to finance (1) the acquisition and construction of park improvements consisting of landscaping, utilities, irrigation and recreational amenities (the "Improvements"), and (ii) the undergrounding of certain existing electrical transmission lines (the "Undergrounding," and together with the Improvements, the "Project"). Except for certain components of the Undergrounding that will be owned by a private entity (the "Utility Assets"), the Authority, the City, or other government agencies will own all of the facilities that comprise the Project. 2.2.1 No Private Loans. The Authority will not loan any of the proceeds of the Bonds to any Nongovernmental Person, except for any deemed loans which may arise as a result of the imposition of Special Tax liens upon properties located in the District. The Authority certifies that (a) the Special Tax which is being levied in connection with the Bonds is an enforced contribution that is being imposed and collected for the purpose of raising revenue to finance the capital costs of the Project; (b) that the Special Tax is being imposed and collected pursuant to a state law of general application that is applicable equally to natural persons not acting in a trade or business and to persons acting in a trade or business; and (c) that owners of both business and nonbusiness property benefiting from the Project are eligible (or required) to make deferred payments of the Special Tax, through the payment of an allocable portion of debt service on the Bonds, on an equal basis, and such deferred payments of the Special Tax are payable pursuant to the same terms for all persons subject to the Special Tax. The purposes of the Project provide an essential governmental function in that they will be owned by the Authority, the City, or other governmental agencies, or will provide utility services to the general public. 2.2.2 Private Business Use. The Authority, based on certifications of the City, will not allow more than 10% of the Proceeds of the Bonds or the Project (other than the Utility Assets) to be "used" in the trade or business of any Nongovernmental Persons (other than in their roles as members of the general public). Management or service contracts, agreements, and arrangements with nongovernmental persons will not result in "use" of the Project by such persons within the meaning of this Section 2.2.2 if the guidelines set forth in IRS Revenue Procedure 2017-13 are satisfied. For purposes of the first sentence of this paragraph, "10%" is reduced to "5%" for nongovernmental use which is disproportionate to or not related to the governmental purposes of the Bonds. Absent an Opinion of Counsel, for purposes of this Section 2.2.2, a Nongovernmental Person will be treated as "using" Proceeds of the Bonds to the extent the Nongovernmental Person— (i) borrows Proceeds of the Bonds; (ii) uses the Project (e.g., as owner, lessee, service provider, operator, or manager); or (iii) in the case of facilities used to provide water, natural gas or electricity, acquires the output (or throughput) of the Project, if any, other than pursuant to standard rates and charges. 5 4156-9865-2694.1 With respect to the Utility Assets, based in part on Treasury Regulation § 1.141-4(g), example 4, Bond Counsel has advised that the Special Tax payments will not be treated as private payments with respect to the Utility Assets. 2.3 Registered Form. The Bonds are being issued in registered form. 2.4 No Federal Guarantee. The Authority will not directly or indirectly use or permit the use of any proceeds of the Bonds or any other funds of the Authority or take or omit to take any action that would cause the Bonds to be obligations which are "federally guaranteed" within the meaning of Section 149(b) of the Code. In furtherance of this covenant, the Authority will not allow the payment of the principal component or interest component with respect to the Bonds to be guaranteed (directly or indirectly) in whole or in part by the United States or any agency or instrumentality thereof. The Authority also will not, except as provided in the next sentence, use 5% or more of the proceeds of the Bonds to make loans the payment of the principal or interest with respect to which are guaranteed in whole or in part by the United States or any agency or instrumentality thereof, nor will it invest 5% or more of the proceeds in federally insured deposits or accounts. The preceding sentence shall not apply (i) to investments of proceeds during the temporary periods described in this Tax Certificate with respect to the Acquisition and Construction Fund, the Expense Fund, the Costs of Issuance Account, the Bona Fide Debt Service Funds, and the Reserve Fund (except for any Restricted Amounts in the Reserve Fund), and (ii) to investments in bonds issued by the United States Treasury. 2.5 Information Reporting. The Authority shall cause a Form 8038-G to be filed with respect to the Bonds no later than May 15, 2019. 2.6 No Pooling. Except for any deemed assessment loans as described in Section 2.2.1, the Authority will not use the proceeds of the Bonds directly or indirectly to make or finance loans to two or more ultimate borrowers. 2.7 No Hedge Bonds. The Authority reasonably expects that more than 85% of Net Sale Proceeds will be expended for governmental purposes of the Bonds before March 12, 2022. The Authority also reasonably expects that at least 10% of the Net Sale Proceeds will be expended for governmental purposes of the Bonds before March 12, 2020, and that at least 30% of the Net Sale Proceeds will be expended for governmental purposes of the Bonds before March 12, 2021. Not more than 50% of proceeds of the Bonds will be invested in Nonpurpose Investments having a substantially guaranteed yield for four years or more. In addition, the payment of legal and underwriting costs associated with issuance of the Bonds is not contingent, and at least 95% of all legal and underwriting costs associated with issuance of the Bonds will be paid no later than 180 days after the issue date. 2.8 No Refunding. Proceeds of the bonds will not be used directly or indirectly to make principal, interest or premium payments with respect to any governmental obligation other than the Bonds. 2.9 No Imputed Proceeds. The purchase price of each Bond is at least 95% of that Bond's face amount. The stated interest rate of each Bond does not increase over the term of that Bond. 6 4156-9865-2694.1 2.10 Change in Use. The Authority reasonably expects to use all proceeds of the Bonds and all facilities that are financed from proceeds of the Bonds as set forth in Section 2.2 of this Tax Certificate for the entire stated term to maturity of the Bonds. Absent an Opinion of Counsel, the Authority in fact will use all proceeds of the Bonds and each facility financed from proceeds of the Bonds as set forth in Section 2.2 of this Tax Certificate. For purposes of this Section 2.10, abandonment or decommissioning of the Project or any component thereof shall not be considered a change in use. Demolition of the Project or a component thereof where there is no net scrap value to the Authority, and disregarding any use by or by means of a scrap contractor who removes bond -financed components without any consideration other than the contractor's services in demolishing and hauling away those components, will not be considered a change in use. ARBITRAGE 3.1 Reasonable Expectations., Reliance on Others. This Part III states the reasonable expectations of the Authority with respect to the amounts and uses of the proceeds of the Bonds and certain other funds. The expectations of the Authority concerning certain uses of Bond proceeds and certain other moneys described herein and other matters are based in whole or in part upon representations of other parties as set forth in this Tax Certificate or exhibits hereto. The Authority is not aware of any facts or circumstances that would cause it to question the accuracy or reasonableness of any representations made in this Tax Certificate, including exhibits attached to this Tax Certificate. 3.2 Offering Price. The Authority is delivering the Bonds to the Underwriter on the date hereof in exchange for payment of the Sale Proceeds, less the underwriter's discount of $124,500.00. Based upon advice of the Underwriter (attached hereto as Exhibit A), the first price at which 10% of each maturity of the Bonds was sold to the general public was the initial offering price reflected on Exhibit A. Based upon such representations the issue price of the Bonds is $8,839,472.40. 3.3 Sale Proceeds. Sale Proceeds of the Bonds will be used or deposited to the following funds and accounts established with respect to the Bonds in the following amounts: Reserve Fund $730,314.47 Capitalized Interest Account 817,319.44 Costs of Issuance Account 326,815.82 Underwriters Discount 124,500.00 Acquisition and Construction Fund 6,840,522.67 TOTAL $8,839,472.40 3.4 Investment Proceeds. Investment Proceeds earned with respect to the Rebate Fund will be retained in the Rebate Fund. To the extent that the amount of money in the Reserve Fund is less than the Required Bond Reserve, Investment Proceeds earned with respect to the 7 4156-9865-2694.1 Reserve Fund will be retained in the Reserve Fund. Otherwise, Investment Proceeds earned with respect to the Reserve Fund will be deposited in the Redemption Fund. 3.5 Funds and Accounts. Pursuant to the Indenture, the Authority has established or will establish each of the following funds or accounts with respect to the Bonds: Special Tax Fund: Redemption Fund Capitalized Interest Account Expense Fund Reserve Fund Acquisition and Construction Fund Undergrounding Subaccount Park Improvements Subaccount Prepayment Fund Rebate Fund Costs of Issuance Account Neither the Authority nor any other person benefiting from the issuance of the Bonds will use any fund or account other than the Redemption Fund, the Prepayment Fund or the Reserve Fund, directly or indirectly, to pay principal of or interest represented by the Bonds; nor is any fund or account, however established, other than the foregoing funds and accounts, so pledged as security for the Bonds that there is a reasonable assurance that amounts held in such other fund or account will be available if needed to pay debt service with respect to the Bonds. 3.6 No Other Replacement Proceeds. Neither the Authority nor any related persons will use any proceeds of the Bonds directly or indirectly to replace funds of the Authority or any related persons that are used directly or indirectly to acquire investment property reasonably expected to produce a yield materially higher than the yield on the Bonds. The weighted average maturity of the Bonds does not exceed 120% of the weighted average reasonably expected remaining useful life of the facilities comprising the Project. 3.7 Expenditure of Gross Proceeds. For purposes of this Tax Certificate, Gross Proceeds will be treated as spent when they are used to pay or reimburse disbursements by the Authority or the City that are (i) capital expenditures, (ii) costs of issuing the Bonds, (iii) interest on the Bonds through the later of three years after the Closing Date or one year after the Projects is placed in service, (iv) initial operating expenses directly associated with the Projects (in aggregate amount not exceeding 5% of the Sale Proceeds), or (v) other miscellaneous expenditures described in Treasury Regulations Section 1.148-6(d)(3)(ii). Gross Proceeds used to pay or reimburse any fees to the City will not be expended when paid to the City but will be expended only in accordance with the preceding sentence. Absent an Opinion of Counsel, all expenditures of Gross Proceeds will be made in respect of (a) Preliminary Expenditures, (b) capital expenditures reimbursed in respect of payments made by the Authority on or after the date which is sixty days prior to July 6, 2017, the date on which the Authority formed the District and authorized the issuance of the Bonds, (c) costs of issuing the Bonds, or (d) other payments made by the Authority or the City on or after the Closing Date. In connection with all expenditures of Gross Proceeds described in (b), the reimbursement allocation will be made no 8 4156-9865-2694.1 later than the later of 18 months after the date on which the expenditures were original paid or the date on which the Project is placed in service, but in no event later than three years after the date of expenditure. 3.8 No Overissuance. Proceeds from the sale of the Bonds, taking into account anticipated investment income thereon until expended, do not exceed the amount necessary to pay for the governmental purpose of the Bonds and to pay costs of issuance. 3.9 Three -Year Temporary Period. A portion of the Sale Proceeds will be deposited in the Acquisition and Construction Fund, the Capitalized Interest Account and the Costs of Issuance Account for the purpose of paying costs of the Project, including interest payments on the Bonds through March 1, 2021, and costs of issuing the Bonds. The Authority reasonably expects that at least 85% of the Net Sale Proceeds will be spent to pay costs of issuing the Bonds and costs of the Project before March 12, 2022. The Authority heretofore has incurred or within six months hereafter will incur a binding obligation to one or more unrelated parties involving an expenditure of not less than 5% of Net Sale Proceeds. Allocations of Net Sale Proceeds to costs of issuing the Bonds and costs of the Project will proceed with due diligence. Sale Proceeds and Investment Proceeds deposited into the Acquisition and Construction Fund, the Redemption Fund, and the Costs of Issuance Account, and Investment Proceeds earned thereon, will be invested without regard to yield through March 12, 2022. 3.10 Special Tax Fund. 3.10.1 The Bonds are an obligation of the Authority payable solely from the Special Tax Revenues. 3.10.2 Under the Indenture, the Authority is required to make periodic payments to the Redemption Fund established with respect to the Bonds. The Authority anticipates making these payments from Special Tax Revenues. 3.10.3 The Prepayment Fund and the Redemption Fund (collectively, the "Bona Fide Debt Service Funds"), will be used primarily to achieve a proper matching of revenues and debt service within each Bond Year. Excluding Sale Proceeds and Investment Proceeds deposited in the Redemption Fund, such funds in the aggregate will be depleted at least once a year except for a carryover amount not to exceed the greater of the earnings on such funds for the immediately preceding Bond Year or 1/12th of the debt service on the Bonds for the immediately preceding Bond Year. Amounts other than Sale Proceeds and Investment Proceeds contributed to such funds will be spent within 13 months after the date of such contribution, and any amounts received from the investment or reinvestment of moneys held in such fund will be expended within one year after the accumulation therein in such fund. Amounts in the Bona Fide Debt Service Funds shall be invested without regard to yield. 3.11 Expense Fund. Special Tax Revenues held in the Special Tax Fund will be transferred to the Expense Fund in the amounts required to pay or reimburse for expenses of the Authority in connection with the District, including costs associated with the collection and payment of the Special Tax. Amounts transferred to the Expense Fund are not expected to be used to pay debt service on the Bonds. Proceeds held in the Expense Fund may be invested 9 4156-9865-2694.1 without regard to yield through March 12, 2022, and after such date will be invested as described in Section 3.18. Amounts that are not Proceeds of the Bonds held in the Expense Fund may be invested without regard to yield. 3.12 Reserve Fund. The Indenture establishes a Reserve Fund with respect to the Bonds. The Reserve Fund will be funded from proceeds of the Bonds. Except for withdrawals because of over funding, all amounts held in the Reserve Fund may be used solely for paying debt service on the Bonds. The Underwriter has advised that the Reserve Fund is reasonably required in that it was a material factor in selling the Bonds at the lowest possible yield (given other characteristics of the Bonds) without regard to any benefit from positive net investment earnings on amounts held in the Reserve Fund, and that it is reasonable and customary in marketing similar issues of governmental obligations. See Exhibit A. Any amounts deposited in the Reserve Fund will not exceed the least of (i) 10% of the original principal amount of the Bonds, (ii) maximum annual debt service on the Bonds, or (iii) 125% of average annual debt service on the Bonds. Amounts in the Reserve Fund that do not exceed the least of (i) through (iii) above will be invested without regard to yield. Absent an Opinion of Counsel, any amount in the Reserve Fund that exceeds the least of (i) through (iii) above (the "Restricted Amounts") will be invested as set forth in Section 3.18 of this Tax Certificate. 3.13 Rebate Fund. The Authority has covenanted not to use moneys on deposit in any fund or account in connection with the Bonds in a manner which will cause the Bonds to be arbitrage bonds within the meaning of Section 148 of the Code and the applicable Treasury Regulations. To that end, a Rebate Fund is created. The amount required to be held in this Rebate Fund at any point in time is determined pursuant to the requirements of the Code, including particularly Section 148(f) of the Code and the regulations applicable thereto. Moneys in the Rebate Fund are neither pledged to nor expected to be used to pay debt service on the Bonds. Sale Proceeds and Investment Proceeds are not expected to be held in the Rebate Fund. Except for Sale Proceeds and Investment Proceeds held in the Rebate Fund, amounts in the Rebate Fund will be invested without regard to yield. 3.14 Redemption Fund. Sale Proceeds will be deposited into the Redemption Fund and used to pay a portion of the interest accruing on the Bonds for the period ending March 1, 2021. Such amounts will be invested at an unrestricted yield until spent, as set forth in Section 3.9 of this Tax Certificate. 3.15 Yield. For purposes of this Tax Certificate, yield is calculated as set forth in Section 148(h) of the Code and Treasury Regulation Sections 1.148-4 and 1.148-5. Thus, yield on the Bonds or yield on Investment Property generally means that discount rate which when used in computing the present value of all unconditionally payable payments representing principal, interest, and, with the respect to the yield on the Bonds, the cost of qualified guarantees paid and to be paid with respect to the Bonds, produces an amount equal to the issue price of the Bonds or the purchase price of the Investment Property, as appropriate. Based on representations of the Underwriter in Exhibit A, the issue price of the Bonds is $8,839,472.40. For purposes hereof, yield shall be calculated on a 360-day year basis with interest compounded semiannually. The yield on the Bonds has been calculated to be at least 4.148428%. 10 4156-9865-2694.1 3.16 No Qualified Guarantee. The Bonds are not insured and are not expected to be covered by any qualified guarantee. 3.17 No Qualified Hedges. No contract has been, and (absent an Opinion of Counsel) no contract will be, entered into such that failure to take the contract into account would distort the yield on the Bonds or otherwise would fail clearly to reflect the economic substance of the transaction. 3.18 Yield Restriction. Unless otherwise authorized by an Opinion of Counsel, if the sum of (A) all Restricted Amounts held in the Reserve Fund, (B) any amounts held in the Bona Fide Debt Service Funds, and remaining unexpended after thirteen (13) months from the date of accumulation in such fund and (C) all Sale Proceeds and Investment Proceeds (excluding amounts in the Reserve Fund) remaining unexpended after March 12, 2022, at any time in the aggregate exceeds $100,000, the excess will be invested either (i) in assets that are not Investment Property, (ii) in Investment Property with a yield not exceeding the yield on the Bonds, or (iii) in assets that satisfy the requirements for qualified yield reduction payments set forth in Treasury Regulations Section 1.148-5(c), subject to the limitation set forth in Section 1.148-10(b)(1)(ii). 3.19 No Abusive Arbitrage Device. The Bonds are not and will not be part of a transaction or series of transactions (i) that attempts to circumvent the provisions of Section 148 of the Code, or any successor thereto, and the regulations promulgated thereunder or under any predecessor thereto, enabling the Authority or any related person to exploit the difference between tax-exempt and taxable interest rates to gain a material financial advantage, and (ii) that increases the burden on the market for tax-exempt obligations in any manner, including, without limitation, by selling bonds that would not otherwise be sold, or selling more bonds, or issuing bonds sooner, or allowing bonds to remain outstanding longer, than otherwise would be necessary. 3.20 No Expected Sale. It is not expected that the Project financed with the Bonds will be sold or otherwise disposed of before September 1, 2048, the last scheduled maturity of the Bonds. IV. REBATE 4.1 Undertakings. The Authority, pursuant to the Indenture, has covenanted to comply with certain requirements of the Code. The Authority acknowledges that the United States Department of the Treasury has issued regulations with respect to certain of these undertakings, including the proper method for computing whether any rebate amount is due the federal government under Section 148(f) of the Code. The Authority covenants that it will undertake to determine what is required with respect to the rebate provisions contained in Section 148(f) of the Code and said regulations from time to time and will comply with any requirements that may be applicable to the Bonds. Except to the extent inconsistent with any requirements of the Code or the recently issued temporary regulations or future regulations, the Authority will undertake the methodology described in this Tax Certificate. 11 4156-9865-2694.1 4.2 Rebate Fund. A special fund designated the "Rebate Fund" has been established pursuant to the Indenture. For the purposes of Part IV of this Tax Certificate this fund shall be referred to as the "Rebate Fund." The Authority will keep the Rebate Fund (or have them kept) separate and apart from all other funds and moneys held by it. 4.3 Recordkeeping. The Authority shall maintain or cause to be maintained detailed records with respect to each Nonpurpose Investment attributable to Gross Proceeds of the Bonds, including: (i) purchase date, (ii) purchase price, (iii) information establishing fair market value on the date such investment became a Nonpurpose Investment, (iv) any accrued interest paid, (v) face amount, (vi) coupon rate, (vii) periodicity of interest payments, (viii) disposition price, (ix) any accrued interest received, and (x) disposition date. Such detailed record keeping is required to facilitate the calculation of the Rebate Requirement. 4.4 Exception to Rebate Requirement -Debt Service Fund. 4.4.1 Bona Fide Debt Service Funds. Subject to the representations and certifications made in Section 3.10.3 of this Tax Certificate, no rebate calculations will need to be made with respect to any moneys in the Bona Fide Debt Service Funds. 4.4.2 Six -Month Expenditure Exception. In general, no rebate calculations will be required with respect to Adjusted Gross Proceeds if all such Adjusted Gross Proceeds actually are spent within six months after the Closing Date. 4.4.3 Eighteen -Month Expenditure Exception. In general, no rebate calculations will be required with respect to Sale Proceeds or Investment Proceeds, other than such proceeds held in the Reserve Fund, if at least 15% of expected Adjusted Gross Proceeds actually are spent within six months after the Closing Date, at least 60% of expected Adjusted Gross Proceeds actually are spent within twelve months after the Closing Date, and 100% of actual Adjusted Gross Proceeds actually are spent within eighteen months after the Closing Date. For purposes of the 15% and the 60% expenditure exceptions listed in the previous sentence, the amount of Investment Proceeds that is included in Adjusted Gross Proceeds is determined based only on the expected investment earnings as of the Closing Date. The requirement that 100% of actual Adjusted Gross Proceeds be spent within eighteen months after the Closing Date will be met if at least 95% of Adjusted Gross Proceeds is spent within eighteen months and the remainder is held as a reasonable retainage, as permitted by contracts with the Issuer's contractors, and such remainder is spent within thirty months after the Closing Date. 4.4.4 Two -Year Construction Expenditures Exception. In determining the amount of Available Construction Proceeds as of any date, there shall be included the amount of investment earnings reasonably expected after such date, together with investment earnings actually received or accrued as of such date. See Section 1.6 of this Tax Certificate, defining "Available Construction Proceeds." The Authority reasonably expects that at least 75% of Available Construction Proceeds will be expended for construction expenditures with respect to the Project. For this purpose, construction expenditures include costs of reconstruction and rehabilitation, but do not include costs of acquiring any interest in land or other existing real or personal property. In general, no rebate calculations will be required in respect of Available 12 4156-9865-2694.1 Construction Proceeds if Available Construction Proceeds in fact are spent at least as quickly as follows: 10% within six months after the Closing Date 45% within twelve months after the Closing Date 75% within eighteen months after the Closing Date 100% within twenty-four months after the Closing Date For purposes of the first three expenditure requirements above, the amount of Investment Proceeds included in the Available Construction Proceeds is determined based only on the Issuer's reasonable expectations as of the Closing Date. The requirement that 100% of Available Construction Proceeds be spent within twenty-four months after the Closing Date will be met if at least 95% of Available Construction Proceeds is spent within twenty-four months and the remainder is held as a reasonable retainage, as permitted by contracts with contractors constructing the Project, and such remainder is spent within thirty-six months after the Closing Date. 4.5 Rebate Requirement Calculation and Payment. (a) Beginning at the end of the second Bond Year, the Authority will prepare or cause to be prepared an annual calculation of the Rebate Requirement consistent with the rules described in this Section 4.5. The Authority will complete the annual calculation of the Rebate Requirement within 55 days after the close of each Bond Year and within 55 days after the first date on which there are no outstanding Bonds. (b) For purposes of calculating the Rebate Requirement (i) the aggregate amount earned with respect to a Nonpurpose Investment shall be determined by assuming that the Nonpurpose Investment was acquired for an amount equal to its fair market value (determined as provided in Section 1.148-5(d)(6) of the Treasury Regulations, as applicable) at the time it becomes a Nonpurpose Investment, and (ii) the aggregate amount earned with respect to any Nonpurpose Investment shall include any unrealized gain or loss with respect to the Nonpurpose Investment (based on the assumed purchase price at fair market value and adjusted to take into account amounts received with respect to the Nonpurpose Investment and earned original issue discount or premium) on the first date when there are no outstanding Bonds or when the investment ceases to be a Nonpurpose Investment. (c) The Authority shall pay to the United States Department of the Treasury not later than 60 days after the end of the fifth Bond Year and each succeeding fifth Bond Year, an amount equal to 90% and, not later than 60 days after the first date when there are no outstanding Bonds, an amount equal to 100% of the Rebate Requirement (determined as of the end of the immediately preceding Bond Year), all as set forth in Section 1.148-3 of the Treasury Regulations. (d) Each payment required to be made pursuant hereto shall be filed with the Internal Revenue Service Center, Ogden, Utah, on or before the date such payment is due, and shall be accompanied by Form 8038-T. The Authority shall retain records of the calculations required by this Section 4.5 until six years after the retirement of the last of the Bonds. 13 4156-9865-2694.1 4.6 Prohibited Investments and Dispositions. (a) General Rule. No Investment Property may be acquired with Gross Proceeds for an amount (including transaction costs, except as otherwise provided in Section 1.148-5(e) of the Treasury Regulations) in excess of the fair market value of such Investment Property. No Investment Property may be sold or otherwise disposed of for an amount (including transaction costs, except as otherwise provided in Section 1.148-5(e) of the Treasury Regulations) less than the fair market value of the Investment Property. (b) Fair Market Value. In general, the fair market value of any Investment Property is the price which a willing buyer would pay to a willing seller to acquire the Investment Property, with no amounts paid to artificially reduce or increase the yield on such Investment Property. This Section 4.6 describes various safe harbors for determining fair market value. Other methods may be used to establish fair market value, provided, however, that such methods comply with the requirements of Section 1.148-5(d)(6) of the Treasury Regulations. (c) Arm's-length Purchase and Sale. If Investment Property is acquired pursuant to an arm's length transaction without regard to any amount paid to reduce the yield on the Investment Property, the fair market value of the Investment Property shall be the amount paid for the Investment Property (without increase for transaction costs, except as otherwise provided in Section 1.148-5(e) of the Treasury Regulations). If Investment Property is sold or otherwise disposed of in an arm's length transaction without regard to any reduction in the disposition price to reduce the Rebate Requirement, the fair market value of the Investment Property shall be the amount realized from the sale or other disposition of the Investment Property (without reduction for transaction costs, except as otherwise provided in Section 1.148-5(e) of the Treasury Regulations). (d) SLGS. If a United States Treasury obligation is acquired directly from or disposed of directly to the United States Department of the Treasury (as in the case of United States Treasury Time Deposit Securities --State and Local Government Series, or "SLGS"), such acquisition or disposition shall be treated as establishing a market for the obligation and as establishing the fair market value of the obligation. (e) Investment Contracts. The purchase price of any Investment Property acquired pursuant to an investment contract (within the meaning of Section 1.148-1(b) of the Treasury Regulations) shall be determined as provided in Section 1.148-5 of the Treasury Regulations. No investment contract shall be acquired with Gross Proceeds unless the requirements of Section 1.148-5 of the Treasury Regulations are satisfied. With respect to any investment contract, the Authority will obtain from any provider of the investment contract, broker thereof or other party, such information, certification or representation as will enable the Authority to determine that these requirements are satisfied. Pursuant to Section 1.148-5 of the Treasury Regulations, the purchase price of an investment contract will be considered to be fair market value if: (1) the Authority makes (or has made on its behalf) a bona fide written solicitation for the investment contract, timely forwarded to potential providers. The 14 4156-9865-2694.1 solicitation specifies all the material terms of the investment contract (i.e., all the terms that could directly or indirectly affect the yield or the cost of the investment). The solicitation has a legitimate business purpose (i.e., a purpose other than to increase the purchase price or reduce the yield) for every term of the bid specification. The terms of the solicitation take into account the Authority's reasonably expected deposit and drawdown schedule for the amounts to be received; (2) all bidders have an equal opportunity to bid so that, for example, no bidder is given the opportunity to review other bids (a last look) before bidding; (3) the Authority solicits bids from at least three (3) investment contract providers with established industry reputations as competitive providers of investment contracts; (4) the Authority includes in the bid specifications a statement to potential bidders that by submitting a bid, the provider is making certain representations that the bid is bona fide, and specifically that 1) the bidder did not consult with any other potential provider about its bid, 2) the bid was determined without regard to any other formal or informal agreement that the potential provider had with the Authority or any other person, and 3) the bid was not submitted solely as a courtesy to the Authority or any other person for purposes of satisfying the requirements of Section 1.148-5 of the Treasury Regulations; (5) the Authority receives at least three (3) bids from providers that do not have a material financial interest in the issue (the following investment contract providers are considered to have a material financial interest in the issue: 1) a lead underwriter in a negotiated underwriting, but only until 15 days after the issue date of the issue, 2) an entity acting as a financial advisor with respect to the purchase of the investment contract at the time the bid specifications were forwarded to potential providers; and 3) any related party to a provider that is disqualified for one of the two preceding reasons); (6) at least one (1) of the bids received by the Authority that meets the requirements of the preceding paragraph is from an investment contract provider with an established industry reputation as a competitive provider of investment contracts; (7) if an agent for the Authority conducts the bidding process, the agent does not bid; (8) the winning bid is the highest yielding bona fide bid (determined net of any broker's fees); and (9) the provider of the investment contract certifies as to all administrative costs to be paid on behalf of the Authority, including any fees paid as broker commissions in connection with the investment contract. (f) Deemed Acquisition or Sale. The fair market value of any Investment Property not directly purchased with Gross Proceeds for which there is an established securities market (within the meaning of Section 15A.453-1(e)(4)(iv) of the Treasury Regulations) shall be 15 4156-9865-2694.1 determined as provided in this Section 4.5(0. (Any market especially established to provide Investment Property to an issuer of governmental obligations shall not be treated as an established securities market.) The price at which a willing buyer would purchase Investment Property that is traded in an established securities market generally shall be determined as provided in Section 20.2031-2 of the Estate Tax Regulations, as adjusted by Treasury Regulations Section 1.148-5(d). (g) Certificates of Deposit. The purchase price of a certificate of deposit issued by a commercial bank that has a fixed interest rate, a fixed principal payment schedule, a fixed maturity and a substantial penalty for early withdrawal will be considered to be fair market value if: (1) the yield on the certificate of deposit is not less than the yield on reasonably comparable direct obligations of the United States; and (2) the yield on the certificate of deposit is not less than the highest published yield of the provider thereof which is currently available on comparable certificates of deposit offered to the public. (h) Broker Compensation. For purposes of computing the Yield on any investment contract acquired through a broker, reasonable compensation received by such broker, whether payable by or on behalf of the obligor or obligee of such investment contract, may be taken into account in determining the cost of the investment contract (as provided in Section 1.148 5(e)(2)(iii) of the Treasury Regulations). For calendar year 2019, compensation is deemed reasonable if does not exceed the lesser of (i) $41,000 or (ii) 0.2% of the amount reasonably expected, as of the date of acquisition of the investment contract, to be invested under the investment contract over its term, or $4,000 (if 0.2% of such amount reasonably expected to be invested under the investment contract over its term is less than $4,000). In addition, the total fees received by the broker with respect to the investment of any proceeds of the Bonds that are taken into account with respect to all investment contracts, at any time, may not exceed $115,000. All amounts referenced are to be adjusted for inflation after the Closing Date. 4.7 Segregation of Proceeds. In order to perform the calculations required by the Code, it is necessary to track separately all of the Gross Proceeds. To that end, the Authority shall establish or have established separate sub -accounts or take other accounting measures in order to account fully for all Gross Proceeds. 4.8 Filing Requirements. The Authority shall file or cause to be filed such reports or other documents with the Internal Revenue Service as is required by the Code in accordance with an Opinion of Counsel. 4.9 Survival of Defeasance. Notwithstanding anything in this Tax Certificate or any other provisions of the Indenture to the contrary, the obligation to remit the penalty payments described in Section 4.4 hereof and the Rebate Requirement to the United States Department of the Treasury and to comply with all other requirements contained in this Tax Certificate shall survive the defeasance of the Bonds. 16 4156-9865-2694.1 4.10 Satisfaction of Obligation. The Authority hereby undertakes to satisfy its obligation to perform any rebate calculations that may be required to be made from time to time with respect to the Bonds in the manner set forth in Exhibit B. V. OTHER MATTERS 5.1 Expectations. The undersigned is an authorized representative of the Authority, and is acting for and on behalf of the Authority in executing this Tax Certificate. To the best of the knowledge and belief of the undersigned, there are no other facts, estimates or circumstances that would materially change the expectations as set forth herein, and said expectations are reasonable. 5.2 Retention of Records. The Authority covenants to maintain all records relating to the requirements of the Code and the representations, certifications and covenants set forth in this Tax Certificate until the date three years after the last outstanding Bond has been retired. If any of the Bonds are refunded or prepaid by other Tax -Exempt Bonds (the "Refunding Obligations"), the Authority covenants to maintain all records required to be retained by this Section until the later of the date three years after the last outstanding Bonds have been retired or the date three years after the last Refunding Obligations have been retired. The records that must be retained include, but are not limited to: (a) Basic records and documents relating to the Bonds (including the Trust Agreement, this Tax Certificate and the opinions of Bond Counsel); (b) Documentation evidencing the expenditure of Bond proceeds; (c) Documentation evidencing the use of the Project by public and private sources (i.e., copies of management contracts, research agreements, leases, etc.); (d) Documentation evidencing all sources of payment or security for the Bonds; and (e) Documentation pertaining to any investment of Bond proceeds (including the purchase and sale of securities, SLGs subscriptions, yield calculations for each class of investments, actual investment income received from the investment of proceeds, guaranteed investment contracts, and rebate calculations). 17 4156-9865-2694.1 5.3 Amendments. Notwithstanding any provision of this Tax Certificate, the Authority may amend this Tax Certificate and thereby alter any actions allowed or required by this Tax Certificate if such amendment is based on an Opinion of Counsel. Dated: March 12, 20I9. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT A.LCTHORITY By: <1156-9865-2694 Authorized Signatory EXHIBIT A CERTIFICATE OF UNDERWRITER Dated: March 12, 2019 RBC Capital Markets, LLC (the "RBC") has acted as underwriter in connection with the sale and issuance by the California Statewide Communities Development Authority (the "Authority"), of $8,300,000 Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"), being issued on the date hereof, and RBC hereby certifies and represents the following: A. Issue Price. As of the date of this Certificate, the first price or yield at which at least 10% of each Maturity of the Bonds were sold to the Public was the Initial Offering Price set forth on Schedule 1 hereto. B. Reserve Account. The amount of the deposit in the Reserve Account with respect to the Bonds is reasonably required in that it is not in excess of the amounts used in similar tax- exempt bond issues and it was a material factor in the marketing of the Bonds at the lowest possible yield (given other characteristics of the Bonds) without regard to any benefit from positive net investment earnings on amounts held in the Reserve Account, and it is reasonable and customary in marketing similar issues of governmental obligations. C. Defined Terms. (a) Initial Offering Price means the prices or yields set forth on the inside cover page of the Authority's Official Statement in respect of the Bonds dated February 27, 2019. (b) 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. (c) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than RBC or a Related Party to RBC. (d) Related Party means any entity if an Underwriter and such entity are subject, directly or indirectly, to (i) 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), (ii) more than 50% common ownership of their capital interests or profit interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) 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). A-1 4156-9865-2694.1 (e) Underwriter means (i) any person that agrees pursuant to a written contract with the Authority (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). (Remainder of Page Intentionally Left Blank) A-2 4156-9865-2694.1 The Underwriter 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 to which this certificate is included as an exhibit and with respect to compliance with the federal income tax rules affecting the Bonds, and by Orrick, Herrington & Sutcliffe LLP, in connection with its opinion as to the exclusion of interest on the Bonds from federal gross income, 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. The Underwriter is certifying only as to facts in existence on the date hereof. Nothing herein represents the Underwriter's interpretation of any laws; in particular the Treasury Regulations under the Internal Revenue Code of 1986, or the application of any laws to these facts. The certifications contained herein are not necessarily based on personal knowledge, but may instead be based on either inquiry deemed adequate by the undersigned or institutional knowledge (or both) regarding the matters set forth herein. RBC CAPITAL MARKETS, LLC, as Underwriter By: Its: Dated: March 12, 2019 SCHEDULE 1 MATURITY SCHEDULE AND HOLD THE PRICE MATURITIES Maturity Principal Interest (September 1) Amount Rate Yield Price 2039(T)(c) $3,295,000 5.00% 4.060% 107.327 2048(T) 5,005,000 5.00 4.230 105.955 (T) Term Bond. (c) Yield to optional call at par on September 1, 2028. Schedule 2 4156-9865-2694.1 EXHIBIT B CERTIFICATE REGARDING ARBITRAGE REBATE March 12, 2019 On behalf of the California Statewide Communities Development Authority (the "Issuer") the undersigned hereby certifies, represents and warrants with respect to the Issuer's Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019, being issued on the date hereof in the aggregate principal amount of $8,300,000 (the "Bonds"), that the Issuer has initially retained the firm of BLX Group LLC, to perform rebate calculations that may be required from time to time with respect to the Bonds. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] (Remainder of Page Intentionally Left Blank) B-1 4156-9865-2694.1 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: horized Signatory [Signature page — Certificate Regarding Arbitrage Rebate — Uptown Newport] 4 f s6-9S(5.2694 Execution Version ACQUISITION AGREEMENT BY AND AMONG CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, CITY OF NEWPORT BEACH AND TSG — PARCEL 1, LLC and UPTOWN NEWPORT JAMBOREE, LLC Dated as of March 12, 2019 US-Docs\ 105642049.5 ACQUISITION AGREEMENT Recitals A. The parties to this Acquisition Agreement (the "Agreement") are the California Statewide Communities Development Authority (the "Authority"), City of Newport Beach (the "City"), Uptown Newport Jamboree, LLC, a Delaware limited liability company and TSG — Parcel 1, LLC, a Delaware limited liability company (collectively, the "Developer"). B. The effective date of this Agreement is March 12, 2019. C. The Developer has applied for the financing of certain public capital improvements (each, as more particularly described on Exhibit A, an "Acquisition Improvement" and collectively, the "Acquisition Improvements") and certain utility undergrounding (the "Undergrounding") through the Authority. The Acquisition Improvements are to be owned and operated by the City, and the financing is to be accomplished through a Community Facilities District which will be established and administered by the Authority under and pursuant to the Mello -Roos Community Facilities Act of 1982 — California Government Code Sections 53311 and following (the "Act"). On June 26, 2018, the City adopted Resolution No. 2018-44 authorizing the Authority to form a community facilities district (the "Community Facilities District") within the territorial limits of the City to finance the Acquisition Improvements. On December 20, 2018, the Authority formed the Community Facilities District and, on the same date, a landowner election was conducted for the Community Facilities District in which all of the votes were cast unanimously in favor of conferring the Community Facilities District authority on the Authority Commission. D. The Authority intends to levy special taxes for facilities and issue bonds for the Community Facilities District, in one or more series, to fund, among other things, all or a portion of the Acquisition Improvements and to fund the Undergrounding. The portion of the proceeds of such special taxes (including prepayments) and bonds allocable to the cost of the Undergrounding and the Acquisition Improvements, together with interest earned thereon, is referred to herein as the "Available Amount". E. The Community Facilities District will provide financing for (i) the Undergrounding of the utility lines by Southern California Edison as more particularly described herein and (ii) the acquisition by the City of the Acquisition Improvements and the payment of the Acquisition Price (as defined herein) of the Acquisition Improvements from the Available Amount. Attached hereto as Exhibit A is a description of the Acquisition Improvements, which includes authorized discrete and usable portions, if any, of the Acquisition Improvements, pursuant to Section 53313.51 of the Act, to be acquired from the Developer. F. The parties anticipate that, upon completion of the Acquisition Improvements and subject to the terms and conditions of this Agreement, the City will acquire the completed Acquisition Improvements. G. In order to facilitate the Undergrounding, the City will enter into a Facilities Relocation Agreement (Relocation under SCE Tariff Rule 20B—Applicant to Install I US-DOCS\ 105642049.5 Ducts/Substructures) (the "Rule 20B Agreement") with Southern California Edison. It is the intention of the parties hereto that the Developer be obligated to pay for any costs incurred by the City under the Rule 20B Agreement and to indemnify, defend and hold the City harmless for any and all costs or liabilities to Southern California Edison in excess of the Available Amounts and amounts previously paid to the City and Southern California Edison and arising out of or relating to the Undergrounding. H. Any and all monetary obligations of the City arising out of this Agreement are the special and limited obligations of the City payable only from the Available Amount, and no other funds whatsoever of the City shall be obligated therefor under any circumstances. I. Attached to this Agreement are Exhibit A (Description of the Acquisition Improvements and the Eligible Portions thereof), Exhibit B (Disbursement Request Form for Acquisition Improvements) and Exhibit C (Bidding, Contracting and Construction Requirements for Acquisition Improvements), all of which are incorporated into this Agreement for all purposes. Agreement ARTICLE I DEFINITIONS; COMMUNITY FACILITIES DISTRICT FORMATION AND FINANCING PLAN Section 1.01. Definitions. As used herein, the following capitalized terms shall have the meanings ascribed to them below: "Acceptable Title" means title (whether a fee interest, easement or other acceptable title or property rights) free and clear of all monetary liens, encumbrances, assessments, whether any such item is recorded or unrecorded, and taxes, except (i) those items which are reasonably determined by the City Engineer or Southern California Edison, as applicable, not to interfere with the intended use and therefore are not required to be cleared from the title, and (ii) the lien of the Community Facilities District or any other community facilities district or assessment district provided that the property owned by the City is exempt from such taxation or assessment. "Acquisition and Construction Fund" means each "Uptown Newport Community Facilities District Acquisition and Construction Fund" established by the Authority pursuant to the Resolution and Section 1.03 hereof for the purpose of paying the Acquisition Price of the Acquisition Improvements. "Acquisition Improvement" means a public capital improvement described in Exhibit A hereto. "Acquisition Price" means the total amount eligible to be paid to the Developer upon acquisition of an Acquisition Improvement as provided in Section 2.03, not to exceed the Actual Cost of the Acquisition Improvement. 2 US-DOCS\105642049.5 "Actual Cost" means the total cost of an Acquisition Improvement, as documented by the Developer to the satisfaction of the City and as certified by the City Engineer in an Actual Cost Certificate including, without limitation, (a) the Developer's cost of constructing such Acquisition Improvement including grading, labor, material and equipment costs, (b) the Developer's cost of designing and engineering the Acquisition Improvement, preparing the plans and specifications and bid documents for such Acquisition Improvement, and the costs of inspection, materials testing and construction staking for such Acquisition Improvement, (c) the Developer's cost of any performance, payment and maintenance bonds and insurance, including title insurance, required hereby for such Acquisition Improvement, (d) the Developer's cost of any real property or interest therein that is either necessary for the construction of such Acquisition Improvement (e.g., temporary construction easements, haul roads, etc.), or is required to be conveyed with such Acquisition Improvement in order to convey Acceptable Title thereto to the City or its designee, (e) the Developer's cost of environmental evaluation or mitigation required for such Acquisition Improvement, (f) the amount of any fees actually paid by the Developer to governmental agencies in order to obtain permits, licenses or other necessary governmental approvals and reviews for such Acquisition Improvement, (g) the Developer's cost for construction and project management, administration and supervision services for such Acquisition Improvement, and (h) the Developer's cost for professional services related to such Acquisition Improvement, including engineering, accounting, legal, financial, appraisal and similar professional services. "Actual Cost Certificate" means a certificate prepared by the Developer detailing the Actual Cost of an Acquisition Improvement, or an Eligible Portion thereof, to be acquired hereunder, as may be revised by the City Engineer pursuant to Section 2.03. "Agreement" means this Acquisition Agreement, dated as of March 12, 2019. "Authority" means the California Statewide Communities Development Authority. "Authority Trust Agreement" means a Trust Agreement or Indenture entered into by the Authority and an Authority Trustee in connection with the issuance of bonds. "Authority Trustee" means the financial institution identified as trustee in an Authority Trust Agreement. "Available Amount" shall have the meaning assigned to the term in Recital D. "Bonds" means bonds or other indebtedness issued by the Authority that are to be repaid with Special Taxes. "City" means the City of Newport Beach, California. "City Engineer" means the Engineer of the City or his/her designee who will be responsible for administering the Undergrounding and the acquisition of the Acquisition Improvements hereunder. "Code" means the Government Code of the State of California. 3 US-DOCS\ 105642049.5 "Community Facilities District" shall have the meaning assigned to the term in Recital C. "Developer" means, collectively or severally, as appropriate, TSG — Parcel 1, LLC, a Delaware limited liability company and Uptown Newport Jamboree, LLC, a Delaware limited liability company, and their respective successors and assigns. "Disbursement Request Form" means a requisition for payment of funds from an Acquisition and Construction Fund for an Acquisition Improvement, or an Eligible Portion thereof in substantially the form contained in Exhibit B hereto. "Eligible Portion" shall have the meaning ascribed to it in Section 2.03 below. "Holdback" shall have the meaning ascribed to it in the Section 2.04(b). "Installment Payment" means an amount equal to ninety percent (90%) of the Actual Cost of an Eligible Portion. "Jazz Semiconductor" means Newport Fab LLC, a Delaware limited liability company doing business as "Jazz Semiconductor." "Project" means the development of the property in the Community Facilities District, including the design and construction of the Acquisition Improvements and the Undergrounding and the other public and private improvements to be constructed by the Developer or Southern California Edison within or in the vicinity of the Community Facilities District. "Resolution" means City of Newport Beach Resolution No. 2018-44, adopted June 26, 2018 authorizing the execution and delivery of this Agreement. "Special Taxes" means annual special taxes for facilities, and prepayments thereof, authorized by the Community Facilities District to be levied by the Commission of the Authority within the Community Facilities District. "Title Documents" means, for each Acquisition Improvement acquired hereunder or for the Undergrounding, a grant deed or similar instrument necessary to transfer title to any real property or interests therein (including easements or rights of way), or an irrevocable offer of dedication of such real property with interests therein necessary to the operation, maintenance, rehabilitation and improvement by the City of the Acquisition Improvement or Southern California Edison with respect to the Undergrounding (including, if necessary, easements for ingress and egress) and a bill of sale or similar instrument evidencing transfer of title to the Acquisition Improvement (other than said real property interests) to the City or title to Undergrounding to Southern California Edison, where applicable. "Undergrounding" means the underground relocation of overhead electrical transmission utilities operated and maintained by Southern California Edison within the vicinity of the Project. Section 1.02. Establishment of Community Facilities District. Developer has requested the City to permit the Authority to provide for financing of the Acquisition 4 US-DOCS\105642049.5 Improvements and the Undergrounding and collection of special tax through the establishment and authorization of the Community Facilities District and the City agreed by its adoption of the Resolution. The Community Facilities District was established by the Authority on December 20, 2018, and through the successful landowner election held that same day with respect to the Community Facilities District, the Commission of the Authority is authorized to levy the Special Taxes and to issue the Bonds to finance the Acquisition Improvements and the Undergrounding. Developer and the City agree to reasonably cooperate with one another and with the Authority in the completion of the financing through the issuance of the Bonds in one or more series for the Community Facilities District. Section 1.03. Deposit and Use of Available Amount. (a) Prior to the issuance of Bonds for the Community Facilities District, Special Taxes collected by the Authority (including from prepayments of Special Taxes) shall be deposited in the Acquisition and Construction Fund established by the Authority pursuant to the terms of the Resolution, and may be disbursed to pay the Acquisition Price of Acquisition Improvements or the costs of Undergrounding in accordance with Article II of this Agreement. All funds in the Acquisition and Construction Fund shall be considered a portion of the Available Amount, and upon the issuance of the Bonds the Acquisition and Construction Fund shall be transferred to the Authority Trustee to be held in accordance with the Authority Trust Agreement. (b) If not already established pursuant to the Resolution, upon the issuance of the Bonds, the Authority will cause the Authority Trustee to establish and maintain the Acquisition and Construction Fund for the purpose of holding all funds for the Acquisition Improvements or the costs of Undergrounding to be financed by the Community Facilities District. All earnings on amounts in the Acquisition and Construction Fund shall remain in the Acquisition and Construction Fund for use as provided herein and pursuant to the Authority Trust Agreement. Money in such Acquisition and Construction Fund shall be available to respond to delivery of a Disbursement Request Form and to be paid to the Developer or its designee to pay the Acquisition Price of the Acquisition Improvements or the costs of Undergrounding, as specified in Article II hereof. Upon completion of all of the Acquisition Improvements and the Undergrounding and the payment of all costs thereof, any remaining funds in the Acquisition and Construction Fund (less any amount determined by the City as necessary to reserve for claims against the account) (i) shall be applied to pay the costs of any additional Acquisition Improvements eligible for acquisition with respect to the Project, as approved by the Authority and, to the extent not so used, (ii) shall be applied by the Authority to call Bonds or to reduce Special Taxes as the Authority shall determine. Section 1.04. No City Liability; City Discretion; No Effect on Other Agreements. In no event shall any actual or alleged act by the City or any actual or alleged omission or failure to act by the City with respect to the Authority subject the City to monetary liability therefor. Further, nothing in this Agreement shall be construed as affecting the Developer's or the City's duty to perform their respective obligations under any other agreements, public improvement standards, land use regulations or subdivision requirements related to the Project, which obligations are and shall remain independent of the Developer's and the City's rights and obligations under this Agreement. 5 US-DOCS\ 105642049.5 ARTICLE II DESIGN, CONSTRUCTION AND ACQUISITION OF ACQUISITION IMPROVEMENTS Section 2.01. Letting and Administering Design Contracts. The Developer has awarded and administered, or will award and administer, engineering design contracts for the Acquisition Improvements to be acquired from Developer. All eligible expenditures of the Developer for design engineering and related costs in connection with the Acquisition Improvements (whether as an advance to the City or directly to the design consultant) shall be reimbursed at the time of acquisition of the Acquisition Improvements. The Developer shall be entitled to reimbursement for any design costs of the Acquisition Improvements only out of the Acquisition Price as provided in Section 2.03 and shall not be entitled to any payment for design costs independent of the acquisition of Acquisition Improvements. Section 2.02. Letting and Administration of Construction Contracts; Indemnification. State law requires that all Acquisition Improvements not completed prior to the formation of the Community Facilities District shall be constructed as if they were constructed under the direction and supervision, or under the authority, of the City. In order to assure compliance with those provisions, except for any contracts entered into prior to the date hereof, Developer agrees to comply with the requirements set forth in Exhibit C hereto with respect to the bidding and contracting for the construction of the Acquisition Improvements. The Developer agrees that all the contracts shall call for payment of prevailing wages as required by the Labor Code of the State of California. The Developer's indemnification obligation set forth in Section 3.01 of this Agreement shall also apply to any alleged failure to comply with the requirements of this Section, and/or applicable State laws regarding public contracting and prevailing wages. Section 2.03. Sale of Acquisition Improvements. The Developer agrees to sell to the City each Acquisition Improvement to be constructed by or on behalf of the Developer (including any rights -of -way or other easements necessary for the Acquisition Improvements, to the extent not already publicly owned), when the Acquisition Improvement is completed to the satisfaction of the City for an amount not to exceed the lesser of (i) the Available Amount from time to time or (ii) the Actual Cost of the Acquisition Improvement. Exhibit A, attached hereto and incorporated herein, contains a list of the Acquisition Improvements. Portions of an Acquisition Improvement eligible for Installment Payments prior to completion of the entire Acquisition Improvement are described as eligible, discrete and usable portions in Exhibit A (each, an "Eligible Portion"). At the time of completion of each Acquisition Improvement, or Eligible Portion thereof, the Developer shall deliver to the City Engineer a written request for acquisition, accompanied by an Actual Cost Certificate, and by executed Title Documents for the transfer of the Acquisition Improvement where necessary. In the event that the City Engineer finds that the supporting paperwork submitted by the Developer fails to demonstrate the required relationship between the subject Actual Cost and eligible work, the City Engineer shall advise the Developer that the determination of the Actual Cost (or the ineligible portion thereof) has been disallowed and shall request further documentation from the Developer. If the further documentation is still not adequate, the City Engineer may revise the Actual Cost Certificate to delete any disallowed items and the determination shall be final and conclusive. 6 US-DOCS\ 105642049.5 Certain soft costs for the Acquisition Improvements, such as civil engineering, may have been incurred pursuant to single contracts that include work relating also to the private portions of the Project. In those instances, the total costs under such contracts will be allocated to each Acquisition Improvement as approved by the City Engineer. Where a specific contract has been awarded for design or engineering work relating solely to an Acquisition Improvement, one hundred percent (100%) of the costs under the contract will be allocated to that Acquisition Improvement. Amounts allocated to an Acquisition Improvement will be further allocated among the Eligible Portions of that Acquisition Improvement, if any, in the same proportion as the amount to be reimbursed for hard costs for each Eligible Portion bears to the amount to be reimbursed for hard costs for the entire Acquisition Improvement. Costs will be allocated to each Acquisition Improvement as approved by the City Engineer. The costs of certain environmental mitigation required to mitigate impacts of the public and private portions of the Project will be allocated to each Acquisition Improvement as approved by the City Engineer. Section 2.04. Conditions Precedent to Payment of Acquisition Price. Payment to the Developer or its designee of the Acquisition Price for an Acquisition Improvement from the Acquisition and Construction Fund shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Acquisition Improvement satisfies all City regulations and ordinances and is otherwise complete and ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The City shall have paid all amounts to be due and owing pursuant to the Rule 20B Agreement between the City and Southern California Edison within the time frame specified therein for the Undergrounding and the City shall have received confirmation from Southern California Edison that they have received the same. The City's obligation to pay amounts under the Rule 20B Agreement shall be solely from the Available Amounts or other funds made available to the City by the Developer pursuant to Section 2.08 below. (b) $500,000 of proceeds from bonds issued by the Community Facilities District (the "Holdback"), will be retained in the Acquisition and Construction Fund to be used first to make any additional payments due to Southern California Edison under the Rule 20B Agreement under the Rule 20B Agreement in connection with the Undergrounding and second, upon completion of the Undergrounding and payment of all amounts related thereto, to make an additional payment to the Developer for the remainder of the Acquisition Price for such Acquisition Improvement (solely to the extent of available funds therefor). The City shall be under no obligation to direct the release of the Holdback to the Developer until it receives assurances from Southern California Edison that all amounts due under the Rule 20B Agreement have been paid. (c) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that none of the property (including any rights -of -way or other easements necessary for the operation and maintenance of the Acquisition Improvement, to the extent not already publicly owned) comprising the Acquisition Improvement is not subject to any prospective mechanics lien claim respecting the Acquisition Improvements. 7 US-DOCS\ 105642049.5 (d) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. Property shall be exempt from the special tax of the Community Facilities District upon conveyance to the City or the Developer shall prepay the special tax on the property so conveyed. (e) The Developer shall certify that it is not in default with respect to any loan secured by any interest in the Project. (f) The Developer shall have provided the City with Title Documents needed to provide the City with Acceptable Title to the site, right-of-way, or easement upon which the subject Acquisition Improvement is situated. All such Title Documents shall be in a form acceptable to the City and shall convey Acceptable Title. The Developer shall provide a policy of title insurance as of the date of transfer in a form acceptable to the City Engineer and the City Attorney insuring the City as to the interests acquired in connection with the acquisition of any interest for which such a policy of title insurance is not required by another agreement between the City and the Developer. Each title insurance policy required hereunder shall be in the amount equal to the Acquisition Price. The amount paid to the Developer or its designee upon satisfaction of the foregoing conditions precedent shall be the Acquisition Price less all Installment Payments paid previously with respect to the Acquisition Improvement less the Holdback (which shall be paid to the Developer, to the extent of funds available therefor, pursuant to the provisions of 2.04(b) and 2.06 below). (g) The City shall have been paid $30,000 from proceeds of the Bonds to cover its costs in relation to the formation of the Community Facilities District and entering into this Agreement. Section 2.05. Payment for Eligible Portions. The Developer may submit an Actual Cost Certificate to the City Engineer with respect to any Eligible Portion. Payment to the Developer or its designee from the Acquisition and Construction Fund of an Installment Payment with respect to such Eligible Portion shall in every case be conditioned first upon the determination of the City Engineer, pursuant to Section 2.03, that the Eligible Portion has been completed in accordance with the applicable plans and specifications and that the Eligible Portion satisfies all City regulations and ordinances and is otherwise complete and, where appropriate, is ready for acceptance by the City, and shall be further conditioned upon satisfaction of the following additional conditions precedent: (a) The Developer shall have provided the City with lien releases or other similar documentation satisfactory to the City Engineer as evidence that the property (including any rights -of -way or other easements necessary for the operation and maintenance of the Eligible Portion, to the extent not already owned by the City) comprising the Eligible Portion is not subject to any prospective mechanics lien claim respecting the Eligible Portion. (b) The Developer shall be current in the payment of all due and payable general property taxes, and all special taxes of the Community Facilities District, on property owned by the Developer within the Community Facilities District. 8 US-DOCS\105642049.5 (c) The Developer shall have provided the City with Title Documents needed to provide the City with title to the site, right-of-way, or easement upon which the subject Eligible Portion is situated. All such Title Documents shall be in a form acceptable to the City Engineer and shall be sufficient, upon completion of the Acquisition Improvement of which the Eligible Portion is a part, to convey Acceptable Title. (d) Payment and performance bonds, from a bonding company with an A.M. Best rating of at least "A-" or its equivalent, applying to plans and specifications for the Acquisition Improvement approved by the City, shall be in place to secure completion of the Acquisition Improvement of which the Eligible Portion is a part. Section 2.06. Disbursement Request Form/Payment of Holdback. Upon a determination by the City Engineer to pay the Acquisition Price of an Acquisition Improvement pursuant to Section 2.04 or to pay an Installment Payment for an Eligible Portion pursuant to Section 2.05, the City Engineer shall cause a Disbursement Request Form substantially in the form attached hereto as Exhibit B-1 to be submitted to the Authority and Authority Trustee, and the Authority or Authority Trustee shall make payment directly to the Developer or its designee of the amount requested from the applicable Acquisition and Construction Fund. The City and the Developer acknowledge and agree that the Authority or Authority Trustee shall make payment strictly in accordance with the Disbursement Request Form and shall not be required to determine whether or not the Acquisition Improvement or Eligible Portion has been completed or what the Actual Costs may be with respect to the Acquisition Improvement or Eligible Portion. The Authority or Authority Trustee shall be entitled to rely on the executed Disbursement Request Form on its face without any further duty of investigation. Subject to the Holdback and Section 2.08 below, in the event that the Actual Cost of an Acquisition Improvement or the Installment Payment for an Eligible Portion is in excess of the Available Amount, the Authority or Authority Trustee shall withdraw all funds remaining in the Acquisition and Construction Fund and shall transfer those amounts to the Developer or its designee. The unpaid portion of the Actual Cost shall be paid from funds that may subsequently be deposited in the Acquisition and Construction Fund from a subsequent issuance of Bonds, from prepayments of Special Taxes to be used for financing Acquisition Improvements, or from Special Tax revenues, if any of those occurs. Upon a determination by the City Engineer to pay the Acquisition Price of an Acquisition Improvement less any Holdback pursuant to Section 2.04(b) and further upon completion of the Undergrounding and payment of all amounts due and owing with respect thereto, the City Engineer shall notify the Authority Trustee and authorize the release to the Developer of all amounts previously included and approved in an executed Disbursement Request Form with respect to an Acquisition Improvement but held back by the Authority as a Holdback (but solely to the extent of any available amounts remaining in or subsequently deposited in the Acquisition and Construction Fund). Section 2.07. Limitation on Obligations. In no event shall the City be required to pay the Developer or its designee more than the amounts held in the Acquisition and Construction Fund. 9 US-DOCS\105642049.5 Section 2.08. Undergrounding of Utilities. In addition to financing the acquisition of the Acquisition Improvements, proceeds of bonds for the Community Facilities District are expected to finance the Undergrounding of certain electrical transmission facilities operated and maintained by Southern California Edison. Notwithstanding anything to the contrary herein, the City shall be entitled to directly request payment to the City (or to reimburse the Developer) pursuant to a Request to the Authority Trustee to (i) reimburse amounts the City or Developer has paid Southern California Edison or a contractor for the amount in such request, or (ii) to pay directly to Southern California Edison, the Developer or a contractor for the amount in such request. To the extent authorized by law, the City agrees to first reimburse amounts previously deposited by the Developer pursuant to the Deposit Agreement between the City of Newport Beach and TSG — Parcel 1, LLC, dated January 5, 2015, for the costs of the Undergrounding of utilities, including design and planning and any amounts deposited by Developer for materials or otherwise, from proceeds of Bonds or the Special Tax pursuant to this Section. Pursuant to the Rule 20B Agreement, Southern California Edison has estimated the costs of the Undergrounding to be performed by Southern California Edison to be $1,093,000. To the extent the actual cost of the Undergrounding exceeds $1,093,000 plus the Holdback Amount and the Developer has not reimbursed the City or paid Southern California Edison directly within 90 days of receipt of the final invoice from Southern California Edison, the Authority and the Developer shall levy special taxes up to the maximum amount permitted to reimburse the City or pay Southern California Edison directly for such costs. The Developer further agrees that it shall transfer: (i) any and all real property interests required by Southern California Edison as part of the Undergrounding to the City or Southern California Edison, as applicable, free of any encumbrances to which Southern California Edison objects, and (ii) all ducts and substructures built in connection with the Undergrounding, all in accordance with the terms of the 20B Agreement. The Developer shall be responsible for the costs of acquiring such real property interests, if necessary, and all costs of providing Acceptable Title. In addition, the Developer agrees that it shall pay any and all costs associated with the establishment of any temporary power generating facilities required in connection with the Undergrounding and the provision of power therefrom and may include such costs in costs to be paid to Southern California Edison and/or reimbursed to Developer as part of the costs of the Undergrounding from proceeds of the Bonds, to the extent amounts are available therefrom. Furthermore, the Developer acknowledges that it has reviewed all relocation plans provided by Southern California Edison and the City in connection with the Undergrounding, and further acknowledges that it is not aware of any conflicts with the plans of the Developer, or any related entity, to develop the property within the Community Facilities District. ARTICLE III MISCELLANEOUS Section 3.01. Indemnification and Hold Harmless. The Developer hereby assumes the defense of, and indemnifies and saves harmless the City, the Authority and their respective officers, directors, employees and agents, including the Authority Trustee, from and 10 US-DOCS\ 105642049.5 against (a) any amounts due and owing to Southern California Edison pursuant to the 20B Agreement executed and delivered by the City and Southern California Edison with respect to the Undergrounding, including any Income Tax Component of Contribution required to be paid by Southern California Edison, but solely to the extent not otherwise paid, funded or advanced to Southern California Edison from the proceeds of the Bonds and/or previously paid to the City and/or Southern California Edison by the Developer; (b) any claims, lawsuits or proceedings by any third parties, including, but not limited to, Jazz Semiconductor, that result or relate in any way to the Undergrounding or any disruption of electrical power related thereto or to the Rule 20B Agreement, and (c) 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 or alleged to have resulted from the acts or omissions of the Developer or its agents and employees arising out of any contract for the design, engineering and construction of the Acquisition Improvements or the Undergrounding entered into by the Developer 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 Authority's underwriter, financial advisor, appraiser, district engineer or bond counsel or regarding the Developer, its proposed developments, its property ownership and its contractual arrangements contained in the official statement relating to the Authority financing (provided that the Developer shall have been furnished a copy of the official statement and shall not have objected thereto); and provided, further, that nothing in this Section 3.01 shall limit in any manner the City's rights against any of the Developer's architects, engineers, contractors or other consultants. Except as set forth in this Section 3.01, no provision of this Agreement shall in any way limit the extent of the responsibility of the Developer for payment of damages resulting from the operations of the Developer, its agents and employees. Nothing in this Section 3.01 shall be understood or construed to mean that the Developer agrees to indemnify the City, the Authority or any of their respective officers, directors, employees or agents, for any wrongful acts or omissions to act of the Authority or its officers, employees, agents or any consultants or contractors, including the Authority Trustee, and for any wrongful acts, willful misconduct, active gross negligence or willful omissions to act of the City, or its officers, employees, agents or any consultants or contractors, including the Authority Trustee. Section 3.02. Waiver of Claims, Insurance. The Developer hereby agrees to waive any and all claims against the City arising in connection with the Undergrounding or the agreement with Southern California Edison in connection therewith, including by reason of delay by any party acting in connection with the Undergrounding. The Developer hereby agrees (i) to name or cause its contractors and subcontractors to name the City as an additional insured in connection with any of the construction contracts for the Acquisition Improvements and the Undergrounding work performed by Developers and (ii) to provide an insurance policy providing business interruption coverage in favor of Jazz Semiconductor and naming the City as an additional insured in an aggregate amount not less than $10,000,000 to cover potential losses to Jazz Semiconductor as a result of any interruption in their business due to the a loss of utility services during the Undergrounding. Section 3.03. Audit. The City shall have the right, during normal business hours and upon the giving of ten days' written notice to the Developer, to review all books and records of the Developer pertaining to costs and expenses incurred by the Developer (for which the 11 US-DOCS\ 105642049.5 Developer seeks reimbursement pursuant to this Agreement) in constructing the Acquisition Improvements. Section 3.04. Cooperation. The City and the Developer agree to cooperate with respect to the completion of the financing of the Acquisition Improvements by the Authority through the levy of the Community Facilities District Special Taxes and issuance of Bonds. The City and the Developer agree to meet in good faith to resolve any differences on future matters which are not specifically covered by this Agreement. Section 3.05. General Standard of Reasonableness. Any provision of this Agreement which requires the consent, approval or acceptance of either party hereto or any of their respective employees, officers or agents shall be deemed to require that the consent, approval or acceptance not be unreasonably withheld or delayed, unless the provision expressly incorporates a different standard. Section 3.06. Third Party Beneficiaries. The Authority and its officers, employees, agents or any consultants or contractors are expressly deemed third party beneficiaries of this Agreement with respect to the provisions of Section 3.01. It is expressly agreed that, except for the Authority with respect to the provisions of Section 3.01, there are no third party beneficiaries of this Agreement, including without limitation any owners of bonds, any of the City's or the Developer's contractors for the Acquisition Improvements and any of the City's, the Authority's or the Developer's agents and employees. Section 3.07. Conflict with Other Agreements. Nothing contained herein shall be construed as releasing the Developer or the City from any condition of development or requirement imposed by any other agreement between the City and the Developer, and, in the event of a conflicting provision, the other agreement shall prevail unless the conflicting provision is specifically waived or modified in writing by the City and the Developer. Section 3.08. Notices. All invoices for payment, reports, other communication and notices relating to this Agreement shall be mailed to: If to the City: City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Attention: City Manager If to the Authority: California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, CA 95814 Attention: Chair 12 US-DOCS\ 105642049.5 If to the Developer: Uptown Newport Jamboree, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff TSG — Parcel 1, LLC c/o Shopoff Realty Investments, L.P 2 Park Plaza, Suite 700 Irvine, CA 92614 Attention: William A. Shopoff With a copy to: Jackson Tidus 2030 Main Street 12th Floor Irvine, CA 92614 Attention: Gregory P. Powers, Esq. Either party may change its address by giving notice in writing to the other party. Section 3.09. 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. Section 3.10. 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. Section 3.11. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party's right to insist and demand strict compliance by the other party with the terms of this Agreement. Section 3.12. 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. Section 3.13. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. Section 3.14. Successors and Assigns. This Agreement is binding upon the heirs, assigns and successors -in -interest of the parties hereto. The Developer may not assign its rights or obligations hereunder, except to successors -in -interest to the property within the Community Facilities District, without the prior written consent of the City. 13 US-DOCS\ 105642049.5 Section 3.15. Remedies in General. It is acknowledged by the parties that the City would not have entered into this Agreement if it were to be liable in damages under or with respect to this Agreement or the application thereof, other than for the payment to the Developer of any (i) moneys owing to the Developer hereunder, or (ii) moneys paid by the Developer pursuant to the provisions hereof which are misappropriated or improperly obtained, withheld or applied by the City. Section 3.16. Non -Liability of Authority. The Authority shall not be liable for any costs, expenses, losses, damages, claims or actions, of any conceivable kind on any conceivable theory, under or by reason of or in connection with this Agreement, except only to the extent amounts are received for the payment thereof from the Special Tax. In general, each of the parties hereto may pursue any remedy at law or equity available for the breach of any provision of this Agreement, except that the City shall not be liable in damages to the Developer, or to any assignee or transferee of the Developer other than for the payments to the Developer specified Section 3.14. Subject to the foregoing, the Developer covenants not to sue for or claim any damages for any alleged breach of, or dispute which arises out of, this Agreement. [Remainder of Page Intentionally Left Blank' 14 US-DOCS\ 105642049.5 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. ATTEST: City Clerk By: Name: Leilani I. Brown Title: City Clerk CITY OF NEWPORT ' EAC By: Name ce K. Leung Title:E'ity Manager UPTOWN NEWPORT JAM ILOREE, LLC, a Delaware limited liability company APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE By: Date: 2- / 2 ( (1 Name Title By: - Aaron c . Harp, City Attorney TSG — PARCEL 1, LLC, a Delaware limited liability company By: Name Title CALIFORNIA STATEWIEE COMMUNITIES i15EVELOPMENT AUTHORITY By: Authorized Signatory SIGNATURE PAGE - ACQUISITION AGREEMENT IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. CITY OF NEWPORT BEACH By: Authorized Officer ATTEST: City Clerk By: UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited liability company By: NameA'- G-`P.uP Title S V - �EAJ = I_aP;r\,. w i-~ TSG — PARCEL 1, LLC, a Delaware limited liability company By: .� Name 13 `,yam 6-, R o Title 5 J '1•N�v CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory S[GNATUItE PAGE - ACQUISITION AGREEMENT US-DOCS\IO564" O49.5 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year written above. CITY OF NEWPORT BEACH By: Authorized Officer ATTEST: City Clerk By: UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited liability company By: Name Title TSG — PARCEL 1, LLC, a Delaware limited liability company By: Name Title CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY Authorized Signatory SIGNATURE PAGE — ACQUISITION AGREENIENT US-DOCS\ I (15642049 5 EXHIBIT A TO THE ACQUISITION AGREEMENT DESCRIPTION OF ACQUISITION IMPROVEMENTS, ELIGIBLE PORTIONS ACQUISITION IMPROVEMENTS Park improvements, including playground infrastructure, irrigation, landscaping, utilities, drainage and grading. A-1 US-DOCS\ 105642049.5 EXHIBIT B TO THE ACQUISITION AGREEMENT DISBURSEMENT REQUEST FORM (Acquisition Improvement or Eligible Portion) To: Wilmington Trust, National Association Attention: Fax: Phone: Re: CSCDA Community Facilities District No. 2018-03 (Uptown Newport) The undersigned, a duly authorized officer of the CITY OF NEWPORT BEACH hereby requests a withdrawal from the Uptown Newport Project Community Facilities District Acquisition and Construction Fund, as follows: Request Date: Name of Developer: [Insert Date of Request] Acquisition Price/Installment [Insert Acquisition Price/Installment Payment: Payment] Acquisition Improvements: [Insert Description of Acquisition Improvement(s)/Eligible Portion(s) from Exhibit A] Holdback Amount: [Insert Holdback Amount, if applicable] Withdrawal Amount: [Insert Acquisition Price less Holdback] Payment Instructions: [Insert Wire Instructions or Payment Address for Developer or Developer's designee as provided by the Developer] The undersigned hereby certifies as follows: The Withdrawal is being made in accordance with a permitted use of the monies pursuant to the Acquisition Agreement and the Withdrawal is not being made for the purpose of reinvestment. None of the items for which payment is requested have been reimbursed previously from the Acquisition and Construction Fund. If the Withdrawal Amount is greater than the funds held in the Acquisition and Construction Fund, the Authority Trustee is authorized to pay the amount of such funds and to pay B-1 US-DOCS\ 105642049.5 remaining amount(s) as funds are subsequently deposited in the Acquisition and Construction Fund, should that occur. [For Park Improvement Disbursements:][The amounts being disbursed pursuant to this request are being used to finance or refinance certain public infrastructure and facilities (the "Improvements"). The City will own, and for the entire useful life of such Improvements reasonably expects to own, all of such Improvements. To the extent any of such Improvements are sold to an entity that is not a state or local government agency, the City will seek the advice and approval of bond counsel to the Authority prior to any such sale. The City will not allow any of such Improvements to be used (for example, by lease or other contract) in the trade or business of any nongovernmental persons (other than in their roles as members of the general public). All of such Improvements will be used in the performance of essential governmental functions of the City or another state or local government agency. The average expected useful life of such Improvements is at least 20 years. The representations and covenants contained in this paragraph are intended to support the conclusion that the interest paid on the bonds issued to finance the Improvements is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code").] CITY OF NEWPORT BEACH By: Title: B-2 US-DOCS\ 105642049.5 EXHIBIT C TO THE ACQUISITION AGREEMENT BIDDING, CONTRACTING AND CONSTRUCTION REQUIREMENTS FOR ACQUISITION IMPROVEMENTS With respect to construction contracts awarded after approval of the Agreement, bids for construction shall be solicited from at least three (3) qualified contractors, provided at least three (3) qualified contractors are reasonably available. The Developer may also directly solicit bids. The bid package may consist of preliminary plans and specifications. The bidding response time shall be not less than ten (10) working days. An authorized representative of the City shall be provided a copy of the tabulation of bid results upon request. Contract(s) for the construction of the public Acquisition Improvements shall be awarded to the qualified contractor(s) submitting the lowest responsible bid(s), as determined by the Developer. The contractor to whom a contract is awarded shall be required to pay not less than the prevailing rates of wages pursuant to Labor Code Sections 1770, 1773 and 1773.1. A current copy of applicable wage rates shall be on file in the Office of the City Clerk, as required by Labor Code Section 1773.2. The Developer shall provide the City with certified payrolls. C-1 US-DOCS\ 105642049.5 FACILITIES RELOCATION AGREEMENT (RELOCATION UNDER SCE TARIFF RULE 206 - APPLICANT TO INSTALL DUCTS/SU BSTRUCTU RES) This Facilities Relocation Agreement ("Agreement") is made and entered into this 13 day of December, 2018 (the "Effective Date") by and between Southern California Edison Company, a California corporation ("SCE"), and the City of Newport Beach (the "Applicant"). SCE and the Applicant are sometimes individually referred to herein as a "Party" and collectively as the "Parties". RECITALS WHEREAS, the Applicant, as a public entity, is coordinating with the developer of a Residential project (the "Project") within that area generally depicted in the attached Exhibit A (the "Project Location"). WHEREAS, SCE currently operates and maintains certain transmission, facilities (collectively the "SCE Facilities") within and proximate to the Project Location. WHEREAS, the Applicant has determined that implementation of the Project will require the relocation of portions of the SCE Facilities and, to that end, the Applicant has requested that SCE relocate some or all of the SCE Facilities. WHEREAS, subject to the terms and provisions set forth herein, SCE is willing and able to relocate the identified SCE Facilities in order to accommodate the Project. NOW, THEREFORE, IT IS MUTUALLY AGREED BY AND BETWEEN THE APPLICANT AND SCE AS FOLLOWS: AGREEMENT 1. SCOPE OF WORK The Project will require that certain of SCE's overhead transmission, facilities be relocated underground ("the Relocation"). The Applicant hereby represents that the area to be undergrounded includes both sides of a street for at least one block or 600 feet, whichever is lesser, and all existing overhead communication and electric distribution facilities within the area will be removed. The Relocation will be performed in accordance with SCE's Tariff Rule 20: Replacement of Overhead with Underground Electric Facilities, Section B ("Rule 20B"), which is incorporated herein by this reference. The Scope of Work for the Relocation is as follows: Rule 20B conversion of overhead to underground relocation, which includes, but not limited to; two (2) TSP risers and two (2) vaults and removal of power poles on jamboree Rd in conflict with development west side of jamboree Blvd@ Fairchild Rd in the City of Newport Beach. 2. RELOCATION PLANS a. Approved Relocation Plans. In furtherance of the Applicant's request, SCE has prepared certain plans/designs that identify (i) the SCE Facilities that will be impacted by the Project and (ii) the relocation areas for the affected SCE Facilities (the "Relocation Plans"). Copies of the Relocation Plans are attached hereto as Exhibit B. The Applicant expressly acknowledges that (a) it has reviewed and approved the Relocation Plans and (b) the Relocation Plans do not present any conflicts with the Applicant's development plans for the Project, nor Page 1 of 12 Transmission Project Management Rule 20B - Applicant to Install Ducts/Substructures Revision Date: March 2016 do the Relocation Plans conflict with any other non -SCE utilities that are located, or will be located, in the Project Location. It is the Applicant's sole responsibility to ensure that no conflicts exist between the Relocation Plans and the Applicant's development plans or other non -SCE utilities, and to timely inform SCE of the need for any refinements, modifications, or revisions to the Relocation Plans to resolve any such conflicts that may later arise, all in accordance with subsections (b) - (d) below. b. Refinements to Plans. Depending upon the design status of the Project as of the Effective Date, the Parties acknowledge that refinements and/or adjustments to portions of the Relocation Plans may be required in order to eliminate minor conflicts. In such instance, SCE shall prepare such refinements to the Relocation Plans as may be necessary in order to address/eliminate said conflicts. The refined Relocation Plans shall be presented to the Applicant for review and approval; SCE shall not commence the Relocation Work (see Section 4, below) unless and until the Applicant has reviewed and approved the refined Relocation Plans. The Applicant shall be responsible for all costs and expenses reasonably incurred by SCE in relation to SCE's refinement of the Relocation Plans. c. Revised Plans. In the event that modifications/revisions to the Relocation Plans are required in order to accommodate changes to the Project (including the elimination of conflicts with the Applicant's development plans), to resolve conflicts with other non -SCE utilities within the Project area, or to address other changed circumstances, then SCE shall prepare such modifications/revisions as are necessary to address said changes and shall present same to the Applicant for review and approval. The Applicant shall be responsible for all costs and expenses reasonably incurred by SCE in relation to SCE's preparation of the modifications/revisions to the Relocation Plans. d. Potential Project Delays. The Applicant expressly acknowledges that the preparation of refined, modified and/or revised Relocation Plans may cause delays in SCE's performance of the Relocation Work, and that said delays could impact the development schedule for the Project. The Parties agree that SCE shall not have any liability or obligation to the Applicant (or others) in the event that the preparation of refined, modified and/or revised Relocation Plans results in delays in the Project. 3. ACQUISITION OF LAND RIGHTS The Applicant shall be responsible for securing all land rights required by SCE to allow SCE to relocate, construct and permanently operate and maintain the SCE Facilities on the areas depicted in the Relocation Plans (the "Relocation Areas"). The land rights acquired by the Applicant (the "SCE Land Rights") shall be in a form prescribed by SCE (the "SCE Land Rights Form"); SCE shall provide the SCE Land Rights Form to the Applicant. The SCE Land Rights shall also include permanent rights of ingress/egress that allow SCE to gain reasonable, unimpeded and non -escorted access to and from the Relocation Areas and the SCE Facilities (whether over lands owned by the Applicant or otherwise). In connection with the acquisition of the SCE Land Rights, the Applicant shall be responsible for clearing all encumbrances identified by SCE that could interfere with the Relocation Work and the exercise of the SCE Land Rights on/about the Relocation Areas (including access thereto/therefrom). Unless otherwise agreed (in writing) by SCE, the SCE Land Rights shall be granted directly to SCE. Notwithstanding any provision herein to the contrary, SCE will not begin the Relocation Work unless and until all required SCE Land Rights have been executed, in writing, and presented to and approved by SCE. Page 2 of 12 Transmission Project Management Rule 20B - Applicant to Install Ducts/Substructures Revision Date: March 2016 4. RELOCATION WORK Following (i) the Parties' confirmation of the finality of the Relocation Plans and (ii) the Applicant's acquisition (and SCE's approval) of the SCE Land Rights, SCE shall cause the SCE Facilities to be removed and relocated to the Relocation Areas in accordance with the Relocation Plans (the "Relocation Work"). SCE and the Applicant shall perform the Relocation Work in accordance with all applicable laws, rules and regulations. a. Work to Be Performed by SCE 1. SCE shall procure and install all materials related to its electrical system - for example: cable, transformers, switches, capacitors, meters, and connectors - except the ducts and substructures as defined in Rule 20B.2.a, which are to be procured and installed by the Applicant. SCE shall provide all engineering work related to the relocation of said electrical facilities. 2. SCE shall inspect and approve all ducts and substructures procured and installed by the Applicant before SCE begins the installation of the underground facilities. 3. SCE shall, at no cost to the Applicant, remove its overhead electrical facilities after the underground facilities have been installed, energized, and placed into permanent service. 4. Except as stated in Section 9 below, SCE and the Applicant shall each separately be responsible for obtaining all permits required to complete the portion of the work for which each Party is responsible under this Agreement, unless the Parties agree otherwise in writing. b. Work to Be Performed by Applicant 1. The Applicant, at no cost to SCE, is responsible for providing SCE with any required street improvement or site plans reflecting the location of all existing and proposed underground and/or overhead structures and/or facilities. 2. The Applicant, at no cost to SCE, shall procure and install the pads and vaults for transformers and associated equipment, conduits, ducts, boxes, and poles bases, and perform other work related to structures and substructures including breaking of pavement, trenching, backfilling, and repaving in connection with the installation of the underground system, all in accordance with the Relocation Plans, subject to inspection and approval by SCE. 3. The Applicant shall notify SCE 48 hours prior to construction or installation of the ducts and substructures so that SCE can schedule the required inspection. 4. The Applicant shall provide SCE with "As -Built" drawings. 5. The Applicant, at no cost to SCE and subject to SCE's approval and acceptance, will grant SCE, in writing, ownership of all ducts and substructures installed pursuant to this Agreement. The Applicant warrants and represents that the ownership of the installed ducts and substructures, and each and every component thereof, as approved by SCE, will pass to SCE free and clear of any Page 3 of 12 Transmission Project Management Rule 20B - Applicant to Install Ducts/Substructures Revision Date: March 2016 and all liens and encumbrances. 6. After the Applicant has completed installation of all ducts and substructures, and the ducts and substructures have been inspected and approved by SCE, the Applicant shall furnish to SCE a schedule of all costs incurred in the construction of the ducts and substructures. The purpose of this information is to allow SCE to calculate the amount of Income Tax Component of Contribution ("ITCC") that will be charged on the ducts and substructures installed by the Applicant. SCE must have this information before SCE energizes the underground facilities and de -energizes the overhead facilities. As part of the project reconciliation, SCE will provide a statement of ITCC for the project, which includes the ITCC charged on the ducts and substructures installed by the Applicant. 5. COST ALLOCATION Applicant is exclusively responsible for all costs and expenses associated with SCE's implementation of the Relocation Plans including, but not limited to, the costs and expenses associated with (i) SCE's preparation of the Relocation Plans (and any revisions thereto and refinements thereof), (ii) SCE's performance of the Relocation Work and (iii) the Applicant's acquisition of the SCE Land Rights SCE may provide Applicant with credits with respect to the Relocation as required by its applicable Tariff Rules of service. Applicant shall reimburse SCE for costs and expenses incurred by SCE in accordance with the provisions of Section 6, below. 6. INITIAL COST ESTIMATE. PAYMENT(S) AND RECONCILIATION a. Initial Cost Estimate. The total estimated cost for the Relocation Work for which the Applicant is responsible is $1,093,000 (the "Initial Cost Estimate"). The Initial Cost Estimate does not include an Income Tax Component of Contribution ("ITCC") based on SCE's understanding that this project is exempt from ITCC charges. In the event that the Internal Revenue Service, state, city, and/or local governmental taxing authority determines that this project is taxable, the Applicant will reimburse SCE for the full amount of the tax liability, plus interest, penalties, fees, and related costs. Such amounts will be paid to SCE within 60 days after notification of such event by SCE to the Applicant. By execution of this Agreement, the Applicant hereby acknowledges that this project is funded by the Applicant. b. Prior Advances: Outstanding Balance. SCE has previously received an engineering advance from the Applicant in the amount of $144,000 and an amount for long lead time items of $200,000, which have been applied toward the total Initial Cost Estimate owed by the Applicant. Thus, the total remaining balance due to SCE at this time is $749,000 (the "Outstanding Balance"). c. Payment of Outstanding Balance. Concurrent with the Applicant's execution and delivery of this Agreement, the Applicant shall pay to SCE the Outstanding Balance. The Outstanding Balance shall be delivered to SCE at the address shown in Section 12.b, below, and shall reference the following SCE Project File Number: 747 Notwithstanding any provision herein to the contrary, the Applicant acknowledges and agrees Page 4 of 12 Transmission Project Management Rule 20B - Applicant to Install Ducts/Substructures Revision Date: March 2016 that SCE will not begin the Relocation Work unless and until SCE has received the Outstanding Balance. d. Reconciliation. The Parties acknowledge that the Initial Cost Estimate is valid only for a period of 90 days following the Effective Date, and that the costs associated with SCE's performance of the Relocation Work could increase prior to SCE's completion of the Relocation Work. Upon completion of the Relocation Work (or the cancellation of the Project or termination of this Agreement), the Applicant will be responsible for paying the total costs and expenses actually incurred by SCE for which the Applicant is responsible under this Agreement in relation to implementation of the Relocation Plans. Thus, at the completion of the Relocation Work (or upon the cancellation of the Project or termination of this Agreement), SCE will calculate the total actual costs and expenses for which the Applicant is responsible hereunder, and the Applicant will be provided with a final invoice identifying said costs and expenses. The Applicant will be billed or refunded, as applicable, for any difference between the amounts paid by the Applicant hereunder and the actual costs and expenses incurred by SCE. Any amount owed to SCE shall be due no later than 30 days after the Applicant's receipt of the final invoice. Similarly, any amount owed by SCE to the Applicant shall be refunded by SCE to the Applicant within 30 days following SCE's preparation and delivery of the final invoice. If the Applicant fails to pay the final invoice within 30 days of receipt, the Applicant is responsible for paying to SCE, in addition to the invoiced amount, any and all costs incurred by SCE to collect the past due amount, including but not limited to, collection agency fees and court costs, but excluding attorneys' fees. 7. PROJECT SCHEDULING The Parties acknowledge and agree that completion of the Relocation Work is contingent upon mutually acceptable schedules, which, among other things, limit impacts on customers of SCE, available resources, the timely obtaining of permits, licenses, real property rights, and other documents, outages or other key items and not being delayed by those forces described in Section 8, below. The Parties shall work cooperatively and in good faith to timely meet all mutually -acceptable schedules and to minimize delays or impacts on customers of SCE; however, the Applicant expressly acknowledges and agrees that SCE offers no guarantees or warranties regarding the completion date for the Relocation Work. 8. NO RESPONSIBILITY FOR DELAYS SCE shall not be responsible or liable to the Applicant (or others) for any delay in its performance hereunder, or for any delays in the Project, due to any reason including, but not limited to: shortage of labor or materials, delivery delays, major equipment breakdown, load management, strikes, labor disturbances, war, riot, insurrection, civil disturbance, weather conditions, epidemic, quarantine restriction, sabotage, act of public enemy, earthquake, governmental rule, regulation or order, including orders of judgments of any court or commission, requirement of additional or separate Environmental Impact Reports requested by the California Public Utilities Commission ("CPUC"), delay in receiving a Certificate of Public Convenience and Necessity from the CPUC, delay in obtaining necessary rights of way, act of God, or any cause or conditions beyond the control of SCE or the Applicant. The Applicant expressly waives and releases any and all claims for damages against SCE arising out of any delays in the Project unless due to SCE's sole negligence or willful misconduct. 9. COMPLIANCE WITH CEQA AND OTHER ENVIRONMENTAL LAWS The Applicant, at no cost to SCE, but with SCE's reasonable cooperation, shall comply with the requirements of the California Environmental Quality Act ("CEQA") and other environmental Page 5 of 12 Transmission Project Management Rule 20B - Applicant to Install Ducts/Substructures Revision Date: March 2016 laws, as applicable, and shall prepare any and all Negative Declarations, Mitigated Negative Declarations and/or Environmental Impact Reports which may be required by any agency or entity having jurisdiction over the Project and the Relocation Work. The Applicant expressly acknowledges that SCE is relying upon the Applicant's representations that the Relocation Work is covered by the environmental documentation, clearances and permits issued (or to be issued) in relation to the Project, and that the Applicant is responsible for satisfying all mitigation requirements and conditions attendant to SCE's performance of the Relocation Work. Notwithstanding any provision herein to the contrary, the Applicant acknowledges and agrees that SCE will not begin the Relocation Work unless and until all environmental permits, approvals, certifications and authorizations have been issued in relation to the Project and the Relocation Work. 10. COOPERATION BY BOTH PARTIES: TIMELY COMMUNICATION The Parties shall work cooperatively and in good faith to timely implement their respective duties and obligations set forth herein. To that end, the Parties shall timely communicate with one another regarding the status of the Project, the status of the Relocation Work, and ways that the Parties may work together to facilitate the completion of this Agreement. Notwithstanding any provision herein to the contrary, failure by the Applicant to timely respond to requests for information by SCE shall be considered a default of this Agreement. 11. INDEMNIFICATION The Applicant agrees, for itself, and for its agents, contractors, and employees, to save harmless, defend, and indemnify SCE, its officers, agents, contractors, and employees, and its successors and assigns, from and against all claims, loss, damage, actions, causes of action, expense and/or liability arising from or growing out of Toss or damage to property, including SCE's own personal property, or injury to or death of persons, including employees of SCE, resulting in any manner whatsoever, directly or indirectly, by reason of the Applicant's Project necessitating the subject work. Applicant's duty to indemnify SCE includes, without limitation, claims against SCE regarding approvals given by Applicant for SCE's plans, claims against SCE pertaining to the location and/or underlying real property rights for SCE's facilities in new locations (as may be applicable), and claims against SCE for the removal and/or remediation of pre-existing environmental contamination (provided such contamination was not caused by SCE). Applicant shall not be excused of its duty to indemnify for SCE's ordinary negligence, but shall be excused to the extent claims, losses, or damages are attributable to SCE's sole negligence, gross negligence, or willful misconduct. SCE agrees, for itself, and for its agents, contractors, and employees, to save harmless, defend, and indemnify Applicant, its officers, agents, contractors, and employees, and its successors and assigns, from and against all claims, loss, damage, actions, causes of action, expense and/or liability arising from or growing out of loss or damage to property, including Applicant's own personal property, or injury to or death of persons, including employees of Applicant, resulting directly from the performance of SCE's construction and/or relocation work under this Agreement. SCE shall not be excused of its duty to indemnify for Applicant's ordinary negligence, but shall be excused to the extent claims, losses, or damages are attributable to Applicant's sole negligence, gross negligence, or willful misconduct. 12. NOTICES, CORRESPONDENCE. AND PAYMENT ADDRESS a. Notices and Correspondence. Any notices and correspondence provided for in this Agreement, other than payments, to be given by either Party hereto to the other shall be deemed to have been duly given when made in writing and deposited in the United States mail, registered or certified and postage prepaid, addressed as follows: Page 6 of 12 Transmission Project Management Rule 206 - Applicant to Install Ducts/Substructures Revision Date: March 2016 To SCE: Ryann Higashi Project Manager (Transmission) Southern California Edison 1444 E. McFadden Ave, Bldg D Santa Ana, CA 92705 To City of Newport Beach: 3300 Jamboree Rd. Newport Beach, CA 92663 Attention: Mike Sinacori b. Payments: Any payments provided for in this Agreement shall be forwarded to the addresses below. To SCE: Southern California Edison Company P.O. Box 800 Rosemead, California 91771-0001 Attention: Accounts Receivable To City of Newport Beach: 3300 Jamboree Rd. Newport Beach, CA 92663 Attention: Mike Sinacori 13. TERMINATION a. Applicant's Right to Terminate Agreement. The Applicant shall have the right to terminate this Agreement at any time upon written notice to SCE. If this Agreement is terminated by the Applicant, the Applicant shall be responsible to SCE for all costs and expenses actually incurred by SCE in connection with SCE's preparation of the Relocation Plans, performance of the Relocation Work, and any other actions/activities under this Agreement, notwithstanding the cost allocation provisions in Section 5, above. Additionally, Applicant shall be responsible for any additional costs and expenses incurred by SCE as a result of the termination, including but not limited to, restoring the SCE Facilities to a permanent operational state; all costs for equipment and/or materials; and all costs or expenses related to the cancellation of contracts, purchase orders, or other commitments or agreements entered into up to and including the date of the notice of termination, between SCE and all parties furnishing labor, materials, and services in connection with this Agreement. SCE shall prepare and deliver to the Applicant an invoice that describes/identifies the costs and expenses thus incurred by SCE. Within 30 days following SCE's delivery of said invoice, the Applicant shall pay to SCE the amounts specified in the invoice. b. Termination Due to Applicant's Default. If the Applicant is in default of any of the terms, provisions, conditions, limitations and covenants of this Agreement, SCE may give the Applicant written notice of default ("Default Notice"). If the Applicant does not cure Page 7 of 12 Transmission Project Management Rule 208 - Applicant to Install Ducts/Substructures Revision Date: March 2016 such default within the time specified in the Default Notice, SCE has the right, but not the obligation, to terminate this Agreement upon 30 days written notice to the Applicant (or such lesser time as may be appropriate under the circumstances). Except as otherwise provided, should SCE exercise such right of termination, SCE shall be entitled to payment for all costs and expenses for materials, services, labor, overhead, and any other expenses related to the performance of this Agreement thus incurred by SCE, up to and including the date of termination, notwithstanding the cost allocation provisions in Section 5, above. SCE shall also be entitled to payment for all costs and expenses required to effect the termination of this Agreement, including but not limited to: all costs and expenses pertaining to the restoration of the SCE Facilities to a permanent operational state; all costs for equipment and/or materials; and all costs and expenses related to the cancellation of contracts, purchase orders, commitments or other agreements entered into up to and including the date of the notice of termination, between SCE and all parties furnishing labor, materials, and services in connection with this Agreement. SCE shall prepare and deliver to the Applicant an invoice that describes/identifies the costs and expenses thus incurred by SCE. Within 30 days following SCE's delivery of said invoice, the Applicant shall pay to SCE the amounts specified in the invoice. 14. IURISDICTION OF PUBLIC UTILITIES COMMISSION This Agreement shall at all times be subject to such changes or modifications as the California Public Utilities Commission may, from time to time, direct in the exercise of its jurisdiction pursuant to the authority conferred upon it by law. 15. AMENDMENTS The provisions of this Agreement shall not be altered or amended by any representations or promises of any Party unless consented to in a writing executed by all Parties. 16. GOVERNING LAW This Agreement shall be subject to and construed according to the laws of the State of California. 17. HEADINGS The captions and headings used in this Agreement are strictly for convenience and are not intended to and shall not affect the Parties' rights and obligations, or the construction or interpretation of this Agreement. 18. THIRD PARTY BENEFICIARIES Nothing herein is intended to create any third party benefit. 19. NO AGENCY. PARTNERSHIP OR JOINT VENTURE Nothing contained herein shall be deemed or construed as creating the relationship of principal and agent or of partnership or of joint venture by and between the Parties hereto. 20. WAIVER No waiver of any default or breach hereunder shall be implied from any omission to take action on account thereof, notwithstanding any custom and practice or course of dealing. No waiver by any Party of any provision under this Agreement shall be effective unless in writing and Page 8 of 12 Transmission Project Management Rule 20B - Applicant to Install DuctsiSubstructures Revision Date: March 2016 signed by such Party, and no waiver shall affect any default other than the default specified in the waiver and then said waiver shall be operative only for the time and to the extent therein stated. Waivers of any covenant shall not be construed as a waiver of any subsequent breach of the same. 21. DUPLICATE ORIGINALS AND ELECTRONIC SIGNATURES This Agreement may be executed in duplicate originals, each of which, when so executed and delivered, shall be an original but such counterparts shall together constitute one instrument and agreement. The exchange of copies of this Agreement and of signature pages by facsimile transmission, Portable Document Format (i.e., PDF) or by other electronic means constitutes effective execution and delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for all purposes. This Agreement may be executed by way of an electronic signature, in which case, said electronic signature shall have the same force and effect as a written signature. [THIS SPACE INTENTIONALLY LEFT BLANK; SIGNATURES TO FOLLOW] Page 9 of 12 Transmission Project Management Rule 20B - Applicant to Install Ducts/Substructures Revision Date: March 2016 IN WITNESS WHEREOF, this Agreement and each and every term herein is agreed to by and between the undersigned. DATED: BY: DATED: /t-/'r L DATED: 2/1 3/201 q CITY OF NEWPORT BEACH, a California Municipal Corporation Diane Mayor ATTEST: Leilani I. Brown, City Clerk APPROVED AS TO FORM: CITY ATTORNEY'S OFFICE _for Aaron C. Harp, City Attorney DATED: SOUTHERN CALIFORNIA EDISON COMPANY, a California corporation BY: Jennifer Ward signing on Behalf of Ryann Higashi Project Manager Page 10 of 12 Transmission Project Management Rule 20B - Applicant to Install Ducts/Substructures Revision Date. March 2016 EXHIBIT A Description of the Project Location I•Eiouncary ,mburI d rchiId Rd Y h Page 11 of 12 Transmission Project Management Rule 2013 - Applicant to Install Ducts/Substructures EXHIBIT B APPROVED RELOCATION PLANS Please See Attached Page 12 of 12 Transmission Project Management Rule 20B - Applicant to Install Ducts/Substructures 1.009ZL0 ilOr 4 1 M0M100 .0013 91110/00 .0101036 rho San WO '140Y39 1130d113M '0. 335100MY1` d31-1U01 011Y �tl mom402Na 3 000mmo a 060l011101 +.00410 mn mr a1/a41 di VAN Misr •Od fael WV. Wa won corm .31 Apnoea., Wm. a..M ...a« .I .ter taw... nee 'IVNI1� '530 MN0 031.10311 1103 3] dr sro 1001SMY03U q xo0 3.10. 1L 1 .I S30.00 MOM s.ohrdm .3...rf ra,1.4 n 03 0 0 ,00019117.1. x010.1.14.1 317.1TirmS Mu toe aMa 30 n S auuno A .wa 11S PO 103121 331/,035 100303113000 MM.. ordmo Siva ❑Q11 flzu a.remae smo. 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KAI A -A \\\ ANTIACO-CABRILLO C MocARTHUR \58 EX: V5109885 VAULT rne.r r1o' s° xxrs N. 4/0 BC 6 .5" Ducts L/N n w..mcMA.10- De, EX: P5365050 PAD REMDM: AOAFR AMC IPP1A253144] 1-r,I1wO"1 Ca 2-4 cI 1 ,w ® • Q 41.C) VACANT N. 4/0 BC 6-5" Duc s L/N REMDb[ PO*ER Pp{ IPPrzozle55E) mom A>I1 vita TO IA VAULT 6001388 10' x 20' x9'4' W/30" C.I. COVER N0 VENTS NO LAOOERS / / / / / /, / / / / / / / / SEC.F3-13 R/SE 00 00 (00 0 ROLL SOUTHEAST DUCTS DOWN SEC. C-C L/NW 00 00 O O) ROLL NORTHWEST DUCTS DOWN PRELIMINARY Not For Construction VAIC 11/241 NOMA. OM 11.® WA ApAAMr WE REAM. MA01. Rm.!rel•24M>m NNW AOMwMrMO RCM ov+MM Ao.MMrm AMOCO BOA BOOM. Cal RC KW M TAB, 33 - wawa. KAW �" (m Frr�u) °°l"=V • �r ' 41 AN ' 1� "tea B45E MAP MOO 5130455 AND Lop( -UP ,4MBOREE RD. as as as RAWr �� AEwPptr BEAW,�A R" Tata so :A Sou4rm c�aA001 ReakeA od,�P� r HI3 a ' 0726001 RC RC SANTIAGO-CABRILLO CHIP-MUcARTMUR 66kV A -A • 0 lit 0 0O SEC. 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KENMORE BEACH, CA 4 a 4 0726001 No. 1 $3,295,000 UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 aturity Date i<os ber 1, 2039 REGISTERED OWNER: Ced PRINCIPAL AMOUNT: T LIO Bond Date March 12, 2019 CUSIP 13077EGC8 TWO HUNDRED NINETY-FIVE S The California Statewid Commun es ► velopment Authority, a public entity of the State of California (the "Authority"), v ue re- ed hereby promises to pay (but only out of the Special Tax Revenues hereinafter re - d t ► d c other funds as described herein) to the registered owner set forth above on the m. ' ty . t forth above (subject to any right of prior redemption hereinafter provided for) the pr 9 . . mou . - t forth above, together with interest thereon computed on the basis of a 360-da y: • I : • (1 30-day calendar months from the Interest Payment Date next preceding the s . - of e ' of this Bond, unless (i) this Bond is authenticated on a day during the perioo sixt- h (16th) day of the calendar month next preceding an Interest Payment Date to su' me Payme e t Date, both days inclusive, in which event it shall bear interest from such -st P. - ►ate, or (ii) it is authenticated on a day on or before the fifteenth (15th) day of the - h pr- d g the first Interest Payment Date, in which event it shall bear interest from the Bond D she • • . e until the principal hereof shall have been paid, at the interest rate per annum set f r ' ove, payable semiannually on March 1 and September 1 in each year, commencing on Se . l er 1, 2019. The interest on and principal of and redemption premium, if any, on this Bond a e payable in lawful money of the United States of America at the Principal Corporate Trust Office (as that term is defined in the Indenture hereinafter referred to, and herein the "Principal Corporate Trust Office") of Wilmington Trust, National Association, as trustee for the Bonds, or any other bank or trust company at its principal corporate trust office which may at any time be substituted in its place as provided in the Indenture hereinafter referred to (the "Trustee"). The interest on this Bond due on or before the maturity or prior redemption hereof shall be payable only to the person whose name appears in the registration books required to be kept by the Trustee as the registered owner hereof 1 4138-5456-6938 at the close of business as of the fifteenth (15th) day of the calendar month preceding the month in which the applicable Interest Payment Date falls, such interest to be paid by check mailed by first class mail on each such Interest Payment Date to such registered owner at his address as it appears on such books, except that in the case of a registered owner of one million dollars ($1,000,000) or more in principal amount of Bonds then outstanding, payment shall be made at such owner's option by wire transfer on each such Interest Payment Date of immediately available funds to an account in a bank or trust company or savings bank that is a member of the Federal Reserve System and that is located in the United States of America according to written instructions provided by such owner to the Trustee at least fifteen (15) days before such Interest Payment Date. The principal of and redemption premium, if any, on this Bond shall be payable only to the perso • • se name appears in such registration books as the registered owner hereof, such principal a re s i ption premium, if any, to be paid only on the surrender of this Bond at the Principa o ate st Office of the Trustee at maturity or on redemption prior to maturity. amount of eight and through its Cal District No. 2018-03 (Uptown Development Authority Com Tax Bonds, Series 2019" ( Community Facilities Act of Code of the State of California) "Law") and under and pursuant to the "Indenture") between the Authority an of like tenor and date (except for such va numbers, denominations, maturities, interest rat this Bond, are equally and ratably secured in cc Indenture (copies of which are on file at the offi above -mentioned office of the Trustee), and referen Indenture and any and all amendments thereof and suppl terms on which the Bonds are issued and for the rights of t e r all the terms of the Law and the Indenture are hereby incorpor between the Authority and the registered owner from time to time of which the registered owner of this Bond, by his acceptance her each subsequent registered owner hereof shall have recourse to all the the Indenture and shall be bound by all the terms and conditions thereof. of a duly authorized issue of Bonds in the aggregate principal ed thousand dollars ($8,300,000) issued by the Authority by de • mmunities Development Authority Community Facilities , designated the "California Statewide Communities es District No. 2018-03 (Uptown Newport), Special , which Bonds are issued pursuant to the Mello -Roos ing Sections 53311 et seq. of the Government datory thereof or supplemental thereto (the ndenture, dated as of March 1, 2019 (the st, National Association, as Trustee, all ay be required to designate varying on provisions). All Bonds, including with t . - terms and conditions of the of e - «' of the Authority and at the to the Law and to the a description of the s of the Bonds; and stitute a contract all the provisions f ee ' ; nd sents; and the Law and The Bonds are issued to provide funds to finance Uptown Newport public facilities to meet increased demands placed on Uptown Newport and other local agencies as the result of development expected to occur within the Community Facilities District. The Bonds are special tax obligations of the Authority and the interest on and principal of and redemption premiums, if any, on the Bonds are payable solely from the Special Tax Revenues (as that term is defined in the Indenture, and herein the "Special Tax Revenues") and certain other funds, as provided in the Indenture, and the Authority is not obligated to pay them except from the Special Tax Revenues and such other funds as so provided. The general funds and assets of the Authority are not liable and the full faith and credit of the Authority is not pledged for the payment of the interest on or 2 4138-5456-6938 principal of or redemption premiums, if any, on the Bonds, and no tax or assessment other than the Special Tax (as that term is defined in the Indenture, and herein the "Special Tax") shall ever be levied or collected to pay the interest on or principal of or redemption premiums, if any, on the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the Authority or any of its income or receipts except the Special Tax Revenues and such other funds, as provided in the Indenture, and neither the payment of the interest on or principal of or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the Authority. The Bonds are subject to optional, extraordinary and mandatory redemption by the Authority prior to • - it respective maturity dates as a whole or in part on the dates, at the prices and subject to th e . rovided in the Indenture. utstanding Bonds are to be redeemed at the option of the Authority at any one t - t A hall select the maturity dates from which the Bonds shall be redeemed, and 1 ss all th= utstanding Bonds of any one maturity date are to be redeemed at any one time, th st- el= t the Bonds or portions thereof of such maturity date to be redeemed in integral multiples of sand dollars ($5,000) by lot in any manner that it deems appropriate. Notice of rede 'tion . th' • - . or any portion hereof shall be mailed by the Trustee not less than thirty (30) . no +re th. .ixty (60) days before the redemption date by first class mail to the registered owner ereof an. . those securities depositories and securities information services selected by the Au . rity in accor ce with the Indenture and to the original underwriter of the Bonds, but neither fai -ce an ch mailed notice nor any immaterial defect contained therein shall affect the sufficien r v, , of such proceedings for redemption. If notice of redemption has been duly given as ore ., en this Bond or the portion thereof to be redeemed shall, on the redemption date design. i ► .uc , become due and payable at the above -described redemption price; and from and . - e e s ► - signated interest on this Bond or the portion thereof to be redeemed shall cease to a' • e . th- :istered owner of this Bond shall have no rights in respect hereof except to rece p. oft' edemption price of this Bond. If this Bond will not be redeemable in whole, f this Bond for redemption there will be issued in lieu of the unredeemed portio princi. reof a new Bond or Bonds of the same maturity date, of authorized denomination qu gre_- principal amount to such unredeemed portion. Upon written direction of the on t i rustee shall rescind, cancel and annul such redemption by giving notice of such resciss . ncellation and annulment to the same persons and in the same manner as the original notic redemption. The Authority has covenanted that, so long as any Bonds are outstanding, it will annually levy the Special Tax against all Taxable Property (as that term is defined in the Indenture) in the Community Facilities District and make provision for the collection of the Special Tax in amounts which will be sufficient, after making reasonable allowances for contingencies and errors in the estimates, to yield proceeds equal to the amounts required for compliance with the agreements, conditions, covenants and terms contained in the Indenture, and which in any event will be sufficient to pay the interest on and principal of and all Mandatory Sinking Account Payments for and redemption premiums, if any, on the Bonds as they become due and payable and 4138-5456-6938 to pay all current Administrative Expenses (as that term is defined in the Indenture) as they become due and payable in accordance with the provisions and terms of the Indenture. The Bonds are issuable in the form of fully registered Bonds in the denomination of five thousand dollars ($5,000) or any integral multiple of five thousand dollars ($5,000) (not exceeding the principal amount of Bonds maturing at any one time). The registered owner of any Bond or Bonds may surrender the same (together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney) in exchange for an equal aggregate principal amount of Bonds of the same maturity date of any other authorized denominations in the manner, subject to the conditions and upon payment of the charges provided in the Indenture. T egi ation of this Bond is transferable on the registration books kept by the Trustee by i - reg -r o , ' er hereof or by his duly authorized attorney upon surrender of this Bond togeth: it wr' trument of transfer satisfactory to the Trustee duly executed by the registered o r duly thorized attorney, and thereupon a new Bond or Bonds of the same maturity date aut de ► . minations in the same aggregate principal amount will be issued to the transferee in exc an: - or in the manner, subject to the conditions and terms and upon payment of the charges p ' -din . Indenture. The Authority and the Trustee may deem and treat the person in who ame s Bond is registered as the absolute owner hereof for the purpose of receiving paymen or o a • , the interest hereon, the principal hereof, and redemption premium, if any, her an all of . purposes. The rights and obligati i of the Aut ty and of the registered owners of the Bonds may be amended at any time in t er he tent and upon the terms provided in the Indenture, and in certain circumstances with he i nt of such registered owners, but no such amendment shall (1) extend the maturity th' . • or reduce the interest rate hereon or otherwise alter or impair the obligation of the A on - to • interest hereon or principal hereof or any Mandatory Sinking Account Payment or = p - um, if any, hereon at the time and place and at the rate and in the currency and om fu . • r • ed herein without the express written consent of the registered owner of this B • d, • - opa . e the ability of the Authority to levy and collect the Special Tax, or (3) reduce t • erce :e of ' nds required for the written consent to an amendment of the Indenture, or (4) m• any or obligations of the Trustee without its prior written assent thereto; all as more full 't i he -nture. The Bonds do not constitute an indebtedness of the Authorit n the meaning of any constitutional or statutory debt limitation or restriction, and neither t uthority nor any officer or employee thereof shall be liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds other than from the Special Tax Revenues and such other funds as may be pledged therefor, as provided in the Indenture. This Bond shall not be entitled to any benefits under the Indenture or become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been manually signed by an authorized signatory of the Trustee. It is hereby certified that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, 4138-5456-6938 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 obligations of the Authority by and through its Community Facilities District, does not exceed any limit prescribed by the laws of the State of California and is not in excess of the principal amount of the Bonds permitted to be issued under the Indenture. IN WITNESS WHEREOF, the California Statewide Communities Development Authority has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of the Chair of the Authority and attested by the manual or facsimile signature of the Secretary of the Authority, and has caused this Bond to be dated as of the Bond Date set forth above. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY Attest: 4138-5456-6938 CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the within -mentioned Indenture which has been authenticated on March 12, 2019. WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee Authorized Signatory 4138-5456-6938 ASSIGNMENT For value received the undersigned do(es) hereby sell, assign and transfer unto the within Bond and do(es) hereby irrevocably constitute and appoint attorney to transfer the same on the bond register of the Trustee, with full power of substitution in the premises. Dated: SIGNATURE G ... TEED BY: Note: The si '' (s is ignment must correspond with the name(s) as written on the face of the w end i -very particular, without alteration or enlargement or any change wha s ever, . e • ' , ture(s) must be guaranteed by an eligible guarantor institution. Social Security Numbe 4138-5456-6938 dentif cation Number or other identifying number of No. 2 $5,005,000 UNITED STATES OF AMERICA STATE OF CALIFORNIA COUNTY OF ORANGE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 aturity Date i<t)ber 1, 2048 REGISTERED OWNER: C PRINCIPAL AMOUNT: Bond Date March 12, 2019 CUSIP E THOUSAND DOLLARS 13077EGD6 The California Stat' 'id ommun s Development Authority, a public entity of the State of California (the "Authority' for value ce d, hereby promises to pay (but only out of the Special Tax Revenues hereinafter to e in other funds as described herein) to the registered owner set forth above on the atu ' da - forth above (subject to any right of prior redemption hereinafter provided for) th inc' ount set forth above, together with interest thereon computed on the basis of a 360-d, le. •f tw- 12) 30-day calendar months from the Interest Payment Date next preceding the d - " nti tion of this Bond, unless (i) this Bond is authenticated on a day during the p •d r t .>< -nth (16th) day of the calendar month next preceding an Interest Payment Date tent Date, both days inclusive, in which event it shall bear interest from such "rest ent 1 ate, or (ii) it is authenticated on a day on or before the fifteenth (15th) day of the onth rec: : the first Interest Payment Date, in which event it shall bear interest from the Bo at- o abo e until the principal hereof shall have been paid, at the interest rate per annu ► . -t fc h . e, payable semiannually on March 1 and September 1 in each year, commencing on Sep i� 1, 2019. The interest on and principal of and redemption premium, if any, on this Bond . • ayable in lawful money of the United States of America at the Principal Corporate Trust 0 ice (as that term is defined in the Indenture hereinafter referred to, and herein the "Principal Corporate Trust Office") of Wilmington Trust, National Association, as trustee for the Bonds, or any other bank or trust company at its principal corporate trust office which may at any time be substituted in its place as provided in the Indenture hereinafter referred to (the "Trustee"). The interest on this Bond due on or before the maturity or prior redemption hereof shall be payable only to the person whose name appears in the registration books required to be kept by the Trustee as the registered owner hereof 1 4138-5456-6938 at the close of business as of the fifteenth (15th) day of the calendar month preceding the month in which the applicable Interest Payment Date falls, such interest to be paid by check mailed by first class mail on each such Interest Payment Date to such registered owner at his address as it appears on such books, except that in the case of a registered owner of one million dollars ($1,000,000) or more in principal amount of Bonds then outstanding, payment shall be made at such owner's option by wire transfer on each such Interest Payment Date of immediately available funds to an account in a bank or trust company or savings bank that is a member of the Federal Reserve System and that is located in the United States of America according to written instructions provided by such owner to the Trustee at least fifteen (15) days before such Interest Payment Date. The principal of and redemption premium, if any, on this Bond shall be payable only to the perso • • se name appears in such registration books as the registered owner hereof, such principal a re s i ption premium, if any, to be paid only on the surrender of this Bond at the Principa o ate st Office of the Trustee at maturity or on redemption prior to maturity. amount of eight and through its Cal District No. 2018-03 (Uptown Development Authority Com Tax Bonds, Series 2019" ( Community Facilities Act of Code of the State of California) "Law") and under and pursuant to the "Indenture") between the Authority an of like tenor and date (except for such va numbers, denominations, maturities, interest rat this Bond, are equally and ratably secured in cc Indenture (copies of which are on file at the offi above -mentioned office of the Trustee), and referen Indenture and any and all amendments thereof and suppl terms on which the Bonds are issued and for the rights of t e r all the terms of the Law and the Indenture are hereby incorpor between the Authority and the registered owner from time to time of which the registered owner of this Bond, by his acceptance her each subsequent registered owner hereof shall have recourse to all the the Indenture and shall be bound by all the terms and conditions thereof. of a duly authorized issue of Bonds in the aggregate principal ed thousand dollars ($8,300,000) issued by the Authority by de • mmunities Development Authority Community Facilities , designated the "California Statewide Communities es District No. 2018-03 (Uptown Newport), Special , which Bonds are issued pursuant to the Mello -Roos ing Sections 53311 et seq. of the Government datory thereof or supplemental thereto (the ndenture, dated as of March 1, 2019 (the st, National Association, as Trustee, all ay be required to designate varying on provisions). All Bonds, including with t . - terms and conditions of the of e - «' of the Authority and at the to the Law and to the a description of the s of the Bonds; and stitute a contract all the provisions f ee ' ; nd sents; and the Law and The Bonds are issued to provide funds to finance Uptown Newport public facilities to meet increased demands placed on Uptown Newport and other local agencies as the result of development expected to occur within the Community Facilities District. The Bonds are special tax obligations of the Authority and the interest on and principal of and redemption premiums, if any, on the Bonds are payable solely from the Special Tax Revenues (as that term is defined in the Indenture, and herein the "Special Tax Revenues") and certain other funds, as provided in the Indenture, and the Authority is not obligated to pay them except from the Special Tax Revenues and such other funds as so provided. The general funds and assets of the Authority are not liable and the full faith and credit of the Authority is not pledged for the payment of the interest on or 2 4138-5456-6938 principal of or redemption premiums, if any, on the Bonds, and no tax or assessment other than the Special Tax (as that term is defined in the Indenture, and herein the "Special Tax") shall ever be levied or collected to pay the interest on or principal of or redemption premiums, if any, on the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the Authority or any of its income or receipts except the Special Tax Revenues and such other funds, as provided in the Indenture, and neither the payment of the interest on or principal of or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the Authority. The Bonds are subject to optional, extraordinary and mandatory redemption by the Authority prior to • - it respective maturity dates as a whole or in part on the dates, at the prices and subject to th e . rovided in the Indenture. utstanding Bonds are to be redeemed at the option of the Authority at any one t - t A hall select the maturity dates from which the Bonds shall be redeemed, and 1 ss all th= utstanding Bonds of any one maturity date are to be redeemed at any one time, th st- el= t the Bonds or portions thereof of such maturity date to be redeemed in integral multiples of sand dollars ($5,000) by lot in any manner that it deems appropriate. Notice of rede 'tion . th' • - . or any portion hereof shall be mailed by the Trustee not less than thirty (30) . no +re th. .ixty (60) days before the redemption date by first class mail to the registered owner ereof an. . those securities depositories and securities information services selected by the Au . rity in accor ce with the Indenture and to the original underwriter of the Bonds, but neither fai -ce an ch mailed notice nor any immaterial defect contained therein shall affect the sufficien r v, , of such proceedings for redemption. If notice of redemption has been duly given as ore ., en this Bond or the portion thereof to be redeemed shall, on the redemption date design. i ► .uc , become due and payable at the above -described redemption price; and from and . - e e s ► - signated interest on this Bond or the portion thereof to be redeemed shall cease to a' • e . th- :istered owner of this Bond shall have no rights in respect hereof except to rece p. oft' edemption price of this Bond. If this Bond will not be redeemable in whole, f this Bond for redemption there will be issued in lieu of the unredeemed portio princi. reof a new Bond or Bonds of the same maturity date, of authorized denomination qu gre_- principal amount to such unredeemed portion. Upon written direction of the on t i rustee shall rescind, cancel and annul such redemption by giving notice of such resciss . ncellation and annulment to the same persons and in the same manner as the original notic redemption. The Authority has covenanted that, so long as any Bonds are outstanding, it will annually levy the Special Tax against all Taxable Property (as that term is defined in the Indenture) in the Community Facilities District and make provision for the collection of the Special Tax in amounts which will be sufficient, after making reasonable allowances for contingencies and errors in the estimates, to yield proceeds equal to the amounts required for compliance with the agreements, conditions, covenants and terms contained in the Indenture, and which in any event will be sufficient to pay the interest on and principal of and all Mandatory Sinking Account Payments for and redemption premiums, if any, on the Bonds as they become due and payable and 4138-5456-6938 to pay all current Administrative Expenses (as that term is defined in the Indenture) as they become due and payable in accordance with the provisions and terms of the Indenture. The Bonds are issuable in the form of fully registered Bonds in the denomination of five thousand dollars ($5,000) or any integral multiple of five thousand dollars ($5,000) (not exceeding the principal amount of Bonds maturing at any one time). The registered owner of any Bond or Bonds may surrender the same (together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney) in exchange for an equal aggregate principal amount of Bonds of the same maturity date of any other authorized denominations in the manner, subject to the conditions and upon payment of the charges provided in the Indenture. T egi ation of this Bond is transferable on the registration books kept by the Trustee by i - reg -r o , ' er hereof or by his duly authorized attorney upon surrender of this Bond togeth: it wr' trument of transfer satisfactory to the Trustee duly executed by the registered o r duly thorized attorney, and thereupon a new Bond or Bonds of the same maturity date aut de ► . minations in the same aggregate principal amount will be issued to the transferee in exc an: - or in the manner, subject to the conditions and terms and upon payment of the charges p ' -din . Indenture. The Authority and the Trustee may deem and treat the person in who ame s Bond is registered as the absolute owner hereof for the purpose of receiving paymen or o a • , the interest hereon, the principal hereof, and redemption premium, if any, her an all of . purposes. The rights and obligati i of the Aut ty and of the registered owners of the Bonds may be amended at any time in t er he tent and upon the terms provided in the Indenture, and in certain circumstances with he i nt of such registered owners, but no such amendment shall (1) extend the maturity th' . • or reduce the interest rate hereon or otherwise alter or impair the obligation of the A on - to • interest hereon or principal hereof or any Mandatory Sinking Account Payment or = p - um, if any, hereon at the time and place and at the rate and in the currency and om fu . • r • ed herein without the express written consent of the registered owner of this B • d, • - opa . e the ability of the Authority to levy and collect the Special Tax, or (3) reduce t • erce :e of ' nds required for the written consent to an amendment of the Indenture, or (4) m• any or obligations of the Trustee without its prior written assent thereto; all as more full 't i he -nture. The Bonds do not constitute an indebtedness of the Authorit n the meaning of any constitutional or statutory debt limitation or restriction, and neither t uthority nor any officer or employee thereof shall be liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds other than from the Special Tax Revenues and such other funds as may be pledged therefor, as provided in the Indenture. This Bond shall not be entitled to any benefits under the Indenture or become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been manually signed by an authorized signatory of the Trustee. It is hereby certified that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, 4138-5456-6938 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 obligations of the Authority by and through its Community Facilities District, does not exceed any limit prescribed by the laws of the State of California and is not in excess of the principal amount of the Bonds permitted to be issued under the Indenture. IN WITNESS WHEREOF, the California Statewide Communities Development Authority has caused this Bond to be executed in its name and on its behalf by the manual or facsimile signature of the Chair of the Authority and attested by the manual or facsimile signature of the Secretary of the Authority, and has caused this Bond to be dated as of the Bond Date set forth above. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY Attest: 4138-5456-6938 CERTIFICATE OF AUTHENTICATION This is one of the Bonds described in the within -mentioned Indenture which has been authenticated on March 12, 2019. WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee Authorized Signatory 4138-5456-6938 ASSIGNMENT For value received the undersigned do(es) hereby sell, assign and transfer unto the within Bond and do(es) hereby irrevocably constitute and appoint attorney to transfer the same on the bond register of the Trustee, with full power of substitution in the premises. Dated: SIGNATURE G ... TEED BY: Note: The si '' (s is ignment must correspond with the name(s) as written on the face of the w end i -very particular, without alteration or enlargement or any change wha s ever, . e • ' , ture(s) must be guaranteed by an eligible guarantor institution. Social Security Numbe 4138-5456-6938 dentif cation Number or other identifying number of 0 o PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY 13, 2019 s ° NEW ISSUE — BOOK -ENTRY ONLY NOT RATED In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, based upon an analysis of existing laws, regulations, h rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel expresses no opinion regarding any other tax consequences y related to the ownership or disposition of or the amount, accrual or receipt of interest on, the Bonds. See "TAX MATTERS" herein. Hr d •L $8,800,000* CSC D /� COMMUNITYCALIFORNIA FACILITIESDE IDISTRICT MUNITIES NO.2I 18 03 ENT UTHORITY ob f1 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (UPTOWN NEWPORT) G 2' SPECIAL TAX BONDS, SERIES 2019 u yo yr • u i � L 0 oi. oa k R u u 0 3 .75 oy '3 0 L H od �.o d� ar o^ � 3 o k d:, 6 � u o di I'ti dy Pt Lao '= oV, y o0 o� L d w�. g° s R y � L R C o° 8 0 u o w ` RBC Capital Markets® 10 L •u o. c ad Fy Dated: Date of Delivery Due: September 1, as shown on the Inside Cover The California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), Special Tax Bonds, Series 2019 (the "Bonds") are being issued under the Mello -Roos Community Facilities Act of 1982 (the "Act") to (a) finance the acquisition and construction of certain public capital improvements and certain utility undergrounding authorized to be financed in connection with the development of property within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "Community Facilities District"), (b) make a deposit to the Reserve Fund, (c) capitalize a portion of the interest on the Bonds through September 1, 2020, and (d) pay certain costs of issuing the Bonds. See "ESTIMATED SOURCES AND USES OF BOND PROCEEDS" herein. The Bonds will be issued in accordance with the provisions of an Indenture (the "Indenture"), between the California Statewide Communities Development Authority (the "Authority") and Wilmington Trust, National Association, as trustee (the "Trustee"). Bonds may be purchased in the principal amount of $5,000 or integral multiples thereof. Interest is payable semiannually on March 1 and September 1 of each year, commencing September 1, 2019. The Trustee pays interest to the Holders as their names appear, at the close of business as of the fifteenth day of the calendar month preceding the calendar month in which the applicable Interest Payment Date falls. The Bonds are being issued as fully registered bonds in book -entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Purchasers will not receive certificates representing their interest in the Bonds. See Appendix G — "BOOK -ENTRY SYSTEM." THE BONDS REPRESENT A HIGH DEGREE OF SPECULATIVE RISK. Investment in the Bonds involves risks which may not be appropriate for some investors. See "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 information for general reference only. It is not a complete summary of the Bonds. Investors should read the entire Official Statement to obtain information essential to the making of an informed investment decision. The Bonds are subject to redemption prior to maturity as described herein. See "THE BONDS — Redemption" herein. The Bonds are secured by a pledge of and are payable from the Special Tax (as defined herein) to be levied on certain real property within the Community Facilities District, including any prepayments thereof and any amounts received, net of costs of collection, as a result of foreclosure or other actions by the Authority to collect delinquent Special Tax, and amounts held in certain funds pursuant to the Indenture. Following the issuance of the Bonds, Refunding Bonds are permitted pursuant to the Indenture, which Refunding Bonds will be secured by a lien on the Special Tax on parity with the Bonds. See "SECURITY FOR THE BONDS." THE PRINCIPAL OF AND INTEREST AND REDEMPTION PREMIUMS, IF ANY, ON THE BONDS ARE LIMITED OBLIGATIONS PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX. THE AUTHORITY IS NOT OBLIGATED TO PAY THE BONDS EXCEPT FROM THE PROCEEDS OF THE SPECIAL TAX. THE GENERAL FUNDS AND ASSETS OF THE AUTHORITY ARE NOT LIABLE AND THE FULL FAITH AND CREDIT OF THE AUTHORITY IS NOT PLEDGED FOR THE PAYMENT OF THE PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS. NO TAX OR ASSESSMENT OTHER THAN THE SPECIAL TAX SHALL EVER BE LEVIED OR COLLECTED TO PAY THE PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS. THE BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF OR CHARGE, LIEN OR ENCUMBRANCE UPON ANY OF THE PROPERTY OF THE AUTHORITY OR ANY OF ITS INCOME OR RECEIPTS EXCEPT THE MONEY HELD IN THE SPECIAL TAX FUND PURSUANT TO THE INDENTURE. NEITHER THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS IS A GENERAL DEBT, LIABILITY OR OBLIGATION OF THE AUTHORITY. The Bonds are offered when, as and if issued and delivered to the Underwriter, subject to the approval as to their validity by Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, and subject to certain other conditions. Certain legal matters will be passed upon for the Underwriter by Kutak Rock LLP, Irvine, California. Orrick, Herrington & Sutcliffe LLP is also acting as Disclosure Counsel to the Authority. Latham & Watkins LLP, Los Angeles, California, is serving as counsel to the Developers (as defined herein). It is anticipated that the Bonds will be available for delivery in book -entry form through the facilities of DTC on or about March _, 2019. This Official Statement is dated , 2019. Preliminary, subject to change. MATURITY SCHEDULE RELATING TO $8,800,000* CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 MATURITY SCHEDULE (Base CUSIPt Number Maturity Principal CUSIPt (September 1) Amount Interest Rate Price or Yield$ Suffix $ % Term Bond due September 1, 20; Priced to Yield$ %; CUSIPt Suffix $ % Term Bond due September 1, 20; Priced to Yield$ %; CUSIPt Suffix Preliminary, subject to change. CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright© 2019 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP numbers are provided for convenience of reference only. The Authority and the Underwriter take no responsibility for the accuracy of such numbers. Reoffering prices/yields furnished by the Underwriter. The Authority takes no responsibility for the accuracy thereof. No dealer, broker, salesperson or other person has been authorized by the Authority or the Underwriter to give any information or to make any representations with respect to the Authority, the Community Facilities District or the Bonds other than the information contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by the Authority 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 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 a representation of facts. Certain of the information set forth herein has been obtained from sources which the Authority believes to be reliable, but such information is not guaranteed as to accuracy or completeness. All summaries of the Indenture or other documents are made subject to the provisions thereof 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 Authority for further information in connection therewith. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement includes forward -looking statements that are based on the current expectations and projections of the Authority or the developers of the land within the Community Facilities District about future events. These forward -looking statements are subject to risks and uncertainties, including risks and uncertainties outside the control of the Authority, the Developers or all of them. Such statements generally are identifiable by the terminology used, such as "project," "plan," "expect," "anticipate," "estimate," "budget," "believe" or other similar words. The achievement of certain results or other expectations contained in such forward -looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. No assurance is given that actual results will meet the Authority's or the Developers' forecasts in any way. Except as set forth in the continuing disclosure undertakings, forms of which are attached as Appendix F hereto, the Authority and the Developers do not plan to issue any updates or revisions to those forward -looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur or change. 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. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 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 UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE HEREOF AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. (THIS PAGE INTENTIONALLY LEFT BLANK) CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY Commission Larry Combs, Chair Kevin O'Rourke, Vice Chair Brian Moura, Treasurer Tim Snellings, Secretary Jordan Kaufman, Member Dan Mierzwa, Member Marcia Raines, Member Michael Cooper, Alternate Member Niroop Srivatsa, Alternate Member Officers Cathy Bando, Executive Director PROFESSIONAL SERVICES Special Tax Consultant David Taussig & Associates, Inc. Appraiser Integra Realty Resources Bond and Disclosure Counsel Orrick, Herrington & Sutcliffe LLP Trustee Wilmington Trust, National Association (THIS PAGE INTENTIONALLY LEFT BLANK) TABLE OF CONTENTS Page INTRODUCTION 1 THE BONDS 6 Description of the Bonds 6 Redemption 6 Transfer and Exchange of Bonds 9 Debt Service Schedule 9 THE CITY OF NEWPORT BEACH 10 THE COMMUNITY FACILITIES DISTRICT 10 General Information 10 The Community Facilities District 10 THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS 11 Ownership 11 The Project, Planned Development and Status of Construction 12 Development Entitlements 15 Utilities 15 Project Plan of Finance 16 The Developers and Shopoff Realty Investments, L.P 17 Surrounding Area 18 Acquisition Agreement and Facilities Relocation Agreement 18 The Improvements and Undergrounding 20 ESTIMATED SOURCES AND USES OF BOND PROCEEDS 20 SECURITY FOR THE BONDS 21 General 21 The Special Tax 21 Rate and Method of Apportionment of Special Tax 22 Special Tax Calculations 25 Debt Service Coverage 27 Authority Policy Regarding Assessments and Special Tax 28 Funds and Accounts; Flow of Funds 28 Refunding Bonds 29 Covenant for Superior Court Foreclosure 30 Property Values 31 Direct and Overlapping Debt 32 Estimated Value -to -Lien Debt Ratios 33 -i- TABLE OF CONTENTS (continued) Page Other Potential Debt 37 SPECIAL RISK FACTORS 37 Insufficiency of Special Tax 37 Limited Obligation to Pay Bonds 37 Non -Recourse Obligation to Pay Special Tax 38 Special Tax Delinquencies 38 Shapiro v. San Diego 38 Failure to Develop 39 Construction Risk 39 Concentration of Ownership and Risks Relating to Future Owners 40 Extraordinary Redemption from Prepaid Special Taxes 40 Appraisal Risks 40 Assessed Valuation Risks 41 Bankruptcy and Foreclosure Delays 41 Disclosures to Future Purchasers 41 Billing of Special Tax 42 Endangered and Threatened Species 42 Natural Disasters 42 Hazardous Substances 43 FDIC/Federal Government Interests in Properties 43 Parity Taxes and Special Assessments 44 Value -to -Lien Debt Ratios 45 Limitations on Remedies; No Acceleration 45 Right to Vote on Taxes Act 45 Tax Cuts and Jobs Act of 2017 46 Risks Relating to Tax -Exempt Status of the Bonds 46 THE AUTHORITY 47 LITIGATION 47 CONTINUING DISCLOSURE 47 The Authority 47 The Developers 47 LEGAL OPINIONS 48 TAX MATTERS 48 UNDERWRITING 49 TABLE OF CONTENTS (continued) Page NO RATINGS 50 MISCELLANEOUS 51 APPENDIX A GENERAL INFORMATION ABOUT THE CITY OF NEWPORT BEACH AND VICINITY APPENDIX B APPRAISAL APPENDIX C RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX APPENDIX D PROPOSED FORM OF OPINION OF BOND COUNSEL APPENDIX E SUMMARY OF THE INDENTURE APPENDIX F FORMS OF CONTINUING DISCLOSURE CERTIFICATES APPENDIX G BOOK -ENTRY SYSTEM (THIS PAGE INTENTIONALLY LEFT BLANK) OFFICIAL STATEMENT $8,800,000* CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 INTRODUCTION The purpose of this Official Statement, including the cover, table of contents and the Appendices, is to provide certain information concerning the $8,800,000* aggregate principal amount of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), Special Tax Bonds, Series 2019 (the "Bonds"). This introduction is not a summary of this Official Statement. It is only a general description of and guide to, and is qualified by, the more complete and detailed information contained in the entire Official Statement, including the cover page and Appendices hereto, and the documents summarized or described herein. Investors should review the entire Official Statement. The sale and delivery of the Bonds to investors is made only by means of the entire Official Statement. The Bonds are being issued under the Mello -Roos Community Facilities Act of 1982 (the "Act") to (a) finance the acquisition and construction of certain public capital improvements and certain utility undergrounding authorized to be financed in connection with the development of property within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "Community Facilities District"), (b) make a deposit to the Reserve Fund, (c) capitalize a portion of the interest on the Bonds through September 1, 2020, and (d) pay certain costs of issuing the Bonds. See "ESTIMATED SOURCES AND USES OF BOND PROCEEDS" herein. Bonds may be purchased in principal amounts of $5,000 or integral multiples thereof. Interest is payable semiannually on March 1 and September 1 of each year, commencing September 1, 2019. The Trustee pays interest to the Holders as their names appear, at the close of business as of the fifteenth day of the calendar month preceding the calendar month in which the applicable Interest Payment Date falls. The Bonds are being issued as fully registered bonds in book -entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Purchasers will not receive certificates representing their interest in the Bonds. See Appendix G — "BOOK -ENTRY SYSTEM." The Bonds are subject to redemption prior to maturity as described herein. See "THE BONDS — Redemption" herein. The Bonds will be issued in accordance with the provisions of an Indenture (the "Indenture"), between the California Statewide Communities Development Authority (the "Authority") and Wilmington Trust, National Association, as trustee (the "Trustee"). The Commission of the Authority, through proceedings conducted under the Act, has become authorized to issue special tax bonds for the Community Facilities District in an aggregate principal amount not to exceed $8,800,000. Following the issuance of the Bonds, Refunding Bonds are permitted pursuant to the Indenture, which Refunding Bonds will be secured by a lien on the Special Tax (as defined below) on parity with the Bonds. See "SECURITY FOR THE BONDS — Refunding Bonds." The Community Facilities District is located within the Airport Area (near John Wayne Airport) of the City of Newport Beach (the "City") in Orange County, California (the "County"). The City is located in the coastal center of the County, approximately 89 miles north of San Diego, 15 miles south of Long Beach and 45 miles southwest of * Preliminary, subject to change. 1 Los Angeles. For additional information regarding the City, see "THE CITY OF NEWPORT BEACH" and Appendix A — "GENERAL INFORMATION ABOUT THE CITY OF NEWPORT BEACH AND VICINITY." The Community Facilities District consists of approximately 15.8 net taxable acres of land and is currently expected to be developed into 472 condominiums, 314 apartments and 11,500 cumulative square feet of commercial space. The Community Facilities District is expected to be developed in two primary phases. Phase 1 is currently planned to consist of the development of approximately 3.24 net taxable acres (total of approximately 7.6 gross acres), comprised of 158 condominiums and approximately 7,500 square feet of commercial space. Phase 2 is currently planned to consist of the development of approximately 12.56 acres, comprised of approximately 628 residential units, including 314 apartments and 314 condominiums, and approximately 4,000 square feet of commercial space. The property anticipated to be developed for Phase 2 is currently improved with a 320,510 square foot industrial building, and subject to an existing lease by and between Uptown Newport Jamboree, LLC ("Uptown Newport Jamboree") and Newport Fab, LLC, doing business as Jazz Semiconductor ("TowerJazz"), a semi -conductor chip manufacturer. Upon expiration of such lease (currently scheduled to expire in March 2027), demolition of the current improvements will commence and is currently anticipated to be completed by the end of 2027 with Phase 2 development of the site for residential and commercial uses planned to begin in the first quarter of 2028. See additional detail on the lease in "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — Ownership" below. The Community Facilities District comprises a portion of the Uptown Newport Planned Community Development Plan, which is a mixed -use development expected to include 1,244 residential units, including apartments (including affordable units) and condominiums, retail and commercial space, recreational parks and open space. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS" herein. TSG-Parcel 1, LLC, a Delaware limited liability company ("TSG Parcel 1" and together with Uptown Newport Jamboree, the "Developers"), the current owners of all of the property within the Community Facilities District, are coordinating the installation of the improvements for the Community Facilities District, including grading, wet and dry utilities and roadway improvements. Construction of the improvements within the Community Facilities District is underway and is further described under "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS." The Community Facilities District is subject to the levy of the Special Tax for payment of the Bonds, as described under "SECURITY FOR THE BONDS." For additional information regarding the Community Facilities District and its development, see "THE COMMUNITY FACILITIES DISTRICT." Pursuant to the Act, the qualified electors of the Community Facilities District were the owners of the Taxable Property (as defined in Appendix C — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX") within the Community Facilities District. The property owners approved the levy of a special tax (the "Special Tax") on their real property within the boundaries of the Community Facilities District. See "THE COMMUNITY FACILITIES DISTRICT — General Information." The Bonds are limited obligations payable solely from and secured by a pledge of the Special Tax, including any prepayments thereof and any amounts received, net of costs of collection, as a result of foreclosure or other actions by the Authority to collect delinquent Special Tax, and amounts held in certain funds pursuant to the Indenture. See "SECURITY FOR THE BONDS." The Bonds will be further secured by amounts on deposit in a Reserve Fund. See "SECURITY FOR THE BONDS — Funds and Accounts; Flow of Funds." THE PRINCIPAL OF AND INTEREST AND REDEMPTION PREMIUMS, IF ANY, ON THE BONDS ARE LIMITED OBLIGATIONS PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX. THE AUTHORITY IS NOT OBLIGATED TO PAY THE BONDS EXCEPT FROM THE PROCEEDS OF THE SPECIAL TAX. THE GENERAL FUNDS AND ASSETS OF THE AUTHORITY ARE NOT LIABLE AND THE FULL FAITH AND CREDIT OF THE AUTHORITY IS NOT PLEDGED FOR THE PAYMENT OF THE PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS. NO TAX OR ASSESSMENT OTHER THAN THE SPECIAL TAX SHALL EVER BE LEVIED OR COLLECTED TO PAY THE PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS. THE BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF OR CHARGE, LIEN OR ENCUMBRANCE UPON ANY OF THE PROPERTY OF THE AUTHORITY OR ANY OF ITS INCOME OR RECEIPTS EXCEPT THE MONEY HELD IN THE SPECIAL TAX FUND PURSUANT TO THE INDENTURE. NEITHER THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS IS A GENERAL DEBT, LIABILITY OR OBLIGATION OF THE AUTHORITY. 2 THE BONDS REPRESENT A HIGH DEGREE OF SPECULATIVE RISK. Investment in the Bonds involves risks that may not be appropriate for some investors. Certain risk factors should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. See "SPECIAL RISK FACTORS." General descriptions of the Bonds, the Indenture, the security for the Bonds, the Community Facilities District, the status of development within the Community Facilities District, the Developers and certain other information are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. The descriptions herein of the Bonds, the Indenture and other documents are qualified in their entirety by reference to the complete terms thereof. Capitalized terms used but not defined herein have the meanings given in the Indenture, certain provisions of which, including certain definitions, are summarized in Appendix E hereto. Copies of the Indenture and such other documents may be obtained from the Trustee. [Remainder of page intentionally left blank] 3 Regional Map of CSCDA CFD No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California I Costa Mesa % John Wayne Airport Site Boundary ------ City Boundary AND W -edit* t*k San Diego Creek Chann 4r. 0 2, COO Scale (Feet) m 4 Boundary Map of CSCDA CFD No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California Far particu63s of linca and dimcnaiona. reference is made In 1ho parcels maps of me orange tWriry ASseSSOr_ caliimia, and to Tract map hb_ 17769 recorded 31 June 19. 2415 as Instrument fvo. 291500320061 at Paces 17 through 23 In Book 937 of maps n the Mize of the County Rrrnrrler of Crzrige County. CaWr9111I9. LEGEND Proposed Boundaries of California Starcwide Cornmunil s Ocvelopment ■•MINN■ Autt.yitt Cei irpuilily F is ics O 1rIC1 NO 201E-931Upwnil Nverrpurq. Cfyur Newpur. Beads. Gounry or oranoe Callum a 111 11111 Parcel Una Ts&Zoos 1 ist Zooe 2 415-13o-1n Assessor Parcel Monter rtrawmcs GLllnTLLKIY, SH6. aacllfgIM 5 THE BONDS Description of the Bonds The Bonds will be issued pursuant to the Act and the Indenture as fully registered Bonds without coupons in denominations of $5,000, or any integral multiple thereof (not exceeding the principal amount maturing at any one time). The Bonds will be issued in book -entry only form. The Depository Trust Company, New York, New York ("DTC") will act as securities depository for the Bonds. So long as the Bonds are held in book -entry only form, principal of and interest on the Bonds will be paid directly to DTC for distribution to the beneficial owners of the Bonds in accordance with DTC's procedures. See Appendix G — "BOOK -ENTRY SYSTEM." The Bonds will be dated the date of delivery and will mature on September 1 in the years and in the principal amounts shown on the inside cover of this Official Statement. The Bonds will bear interest at the per annum rates shown on the inside cover of this Official Statement. Such interest will be payable semiannually on March 1 and September 1 of each year, commencing September 1, 2019 (each, an "Interest Payment Date") and will be computed on the basis of a 360-day year consisting of twelve 30-day months. The Trustee pays interest to the Holders as their names appear, at the close of business as of the fifteenth day of the calendar month preceding the calendar month in which the applicable Interest Payment Date falls. Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (i) it is authenticated on a day during the period from the sixteenth (16th) day of the calendar month next preceding an Interest Payment Date to such Interest Payment Date, both days inclusive, in which event it will bear interest from such Interest Payment Date, or (ii) it is authenticated on a day on or before the fifteenth (15th) day of the month preceding the first Interest Payment Date, in which event it will bear interest from its date; provided, that if at the time of authentication of any Bond interest is then in default on the Bonds, the Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment of interest on the Bonds. Interest and redemption premiums, if any, on, and the principal of, the Bonds will be payable in lawful money of the United States of America at the principal corporate trust office of the Trustee in Los Angeles or San Francisco, California, or at such other place as designated by the Trustee. Payment of interest on the Bonds due on or before the maturity or prior redemption thereof will be made only to the person named in the Trustee's registration books as the registered owner thereof at the close of business on the fifteenth (15th) day of the month next preceding the Interest Payment Date. Interest will be paid by check mailed by first class mail to the registered owner at the address appearing in such registration books, except that a registered owner of $1,000,000 or more in principal amount of Bonds then Outstanding may elect to receive payment on any Interest Payment Date by wire transfer of immediately available funds to an account in a bank or trust company or savings bank that is a member of the Federal Reserve System and that is located in the United States of America by delivering written instructions to the Trustee at least fifteen (15) days before each such Interest Payment Date. Payment of the principal of and redemption premium, if any, on the Bonds shall be made only to the person named in such registration books as the registered owner thereof. Principal and redemption premiums, if any, will be paid only on the surrender of the Bonds at the principal corporate trust office of the Trustee at maturity or on redemption prior to maturity. So long as Cede & Co. is the registered owner of the Bonds, payments of the principal of, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co., by the Trustee. Disbursements of such payments to DTC's Participants is the responsibility of DTC and disbursements of such payments to the beneficial owners is the responsibility of DTC's Participants and Indirect Participants, as more fully described herein. See Appendix G — `BOOK - ENTRY SYSTEM," herein. Redemption* Extraordinary Redemption from Prepayment of Special Tax. The Bonds are subject to extraordinary redemption by the Authority prior to their respective maturity dates as a whole or in part on any Interest Payment Date solely from money derived by the Authority from prepayments of the Special Tax under the Act at the following * Preliminary, subject to change. 6 redemption prices (computed upon the principal amount of the Bonds or portions thereof called for redemption), together with accrued interest to the date fixed for redemption, as follows: Redemption Date Any Interest Payment Date on and after September 1, 2018 through March 1, 2027 Any Interest Payment Date on and after September 1, 2027 through March 1, 2028 September 1, 2028 and any Interest Payment Date thereafter Redemption Price 102% 101% 100% Transfers of property ownership and certain other circumstances could result in prepayments of the Special Tax by the Developers or any individual owner. The Special Taxes could also be prepaid by the proceeds of bonds issued by or on behalf of an over -lapping special assessment district or community facilities district. Such prepayments would result in redemption of all or a portion of the Bonds prior to their stated maturity, at the redemption prices corresponding to the redemption dates as shown herein and would thus cause a proportionate reduction of the amount on deposit in the Reserve Fund. See "SECURITY FOR THE BONDS — Funds and Accounts; Flow of Funds" and "SPECIAL RISK FACTORS — Extraordinary Redemption from Prepaid Special Taxes." Optional Redemption. The Bonds maturing on or before September 1, 2028, are not subject to optional redemption prior to their respective stated maturity dates. The Bonds maturing on or after September 1, 2029, are subject to optional redemption by the Authority prior to their respective maturity dates as a whole or in part on any date on or after September 1, 2028, from money derived by the Authority from any source other than Mandatory Sinking Account Payments (defined herein) or prepayments of the Special Tax (described herein), at the principal amount of the Bonds or portions thereof called for redemption, together with accrued interest to the date fixed for redemption, without premium. Mandatory Redemption from Mandatory Sinking Account Payments. The Authority will establish and maintain with the Trustee the 20_ Sinking Account in the Redemption Fund for the Bonds maturing on September 1, 20_ (the "20_ Term Bonds"), to receive payments (the "20_ Mandatory Sinking Account Payments") for the mandatory redemption of the 20_ Term Bonds. The 20_ Term Bonds are subject to mandatory redemption by the Authority prior to their maturity date in part on any September 1 on and after September 1, 20_, in the principal amounts thereof together with accrued interest thereon to the date fixed for redemption, without premium, solely from 20_ Mandatory Sinking Account Payments deposited into the 20_ Sinking Account, as follows except that if any Bonds maturing on September 1, 20, shall have been extraordinarily and/or optionally redeemed pursuant to the Indenture, the amounts of the Mandatory Sinking Account Payments shall be reduced proportionately by the principal amount of all such Bonds so redeemed: Term Bonds Maturing September 1, 20_ Mandatory Sinking Account Payment Date (September 1) * Maturity Mandatory Sinking Account Payments The Authority will establish and maintain with the Trustee the 20 Sinking Account in the Redemption Fund for the Bonds maturing on September 1, 20 (the "20_ Term Bonds"), to receive payments (the "20_ Mandatory Sinking Account Payments") for the mandatory redemption of the 20 Term Bonds. The 20 Term 7 Bonds are subject to mandatory redemption by the Authority prior to their maturity date in part on any September 1 on and after September 1, 20_, in the principal amounts thereof together with accrued interest thereon to the date fixed for redemption, without premium, solely from 20_ Mandatory Sinking Account Payments deposited into the 20_ Sinking Account, as follows except that if any Bonds maturing on September 1, 20_, shall have been extraordinarily and/or optionally redeemed pursuant to the Indenture, the amounts of the Mandatory Sinking Account Payments shall be reduced proportionately by the principal amount of all such Bonds so redeemed: Term Bonds Maturing September 1, 20_ Mandatory Sinking Account Payment Date (September 1) * Maturity Mandatory Sinking Account Payments Selection of Bonds for Redemption. If less than all the Outstanding Bonds are to be redeemed at the option of the Authority or from prepayments of the Special Tax, the Authority will select the maturity dates from which the Bonds shall be redeemed, and if less than all the Outstanding Bonds of any one maturity are to be redeemed at any one time, the Trustee will select the Bonds of such maturity or the portions thereof to be redeemed in integral multiples of five thousand dollars ($5,000) by lot in any manner that it deems appropriate. Notice of Redemption. The Trustee will mail a notice of redemption to the registered owners of the Bonds selected for redemption, at the addresses appearing on the registration books, at least 30 days but not more than 60 days prior to the date fixed for redemption; however, neither the failure to receive a notice of redemption nor any immaterial defect therein shall affect the sufficiency or validity of the redemption proceedings. So long as the Bonds are held in book -entry only form, the Trustee will send notices of redemption exclusively to DTC, as registered owner of the Bonds, and will not send any such notices to any beneficial owners. DTC is to distribute such notices to the beneficial owners of the Bonds in accordance with its procedures. See Appendix G — "BOOK - ENTRY SYSTEM." Upon written direction of the Authority received at least five (5) days prior to the date fixed for the redemption of Bonds pursuant to the Indenture, the Trustee shall promptly rescind, cancel and annul such redemption by giving notice of such rescission, cancellation and annulment to the same persons and in the same manner as the original notice of redemption. Notwithstanding anything to the contrary contained in the Indenture, with respect to any notice of optional or extraordinary redemption of Bonds, unless, upon the giving of such notice, such Bonds are deemed to have been paid within the meaning of the Indenture, such notice will state that such redemption is conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of amounts sufficient to pay the principal of, and premium, if any, and interest on, such Bonds to be redeemed, and that if such amounts are not received the notice will be of no force and effect and the Authority will not be required to redeem such Bonds. In the event that any such notice of redemption contains such a condition and such amounts are not so received, the redemption will not be made and the Trustee will within a reasonable time thereafter give notice to the effect that such amounts were not so received and such redemption was not made, such notice to be given by the Trustee in the same manner, and to the same parties, as the notice of redemption was given. Such failure to redeem such Bonds shall not constitute an event of default under the Indenture. 8 Effect of Redemption of Bonds. If notice of redemption has been duly given, and has not been rescinded as described in the preceding paragraph, and the Trustee holds money for the payment of the principal of and redemption premiums, if any, on, together with interest to the redemption date on, the Bonds to be redeemed, then on the redemption date such Bonds to be redeemed shall become due and payable, and from and after the date fixed for redemption interest on the Bonds to be redeemed will cease to accrue and the Holders of such Bonds shall have no rights except to receive payment of principal, redemption premiums, if any, thereon and interest accrued thereon to the date fixed for redemption. Such Bonds are required to be surrendered on the date fixed for redemption at the address or addresses of the Trustee so designated. If any Bond chosen for redemption will not be redeemable in whole, upon presentation of such Bond for redemption there will be issued in lieu of the unredeemed portion of principal thereof a new Bond or Bonds of the same maturity date, of authorized denominations equal in aggregate principal amount to such unredeemed portion. Transfer and Exchange of Bonds So long as DTC or Cede & Co. is the registered owner of the Bonds, transfers of beneficial interests in the Bonds shall be according to the DTC book -entry system, as more fully described herein. See Appendix G — `BOOK - ENTRY SYSTEM." The Indenture provides that the Trustee will keep at its principal corporate trust office books for the transfer and exchange of the Bonds, which books at all times during normal business hours with reasonable prior notice shall be open to inspection by the Authority or by any Owner. Any Bond may, in accordance with its terms, be transferred or exchanged on such books by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon payment by the Owner requesting such transfer or exchange of any tax or other governmental charge required to be paid with respect to such transfer or exchange, and upon surrender of such Bond for cancellation accompanied by delivery of a duly executed written instrument of transfer or exchange in a form approved by the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the Authority shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds of the same maturity date and of authorized denominations for the same aggregate principal amount, except that neither the Authority nor the Trustee shall be required (i) to transfer or exchange any Bonds during the 15-day period prior to the selection of any Bonds for redemption, or (ii) to transfer or exchange any Bond which has been selected for redemption in whole or in part, except the unredeemed portion of such Bond selected for redemption in part, from and after the day that such Bond has been selected for redemption in whole or in part. Debt Service Schedule The annual debt service schedule for the Bonds (assuming no early redemptions) is set forth as follows: Period Ending (September 1) Principal Interest Debt Service 2019 $223,666.67 $223,666.67 2020 440,000.00 440,000.00 2021 $35,000 440,000.00 475,000.00 2022 45,000 438,250.00 483,250.00 2023 55,000 436,000.00 491,000.00 2024 70,000 433,250.00 503,250.00 2025 85,000 429,750.00 514,750.00 2026 100,000 425,500.00 525,500.00 2027 115,000 420,500.00 535,500.00 2028 130,000 414,750.00 544,750.00 2029 145,000 408,250.00 553,250.00 2030 165,000 401,000.00 566,000.00 2031 185,000 392,750.00 577,750.00 2032 205,000 383,500.00 588,500.00 2033 230,000 373,250.00 603,250.00 2034 255,000 361,750.00 616,750.00 2035 280,000 349,000.00 629,000.00 2036 305,000 335,000.00 640,000.00 2037 335,000 319,750.00 654,750.00 9 Period Ending (September 1) Principal Interest Debt Service 2038 360,000 303,000.00 663,000.00 2039 395,000 285,000.00 680,000.00 2040 425,000 265,250.00 690,250.00 2041 465,000 244,000.00 709,000.00 2042 500,000 220,750.00 720,750.00 2043 540,000 195,750.00 735,750.00 2044 580,000 168,750.00 748,750.00 2045 625,000 139,750.00 764,750.00 2046 675,000 108,500.00 783,500.00 2047 720,000 74,750.00 794,750.00 2048 775,000 38,750.00 813,750.00 Total $8,800,000 $9,470,166.67 $18,270,166.67 THE CITY OF NEWPORT BEACH The City of Newport Beach (the "City") is a city located within Orange County (the "County"). The City is located in the coastal center of the County, approximately 89 miles north of San Diego, 15 miles south of Long Beach and 45 miles southwest of Los Angeles. The City encompasses approximately 24 square miles of land and has an estimated population of 87,182 as of January 1, 2018. For additional information regarding the City, see Appendix A — "GENERAL INFORMATION ABOUT THE CITY OF NEWPORT BEACH AND VICINITY." The Bonds are not a debt or obligation of the City. THE COMMUNITY FACILITIES DISTRICT General Information On December 20, 2018, the Authority conducted proceedings to establish the Community Facilities District. At a special election held on the same date, the owners of the property within the boundaries of the Community Facilities District authorized the Authority, on behalf of the Community Facilities District, to incur a bonded indebtedness in an amount not to exceed $8,800,000 and approved the Rate and Method of Apportionment (the "Rate and Method"). See "SECURITY FOR THE BONDS — Rate and Method of Apportionment of Special Tax." The Community Facilities District The Community Facilities District is located within the City. Regional maps showing the location of the City appear herein under the caption "INTRODUCTION." Specifically, the Community Facilities District is located within the City of Newport Beach Airport Area near John Wayne Airport, bounded by Jamboree Road to the east and between Birch Street to the north, and Von Karman Avenue and MacArthur Boulevard to the west. The Community Facilities District consists of approximately 15.80 net taxable acres of land and is expected to be developed to include approximately 472 condominiums, 314 apartments and 11,500 square feet of commercial space. The Community Facilities District is currently expected to be developed in two primary phases. Phase 1 is currently anticipated to consist of the development of approximately 3.24 net taxable acres (total of 7.6 gross acres), comprised of 158 condominiums and approximately 7,500 square feet of commercial space. Phase 2 is currently anticipated to consist of the development of approximately 12.56 acres, comprised of approximately 628 residential units, including 314 apartments and 314 condominiums, and approximately 4,000 square feet of commercial space. Vertical construction of Phase 2 is currently expected to commence in early 2028 after termination of the existing lease with TowerJazz, which currently occupies the building located on land within the expected Phase 2 development, and demolition of the existing building on site. The Community Facilities District comprises a portion of the Uptown Newport Planned Community Development Plan (the "Uptown Newport Project"), which is a mixed -use community expected to include 1,244 residential units, including apartments and condominiums, retail and commercial space, recreational parks and open 10 space. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Project, Planned Development and Status of Construction" below. David Taussig & Associates, Inc., as the special tax consultant for the Community Facilities District, has prepared a Community Facilities District Report (the "Hearing Report") relating to the Community Facilities District. Certain additional information regarding the improvements to be financed, including descriptions, cost estimates and related information, can be found in the Hearing Report, which is available for review at the offices of the Authority. THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS A description of the Project is set forth below. The following information has been obtained by the Authority from representatives of the Developers and other sources believed by the Authority to be reliable, but has not been independently verified by the Authority or any of its consultants or the Underwriter. Ownership Current Ownership. TSG-Parcel 1, LLC, a Delaware limited liability company ("TSG Parcel 1"), and Uptown Newport Jamboree, LLC, a Delaware limited liability company ("Uptown Newport Jamboree" and, together with TSG Parcel 1, the "Developers"), are the owners and developers of the property within the Community Facilities District. TSG Parcel 1 is the owner of Lot 1 of Phase 1 and Uptown Newport Jamboree is the owner of Lot 2 of Phase 1 and all of the property to be developed in Phase 2. TSG Parcel 1 is providing backbone infrastructure to Phase 1 of the Uptown Newport Project. See "— The Developers and Shopoff Realty Investments, L.P." for a discussion of the Developers. TowerJazz Lease. Uptown Newport Jamboree (the "Landlord") and Newport Fab, LLC dba Jazz Semiconductor (the "Tenant") are parties to a lease (the "Lease") for the real property located at 4321 Jamboree Road, Newport Beach, California 92660 (the "Leased Premises" or the "Property"). The Leased Premises are improved with a 320,510 square foot industrial building, in which the Tenant (known as Jazz Semiconductor or TowerJazz) manufactures semiconductor computer chip wafers. Shopoff Management, Inc. (the "Agent") is the Landlord's property manager and oversees maintenance of the parking lot and landscaping that are part of the Leased Premises. The Tenant maintains the interior of the building. The Lease term commenced on March 12, 2002 and had an initial 15-year period. The Tenant exercised the first of two 5-year options, extending the lease term to March 12, 2022. The Tenant has the second (and last) 5-year option remaining, which if timely exercised may extend the term to March 12, 2027. The Lease is a triple net lease, and the Tenant is obligated to pay base rent, maintenance costs and utilities at the Leased Premises. The Tenant's pro rata share of water, electric, gas and property taxes is 100%. The Tenant pays water, electricity and natural gas directly to utility providers. The Landlord pays real property taxes and maintenance, but the Tenant is obligated to reimburse the Landlord for such costs through CAM (common area maintenance) charges, paid based on estimated costs with quarterly CAM charge reconciliations. Under the Lease, the Tenant is responsible for reimbursing Landlord for real property taxes, including the Special Taxes, allocable to the Leased Premises based on the tax bill received from the Orange County Treasurer -Tax Collector. Under the Lease, the failure by the Tenant to timely pay or reimburse real property taxes is a default by the Tenant under the Lease. The Landlord's remedies for such default if not timely cured include seeking reimbursement of the unpaid taxes/reimbursement through legal action, whether the Landlord elects the Lease to stay in effect or to terminate due to such monetary default. A default by the Tenant under the Lease does not discharge the Landlord's responsibility to pay real property taxes. TowerJazz Lease Litigation. There is a pending lawsuit in Orange County Superior Court wherein the Landlord is seeking Declaratory Relief against the Tenant citing allegations of breach of the Lease due to excessive noise and compliance items not completed by the Tenant, in accordance with the Lease and any and all amendments thereto. The pending action will not hinder the Landlord's ability to develop Phase 2. In the event the Landlord 11 prevails in the action, the Landlord could accelerate the development timeline for Phase 2 if the Lease is terminated prior to its term. Unpaid Special Tax does not constitute a personal indebtedness of the owners of the parcels within the Community Facilities District, and the property owners and lessees have made no commitment to pay the principal of or interest on the Bonds or to support payment of the Bonds in any manner. There is no assurance that the owners have the ability to pay the Special Tax or that, even if they have the ability, they will choose to pay such Special Tax. An owner may elect not to pay the Special Tax when due and cannot be legally compelled to do so. Neither the Authority nor any Bondholder will have the ability at any time to seek payment from the owners of property within the Community Facilities District of any Special Tax or any principal or interest due on the Bonds, or the ability to control who becomes a subsequent owner of any property within the Community Facilities District The Authority's only remedy for the failure of a landowner to pay Special Tax on a parcel of land within the Community Facilities District is to foreclose on such parcel. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure" and "SPECIAL RISK FACTORS — Non -Recourse Obligation to Pay Special Tax" and "— Special Tax Delinquencies." The Project, Planned Development and Status of Construction The Community Facilities District consists of approximately 15.8 net taxable acres of land within the Uptown Newport Project and is expected to be developed to include approximately 472 condominiums, 314 apartments and 11,500 square feet of commercial space. The property within the Community Facilities District is expected to be developed in the following two phases: Phase 1. Phase 1 consists of the development of two lots in the westerly portion of the Uptown Newport Project. Lot 1 is expected to be developed to include 158 condominiums and approximately 3,000 square feet of neighborhood -serving retail uses. Lot 1 is an approximately 2.6-acre parcel adjacent to the public park (which is currently under construction and discussed below in "—The Improvements and Undergrounding"). The site development review process for the Lot 1 development is underway with the initial site development review application submitted to and reviewed by the City of Newport Beach. The design plans include 158 high -end luxury condominiums, contained in 2 buildings, one 6 and one 7 story building, with structured parking, some of which is subterranean parking. The condominiums will share common amenities and have convenient access to up to 3,000 square feet of retail space. The retail space is anticipated to cater to a higher -end market and will be easily accessible not only to the owners of the condominiums but to the general public as well. The Developers currently anticipate pulling initial building permits in the 4th quarter of 2019 and an estimated 18 to 24 month construction period, with completion of the condominiums currently anticipated to be in late-2021. The Developers are currently in negotiations with potential equity partners, with the goal of forming a joint venture to fund the development and construction of Lot 1 condominiums. The Developers have received preliminary indications of interest from financial institutions for the construction financing. It is anticipated that the financing will consist of a construction loan to finance approximately 80% of the total costs with the remainder fmanced by joint venture equity participants. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — Project Plan of Finance" Lot 2 is currently anticipated to be developed into two commercial/retail spaces. The Developers currently have an executed letter of intent from a restaurant user for a long-term lease and, in conjunction with such restaurant user, have commenced design of an approximately 3,100 square foot restaurant with an up to 1,300 square foot roof top deck, which is not included in the calculation of entitlement square footage. The restaurant is anticipated to be located on the corner of Uptown Newport Drive and Jamboree Road to provide high visibility and easy access to the public. The restaurant user is currently developing building/architectural renderings which will be assembled and submitted as part of a site development review application currently anticipated to be submitted to the City in late February 2019. The second retail space on Lot 2 is approximately 1,200 square feet and has been designated for a boutique coffee house. Several letters of intent have been provided, but no tenant has been selected as the building may initially be leased first as the sales center for the condominiums on Lot 1. It is anticipated that Uptown Newport Jamboree will continue to own the commercial space as long term investment properties. 12 Improvement plans (grading, sewer, water, drainage) have also been developed for the site with expected approval anticipated to be received by the end of the second quarter of 2019. The review and approval of the architectural design will occur at a City staff level with no public hearing required. The Developers currently anticipate final review and approvals from the City by mid-2019, with completion of the restaurant building "shell" in the 4th quarter of 2019. Thereafter, the restaurant user will submit application for approvals for their tenant improvements and anticipates commencing tenant improvements in early 2020. All tenant improvements will be financed by the restaurant user while the Developers will fund the improvement development and shell building construction for Lot 2. It is currently anticipated that the construction loan will finance 100% of the Developer's costs of development of Lot 2 with the value of the land in Lot 2 providing the equity requirement for the financing. Phase 2. Phase 2 consists of the development of approximately 12.56 acres in the easterly portion of the Uptown Newport Project. This site is currently expected to be developed into approximately 628 residential units, including apartments and condominiums, including 10 affordable housing units, and approximately 4,000 square feet of commercial use. TowerJazz is a semi -conductor chip manufacturer that currently occupies the existing 320,510 square foot industrial building within the expected Phase 2 development. If the TowerJazz lease is not earlier terminated due to the pending legal action described above, and TowerJazz exercises its last 5-year extension option, Phase 2 development will commence following TowerJazz's vacating the Leased Premises in March of 2027. See "— Ownership" above for a discussion of the TowerJazz lease. If the TowerJazz lease is terminated early, the Developers anticipate commencing Phase 2 development immediately thereafter. Although development of Phase 2 is expected to commence immediately upon the expiration or earlier termination of the TowerJazz lease, there can be no assurance that construction will in fact commence at such time. Nor can there be any assurance that in 2027 (or sooner if the Lease is terminated earlier), plans for the development or fmancing of Phase 2 will materialize. See "SPECIAL RISK FACTORS — Failure to Develop." An affiliate of Uptown Newport Jamboree is expected to develop the retail space and to own and manage the retail space for a long-term investment. The Developers are currently exploring options for a joint venture to develop the condominiums and apartments within Phase 2, but do not yet have detailed plans in place. It is currently anticipated that the Developers will sell the condominiums and lease the apartments within the Community Facilities District but will continue to own the apartment buildings and commercial space in Phase 2 under the new joint venture structure. In the future however, the Developers may decide to own, sell or lease any of the apartments, condominiums or commercial spaces in the Community Facilities District. According to the Rate and Method, the TowerJazz site is treated as Undeveloped Property until a new building permit is pulled. See "SECURITY FOR THE BONDS — Rate and Method of Apportionment of Special Tax." The following table shows the development of the Community Facilities District and status of construction or expected construction commencement dates. 13 Portion of Community Facilities District Phase 1 Lot 1 Lot 2 Phase 2 Table 1 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Status of Construction, as of January 9, 2019 Expected Land Development 158 condominiums and 3,000 square feet of commercial use 4,500 square feet of commercial use 628 residential units (314 apartments and 314 condominiums) and approximately 4,000 square feet mixed commercial use Source: Developers. Expected Development Schedule Site development approvals expected first quarter of 2019, construction to begin fourth quarter of 2019 and completion by fourth quarter of 2021. Site development approvals expected first quarter of 2019, construction of "shell" restaurant building and smaller retail building to begin second quarter of 2019 and completion of "shell" and smaller building by the end of 2019; Tenant improvements in restaurant space to follow in early 2020. Demolition expected to commence upon the expiration of the existing lease of the TowerJazz semiconductor facility in 2027; vertical construction of residential and commercial space expected to commence in first quarter of 2028. The Planned Development and Status of Construction. A final tract map (Tract Map No. 17763), encompassing Lot 1 of Phase 1 and a portion of Phase 2 of the Uptown Newport Project was recorded on June 19, 2015. The planned development of Lot 1 in Phase 1 contemplates an average condominium unit size of 1,670 square feet. As of January 9, 2019, the Developers have performed the following improvements to property within the Community Facilities District: rough and fine grading, installation of sewer lines, water lines, storm drain lines, curbs and gutters, street paving, and dry utilities. Remaining public improvements required for completion of development of the property within the Community Facilities District consist of removal and replacement of a portion of the Jamboree Road street median, and the installation of a new traffic signal, median landscaping, on -site street lighting, enhanced project street entries, project perimeter landscaping, the City park (construction is underway and will be financed from the proceeds of the Bonds), final lift of asphalt street paving, completion of the relocation of an ammonia tank serving TowerJazz business operations at the Leased Premises, and completion of electrical undergrounding pursuant to the 20B Contract discussed below. The Developers currently anticipate all the above improvements to be completed no later than end of 4th quarter, 2019. The Developers have funded all horizontal improvements on site, including demolition work, and will continue to finance the remainder of such improvements with cash on hand (except to the extent anticipated to be financed from Bond proceeds). As of January 9, 2019, no building permits have been issued for lots within the Community Facilities District. Development Conditions. The Development Agreement, dated as of February 26, 2013 (the "Development Agreement"), by and between the Developers and the City requires the Developers to prepare an annual development report to the City as a condition of development of the Uptown Newport Project. The Developers last prepared their development report on May 13, 2018. Prior to the issuance of certificates of occupancy for Lot 1, the Developers must complete the City park improvements that will be funded with a portion of the proceeds of the Bonds. The park improvements are currently anticipated to be completed in May of 2019. Other development conditions of approval to enable the issuance of building permits have been met with the exception of paying development and mitigation fees, which are not due until building permit issuance. 14 Development of Phase 2 is planned to commence upon the expiration or earlier termination of the TowerJazz lease on the Phase 2 portion of the Uptown Newport property, and is currently anticipated to include 628 residential units, including 314 apartments and 314 condominiums, and approximately 4,000 square feet of neighborhood -serving retail uses. Demolition of the existing semiconductor fabrication building is expected to commence upon the expiration of the Lease in 2027. Preparation of demolition plans will begin in 2026 (or sooner if the Lease is terminated earlier) to allow for issuance of a demolition permit from the City such that demolition can begin shortly after the Tenant vacates the premises. Demolition activities include salvaging of existing HVAC equipment, copper and stainless steel piping, demolition of the building and foundation and recycling and disposal of materials. In addition, during the demolition phase, approximately 29,000 cubic yards of soil is expected to be removed as a part of site remediation in the area to the north and northwest of the TowerJazz building. This remediation is necessary to remove soil and groundwater contamination relating to volatile organic compounds. In connection with such remediation, the Developers will be required to obtain a "No Further Action Letter" from the Regional Water Quality Control Board before the first building permit is pulled for Phase 2 development. Phase 2 is fully entitled and no discretionary approvals for the development of Phase 2 are required from the City. Final engineering plans will be prepared to allow for site development to commence the first quarter 2028 (or sooner if the Lease is terminated earlier), and Site Development Review by City staff will be initiated to allow for vertical construction to commence nine months later. Although development is expected to commence upon the expiration or earlier termination of the Lease, there is no assurance that construction or demolition activities will begin at such time. See "SPECIAL RISK FACTORS — Failure to Develop." Final engineering plans and the Site Development Review approvals are outlined in the Uptown Newport Planned Community Development Plan. These approvals are authorized at staff level, and do not require Planning Commission or City Council approval. Development Entitlements The Uptown Newport Project has a General Plan designation of MU-H2 (Mixed -Use Horizontal - 2), which is intended to allow for the horizontal intermixing of uses, including the development of free standing multi -family residential units. The Uptown Newport Project is also currently zoned PC-58 (Planned Community), which is intended to allow for diverse uses otherwise allowable within the General Plan. Entitlement approvals for the Uptown Newport Project were obtained through Tentative Tract Map #17348, the Uptown Newport Planned Community Development Plan, a Certified EIR, architectural and landscape design guidelines, an affordable housing implementation plan and the Development Agreement. The Tract Map approval duration runs with the Development Agreement, 15 years from February 26, 2013. Under the terms of the Uptown Newport Development Agreement, the City shall grant two (2) five (5) year extensions that extend the term of the Development Agreement for a total of ten (10) additional years provided that the Developers have submitted a written request to extend the Development Agreement and the following has occurred: (1) for the first five (5) year extension, building permits for the two hundred fiftieth (250th) units have been issued; and (2) for the second five (5) year extension, building permits for the five hundredth (500th) unit have been issued. As such, the life of the Tentative Tract Map and Development Agreement can be extended to February 26, 2038. Tract Map 17763, a four lot tract map covering a portion of approved Tentative Tract Map 17348, was recorded on the 12.47 acres in Phase 1 of the Uptown Newport Project in June 2015 (which includes Lot 1 of Phase 1 and a portion of Phase 2 in the Communities Facilities District as well as the adjacent apartment development that is not within the Community Facilities District). The Developers believe they have satisfied all conditions to recordation of a condominium map on Lot 1 of Phase 1. Other than permits required in the ordinary course of construction, there are no other discretionary approvals required to develop the Uptown Newport Project. Utilities Public utilities, including electricity, natural gas, water, sewer, and telephone service, are available to the property in the Community Facilities District. Electricity services will be provided by SCE (defined below) and gas services will be provided by the Southern California Gas Company. Water services will be provided by the Irvine Ranch Water District and sewer services will be provided by the City and Orange County Sanitation District. Onsite storm drain services will be provided by Uptown Newport HOA and offsite storm drain services will be provided by 15 the City. CATV (community access television) services will be provided by Cox Communications. All "Will Serve" letters for these public utilities have been obtained. Project Plan of Finance The information in this section has been provided by the Developers. The Authority believes this information to be reliable, but can give no assurances that the Uptown Newport Project will be financed in the manner described in this section. The Community Facilities District consists of approximately 15.80 net acres of land and is expected to be developed into approximately 472 condominiums, 314 apartments and 11,500 square feet of commercial space. As of January 25, 2019, the Developers have expended approximately $52.20 million in land acquisition costs, $16.18 million in site development, consultants and City permits and fees, and $5.95 million in various carry costs related to the horizontal development of the property for the Uptown Newport Project (including the property within the Community Facilities District and the adjacent 458 apartment development). The Developers estimate that it will require an additional approximately $9.6 million to complete land development within Phase 1 of the Community Facilities District to a finished lot condition and approximately $16.46 million to complete Phase 2 of the Community Facilities District to a finished lot condition. For vertical construction, the Developers estimate additional costs of approximately $237.27 million to develop Phase 1 condominium and commercial products and approximately $4.9 million for Lot 2 commercial improvements and buildings. To date, the Developers have financed their land acquisition and various site development costs related to its property within the Community Facilities District through equity contributions from entities affiliated with Shopoff Realty Investments, L.P, an affiliate of the Developers. In addition, TSG — Parcel 1, LLC has an outstanding loan in the amount of $18,000,000 from Terra Property Trust, Inc., a Maryland corporation, secured by Lot 1 and Uptown Newport Jamboree, LLC has an outstanding loan in the amount of $25,750,000 from Fidelity & Guaranty Life Insurance Company, an Iowa corporation, secured in part by Lot 2 and in part by the property in Phase 2. The foregoing loans were used by the Developers to finance the acquisition of the subject property. The Developers are currently in negotiations with potential equity partners, with the goal of forming a joint venture to fund the development and construction of the planned condominiums for Lot 1 of Phase 1. The Developers have received preliminary indications of interest from financial institutions for the construction financing. It is anticipated that the financing will consist of a construction loan to finance approximately 80% of the total costs with the remainder financed by joint venture equity participants. The Developers are currently exploring options for a joint venture to develop the condominiums and apartments within Phase 2, but do not yet have detailed plans in place. In the future, the Developers intend to use a combination of equity and debt contributions, as discussed above, sales revenues, and proceeds from the Bonds, to finance the required improvements to the Community Facilities District. The Developers believe that they will have sufficient funds available to complete their proposed development in the Community Facilities District commensurate with the development timing described in this Official Statement. However, at this time, the negotiations with potential equity partners and lenders are in the early stages, and for Phase 2, will not be completed in earnest until closer to commencement of development for Phase 2. There can be no assurance that the potential third -party loans and equity joint ventures described above, or any renewals or replacements thereof, will be forthcoming or that future sales revenues from the sale of condominiums and/or operations of the property within the Community Facilities District will actually materialize. See "SPECIAL RISK FACTORS — Failure to Develop." All expectations of the Developers described above are based upon the current and actual knowledge of the Developers and the present facts and circumstances, and such expectations may change as the result of facts and circumstances occurring, or discovered, after the date of this Official Statement. Although the Developers expect to have sufficient funds available to complete their development in the Community Facilities District, commensurate with the development timing described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining development costs will be available from the Developers or any other source when needed. Neither the Developers nor any of their related entities are under any legal obligation of any 16 kind to expend funds for the remaining development of and construction on their property in the Community Facilities District. Any contributions by the Developers and any of their affiliates to fund the costs of such development are entirely voluntary. The Developers and Shopoff Realty Investments, L.P. Information in this section is included because it may be considered relevant by some investors to make an informed evaluation and analysis of the Taxable Property within the Community Facilities District and any existing or future improvements thereon as security for the Bonds. The information contained in this section does not guarantee that ownership will not change or that the current or any subsequent property owners will pay the Special Tax when due. The Special Tax will constitute a lien on parcels subject to taxation within the Community Facilities District and is not a personal indebtedness of the owners of property within the Community Facilities District. Information in this section has been provided by the Developers, and neither the Authority nor the Underwriter can ensure, and do not ensure, its completeness or accuracy. As previously defined in this Official Statement, "TSG Parcel 1" is a Delaware limited liability company formed on January 1, 2014, for the purpose of acquiring and developing property in the Uptown Newport Project. TSG Parcel 1 is a wholly -owned subsidiary of Parcel 1 Venture Member, LLC, a Delaware limited liability company. As previously defined in this Official Statement, "Uptown Newport Jamboree" is a Delaware limited liability company formed on February 4, 2014, for the purpose of acquiring and developing property in the Uptown Newport Project. Uptown Newport Jamboree is a wholly -owned subsidiary of Uptown Newport LP, a Delaware limited partnership. William A Shopoff, Chief Executive Officer and President of Shopoff Realty Investments, L.P. ("Shopoff Realty Investments"), has a controlling ownership interest in both TSG Parcel 1 and Uptown Newport Jamboree. Shopoff Realty Investments is a private real estate investment company currently headquartered in Irvine, California, a short distance from the Uptown Newport Project. The Developers have reported that Shopoff Realty Investments and its subsidiaries have over 20 years of experience in private real estate and development. The Developers have further advised that Shopoff Realty Investments is one of the County's fastest growing private companies, with in-depth knowledge of entitling and developing land as well as a unique understanding of the complexities of the real estate marketplace. Shopoff Realty Investments specializes in offering long-term investment products and opportunities to banks, developers, builders, high -net worth individuals and the public in general. Shopoff Realty Investments provides access to strategic investments in residential, multi -family, commercial and retail properties, mortgage banking products and real estate investment trusts. Shopoff Realty Investments maintains a website at www.shopoff.com. This internet address is included for reference only and the information on the Internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on the internet site. Among other projects, affiliates of Shopoff Realty Investments (collectively referred to as "Shopoff' below) have completed and are in development of the following projects: • 333 North Prairie, Inglewood, California is a residential development site that Shopoff entitled for 310 residential units. Shopoff managed the site planning, engineering, preliminary architecture, landscape architecture and environmental approvals as part of the entitlements. The property was sold to a home builder on May 8, 2017. • San Gorgonio Crossing Commercial Development, located in the Calimesa/Cherry Valley unincorporated area of Riverside County, California is a 229-acre commercial development site that Shopoff entitled for two industrial warehouse buildings, totaling approximately 1,800,000 square feet. Shopoff managed the site planning, engineering, preliminary architecture, landscape architecture and environmental approvals as part of the entitlements. • 901 South Street, Anaheim, Orange County, California is a 20.49-acre site that Shopoff entitled for the development of 160 for sale townhomes and 314 apartments. Shopoff managed the site planning, 17 engineering, preliminary architecture, landscape architecture and environmental approvals as part of the entitlements. The townhome site was sold in July 2018 to a public homebuilder. • Adams Street, La Quinta, Riverside County, California is a 22.02-acre site that Shopoff entitled for the development of a 2-acre, 125 room hotel site and 131 single family residential for sale units. Shopoff managed the site planning, engineering, preliminary architecture, landscape architecture and environmental approvals as part of the entitlements. The residential property site is currently being marketed for a sale to a homebuilder. • 21845 Magnolia Street, Huntington Beach, Orange County, California is a coastal 28.6-acre site planned for the entitlement of a 215 room hotel with commercial and retail uses as well as a 250 single-family residential units. The site will feature public open space and park areas for use by residences and hotel guests. The project is currently undergoing environmental review with circulation of the Draft Environmental Impact Report. Shopoff is managing the site planning, engineering, preliminary architecture, landscape architecture and environmental approvals as part of the entitlements. Shopoff expects development entitlement approvals in the 4th quarter of 2020. Surrounding Area The Community Facilities District is part of the Uptown Newport Project. The Uptown Newport Project was originally developed as part of The Koll Center Newport, a mixed -use office park campus located in the City's Airport Area, and has been used for manufacturing telecommunications equipment and computer chips since the 1970's. Pursuant to the City's General Plan, which calls for the infill development and redevelopment of the Airport Area, the City approved the redevelopment of the Uptown Newport Project and The Koll Center Newport into high -density mixed use residential projects in September 2010. The Uptown Newport Project is expected to be developed into a mixed -use community, consisting of 1,244 residential units, including apartments and condominiums, 11,500 square feet of commercial space, recreational parks and open space on a total of approximately 25.04 acres. The Community Facilities District covers only a portion of the Uptown Newport Project, excluding, among other things, a 458-unit apartment site, including 92 affordable housing apai ttiient units, that is nearly completed with occupancy expected in March 2019. Only the property in the Community Facilities District is subject to the lien of the Special Tax that secures payment on the Bonds. The Uptown Newport Project is located adjacent to John Wayne Airport, in an area generally comprised of high-rise, mid -rise and low-rise office buildings, a private social club, a hotel, parking stalls and structures and a common area that includes landscaping, lakes, surface parking areas and water features. The area to the north and northeast of the Community Facilities District consists of light industrial and commercial use. The area to the south and southwest of the Community Facilities District consists of office and commercial use. East across Jamboree Road, is vacant land owned by the University of California, Irvine, for which there are no current known plans for development. Acquisition Agreement and Facilities Relocation Agreement Acquisition Agreement In connection with the formation of the Community Facilities District, TSG Parcel 1, Uptown Newport Jamboree, the Authority, and the City are expected to enter into an Acquisition Agreement (the "Acquisition Agreement"). Pursuant to the Acquisition Agreement, the City will purchase certain park improvements from the Developers (the "Authorized Improvements"), but solely from the net proceeds of bonds issued for the Community Facilities District (including the Bonds), certain investment earnings thereon and the special tax within the Community Facilities District. When the Developers have completed an Authorized Improvement, they may submit an Actual Cost Certificate to the City Engineer requesting payment of their "Actual Costs" incurred (as defined in the Acquisition Agreement). The City Engineer will determine if the Authorized Improvement thereof has been completed to City standards and whether all required documentation, such as proper conveyance of title (where that is required), lien releases, title insurance, etc. has been submitted. If the City Engineer so determines, the City Engineer will review the Actual Cost Certificate, and may request additional information to substantiate the Actual Cost Certificate, and may disallow portions not properly substantiated. To the extent the Actual Cost Certificate is approved by the City Engineer, the City Engineer will submit a Disbursement Request Form to the Trustee, requesting the Trustee to make payment 18 for the approved costs to the extent funds are available in the Acquisition and Construction Fund. The Acquisition Agreement contains requirements restricting the use of Bond proceeds to ensure that the undergrounding described in the 20B Contract below will be fully funded. To the extent that the proceeds of the Bonds are not sufficient to finance the costs of the Authorized Improvements as well the costs incurred by the City pursuant to the 20B Contract (described below), the Developers will be required to finance such shortfall. In addition, the Acquisition Agreement requires the Developers to post business interruption insurance to protect against any disruption in the Tenant's business operations as a result of the undergrounding of the electrical transmission facilities described below in "— Facilities Relocation Agreement." Facilities Relocation Agreement. As a result of the development of the Uptown Newport Project, certain of the electrical transmission facilities that run along Jamboree road, to the east of the Community Facilities District, that are owned and operated by Southern California Edison ("SCE") will need to be relocated underground. Pursuant to a Facilities Relocation Agreement (the "20B Contract") approved by the City on February 12, 2019 by and between SCE and the City, and in conjunction with SCE's Tariff Rule 20 Section B, the City has applied to and received approval from SCE to underground such facilities. In conjunction with the Developers, the City and SCE have agreed to plans and design for the relocation of the facilities in a manner that is consistent with plans for development of the Uptown Newport Project. The 20B Contract allows for adjustment to the plans of relocation in order to ensure that the relocation does not conflict with the intended development of the Uptown Newport Project. Pursuant to the 20B Contract, the City is responsible for all costs related to the relocation and to the acquisition of any land or rights of way required for the relocation. As of the date hereof, the relocation plans are in substantially final form and all property and/or rights of way required for the relocation of the SCE facilities is owned by the City and/or the Developers and appropriate easements are in the process of being granted to SCE. Pursuant to the 20B Contract, the City is required to at no cost to SCE to: (i) provide SCE with any required street improvement or site plans reflecting the location of all existing and proposed underground and/or overhead structures and/or facilities, (ii) procure and install the pads and vaults for transformers and associated equipment, conduits, ducts, boxes, and poles bases, and perform other work related to structures and substructures including breaking of pavement, trenching, backfilling, and repaving in connection with the installation of the underground system, all in accordance with the plans for relocation (subject to inspection and approval by SCE), (iii) notify SCE 48 hours prior to construction or installation of the ducts and substructures so that SCE can schedule the required inspection, (iv) provide SCE with "As -Built" drawings, and (v) subject to SCE's approval and acceptance, grant SCE, in writing, ownership of all ducts and substructures installed pursuant to the 20B Contract (collectively, the "Applicant Work"). Pursuant to an agreement between the City and the Developers, the Developers have expended approximately $500,000 to date and have completed all but a minor portion of the Applicant Work, with the remainder to be completed once the amounts remaining due and owing to SCE are paid (see discussion below). After completion of the Applicant Work, SCE: (i) shall procure and install all materials related to its electrical system (i.e. cable, transformers, switches, capacitors, meters, and connectors) except certain ducts and substructures which are to be procured and installed as part of the Applicant Work, (ii) shall provide all engineering work related to the relocation of said electrical facilities, (iii) shall inspect and approve all ducts and substructures procured and installed as part of the Applicant Work before SCE begins the installation of the underground facilities, and (iv) at no cost to the City, remove its overhead electrical facilities after the underground facilities have been installed, energized, and placed into permanent service (collectively, the "SCE Work"). The initial cost estimate, as stated in the 20B Contract, for the SCE Work to be funded by the City (via proceeds of the Bonds) is $1,093,000 and to date SCE has received $344,000 towards construction costs for the relocation and approximately $5,000 for various plan and document inspection fees (all of which were funded by the Developers pursuant to a reimbursement arrangement between the City and the Developers). The outstanding balance due to SCE as of the date hereof is $749,000. Pursuant to the Rule 20B Contract, SCE will not begin the SCE Work until it receives the balance of the amount due and owing thereunder. Should the final costs of the SCE Work exceed the initial cost estimate noted above, the City will be responsible for paying SCE any additional cost overruns related to the relocation within 30 days after receipt of invoice for such amounts (and such amounts will be funded either from any Bond proceeds available therefor and/or the Developers). The City will have no liability for any amounts due under or obligations arising from the 20B Contract, rather, pursuant to the Acquisition Agreement, the Developers will be required to fund any shortfalls from Bond proceeds and to indemnity and hold the City harmless with respect thereto. 19 It is currently anticipated that the remaining amounts due and owing to SCE ($749,000) will be funded directly to SCE from the proceeds of the Bonds upon their issuance. Costs estimated for the acquisition price of the park improvements (described below) and the direct costs incurred by the City for the SCE Work included a contingency to ensure that proceeds from the Bonds would be sufficient to cover all costs of such facilities and/or work including any unanticipated cost overruns. To the extent that the proceeds from the Bonds are not sufficient to cover any of such amounts, the Developers will be responsible for any such shortfall. The City required that, prior to execution of the 20B Contract, the Developers advance all funds paid to SCE to date (i.e. the $344,000 deposit noted above) and that the Community Facilities District was formed with enough capacity to finance the amounts due and owing to SCE under the 20B Contract. The Improvements and Undergrounding A portion of the proceeds of the Bonds will be used to finance City park improvements. The park improvements consist of landscaping, utilities, irrigation and recreational amenities. As of January 9, 2019, the Developers anticipate that construction of the park improvements will cost approximately $3,870,000. A portion of the proceeds of the Bonds will also be used to finance the undergrounding of overhead utilities owned and operated by SCE pursuant to the 20B Contract discussed above. As of January 9, 2019, the Developers anticipate that the undergrounding (including those portions of the Applicant Work that has been or will be completed separately by the Developers) will cost approximately $1,940,067. To date, the Developers have expended $175,000 in hard costs for construction of the park improvements and $531,510 in hard costs for the utility undergrounding. The net proceeds of the Bonds, certain investment eamings thereon and the Special Tax are currently expected to be sufficient to fund all of the park improvements and undergrounding. ESTIMATED SOURCES AND USES OF BOND PROCEEDS The estimated sources and uses of funds with respect to the Bonds are set forth in the following table. Table 2 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Estimated Sources and Uses of Bond Proceeds Sources: Principal Amount of Bonds Plus/Less [Net] Original Issue Premium/Discount Total Sources: Uses: Deposit to Acquisition and Construction Fund Deposit to Reserve Fund Deposit to Capitalized Interest Account of Redemption Fund(1) Underwriter's Discount Costs of Issuance ) Total Uses: (1) Represents capitalized interest on a portion of the Bonds through September 1, 2020. (2) Includes administrative expenses for the first two years after bond issuance, legal, disclosure, trustee, special tax consultant, appraiser, issuer, printing and other issuance fees and costs. 20 SECURITY FOR THE BONDS General The Bonds are authorized pursuant to the Act and are issued under the Indenture pursuant to a resolution of the Authority. The Act was enacted by the California Legislature to provide an alternate method of financing certain essential public capital facilities and services, especially in developing areas of the State. Subject to approval by a two-thirds vote of qualified electors and compliance with the provisions of the Act, a legislative body of a city, county or joint exercise of power authority may issue bonds for a community facilities district and may levy and collect a special tax within such community facilities district to repay such indebtedness. THE PRINCIPAL OF AND INTEREST AND REDEMPTION PREMIUMS, IF ANY, ON THE BONDS ARE LIMITED OBLIGATIONS PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX. THE AUTHORITY IS NOT OBLIGATED TO PAY THE BONDS EXCEPT FROM THE PROCEEDS OF THE SPECIAL TAX. THE GENERAL FUNDS AND ASSETS OF THE AUTHORITY ARE NOT LIABLE AND THE FULL FAITH AND CREDIT OF THE AUTHORITY IS NOT PLEDGED FOR THE PAYMENT OF THE PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS. NO TAX OR ASSESSMENT OTHER THAN THE SPECIAL TAX SHALL EVER BE LEVIED OR COLLECTED TO PAY THE PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS. THE BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF OR CHARGE, LIEN OR ENCUMBRANCE UPON ANY OF THE PROPERTY OF THE AUTHORITY OR ANY OF ITS INCOME OR RECEIPTS EXCEPT THE MONEY HELD IN THE SPECIAL TAX FUND PURSUANT TO THE INDENTURE. NEITHER THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS IS A GENERAL DEBT, LIABILITY OR OBLIGATION OF THE AUTHORITY. Although the Special Tax will constitute a lien on Taxable Property in the Community Facilities District, it will not constitute a personal indebtedness of the owners of such property. There is no assurance that the owners will be financially able to pay the annual Special Tax or that they will pay such tax even if financially able to do so. The risk of nonpayment by property owners is more fully described in "SPECIAL RISK FACTORS — Non -Recourse Obligation to Pay Special Tax." The Special Tax In accordance with the provisions of the Act and a Joint Community Facilities Agreement, between the Authority and the City, the Authority established the Community Facilities District on December 20, 2018 for the purpose of providing for the financing of the acquisition and construction of certain public capital improvements and certain utility undergrounding, funding the Reserve Fund and the capitalized interest and paying certain costs of issuance of the Bonds. At an election conducted on that date, the qualified electors within the Community Facilities District authorized the issuance of special tax bonds in the principal amount not to exceed $8,800,000 for the purpose of financing such public facilities and undergrounding and the levy of the Special Tax (as defined herein) in the Community Facilities District to be used for the purpose, among others, of paying the interest on and principal of and redemption premiums, if any, on the Bonds. Principal of and interest on the Bonds is payable from the annual Special Tax to be levied and collected on Taxable Property within the Community Facilities District and from the proceeds, if any, from the foreclosure and sale of such property for delinquency of such Special Tax. The amount of Special Tax may be levied in any year is strictly limited by the maximum rates approved by the qualified electors within the Community Facilities District. The Special Tax, all funds and accounts established under the Indenture (other than the Acquisition and Construction Fund, the Prepayment Fund, Expense Fund and the Rebate Fund) and any interest earned thereon are pledged to the payment of and constitute a trust fund for the payment of principal and interest on the Bonds. So long as the principal of and interest on the Bonds remains unpaid, the Special Tax, such funds and accounts, and investment earnings thereon shall not be used for any other purpose, except as permitted by the Indenture, and shall be held in trust for the benefit of the owners of any Bonds and shall be applied pursuant to the Indenture and any authorized supplement thereto. 21 Pursuant to the Indenture, so long as any Bonds are outstanding, the Authority is required annually to levy the Special Tax against all Taxable Property (as defined in Appendix C — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX") in the Community Facilities District and make provision for the collection of the Special Tax in amounts which will be sufficient, after making reasonable allowances for contingencies and errors in the estimates, to yield proceeds equal to the amounts required for compliance with the agreements, conditions, covenants and terms contained in the Indenture, and which in any event will be sufficient to pay the interest on, principal (including Mandatory Sinking Account Payments, if any) and redemption premiums, if any, on all Outstanding Bonds as they become due and payable, and to pay all current Expenses for the Bonds as they become due and payable. The Special Tax is to be levied and collected against all Taxable Property within the Community Facilities District in accordance with the Rate and Method, approved at the election held on December 20, 2018. The Rate and Method is summarized herein and attached as Appendix C. Although the Special Tax will constitute a lien on Taxable Property, it will not constitute a personal indebtedness of the owners of such property. There is no assurance that the owners will be financially able to pay the annual Special Tax or that they will pay such tax even if financially able to do so. The risk of nonpayment by property owners is more fully described in "SPECIAL RISK FACTORS — Non -Recourse Obligation to Pay Special Tax." Rate and Method of Apportionment of Special Tax General. The Authority has covenanted to cause the levy of the Special Tax in an amount determined according to the Rate and Method contained in the Authority's Resolution of Formation adopted December 20, 2018. The Rate and Method apportions the total amount of Special Tax to be collected among the Taxable Property in the Community Facilities District as more particularly described herein. Capitalized terms not otherwise defined under this heading shall have the meaning given such terms in Appendix C — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX." Further, this description of the Rate and Method is qualified in all respects by the full text thereof, set forth in Appendix C hereto. Land Use Categories. The Rate and Method declares that for each Fiscal Year, all Taxable Property be classified as Developed Property, Final Mapped Property, Undeveloped Property, Apartment Property, Non - Residential Property, Taxable Property Owner Association Property, or Taxable Public Property. "Developed Property" is defined to mean, for each Fiscal Year, all Taxable Property in Tax Zone 1 and Tax Zone 2, for which a Building Permit for new construction was issued after January 1, 2018 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied. "Final Mapped Property" is defined to mean, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, and Taxable Public Property, located in a Final Subdivision as of January 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied, but no earlier than January 1, 2018. "Undeveloped Property" is defined to mean, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, or Taxable Public Property. "Apartment Property" is defined to mean an Assessor's Parcel of Developed Property on which all or any portion of a structure or structures with multiple Apartment Units are located, and such Apartment Units are offered for rent and are not available for sale to individual owners. If Apartment Property is subsequently reclassified as Residential Property, Special Taxes levied on such reclassified Assessor's Parcels shall be modified to match those of Residential Property. "Non -Residential Property" is defined to mean all Assessor's Parcels of Developed Property for which a Building Permit permitting the construction of one (1) or more non-residential units or facilities has been issued by the City or other governmental agency. 22 "Taxable Property Owner Association Property" is defined to mean all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to the terms of the Rate and Method. "Taxable Public Property" is defined to mean all Assessor's Parcels of Public Property that are not exempt pursuant to the Rate and Method. Maximum Special Tax, Assigned Special Tax and Backup Special Tax. The Maximum Special Tax is defined in the Rate and Method as follows: Developed Property: The Maximum Special Tax for each Assessor's Parcel classified as Developed Property is the greater of (a) the amount derived by application of the Assigned Special Tax and (b) the amount derived by application of the Backup Special Tax. The Assigned Special Tax that will be levied in Fiscal Year 2019-2020 for each Assessor's Parcel classified as Developed Property is shown as follows: Land Use Class 1 2 3 Assigned Special Tax for Developed Property Description Assigned Special Tax — Zone 1 Assigned Special Tax — Zone 2 Residential Property Apartment Property Non -Residential Property $750 per Dwelling Unit $0 per Apartment Unit $5.35 per Square Foot of Non -Residential Floor Area $950 per Dwelling Unit $260 per Apartment Unit $5.35 per Square Foot of Non -Residential Floor Area On each July 1, commencing on July 1, 2020, the Assigned Special Tax will be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. The Backup Special Tax for an Assessor's Parcel of Developed Property equals $50,028 per Acre of the Assessor's Parcel. On each July 1, commencing on July 1, 2020, the Backup Special Tax will be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. The Rate and Method provides that the Backup Special Tax may be reduced or eliminated in certain circumstances, as further described in the Rate and Method. Multiple Land Use Categories: In some instances, an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Special Tax levied on an Assessor's Parcel will be the sum of the Special Tax for all Land Use Classes located on that Assessor's Parcel. Furthermore, if only a portion of Building Permits have been issued on an Assessor's Parcel, the remaining portion of the Assessor's Parcel will be considered Final Mapped Property. The CSCDA Program Manager's allocation to each type of property will be final. Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property: The Fiscal Year 2019-2020 Maximum Special Tax for each Assessor's Parcel of Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property is $50,028 per Acre. On each July 1, commencing on July 1, 2020, the Maximum Special Tax for Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property within each respective Tax Zone, will be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. Method of Apportionment. Under the Rate and Method, the Special Tax shall be levied in the following order of priority: First: The Special Tax shall be levied on each Assessor's Parcel of Residential Property and Apartment Property, within all Tax Zones, in an amount equal to 100% of the applicable Assigned Special Tax for Residential Property and Apartment Property respectively. 23 Second: If additional moneys are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax will be levied on each Assessor's Parcel of Non -Residential Property, within all Tax Zones, until (i) the total Special Tax levied under the first two steps listed in this priority equals the Special Tax Requirement, or (ii) the Special Tax levied on Non -Residential Property equals 100% of the applicable Assigned Special Tax, whichever comes first. Third: If additional moneys are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax will be levied Proportionately on each Assessor's Parcel of Final Mapped Property, within all Tax Zones, until (i) the total Special Tax levied under the first three steps listed in this priority equals the Special Tax Requirement, or (ii) the Special Tax levied on Final Mapped Property equals 100% of the applicable Maximum Special Tax, whichever comes first. Fourth: If additional moneys are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax will be levied Proportionately on each Assessor's Parcel of Undeveloped Property, within all Tax Zones, until (i) the total Special Tax levied under the first four steps listed in this priority equals the Special Tax Requirement, or (ii) the Special Tax levied on Undeveloped Property equals 100% of the applicable Maximum Special Tax, whichever occurs first. Fifth: If additional moneys are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property for which the Maximum Special Tax is determined through the application of the Backup Special Tax will be increased in equal percentages from the Assigned Special Tax up to 100% of the Maximum Special Tax for each such Assessor's Parcel of Developed Property, within all Tax Zones, until (i) the total Special Tax levied under the first five steps listed in this priority equals the Special Tax Requirement, or (ii) the Special Tax levied on all Developed Property equals 100% of the Maximum Special Tax for Developed Property, whichever occurs first. Sixth: If additional moneys are needed to satisfy the Special Tax Requirement after the first five steps have been completed, the Special Tax will be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property, within all Tax Zones, until (i) the total Special Tax levied under the first six steps listed in this priority equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Property Owner Association Property equals 100% of the Maximum Special Tax for Property Owner Association Property, whichever occurs first. Seventh: If additional moneys are needed to satisfy the Special Tax Requirement after the first six steps have been completed, the Special Tax will be levied Proportionately on each Assessor's Parcel of Taxable Public Property, within all Tax Zones, until (i) the total Special Tax levied under the first seven steps listed in this priority equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Public Property equals 100% of the Maximum Special Tax for Taxable Public Property, whichever occurs first. Notwithstanding the above, the CSCDA Program Manager or its designee may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax in the first step (above), when (a) the Authority is no longer required to levy the Special Tax beyond the first step (above) in order to meet the Special Tax Requirement; and (b) all bonds authorized to be issued within the Community Facilities District have already been issued or the Authority has covenanted that it will not issue any additional bonds within the Community Facilities District (except refunding bonds), to be supported by the Special Tax. Pursuant to Section 53321 of the Act as applied to the Community Facilities District, under no circumstances will the Special Tax levied in any Fiscal Year against any parcel used for private residential purposes be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within the Community Facilities 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. For such purposes, a parcel will be considered used for private residential purposes not later than the date on which an occupancy permit for private residential use is issued. Prepayment of Special Tax. An Assessor's Parcel within the Community Facilities District is permitted to prepay the Special Tax in full or in part, provided that a prepayment may be made only for Assessor's Parcels of Developed Property, or for an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2019, and only if there are no delinquent Special Taxes with respect 24 to such Assessor's Parcel at the time of prepayment. The amount of such prepayment for an Assessor's Parcel eligible for prepayment shall be determined in the manner set forth in the Rate and Method. Special Tax Calculations The Projected Fiscal Year 2019-20 maximum Special Tax for the Community Facilities District is reflected in the following table. The projection assumes that no building permits will be pulled prior to May 1, 2019. Table 3 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Calculation — Projected 2019-20 Fiscal Year Undeveloped Property/Final Mapped Property Maximum Special Tax Calculation(1) Expected Taxable AcresP15.8 Max Special Tax (Per Acre) $ 50,028 Total $ 790,442.40 (1) Assumes no building permits issued after January 1, 2018, but before May 1, 2019 within the Community Facilities District. (2) Excludes acres expected to be dedicated to public use that will be exempt from the Special Tax. Source: David Taussig & Associates. The following table reflects what the Assigned and Maximum Special Tax on taxable property within the Community Facilities District would be in Fiscal Year 2019-20, assuming that all property in Phase 1 were Developed Property but Phase 2 remained undeveloped. According to the Developers' development plan, Phase 2 is likely to remain Undeveloped Property through 2027-28 or 2028-29. Table 4 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Representative Special Tax Calculation — Assuming Buildout of Phase Developed Property Assigned Special Tax Calculation — Phase 1 Units/Sq.Ft. Assigned Special Tax Total Tax Class 1 Class 3 Residential Property Non -Residential Property Total 158 $750 $118,500 7,500 $5.35 $40,125 $158,625 Undeveloped Property Maximum Special Tax Calculation — Phase 2 Acres Maximum Special Tax per Acre Total Tax Undeveloped Property 12.555 $50,028 $628,101.54 Grand Total $786,726.54 (1) Assumes all planned building permits issued after January 1, 2018, within Phase 1 of the Community Facilities District and no building permits pulled in Phase 2 after such date. Assumes Phase 1 is developed in accordance with Developers' plans. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Project, Planned Development and Status of Construction". Maximum Special Tax for each Assessor's Parcel classified as Developed Property equals the greater of (i) the Assigned Special Tax shown in this table and (i) the Backup Special Tax of $50,028 per Acre. Excludes classes with zero units. Source: David Taussig & Associates. 25 The following table reflects what the Assigned Special Tax on taxable property within the Community Facilities District would be in Fiscal Year 2019-20, assuming that all property were Developed Property. This table is representative only. Table 5 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Representative Special Tax Calculation — Assuming Full Buildout Developed Property Assigned Special Tax Calculation — Phase 1(1) Class 1 Class 3 Residential Property Non -Residential Property Total Units/Sq.Ft. Assigned Special Tax Total Tax 158 $750 $118,500 7,500 $5.35 $40,125 $158,625 Developed Property Assigned Special Tax Calculation — Phase 2(1) Units/Sq.Ft. Assigned Special Tax Total Tax Class 1 Residential Property 314 $950 $298,300 Class 2 Apartment Property 314 $260 $81,640 Class 3 Non -Residential Property 4,000 $5.35 $21,400 Total $401,340 Developed Property Grand Total $559,965.00 (I) Assumes all building permits issued after January 1, 2018, within the Community Facilities District and all taxable property has been classified as Developed Property and has been developed in accordance with the Developers' plans. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Project, Planned Development and Status of Construction". Maximum Special Tax for each Assessor's Parcel classified as Developed Property equals the greater of (i) the Assigned Special Tax shown in this table and (i) the Backup Special Tax of $50,028 per Acre. Excludes classes with zero units. Source: David Taussig & Associates. 26 Debt Service Coverage The following table shows the debt service coverage for the Bonds based on Assigned Special Tax and assuming full buildout of the Community Facilities District. Table 6 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Projected Annual Assigned Special Tax and Estimated Debt Service Coverage Special Taxes and Proceeds Bond Year Available Ending Assigned CSCDA for Total Debt September Special Administrative Annual Debt Debt Capitalized Net Debt Service 1 Taxo) Expenses Fee Service) Service Interest Servicee3)* Coverage* 2019 - $223,667 ($223,667) N/A 2020 $559,965 - - $440,000 ($440,000) N/A 2021 $571,164 ($20,000) ($10,000) $541,164 $475,000 - $475,000 113.93% 2022 $582,588 ($20,400) ($10,000) $552,188 $483,250 $483,250 114.27% 2023 $594,239 ($20,808) ($10,000) $563,431 $491,000 $491,000 114.75% 2024 $606,124 ($21,224) ($10,000) $574,900 $503,250 $503,250 114.24% 2025 $618,247 ($21,649) ($10,000) $586,598 $514,750 $514,750 113.96% 2026 $630,612 ($22,082) ($10,000) $598,530 $525,500 $525,500 113.90% 2027 $643,224 ($22,523) ($10,000) $610,701 $535,500 $535,500 114.04% 2028 $656,088 ($22,974) ($10,000) $623,114 $544,750 $544,750 114.39% 2029 $669,210 ($23,433) ($10,000) $635,777 $553,250 $553,250 114.92% 2030 $682,594 ($23,902) ($10,000) $648,692 $566,000 $566,000 114.61% 2031 $696,246 ($24,380) ($10,000) $661,866 $577,750 $577,750 114.56% 2032 $710,171 ($24,867) ($10,000) $675,304 $588,500 $588,500 114.75% 2033 $724,374 ($25,365) ($10,000) $689,009 $603,250 $603,250 114.22% 2034 $738,862 ($25,872) ($10,000) $702,990 $616,750 $616,750 113.98% 2035 $753,639 ($26,390) ($10,000) $717,249 $629,000 $629,000 114.03% 2036 $768,712 ($26,917) ($10,000) $731,795 $640,000 $640,000 114.34% 2037 $784,086 ($27,456) ($10,000) $746,630 $654,750 $654,750 114.03% 2038 $799,768 ($28,005) ($10,000) $761,763 $663,000 $663,000 114.90% 2039 $815,763 ($28,565) ($10,000) $777,198 $680,000 $680,000 114.29% 2040 $832,079 ($29,136) ($10,000) $792,943 $690,250 $690,250 114.88% 2041 $848,720 ($29,719) ($10,000) $809,001 $709,000 $709,000 114.10% 2042 $865,695 ($30,313) ($10,000) $825,382 $720,750 $720,750 114.52% 2043 $883,008 ($30,920) ($10,000) $842,088 $735,750 $735,750 114.45% 2044 $900,669 ($31,538) ($10,000) $859,131 $748,750 $748,750 114.74% 2045 $918,682 ($32,169) ($10,000) $876,513 $764,750 $764,750 114.61% 2046 $937,056 ($32,812) ($10,000) $894,244 $783,500 $783,500 114.13% 2047 $955,797 ($33,468) ($10,000) $912,329 $794,750 $794,750 114.79% 2048 $974,913 ($34,138) ($10,000) $930,775 $813,750 $813,750 114.38% Source: David Taussig & Associates. * Preliminary, subject to change. (1) Reflects Assigned Special Tax assuming Community Facilities District is fully developed as of January 1, 2018. The Maximum Special Tax for each Assessor's Parcel classified as Developed Property equals the greater of (i) the Assigned Special Tax shown in this table and (i) the Backup Special Tax of $50,028 per Acre. (2) Special Taxes less Administrative Expenses less CSCDA Annual Fee. (3) Does not include debt service through September 1, 2020, which will be paid from capitalized interest. 27 Authority Policy Regarding Assessments and Special Tax On February 7, 2019, the Authority adopted its "Further Amended and Restated Local Goals and Policies Concerning the Use of the Mello -Roos Community Facilities Act of 1982" (the "Authority Policy"). The Authority Policy requires that the credit quality of any community facilities district bond issue be such that the requirements of Section 53345.8 of the Act will be met; provided, however, that the Authority requires that the value of the real property that would be subject to the special tax to pay debt service on the community facilities district bonds be at least four times the principal amount of the community facilities district bonds to be sold 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 community facilities district. The Authority expects to remain in full compliance with the Authority Policy after the issuance of the Bonds. See "SECURITY FOR THE BONDS — Estimated Value -to -Lien Debt Ratios." Funds and Accounts; Flow of Funds All proceeds of the Special Tax (including any prepayments thereof and the proceeds from the sale of property collected pursuant to the foreclosure provisions of the Indenture for the delinquency of Special Tax and proceeds from any security for payment of Special Tax, taken in lieu of foreclosure, but excluding amounts held in the Rebate Fund), are required to be deposited into the Special Tax Fund held by the Trustee and, except as otherwise provided in the Indenture, are pledged to the payment of the Bonds. Priority of Deposits. All prepayments of the Special Tax shall be immediately deposited by the Trustee in the Prepayment Fund. Where the Rate and Method provides for use to pay for Authorized Facilities, those funds shall be immediately deposited by the Trustee in the Acquisition and Construction Fund. All other money in the Special Tax Fund shall be set aside by the Trustee in the following respective funds in the following order of priority, and all money in each fund shall be applied, used and withdrawn only for the purposes authorized in the Indenture, namely: (1) Redemption Fund; (2) Expense Fund; (3) Reserve Fund; and (4) Acquisition and Construction Fund. Redemption Fund. On or prior to each March 1 and September 1, the Trustee shall, from the money in the Special Tax Fund, deposit into the Redemption Fund an amount of money equal to the aggregate amount of interest becoming due and payable on all Outstanding Bonds on such dates, except no such transfer need be made to the extent amounts have previously been deposited in the Redemption Fund and set aside therein for the payment of such interest, including without limitation sale proceeds of Bonds deposited in such fund for such purpose. On or prior to September 1 of each year, commencing with the first September 1 on which principal is due on any of the Bonds, the Trustee shall, from the then remaining money in the Special Tax Fund, deposit into the Redemption Fund an amount of money equal to the aggregate amount of principal becoming due and payable on all Outstanding Bonds not subject to Mandatory Sinking Account Payments on such date plus the aggregate of the Mandatory Sinking Account Payments required by the Indenture and by all Supplemental Indentures to be made on such date into the Sinking Accounts. Expense Fund. On or before March 1 and September 1 of each year, the Trustee is required, from the then remaining money in the Special Tax Fund, to transfer to and deposit in the Expense Account a sum equal to the amount required by the Authority for the payment of budgeted Administrative Expenses during the six-month period commencing on such date, or to reimburse the Authority for payment of unbudgeted Administrative Expenses during the prior six-month period. Reserve Fund. The Trustee shall establish and maintain the Reserve Fund into which shall be deposited an amount equal to the Required Bond Reserve. Moneys in the Reserve Fund shall be used solely for the purpose of paying the principal of and interest on the Bonds in the event that the moneys in the Redemption Fund are insufficient 28 therefor, and for that purpose the Trustee shall withdraw from the Reserve Fund, for deposit in the Redemption Fund, moneys necessary for such purpose. Amounts in the Reserve Fund shall only be withdrawn to pay principal and interest on the Bonds; provided, that if the amount on deposit in the Reserve Fund is less than the Required Bond Reserve, the Trustee shall notify the Authority of the amount needed to replenish the Reserve Fund to the Required Bond Reserve and the Authority shall collect the deficiency by including it in the next annual Special Tax levy, to the extent permitted by law and as necessary. The term "Required Bond Reserve" is defmed under the Indenture as, for each Series of Bonds, as of any date of calculation, the least of (a) ten percent (10%) of the proceeds (within the meaning of Section 148 of the Code) of such Series of Bonds, or (b) the Maximum Annual Debt Service, or (c) one hundred twenty-five percent (125%) of the Average Annual Debt Service, all as computed by the Authority under the Code and specified in writing by the Trustee, and means for all Outstanding Bonds, the sum of the Required Bond Reserve for each Series of Outstanding Bonds. On the delivery date, proceeds of the Bonds in the amount of $ will be deposited in the Reserve Fund, constituting the Required Bond Reserve for the Bonds. The Trustee shall, on or before the first (1st) day in September in each year, from the then remaining money in the Special Tax Fund, deposit into the Reserve Fund the amount of money that is required to restore the Reserve Fund to an amount equal to the Required Bond Reserve. The Trustee is responsible for valuation of all investments in the Reserve Fund. Such investments shall be valued at the face value thereof if such investments mature within twelve (12) months from the date of valuation, or if such investments mature more than twelve (12) months after the date of valuation, at the price at which such investments are redeemable by the Trustee at his option, if so redeemable, or if not so redeemable, at the lesser of (i) the cost of such investments; or (ii) the market value of such investments and in making any valuations under the Indenture, the Trustee may use and rely on computerized securities pricing services that may be available to it, including those available through its regular accounting system; provided, that no deposit need be made into the Reserve Fund if the amount contained therein is at least equal to the Required Bond Reserve. Acquisition and Construction Fund All money remaining in the Special Tax Fund on September 1 of each year after making the foregoing transfers and deposits is required to be deposited by the Trustee into the applicable subaccount of the Acquisition and Construction Fund. All moneys in each subaccount of the Acquisition and Construction Fund are required to be used by the Authority to construct or acquire capital improvements for the benefit of the Community Facilities District, including the use by the Authority to reimburse the Developers for certain capital expenditures related to the Authorized Improvements. Any amount remaining in any subaccount of the Acquisition and Construction Fund after the completion of its purpose, which completion shall be conclusively evidenced by a Certificate of the City, shall be transferred by the Trustee to the Special Tax Fund. Prepayment Fund All money in the Prepayment Fund constituting proceeds of prepayments of the Special Tax shall be used to redeem the Bonds as provided in the Indenture. Refunding Bonds In addition to the Bonds, the Authority may at any time issue a Series of bonds payable from the Special Tax on parity with the Bonds (the "Refunding Bonds") for the purposes of refunding the Bonds (or any Refunding Bonds), but only subject to the conditions under the Indenture, which are thereby made conditions precedent to the issuance of such Series of Refunding Bonds, which include the following: (a) The issuance of such Series of Refunding Bonds shall have been authorized pursuant to and in accordance with the terms of the Act and pursuant to the Indenture and shall have been provided for by a Supplemental Indenture in accordance with the Act and with the Indenture; (b) The Authority shall be in compliance with all agreements, conditions, covenants and terms contained in the Indenture and in all Supplemental Indentures required to be observed or performed by it, and no default hereunder shall have occurred and shall be then continuing; (c) The Special Tax revenue available to the Authority if the Special Tax were to be levied and collected at the maximum rate and amount in accordance with the Rate and Method on all Taxable Property (as defined in the 29 Rate and Method) during each Fiscal Year that any Bonds will be Outstanding (excluding the estimated Special Tax from any Taxable Property then delinquent in the payment of any Special Tax) would produce a sum equal to at least one hundred ten percent (110%) of the annual Debt Service during the Bond Year which begins in such Fiscal Year; as shown by a certificate of an Independent Certified Public Accountant or nationally recognized, independent municipal finance consultant on file with the Trustee; and (d) The aggregate Value -to -Lien Ratio of all Taxable Property (excluding any Taxable Property then delinquent in the payment of any Special Tax) shall be at least 4:1; and for the purposes of this paragraph of this provision, the term "Value" means either the current assessed valuation of the Taxable Property or the appraised value of the Taxable Property determined by an MAI appraiser, and the term "Value -to -Lien Ratio" means the ratio of the Value of all Taxable Property to the aggregate principal amount of all Bonds and Refunding Bonds that will be Outstanding after the issuance of such Series of Refunding Bonds plus the aggregate principal amount of all other assessment bonds and bonds issued under the Act reasonably allocable to the Taxable Property; and (e) Notwithstanding the limitations contained in the preceding paragraphs (c) and (d), nothing contained in the Indenture shall limit the issuance of any Series of Refunding Bonds thereunder if after the issuance and delivery of such Series of Refunding Bonds none of the Bonds and Refunding Bonds theretofore issued under the Indenture will be Outstanding, and nothing contained in the Indenture shall limit the issuance of any Series of Refunding Bonds under the Indenture if after the issuance and delivery of such Series of Refunding Bonds the annual Debt Service on all Bonds and Refunding Bonds to be Outstanding after the issuance of such Series of Refunding Bonds in each Bond Year thereafter shall not be increased by reason of the issuance of such Series of Refunding Bonds. So long as any Bonds remain Outstanding, the Authority may not issue any obligations payable from Special Tax Revenues on parity with the Bonds except as Refunding Bonds. The Authority may at any time, or from time to time, issue evidences of indebtedness for any lawful purpose of the Community Facilities District so long as any payments due thereunder shall be subordinate in all respects to the use of the Special Tax Revenues as described herein. Covenant for Superior Court Foreclosure The Indenture provides that the Special Tax is to be collected by the County on the secured property tax roll. Except as provided in the special covenant for foreclosure described herein and in the Act, the Special Tax is subject to the same penalties and the same procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes. Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of the Special Tax, the Authority may order the institution of a Superior Court action to foreclose the lien therefor within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Such judicial foreclosure action is not mandatory. However, the Authority has covenanted for the benefit of the Owners of the Bonds that it will annually on or before October 1 review the public records of the County relating to the collection of the Special Tax in the Community Facilities District in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and on the basis of such review the Authority shall, not later than December 1 of such year, institute foreclosure proceedings as authorized by the Act (a) against any single parcel within the Community Facilities District with aggregate delinquent Special Taxes (including prior years) of $5,000 or more in any year in which such Special Taxes were due, (b) against all parcels owned within the Community Facilities District by any single owner with delinquent Special Taxes in the aggregate amount (including prior years) of $5,000 or more, and (c) against all parcels with delinquent Special Taxes regardless of their delinquent amount in any fiscal year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levy, and will diligently prosecute and pursue the foreclosure proceedings to judgment and sale; provided that any actions taken to enforce delinquent Special Tax liens shall be taken only consistent with Sections 53356.1 through 53356.7, both inclusive, of the Act. In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Owners of the Bonds (if the Reserve Fund has been depleted) pending such sales or the prosecution of such foreclosure proceedings and receipt by the Authority of the proceeds of sale. However, within the limits of the Special Tax, the Authority may adjust the Special Tax levied on Taxable Property in the Community Facilities District, subject to the 30 limitation on the Maximum Annual Special Tax, to provide an amount required to pay interest on, principal of, and redemption premiums, if any, on the Bonds, and the amount, if any, necessary to replenish the Reserve Fund to an amount equal to the Required Bond Reserve for the Bonds and to pay all current Administrative Expenses for the Community Facilities District. There is, however, no assurance that the total amount of the Special Tax that could be levied and collected against Taxable Property in the Community Facilities 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 Annual Special Tax rates. See "SPECIAL RISK FACTORS." 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 Authority to purchase or otherwise acquire any lot or parcel of property to be sold 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 at least 75% of the Outstanding Bonds is obtained. After the Authority has ordered a foreclosure action, it shall dismiss the action before judgment if the owner of the subject property (or any other person) pays all of the following amounts: the delinquent Special Tax on the subject property and all penalties, interests and costs accrued; costs of the foreclosure action; authorized attorneys' fees; and the tax collector's authorized costs. Property Values Appraisal. Integra Realty Resources, Rocklin, California (the "Appraiser"), has prepared an appraisal of Lot 1 in Phase 1 in the Community Facilities District, dated February 5, 2019, which estimates the value of the property as of December 22, 2018 (the "Appraisal"). The Appraisal is attached to this Official Statement as Appendix B. The Appraisal estimates only the value of a portion of the Community Facilities District (the "Appraised Parcel"). The Appraisal is based on a number of general assumptions and limiting conditions further described therein. In addition, the Appraisal is subject to the hypothetical condition, which assumes the value based on the hypothetical condition that all public infrastructure, facilities and improvements to be financed by the Bonds are in place and available for use as of the date of inspection, with the lien of the Special Tax securing Bonds serviced by the Community Facilities District development. Using these assumptions and conditions in the Appraisal, the Appraiser estimates that the hypothetical market value of the Appraised Parcel is estimated to be $49,500,000 as of the valuation date of the inspections. Again, the hypothetical market value estimated therein is based on the premise that the Authorized Improvements to be financed by the Bonds were in place as of the date of inspection. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Improvements and Undergrounding" for a discussion of the current status of the Authorized Improvements and undergrounding. The complete Appraisal, including all attachments and appendices, is reproduced in Appendix B. The information contained herein is only a summary of certain information contained in the Appraisal, and such information is qualified in its entirety by the complete Appraisal. See "SPECIAL RISK FACTORS — Appraisal Risks." Assessed Value. The assessed value of the remaining property within the Community Facilities District is $33,352,864, which represents the secured assessed valuation established by the County Assessor. Assessed values do not necessarily represent market values. Article XIIIA of the California Constitution (Proposition 13) defines "full cash value" to mean "the County assessor's valuation of real property as shown on the 1975/76 roll under 'full cash value', or, thereafter, the appraised value of real property when purchased or newly constructed or when a change in ownership has occurred after the 1975 assessment," subject to exemptions in certain circumstances of property transfer or reconstruction. The "full cash value" is subject to annual adjustment to reflect increases, not to exceed 2% for any year, or decreases in the consumer price index or comparable local data, or to reflect reductions in property value caused by damage, destruction or other factors. Because of the general limitation to 2% per year in increases in full cash value of properties which remain in the same ownership, the County tax roll does not reflect values uniformly proportional to actual market values. There can be no assurance that the assessed valuations of the properties within 31 the Community Facilities District accurately reflect their respective market values, and the future fair market values of those properties may be lower than their current assessed valuations. The table below sets forth historical secured assessed values of all property within the Community Facilities District (including the Appraised Parcel) from Fiscal Years 2009-10 through 2018-19. Table 7 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Historical Secured Assessed Values Secured Percentage Fiscal Year Assessed Value Change 2009-10(1) $65,993,184 NA 2010-11 76,018,027 15% 2011-12 16,200,000(3) -79 2012-13 16,524,000 2 2013-14 16,854,479 2 2014-15 16,930,997 0 2015-16(2) 43,197,451(4) 155 2016-17 43,831,115 1 2017-18 44,721,235 2 2018-19 45,608,773 2 Source: Orange County Assessor's Office; David Taussig & Associates. (1) Assessed values for fiscal years 2009-10 through 2014-15 are for the entire Uptown Newport Project property. (2) Assessed values for fiscal years 2015-16 through 2018-19 are for Lots 1 and 2 and the property that is part of Phase 2, and do not include Lots 3 and 4, which are not part of the Community Facilities District. (3) Reduction in assessed value is due to the purchase of the Uptown Newport Project property at $23,500,000 in December 2010, and a further reduction in assessed value is due to anticipated environmental remediation. (4) Increase in assessed value is due to recapitalization of the Uptown Newport Project property after securing entitlements for development into 1,244 residential units and 11,500 square feet of retail uses. Direct and Overlapping Debt The principal of and interest on the Bonds are payable from the Special Tax authorized to be collected within the Community Facilities District, and payment of the Special Tax is secured by a lien on Taxable Property. Such lien is co -equal to and independent of the lien for general taxes and any other liens imposed under the Act. The imposition of additional special taxes, assessments and general property taxes will increase the amount of independent and co -equal liens which must be satisfied in foreclosure. The City, the County and certain other public agencies are authorized by the Act to form other community facilities districts and, under other provisions of State law, to form special assessment districts, either or both of which could include all or a portion of the land within the Community Facilities District. Further, private liens, such as deeds of trust securing loans obtained by the Developers or other merchant builders, have been and may in the future be placed upon property in the Community Facilities District at any time. Under California law, the Special Tax has priority over all existing and future private liens imposed on property subject to the lien of the Special Tax. Set forth below is an overlapping debt table showing the existing authorized indebtedness payable with respect to property within the Community Facilities District. Additional indebtedness could be authorized by other public agencies at any time. This table has been prepared by California Municipal Statistics, Inc. as of February 6, 2019, and is included for general information purposes only. California Municipal Statistics, Inc., allocates overlapping debt based on the assessed value of property and not on taxes paid. Neither the Authority nor the Underwriter has reviewed the data for completeness or accuracy and makes no representations in connection therewith. [Remainder of page intentionally left blank] 32 Table 8 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Overlapping Debt Statement 2018-19 Assessed Valuation: $45,608,773 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 2/1/19 Metropolitan Water District 0.002% $ 948 Rancho Santiago Community College District 0.059 137,775 Rancho Santiago Community College District School Facilities Improvement District No. 1 0.111 128,556 Santa Ana Unified School District 0.138 326,088 California Statewide Communities Development Authority Community Facilities District No. 2018-03 Uptown Newport(1) 100.000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $593,367 OVERLAPPING GENERAL FUND DEBT: Orange County General Fund Obligations 0.008% $ 30,482 Orange County Pension Obligation Bonds 0.008 29,338 Orange County Board of Education Certificates of Participation 0.008 1,078 Santa Ana Unified School District Certificates of Participation 0.138 92,686 City of Newport Beach Certificates of Participation 0.079 82,284 TOTAL OVERLAPPING GENERAL FUND DEBT $235,868 COMBINED TOTAL DEBT(2) $829,235 (1) Excludes issue to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non -bonded capital lease obligations. Ratios to 2018-19 Assessed Valuation: Direct Debt - Total Overlapping Tax and Assessment Debt 1.30% Combined Total Debt 1.82% Source: California Municipal Statistics. Other than as described herein, the property in the Community Facilities District is not subject to any other bonded special tax or assessment liens (other than the lien of the Special Tax). There can be no assurance that the Developers, their affiliates, the other property owners within the Community Facilities District, or any subsequent owner will not petition for the formation of other community facilities districts or for a special assessment district or districts and that parity Special Tax or special assessments will not be levied by the City, the County or some other public agency to finance additional public facilities. No other special districts are currently contemplated by the Authority, the City, or the Developers. Estimated Value -to -Lien Debt Ratios The appraised value of Lot 1 in Phase 1 in the Community Facilities District, as estimated by the Appraiser as of December 22, 2018, subject to the methodology and assumptions contained in the Appraisal, is $49,500,000. The 2018-19 assessed valuation of the remaining property within the Community Facilities District is $33,352,864. Based on the foregoing, the value to lien ratio is approximately 9.40* times the aggregate principal amount of the Bonds. No assurance can be given that the foregoing value -to -lien debt ratio will be maintained during the period of time that the Bonds are Outstanding. The Authority has no control over future property values or the amount of * Preliminary, subject to change 33 additional indebtedness that may be issued in the future by other public agencies, the payment of which, through the levy of a tax or an assessment, is on a parity with the Special Tax. See "SPECIAL RISK FACTORS — Appraisal Risks," "— Assessed Valuation Risks" and "— Value -to -Lien Debt Ratios." The following tables reflect the value to lien ratios by proposed land development, both before and after development of Phase 2. Scenario 2 is representative only, reflecting the value -to -lien ratios in a hypothetical assuming all land is developed in accordance with the Developers' plans. Scenario 1 reflects development status as of January 1, 2019, and assumes that no building permits will be pulled before March 1, 2019. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS" for more information about the Developers' proposed development. 34 Table 9 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Value -to -Lien Ratios by Proposed Development and Phase SCENARIO 1: Current Development Status — All Undeveloped 2018-19 2019-20 % of Assessed Maximum Maximum Existing Appraised Land Undeveloped Undeveloped APN Property Owner Acres Land Use Land Value(') Value(2) Special Tax(2) Special Tax Phase 1 Bonds* Value to Lien Ratio± 445-134-17 TSG-Parcel 1 2 583 Residential $49,500,000 $12,255,909 $129,222 16.34% $1,438,360 34.41 LLC Multiple 445-134- TSG-Parcel 1 22(4) LLC 0.030 Remainder $0.00 $1,501 0.19% Parcel $16,706 0.00 445-134-29 Uptown Newport Jamboree 0.635 Commercial - $1,721,636 $31,768 4.02% $353,604 4.87 Subtotal Phase I 3.248 Phase 2 $49,500,000 $13,977,545 $162,491 20.55% $1,808,669 28.32 445-133-07 Uptown Newport 12.555 Industrial - $31,631,228 $628,102 79.45% $6,991,331 4.51 Jamboree (TowerJazz) Total 15.80 $49,500,000 $45,608,773 $790,592 100.00% $8,800,000 9.40 * Preliminary, subject to change. ± Where the appraised value is available for property in the Community Facilities District, the value to lien ratio reflects the appraised value of such property. Where no such appraised value is available, the value to lien ratio reflects the assessed value of such property. Total value to lien ratio reflects appraised value where available and assessed value where no appraisal was performed in the combined amount of $82,852,864. (1) Source: Integra Realty Resources. See "SECURITY FOR THE BONDS — Property Values" herein. (2) Source: Orange County Assessor's Office. See "SECURITY FOR THE BONDS — Property Values" herein. (3) See "SECURITY FOR THE BONDS — Rate and Method of Apportionment of Special Tax." (4) Parcel 445-134-22 is a remainder parcel that will be transferred to Uptown Newport Jamboree and merged into Parcel 445-134-29. Source: Except where otherwise noted, Developers and David Taussig & Associates. 35 SCENARIO 2: All Land Categorized as Developed (100% Buildout) Proposed 2019-20 Proposed Units / Sq. Appraised Assessed Scenario % of Special APN Property Owner Land Use Ft. Land Value(I) Land Value(2) Special Tax(3) Tax Phase 1 Bonds* Value to Lien Ratio± Condominiums 158 445-134-17 TSG-Parcel 1 LLC Commercial — $49,500,000 $12,255,909 3,000 sq. ft. Retail $118,500 21.16% $1,862,259 $16,050 2.87% $252,230 26.58 445-134-22(4) TSG-Parcel 1 LLC Remainder Parcel N/A N/A N/A 445-134-29 Uptown Newport Jamboree Subtotal Phase I Phase 2 Commercial — Retail 4,500 sq. ft. $ 1,721,636 $24,075 4.30% $378,345 3.81 $49,500,000 $13,977,545 $158,625 28.33% $2,492,994 19.96 445-133-07 Condominiums 314 $298,300 53.27% $4,687,864 Uptown Newport Apartments Jamboree Commercial — Retail 314 4,000 sq. ft. - $31,631,228 $81,640 14.58% $1,282,994 $21,400 3.82% $336,307 6.73 Total $49,500,000 $45,608,773 $559,965 100.00% $8,800,000 9.40 * Preliminary, subject to change. ± Where the appraised value is available for property in the Community Facilities District, the value to lien ratio reflects the appraised value of such property. Where no such appraised value is available, the value to lien ratio reflects the assessed value of such property. Total value to lien ratio reflects appraised value where available and assessed value where no appraisal was performed in the combined amount of $82,852,864. (1) Source: Integra Realty Resources. See "SECURITY FOR THE BONDS — Property Values" herein. (2) Source: Orange County Assessor's Office. See "SECURITY FOR THE BONDS — Property Values" herein. (3) Hypothetical Assigned Special Tax on all property, assuming all building permits have been pulled and planned development stage has been reached. The Maximum Special Tax for each Assessor's Parcel classified as Developed Property equals the greater of (i) the Assigned Special Tax shown in this table and (i) the Backup Special Tax of $50,028 per Acre. See "SECURITY FOR THE BONDS — Rate and Method of Apportionment of Special Tax." (4) Parcel 445-134-22 is a remainder parcel that will be transferred to Uptown Newport Jamboree and merged into Parcel 445-134-29. Source: Except where otherwise noted, Developers and David Taussig & Associates. 36 Other Potential Debt The Authority has no control over the amount of additional debt payable from taxes or assessments levied on all or a portion of the property within the Community Facilities District which may be incurred in the future by other governmental agencies having jurisdiction over all or a portion of the property within the Community Facilities District. Furthermore, nothing prevents the owners of property within the Community Facilities District from consenting to the issuance of additional debt which would be secured by taxes or assessments on a parity with the Special Tax. To the extent such indebtedness is payable from assessments, other special taxes levied pursuant to the Act or ad valorem taxes, such assessments, special taxes and ad valorem taxes will be secured by liens on the property within the Community Facilities District on a parity with the lien of the Special Tax. Accordingly, the debt on the property within the Community Facilities District could increase, without any corresponding increase in the value of the property therein, and thereby reduce the estimated Value -to -Lien debt ratio that exists at the time the Bonds are issued. The imposition of such additional indebtedness could also reduce the willingness and ability of the property owners within the Community Facilities District to pay the Special Tax when due. See "SPECIAL RISK FACTORS — Parity Taxes and Special Assessments." SPECIAL RISK FACTORS The following is a discussion of certain risk factors which should be considered, in addition to other matters described in this Official Statement, in evaluating the investment quality of the Bonds. This discussion does not purport to be comprehensive or definitive. The occurrence of one or more events discussed herein could adversely affect the value of the property in the Community Facilities District, or could adversely affect the ability or willingness of property owners in the Community Facilities District to pay Special Tax when due. A failure to receive Special Tax could result in the inability of the Authority to pay debt service on the Bonds when due. THE BONDS REPRESENT A HIGH DEGREE OF SPECULATIVE RISK. Investment in the Bonds involves risks that may not be appropriate for some investors. Insufficiency of Special Tax Under the Rate and Method, the annual amount of Special Tax to be levied on each parcel in the Community Facilities District is to be based on whether such parcel is publicly owned or otherwise exempt from Special Tax and, if not so exempt, whether such parcel is Developed Property, Final Mapped Property or Undeveloped Property (as such terms are defined in the Rate and Method). See "SECURITY FOR THE BONDS — Rate and Method of Apportionment of Special Tax." All of the Taxable Property constitutes Undeveloped Property for Fiscal Year 2019- 20. The Authority expects Taxable Property within the Community Facilities District to progress from Undeveloped Property to Final Mapped Property to Developed Property. As such progression occurs, the ratio of value to bond debt of the Taxable Property is expected to increase, as is the landowner's incentive to keep property taxes (including Special Tax) current. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Project, Planned Development and Status of Construction." No assurance can be given with respect to continued progress in developing the Community Facilities District. Other factors may also affect a landowner's willingness and ability to keep Special Tax current. See "SPECIAL RISK FACTORS — Failure to Develop," herein, for a discussion of the risks associated with development of the land within the Community Facilities District. Limited Obligation to Pay Bonds Funds for the payment of the principal of and interest on the Bonds are derived from Special Tax levied against Taxable Property in the Community Facilities District. The Special Tax collected could be insufficient to pay debt service on the Bonds due to delinquencies, non-payment or the failure to receive timely and sufficient proceeds from foreclosure proceedings. The Authority's obligation with respect to delinquent Special Tax is limited to the institution of judicial foreclosure proceedings under the circumstances described in the Indenture. The Authority has no obligation to make any payment on the Bonds except from Special Tax revenues and the other sources pledged under, and subject to the limitations provided in, the Indenture. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure." 37 Non -Recourse Obligation to Pay Special Tax The obligation to pay Special Tax levied within the Community Facilities District does not constitute a personal obligation of the current or subsequent owners of the property in the Community Facilities District. Enforcement of Special Tax payment obligations is limited to judicial foreclosure in the Orange County Superior Court. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure." If the proceeds of any foreclosure sale are insufficient to satisfy the applicable Special Tax lien, the Authority is not entitled to the deficiency from the landowner. There is no assurance that any current or subsequent owner of a parcel subject to Special Tax will be able to pay the Special Tax, or that such owner will choose to pay such installments even if otherwise able to do so. The Developers are the current owners of all of the Taxable Property within the Community Facilities District. Although bondholders should not look to the assets or credit of the Developers as a source of payment for the Bonds, the Developers' ability to pay the Special Tax and to develop the Community Facilities District is subject to the financial resources available to it. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — Project Plan of Finance" for a description of the financial resources available to the Developers. Concentration of ownership increases the risk of a failure to collect sufficient Special Tax to pay debt service on the Bonds, all other things being equal. The members of the Developers have no obligation to contribute additional capital to the Developers in the event of a shortfall of other resources, and the Authority can give no assurance that the Developers or any of their members or eventual joint venture partners will have sufficient funds or be willing to make payments of Special Taxes. Special Tax Delinquencies The Tax Collector of the County will include the Special Tax on the ad valorem property tax bills sent to owners of properties within the Community Facilities District. Such Special Tax installments will be due and payable and bear the same penalties and interest for non-payment as ad valorem property tax installments. Significant delinquencies in the payment of annual Special Tax installments or delays in foreclosure proceedings to collect such Special Tax could result in the depletion of the Reserve Fund and adversely affect the ability to pay debt service on the Bonds when due. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure," for a discussion of the provisions that apply, and the procedures that the Authority is obligated to follow, under the Indenture in the event of delinquencies in the payment of Special Tax. See "SPECIAL RISK FACTORS — FDIC/Federal Government Interests in Properties" and "— Bankruptcy and Foreclosure Delays" herein, for a discussion of the policy of the Federal Deposit Insurance Corporation regarding the payment of special taxes and limitations on the Authority's ability to foreclose on the lien of the Special Tax in certain circumstances. Shapiro v. San Diego On August 1, 2014, the California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in Shapiro v. San Diego City Council, 117 Cal. Rptr. 2d 631, 96 Cal. App. 4th 904 (2002). The case involved a Convention Center Facilities District (the "CCFD") established by the City of San Diego, much like a community facilities district established under the provisions of the Act. The CCFD is comprised of all of the real property in all of the City of San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties. At the election to authorize such special tax, the electorate was limited to owners of hotel properties and lessees of certain of such hotel properties. Thus, the election was a landowner election limited to owners and lessees of properties on which the special tax would be levied, and not a registered voter election. Such approach to determining who would constitute the qualified electors of the CCFD was based on Section 53326(c) of the Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the special tax. The Court held that the CCFD special tax election was invalid under the California Constitution because Article XIII A, Section 4 thereof and Article XIII C, Section 2 thereof require that the electors in such an election be the registered voters within the district. 38 In the case of the CCFD, at the time of the election there were many, many registered voters within the CCFD (viz., all of the registered voters in the City of San Diego). In the case of the Community Facilities District, there were no registered voters within the Community Facilities District at the time of the election to authorize the Special Tax. In City of San Diego, the Court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the Court's holding does not apply to the special tax election in the Community Facilities District. 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." Failure to Develop Land development operations are subject to comprehensive federal, State of California and local regulations. Various federal, state and local agencies have issued approvals within their jurisdictional authority required for the development and additional approvals may be required for certain elements of the development. Future governmental restrictions, including, but not limited to, governmental policies restricting or controlling development within the Community Facilities District, could be enacted, and future land use initiatives approved by the voters in the City could add more restrictions and requirements on development within the Community Facilities District. Moreover, there can be no assurance that the means and incentive to conduct land development operations within the Community Facilities District will not be adversely affected by a deterioration of the real estate market or economic conditions generally, future local, State and federal governmental policies relating to real estate development, the income tax treatment of real property ownership, acts of war or terrorism, or other factors. Certain Taxable Property in the Community Facilities District is presently undergoing active development. Undeveloped property is typically less valuable per acre than a developed property, and therefore provides less security to the Owners of the Bonds should it be necessary for the Authority to foreclose due to the nonpayment of the Special Tax. The Developers plan to demolish and redevelop buildings in a portion of the Community Facilities District in Phase 2, which may result in either temporary or, if development stalls, permanent reduction in property values. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS." The development of Phase 2 is expected to commence upon the expiration or earlier termination of the Lease. There can be no assurance, however, that the construction will in fact begin at such time, or that the Developers will be able to obtain sufficient financing to commence or complete such development of Phase 2. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS." Furthermore, an inability to sell condominiums within the Community Facilities District as currently proposed would result in slower rates of diversification of property ownership within the Community Facilities District. The timely payment of Special Tax levied depends primarily upon the ability and willingness of owners of such property to pay such taxes when due. A slowdown in or cessation of the development of land within the Community Facilities District could reduce the ability and willingness of such owners to make Special Tax payments, and could greatly reduce the value of such property in the event it has to be foreclosed upon to collect delinquent special taxes. See "SPECIAL RISK FACTORS — Bankruptcy and Foreclosure Delays" herein for a discussion of certain limitations on the ability of the Authority to pursue judicial foreclosure proceedings with respect to taxpayers with delinquent Special Tax. Construction Risk Development of property within the Community Facilities District is conditioned upon the construction of certain public infrastructure, including park facilities. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Project, Planned Development and Status of Construction." Such construction is subject to a number of risks, including, without limitation, inclement weather, shortages of or other supply problems relating to labor and materials, design or construction defects, delays in obtaining governmental or agency approvals and permits, compliance with existing permits and approvals and other risks. The realization of one or more of such risks could result in delays to or a failure to complete such required facilities, which could in turn result in delays to or a failure to develop the land within the Community Facilities District. See "SPECIAL RISK FACTORS — Failure to Develop" herein. 39 Cost overruns for public infrastructure to be constructed by the Developers are generally the responsibility of the Developers. The ability to pay for such cost overruns and to complete the applicable construction project is dependent on the availability of funding sources to the Developers. No assurances can be given that the Developers will obtain any such funding in a manner timely enough to avoid delays to the development of the land within the Community Facilities District as described herein. Concentration of Ownership and Risks Relating to Future Owners Generally, the risk of delinquency or nonpayment of Special Tax at levels which do not permit the timely payment of principal of and interest on the Bonds is inversely correlated to the diversity of ownership of Taxable Property within the Community Facilities District. The anticipated sale of condominiums will diversify ownership of real property within the Community Facilities District. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS —Ownership." The Developers currently intend to enter into a joint venture for construction of condominium units in Phase 1 and are negotiating the terms of potential construction financing for development in Phase 1 and expect to hold the property in Phase 2 until it is developed, which development is likely to begin no earlier than 2028. Financing for Phase 2 will not be finally determined until closer to commencement of construction for Phase 2. No representation is made as to the experience, abilities or financial resources of any future owner of property in the Community Facilities District, the willingness of any future owner to pay the Special Tax when due or the likelihood that any such future owner will be successful in developing property within the Community Facilities District beyond the stage of development reached by the Developers. The Authority has not made any investigation of or imposed any restrictions on any prospective owner of property in the Community Facilities District. Extraordinary Redemption from Prepaid Special Taxes The Bonds are subject to extraordinary redemption prior to maturity, as a whole or in part, on any Interest Payment Date from prepaid Special Taxes. Prepayment of the Special Taxes could be made by any of the owners of any of the property within the Community Facilities District, including the Developers or any individual owner; and they could also be made from the proceeds of bonds issued by or on behalf of an over -lapping special assessment district or community facilities district. The resulting extraordinary redemption of Bonds that were purchased at a price greater than the applicable redemption price could reduce the otherwise expected yield on such Bonds. Appraisal Risks The Appraiser has estimated the hypothetical market value of certain property in the Community Facilities District on the basis of certain assumptions which the Appraiser believes to be reasonable under the circumstances. See the Appraisal included in Appendix B hereto. However, certain of the events assumed by the Appraiser have not yet occurred as of the date of this Official Statement or may prove to be untrue. In particular, the value estimates in the Appraisal are based on the assumption that all public infrastructure and utility undergrounding to be funded with proceeds of the Bonds have been completed and are fully operational. In fact, that has not yet occurred, although the sale and delivery of the Bonds would produce the funds expected to be required for such purpose. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Improvements and Undergrounding" for a description of the status of such improvements. Although the Authority believes that the Appraiser's methodology and assumptions are reasonable under the circumstances, the Appraiser's hypothetical market value conclusions are expressions of professional opinion only. No assurance can be given that the market values of property in the Community Facilities District are equal to or greater than the Appraiser's estimated hypothetical market value, nor can any assurance be given that such market values will not decline during the period of time the Bonds are Outstanding. The market values of the property in the Community Facilities District can be adversely affected by a variety of factors, including, but not limited to, the occurrence of one or more of the special risk events discussed herein. A decline in the market value of a parcel in the Community Facilities District could lower the ability or willingness of the owner of such parcel to pay Special Tax when due and would decrease the amount recoverable at a foreclosure sale of such parcel. 40 See "SECURITY FOR THE BONDS — Property Values" for a further discussion of estimated property values in the Community Facilities District. Assessed Valuation Risks In the event that a property owner defaults in the payment of an installment of Special Taxes, the Authority's only remedy is to judicially foreclose on that property in the Community Facilities District. Prospective purchasers of the Bonds should not assume that the property within the Community Facilities District could be sold for the assessed values described in this Official Statement at a foreclosure sale for delinquent Special Taxes or for an amount adequate to pay delinquent Special Taxes. In addition to the foregoing, property values are not evenly distributed throughout the Community Facilities Districts. This disparity of values across the Community Facilities Districts is significant because, in the event of nonpayment of Special Taxes, the Authority's only remedy is to foreclose against the delinquent parcel. See "SECURITY FOR THE BONDS." The assessed values for the property within the Community Facilities District are the property values determined by the County Assessor for property tax purposes. Such assessed value determinations may be subject to appeal by property owners. The resolution of an appeal may result in a reduction to the County Assessor's original taxable value and a tax refund to the applicant/property owner. Although such a result would not reduce the Special Tax levy on the property, any reduction in the assessed taxable values of property within the Community Facilities District would have an adverse impact on the value -to -lien ratios discussed herein, and could lessen the ability or willingness of the owners of such property to pay their Special Taxes. Moreover, assessed values do not necessarily represent the current market value for any parcel. Bankruptcy and Foreclosure Delays The payment of Special Tax and the ability of the Authority to foreclose the lien of a delinquent Special Tax may be limited by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of Bonds (including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal instruments, by bankruptcy, reorganization, insolvency, or other similar laws affecting the rights of creditors generally. Although bankruptcy proceedings would not cause the Special Tax to become extinguished, the amount of any lien on property securing the payment of delinquent Special Tax could be reduced if the value of the property were determined by the bankruptcy court to have become less than the amount of the lien, and the amount of the delinquent Special Tax in excess of the reduced lien would then be treated as an unsecured claim by the court. Further, bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings. Such a delay could adversely affect the payment of the principal of, and interest on, the Bonds when due. The prosecution of foreclosure proceedings could also be delayed by other factors affecting the prosecution of lawsuits generally, including local court calendars and procedural delays. Disclosures to Future Purchasers The Notice of Special Tax Lien has been recorded in the Office of the County Recorder pursuant to the Act. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective landowner or lender will consider such obligation for Special Tax in the purchase of all or a portion of the Community Facilities District or the lending of money thereon. Failure to disclose the existence of the Special Tax or the full amount of the pro rata share of debt on the land in the Community Facilities District may affect the willingness and ability of future owners of land within the Community Facilities District to pay the Special Tax when due. 41 Billing of Special Tax A special tax formula can result in a substantially heavier property tax burden being imposed upon properties within a community facilities district than elsewhere in a city or county, and this in turn can lead to problems in the collection of the special tax. In some community facilities districts, taxpayers have refused to pay the special tax and have commenced litigation challenging the special tax, the community facilities district and the bonds issued by or on behalf of the community facilities district. Under provisions of the Act, the Special Tax is to be billed to the properties within the Community Facilities District which were entered on the assessment roll of the County Assessor by January 1 of the previous fiscal year on the regular property tax bills sent to owners of such properties. Such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as regular property tax installments. These Special Tax installment payments cannot be made separately from property tax payments. Therefore, the unwillingness or inability of a property owner to pay regular property tax bills as evidenced by property tax delinquencies may also indicate an unwillingness or inability to make regular property tax payments and installment payments of Special Tax in the future. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure," for a discussion of the provisions which apply, and procedures which the Authority is obligated to follow, in the event of delinquency in the payment of installments of Special Tax. Endangered and Threatened Species It is illegal to harm or disturb any plants or animals in their natural habitats that have been listed as endangered species by the United States Fish & Wildlife Service under the ESA or by the CDFG under the California Endangered Species Act without a permit. Thus, the presence of an endangered plant or animal could delay development of vacant property in the Community Facilities District or reduce the value of Taxable Property. Failure to develop the vacant property in the Community Facilities District as planned, or substantial delays in the completion of the planned development of the property may increase the amount of Special Tax to be paid by the owners of Taxable Property and affect the willingness and ability of the owners of the property within the Community Facilities District to pay the Special Tax when due. Pursuant to the Environmental Impact Report (EIR), the City Council concluded that development within the Community Facilities District is not likely to cause substantial and considerable damage to the natural environment, including fish, wildlife or their habitat, because the subject property has already previously been developed to urban use. The presence of any rare, endangered or sensitive species in the Community Facilities District is not expected to interfere with the proposed development in the Community Facilities District. Natural Disasters In the future, the Community Facilities District could be subject to earthquakes, wildfire, flooding, acts of terrorism or war, or other calamities or natural disasters. The occurrence of such a calamity or disaster in or around the Community Facilities District could result in damage to properties in the Community Facilities District or could otherwise reduce the value of such properties and affect the ability or willingness of the property owners in the Community Facilities District to pay Special Tax when due. Earthquake. There are several active geological faults in the State that have potential to cause serious earthquakes that could result in damage within the Community Facilities District. According to the Seismic Safety Commission, the Community Facilities District is located within "Zone 4," which is considered to be the highest risk zone in California. There are only two zones in California: (i) Zone 4, which is assigned to areas near major faults; and (ii) Zone 3, which is assigned to all other areas of more moderate seismic activity. It is possible that new geological faults could be discovered in the area and that an earthquake occurring on such faults could result in damage of varying degrees of seriousness to property and infrastructure in the Community Facilities District. Flooding. Property within the Community Facilities District is located within Zone X, which means that it is outside of the 500 year flood plain. 42 Hazardous Substances The market value of the property in the Community Facilities District could decrease if a hazardous substance is discovered or released in the vicinity of the Community Facilities District. 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 "Superfund Act," is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance. Should any of the parcels be affected by a hazardous substance, the value of such parcels could decline, because the purchaser, upon becoming the owner, will become obligated to remedy the condition. The estimated value of the property within the Community Facilities District, as set forth in the Appraisal, assumes there are no hazardous substances and that there is no liability to remedy a hazardous substance condition of the property. The Authority has made no independent investigation as to the environmental condition of the Community Facilities District and the Authority is not aware of the presence of any hazardous substance liabilities with respect to the Community Facilities District except as described herein. However, it is possible that such liabilities do currently exist and that the Authority is not aware of them. Further, it is possible that liabilities may arise in the future with respect to any of the land within the Community Facilities District resulting from the present or future existence of a substance classified as a hazardous substance under the federal or State environmental laws, including the removal of volatile organic compounds described herein. Any of these possibilities could adversely affect the value of a parcel and the willingness or ability of the owner of any parcel to pay the Special Tax when due. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Project, Planned Development and Status of Construction — Development Conditions" for a discussion of environmental remediation in Phase 2. FDIC/Federal Government Interests in Properties The ability of the Authority to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the "FDIC"), Fannie Mae, Freddie Mac, the Federal National Mortgage Association, the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest. Fannie Mae, Freddie Mac and Mortgage Interests. In the event that a parcel of taxable property in the Community Facilities District is owned by a federal governmental entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or in the event a private deed of trust secured by such parcel is owned by a federal governmental 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. Under the Supremacy Clause of the United States Constitution, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes within the Community Facilities District but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments. Moreover, unless Congress has otherwise provided, if the federal government, such as Fannie Mae or Freddie Mac, has a mortgage interest in the parcel and the Community Facilities District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government's mortgage interest. In Rust v. Johnson, 597 F.2d 174 (1979), the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association ("FNMA") is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States. The Authority has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special Taxes within 43 the Community Facilities District, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Bonds are outstanding. FDIC. In the event that any financial institution making any loan which is secured by real property within the Community Facilities District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, then the ability of the Authority to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited. The FDIC's policy statement regarding the payment of state and local real property taxes (the "Policy Statement") provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property's value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution's affairs, unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC -owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC's consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent. The Policy Statement states that the FDIC generally will not pay non -ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Mello -Roos Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC's federal immunity. The Ninth Circuit has issued a ruling on August 28, 2001, in which it determined that the FDIC, as a federal agency, is exempt from Mello -Roos special taxes. Currently, the FDIC does not have an interest in any land within the Community Facilities District. The Authority is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the Community Facilities District 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 could reduce or eliminate the number of persons willing to purchase a parcel at foreclosure sale. Such an outcome could cause a draw on the Reserve Fund and could adversely affect the payment when due of debt service on the Bonds. Parity Taxes and Special Assessments The Special Tax constitutes a lien against the parcels of land on which it is levied. Such lien is on parity with all special taxes levied by the Authority or other agencies and is co -equal to and independent of the lien for general property taxes, regardless of when they are imposed upon the same property. The Authority does not have control over the ability of other entities to issue indebtedness secured by ad valorem taxes, special taxes or assessments payable from all or a portion of the property within the Community Facilities District. In addition, the owners of property within the Community Facilities District may, without the consent or knowledge of the Authority, petition other public agencies to issue public indebtedness secured by ad valorem taxes, special taxes or assessments. Any such special taxes may have a lien on such property on parity with the lien of the Special Tax. See "SECURITY FOR THE BONDS — Other Potential Debt." Refunding Bonds are permitted pursuant to the Indenture, which Refunding Bonds will be secured by a lien on the Special Tax on parity with the Bonds. See "SECURITY FOR THE BONDS — Refunding Bonds." 44 Value -to -Lien Debt Ratios The estimated value -to -lien debt ratios set forth herein under the caption "SECURITY FOR THE BONDS — Estimated Value -to -Lien Debt Ratios" are based on the appraised values of certain property in the Community Facilities District as of December 22, 2018 and the assessed values of the remaining property in the Community Facilities District as of February 6, 2019. No assurance can be given that such value -to -lien debt ratios will be maintained over time. As discussed herein, many factors which are beyond the control of the Authority could adversely affect the property values within the Community Facilities District. The Authority also has no control over the amount of additional indebtedness that may be issued by other public agencies, the payment of which, through the levy of a tax or an assessment, is on a parity with the Special Tax. See "SPECIAL RISK FACTORS — Parity Taxes and Special Assessments" and "— SECURITY FOR THE BONDS — Other Potential Debt." The Developers intend to demolish and redevelop buildings in a portion of Phase 2 within the Community Facilities District, which may result in a decrease in the overall property values in the Community Facilities District. A decrease in the property values in the Community Facilities District, or an increase in bond debt liens on property in the Community Facilities District, or both, could result in a lowering of the value -to -lien debt ratios of the property in the Community Facilities District. Limitations on Remedies; No Acceleration The Indenture does not permit the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Indenture. Generally, remedies are limited to legal actions to compel the Authority to perform under the Bonds and the Indenture, to enjoin acts which are unlawful or violate the rights of the Holders, or to account as the trustee of an express trust. See Appendix E — "SUMMARY OF THE INDENTURE — Events of Default and Remedies of Holders." Remedies available to the Owners may be inadequate to assure the timely payment of principal of and interest on the Bonds or to preserve the tax-exempt status of the Bonds. 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. 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, receivership, reorganization, arrangement, fraudulent conveyance, moratorium, or others similar laws affecting generally the enforcement of creditor's rights, by equitable principles, by the exercise of judicial discretion and by limitations on remedies against joint powers authorities in the State of California. Right to Vote on Taxes Act Article XIIIC and Article XIIID to the California Constitution, enacted in 1996, limit the authority of local governments to impose taxes and property -related assessments, fees and charges. Many provisions of Articles XIIIC and XIIID have not yet been interpreted by the courts, although a number of lawsuits have been filed requesting the courts to interpret various aspects thereof. Among other things, Section 3 of Article XIIIC states that "... the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The Act provides for a procedure, which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. Although the matter is not free from doubt, it is likely that the exercise by the voters of the initiative power referred to in Article XIIIC to reduce or terminate a Special Tax is subject to the same restrictions as are applicable to the Authority pursuant to the Act. Accordingly, although the matter is not free from doubt, it is likely that Articles XIIIC and XIIID have not conferred on the voters the power to repeal or reduce the Special Tax if such reduction would interfere with the timely retirement of the Bonds. It may be possible, however, for voters to reduce the Special Tax in a manner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amount of Special Tax that may be levied in any year below the existing levels. Therefore, no assurance can be given with respect to the levy of Special Tax for 45 administrative expenses. Furthermore, no assurance can be given with respect to the future levy of the Special Tax in amounts greater than the amount necessary for the timely retirement of the Bonds. The interpretation and application of Articles XIIIC and XIIID will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See "SPECIAL RISK FACTORS — Limitations on Remedies; No Acceleration." Tax Cuts and Jobs Act of 2017 Recent changes enacted by federal tax legislation (the Public Law No. 115-97, also referred to as the "Tax Cuts and Jobs Act of 2017") was enacted into law on December 22, 2017. The Tax Cuts and Jobs Act made significant changes to many aspects of the Internal Revenue Code of 1986. For example, the Tax Cuts and Jobs Act reduced the amount of mortgage interest deduction to the first $750,000 of a home loan on new purchases (existing loans are grandfathered in), increased the standard deduction, and put a limit of $10,000 on deductions for state and local income tax, sales tax and property tax expenses that individuals may deduct from their gross income for federal income tax purposes. The changes made by the Tax Cuts and Jobs Act could increase the cost of home ownership within the Community Facilities District. The Authority cannot predict the effect that the Tax Cuts and Jobs Act may have on the cost of home ownership or the price of homes in the Community Facilities District, the rate at which condominiums in the Community Facilities Districts are sold to end users by the Developers or the ability or willingness of home owners to pay Special Taxes or property taxes. Risks Relating to Tax -Exempt Status of the Bonds As further described in "TAX MATTERS" below, failure of the Authority or the City to comply with the requirements of the Internal Revenue Code of 1986 (the "Code") and the related legal authorities, or changes in the federal tax law or its application, could cause interest on the Bonds to be included in the gross income of Holders for federal income tax purposes, possibly from the date of original issuance of the Bonds. Further, the opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of interest on the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. The IRS has an ongoing program of auditing obligations that are issued and sold as bearing tax-exempt interest to determine whether, in the view of the IRS, interest on such obligations is included in the gross income of the owners thereof for federal income tax purposes. The IRS has announced that its audit efforts will focus in part on "developer -driven bond transactions," including certain tax increment financings and certain assessment bond transactions. In recent audits, the IRS has asserted that interest on such "developer -driven" obligations can be taxable, in certain circumstances, even when those transactions otherwise meet all applicable tax law requirements. It cannot be predicted if this IRS focus could lead to an audit of the Bonds or what the result would be of any such audit. If an audit of the Bonds is commenced, under current procedures parties other than the Authority and the City would have little, if any, right to participate in the audit process. Moreover, because achieving judicial review in connection with an audit of tax-exempt obligations is difficult, obtaining an independent review of IRS positions with which the Authority and the City legitimately disagree, may not be practicable. Any action of the IRS, regardless of the outcome, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of obligations presenting similar tax issues, may affect the market price for, or the marketability of, the Bonds. Finally, if the IRS ultimately determines that the interest on the Bonds is not excluded from the gross income of Bondholders for federal income tax purposes, the Authority may not have the resources to settle with the IRS, the Bonds are not required to be redeemed, and the interest rate on the Bonds will not increase. 46 THE AUTHORITY The Authority is a joint powers agency organized pursuant to a Joint Exercise of Powers Agreement among a number of California counties, cities and special districts entered into pursuant to the provisions relating to the joint exercise of powers contained in Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code. The Authority is authorized to establish community facilities districts and issue the Bonds under the Act. LITIGATION To the knowledge of the Authority, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body, pending against the Authority seeking to restrain or enjoin the sale or issuance of the Bonds, or in any way contesting or affecting any proceedings of the Authority taken concerning the sale thereof, the pledge or application of any moneys or security provided for the payment of the Bonds, the validity or enforceability of the documents executed by the Authority in connection with the Bonds, the completeness or accuracy of the Official Statement or the existence or powers of the Authority relating to the sale of the Bonds. CONTINUING DISCLOSURE The Authority The Authority has covenanted for the benefit of the Owners of the Bonds pursuant to a continuing disclosure certificate ("the "Authority Continuing Disclosure Certificate") to provide, each year for so long as the Bonds are Outstanding, certain financial information and operating data relating to the Bonds, the Community Facilities District, ownership of the property in the Community Facilities District that is subject to the Special Tax, the occurrence of delinquencies in payment of the Special Tax, and the status of foreclosure proceedings, if any, respecting Special Tax delinquencies (the "District Disclosure Report"), and to provide notices of the occurrence of certain enumerated events. The fmancial information and operating data will be provided annually on or before January 15 for the twelve months ended on the preceding June 30, commencing January 15, 2020. A form of the Authority's undertaking is included in Appendix F — "FORMS OF CONTINUING DISCLOSURE CERTIFICATES." The Community Facilities District Disclosure Reports are to be filed by the Authority with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access system ("EMMA"). These covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). The Authority has separately contracted with BLX Group LLC, David Taussig & Associates, Inc., or other consultants, for its continuing disclosure undertakings with respect to its bond issues. Certain event filings related to unscheduled draws on reserve funds, defeasance of bonds and rating changes were not filed in a timely manner but have since been corrected. In certain circumstances, CUSIPs were not linked to appropriate filings but have since been corrected. Certain operating data relating to the Authority's Statewide Community Infrastructure Program Revenue Bonds, Series 2014B was not originally included in the timely filed annual report for fiscal year 2014-15 but was included 7 days after the filing due date. The Developers Pursuant to a separate continuing disclosure certificate (the "Developer Continuing Disclosure Certificate"), the Developers have covenanted for the benefit of the Owners of the Bonds, to provide certain information relating to the development plan and the financing plan for the Community Facilities District (the "Developer Disclosure Report"), and to provide notices of the occurrence of certain enumerated events, until the property owned by the Developers (in aggregate) in the Community Facilities District is responsible for less than 20% of the Special Taxes levied in the Community Facilities District or until the obligation to so provide such information, data and notices is otherwise terminated in accordance with the provisions of Developer Continuing Disclosure Certificate. A form of the Developer Continuing Disclosure Certificate is included in Appendix F — "FORMS OF CONTINUING DISCLOSURE CERTIFICATES." Such information is to be provided or caused to be provided by 47 the Developers annually not later than December 15 of each year, commencing December 15, 2019. Reports are to be filed with EMMA. LEGAL OPINIONS The validity of the Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority ("Bond Counsel"). Bond Counsel has not undertaken any responsibility for the accuracy, completeness or fairness of this Official Statement and expresses no opinion as to the matters set forth herein. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix D hereto. Payment of the fees and expenses of Bond Counsel are contingent upon the issuance and delivery of the Bonds. From time to time, Bond Counsel may represent the Underwriter on matters unrelated to the Bonds. Certain legal matters will be passed upon for the Underwriter by Kutak Rock LLP, Irvine, California. Orrick, Herrington & Sutcliffe LLP is also acting as Disclosure Counsel to the Authority. TAX MATTERS In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Code and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix D. To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each beneficial owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Beneficial owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of beneficial owners who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public. Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a beneficial owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such beneficial owner. Beneficial owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The Authority has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure 48 that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel's attention after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters. Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Bonds may otherwise affect a beneficial owner's federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the beneficial owner or the beneficial owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel is expected to express no opinion. The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Authority, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Authority has covenanted, however, to comply with the requirements of the Code. Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Authority or the beneficial owners regarding the tax- exempt status of the Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the Authority and their appointed counsel, including the beneficial owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Authority legitimately disagrees may not be practicable. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the Authority or the beneficial owners to incur significant expense. UNDERWRITING The Bonds are being purchased by RBC Capital Markets, LLC (the "Underwriter"). Pursuant to a Bond Purchase Contract between the Underwriter and the Authority (the "Purchase Contract"), the Underwriter has agreed to purchase all of the Bonds for an aggregate purchase price of $ , subject to certain conditions set forth in the Purchase Contract. The purchase price reflects an underwriter's discount of $ and a [net] original issue premium/discount of $ . The initial offering prices stated on the inside cover of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts), dealer banks, banks acting as agent and others at prices lower than said public offering prices. The Underwriter and its respective affiliates are full -service financial institutions engaged in various activities that may include securities trading, commercial and investment banking, municipal advisory, brokerage and asset 49 management. In the ordinary course of business, the Underwriter and its respective affiliates may actively trade debt and, if applicable, equity securities (or related derivative securities) and provide financial instruments (which may include bank loans, credit support or interest rate swaps). The Underwriter and its respective affiliates may engage in transactions for their own accounts involving the securities and instruments made the subject of this securities offering or other offering of the Authority. The Underwriter and its respective affiliates may make a market in credit default swaps with respect to municipal securities in the future. The Underwriter and its respective affiliates may also communicate independent investment recommendations, market color or trading ideas and publish independent research views in respect of this securities offering or other offerings of the Authority. NO RATINGS The Authority has not made, and does not contemplate making, application to any rating agency for the assignment of a rating to the Bonds. [Remainder of page intentionally left blank] 50 MISCELLANEOUS The quotations from, and the summaries and explanations of the Indenture and other statutes and documents contained herein do not purport to be complete, and reference is made to such documents and statutes for the full and complete statements of their respective provisions. This Official Statement is submitted only in connection with the initial offering of the Bonds by the Authority, and is not to be used for any other purpose. This Official Statement does not constitute a contract with the purchasers of the Bonds. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The execution and delivery of this Official Statement has been duly authorized by the Authority. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory 51 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX A GENERAL INFORMATION ABOUT THE CITY OF NEWPORT BEACH AND VICINITY The following information was obtained from sources the Authority believes to be reliable, but the Authority gives no assurances as to its accuracy or completeness. The City of Newport Beach has not reviewed or approved this Official Statement and the Authority makes no representation as to the finances of the City or the general economic conditions within the City or surrounding region. The California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) (the "Community Facilities District") is located within the City of Newport Beach (the "City") in the County of Orange (the "County"). The City is located in the coastal center of the County, approximately 89 miles north of San Diego, 15 miles south of Long Beach and 45 miles southwest of Los Angeles. The City is a full service city providing its residents and visitors with the following functional services: general governance, legal, financial, information technology, and administrative management; police, fire, paramedic, lifeguard, and emergency medical transport services; engineering, construction, and maintenance of public facilities, public streets, beaches, and parks; planning, zoning, and economic development services; building inspection, plan check and code enforcement services libraries and cultural and arts services; recreation and senior services; and water, wastewater, and street light utility services. The City provides water and wastewater service to most areas within City limits, but it does not provide gas, cable television, electrical, or other utility services. Public elementary and secondary education is provided by the Newport -Mesa Unified School District and the Laguna Beach Unified School District. The City encompasses approximately 24 square miles of land and has an estimated population of 87,182 as of January 1, 2018. The following financial and economic data for the City and the County are presented for information purposes only. The principal of and interest and redemption premiums, if any, on the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), Special Tax Bonds, Series 2019 (the "Bonds") are limited obligations payable solely from the proceeds of the Special Tax. The Authority is not obligated to pay the Bonds except from the proceeds of the Special Tax. The general funds and assets of the Authority are not liable and the full faith and credit of the Authority is not pledged for the payment of the principal of or interest or redemption premiums, if any, on the Bonds. No tax or assessment other than the Special Tax shall ever be levied or collected to pay the principal of or interest or redemption premiums, if any, on the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any of the property of the Authority or of the City or any of their income or receipts except the money held in the Special Tax Fund pursuant to the Indenture. Neither the payment of the principal of or the interest or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the Authority or of the City. Demographic Information Table A sets forth City's population for the last five years. TABLE A CITY OF NEWPORT BEACH City Population 2014-20180) As of January 1 City Population 2014 85,738 2015 85,815 2016 85,782 2017 86,207 2018 87,182 Source: California Department of Finance, E-4 Population Estimates for Cities, Counties, and State, 2011-2018 with 2010 Benchmark. (1) Most recent data available as of the date of this Official Statement. A-1 Table B sets forth the median age of the City's residents for fiscal years 2010-11 to 2015-16. TABLE B CITY OF NEWPORT BEACH Median Age 2010-11 to 2015-16(1) Fiscal Year Median Aget2) 2010-11 42.9 2011-12 43.8 2012-13 43.7 2013-14 44.7 2014-15 45.4 2015-16 45.6 (1) Most recent data available as of the date of this Official Statement. (2) Source: U.S. Census Bureau, American Community Survey estimate for City of Newport Beach. Employment Table C sets forth the civilian labor force, the employed labor force, the unemployed labor force and the unemployment rate for the City, County and State for calendar years 2013 to 2017. City County State TABLE C CITY OF NEWPORT BEACH, ORANGE COUNTY, STATE OF CALIFORNIA Labor Force 2013-2017(1) Year Civilian Employed Unemployed Unemployment Labor Force Labor Force Labor Force Rate 2013 44,300 41,900 2,400 5.4% 2014 44,600 42,600 2,000 4.5 2015 45,200 43,500 1,700 3.7 2016 45,600 44,100 1,500 3.3 2017 44,100 42,900 1,200 2.8 2013 1,565,300 1,462,400 102,900 6.6% 2014 1,572,000 1,485,700 86,200 5.5 2015 1,588,700 1,518,000 70,700 4.4 2016 1,602,400 1,538,000 64,300 4.0 2017 1,619,200 1,562,600 56,600 3.5 2013 18,625,000 16,958,400 1,666,600 8.9% 2014 18,758,400 17,351,300 1,407,100 7.5 2015 18,896,500 17,724,800 1,171,700 6.2 2016 19,093,700 18,048,800 1,044,800 5.5 2017 19,312,000 18,393,100 918,900 4.8 (1) Most recent data available as of the date of the Official Statement. Source: California Employment Development Department, Annual Averages. Table D sets forth the income levels for the City for fiscal years 2011-12 to 2016-17. A-2 TABLE D CITY OF NEWPORT BEACH Personal Income and Per Capita Personal Income Fiscal Years 2011-12 to 2016-17(1) Fiscal Year Per Capita Personal Income Personal Income 2011-12 $5,809,828 $67,564 2012-13 6,995,784 80,936 2013-14 6,926,725 79,733 2014-15 6,848,523 78,494 2015-16 6,574,071 78,012 2016-17 6,736,392 79,331 (1) Most recent data available as of the date of the Official Statement. Source: City of Newport Beach Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2017. Table E sets forth the top ten employers in the City as of June 30, 2017. TABLE E CITY OF NEWPORT BEACH Principal Employers (As of June 30, 2017)(1) Employer Employees Hoag Memorial Hospital 4,800 Glidewell Dental 1,390 Pacific Life Insurance 1,248 PIMCO Advisors 994 Newport -Mesa Unified School District 860 Jazz Semi -Conductor 805 Resort at Pelican Hill 753 City of Newport Beach 724 Balboa Bay Club and Resort 691 Fletcher Jones Motor Cars Inc. 524 Total 12,789 00) Most recent data available as of the date of the Official Statement. Source: City of Newport Beach Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2017; City of Newport Beach Finance Department. Property Values Table F shows the assessed valuation for the property within the City since fiscal year ending June 2009. Assessed valuation may not be representative of the actual market value of property in the City because Article XIIIA of the California Constitution limits any increase in assessed value to no more than 2% a year unless a property is sold or transferred. As a consequence, assessed values are typically less than actual market values unless the property has recently changed ownership or has been reassessed, and may be greater than actual market values in an environment of falling real estate values. A-3 Fiscal Year Ended June 30 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 TABLE F Historical Assessed Valuation Secured Residential $28,733,809,754 29,057,665,304 30,853,053,683 31,603,505,416 32,522,843,119 34,678,952,381 36,814,891,583 39,263,791,190 41,834,060,284 44,862,969,434 Commercial $4,477,310,761 4,614,669,993 4,711,084,222 4,504,291,343 4,627,463,458 4,688,189,694 5,007,508,388 5,264,898,550 5,539,551,197 5,953,148,011 Other $3,224,940,905 3,406,238,449 1,516,055,361 1,442,600,505 1,435,546,888 1,489,111,147 1,348,136,131 1,394,764,145 1,398,481,252 1,499,414, 812 Unsecured $1,482,083,490 1,580,961,132 1,671,177,215 1,565,104,496 1,597,277,039 1,484,909,241 1,581,520,801 1,465,016,213 1,569,593,832 1,464,683,763 Total Taxable Assessed Value $37,918,144,910 38,659,534,878 38,751,370,481 39,115,501,760 40,183,130,504 42,341,162,463 44,752,056,903 47,388,470,098 50,341,686,565 53,780,216,020 Total Direct Tax Change Rate 5.93% 1.000% 1.96% 1.000% 0.24% 1.000% 0.94% 1.000% 2.73% 1.000% 5.37% 1.000% 5.69% 1.000% 5.89% 1.000% 6.23% 1.000% 6.83% 1.000% Source: Orange County Auditor -Controller. Education Table G summarizes the percentage of the City's population with formal schooling for fiscal years 2010 to 2016. Fiscal Year 2010 2011 2012 2013 2014 2015 2016 TABLE G CITY OF NEWPORT BEACH Education Level 2010 to 2016(1) Percent of Population who are High School Graduates or HigherM 97.7% 97.9 97.9 97.5 97.7 97.7 97.7 (1) Most recent data available as of the date of the Official Statement. (2) Percent of City's population 25 years and over. Source: U.S. Census Bureau estimate for City of Newport Beach Percent of Population who have Bachelor's Degree or Higher(2) 62.5% 63.4 64.2 64.1 64.5 64.6 65.7 A-4 Commercial Activity Table H sets forth information regarding taxable sales in the City for calendar years 2011-2016. TABLE H CITY OF NEWPORT BEACH Taxable Retail Sales 2011-2016(0 (000s) 2011 2012 2013 2014 2015 2016 Motor Vehicles and Parts Dealers $ 500,538 $ 560,506 $ 634,391 $ 747,162 $ 759,863 $ 759,089 Home Furnishings and Appliance Stores 43,129 42,505 40,901 40,878 41,069 44,145 Bldg. Materials & Garden Equip. & Supplies 45,460 48,783 48,481 38,995 40,931 39,559 Food and Beverage Stores 100,179 113,602 122,033 129,045 134,010 138,035 Gasoline Stations 142,269 140,215 128,740 132,068 112,991 95,469 Clothing and Clothing Accessories Stores 234,895 260,005 269,666 277,852 272,188 274,327 General Merchandise Stores 169,586 172,779 183,351 188,016 187,195 170,950 Food Service and Drinking Places 394,299 422,212 436,113 480,509 512,058 527,269 Other Retail Group 143,961 150,758 154,424 165,716 181,457 197,996 Total Retail and Food Services $1,774,317 $1,911,365 $2,018,100 $2,200,243 $2,241,761 $2,246,838 All Other Outlets 616,035 655,257 677,774 743,101 792,631 806,382 Total All Outlets $2,390,352 $2,566,623 $2,695,874 $2,943,344 $3,034,392 $3,053,220 (1) Most recent data available as of the date of the Official Statement. 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: California State Board of Equalization, 2011 - 2016 Taxable Sales in California Reports. A-5 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX B APPRAISAL (THIS PAGE INTENTIONALLY LEFT BLANK) Integra Realty Resources Sacramento Appraisal of Real Property Uptown Newport (Phase 1) CSCDA Community Facilities District No. 2018-03 Newport Beach, Orange County, California 92660 Prepared For: California Statewide Communities Development Authority Effective Date of the Appraisal: December 22, 2018 Report Format: Appraisal Report — Comprehensive Format IRR - Sacramento File Number: 193-2018-0555 irr I Uptown Newport (Phase 1) CSCDA Community Facilities District No. 2018-03 Newport Beach, California Integra Realty Resources Sacramento February 5, 2019 3825 Atherton Road Suite 500 Rocklin, CA 95765 Mr. James Hamill Mr. Jon Penkower Managing Directors California Statewide Communities Development Authority 1700 N. Broadway Walnut Creek, CA 94596 T 916.435.3883 F 916.435.4774 www.irr.com SUBJECT: Market Value Appraisal Uptown Newport (Phase 1) CSCDA Community Facilities District No. 2018-03 Newport Beach, Orange County, California 92660 IRR - Sacramento File No. 193-2018-0555 Dear Messrs. Hamill and Penkower: Integra Realty Resources — Sacramento is pleased to submit the accompanying appraisal of the referenced property. The purpose of the appraisal is to develop an opinion of the market value of lot 1, as if public capital facilities and improvements have been completed, subject to a hypothetical condition, of the fee simple interest in the property in bulk as of the effective date of the appraisal, December 22, 2018. The client for the assignment is California Statewide Communities Development Authority, and the intended use is for bond underwriting purposes. The appraised property comprises Lot 1 within Phase 1 of the Uptown Newport project. The appraised property herein encompasses 158 condominium units and 3,000 square feet of commercial space. The Uptown Newport project site is located on Jamboree Road and bounded by Birch Street and MacArthur Boulevard in downtown Newport Beach, Orange County, California, within the Newport Beach city limits. A more detailed legal and physical description of the subject property is contained within the attached report. The appraised property comprises the taxable portion of the proposed California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) No. 2018-03 for the Uptown Newport project. In addition to the appraised property, CSCDA CFD No. 2018-03 Mr. James Hamill Mr. Jon Penkower California Statewide Communities Development Authority February 5, 2019 Page 2 (Newport Uptown) also contains a 0.635-acre parcel (identified as Lot 2) and one public/quasi-public parcel, which are not a part of this appraisal. To report the assignment results, we use the Appraisal Report option of Standards Rule 2- 2(a) of USPAP. As USPAP gives appraisers the flexibility to vary the level of information in an Appraisal Report depending on the intended use and intended users of the appraisal, we adhere to the Integra Realty Resources internal standards for an Appraisal Report — Standard Format. This format summarizes the information analyzed, the appraisal methods employed, and the reasoning that supports the analyses, opinions, and conclusions. The appraisal report has been conducted in accordance with appraisal standards and guidelines found in the Uniform Standards of Professional Appraisal Practice (USPAP) and the Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (2004). This document is an Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the 2018-2019 edition of USPAP. Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of value of the appraised property, in bulk, subject to the hypothetical condition all public capital facilities and improvements to be financed by the CFD Special Tax have been completed, as well as the Assessed Value of Lot 2 not appraised, is as follows: Value Conclusions Appraisal Premise Market Value of Lot 1, As If Public Capital Facilities and Improvements Have Been Completed Assessed Value of Lot 2 Total Aggregate Value of Appraised and Assessed Properties in the District Interest Appraised Date of Value Value Conclusion Fee Simple December 22, 2018 $49,500,000 S1,721.636 $51,221,636 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. None The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. We have been requested to provide the market value of the fee simple interest in the appraised property, subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. irr- Mr. James Hamill Mr. Jon Penkower California Statewide Communities Development Authority February 5, 2019 Page 3 Any properties within CFD No. 2018-03 Phase 1 not subject to the Lien of the Special Tax securing the Bonds (for -rent multi -family, public and quasi -public land use sites) are not a part of this appraisal. The opinions of value expressed in this report are based on estimates and forecasts that are prospective in nature and subject to considerable risk and uncertainty. Events may occur that could cause the performance of the property to differ materially from our estimates, such as changes in the economy, interest rates, capitalization rates, financial strength of tenants, and behavior of investors, lenders, and consumers. Additionally, our opinions and forecasts are based partly on data obtained from interviews and third party sources, which are not always completely reliable. Although we are of the opinion that our findings are reasonable based on available evidence, we are not responsible for the effects of future occurrences that cannot reasonably be foreseen at this time. If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service. Respectfully submitted, INTEGRA REALTY RESOURCES - SACRAMENTO Eric Segal, MAI Certified General Real Estate Appraiser California Certificate # AG026558 Telephone: 916-435-3883, ext. 228 Email: esegal@irr.com Sara Gilbertson Certified General Real Estate Appraiser California Certificate # 3002204 Telephone: 916-435-3883, ext. 248 Email: sgilbertson@irr.com irr- Table of Contents Summary of Salient Facts and Conclusions General Information Identification of Subject Sale History Purpose of the Appraisal Definition of Market Value Definition of Property Rights Appraised Intended Use and User Applicable Requirements Report Format Prior Services Scope of Work Economic Analysis Area Analysis — Orange County Area Map Surrounding Area Analysis Residential Market Analysis Retail Market Analysis Property Analysis Land Description and Analysis 9 9 14 14 18 33 37 37 1 Highest and Best Use 50 2 Valuation 52 4 Valuation Methodology 52 5 Land Residual Analysis 54 5 Adjustment Factors 56 5 Sales Comparison Approach 68 5 Adjustment Factors 71 6 Analysis and Adjustment of Sales 72 6 Land Value Conclusion — Sales Comparison 6 Approach 74 6 Reconciliation and Conclusion of Land Value 75 6 Exposure Time 76 Marketing Time 76 Certification 77 Assumptions and Limiting Conditions 79 Addenda A. Appraiser Qualifications B. Definitions C. Preliminary Title Report Uptown Newport (Phase 1) irr. Summary of Salient Facts and Conclusions 1 Summary of Salient Facts and Conclusions Property Name Uptown Newport (Phase 1) Address 4311-4321 Jamboree Rd. Newport Beach, Orange County, California 92660 Property Type Land - Multifamily Owner of Record TSG - Parcel 1, LLC, a Delaware limited liability company, and Uptown Newport Ja mboree, LLC, a Delaware limited liability company (collectively, the "Developer") Tax ID 445-134-17 (Lot 1), 445-134-29 (Lot 2) and 445-134-22 (Remainder) Land Area Zoning Designation Highest and Best Use Exposure Time; Marketing Period Date of the Report 3.248 acres; 141,483 SF PC-58, Planned Community (Uptown Newport), Uptown Newport Planned Community Development Mixed -use (residential with commercial) 12 months; 12 months February 5, 2019 Value Conclusions Appraisal Premise Interest Appraised Date of Value Value Conclusion Market Value of Lot 1, As If Public Capital Facilities and Improvements Have Been Completed Assessed Value of Lot 2 Total Aggregate Value of Appraised and Assessed Properties in the District Fee Simple December 22, 2018 $49,500,000 51,721,636 $51,221,636 The values reported above are subjecttothe definitions, assumptions, and limiting conditions set forth in the accompanying report of which this summary is a part. No party other than California Statewide Communities Development Authority and the associated finance team may use or rely on the information, opinions, and conclusions contained in the report. It is assumed that the users of the report have read the entire report, including all of the definitions, assumptions, and limiting conditions contained therein. Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. None The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. We have been requested to provide the market value of the fee simple interest in the appraised property, subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. irr. Uptown Newport (Phase 1) General Information 2 General Information Project History The Uptown Newport Planned Community Development Plan is located within the City of Newport Beach Airport Area, encompassing a 25-acre project site with access provided by Jamboree Road, Birch Street, Von Karman Avenue, and MacArthur Boulevard. The Uptown Newport project is located in close proximity to the 405, 73 and 55 Freeways via MacArthur Boulevard and Jamboree Road. Uptown Newport is located near regional open space areas, including Upper Newport Bay, Mason Regional Park in Irvine and the San Joaquin Freshwater Marsh. It is also located near the University of California - Irvine (UCI) with immediate adjacency to the UCI North Campus, which is located opposite the Uptown Newport project on Jamboree Road. The Uptown Newport project site was originally developed as part of the Koll Center Newport, and has been used for manufacturing telecommunications equipment and computer chips since the 1970's. The City's General Plan calls for infill development and redevelopment of the Airport Business Area. In September of 2010, the City approved the Integrated Conceptual Development Plan (ICDP) to provide a framework for residential development on both the Koll Center Newport and Uptown Newport properties. The ICDP allocated 1,244 residential units and up to 11,500 square feet of retail to be developed on the Uptown Newport property and up to 260 residential units to be developed on the Koll property. The Uptown Newport Planned Community Development Plan provides the regulatory framework for redevelopment of the Subject Property into a high -density mixed use residential project. Uptown Newport (Phase 1) General Information 3 - till. 4, 1111. � lb'# KOLL CENTER • j 1- '.3, l f ,ti0'I NEWPORT I W 't- LAI(E I r �1 �Peilop....‘ I 2 ¢ KOL1,. CENTER! . � +�� , i` 1 m NEWPQRT * ti _ #I ■ t "i EXISTINi ACCESS ' KOLL CENTER NEWPORT yS,Id ....4311 JAMBOREE RD -. 4321 JAMBOREE RI da— - * ::.JAMBOREE ROAD'.* ISTING SIAALIZED EXISTING ACCESS ACCESS 1 UNIVERSITY OF CALIFORNIA IRVINE"NORTH CAMPUS" SITE BOUNDARY SCALE:1"=400' 0 200' 400' (Source: Uptown Newport Planned Community Development Plan 2-14-13, Figure 1-3: Aerial photo of the Uptown Newport Project site) The Uptown Newport project will be developed in two primary phases. Phase 1, which encompasses a portion of the appraised property, will include demolition of the existing single -story office building at 4311 Jamboree Road and development of the westerly portion of the property, including the frontage along Jamboree Road. Phase 1 development includes 680 residential units (attached single- and multi- family) and 11,500 square feet of retail. The TowerJazz semiconductor facility is an existing semiconductor chip manufacturing facility that operates on the Uptown Newport property. The operation of TowerJazz may continue as an interim use. In accordance with the Uptown Newport Planned Community Development Plan, interim light irr Uptown Newport (Phase 1) General Information 4 industrial uses shall cease to be an allowed use after March 12, 2027. Phase 2 will include demolition of the TowerJazz building and development of approximately 564 residential units on the easterly portion of the property. JAUBORFF ROAD Figure 1-1: Phasing Diagram Phase 1 Phaso2 Total Number of Units: 68D 564 1,244 Developable Area Oa 8-74 9-72 18.46 ParkArea (ac): 1.03 1.02 2.05 Retail (sr): 1 1.303 0 11,500 Right of WayAr a {ack >329 1_3D 4,54 Total Area (ad: 13_01 12.04 25.05 (Source: Uptown Newport Planned Community Development Plan 2-14-13) ,5O ?OD Identification of Subject The appraised property comprises Lot 1 within Phase 1 of the Uptown Newport project. The appraised property herein encompasses 158 condominium units and 3,000 square feet of commercial space. The Uptown Newport project site is located on Jamboree Road and bounded by Birch Street and MacArthur Boulevard in downtown Newport Beach, Orange County, California, within the Newport Beach city limits. A more detailed legal and physical description of the subject property is contained within the attached report. The appraised property comprises the taxable portion of the proposed California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) No. 2018-03 for the Uptown Newport project. In addition to the appraised property, CSCDA CFD No. 2018-03 (Newport Uptown) also contains a 0.635-acre parcel (identified as Lot 2) and one public/quasi-public parcel, which are not a part of this appraisal. A legal description of the property is provided in the preliminary title report, a copy of which is provided in the Addenda. irr. Uptown Newport (Phase 1) General Information 5 Property Identification Property Name Tax ID Owner of Record Uptown Newport (Phase 1) Newport Beach, California 92660 445-134-17 (Lot 1), 445-134-29 (Lot 2) and 445-134-22 (Remainder) TSG - Parcel 1, LLC, a Delaware Iimited IiabiIity company, and Uptown Newport Jamboree, LLC, a Delaware limited liability company (collectively, the "Developer") Sale History To the best of our knowledge, no sale or transfer of ownership has taken place within a three-year period prior to the effective appraisal date. Purpose of the Appraisal The purpose of the appraisal is to develop an opinion of the market value of lot 1, as if public capital facilities and improvements have been completed, subject to a hypothetical condition, of the fee simple interest in the property in bulk as of the effective date of the appraisal, December 22, 2018. The date of the report is February 5, 2019. The appraisal is valid only as of the stated effective date or dates. Definition of Market Value Market value 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 and 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: • Buyer and seller are typically motivated; • Both parties are well informed or well advised, and acting in what they consider their own best interests; • A reasonable time is allowed for exposure in the open market; • Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and • 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." (Source: Code of Federal Regulations, Title 12, Chapter 1, Part 34.42(g]; also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472) Definition of Property Rights Appraised Fee simple estate is defined 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." irr. Uptown Newport (Phase 1) General Information 6 (Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015)) Intended Use and User The intended use of the appraisal is for bond underwriting purposes. The client is California Statewide Communities Development Authority. The intended users are California Statewide Communities Development Authority and the associated finance team. The appraisal is not intended for any other use or user. No party or parties other than California Statewide Communities Development Authority and the associated finance team may use or rely on the information, opinions, and conclusions contained in this report. Applicable Requirements This appraisal is intended to conform to the requirements of the following: • Uniform Standards of Professional Appraisal Practice (USPAP); • Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute; • Applicable state appraisal regulations; • Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (2004); • Interagency Appraisal and Evaluation Guidelines issued December 10, 2010. Report Format This report is prepared under the Appraisal Report option of Standards Rule 2-2(a) of USPAP. As USPAP gives appraisers the flexibility to vary the level of information in an Appraisal Report depending on the intended use and intended users of the appraisal, we adhere to the Integra Realty Resources internal standards for an Appraisal Report — Standard Format. This format summarizes the information analyzed, the appraisal methods employed, and the reasoning that supports the analyses, opinions, and conclusions. Prior Services USPAP requires appraisers to disclose to the client any other services they have provided in connection with the subject property in the prior three years, including valuation, consulting, property management, brokerage, or any other services. We have not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. Scope of Work To determine the appropriate scope of work for the assignment, we considered the intended use of the appraisal, the needs of the user, the complexity of the property, and other pertinent factors. Our concluded scope of work is described below. irr. Uptown Newport (Phase 1) General Information 7 Valuation Methodology This Appraisal Report has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). This analysis is intended to be an "appraisal assignment," as defined by USPAP; the intention is the appraisal service be performed in such a manner that the result of the analysis, opinions, or conclusion be that of a disinterested third party. Several legal and physical aspects of the appraised properties were researched and documented. A physical inspection of the property was completed and serves as the basis for the site description contained in this report. Zoning and entitlement information was collected from the City of Newport Beach Planning Department. The subject's earthquake zones, flood zones and utilities were obtained from the respective agencies, and property tax information was obtained from the Orange County Assessor's Office on-line resources. Data relating to the subject's neighborhood and surrounding market area were analyzed and documented. This information was obtained through personal inspections of portions of the neighborhood and market area; newspaper articles; real estate conferences; and interviews with various market participants, including property owners, property managers, land brokers, developers and local government agencies. In this appraisal we determined the highest and best use of the subject property as vacant based on the four standard tests (legal permissibility, physical possibility, financial feasibility and maximum productivity). As will be shown in the Highest and Best Use Analysis section, the highest and best use of the subject property as vacant is for near term mixed -use development (in accordance with existing entitlements). We have been requested to provide estimates of market value of the appraised property in bulk, subject to the hypothetical condition various public capital facilities and improvements to be financed by the CFD Special Tax have been completed. Appraisers usually consider the use of three approaches to value when developing a market value opinion for real property. These are the cost approach, sales comparison approach, and income capitalization approach. Use of the approaches in this assignment is summarized as follows: Approaches to Value Approach Applicability to Subject Use in Assignment Cost Approach Applicable Utilized Sales Comparison Approach Applicable Utilized Income Capitalization Approach Applicable Utilized We have been requested to estimate the market value of the fee simple estate of the appraised property, in bulk, comprising the California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) No. 2018-03 (Uptown Newport), subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. In order to estimate the market value of the subject property, two approaches to value were utilized: the sales comparison approach and the land residual analysis, which is a form of discounted cash flow analysis. Uptown Newport (Phase 1) General Information 8 In the land residual analysis, the revenue component of the DCF will be based on the probable market value for the average, proposed residential condominium units and the concluded market value of the commercial condominium unit. A number of assumptions were made in the discounted cash flow analysis, not the least of which was the forecast of absorption, or disposition, of the condominium units comprising the subject property. Any properties within CFD No. 2018-03 Phase 1 not subject to the Lien of the Special Tax securing the Bonds (for -rent multi -family, public and quasi -public land use sites) are not a part of this appraisal. Research and Analysis The type and extent of our research and analysis is detailed in individual sections of the report. This includes the steps we took to verify comparable sales, which are disclosed in the comparable sale profile sheets in the addenda to the report. Although we make an effort to confirm the arms -length nature of each sale with a party to the transaction, it is sometimes necessary to rely on secondary verification from sources deemed reliable. Inspection Eric Segal, MAI, conducted an on -site inspection of the property on December 15, 2018. irr. Uptown Newport (Phase 1) Area Analysis — Orange County 9 Economic Analysis Area Analysis — Orange County Introduction Orange County is located in the southern part of California, bordered by Los Angeles County on the north, San Bernardino and Riverside Counties on the northeast and San Diego County on the southeast and the Pacific Ocean on the southwest. It is the smallest county in Southern California, with an area of 948 square miles, 157 square miles of which is water. The Santa Ana River roughly bisects the county into a northwestern and southeastern portion. The southeastern, inland part of the county has higher elevations in the foothills of the Santa Ana Mountains, the topography transitions to lower coastal land in the northwestern part of the county. Most of the population in the county is concentrated within two coastal valleys — the Santa Ana Valley and Saddleback Valley — that lie in the basin. The northern and central portions of the county are more urbanized with dense development, while the southern portion is suburban in nature, with lower density development. The Santa Ana Valley is home to most of the business districts in the county, with Anaheim, Buena Park, Costa Mesa, Fullerton, Irvine, Orange, Placentia, Santa Ana and Yorba Linda among the larger cities located there. Several cities within the county are located on the Pacific Coast: Huntington Beach, Newport Beach, Laguna Beach, Dana Point and San Clemente. In total, there are 34 incorporated towns and cities in the county. Population The county has a population of over 3.2 million and has grown at a moderate rate of 0.8% per year for the past five years. The following table illustrates recent population trends for areas within Orange County over the past several years. irr. Uptown Newport (Phase 1) Area Analysis - Orange County 10 Population Trends City 2013 2014 2015 2016 2017 2018 %/Yr Aliso Viejo 49,812 50,142 50,281 50,335 50,384 51,950 0.9% Anaheim 349,827 351,345 353,211 354,167 356,502 357,084 0.4% Brea 41,826 42,846 43,802 44,175 44,776 44,890 1.5% Buena Park 82,485 82,646 82,869 82,950 83,926 83,995 0.4% Costa Mesa 112,899 113,161 114,423 114,825 115,012 115,296 0.4% Cypress 48,893 49,104 49,347 49,546 49,704 49,978 0.4% Dana Point 33,581 33,595 33,656 33,768 33,897 34,071 0.3% Fountain Valley 56,350 56,683 56,773 56,815 56,916 56,920 0.2% Fullerton 139,364 140,808 141,438 142,406 143,499 144,214 0.7% Garden Grove 174,680 175,302 176,318 176,955 176,784 176,896 0.3% Huntington Beach 194,769 196,546 198,243 200,501 201,981 202,648 0.8% Irvine 232,910 243,906 251,181 256,926 267,097 276,176 3.7% Laguna Beach 23,016 23,040 23,097 23,137 23,248 23,309 0.3% Laguna Hills 30,818 30,872 30,915 30,935 31,829 31,818 0.6% Laguna Niguel 63,545 63,638 63,804 63,850 65,288 65,377 0.6% Laguna Woods 16,468 16,483 16,504 16,513 16,575 16,597 0.2% La Habra 61,597 61,968 62,184 62,270 62,451 62,850 0.4% Lake Forest 78,693 78,911 79,432 81,903 83,414 84,845 1.6% La Palma 15,851 15,874 15,896 15,907 15,933 15,948 0.1% Los Alamitos 11,711 11,782 11,811 11,846 11,860 11,863 0.3% Mission Viejo 94,202 94,433 94,985 95,510 95,985 95,987 0.4% Newport Beach 85,709 85,738 85,815 85,782 86,207 87,182 0.3% Orange 140,118 140,301 140,670 140,792 140,981 141,952 0.3% Placentia 52,179 52,278 52,483 52,709 52,772 52,755 0.2% Rancho Santa Margari 48,884 49,025 49,205 49,258 49,301 49,329 0.2% San Clemente 64,160 64,179 64,468 64,547 65,009 65,543 0.4% San Juan Capistrano 35,536 36,010 36,240 36,412 36,624 36,759 0.7% Santa Ana 333,558 335,441 337,180 337,373 337,843 338,247 0.3% Seal Beach 25,406 25,528 25,909 25,938 25,959 25,984 0.5% Stanton 38,997 39,079 39,233 39,378 39,500 39,470 0.2% Tustin 78,542 78,695 79,975 81,484 82,291 82,344 1.0% Villa Park 5,893 5,905 5,913 5,920 5,944 5,951 0.2% Westminster 92,297 92,653 93,431 93,991 94,353 94,476 0.5% Yorba Linda 66,416 67,126 67,528 67,858 68,781 69,121 0.8% Unincorporated 121,160 121,875 124,094 125,540 126,342 129,278 1.3% Total 3,102,152 3,126,918 3,152,314 3,172,222 3,198,968 3,221,103 0.8% Source: California Department of Finance Orange County is the third most populous county in California, following Los Angeles and San Diego Counties. The majority of residents live within incorporated areas, the largest of which is the city of Anaheim, with a population of just over 357,000. Santa Ana is the second most populous and is also the county seat. The seven largest cities, ranging in population from 141,952 to 357,084, make up over 50% of the total county population. Employment & Economy The California Employment Development Department has reported the following employment data for Orange County over the past few years. Uptown Newport (Phase 1) Area Analysis — Orange County 11 Employment Trends 2012 2013 2014 2015 2016 2017 Labor Force 1,562,100 1,565,300 1,572,700 1,588,800 1,602,500 1,618,800 Employment 1,439,300 1,462,300 1,486,400 1,517,800 1,537,700 1,562,200 Job Growth 32,900 23,000 24,100 31,400 19,900 24,500 Unemployment Rate 7.9% 6.6% 5.5% 4.5% 4.0% 3.5% Source: California Employment Development Department The unemployment rate in Orange County was 2.9% in October 2018, which is lower than California and the U.S., with 4.0% and 3.5% rates, respectively. Most areas within the state and nation, including Orange County, saw declining unemployment rates from 2004 through 2006, increases from 2007 to 2010, and declines from 2011-2017. The following chart indicates the percentage of total employment for each sector within the county as of October 2018. EMPLOYMENT BY SECTOR Professional/Business Services Trade/Transportation/Utilities Educational/Health Services Leisure/Hospitality Government Manufacturing Financial Activities Construction/Mining/Logging Other Services Information Agriculture 0.0% 2.0% 4.0% 6.0% 8.0% 10 0% 12.0% 14.0% 16 0% 18.0% 20.0% Source: California Employment Development Department Orange County has a diverse economy, with the majority of its employment distributed among several sectors of industry, as opposed to one or two key sectors. As illustrated in the chart above, the region's largest employment sectors are Professional and Business Services; Trade/Transportation/ Utilities; Educational and Health Services; and Leisure and Hospitality. The county is home to several Fortune 500 and Fortune 1000 companies, as well as start-up companies and notable technology companies, such as Gateway Inc., Linksys, Blizzard Entertainment irr. Uptown Newport (Phase 1) Area Analysis — Orange County 12 and Panasonic Avionics Corporation. Regional headquarters of several international companies, such as Mazda, Toshiba, Toyota, Samsung, Mitsubishi, Hyundai and others, are also located in the county, as are headquarters for several fashion brands (Oakley, Inc., Hurley International, St. John's) and restaurants (In-N-Out Burger, Marie Callendar's, Claim Jumper, Taco Bell, El Pollo Loco and Wienerschnitzel). The region's largest employers are listed in the following table. Largest Employers Employer Industry Employees 1 Walt Disney Co. Leisure / Hospitality 29,000 2 University of California, Irvine Education 23,605 3 County of Orange Government 18,264 4 St. Joseph Health System Healthcare 11,925 5 Allied Universal Security Services 8,229 6 Kaiser Permanente Healthcare 7,694 7 Boeing Co. Manufacturing 6,103 8 Walmart Retail 6,000 9 California State University Fullerton Education 5,781 10 Bank of America Corp. Financial 5,500 Source: County of Orange, Comprehensive Annual Financial Report, June 30, 2017 Household Income Median household income represents a broad statistical measure of well-being or standard of living in a community. The median income level divides households into two equal segments with one half of households earning less than the median and the other half earning more. The median income is considered to be a better indicator than the average household income as it is not dramatically affected by unusually high or low values. In the year 2016 (most recent data available from the U.S. Census Bureau), Orange County's median household income was $78,145, which was higher than the state of California's median income of $63,783. Transportation Access to and through Orange County is provided by several routes, including three major interstates and several state routes and connector highways. The Santa Ana Freeway (Interstate 5) is one the primary north -south transportation routes in Southern California, connecting all of California, Oregon and Washington to Los Angeles, and Los Angeles to suburbs southeast, terminating in San Diego. It connects to several state highways, including State Route 91, State Route 22, and State Route 55. It also connects with Interstate 405, known as the San Diego Freeway, another primary route through the region, providing access from San Fernando north of Los Angeles, continuing south through Inglewood west of Los Angeles, through Torrance, Fountain Valley and Irvine, where it terminates at the 1-5 junction. Several major east -west freeways provide access to neighboring counties in Southern California. State Route 91, known as the Riverside Freeway, runs from Gardena in Los Angeles County to Riverside county to the east. State Route 22 runs between Long Beach and Orange, through Garden Grove. irr. Uptown Newport (Phase 1) Area Analysis — Orange County 13 State Route 55, also known as the Costa Mesa Freeway, runs from the coast in Newport Beach to Anaheim, where it terminates at State Route 91. Several smaller highways connect to these primary routes to provide ground transportation throughout the county. Public transportation is provided primarily by the Orange County Transportation Authority (OCTA), which manages the county's bus network, maintains local streets and freeways, regulates taxicab services; and manages express toll lanes on State Route 91. The OCTA also collaborates with Southern California's Metrolink to provide commuter rail service via the Orange County Line, the 91 Line and the Inland Empire -Orange County Line. The county has one major airport — the John Wayne Airport, with 14 airlines servicing over 9 million passengers annually. The next closest airports are Los Angeles International Airport approximately 42 miles northwest; Ontario Airport approximately 43 miles northeast; and Hollywood Burbank Airport approximately 54 miles northwest. Recreation & Culture Orange County offers innumerable recreational and cultural opportunities, including world renowned Disneyland, Knotts Berry Farm, beaches, biking paths and hiking trails, golf courses, shopping and dining. Disneyland is ranked as the second most visited theme park in the world and Knotts Berry Farm receives roughly seven million visitors per year. The year-round, mild climate attracts millions of tourists annually, with 40 miles of coastline home to several beaches popular for surfing and sunbathing. Anaheim is home to the largest convention center on the West Coast with major conventions held throughout the year. Several significant shopping malls are located in Orange County, including South Coast Plaza, the largest mall in California and the third largest in the U.S.; Fashion Island, an open-air mall, in Newport Beach; and the Irvine Spectrum Center, an outdoor shopping and entertainment center. There are several historical points of interest in the county, including Mission San Juan Capistrano and the Richard Nixon Presidential Library and Museum, as well as other notable structures/venues, such as Crystal Cathedral and Angel Stadium. Over 28 school districts provide elementary, middle and high school education in the county. Orange County has many higher education institutions ranging from two-year community colleges to private and public universities, including Chapman University, Concordia University, Hope international University, Trinity Law School, Vanguard University, California State University Fullerton, and University of California Irvine. Conclusion Orange County, one of the largest counties in the state, is located in the southern portion of California, with extensive transportation routes; diverse employment opportunities; numerous colleges and universities; and recreational activities ranging from world famous amusement parks, popular beaches, an abundance of shopping centers and dining establishments, and outdoor hiking and biking trails. After a period of contraction in the economy and real estate markets around 2008- 2010, the region has seen improvement in employment and economic conditions over the past few years. The near -term outlook is for sustained growth. Uptown Newport (Phase 1) Area Map 14 Area Map Simi Vallet, Thousand C-:!ks Agoura His Ja Mourn Sgn illn Anhlog...trt Wilson Antonio . .0.064 fr ?,,,,,..... SQ17 Bernardino Pia[Tonal Glerlda[e Arcadld ia Genora /7 _ :•:. Highland West Haywood lea AI:Ian-13'a Baldwin P.arli. 2".10j—IAPIalici Enna Sart Bernardino LOs Angeles El Monte West,COvi 6-2-76ntliira -1 0.• Colton Redlands Santa Mar ica riorencMontebello .. Ponic...,n- a-- —Rubicipux Lorna Linda •yr.lcai.pa e . C,•la ",•=2 Ghino YThittier Riv :side ingiewooci Bell ... Hawthorne ..=■—i..- Norwalk Yorba Linda Cl-den :pillrtc?1CIZ..,:!"Fullertpre Torrance Larson ;ific Ocean bing Long Rancho Palos Verdes Beach 6e?Orit G:izat.c Newport Beach Laguna Niguel Garden Grine Santa Ana 1 Norco Cleveand !Van ol Forest s,,ntkig.,0 ak Huntins.Ron Beach Costa Mesa Mission Viejo I NI Dana Point daN5,46 [Iey Perri Sae 5 Lake EISite Murrieta Ns Tern4ula San Clemente Cone Fa Ilbrciok Penthetun Fob] Mar..neLJ prp5 OUSE rosof Corparal kap 20/8 HERE irr. Uptown Newport (Phase 1) Surrounding Area Analysis 15 Surrounding Area Analysis Location The subject is located in the northern portion of the city of Newport Beach, on the border of the city of Irvine. It is located south of John Wayne Airport and north of the University of California, Irvine campus. Specifically, the subject site is situated along the north side of Jamboree Road, between MacArthur Boulevard and Campus Drive, east of Bristol Street and State Route 73 and west of Interstate 405. Access and Linkages The subject site benefits from excellent access near freeways and major thoroughfares. Both Jamboree Road and MacArthur Boulevard are primary thoroughfares in the neighborhood. The two streets intersect southwest of the subject and both extend southwest towards the coast where they terminate at East Coast Highway/Pacific Coast Highway 1. Heading east from the subject site, Jamboree Road extends northeast through Irvine, past Interstate 5 and northbound until it terminates at East Santiago Canyon Road in the City of Tustin. MacArthur Boulevard extends northeast from the subject site along the southern portion of the John Wayne Airport, past Interstate 405 and then it loops westward intersecting State Route 55 and continuing west until the Santa Ana River. The neighborhood has excellent highway access with Interstate 405 and State Route 55 intersecting north of the subject next to the airport. State Route 55 also intersects State Route 73 northwest of the subject. Interstate 405 is a major north -south interstate in southern California which extends from the San Fernando Valley north of the Los Angeles area to Irvine. State Route 55 runs north -south thorough Orange County extending from Pacific Coast Highway in Newport Beach and ending at State Route 91 in Anaheim. State Route 73 begins at its junction with Interstate 405 and extends south through the San Joaquin Hills to its junction with Interstate 5 in San Juan Capistrano. The majority of this highway is a tollway. Public transportation in the neighborhood is provided by Orange County Transit Authority (OCTA). Bus Routes 178, 472, 213 and 59 are located in close proximity to the subject. Route 59 has a stop at Campus Drive and Jamboree Road, less than one mile east of the subject; the nearest stop on Route 213 is at Michelson Drive and Teller Avenue, approximately 1 mile east of the subject; Route 178 has a station approximately one-half mile northwest of the subject at Von Karman Ave and Birch Street. Route 472 is a Metrolink feeder route. The nearest Metrolink station is Tustin Station, located approximately five miles northeast. The nearest airport for commercial air travel is John Wayne Airport located a few streets north of the subject, within a two-mile driving distance. Demand Generators In the subject's immediate area, major employers include University of California, Irvine; John Wayne Airport; South Coast Plaza mall; UCI Health Gottschalk Medical Plaza; as well as Concordia University and Orange Coast College. The Irvine Business Complex, a predominantly office, industrial and commercial corridor, is located northeast of the subject, east of Interstate 405 with concentration of employment centers. irr. Uptown Newport (Phase 1) Surrounding Area Analysis 16 Demographics A demographic profile of the surrounding area, including population, households, and income data, is presented in the following table. Surrounding Area Demographics Los Angeles -Long Orange County, Beach -Anaheim, 2019 Estimates 5-Mile Radius 10-Mile Radius 15-Mile Radius CA CA Metro Population 2010 415,801 1,399,064 2,410,200 3,010,232 12,828,837 Population 2019 450,435 1,507,246 2,578,795 3,222,381 13,478,088 Population 2024 469,273 1,566,276 2,677,705 3,348,192 13,913,534 Compound %Change 2010-2019 0.9% 0.8% 0.8% 0.8% 0.6% Compound %Change 2019-2024 0.8% 0.8% 0.8% 0.8% 0.6% Households 2010 146,789 457,192 785,153 992,781 4,233,985 Households 2019 159,074 495,174 841,667 1,062,951 4,452,770 Households 2024 165,957 515,466 874,737 1,105,004 4,599,698 Compound %Cha nge 2010-2019 0.9% OS% 0.8% 0.8% 0.6% Compound %Cha nge 2019-2024 0.9% 0.8% 0.8% 0.8% 0.7% Median Household Income 2019 $97,413 $87,468 $88,697 $91,094 $72,264 Average Household Sire 2.8 3.0 3.0 3.0 3.0 College Graduate % 49% 40% 38% 39% 33% Median Age 37 38 38 38 37 ❑wner occupied % 48% 53% 57% 59% 50% Renter occupied % 52% 47% 43% 41% 50% Median owner occupied Housing Value $879,347 $741,206 $715,389 $733,175 5650,973 Median Year Structure Built 1978 1976 1976 1976 1968 Avg. Travel Time to Work in Min. 26 28 30 30 33 Source! Environics Analytics As shown above, the current population within a 10-mile radius of the subject is 1,507,246, and the average household size is 3.0. Population in the area has grown since the 2010 census, and this trend is projected to continue over the next five years. Compared to Orange County overall, the population within a 10-mile radius is projected to grow at a similar rate. Median household income is $87,468, which is lower than the household income for Orange County. Residents within a 10-mile radius have a similar level of educational attainment to those of Orange County, while median owner occupied home values are similar. Land Use The most significant uses in the subject's immediate area are the John Wayne Airport and University of California Irvine campus, with a mix of complementary office, retail/commercial and service uses nearby. Adjacent to the subject site is Von Karman Avenue and office uses to the north, as well as to the west and northwest; and Courthouse Plaza and retail/restaurant to the east. The office uses are part of the Koll Center Newport — a mixed -use office park extending from the northwest corner of MacArthur Boulevard and Jamboree Road to the southeast corner of Campus Drive and MacArthur Boulevard and back to Jamboree Road. To the south of the subject site is the University of California Irvine — North Campus, including the UC Irvine Arboretum. irr. Uptown Newport (Phase 1) Surrounding Area Analysis 17 Uses along the west line of MacArthur Boulevard and Birch Street, Bristol Avenue and Campus Avenue are predominantly retail and neighborhood service uses, including restaurants, banks and financial services, car dealerships, fitness studios and salons. Uses to the east of MacArthur Boulevard are predominantly office uses with several high-rise buildings. The Harbor Justice Center Newport Beach is located at the northeast corner of Birch Street and Jamboree Road, The Irvine Museum is located along the north side of Von Karman Ave, east of Campus Drive. To the east of Campus Drive are also several apartment projects: Carlyle Apartments and the Metropolitan near MacArthur Boulevard; and Toscana Apartments, Watermarke, Avenue One and Villa Sienna Apartment Homes at the southeast quadrant of Campus Avenue and Jamboree Road. The John Wayne Airport is located along the north line of MacArthur Boulevard with direct access from Interstate 405. The airport terminal houses 14 airline carriers and a number of car rental companies. Uses to the north of the airport and south of State Route 55 are varied commercial and office uses. To the east of Interstate 405 is Main Street and the Irvine business district. The San Diego Creek is located south of the subject, parallel to Jamboree Road. Along the north side of the Creek is the San Joaquin Marsh and Wildlife Sanctuary Reserve, which protects some of the last remaining wetlands that once covered Orange County. The reserve supports a variety of habitats, provides a stopping place for migratory birds and serves as a field study site for university students. It is an area bordered by Carlson Ave on the northwest, Michelson Drive on the north, Riparian View on the east and southeast and Campus Drive on the west. It features 11 ponds, an urban forest, the Michelson Wastewater Treatment Plant and various walking trails. To the south of the San Diego Creek is the University of California Irvine campus. The campus encompasses 1,527 acres. The core of the campus resembles a circle with Aldrich Park at the center and a main road encircling the park. Most schools and libraries are located along this road and it is the primary pedestrian road for students and faculty. Northeast of the UC Irvine campus are the Rancho San Joaquin and University Park neighborhoods, which include single family homes, apartments and the Rancho San Joaquin Golf Course. There are several parks in the subject's neighborhood, including the William R. Mason Regional Park, the Crawford Field and Athletics Complex, Aldrich Park within the UC Irvine campus and Stanford Park. The Newport Beach Golf Course is located west of State Route 73 along Irvine Avenue and the Santa Ana Country Club is situated at the southeast corner of Newport Boulevard and Bristol Street. The nearest hospitals are UCI Health Gottschalk Medical Plaza within the University of California Irvine campus and College Hospital Costa Mesa, approximately six miles east of the subject along State Route 55. Outlook and Conclusions The area is in a redevelopment stage of its life cycle. We anticipate that property values will remain stable in the near future. irr. Uptown Newport (Phase 1) Residential Market Analysis 18 Surrounding Area Map FoCic twin Valley lams A4C ltlanta Ave L bing VJELAGL 7J77r5TOL WARNER MEFRO C'L,45SJC Aosdiopt � r m ti�J Anil ms A5+2 p = Costa Mesa `,�� • sn^I 1:;A,QU1N MARSH � s'ty far Victoria St S 1 TA .N i Ht'1frrs Ge� Sy Placentia F\Yr • Dyer Surma Ano SS - Marine x @, C Stratio rr Station raH• Cliff Raven Newport Beach Lido is it E Coo_ r77buoy �sdarld Irvine 2a WOO RSRrOSE :iRTLf ROCK Li ru.4TLF RIDGE S,o San Joaquin Hills Corona del Mar Laguna CGQsf Wr7derness Park NOR F7f WOOD F07NY Kathryn (Taj FAS r IRVJNE Rfi€AR• 4 020n Mir rasaft Carrorafon 2658 HERE Uptown Newport (Phase 1) Residential Market Analysis 19 Residential Market Analysis The subject property is located in the city of Newport Beach, just west of the city of Irvine, approximately five miles northeast of the Newport Beach Yacht Club. There are two projects currently available in Newport Beach (one attached and one detached). Due to the limited number of active projects in the Newport Beach area, as well as the subject's location adjacent to the City of Irvine, we have also included Irvine in our survey. Currently, there are 63 active projects in Irvine, of which 12 are attached projects and 51 detached. Home price points at active attached projects will be described from available projects in an effort to characterize the current status of the residential sector in general. We will begin with a County -wide perspective on incentives and pricing at new home projects; then we will shift to a localized perspective of the subject property and surrounding area. It is important to note price points are highest for those areas located closest to the coast. This also holds true for Orange County as a whole as well; price points are significantly higher the more proximate to coastal areas in comparison to those inland. Thus, while this market overview begins with the analysis of Orange County as a whole (macro overview), the market overview for the subject's location included the inland area of Newport Beach, proximate to Irvine. Single -Family Building Permits Single-family building permits for the cities of Newport Beach and Irvine, as well as Orange County are shown in the following table. Building Permits: Single -Family Year City of Newport Beach City of Irvine Orange County 2008 90 125 1,330 2009 62 188 1,341 2010 58 641 1,624 2011 64 857 1,822 2012 75 943 2271 2013 83 1,608 3,670 2014 84 1,564 3,714 2015 99 1,333 3,809 2016 108 1,461 4,357 2017 119 1,715 4,904 2018* 113 1,687 3,611 • Preliminary data for 2018 through October Future Development According to the City of Newport Beach Planning Division, a summary of the residential development activity with the city is provided on the following pages. irr. Uptown Newport (Phase 1) Residential Market Analysis 20 Newport Crossing Mixed -Use Newport Crossing Mixed -Use is a proposed project consisting of 50 residential dwelling units, 2,000 square feet of 'casual -dining' restaurant space, 5,500 square feet of commercial space, and a 0.5-acre public park will replace the existing MacArthur Square shopping center. A six -story parking structure (one level subterranean and five levels above ground) is proposed in the center of the site and will be surrounded and screened from public views by the residential and commercial buildings on all sides. The project would provide a total of 740 parking stalls for its residential and retail uses. This project is located in the airport area, like the subject, about a half mile from John Wayne Airport. The site is generally bounded by Corinthian Way to the northeast, Martingale Way to the east, Scott Drive to the northwest, and Dove Street to the southwest. Koll Center Residences The Koll Center Residences is located in Koll Center Newport, at 4400 Von Karman Avenue. The site is approximately 13.16 acres and is currently developed with surface parking lots and common landscape areas for Koll Center Newport. The irregularly -shaped site is generally bordered by Birch Street to the northeast, Von Karman Avenue to the west, and existing office uses and associated surface parking lots and garages to the east and south. The proposed project is a mixed -use infill development that includes 260 residential condominiums; 3,000 square feet of ground -floor retail uses, a 1.17-acre public park; a freestanding parking structure; lighting, landscaping, and pedestrian improvements; utility improvements; and the reconfiguration of existing surface parking. The 260 condominium dwelling units would be in three, 13-story buildings with a maximum building height of 160 feet. The buildings would have two levels of above - grade and two to three levels of below -grade structured parking. The public park would be located adjacent to Birch Street. Implementation of the project would require the demolition of existing surface parking and landscaping within the project site. Residential parking would be provided on site in the residential building parking structures. Parking for the public park and retail uses would be provided on site within reconfigured surface parking areas Office parking removed during construction of the project would be provided in a new free-standing parking structure, within one of the proposed residential buildings, and in reconfigured surface parking areas. There are three office buildings located within the boundaries of the project site; however, two of the office buildings are not a part of the project: 4490 Von Karman Avenue and 4910 Birch Street. The 4440 Von Karman Avenue office building is a part of the project site as the applicant proposes new landscaping, irrigation, sidewalk improvements and the reconfiguration of disabled parking. No change to the existing building is proposed as a part of the project. Uptown Newport (Phase 1) Residential Market Analysis 21 Uptown Newport The proposed Uptown Newport project (a portion of which is appraised herein) is a mixed -use development with up to 1,244 residential units, 11,500 square feet of neighborhood -serving retail space, and two acres of park space to be located at 4311-4321 Jamboree Road. The project will be developed in two phases. It encompasses 20.05 acres and is generally located on the east side of Jamboree Road, with Birch Street to the north, and Von Karman Avenue and MacArthur Boulevard to the west. Uptown Newport Back Bay Landing L Balboa Peninsula Legend NeLfvport ',,„Beach BACK BAY LANDING MIXED -USE PROJECT AREA Newport Bay — Project Area (Parcel 3) Back Bay Landing Mixed -Use Project Area — Existing PC-9 Boundary — Proposed PC-9 Boundary Expansion Upper Newport Bay Qa Back Bay Landing The Back Bay Landing project is a proposed integrated, mixed -use waterfront village on an approximately 7-acre portion of a 31.5 acre parcel located adjacent to the Upper Newport Bay in the City of Newport Beach. The majority of the project site (6.415 acres) is located immediately north of East Coast Highway between Bayside Drive and the Bayside Marina adjacent to the Upper Newport Bay. The balance of the project site (0.642-acres) is located under and immediately south of the East Coast Highway bridge. The proposed project involves land use amendments to provide the legislative framework for future development of the site. Amendments to the General Plan and Coastal Land Use Plan are required to change the land use designations to a Mixed -Use Water -Related designation and a Planned Community Development Plan (PCDP) is proposed to establish appropriate zoning regulations and development standards for the site. The requested approvals will provide for a mix of uses, including recreational and marine commercial retail, marine office, marine services, enclosed dry stack boat storage, and limited mixed- use structures with residential uses above the ground floor, as regulated by the proposed Back Bay Landing PCDP. No development is proposed for the De Anza Bayside Marsh Peninsula nor are any changes proposed to the existing Bayside Village Marina. In addition to the land use amendments, other requested approvals are a Lot Line Adjustment and Traffic Study pursuant to the City's Traffic Phasing Ordinance. irr. Uptown Newport (Phase 1) Residential Market Analysis 22 Newport Village Mixed -Use Project A mixed -use development encompassing approximately 11.05 acres on the north and south sides of West Coast Highway in the Mariner's Mile corridor. The project includes 175 residential units, 240,650 square feet of office, retail, and restaurant uses, and a new 75-boat marina. A new signalized intersection would provide primary access to the project. The design includes a new publicly accessible waterfront promenade and 1,343 parking spaces within two underground parking structures. Buildings above grade are 35 feet in height. All existing structures will demolished and existing uses will be discontinued with project implementation. The project includes approximately 1,000 linear feet of new bulkhead along the bay. V.OVERALL SfIE IiLUSTRAT1VE PLAN (aROUNO, PEIOIUM, AND E ROOROP LEVELS OH MORSN 0.1i0 SOUTH PARCELS) be City of Irvine Notable single-family residential development projects in the city of Irvine are summarized below, followed by a project map (see the identification number with each project summarized for location on the map): 2152-2182 Alton (3) — 357 attached residential units on 10.23 acres proposed by Wong Properties Irvine Gateway (8) — 434 apartments and condominiums on 8 acres developed by FF Realty II, LLC 17811 Gillette (9) — 44 residential units on 2.4 acres proposed by Sand Dollar Gillette, LLC 17822 Gillette (13) — 137 condominiums on 6 acres developed by Gillette Development, LLLC Central Park West (21) - 1,275 condominium unit project developed by Lennar 17821 Gillette (23) — 39 condominiums proposed by MLC Holdings, Inc. 2602 McGaw (25) — 120 condominium units developed by Natura City, LLC Uptown Newport (Phase 1) Residential Market Analysis 23 a i ro.u-o i ruo. n Squa . South Coast Pia Borr Coral Park Sunflower Ave. 9' L. Santa Ana country Club CL • ;44 Course - Anton IL ___. L. j •ImEml ‘--- 0 .1 .4 -o •E in laularinoAve 4,. ,..." .1,, 4' .-;- -k:::- ---.:-,----..-----------7 • IBakeF St , — 7- •?, L.,'t' . 4 ,'S ' . e" 7 h q. rE,N John Wayne / .....c Aim° a -Ora rye , ., . Tr' e Count Dr : 4ill. ,,L..... '6 44,zr...0.-5. ,1-.. N..., 44P Nee . tx',.. • ',..„ 3- / c ., % yt / .... ,/, -.4„... -,, 0- 1 Park rd Insvorl = Under Review Lc) .=. Approved ••••• e ,,,e1' 9 ,:- .../../ ;:,-- ..., „,..- 46 .4. ,..0 1 '0 AP q Col Bill Barter I rvi nglernorial Fnrk a alii V liFF Atx2.74, ir 9 Duck Ponds ,•V ...,:!ni...... i N Kai ra. 1. 1 %. Plan! N.. The,c430 IL: Ll. "- - • — ..-1 I Tustin Nn / '- Am 4c. 5 IRanc Iv! San Cour c, 8 b's t cr, A . vb.,3 University Macon Re. onal Park L1/4.71= Under Construction L1/471 Completed Uptown Newport (Phase 1) 10. Residential Market Analysis 24 New Home Pricing and Sales According to the Gregory Group, a firm that publishes new homes prices and absorption statistics for areas in California and Nevada, there are presently 13 active new home projects (attached only) in Newport Beach and Irvine, with a total of 37 attached active projects throughout Orange County (including Anaheim, Brea, Buena Park, Costa Mesa, Cypress, Dana Point, Irvine, La Habra, Lake Forest, Newport Beach, Orange, Rancho Mission Viejo, San Juan Capistrano and Santa Ana). As previously mentioned, price points are highest for those areas located closest to the coast. Therefore, we will analyze the communities of Newport Beach and Irvine, which presently contain 13 active attached projects. Below we present a table depicting average sale prices for active single-family residential projects in the market area for the past three years. The data includes only attached projects. New Home Sales History (Attached Only) Average %Change Average Home Average %Change Quarter Number of Sold Per Proj. Time Period Price Average Price Size (SF} Price/Avg SF Price/SF Said Projects Per Month 20 2015 $898,354 - 1,741 $516.00 - 116 8 4.83 30 2015 $861,174 -4.1% 1.751 $491.82 -4.7% 141 11 4.27 4Q 2015 $881,542 2.4% 1,775 $496.64 1.096 164 11 4.97 1Q 2016 $658,661 -25.3% 1.636 $402.60 -18.9% 78 8 3.25 2Q 2016 $646,905 -1.8% 1,602 $403.81 0.3% 274 11 8.30 3Q 2016 5651,447 0.796 1,623 $401.38 -0.696 176 11 5.33 40 2016 5668,125 2.6% 1.658 $402.97 0.4% 266 15 5.91 1Q 2017 $686,736 2.8% 1,719 $399.50 -0.9% 198 16 4.13 2Q 2017 5732.967 6.796 1.786 $410.40 2.796 349 20 5.82 30 2017 $749,624 2.3% 1,814 $413.24 0.7% 188 16 3.92 4Q 2017 $756,432 0.996 1,796 5421.18 1.996 141 14 3.36 1Q 2018 $862,081 14.0% 1,809 $476.55 13.1% 164 14 3.90 2Q 2018 $969,001 12.4% 1,847 $524.64 10.196 103 12 2.86 3Q 2018 $885.580 -8.6% 1.818 $487.12 -7.296 76 13 1.95 As previously discussed, there are presently 13 active new home projects (attached only) in Newport Beach and Irvine, of which only one is located in Newport Beach and is located on the Balboa Peninsula, closest to the coast. This project is discussed in more detail in the next section. However, the survey period above predominantly consists of active attached projects in Irvine, as opposed to Newport Beach. Thus, providing a deflated average sales price for active projects when comparing to the subject's market area (i.e., inland Newport Beach location). In terms of the number of home sales, there have been ups and downs from quarter to quarter. There were 1.95 sales per project per month in the Third Quarter of 2018, which was down from 2.86 in the previous quarter and from a year earlier (3.92 sales per project per month). Absorption rates (homes sold per project per month) have fluctuated, but have generally stayed within the range of 3.0 to 6.0 sales per project per month. Over the last 12 months (through the Third Quarter of 2018), the average was 3.02 sales per project per month. Over the last three years, the number of home sales has averaged 4.49 per project per month. Active New Home Projects Pricing and Absorption As previously mentioned, there are 13 active attached projects in Newport Beach and Irvine. These projects are summarized in the following table, based on data from the Third Quarter of 2018. irr. Uptown Newport (Phase 1) Residential Market Analysis 25 Active Attached Projects Avg. Home Avgerage Units Units Units Units Project Master Plan Comnwnity Developer Average Price Size (SF) Price/SF Planned Offered Sold Unsold Aldea Trevate Irvine Lennar Homes $716,990 1,588 $451.51 105 24 9 15 Brise Portola Springs Irvine California Pacific Homes $708.903 1,448 5489.57 124 44 29 15 C2E — Irvine Intracorp Companies $802,440 1.648 5485.92 71 30 30 0 Celadon Parasol Park Irvine William Lyon Homes 5757.490 2,193 5345.41 79 79 79 0 Chorus Cadence Park Irvine Lennar Homes $826,490 2,260 $365.70 56 20 14 6 Delano Eastwood ViI[age Irvine Brookfield Residential 5913.333 1,721 5530.70 129 120 111 9 Indigo Portola springs Irvine California Pacific Homes 5735,875 1,577 5466.63 171 171 170 1 Rockefeller Central Park West Irvine Lennar Homes $1,500,990 2,545 5589.78 22 18 18 0 Sterling Parasol Park Irvine TriPointe Homes S697,400 1,763 5395.58 96 96 95 1 Tri beta Central Park West Irvine Lennar Homes $853,323 1,718 $496.70 120 66 61 5 Tristania Cypress Village Irvine California Pacific Homes 5859.709 1,770 5485.71 150 94 80 14 Windchime Parasol Park Irvine Lennar Homes $828,740 1.918 $432.09 118 118 114 4 Vue — Newport Beach Third Pain, Capital $2,300,000 2.149 $1,070.27 27 27 12 15 Minimum 5697,400 1,448 $345.41 Maximum $2,302,000 2,545 $1,070.27 Average 5951,668 1,869 5508.20 6o4 :4 rxpsaewo uyd.M c.M1 wu.eec n=4 ,ti 9 eDunw coa.r .,/ COSICO nw.Fa.Q j •t • ` / ° °I F T A D" ,,.,fir .eG ... saw,Gr.rrinFaQ o f CI el IV 'c •'-'.. la F `\• vawry 6{ 99 Q 3 Jon^ Wet, wr sy Irvine +.wc" i' '^n,� Vue nr. , .n. ••? Q waooteicer • Q i c¢ z` r r me ar•n.e.Q F "r" Pd�0 Tribeca re s ,? ./ ./ ._ j/ s �% 9 Rockefeller OC Fr M1Frei. Center l`7 , t• ,� e��. oe,4 =r 1 QC2E uvr�r Q P+EN.i P m.. 9 Aldea w. gri„e I �, �.1�Eel,,, s,� ryp ��.,_�. I"v„I 9 mg.: Fi�ITIi CWI CIWR t uM wrM1*sioe� cosT.f,,. znro.uv°.n ei'"coi'rrwM.. ✓r ""'fe t — _" 9 Tristania " c goan,e.eua Coats mesa % Jf PF..'" eve. ,i��.,. �,�� i C.d.^e uem,e. j ti Il.. j " 5 Celadon •'•• • , I �. '�+Tp, uaMD^ucvl Tun T li tli �liina.ira - $ O n� n.. 4 » ca, Tw, 9 Sterling wo .r e 9 Windchime Hr., i, ch - 9 4 9 Chorus ,u,e„ 9 Indigo Weals ▪ 9 Brisa • r Q Delano ..•••�Lar„:w�nc The projects most similar to the subject property, albeit limited, are detailed further on the following pages. irr. Uptown Newport (Phase 1) Residential Market Analysis 26 PROJECT INFORMATION 'village 750-8868 - Tues 1- 6, Wed 12-6 : 33.712051 9y: 117.749963 Average Price 5913,333 Average Sq Ft 1,721 Total Inventory 18 Standing Inventory 0 AT A GLANCE 35r Sold 12 Qtr WSR 0.92 Tot WSR 132 Avg Incentives $1,000 Project Name Delano Region Orange County Orange Community Irvine Master Plan East000d Age Restricted No Project Phone (888) Sales Office Hours Thurs GPS Coordinates N Cross Street Finished Lots N/A Open Date 02/15/17 Developer Name Brookleld Residential Developer Phone (714) 427-6868 Product Type Attached Type Description Townhome Lot Size Lot Dimension Blue Top Lots N/A Survey Date 10/1118 Special Tax per Month 3258.00 FDA per Month $30,6.00 Broker Coop $12,000 Special Incentives $0 Project Density Model/Trailer Model PLAN DETAILS Plan Horne Sze Base Pnce Pnce Sq Ft Incentives Net Pnce Net Prrce75q Ft Bed Bath Levels Garage Of r om 1,533 1.714 1:916 9788,000 $514.02 0953,000 $556.01 09990011 $521.40 01,000 51,900 01,000 5787,000 3952,000 5998,000 $513.37 $555.43 $520.88 3 3 4 2 2 2 2.5 2 2 3 2 2 None None None SURVEY INFORMATION Survey Per Units Planned Units Offered Units Sold Oh Sold Tot Inv Unothd Inv Unsold Inv Wkly Traffic Tot WSR Car WSR Avg Price % Charge Qtr 3118 129 0W7118 129 Qtr 1118 129 064117 129 Qtr 3+17 129 Qtr 2117 129 alr 1117 129 129 111 105 99 93 82 72 68 51 51 42 42 12 17 14 17 9 25 18 30 47 61 78 67 9 24 36 57 78 67 9 fi 11 4 0 0 85 80 80 125 150 290 1.32 0.92 $913,333 1.39 131 $920,333 1.41 1.08 5912,000 1-51 1.31 5868,333 1.59 0.69 $846,467 2.21 1.92 5798,000 - 0.76 091 5.03 2.58 6.07 5-32 0.00 18 17 17 112 111 1 200 2.83 1.31 5757,667 COMMENTS This project is located the furthest inland of the three highlighted active projects. Further, as shown in the previous table, Irvine generally achieves a substantially lower average price for new attached homes. Thus, the subject would be expected to achieve higher price points in terms of location (both proximity to the coast and Newport Beach). PROJECT INFORMATION AT A GLANCE 7 Project Name Region County Community Master Plan Age Restricted Project Phone Sales Office Hours GPS Coordinates Cross Street Finished Lots Rockefeller Orange ()range Irvine Central Park West No (949) 296-4775 DaOy 10 - 6 N : 33.675697 N/A w : 117.849243 Average Price Average Sq Ft Total Inventory Standing Inventory 51,53.0 990 2,545 4 0 qtr Sold ON WSR Tot WSR Avg Incentives 0 0.00 0.24 $5,000 Open Date Developer Name Developer Phone Product Type Type Description Lot Size Lot Dimension Blue Top Lots 04/29/17 Lennar Homes (949) 349-8100 Attached Townhome N/A Survey Date 1011118 Special Tax per Month $319.09 HGA per Month 3320.00 Broker Coop 2.0% Special Incentives $0 Project Density Model/Trailer Model PLAN DETAILS P an Home Size Base Price Price Sq Ft Inten4ves Net Pnce Net Pncel3q Ft Bed Bath Levels Garage Other Room 2,496 2,594 51,475,9911 $1.525,990 $591.34 $533.23 55,000 55,000 51,470,990 51,520.990 $589.34 $586.35 2 3 2.55 3 3.5 3 2 2 Loft None SURVEY INFORMATION Survey Per Un Is Planned Units Offered Units Sold Otr Sold Tol Inv Unsold In Unsold Inv Wkly Traffic Tot WSR Otr WSR Avg Price 13 Change 1263+18 22 18 18 0 4 4 0 50 0.24 0.00 51,500.990 0.00 Oh-2/18 22 1291/18 22 Otr4/17 22 Qtr 3/17 22 18 18 18 14 18 18 18 14 0 0 4 0 4 4 4 4 4 4 8 8 0 0 0 0 65 100 100 75 0.3U 0.00 0.38 0.00 0.51 0.31 0.64 0.00 31,500,990 51,500.990 31,500,990 51,500.990 0.00 0.00 0.00 6.27 1202117 22 14 14 14 8 8 0 70 1.56 1.08 31,412,490 0-00 COMMENTS 7 r Rockefeller is located the closest in proximity to the subject, about one mile northeast. Even with its close proximity, this project has an Irvine address as opposed to the subject's Newport Beach address which achieves a premium. While this is deemed the best project to estimate market value of the subject's proposed units, a higher price per square foot for the subject is considered reasonable given the smaller average size (1,671 square feet) and location within the city of Newport Beach. Uptown Newport (Phase 1) Residential Market Analysis 27 PROJECT INFORMATION AT A GLANCE Project Name Vue Average Price S2,3130.000 Qtr Sold 0 Region Orange Average Sq Ft 2,149 Qtr WSR 0.00 County Orange Total Inventory 15 Tot WSR 0.32 Community Newport Beach Standing Inventory 15 Avg Incentives $0 Master Plan No Open Date 01i15i18 Survey Date 10.+1118 Age Restricted No Developer Name Third Palm Capital Special Tax per Month $0.00 Project Phone i949; 485-5506 Developer Phone i214; 615-8590 HDA per Month $1,170.00 Sales Office Hours Tires - Sun 10 - 4 Product Type Attached Broker Coop 2.5% Type Description Condominium Special Incentives $0 GPS Coordinates N : 33.610941 w : 117.9281372 Lot Size Project Density Cross Street Lot Dimension Model,Trailer Model Finished Lots NiA Blue Top Lots NA PLAN DETAILS Plan Home Size Base Pnce Pnce 5q Ft Incentives Net Pnce Net Pnce;Sq Ft Bed Bath Levels Garage Other Room 1,711 52:100,000 51,227.35 $0 52,100.000 $1.227.35 2 2.5 1 None 2,723 52:500,000 $918.11 $0 52,500.000 $918.11 3 3 3 2 None SURVEY INFORMATION Survey Per Units Planned Units Offered Units Sold Qtr Sold Tol Inv Unoffrd Inv Unsold Inv Wily Traffic Tot WSR Qtr WSR Avg Price %Change Qtr 3/18 27 27 12 0 15 0 15 15 0.32 0.00 52,300.000 - 6.60 Qtr 2/18 27 27 12 2 15 0 15 25 0.52 0.15 32,462,500 1.20 Qtr 1118 27 27 10 10 17 0 17 25 1.00 0.77 52,433.333 0.00 COMMENTS and Townhomes This represents the only active attached project in Newport Beach consists of 27 units and is located on the Balboa Peninsula, closest to the coast. Thus, this project is achieving the highest average price for an attached project. Given the subject's inland location in comparison, a lower price point for the subject's proposed units is considered reasonable. According the information provided by the Developer, the appraised property will contain a weighted average residential condominium size of 1,671 square feet, with a weighted average anticipated base price per unit of $1,689,381, or $1,011 per square foot. Considering the subject's location in Newport Beach address, a price point towards the upper end of the range, albeit below the Vue's average price, is considered reasonable. Considering these active project's, as well as resale prices discussed next, a sale price (total consideration) of $1,650,000, or approximately $987 per square foot, is supported and utilized in the valuation herein. Absorption Praicc! Master Plan Builder Alden Irvine Lennar Homes arise Irvine California Pacific Homes C26 Irvine Intracerp Companies Celadon Irvine William Lyon Homes Chorus Irvine Lehner Homes Delano Irvine Brookfleld Residential Indigo Irvine California Pacific Homes Rockefeller Irvine Lennar Homes Sterling Irvine TriPointe Homes Tribeca Irvine Lennar Homes Tristania Irvine California Pacific HorneS Windchime Irvine Lennar Homes Vue Newport Beach Third Palm Capital Avg. Home Avg. Horne Average Average Price Size 12-Month Per Per (3418On1yj {3(318Only} 342018 242018 1122018 442017 Total Quarter Month $716,990 1,588 9 -- -- 9 9.0 3.0 5708,903 1,448 4 9 14 - 27 9.0 3.0 $802,440 1,648 15 15 - - 30 15.0 5.0 $757,490 2,393 1 -1 5 35 40 10.0 3.3 5826.490 2.260 14 - -- -- 14 14.0 4.7 S913,333 1.721 12 17 14 17 60 15.0 5.0 5735,875 1,577 3 5 16 15 39 9.8 3.3 S1,500,990 2,545 0 0 0 4 4 1.0 0.3 3697,400 1,763 1 4 13 27 45 11.3 3.8 S853,323 1,718 5 18 18 0 41 10.3 3A 5859,709 1,770 3 2 13 6 24 6.0 2.0 S828.740 1,918 9 18 49 7 83 20.8 6.9 $2,300,000 2.149 0 2 10 - 12 4.0 1.3 Total 76 89 152 111 No. of Active Projects 13 11 10 8 Quarterly Pro-Rata 5.8 8.1 15-2 13.9 Monthly Pro -Bata 1.9 2.7 5.1 44 3.6 Average Monthly Pro•Rata Based on this information, over the last four quarters the monthly absorption rate per attached project has ranged from 1.9 to 5.1 sales per project per month, with an average rate of 3.6 sales per irr. Uptown Newport (Phase 1) Residential Market Analysis 28 project per month. Generally, the absorption rates have decreased as the number of attached active projects have increased. Focusing on the three highlighted active projects (Delano, Rockefeller and Vue), over the last four quarters the monthly absorption rate per attached project has ranged from 1.3 to 3.5 sales per project per month, with an average rate of 2.4 sales per project per month, also on a decreasing trend, as shown below. Absorption Project Master Plan Delano Irvine Rockefeller Irvine Vue Newport Beach Builder Brookfield Residential Lennar Homes Third Palm Capital Avg. Home Avg. Home Average Average Price Size 12-Month Per Per (3Q 18 Only) (3Q 18 Only) 3Q 2018 2Q 2018 1Q 2018 4Q 2017 Total Quarter Month $913,333 1,721 12 17 14 17 60 15.0 5.0 $1,500,990 2,545 0 0 0 4 4 1.0 0.3 $2,300,000 2,149 0 2 10 -- 12 4.0 1.3 Total 12 19 24 21 No. of Active Projects 3 3 3 2 Quarterly Pro-Rata 4.0 6.3 8.0 10.5 Monthly Pro-Rata 1.3 2.1 2.7 3.5 2.4 Average Monthly Pro-Rata Two additional condominium projects in the immediate area, The Plaza Irvine and Marquee at Park West, albeit 2006/2007 construction, are considered in the absorption analysis. Based on historic data from the Gregory Group, The Plaza Irvine sold out within 15 quarters with an average absorption rate of approximately 3.88 sales per quarter, or 1.29 sales per month. While the Marquee at Park West was not tracked by the Gregory Group, the local multiple listing service (MLS) provided the following annual absorption data: 1.42 sales per month in 2006, 1.33 sales per month in 2007, 0.67 sales per month in 2008 and 1.08 sales per month in 2009, with an overall average of approximately 1.13 sales per month. Given market conditions and the subject's location and physical features, as well as its affordable price point for its Newport Beach location, we estimate the subject could achieve an average absorption rate of about 4.0 sales per month. Resale Market In addition to the preceding analysis, we have analyzed recent trends in the resale market for generally new condominium units. Based on data from the local multiple listing service, the tables on the following page show resale prices in Newport Beach and Irvine for attached homes. irr. Uptown Newport (Phase 1) Residential Market Analysis 29 Condominium Resales: Newport Beach (Closed 9/1/2018-11/20/2018;1,000 - 2,500 SF, Year 2000-2017) Contract Living Last List Sale Price Days on Address Date Area (SF) Sale Price Price /SF Sale/List Year Built Market 20402 Santa Ava Ave #9 8/9/2018 1,457 $650,000 $659,888 $446 98.50% 2007 94 20402 Santa Ava Ave #17 9/28/2018 1,457 $658,000 $668,888 $452 98.379E 2007 36 4 Bluefin Ct 8/8/2018 1,768 $739,900 $765,000 $418 96.72% 2005 243 Total Sales 3 1,561 $682,633 $697,925 $439 97.869E 2006 124 (avg.) (avg.) tavg•1 (avg.) (an-) (avg.) (avg.1 Condominium Resales: Irvine (Closed 10/1/2018- 11/20/2018; 1,500- 2,000 SF, Year 2010-2017) Contract Living Last List Sale Price Days on Address Date Area (SF) Sale Price Price /SF Sale/List Year Built Market 145 Neptune 9/20/2018 1,798 $650,000 $659,000 $362 98.63% 2016 29 156 Borrego 9/9/2018 1,631 $735,000 $738,000 $451 99.59% 2014 16 121 Mighty Oak 9/20/2018 1,500 $730,000 $739,000 $487 98.78% 2016 10 181 Pathway 9/14/2018 1,790 $691,500 $739,000 $386 93.57% 2011 87 48 Peony 10/3/2018 1,665 $740,000 $739,000 $444 100.14% 2010 41 157 Fixie 9/21/2018 1,664 $720,000 $740,000 $433 97.30% 2017 112 274 Rodeo 9/6/2018 1,501 $745,000 $745,000 $496 100.00% 2015 7 79 Kestrel 9/19/2018 1,800 $750,000 $749,999 $417 100.00% 2015 12 118 Walking Stick 10/21/2018 1,542 $735,000 $769,999 $477 95.45% 2016 36 76 Granite 10/24/2018 1,611 $775,000 $788,800 $481 98.25% 2016 50 152 Firefly 10/8/2018 1,746 $780,000 $788,888 $447 98.87% 2015 13 235 Carmine 9/7/2018 1,656 $790,000 $799,800 $477 98.77% 2017 121 229 Kempton 10/21/2018 1,614 $798,000 $814,900 $494 97.93% 2014 24 91 Strawberry Grove 9/17/2018 1,626 $825,000 $829,000 $507 99.52% 2014 66 137 Rose Arch 10/17/2018 1,619 $810,000 $838,000 $500 96.66% 2013 15 239 Carmine 9/11/2018 1,619 $819,000 $849,000 $506 96.47% 2017 12 37 Flowerstalk 9/13/2018 1,823 $850,000 $849,888 $466 100.01% 2011 7 179 Overbrook 10/14/2018 1,777 $847,700 $850,000 $477 99.73% 2013 16 128 Quite Grove 9/23/2018 1,646 $857,500 $869,000 $521 98.68% 2017 10 83 Wildvine 8/29/2018 1,745 $865,000 $886,000 $496 97.63% 2015 12 58 Waterleaf 9/26/2018 1,888 $888,500 $898,500 $471 98.89% 2015 26 94 Desert Pine 10/5/2018 1,873 $880,000 $898,888 $470 97.90% 2016 17 509 Rush Lily 10/14/2018 1,862 $870,000 $899,800 $467 96.69% 2014 10 705 Beacon 8/30/2018 1,897 $880,000 $900,000 $464 97.78% 2017 20 30 Pendant 9/28/2018 1,861 $900,000 $919,880 $484 97.84% 2012 46 126 Barrington 9/6/2018 1,982 $918,000 $935,000 $463 98.18% 2016 44 65 Coleridge 9/6/2018 1,739 $920,000 $939,000 $529 97.98% 2012 13 42 Somerton 10/11/2018 1,859 $978,800 $975,800 $527 100.31% 2012 3 51 Rembrandt 10/25/2018 1,861 $940,000 $987,000 $505 95.24% 2013 34 71 Brandisi 9/27/2018 1,713 $980,000 $998,000 $572 98.20% 2013 84 106 Working Ranch 9/13/2018 1,772 $978,000 $999,500 $552 97.85% 2014 99 302 Rockefeller 11/3/2018 1,832 $995,000 $1,025,000 $543 97.07% 2014 12 206 Holbrook 9/19/2018 1,918 $1,005,000 $1,025,000 $524 98.05% 2014 44 207 Traymore 9/18/2018 1,918 $1,017,000 $1,025,000 $530 99.22% 2013 5 118 Island Coral 10/1/2018 1,879 $988,888 $1,048,000 $526 94.36% 2016 95 62 Bianco 9/22/2018 1,775 $1,035,000 $1,089,888 $583 94.96% 2012 112 80 Lupari 8/24/2018 1,878 $1,088,886 $1,134,900 $580 95.95% 2013 95 Total Sales 37 1,754 $858,832 $877,876 $490 97.90% 2014 39 (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) Uptown Newport (Phase 1) ,71 Residential Market Analysis 30 As shown by the data, MLS reports that there have been three resales in Newport Beach with close dates in the last 2.5 months. The data shows the limited amount of condominium units available within this market area. Further, all of these resales were constructed in 2005 and 2007, with no newer resale construction (2010+). Most homes closed at or near the asking price, and the time on the market has averaged about four months. As for the Irvine resale market for condominium units, there is ample supply, with 37 resales closing since October 1, 2018. Additionally, these homes are of newer construction (2010 to 2017) with sale prices between $659,000 and $1,088,886, which averaged 97.9% of the list price. These statistics indicate a generally healthy resale market. Considering the limited amount of data for similar condominium projects in the market area, we also surveyed the greater Orange County market for resales of newer homes with sale prices over $800 per square foot. It is noted, these consist of both attached and detached units. The results of this survey is provided in the table on the following page. irr. Uptown Newport (Phase 1) Residential Market Analysis 31 Resales: Orange County (Closed 1/1/2018 -11/20/2018; Year 2017+) No. Address 1 415.5 Marguerite 2 309 34th #B 3 503 1/2 Poinsettia AVE 4 6081/2 Heliotrope Ave. 5 608.5 Heliotrope AVE 6 603.5 Marguerite AVE 7 617 .5 Poppy AVE 8 607 .5 Carnation AVE 9 129 34th ST #A 10 712 1/2 Heliotrope AVE 11 518 1/2 Narcissus AVE 12 617 .5 Narcissus AVE 13 424 Larkspur AVE#B 14 415 .5 38th 15 2950 Third Ave 16 615 1/2 Begonia AVE 17 216 .5 33rd 18 129 34th ST #B 19 308 1/2 Fernleaf 20 4405 Channel PL 21 4401 Channel PL 22 2210 Newport BLVD #9 23 415 38th ST 24 400 1/2 Jasmine 25 701 .5 Poppy AVE 26 2210 Newport BLVD #8 27 503 Poinsettia AVE 28 617 Poppy AVE 29 603 Marguerite AVE 30 216 33rd ST 31 708 Heliotrope AVE #A 32 705 Acacia AVE 33 711 Marigold Avenue 34 607 Carnation AVE 35 2270 Newport BLVD #26 36 712 Heliotrope AVE 37 2270 Newport BLVD #20 38 617 Narcissus AVE 39 424 Larkspur AVE 40 2260 Newport BLVD #22 41 615 Begonia 42 308 Fernleaf AVE 43 701 Poppy AVE 44 433 Goldenrod AVE 45 2250 Newport BLVD #21 46 217 Marguerite AVE #1/2 47 2240 Newport BLVD #18 48 2230 Newport BLVD #15 49 2240 Newport BLVD #19 Total Sales Living Last List Sale Price Area (SF) Sale Price Price /SF $1,160,000 $1,198,000 $935 $1,200,000 $1,199,000 $915 $1,275,000 $1,395,000 $1,159 $1,300,000 $1,488,000 $1,086 $1,300,000 $1,490,000 $1,086 $1,500,000 $1,495,000 $1,270 $1,525,000 $1,498,000 $1,218 $1,565,000 $1,575,000 $1,304 $1,580,000 $1,599,000 $1,081 $1,600,000 $1,600,000 $1,348 $1,650,000 $1,650,000 $1,341 $1,515,125 $1,650,000 $1,218 1,240 1,312 1,100 1,197 1,197 1,181 1,252 1,200 1,462 1,187 1,230 1,244 1,370 1,500 1,235 1,213 1,821 1,378 1,220 1,734 1,654 1,916 1,500 1,703 1,300 1,888 1,450 2,332 1,768 2,449 1,705 2,019 1,739 1,940 2,308 1,778 2,160 1,715 1,941 2,262 1,908 1,933 1,700 1,893 2,012 1,982 2,104 2,105 2,105 $1,550,000 $1,575,000 $1,650,000 $1,700,000 $1,725,000 $1,749,000 $1,700,000 $1,775,000 $1,850,000 $1,999,000 $1,862,500 $2,150,000 $2,144,000 $2,250,000 $2,035,000 $2,225,000 $2,367,000 $2,225,000 $2,500,000 $2,490,000 $2,485,000 $2,604,000 $2,548,000 $2,550,000 $2,600,000 $2,550,000 $2,550,000 $2,700,000 $2,667,500 $2,699,000 $2,800,000 $2,725,000 $2,900,000 $2,995,000 $3,075,000 $3,225,000 $3,464,000 $1,695,000 $1,699,000 $1,699,900 $1,740,000 $1,749,000 $1,749,000 $1,795,000 $1,795,000 $1,919,000 $1,999,000 $1,999,999 $2,150,000 $2,150,000 $2,250,000 $2,295,000 $2,348,000 $2,367,000 $2,395,000 $2,495,000 $2,540,000 $2,575,000 $2,580,000 $2,600,000 $2,600,000 $2,600,000 $2,650,000 $2,695,000 $2,700,000 $2,730,000 $2,799,000 $2,850,000 $2,900,000 $2,900,000 $2,995,000 $3,075,000 $3,499,000 $3,649,000 $1,131 $1,050 $1,336 $1,401 $947 $1,269 $1,393 $1,024 $1,119 $1,043 $1,242 $1,262 $1,649 $1,192 $1,403 $954 $1,339 $909 $1,466 $1,233 $1,429 $1,342 $1,104 $1,434 $1,204 $1,487 $1,314 $1,194 $1,398 $1,396 $1,647 $1,440 $1,441 $1,511 $1,462 $1,532 $1,646 1,664 $2,118,962 $2,184,978 $1,272 (avg.) (avg.) (avg.) (avg.) Sale/List 96.83% 100.08% 91.40% 87.37% 87.25% 100.33% 101.80% 99.37% 98.81% 100.00% 100.00% 91.83% 91.45% 92.70% 97.06% 97.70% 98.63% 100.00% 94.71% 98.89% 96.40% 100.00% 93.13% 100.00% 99.72% 100.00% 88.67% 94.76% 100.00% 92.90% 100.20% 98.03% 96.50% 100.93% 98.00% 98.08% 100.00% 96.23% 94.62% 100.00% 97.71% 96.43% 98.25% 93.97% 100.00% 100.00% 100.00% 92.17% 94.93% Year Built 2017 2017 2018 2018 2018 2017 2017 2017 2017 2017 2017 2018 2017 2018 2017 2018 2018 2017 2018 2017 2017 2017 2018 2018 2017 2017 2018 2017 2017 2018 2018 2017 2017 2017 2017 2017 2017 2018 2017 2017 2018 2018 2017 2018 2018 2018 2018 2018 2017 Days on Market 72 27 43 65 50 7 9 175 18 4 300 273 92 183 95 319 147 7 9 91 79 0 43 248 0 0 117 198 24 150 126 26 338 0 0 35 0 54 92 0 326 53 145 46 0 0 0 33 346 96.89% 2017 91 (avg.) (avg.) (avg.) Uptown Newport (Phase 1) Residential Market Analysis 32 Tax Cuts and Jobs Act The U.S. Congress enacted a new law on December 22, 2017, known as the "Tax Cuts and Jobs Act". The Tax Act makes significant changes to many aspects of the Tax 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 California and could adversely affect the sale of homes in the State. However, at this time there is neither a consensus nor a central prediction regarding the effect that the Tax Act may have on the cost of home ownership or the price of homes in the State. Based on input from regional and national homebuilders, they are not adjusting either pricing or sales pace projections due to the Tax Act. This analysis was completed without projections of either an enhancement or a diminution to the price of homes in the State. Conclusions We have summarized some of the key points from this section as follows: • Building permit activity for single-family residences in the market area generally trended upward, with more moderate upward tends in recent years compared to 2009 through 2013. • New home pricing in Newport Beach and Irvine has been in a general increasing pattern since the First Quarter 2016, albeit a "pull -back" in prices as of late. The most recent period indicates the new home pricing generally consistent with those observed in 2015. • New home pricing per square foot of living area in Newport Beach and Irvine has fluctuated, but has generally been on an upward trend since 2016, from a low of $401.38 in the Third Quarter 2016 to a high of $524.64 in the Second Quarter 2018. • There are currently 13 active new attached projects in Newport Beach and Irvine. • Absorption rates at attached projects most similar to the subject in Newport Beach and Irvine have ranged from 1.3 to 3.5 sales per project per month over the past year, with an average of approximately 2.4 sales per month. • Resale homes in Newport Beach and Irvine are transferring at or near the asking price, and the exposure period has averaged from one to four months, both indicators of a healthy market. Overall, demand for new homes in the subject's market area remains stable. The housing market is considered to be in a stage of stability. Uptown Newport (Phase 1) Retail Market Analysis 33 10-91 90 Retail Market Analysis Strong economic conditions and high consumer confidence nationwide has had a positive impact on the retail industry overall, despite several recent bankruptcy announcements and national store closures. Orange County has experienced steady job growth, with levels remaining well below state and national levels in August 2018 at 3.1%. This market is often considered the hypocenter of Southern California's tourism and cutting -edge food and fashion trends; thus, Orange County has perpetually led the pack in terms of the retail market. The information and data obtained for this analysis was provided by the CBRE Orange County Retail Market Report (Q3 2018). k<1/ North County lt0 60� ` [l '1� 110 I I }l 57 39 -�Central:Coun, ty \lli . 91 15 Submarket Avg. Asking SF Overall Current Net YTD Net Under Construction Lease Rates GLA Vacancy (%) Absorption Absorption Construction Deliveries ($PSF/MO/NNN) Central County 29,335,947 3.7 (7,245) 13,121 0 0 2.23 Central Coast 13,227,851 1.3 98,559 170,869 0 0 3.36 North County 14,943,363 3.9 28,045 18,109 115,450 0 2.21 South County 17,942,185 4.0 (17,576) (68,235) 0 0 2.48 West County 10,053,081 2.1 29,018 62,407 0 0 2.92 Orange County 85,502,427 3.3 130,801 196,271 115,450 0 2.40 5ourre: CBRE Resemrh, 03 2018. In the wake of legacy store closures that shook the Southern California region in the first half of the year, the Orange County retail market made an impressive showing over the summer season. In Q3 2018, 130,801 square feet of vacant retail space was absorbed with much of the leasing activity taking Uptown Newport (Phase 1) Retail Market Analysis 34 place in high demand coastal cities. Lease rates dipped slightly quarter over quarter to $2.40 per square feet due to an influx of newly vacated space in South and Central County submarkets. Construction completions remained scarce with only one major project tracked by CBRE that is currently in development and will likely not open until early 2019. As the year draws to a close, the Orange County retail market shows just how resilient a market it can be. Absorption & Vacancy Overall vacancy in Orange County dropped by 20 bps to 3.3% in Q3 2018. Compared with the same period the year prior, vacancy decreased 30 bps. Thanks to strong leasing activity, the vacancy rate in the Central Coast submarket dropped a full percentage point from 2.3% in Q2 2018 to 1.3% in Q3 2018, the lowest level in Central Coast since CBRE began tracking the market. The highest vacancy came from South County at 4.0% an increase of 10 bps since the previous quarter due to the aforementioned vacancies. CBRE EA forecasts that the vacancy rate will stabilize through the end of the year. Figure 6: Overall Vacancy Rate (°I°) 5 4 3 2 0 c c u1 u1 6.n [an. -o -o -O -a r-- r-- r-- 00 Da DO 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 CV CV CV CV CV CV CV CV CV CV CV CV CV CV 0,4 0,1 CV Cri — N cr, — c.. Cr, — — C- c. tV Cr] C3 0 0 C3 0 0 0 0 0 0 0 co co 0 0 0 0 Source: CBRE Research, 03 2018. Figure 1: Vacancy Rote by Center Type (%) - Community Neighborhood S pecialty �SIrip 10 8 6 4 2 0 rowel sr sr u1 u1 .n oo cD ao 4 4 4 4 C. O 4 4 4 0 C. 4 4 4 4 4 4 CV CV CV Cti H N CV CV CV Cti Cti N CV CV CV H N c 0 C] 0 COY d 0 d 000000000 Source: CBRE Research, 03 2018. The end of Q2 2018 was marred by the closing of several legacy big box retailers, namely the prolific Toys/Babies "R" Us brand. The result left a litany of empty big box spaces ranging from 20,000 —50,000 square feet in the Orange County market —but not for very long. As expected, demand for space netted Orange County with 130,801 square feet of absorption for Q3 2018. Approximately 97% of the positive absorption activity took place in the Central Coast submarket where a handful of mid to large deals propelled overall net absorption to 98,559 square feet A pair of transactions in Irvine, Restoration Hardware (40,000 square feet) at Spectrum Crossroads, and an as -of -yet -named tenant at Park Place (38,000 square feet) propelled much of the Central Coast's stellar net absorption. In Santa Ana, shoe store WSS opened a brand-new location in a former Smart & Final supermarket space for 17,676 square feet. Figure 8: Net Absorption (SF) (000's) 800 600 400 200 Net Absorption Rolling 4-Quarter Average 0 U (200) ▪ -. ..n N 41 41 •C •C +O +O 1— ti 1— — CO CO CO O C CC. C. CV CA C. 0 0 0 • 0 • 0 0 0 0 0 ▪ C. 0 0 ▪ CCY alasaaaaaa a`4"cao82 Source: CBRE Reseorch, 03 2018. Uptown Newport (Phase 1) irr Retail Market Analysis 35 South County was hit with a string of small -to mid -sized vacancies, resulting in negative 17,576 square feet of net absorption for Q3 2018. In spite of this, a few transactions of note took place in the submarket during Q3 2018—namely the opening of smaller format Target store (29,851 square feet) and a brand-new lease signed by arts and crafts supply store Michael's (42,000 square feet) both in the city of Mission Viejo. Year to date, net absorption is positive 196,271 square feet Rental Rates The Orange County average asking lease rate Figure 4; Average Asking Lease Rate ($PSFIM0/NNN) decreased slightly by $0.02 to $2.40 per square feet in Q3 2018. Compared with the same period 2.50 last year, asking lease rates were 3.4% higher. 2.40 2.30 The dip can be traced back to two submarkets, 220 Central and South County, both of which had an 2.10 array of newly vacated retail space reenter the 2.00 market at lower than average asking lease rates. 1.90 Asking lease rates in Central County dropped by 1.80 o • o 0 o C. C. o 0 0 0 C.C. 0 n 0 $0.04 per square feet while South County fell as N :� CO ▪ CO ▪ Q CO 4 Q ▪ 0 0 0 O O O O 4 ▪ 4 0 0 low as $0.20 per square feet compared with Q2 2018. Despite this, demand for premiere retail Source:CBRE Reseorch,032018. space pushed asking lease rates higher in Q3 2018, notably in the coastal cities. Asking lease rates in the Central Coast submarket in particular rose by $0.14 per square feet from Q2 2018 to $3.36 per square feet —the highest average asking rates in the county. Meanwhile, West County cities had the largest quarter -to -quarter increase of $0.37 to $2.92 per square feet in Q3 2018. New Construction Though there were no major construction starts or completions during Q3 2018, a handful of projects are still in the planning phase, including the 176,500-sq.-ft. Anaheim Westgate Center and the 91,300- sq.-ft. Cypress City Center. The only center currently under construction is the Yorba Linda Town Center in North Orange County. The 115,450-sq.-ft. neighborhood center has already signed Regal Cinemas (49,500 square feet) and Bristol Farms (26,425 square feet) and is expected to finish construction by Q1 2019. Looking Ahead CBRE Economic Advisors forecasts that the vacancy rate and lease rate for the region will stay relatively stable for the next 12 months. irr Uptown Newport (Phase 1) Retail Market Analysis 36 12-Month Forecast Vacancy (%) 5 4 3 2 Vacancy Rate Asking lease Rate (SPSF/MO/P5C) 2.50 LI7 Ian Lr, Len .o .o -c .O rt r — r — rti ca co CC) CC) Cr, Cr. Cr-, CZD c c = c*D r1 crs cv c+'7 •d▪ - c� ▪ c+7 N cr7 •d- N L-,7 C3 =c3 c3 = {3 r�s === c3 == .:=,C3 = • =!,Ot=5 e3 Source: CBE Econometric Advisors, Q3 24/$_ 2.40 2.30 2.20 2.10 2.00 1.90 1.80 Uptown Newport (Phase 1) Land Description and Analysis 37 Property Analysis Land Description and Analysis Location The property is located on Jamboree Road and bounded by Birch Street and MacArthur Boulevard in downtown Newport Beach, Orange County, California, within the Newport Beach city limits. Land Area The following table summarizes the subject's land area. Land Area Summary Tax ID SF Acres 445-134-17 (Lot 1) 112,515 2.583 445-134-29 (Lot 2) 27,661 0.635 445-134-22 (Remainder) 1,307 0.030 Total 141,483 3.248 Source: Public Records The final large lot tract map (Tract No. 17763) was recorded on March 25, 2015. Final condominium maps for the appraised property (Lot 1) is anticipated in the near term, at which point individual Assessor's parcel numbers will be assigned to each unit. Shape and Dimensions The site of the appraised property (Lot 1) is flag -shaped, with dimensions of approximately 518 feet in width and between 109 and 207 feet in depth. Site utility based on shape and dimensions is average and do not inhibit development. Topography The site is generally level and at street grade. The topography does not result in any particular development limitations. Drainage No particular drainage problems were observed or disclosed at the time of field inspection. This appraisal assumes that there are not any unusual drainage issues that would affect the development of the subject. Flood Hazard Status The following table provides flood hazard information. irr. Uptown Newport (Phase 1) Land Description and Analysis 38 Flood Hazard Status Community Panel Number 06059CO286J Date December 3, 2009 Zone X Description Outside of 500-year fl oodpl a i n Insurance Required? No Environmental Hazards An environmental assessment report was not provided for review, and during our inspection, we did not observe any obvious signs of contamination on or near the subject. However, environmental issues are beyond our scope of expertise. It is assumed that the property is not adversely affected by environmental hazards. Seismic Hazards According to the Seismic Safety Commission, the subject site is located within Zone 4, which is considered to be the highest risk zone in California. There are only two zones in California: Zone 4, which is assigned to areas near major faults; and Zone 3, which is assigned to all other areas of more moderate seismic activity. In addition, the subject is located in a Fault -Rupture Hazard Zone (formerly referred to as an Alquist-Priolo Special Study Zone), as defined by Special Publication 42 (revised January 1994) of the California Department of Conservation, Division of Mines and Geology. In general, a number of faults are located in the Southern California and throughout California; thus, the area is subject to severe ground shaking during earthquakes. Competitive sites face similar seismic risk. Ground Stability A soils report was not provided for our review. Based on our inspection of the subject and observation of development on nearby sites, there are no apparent ground stability problems. However, we are not experts in soils analysis. We assume that the subject's soil bearing capacity is sufficient to support a variety of uses, including those permitted by zoning. Streets, Access and Frontage Details pertaining to street access and frontage are provided in the following table. irr Uptown Newport (Phase 1) Land Description and Analysis 39 Streets, Access and Frontage Street Jamboree Rd. Paving Yes Curbs Yes Sidewalks Yes Lanes 2 way, 3 lanes each way Direction of Traffic Northeast -Southwest Condition Average Traffic Levels Moderate Signals/Traffic Control Turn lane Access/Curb Cuts Average Visibility Average Utilities The availability of utilities to the subject is summarized in the following table. Utilities Service Provider Water Irvine Ranch Water District (IRWD) Sewer City of Newport Beach Electricity Southern California Edison Natural Gas Southern California Gas Company Local Phone Various providers Zoning The following table summarizes our understanding and interpretation of the zoning requirements that affect the subject, with a master site plane and detailed discussion to follow. Zoning Summary Zoning Jurisdiction City of Newport Beach Zoning Designation PC-58, Planned Community (Uptown Newport) Description Uptown Newport Planned Community Development Legally Conforming? Appears to be legally conforming Zoning Change Likely? No Permitted Uses Residential with portion of mixed -use irr. Uptown Newport (Phase 1) Land Description and Analysis 40 1 w' w w- n jal RESIDENTIAL Y, TT i, di' ! Lir- E : ! * 9 0 4 A R D ITESILIPMAL RESIDEMIAL (Source: Uptown Newport Planned Community Development Plan 2-14-13, Figure 1-6: Master Site Plan) The following is information provided in the Uptown Newport Planned Community (PC) Development Plan: Land Uses, Development Standards & Procedures, dated February 14, 2013: Purpose The Uptown Newport coordinates and regulates development of the residential, commercial, open space, circulation and other land uses that may be developed within the Uptown Newport site. It also serves as the implementing zoning document for the property and implements the Newport Beach 2006 General Plan and the approved Integrated Conceptual Development Plan (ICDP). The ICDP encourages the development of coordinated, cohesive and environmentally friendly residential and mixed use projects in the Airport Area, designed to create new urban villages with a distinctive sense of place. The Uptown Newport PC provides a framework for converting the existing industrial uses at the project site into a new village within the Airport Area, with a mix of uses, densities and amenities. The proposed land use intensity is compatible with existing and anticipated development planned in the Airport Area. It also permits the existing industrial development as an allowed interim use until the existing TowerJazz lease expires, or until March 2027, whichever occurs first, and ensures an orderly transition to new residential mixed -use village land uses. The Uptown Newport PC allows for the demolition and replacement of 438,127 square feet of existing industrial and office uses allocated to the Uptown Newport site with a residential and mixed -use development. A new street system will be developed to provide appropriate circulation throughout Uptown Newport (Phase 1) Land Description and Analysis 41 the project site for both pedestrians and vehicles, breaking up the project site into multiple development areas. Land Use The Uptown Newport PC is intended to be a multi -family residential community with neighborhood - serving retail uses. Prior to adoption of the Uptown Newport PC, development on the Uptown Newport property has been controlled by the Koll Center PC-15. The Uptown Newport PC replaces the Koll Center PC with respect to the development of the Uptown Newport site. It is recognized, however, that development and absorption of these elements within the Uptown Newport PC may require a span of several years to commence and complete, and that in the interim, industrial and commercial uses of the site will continue. Existing light industrial and office uses will be phased out as development is implemented. Prior to March 12, 2027 existing uses will continue to be allowed pursuant to the Uptown Newport PC and the Newport Beach Municipal Code (NBMC) relating to non -conforming uses and structures. Permitted uses are detailed in the table on the following page, provided by the Uptown Newport Planned Community Development Plan 2-14-13, Table 2-2: Permitted Land Use Regulation Table. irr. Uptown Newport (Phase 1) Land Description and Analysis 42 RESIDENTIAL i41 Mali-Uf.t Dwellings P Maria Occupations P Live -§errs units P Senor Citieen Housrig P CARE USE# A drR Day Care: Sims [B re fewer. in hornet P Child Day Cane: Small {9 or fewer, is hours) P Day Care, General'commercial) CUP {31 Cargregele Care Home CUP Convalescent Fadlitiy CUP 11:6fAA USES 1111 fJwhol Safes {off -sale) Alcohol Sates I off -sale I Amessary Only AnlIquee LlUP UUP Mum small 9akuln P P Ellodes P Eaaks P Eloutigr.F Shops P Clothing and acaessuifs Can ecn atnel ehologr+pYo Urlaglies Cenveraenee murksrslstores.iaod and be.erages P P P Handcrafted deals P Jewelry P Luggage and leather goads P Musical ins[nmenrs, pads and accessories P Office suppin P Pharmacies P Real estate information center P Shoe sloras P Sporting goads and egaprrnent rotiacao P P rays and Armes P SERVICE U3E5 • BUM SS, FINANCIAL- NIECHICAL AND PROFESSIONAL (II ATM' Pinar ilil Instllutiahs end kelaaed Sery+ors P Meal • Madeal And Mnlil Uptown Newport (Phase 1) SERVICE USE II -GENERAL {1I Animal Graarr ngNeternaay Seruiass fad Marring) Artists Studios P Eating and DrirdUrrg EsLai haler c Aczessory hood sundae {ripen fo pubic F Fast Food (no We hatissl Fast Food {with late -Mum) Food Service Igo late hours) Foal Service myth lace hcers) iake-01AService, Lotted P12} SUP F2) P kIUP 17j P Health Feness Facilities Sall - LDOD sq. ix. OF less Large - Over 2.000 sq. A. P Medical Rata&U $pnsoes EQdr scanning (Dental enhancement treatments Eye exam ereglassicwrtect lens sales SkIn Irealnknts Priori Services Clotlreq Rand Shops pry Cleaners - Agent Only Kew Salons,. &arbre $hops 1-Lorne electrontes and small accoan a repair Leck.n Itr.s Massage Esiablishrrents Manage Essabhhreenb. Acwasary Nai Salons,' Stoney Shops Scars tailors and seamstresses Tahnleg seder,' Travel agenciesrsenrioes PQsral Seryrces P P P F P P F P P MUP MUP P P P P pdnung and Dtlpllcamg Seiceices TRANSPORTATK» . COMMUNICATIONS APIt1INFRA STRUCTURE USES —'IIIIIes k.11nar P Wireless "eleronviwnicatkm Facilities OTIERUSES Accessory Simkins and Uses Iierinnil PrapMy Silas temporary Uen P Ltp LEND P= Permitted Icy -Right CUP. Cared done l Use Permit MUP= Minor Use Perrot LTP= Limited Term Pernik — Not Al lowed (1] US n permit'ed on the hut Floor only. (2) Late hours- FacIlitleswlth Late hours shall mean facilities that cafe r service and are open to the public after 11730 pm. any day of the meek. A Minor Use Perrnit shall be requhied for am/ use that rn Intains late hours. b} Chllld day care that principally serves our site residential uses shall not becounted agalnst the 1 i,500 squaw feet of allowable camrrterclak space. (4] Includes affordable housing In accordance with the Uptown Newport affordable housing Implementation plan. Noter Lard uses that are not listed In tine table above, or are not shown are not allowed, emcept as nthervbse provided by NEVC {hires of Interpretation]. LF such uses are Aoxssory Uses to a Resldantlal Devetaprner[t, such uses shakl rot be counted against the 11,51:1C sf, of allowable commercial Land Description and Analysis 43 Parking Requirements Parking within the Uptown Newport PC shall be provided along internal streets and within structured parking that is integrated with residential and retail buildings. On -street parallel and diagonal parking for visitors, public parks and short-term resident parking shall be provided along internal streets. Structured parking shall be provided for residential and retail uses, and may consist of subterranean or above -grade parking structures. Above -grade parking structures shall be encapsulated or lined with residential units or retail space. Parking requirements are summarized below. LAND USE PARKING REQUIREMENT Residential Studio: 1.1 spaces per dwelling unit (Rental) 1 Bedroom: 1.5 spaces per dwelling unit 2 Bedroom: 1.8 spaces per dwelling unit 3 Bedroom: 2.0 spaces per dwelling unit Visitor Parking: 0.3 spaces per dwelling unit Residential Studio: 1.4 spaces per dwelling unit (Ownership) 1 Bedroom: 1.8 spaces per dwelling unit 2 Bedroom: 1.8 spaces per dwelling unit 3 Bedroom: 2.0 spaces per dwelling unit Visitor Parking: 0.3 spaces per dwelling unit Senior Housing 1 per unit Affordable Housing 0-1 Bedroom: 1.0 spaces per dwelling unit 2+ Bedroom: 2.0 spaces per dwelling unit (Inclusive of handicap and guest parking) Refer to Newport Beach Municipal Code for all uses not listed above. (Source: Uptown Newport Planned Community Development Plan 2-14-13, Table 3-1: Uptown Newport Parking Requirements) According to the local planning department, there are no pending or prospective zoning changes. It appears that the property conforms with zoning requirements. We are not experts in the interpretation of zoning ordinances. An appropriately qualified land use attorney should be engaged if a determination of compliance is required. Entitlements The property appraised herein is entitled for 158 condominium units and 3,000 square feet of commercial space. Other Land Use Regulations We are not aware of any other land use regulations that would affect the property. Easements, Encroachments and Restrictions We were not provided a current title report to review. We are not aware of any easements, encroachments, or restrictions that would adversely affect value. Our valuation assumes no adverse impacts from easements, encroachments, or restrictions, and further assumes that the subject has clear and marketable title. irr. Uptown Newport (Phase 1) Land Description and Analysis 44 Off -Site Improvements Based on the appraiser's inspection and existing construction underway (not a part of the subject), as well as development costs provided by the Developer, a significant amount of the required infrastructure improvements servicing the appraised property has been complete. The valuation herein assumes all public capital facilities and improvements to be financed by the CFD Special Tax have been completed (i.e., undergrounding of overhead utilities and a City park). Based on information provided, the undergrounding of the utilities costs approximately $3,250,000 and the park $3,305,000. Additionally, the Developer's cost budget indicates $2,000,000 remain in off -site improvements. Based on anticipated Bond proceeds of $7,357,770, and $6,555,000 in proceeds amount to $802,770 ($7,357,770 - $6,555,000), which will off -set the $2,000,000 in remaining off -site improvement costs of $1,197,230 and is applied in the first period of the cash flow model. On -Site Development Costs According to the Developer's cost budget, site development costs total $11,817,126, inclusive of on - site development costs and development impact fees, as summarized below: On -Site Development Costs Developer Impact Fees Developer Impact Fees (Retail) Total Site Development Costs $ 1,000,000 $ 10,744,172 $ 72,954 $ 11,817,126 Permits and Fees Based on information provided by the Developer, permits and fees due at building permit total $790,000 for the residential component, or approximately $5,000 per residential unit. Timeline According to information provided, vertical construction is anticipated to begin December 2019 with the first condominium sales closing in December 2021. Vertical construction and sale of the commercial condominium unit is anticipated for the same time frame (construction in December 2019, sale in December 2021). Conclusion of Site Analysis Overall, the subject property is functional in terms of its size, topography, shape and overall location within the market area. There appear to be no unusual or restrictive physical limitations of the properties. The subject property is considered physically suitable for development. With an appropriate marketing campaign, the Uptown Newport project should be competitive with other planned communities in the city of Newport Beach and throughout the Orange County region. irr. Uptown Newport (Phase 1) Land Description and Analysis 45 frinag. a tternc • irr Uptown Newport (Phase 1) Land Description and Analysis 46 Uptown Newport (Phase 1) Land Description and Analysis 47 Parcel Map M LOr B .pC13 27 0.011 AC. LOT C 29 0. 03, AC. LOT D THIS MAP wes PaEPARED FOR ORANGE COUN IY d5SE650F 0£P T. UARANTE ONLY. SfOR MAFEf NO GUARANTEE As i0 O!CLEF!LY NOP l66Is !NY LrdSILITY FOR OTHER USES. NOi 0 B£ REPPOOUCEO. LL Za RESEPVfO. 0 COPYRIGHT DRANC£ COUNTY ASSESSOR 1016 24 n LOT Al 28 r305 AC. 0.01z � Ac. TRACT LOT r 583 aL. 0.030 AC. 0p030 C.e PARK STORM DRAIN 133 LOT P 20 .� Op195 e 41 L. 2 0. 0.706 2t AC. x NEWPORT0 ,0T 0 0.Bv (qAC. TORN DRAIN POP PlRR PUPP06E5. 'H OUCH k ARE S. LANOSCAP£ NI FOP UTIL PURPOSES. LANDSCAPE NANCE PURPOSES. 1.400 AO. LOT O 0.030 LOI 4 1.431 AC. LOTH 14 O.539 AC. LOT 0.09E AC. 1" = 100' NO. 17763 2 6.7 A o. o1e ac. 13 S r.0 445-1 34 PAGE 3 OF 3 13 JANUARY 2016 C. O00. O000B C. JAMBOREE 0.00 0.032 ROAD TRACT NO. 17763 M.M. 937-17 to 23 inol. 07 NOTE - ASSESSOR'S BLOCK 8 PARCEL NUMBERS SHOWN IN CIRCLES ASSESSOR'S MAP BOOK 445 PAGE 134 COUNTY OF ORANGE PRIVATE JrREET Uptown Newport (Phase 1) Land Description and Analysis 48 Real Estate Taxes [The property tax system in California was amended in 1978 by Article XIII to the State Constitution commonly referred to as Proposition 13. It provides for a limitation on property taxes and for a procedure to establish the current taxable value of real property by reference to a base year value, which is then modified annually to reflect inflation (if any). Annual increases cannot exceed 2% per year. The base year was set at 1975-76 or any year thereafter in which the property is substantially improved or changes ownership. When either of these two conditions occurs, the property is to be reappraised at market value, which becomes the new base year assessed value. Proposition 13 also limits the maximum tax rate to 1% of the value of the property, exclusive of bonds and direct charges. Bonded indebtedness approved prior to 1978, and any bonds subsequently approved by a two-thirds vote of the district in which the property is located, can be added to the 1% tax rate. Real estate taxes and assessments for the current tax year are shown in the following table. Taxes and Assessments - 2018-2019 Assessed Value Taxes and Assessments Ad Valorem Tax ID Land Improvements Total Tax Rate Taxes Direct Assessments Total 445-134-17 (Lot 1) $12,255,909 $0 $12,255,909 1.117650% $136,978 $147 $137,125 445-134-29 (Lot 2) $1,721,636 $0 $1,721,636 1.117650% $19,242 $20 $19,262 445-134-22 (Remainder) $0 $0 $0 1.117650% $0 $0 $0 $13,977,545 $0 $13,977,545 $156,220 $167 $156,387 According to the Orange County Treasurer —Tax Collector, the appraised properties are located in Tax Rate Area 07-088, which is subject to a tax rate of 1.11765%. Additional, upon completion of construction, annual direct charges of approximately $60 per unit is also considered in the analysis herein, based on similar projects in the market area. The existing ad valorem taxes are of nominal consequence in this appraisal, primarily due to the fact these taxes will be adjusted substantially as the remaining infrastructure and property improvements are completed and in consideration of the definition of market value employed in this appraisal, which assumes a sale of the appraised property. As referenced, the appraised properties are located within the boundaries of California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) Number 2018-03 (Uptown Newport). According to the Special Tax Bonding Analysis — Projected Debt Service Schedule and Debt Service Coverage provided, the annual special taxes applicable to the subject's facilities are as presented in the table on the next page. irr. Uptown Newport (Phase 1) Land Description and Analysis 49 Assigned special Taxes (2019-20) Land Use & Special Tax Class Class 1- Phase I Condominiums Class 2 - Phase II Condominiums No. of Units 158 314 Assigned Tax $771 $979 Class 3 - Phase II Apartments 314 1284 Total Tax Levy $121,818 $307,406 $89,176 Total Residential 786 Class 4 - Phase I - Non -Res_ Class 5 - Phase II - Non -Res. Total Non -Residential 9,750 sq_ ft. 1,75D sq_ ft. $060 $518,4.00 $5.35/sq. ft_ $5.35 / sq. ft. 5-35 J sq_ fit $52,153 $9,363 $61,525 Total $579,925 (Source: RBC Capital Markets, Special Tax Bonding Analysis — Projected Debt Service Schedule and Debt Service Coverage) The bond indebtedness and direct levies will be considered in the valuation of the subject property. SHEET 1 OF 1 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 / (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA For prkaars d lens and Ilr rsica, milavner 4 mai b re prcah naps of it cage Cam Arians.' Catena and WREN rat No. 17763 mooned or June I. 2015 a Irarulsu No. 201.50332C061 at Pages 17 elrcl*2! nSalk SW Of MOPm arc, efs Cat/itl RateAu CO Oile41 CO, tt Colannia LEGEND NrrrOr ri 11111111 Proposed Bwdanes of Calder. Samoa Camrmles Devebprnsa re61dp6' Canrrlrpiy F#tlpes Oatrct NP 2015.e) Itlp4rnn Neepero l Cif el Nearpel 6arNn Co -my Of [Mg& tasaerr Parer Lana Tea Zwre 1 T. Zara 1431A.4461 r NM* WO., 11I Filed an the &N a die Serseeuy on Caledonia StatewiUe CommWbea Developnners ✓attuney lira day of 201 B Stu -Nary Cm rfomw Sutee de Com munrees Development Adtrar-. y (2) 1 11ereb/ oerbk OM the w,ren map shnwn4 proposed madame d Calk. e Shrenede ammonites Development Rudnonty Community Facile:N DGahbi Ho. 2018413 Rlxkown Newponl. City erf Neeped Beach County al Orange, Sole of COW.. rrs BPINOVetl sY 1 e Cemmasnn Of me Canaan. 5mtewde Comsnmees Developmes Ratio -My al a regutar meeting thereof. held mthe day ad 2018. try do resduaon No. Secretary, C.Yfoma StOreee Corm unntes Development Aurhonty 131 FMB leB dy01 2016. Nuke hodrd &dock m.,nBook dMops dP.. . r1ridCCM,* F wires Oaakrla d page mld w lend Mo. n rte once Of tea Cards Rernee of Orange County. State el Cdtkxnle. %Pr. Gar► Recorder. CdtontYd piing. By Deputy fee irr Uptown Newport (Phase 1) Highest and Best Use 50 Highest and Best Use Process Before a property can be valued, an opinion of highest and best use must be developed for the subject site, both as vacant, and as improved. By definition, the highest and best use must be: • Legally permissible under the zoning regulations and other restrictions that apply to the site. • Physically possible. • Financially feasible. • Maximally productive, i.e., capable of producing the highest value from among the permissible, possible, and financially feasible uses. Highest and Best Use As Vacant Legally Permissible The site is zoned PC-58, Planned Community (Uptown Newport), Uptown Newport Planned Community Development. Permitted uses include residential with portion of mixed -use. To our knowledge, there are no legal restrictions such as easements or deed restrictions that would effectively limit the use of the property. Additionally, the subject is entitled for 158 condominium units and 3,000 square feet of commercial space. The subject property, as proposed, represents a planned community that has undergone extensive planning and review. Based on the difficulties in obtaining the subject's existing approvals, it is doubtful any significant project changes would be allowed and only mixed -use (residential with commercial) is given further consideration in determining the highest and best use of the site as vacant. Physically Possible The physical and locational characteristics of the properties have been previously described in this report. In summary, the physical characteristics of the site, terrain and soils are suitable for the proposed uses. Location considerations include the compatibility of the subject's proposed use(s) and location with respect to surrounding uses. As indicated previously, the subject represents a planned community, which has undergone extensive planning and review. The proposed development has been carefully designed to include an appropriate mix of land uses that are compatible with adjacent uses and uses throughout the planned community. The physical characteristics of the site do not appear to impose any unusual restrictions on development. Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses. Financially Feasible The feasibility of the allowable uses is dependent on the supply and demand conditions, which could influence the competitive position of each proposed type of property use comprising the subject, including residential and commercial development. The subject property is located in an area that has Uptown Newport (Phase 1) Highest and Best Use 51 experienced modest population growth in recent years, with the little population growth a direct result of the limited supply of developable land. As noted in the Residential Market Analysis and Retail Market Analysis sections, the subject's Newport Beach location coupled with the limited supply of land and the upper income level associated with the potential buyer pool, sales of residential and commercial units in the area remain relatively strong. As shown later in this report by the land residual analysis, where the subject's condominium units and remaining site development costs are deducted from current prices, the subject's land value is significantly positive (reflecting its as vacant condition), which demonstrates that mixed -use development as proposed (residential and commercial) is financially feasible. Further, buyers are actively buying homes and builders are actively buying land, reflecting ample demand. Based on the preceding discussion, it appears development consistent with the entitlements approved for Phase 1 of the Uptown Newport Project is financially feasible. It is expected the subject property will be competitive with the other regional redevelopments similar to the subject that have been well received by the market, including currently active Rockefeller project by Lennar, as well as the older, but adjacent projects The Plaza and Marquee Park Place. The subject property's location proximate to transportation routes should bode well for the subject property's various land use components. Maximally Productive Legal, physical and market conditions have been analyzed to evaluate the highest and best use of the subject property. The analysis is presented to evaluate the type of use(s) that will generate the greatest level of future benefits possible to the property. Based on the zoning and entitlements approved for the subject property, a mix of residential and commercial development, are the only land uses that would generate the highest residual land value. Accordingly, it is our opinion that mixed -use (residential with commercial), developed as proposed, is the maximally productive use of the property. Conclusion Development of the site for mixed -use (residential with commercial) is the only use that meets the four tests of highest and best use. Therefore, it is concluded to be the highest and best use of the property as vacant. As Improved As is demonstrated in the valuation section presented later in this report, there is sufficient profit associated with the proposed improvements, suggesting the highest and best use as proposed is the development of the mixed -use project commensurate with the development agreement for the Uptown Newport Project. Most Probable Buyer The definition of market value is based on the components of the subject selling in a single, bulk transaction. The most probable buyer of the subject is a land developer familiar with the regional market area. irr. Uptown Newport (Phase 1) Valuation Methodology 52 Valuation Valuation Methodology Appraisers usually consider three approaches to estimating the market value of real property. These are the cost approach, sales comparison approach and the income capitalization approach. The cost approach assumes that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility. This approach is particularly applicable when the improvements being appraised are relatively new and represent the highest and best use of the land or when the property has unique or specialized improvements for which there is little or no sales data from comparable properties. The sales comparison approach assumes that an informed purchaser would pay no more for a property than the cost of acquiring another existing property with the same utility. This approach is especially appropriate when an active market provides sufficient reliable data. The sales comparison approach is less reliable in an inactive market or when estimating the value of properties for which no directly comparable sales data is available. The sales comparison approach is often relied upon for owner -user properties. The income capitalization approach reflects the market's perception of a relationship between a property's potential income and its market value. This approach converts the anticipated net income from ownership of a property into a value indication through capitalization. The primary methods are direct capitalization and discounted cash flow analysis, with one or both methods applied, as appropriate. This approach is widely used in appraising income -producing properties. Additional analyses often undertaken in the valuation of subdivisions include extraction, land residual analysis, and the subdivision development method. Reconciliation of the various indications into a conclusion of value is based on an evaluation of the quantity and quality of available data in each approach and the applicability of each approach to the property type. The methodology employed in this assignment is summarized as follows: Approaches to Value Approach Applicabiliy to Subject Use in Assignment Cost Approach Applicable Utilized Sales Comparison Approach Applicable Utilized Income Capitalization Approach Applicable Utilized We have been requested to estimate the market value of the fee simple estate of the appraised property, in bulk, comprising the California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) No. 2018-03 (Uptown Newport), subject to the hypothetical irr. Uptown Newport (Phase 1) Valuation Methodology 53 condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. In order to estimate the market value of the subject property, two approaches to value were utilized: the sales comparison approach and the land residual analysis, which is a form of discounted cash flow analysis. In the land residual analysis, the revenue component of the DCF will be based on the probable market value for the average, proposed residential condominium units and the concluded market value of the commercial condominium unit. A number of assumptions were made in the discounted cash flow analysis, not the least of which was the forecast of absorption, or disposition, of the condominium units comprising the subject property. Any properties within CFD No. 2018-03 Phase 1 not subject to the Lien of the Special Tax securing the Bonds (for -rent multi -family, public and quasi -public land use sites) are not a part of this appraisal. Uptown Newport (Phase 1) Land Residual Analysis 54 Land Residual Analysis The land residual analysis is used in estimating land value when subdivision and development are the highest and best use of the land being appraised. All direct and indirect costs are deducted from an estimate of the anticipated gross sales price of the improved product; the resultant net sales proceeds are then discounted to present value at an anticipated rate over the development and absorption period to indicate the value of the land. The land residual analysis is conducted on a semi-annual (six month) basis. As a discounted cash flow analysis, the land residual analysis consists of four primary components summarized as follows: Revenue — the total gross income derived from the disposition of the subject's land components. Absorption Analysis — the time frame required to sell-off the components. Of primary importance in this analysis is the allocation of the revenue over the absorption period — including the estimation of an appreciation factor (if any). Expenses — the expenses associated with the sell-off of the components are calculated in this section — including administration, marketing, expenses, remaining development costs, commission costs and property taxes. Discount Rate — the appropriate discount rate is derived by employing a variety of data. Discussions of these four concepts begin below, with the discounted cash flow analysis offered at the end of this section. Revenue The individual component valuations of the subject property comprise the revenue of the discounted cash flow analysis. Specifically, the subject property represents the taxable portion of the proposed California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) for the Uptown Newport project, which consists of 158 condominium units and a 3,000 square foot retail condominium unit. For purposes of comparison, an average residential unit size of 1,671 square feet will form the basis of the residential land use component. Analysis from the Residential Market Analysis section determined a sale price (total consideration) of $1,650,000, or approximately $987 per square foot, is supported and consistent with current market conditions. In addition, a residential unit premium and upgrade factor of 10% of the sale price is considered reasonable and utilized in this analysis, as well as a 35% model recapture rate which will be discussed in greater detail in the expense section of this approach to value. The sales comparison approach is utilized to estimate the market value of a subject's commercial component. The subject consists of one commercial condominium unit containing 3,000 square feet. On the following pages, we will present and analyze several comparable properties. We will begin by presenting a summary tabulation and location map, followed by a discussion of necessary adjustments, and our conclusion of market value via this approach. These sales are the most recent irr. Uptown Newport (Phase 1) Land Residual Analysis 55 transactions considered reasonably similar to the subject property. This analysis is conducted on a per square foot of rentable area. Improved Commercial sales Summary Grantor Sale Sale Rentable Year Price No. Location Grantee Date Price Area {5f} Built per SI 1 133 The Prominade N. Unit 106 Emerita Garravillas Aug-18 5775,000 2,271 2006 5341.26 Long Beach, Los Angeles County California Holiday Investments. LLC APN: 7280-027-021 Comments: This mmpomble represent the sale of o single tenant, ground floor retail condominium unit looted in the downtown care of tong Beech. Prohibited uses within the space include: medico!/dental office, veterinarian/kennel/animal care facility, tattoo or body piercing service, fortuneteller, banquet facility, adult business, recycling renter, trade or private school religious institution, cafeteria, gymnasium or hearth club, any liquor store of business serving alcohol, end any use or operation which is obnoxious to °rout of harmony with the development or operation of a residentiol/retort project 2 2240 Newport Boulevard. Unit 104 NPBeach Marina LLC Jun-18 51.427,00D 1,057 2017 $1,350.05 Newport Beach, Orange County Berk Properties LLC APN:047.120.33 Comments: This is the sole of on office condominium unit within the VUE Newport mixed -use development offering high -end residential, specialty, retail and eateries. This project is located an the Newport Harbor waterfront 3 727 N. Douglas Street, Unit 7276 Pettus Q tlenekos Dec-17 52,132,000 2,870 2015 5798.50 El Segundo. Los Angeles County Stephanie Lee APN: 4138.031-050 Comments: This condominium unit is improved as a restaurant space located in a Class A creative office campus, Elevon. On the overage day Erevan is projected to hove 600 employees, and abuts another project with 500 employees. The immediate area has limited retail services to support the growing office population. The immediate area is also served by multiple newly developed hotels. 4 139 Hermosa Avenue, Unit 1C Jeffrey 5 & Mercedes C Smith Jun-16 51,310,000 1,2012 2008 $1,091.67 Hermosa Beach, Los Angeles County 139 Hermosa Ave LLC APN: 4183.003-041 Comments: This office condominium unit offers two bathrooms, five parking spaces, expo stroage, an integrates sound and secuirty system, kitchenette and dual zoning heatng and air conditioning system. it is located within less and a block to the beach. Pat Killen designed this two-story office/loft spore, which has been featured in architectural mogazines. 5 2230 Newport Boulevard, Unit 101 NPBeach Marina LLC Listing S1,358,455 1,049 2017 $1,295.00 Newport Beach, Orange County N/Av APN- N/Av Comments: This is a first floor waterfront condominium unit available for sale within the VUE Newport mixed -use development offering high -end residential specialty, retail and eateries. It has been actively marketed for about seven months. In total the VLIE offers II retail/office condominium units within seven buildings. Uptown Newport (Phase 1) 10. Adjustment Factors 56 Comparable Land Sales Map Marina Ladeia Heights I]el Rey Los Angeles International Airport Inglewood O v,ELP huntingtan Park South Gate ▪ Lynwood E!segundo Hawthorne Willowbrook Manhanan Beach _1 Redondo Beach Torrance Car▪ s▪ on Wear Cursor Gardena Ro91np Lomita Hmaealataa r,l ,n Rolling HIIIa Rancho Gales Verdes Subject Property 9 Comparable 1 9 Comparables 2 d 5 9 Comparable 3 9 Comparable Buena Park Lakewood Cerrhtos FET Signal Hill L nggeach Cypress Los Alairdros Stanton O D Seal Beach Go gleMyMaps Garden Grove Westminster Midway City Fountain C Huntington Beach Valley Fullerton Anaheim F.S.11e SCout Reservation Placentia Chino HIIIS 5/ropy Hallow Chino Hills State Park Yorba Linda Q "or Ewe stair" C)r.enr Villa Park P°kD res rr-, r, Orange El Modena lac North Tonga Santiogo Canyon Santa Ana Tustin Costa Mesa Ne n Be h ZIt e Irvine Crystal Co. State Park rQ' Slluereda Limestone Canyon Repronal Perk Whiling Ranch Wilderness Park Lake Forest Rancho Murg� 0 woods Q Laguna Beach Mission Viejo Aksa V. 10 Laguna Nlgual Oliarrandli L adera Ranch Cots Rancho Mission Vlep Wir O San Juan Capistrano irr. Uptown Newport (Phase 1) Adjustment Factors 57 Adjustment Factors The sales are compared to the subject and adjusted to account for material differences that affect value. Adjustments are considered for the following factors, in the sequence shown below. Adjustment Factors Present Value of Bonds Property Rights Conveyed Financing Terms Sale Conditions Market Conditions Location Access/Exposure Size Building Quality Age/Condition Bond debt has a direct impact on the amount for which the end product will sell. In an effort to account for the impact of bond indebtedness on the sales price, we establish a present value amount for the bond encumbrance based on the annual assessment to reflect the total consideration with each transaction. Leased fee, fee simple, leasehold, partial interest, etc. Seller financing, or assumption of existing financing, at non -market terms. Extraordinary motivation of buyer or seller, such as 1031 exchange transaction, assemblage, or forced sale, as well as applicable adjustments for non -stabilized occupancy, above/below market rents, and other economic factors. Excludes differences in rent levels that are already considered in previous adjustments, such as for location or quality. Changes in the economic environment over time that affect the appreciation and depreciation of real estate. Market or submarket area influences on sale price; surrounding land use influences. Convenience to transportation facilities; ease of site access; visibility from main thoroughfares; traffic counts. Inverse relationship that often exists between building size and unit value. Construction quality, amenities, market appeal, functional utility. Effective age; physical condition. irr. Uptown Newport (Phase 1) Adjustment Factors 58 Sales Adjustment Grid - Commercial Condominium Site Characteristics: Subject Comparable Comparable 2 Comparable 3 Comparable 4 Comparable 5 Sale Price per SF $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Bond Encumbrance (Present Value) per SF $0.00 $0.00 $0.00 $0.00 $0.00 Adjusted Price per SF $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Elements of Comparison Property Rights Conveyed Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Adjustment Adjusted Price $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Financing Terms Cash Equiv. Similar Similar Similar Similar Similar Adjustment Adjusted Price $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Sale Conditions Market Market Market Market Market Listing Adjustment Adjusted Price $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Market Conditions Dec-18 Aug-18 Jun-18 Dec-17 Jun-16 Dec-18 Adjustment (Appraisal) Adjusted Price $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Physical Characteristics Location Newport Beach Long Beach Newport Beach El Segundo Hermosa Beach Newport Beach Adjustment Access/Exposure Average Similar Similar Similar Similar Similar Adjustment Rentable Area (SF) 3,000 2,271 1,057 2,670 1,200 1,049 Adjustment Building Quality Good Similar Similar Superor Similar Similar Adjustment .I, .I, Age/Condtion New/Excel. Inferior Similar SI. Inferior Inferior Similar Adjustment TT T TT Net Adjustment Adjusted Price per SF Sig. Upward Downward Upward SI. Upward 51. Downward > $341.26 < $1,350.05 > $798.50 > $1,091.67 < $1,295.00 Given the analysis in the table above and on the preceding pages, a ranking analysis of the subject's commercial condominium unit and the comparable sales is presented below: Improved Commercial Ranking Summary Property Sale Date Price per SF Net Adjustment Comparable2 Jun-18 $1,350.05 Downward Comparable 5 Dec-18 $1,295.00 SI. Downward Subject -- $1,200.00 Comparable4 Jun-16 $1,091.67 SI. Upward Comparable 3 Dec-17 $798.50 Upward Comparable 1 Aug-18 $341.26 Sig. Upward Considering current market conditions and specifics of the subject, an improved market value of $1,200 per square foot is considered reasonable. Applying this unit indicator to the subject's commercial condominium unit results in the following estimate of value via the sales comparison approach: 3,000 square feet x $1,200 per square foot = $3,600,000 irr. Uptown Newport (Phase 1) Adjustment Factors 59 Closing Projections According to the construction schedule provided, and the typical time required for the construction of attached units , it is estimated to take approximately 24 months from start to compete construction and begin sales. It is assumed that closings will occur in the same period as the sales. Changes in Market Conditions (Price Increases or Decreases) Based on market surveys, responses are mixed whether market participants trend revenues and expenses. Generally market participants prefer not to price trend, but sometimes they will trend when trying to justify a sale price when there is strong competition for land. Or, participants have indicated they may trend if the sell-off period is anticipated to be protracted. However, under current market conditions, there is likelihood of some home price appreciation during the sell-off period. We estimate a level appreciation factor of 2.00% per year (1.00% semi-annually) for the subject's sell-off. Absorption Considering our discussion in the Residential Market Analysis section, and for purposes of this analysis, it is estimated the subject can achieve an absorption rate of 4.0 sales per month (24.0 sales semi- annually, or every six months). This estimate is consistent with the average monthly absorption rates observed by similar active residential projects in the immediate market area. With sales beginning in Period 5, the subject's units sell out in seven periods. Expenses Projections As part of an ongoing effort to assemble market information, the table on the next page reflects survey responses and developer budget information for numerous attached single-family residential projects throughout the California region. Attached Residential Budgets Developer Classification RegionaI RegtonaI LOCaI RegionaI Regional National Mrnl7Mlm Maximum Average Budget Date 2018 2018 2018 2018 2017 2015 No. of Unit 63 60 34 29 28 72 Quality Good Good Excellent Good Average/Good Excellent 28 Average/Good 72 Excellent 47.667 Good Avg. Unit Size ]SF] 2,096 2,026 1,133 1,364 2,000 1,079 1.079 2,096 1,616 G&A%of Revenue 1.1% 1.1% N/Av 2.1% 1.2% N/Av I.I% 2.I`% 1.4% Mkt & Sales % of Revenue 1.68% 1.68% NIAv 1.0% 2.6% NIAv 2.696 1.7% Cost per Model 5365,333 5365,333 N/Av 5204,500 581,074 NIAv $81.074 $365.333 5254.060 Site CostsfUnit 580.658 580, 058 552,675 590,074 560,000 NIAv 552,675 590,074 572,573 Permits & Fees/Unit 542,602 541,624 526.034 549,244 543,714 NIAv Direct Costs/SF 5157.69 5157.79 5381.77 S111.92 $89.27 Sass.00 $26,034 $89.27 S381.77 540,044 5179.69 $49, 244 Indirect % of Direct Costs 996 9% 11% 9% 17% WAN 9% 1796 11% Profit % of Revenue IRR 12.5% 20.18% 12.5% 20.18% NIAv N/Av 23.0% NIAv 21.6% NIAv NIAv NIAv 12.5% 20.18% 23.0% 20.18% 17.4% 20.1896 General and Administrative These expenses consist of management fees, liability and fire insurance, inspection fees, appraisal fees, legal and accounting fees and copying or publication costs. This expense category typically ranges from 2.0% to 4.0%, depending on length of project and if all of the categories are included in a builder's budget. We have used 3.0% for general and administrative expenses. This expense category is spread evenly over the entire sellout period. irr. Uptown Newport (Phase 1) Adjustment Factors 60 Marketing and Sales These expenses typically consist of advertising and promotion, closing costs, sales operations, and sales commissions. The expenses are expressed as a percentage of the gross sales revenue. The range of marketing and sales expenses typically found in projects within the subject's market area is 5.0% to 6.5%. A figure of 6.0%, or 3.0% for marketing and 3.0% for sales, is estimated in the marketing and sales expense category. Property Taxes (Ad Valorem and Special Taxes) The subject is located within an area with an effective tax rate of 1.11765%. This amount is applied to the estimated market values and divided by the total number of units to yield an estimate of ad valorem taxes/unit/year. The tax amounts are applied to unclosed inventory over the sell-off period. Property taxes are increased by 2% per year. Direct levies are estimated at $60 per unit per year and are also considered in this analysis. Additionally, as referenced, the appraised properties are located within the boundaries of California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) Number 2018-03 (Uptown Newport). According to the Special Tax Bonding Analysis — Projected Debt Service Schedule and Debt Service Coverage provided, the annual special taxes applicable to the subject's facilities are as presented in the table below. Assigned Special Taxes .r2O19-20? Land Use & Special Tax Class No. of Units Class 1- Phase I Condominiums Class 2 - Phase 11 Condominiums Class 3 - Phase II Apartments 158 314 314 Assigned Tax $771 $979 $284 Total Tax Levy $121.818 $307.40.6 89.176 Total Residential Class 4 - Phase I - Non -Res. Class 5 - Phase II - Nan -Res. Total Non -Residential 786 9,750 sq_ ft. 1,750 sq_ ft. $660 $5.35 / sd. ft. $5.35 / sq. ft. $5.35 / sq. ft. 518,400 $5 2.163 $9,363 $61,525 Total $579,925 (Source: RBC Capital Markets, Special Tax Bonding Analysis — Projected Debt Service Schedule and Debt Service Coverage) The total tax expense is gradually reduced over the absorption period, as the land components are sold off. Homeowner's Association Fee Allocations for HOA fees of approximately $325 per unit per month is applicable to this valuation. The total HOA expense is assumed to be incurred once construction is complete, and is reduced over the absorption period, as units are transferred to homebuyers. irr. Uptown Newport (Phase 1) Adjustment Factors 61 Model Costs Model upgrade expenses can vary widely depending upon construction quality, targeted market and anticipated length of time on the market. These upgrades, exterior and interior, including furniture, can range from $20,000 per model to over $250,000 per model for executive homes. Based on the quality of the subject's proposed improvements and the targeted buyer segment, a model upgrade cost of $150,000 is considered reasonable for the subject's units. Of this amount approximately 35% will be recaptured with the sale of the models reflecting a model recapture of $157,500. Model costs will be applied in the fourth period, at the end of the vertical construction period. Off -Site Improvement Costs Based on the appraiser's inspection and existing construction underway (not a part of the subject), as well as development costs provided by the Developer, a significant amount of the required infrastructure improvements servicing the appraised property has been complete. The valuation herein assumes all public capital facilities and improvements to be financed by the CFD Special Tax have been completed (i.e., undergrounding of overhead utilities and a City park). Based on information provided, the undergrounding of the utilities costs approximately $3,250,000 and the park $3,305,000. Additionally, the Developer's cost budget indicates $2,000,000 remain in off -site improvements. Based on anticipated Bond proceeds of $7,357,770, and $6,555,000 in proceeds amount to $802,770 ($7,357,770 - $6,555,000), which will off -set the $2,000,000 in remaining off -site improvement costs of $1,197,230 and is applied in the first period of the cash flow model. On -Site Development Costs According to the Developer's cost budget, site development costs total $11,817,126, inclusive of on - site development costs and development impact fees, as summarized below: On -Site Development Costs Developer Impact Fees Developer Impact Fees (Retail) Total Site Development Costs $ 1,000,000 $ 10,744,172 $ 72,954 $ 11,817,126 These costs will be incurred as the units are being constructed and are allocated evenly over the first four periods. Permits and Fees Based on information provided by the Developer, permits and fees due at building permit total $790,000. These costs will be incurred as the units are being constructed and are allocated evenly over the first five periods. Direct and Indirect Construction Costs Construction costs are generally classified into direct and indirect costs. Direct costs reflect the cost of labor and materials to build the project. Direct costs generally are lower per square foot for larger floor plans, all else being equal, due to economies of scale. Indirect items are the carrying costs and Uptown Newport (Phase 1) Adjustment Factors 62 fees incurred in developing the project and during the construction cycle. Construction quality and market -segment are significant factors that affect direct construction costs. In addition, national/public builders, which are able to achieve lower costs due to the larger scale in which orders are placed, routinely achieve lower direct costs. According to information provided by the Developer, estimated direct construction costs for the subject are as follows: Residential Condominium Units Direct Construction Costs $ 116,431,938 Upgrade Costs $ 17,349,943 Subtotal $ 133,781,881 ($506.72 per SF) Commercial Condominium Direct Constriction Costs $ 1,302,354 Subtotal $ 1,302,354 ($434.12 per SF) Total Direct Construction Costs $135,084,235 Considering the presumed quality of the subject property, direct construction costs of $500 per square foot of residential unit and $435 per square foot of commercial unit are considered reasonable. Under current market conditions, we estimate a level appreciation factor for direct construction costs of 1.00% per year (0.50% semi-annually) for the subject's sell-off. Regarding indirect costs, the following list itemizes some of the typical components that generally comprise indirect costs: • Architectural and engineering fees for plans, plan checks, surveys and environmental studies • Appraisal, consulting, accounting and legal fees • The cost of carrying the investment in land and contract payments during construction. If the property is financed, the points, fees or service charges and interest on construction loans are considered • All-risk insurance • The cost of carrying the investment in the property after construction is complete, but before sell -out is achieved • Developer fee earned by the project coordinator • Interest reserve Conversations with developers indicate the indirect costs generally range anywhere from 10% to 15% of the direct costs (excluding marketing, sales, general and administrative expenses, taxes, which are accounted for separately). An estimate of 15% is considered reasonable for the subject. Uptown Newport (Phase 1) Adjustment Factors 63 Summary The following chars summarizes the revenue and expenses discussed on the preceding pages. Revenue And Expense Summary Revenue Residential Unit Sire {SF) 1.671 Sale Price (Total Consideration) $1.650.000 Number of Residential Units 158 Res Idential Revenue 5260.700,000 Commercial Unit Size (SF) 3,000 Sale Price (Total Consideration) 53.600.000 Number of Commercial Units 1 Commercial Revenue $3,600,000 Unit Revenue (Belpre Appreciation}: Unit Revenue (After Appreciation): Unit Revenue (Per Unit • from Cash Hpw): Residential Unit Premiums and Upgrades Model Recapture (r# 35% of cast) Lot Premium and Model Recapture Revenue: Expenses Non -Appreciated Expenses General and Administrative Marketing and Sales Ad Valorem Real Estate Taxes 0 i rect Rea! Estate Tax Charges CSCOACFD No. 2018-03 Presidential Units Commercial Unit HOA Model Costs OH -Site improvement Casts On -Site Development Casts Permits and fees Subtotal: $264,300,000 5280,951,135 $1.766,359 526.070.000 3157.500 $26,227,500 $165,000 (per rest detnial unit) 5165,997 {per residetnial unit) Total Revenue (Aker ApprediUon): 5307,078,635 51,931,312 {per unit) $771 /unit/year 55.35 /SF/year Appreciated Expenses Direct Constructor Casts (8eforr Appeciation) Direct Constructor Casts (After Appreciation) Indirect Constructon Costs (Total) Subtotal: ■ 3.0% 6.0% 53,407 $60 $867 Total Over Sell -Off Period of total revenue $9,212,359 el total revenue $18,424,716 /unit/year 51.901,030 (from cash flow) /unit/year 533,473 from cash flow) /unit/year 5470.832 {from cash flow) $325 /unit/month 3 models 15% of Direct CostS 52,117,700 (from cash flow) $450,000 $150,000 (per modell 51,197,230 $7,530 (per unit) $11,617.126 574,322 (per unit) $790 000 $4,969 (per unit) $46.414.474 Residential Units: 5132.009.000 $835,500 (per residential unit) 5500A0 per SF Commercial Unit 51305000 51,305,000 (per commerical unit) 5435.00 per IF 5133,314,000 5134.317.192 5844,762 (per unit) (from cash flow] $20.147,579 $126,714 (per unit) (from cash fiord) $154,464,771 Total Expenses: $200,879,244 Discount Rate The project yield rate is the rate of return on the total un-leveraged investment in a development, including both equity and debt. The leveraged yield rate is the rate of return to the "base" equity position when a portion of the development is financed. The "base" equity position represents the total equity contribution. The developer/builder may have funded all of the equity contribution, or a consortium of investors/builders as in a joint venture may fund it. Most surveys indicate that the threshold project yield requirement is about 20% to 30% for production home type projects. Instances in which project yields may be less than 20% often involve profit participation arrangements in master planned communities where the master developer limits the number of competing tracts. irr. Uptown Newport (Phase 1) Adjustment Factors 64 According to a leading publication within the appraisal industry, the PwC Real Estate Investor Survey', discount rates for land development projects ranged from 10.00% to 20.00%, with an average of 15.40% during the Second Quarter 2018, which is consistent with the Fourth Quarter 2017, the last time the survey was conducted. Without entitlements in place, certain investors will increase the discount rate between 100 and 800 basis points (the average increase is 394 basis points). These rates are free -and -clear of financing, are inclusive of developer's profit, and assume entitlements are in place. The surveyed investors have mixed opinions regarding value trends for the national development land market; their expectations range from negative 10.0% to positive 10.0% with an average expected value change of positive 1.2%. According to the data presented in the survey prepared by PwC, the majority of those respondents who use the discounted cash flow (DCF) method do so free and clear of financing. Additionally, the participants reflect a preference in including the developer's profit in the discount rate, versus a separate line item for this factor. As such, the range of rates presented above is inclusive of the developer's profit projection. The discount rates are based on a survey that includes residential, office, retail and industrial developments. Participants in the survey indicate the highest expected returns are on large-scale, unapproved developments. The low end of the range was extracted from projects where certain development risks had been lessened or eliminated. Several respondents indicate they expect slightly lower returns when approvals/entitlements are already in place. Excerpts from recent PwC surveys are copied below. Compared to investors' responses six months ago, a greater sense of caution is evident among our participants due to heightened uncertainty as it related to the current political environment, capital markets, and the industry's position in the real estate cycle... "the further path of interest rates and inflation, the longevity of the current cycle [are we near the peak?], and the high degree of uncertainty with regard to the overall stability of the decision makers in the federal government. (Second Quarter 2018) The largest increase over the past year occurs for the retail sector, where the rating rises from 2.42 to 2.55. The retail sector's development rating took a big hit between 2016 and 2017 and it appears that developers are now becoming more comfortable with this sector's evolution. Ironically, the only two sectors to see their development ratings decline this year, albeit slightly, are apartments and industrial, where concerns of oversupply issues have been expressed... Single- family development also gets a nod, as well as senior housing, where favorable demographics, compelling returns, greater liquidity, rising transparency, and mounting understanding of the benefits for residents appeal to investors... (Fourth Quarter 2017) This quarter, most surveyed investors note that the industrial sector presents the best opportunities for development land investing in the near term. Other top choices include restaurant and high -end luxury residential... Total spending on U.S. private construction was up 1 PwC Real Estate Investor Survey, PricewaterhouseCoopers, 2nd Quarter 2018, Volume 30, Number 4. irr. Uptown Newport (Phase 1) Adjustment Factors 65 7.0% on a year -over -year basis in March 2017, according to the U.S. Census Bureau. When looking more closely, private residential spending was up 7.5% while private nonresidential spending was up 6.4% — still positive, but below its year -over -year growth for March 2016 (9.3%). In the nonresidential sector, communication, office, and education reported the highest year -over -year gains in spending as of March 2017. In contrast, spending for health care, religious, and transportation construction declined year over year in March 2017... (Second Quarter 2017) Surveyed investors remain divided when asked which property sector presents the best opportunity for development land investing in the near term. While some believe that undeveloped residential land represents the best prospects for investing, a few others feel that land readied for retail development stands as the best opportunity for investors...While investors may be divided when it comes to which land type to pursue, they unanimously see positive opportunities over the near term and are eager to partake...Within the commercial real estate (CRE) industry, Reis reports that construction activity across all major property types continues to increase, fueled by the ongoing recovery in the economy and CRE fundamentals...Total spending on U.S. private construction was up 8.5% on a year -over -year basis in March 2016, according to the U.S. Census Bureau. When looking at private spending, private residential construction was up 7.8%, while private non-residential spending was up 9.3%...Over the next 12 months, all investor participants except one foresee development land values to increase... (Second Quarter 2016) First, investors and developers are increasingly looking for development opportunities throughout the commercial real estate (CRE) industry — in both established sectors, like apartments, as well as in niche sectors, like data centers housing. And second, rising construction and land costs will likely keep the development cycle "in check," helping sustain the industry's recovery. Even though development ranks as the second preferred investment category/ strategy... only three of the five main CRE property types reported development prospects ratings higher than last year's report... retail, office and industrial. The apartment sector's score slipped slightly this year, while the hotel sector's rating decreased the most. Outside the traditional CRE property sectors... respondents felt that development prospects in 2016 were best for 1) urban mixed -use properties, 2) data centers, 3) master -planned communities, 4) self -storage, and 5) infrastructure. (Fourth Quarter 2015) Of the four main property types covered in our Survey, three of them are expected to positively move along the real estate cycle, shifting mainly into either expansion or recovery, which will provide development opportunities. The one exception is the national multifamily sector, where many metros are expected to move into contraction by year-end 2015... Over the next 12 months, all investor participants expect one foresee development land values to increase. Appreciation ranges up to 15.0% and averages 5.2%. (Second Quarter 2015) Information for a developing in-house database of project yield rates is presented in the following table. It is noted the preceding survey related to production home developments at the land stage. Uptown Newport (Phase 1) Adjustment Factors 66 Project Yield Rate Survey Data Source Yield / IRR Expectations (inclusive of Profit) PwC Real Estate Investor Survey - Second Quarter 2018 (updated semi-annually) National Builder Range of 1p.0%to 20.0%, with an average of 15.4%, inclusive of profit and assuming entitlements in place, for land development (national average) 20% to 25% for entitled lots Regional Builder 18% to 25%. Longer term, higher risk projects on higher side of the range, shorter term, lower risk projects on the lower side of the range. Long term speculation properties (10 to 20 years out) often closer to 30%. National Builder 18% minimum, 20% target Developer Minimum IRR of 213-25%; for an 8 to 10 year cash flow, mid to upper 20% range Developer 25% IRR for land development is typical (no entitlements); slightly higher for properties with significant infrastructure costs Land Management Company Land Developer 20% to 30% IRR for land development deals on an unleveraged basis 35% for large land deals from raw unentitled to tentative map stage, unleveraged or leveraged. 25% to 30% from tentative map to pad sales to merchant builders, unleveraged Land Developer 18%to 22%for land with some entitlements, unleveraged. 30% for raw unentitled land Real Estate Consulting Firm Low 20% range yield rate required to attract capital to longer -tern land holdings Land Developer Merchant builder yield requirements in the 20% range for traditionally financed tract developments. Larger land holdings would require 25% to 3096. Environmentally challenged or politically risky development could well run in excess of 35%. Regional Builder 1096 discount rate excluding profit for single-family subdivisions National Builder 10%to40% for single-family residential subdivisions with 1-2year development timelines Regional Builder 15%to 20% IRR Regional Builder Land Developer No less than 20% IRR for land development, either entitled or unentitled 2096 to 3096 far an unentitled property; the lower end of the range would reflect those properties close to tentative maps Regional Builder No less than 30% when typical entitlement risk exists Based on this analysis, an internal rate of return towards the middle of the range is considered reasonable. Land Value Conclusion — Land Residential Analysis The land residual analysis is presented on the following page. irr. Uptown Newport (Phase 1) Adjustment Factors 67 Land Residual Analysis 6 Months: 0 1 2 3 4 5 6 7 8 9 10 11 Total REVENUE AND SALES Sales- Condominium Units 0 4 0 0 0 24 24 24 24 24 24 15 159 Unsold Inventory 159 159 159 159 159 135 111 87 63 39 15 0 Close of Escrow (COE) 0 0 0 0 0 24 24 24 24 24 24 15 159 Contracted Base Revenue (Before Appreciation) 50 $0 $0 $0 539,500,000 $39,600,000 $39,600,000 535,600,000 539,600,000 $39.600,000 $24,750,040 $262,350,000 Semi-annual Appreciation Factor 1.010 1.00000 1.01004 1.02010 1.03030 1.04060 1.05101 1.06152 1.07214 1.08286 1.09369 1.10462 Appreciated Contracted Home Revenue 50 $0 $0 50 $41.207,919 $41,619.998 542.036.198 $42,456,560 $42,881,126 $43,309.937 527,339.398 $280,851.135 Unit Premium and Model Recapture Revenue $Q 5Q a5.4 53 983 924 53 983.924 53.983 924 53 983,924 53 983.924 53 983.924 52.489 953 526 393,497 Total Revenue 50 50 5D $0 545,191,843 $45,603,922 $46,020,122 $46,440,484 $46,865,050 547,293,861 529,829,350 5307,244,631 EXPENSES AND CASH FLOWS Fixed Pr Percentage Expenses General and Administrative 3% (5837,940) ($837,940) ($837,9401 (5837,940) ($837,940) ($837,940) ($837,940j (5837,940) (5837,540) ($837,940) ($837,9401 (59,217,339) Marketing and Sales 6% SD SO 50 50 (52,711,511) (52.736,235) ($2,761.2071 (52,786,4291 (52,811,903) (52.837,5321 (51.789,7611 (518,434,578) Ad Valorem Real Estate Taxes per Unit $3,484 (5276,954) (5276,954) (5282,4531 (5282,493) (5244,649) (5201,156) ($160,816) ($116,453) (573,532) (528,281) 50 (51,943,781) Direct Real Estate Tax ChargeS per Unit $60 (54,770) (54,770) (54)865) (54,865) (S4,214) (53,465) (52,770) (52,006) ($1,2661 (54871 $0 1533.478) CSCDACFO No. 2018-03 per Unit $867 ($58,934) (568.934) ($58,934) ($58,9341 ($58.529) ($48.124) ($37.719) (527.313) ($16.908) ($6,503) $0 ($470,832) HOA per Month per Unit $325 $0 50 $D $0 ($263,250) ($216.450) ($169,6501 (5122,850) ($76,050) (529,250) $0 ($877,500) Model Casts 50 50 50 (5450,000) 50 50 50 50 50 50 50 (5450,0001 off -Site imp rovcment Costs ($1,197,230) $0 S0 50 50 $0 S0 50 50 $0 S0 (51,197,230) On -Site Development Costs (52,954,282) ($2,954,282) (52,954,2821 ($2,954,282) SO $0 $0 50 SO 50 $0 ($11,817,125) Building Permits i5158.0001 15158.0001 151560001 15258.000) 5158.0001 59. 5_4_ 54. 50. N. 54 15790.0001 Subtotal: (55,498,109) ($4,300,8791 (54,306,514) ($4,756,514) ($4,278,092) (54.043,3701 (53,970,1021 (53,892,991) (53,817,599) (53.740.093) (52,627,7011 (545.231,9641 Appreciated Expenses %Complete > 2.2S 2.5N 20:Or Q1 n Q7i Qn Qijr sal (f)0% Direct Construction Costs (533,328,500) (533,328,500) (533.328,500j (533,328,500) $O $0 $0 $0 $0 $0 $0 (5133.314.40D) Semi-annual Appreciation Factor 1.005 1,00000 1.00500 1.01003 1.01508 1.02015 1.02525 1.03038 1.03553 1.04071 1.04591 1.05114 Appreciated Direct Costs (S33.328,500) (533,495,1431 (533,662,6181 (533.830,931) 50 50 50 50 50 50 SO ($134,317,192) Indirect Construction Costs 15% (54,999.275) (55.024.2711 (55.049.3931 j55.074,640) a a gQ 59. a $g a 1520.147.5791 Subtotal; ($38,327,775) (538.519,414) ($38,712.0111 ($38,905.571) $0 $0 $0 50 $0 $0 50 (5154,464,7711 Total Expenses 1543 325 8841 .1542 820 2931 1543018.5241 1543 662 0851 154,278 D921 154 043 3701 153 970 1021 153 892 991) .1531317 5991 (53 7400531 ;52 627 7011 (5199 5957351 NET INCOME (BEFORE DISCOUNTING) (543,825,884) 1542,820,293) ($43,018,524) ($43.662,085} 540,913,751 541,550,552 $42,050,020 542,547,453 543,047,450 543,553.768 527.201,649 5107.547,897 Present Value Factors Internal Rate of Return (IRR) 16.00% 0.96154 0.92456 0.88900 0.85480 0.82193 0.79031 0,75992 0.73069 0.70259 0.67556 0.64958 Discounted Cash Flow ($42,140,273) 1539,589,768) ($38,243,3121 (537,322,533) $33.628,121 532,845,908 531,954,559 $31,089,036 530,244,567 $29,423,365 $17,669,673 549,559,344 Net Present Value 549,560,000 Net Present Value Per Unit: 5311,698 Uptown Newport (Phase 1) Sales Comparison Approach 68 Sales Comparison Approach This approach is based on the economic principle of substitution. According to The Appraisal of Real Estate, 14th Edition (Chicago: Appraisal Institute, 2013), "The principle of substitution holds that the value of property tends to be set by the cost of acquiring a substitute or alternative property of similar utility and desirability within a reasonable amount of time." The sales comparison approach is applicable when there are sufficient recent, reliable transactions to indicate value patterns or trends in the market. The proper application of this approach requires obtaining recent sales data for comparison with the appraised properties. In order to assemble the comparable sales, we searched public records and other data sources for leads, then confirmed the raw data obtained with parties directly related to the transactions (primarily brokers, buyers and sellers). On the following pages, we have arrayed comparable sales that have occurred in the subject's market area of similar redevelopment sites. The summary table is accompanied by a map and discussion of adjustments. For this analysis, we use price per unit as the appropriate unit of comparison because market participants typically compare sale prices and property values on this basis. The sales most relevant to analyzing the subject's land value are summarized in the following table: irr. Uptown Newport (Phase 1) Sales Comparison Approach 69 Summary of Comparable Land Sales Sale Units; Date; Effective Sale SF; Density No. Name/Address Status Price Acres (Units/Ac.) Zoning $/Unit 1 671 West 17th Street Jun-17 $17,100,000 94,090 42 General $407,143 671 W. 17th St. Closed 2.16 19.4 Industrial Costa Mesa Orange County Tax ID: Portion of 424-291-11 Grantor: W-WP Wests i de Gateway Owner VII Grantee: Westsi de Gateway Development LLC Comments: This property is located at the southeast corner of 17th Street and Pomona Avenue. It is irregular in shape with level topography. The surrounding land uses in the immediate area include a mix of industrial, retail, and multi family residential. According to the buyer's broker, Brandon Johnson with Tierra Development Advisors, the site was sold as vacant land and was fully entitled for 42 townhomes. The sale included approved tract maps, however, the infrastructure was not completed. 2 929 Baker Street Jan-17 $21,350,000 201,247 56 Multiple Family $381,250 929 Baker St. Closed 4.62 12.1 Residential Costa Mesa Orange County Tax ID: 141-242-03 Grantor: R & THolmes Family Limited Partnership and William L. Steel, Trustee Grantee: Socal Baker, LLC Comments: This property is located on south side of Baker Street and east of Milbro Street. It is rectangular in shape with level topography. The surrounding land uses in the immediate area are single and multi family residences, along with an education center adjacent to the site. According to the buyer, David Sanson with Civic Property Group, the site was improved with an old industrial building that added no value. The sale was based on land value and was fully entitled to develop 56 single-family residences. 3 E/S Von Karman Avenue; 5/0 Alton Parkway Dec-16 $17,500,000 148,104 71 IBC Multi -Use $246,479 Irvine Closed 3.40 20.9 Orange County Tax ID: Portion of 435-035-06 Grantor: Fairfield Von Karman LLC Grantee: Irvine Gateway Development LLC Comments: This property is located on the east side of Von Karman Avenue and south of Alton Parkway. It is rectangular in shape with level topography. The immediate surrounding land uses are multi family residential and industrial. According to the seller's broker, Mike Hunter with Land Advisors Organization, this property sold as vacant land with entitlements and infrastructure in place. The buyer plans to develop 71 townhomes on the site. 4 2626 Harbor Blvd. Sep-16 $12,500,000 160,214 33 Multifamily $378,788 Costa Mesa Closed 3.68 9.0 Residential, Orange County Medium Tax ID: 141-361-29 and 30; and 141-731-02 and 03 Density Grantor: Suburban Harbor, LLC, etc. Grantee: SoCaI Harbor, LLC, etc. Comments: The seller's broker, Brian Childs, confirmed the sale, and that it was an arm's-length transaction at a market price. There were two buildings which were demolished prior to the sale and the lot sold as vacant land. The sale included a tract map with 33 single family residential lots. No specific value was attributed to the entitlements. Subject 141,483 159 Uptown Uptown Newport (Phase 1) 3.25 49.0 Newport Newport Beach, CA Planned Community Development Uptown Newport (Phase 1) Sales Comparison Approach 70 Comparable Land Sales Map Forcer Ross moor Reserve CentEr 22 Seer? Seal Beach Beach Nawvr Weapons Shtror Sunset each LIP bin?g Garden Grove Westminster nster Midway City Fountain VaLI ey Huntington Beach Orange 122 North Tustin Santa Ana ▪ Tustin ti .. 5Urrwoao crNfRht u* Fi Irvine 0 rr Costa Me▪ sa i Newport Beach lm JiJ r?.F ROCK I,31 San Joaquin Hills Laguna each 261 Kathryn �133 El Toro Marble Cars Air Station Lake Forest Silver Foothill Ranch Mission Viejo Laguna Hills Aliso Viejo Laguna Niguel Ladera reusnnre 20EG hdicrasaft Corporal ion 18 HERE Uptown Newport (Phase 1) Sales Comparison Approach 71 Adjustment Factors The sales are compared to the subject and adjusted to account for material differences that affect value. Adjustments are considered for the following factors, in the sequence shown below. Adjustment Factors Effective Sale Price Real Property Rights Financing Terms Conditions of Sale Market Conditions Location Access/Exposure Size Shape and Topography Off -Site Improvements Zoning /Entitlements Accounts for atypical economics of a transaction, such as demolition cost, expenditures by the buyer at time of purchase, or other similar factors. Usually applied directly to sale price on a lump sum basis. Fee simple, leased fee, leasehold, partial interest, etc. Seller financing, or assumption of existing financing, at non -market terms. Extraordinary motivation of buyer or seller, assemblage, forced sale, related parties transaction. Changes in the economic environment over time that affect the appreciation and depreciation of real estate. Market or submarket area influences on sale price; surrounding land use influences. Convenience to transportation facilities; ease of site access; visibility from main thoroughfares; traffic counts. Inverse relationship that often exists between parcel size and unit value. Primary physical factors that affect the utility of a site for its highest and best use. Infrastructure improvements at the time of sale. Government regulations that affect the types and intensities of uses allowable on a site; the specific level of governmental approvals attained pertaining to development of a site. When considering market conditions, we note that the sales took place from September 2016 to June 2017, and that market conditions generally have been strengthening over this period through the effective date of value. Accordingly, we apply upward adjustments for improving market conditions to Comparables 2 through 4 to account for this trend. Overall, the majority of the comparables require upward adjustments for location as the subject is located within the city of Newport Beach, which is considered superior to Costa Mesa and Irvine. However, the subject's location is least proximate to the coast as most of the Newport Beach area is accustom to. irr. Uptown Newport (Phase 1) Sales Comparison Approach 72 Analysis and Adjustment of Sales Our analysis of the comparable sales is described in the following paragraphs. Land Sale 1 is a 2.16 acre, or 94,090 square foot, parcel located at 671 W. 17th St., Costa Mesa, Orange County, CA, with development potential for 42 units. The property sold in June 2017 for $17,100,000, or $407,143 per unit. Overall, this comparable is deemed superior to the subject and a market value less than this comparable sale is considered reasonable for the subject property. Land Sale 2 is a 4.62 acre, or 201,247 square foot, parcel located at 929 Baker St., Costa Mesa, Orange County, CA, with development potential for 56 units. The property sold in January 2017 for $21,350,000, or $381,250 per unit. This comparable is deemed slightly superior to the subject, as its smaller size and single-family entitlements outweighs its inferior location. Overall, a market value somewhat less than this comparable sale is considered reasonable for the subject property. Land Sale 3 is a 3.40 acre, or 148,104 square foot, parcel located at E/S Von Karman Avenue; S/O Alton Parkway, Irvine, Orange County, CA, with development potential for 71 units. The property sold in December 2016 for $17,500,000, or $246,479 per unit. Located the furthest inland of all the comparables analyzed, this comparable is considered inferior to the subject property and a market value conclusion higher than this transaction is deemed reasonable. Land Sale 4 is a 3.68 acre, or 160,214 square foot, parcel located at 2626 Harbor Blvd., Costa Mesa, Orange County, CA, with development potential for 33 units. The property sold in September 2016 for $12,500,000, or $378,788 per unit. Similar to Comparable 2, this property's size and entitlements provide for a higher indicator of market value as it, overall, is considered slightly superior to the subject property. Overall, a market value somewhat less than this comparable sale is considered reasonable for the subject property. The following table summarizes the adjustments we make to the comparable sales. irr. Uptown Newport (Phase 1) Sales Comparison Approach 73 Land Sales Adjustment Grid Subject Comparable 1 Comparable Comparable Comparable Name Address City County Sale Date Sale Status Sale Price Price Adjustment Description of Adjustment Effective Sale Price Square Feet Acres Number of Units Uptown Newport (Phase 1) 4311-4321 Jamboree Rd. Newport Beach Orange 141,483 3.248 159 671 West 17th Street 671 W. 17th St. Costa Mesa Orange Jun-17 Closed $17,100,000 — $17,100,000 94,090 2.160 42 929 Baker Street 929 Baker St. Costa Mesa Orange Jan-17 Closed $21,350,000 — $21,350,000 201,247 4.620 56 E/S Von Karman Avenue; S/O Alton Parkway E/S Von Karman Avenue; S/O Alton Parkway Irvine Orange Dec-16 Closed $17,500,000 — $17,500,000 148,104 3.400 71 2626 Harbor Blvd, 2626 Harbor Blvd. Costa Mesa Orange Sep-16 Closed $12,500,000 — $12,500,000 160,214 3.678 33 Price per Unit Property Rights Adjustment Financing Terms Adjustment Conditions of Sale Adjustment Market Conditions 12/22/2018 Adjustment Location Access/Exposure Size Shape and Topography Off -Site Improvements Zoning/Entitlements $407,143 Fee Simple = Cash to seller = Market = Jun-17 $381,250 Fee Simple _ Cash to seller = Market _ Jan-17 $246,479 Fee Simple = Cash to seller = Market = Dec-16 $378,788 Fee Simple = Cash to seller = Market = Sep-16 = + + ++ = = = = = + = - = = --- ++ = = = = + = = = Overall Adjustment --- --- + --- Indicated Value Uptown Newport (Phase 1) $300,000 Sales Comparison Approach 74 Land Value Conclusion — Sales Comparison Approach Prior to adjustments, the sales reflect a range of $246,479 - $407,143 per unit. After adjustment, the data indicated a market value less than Comparables 1, 2 and 4, but higher than Comparables 3 for the subject property. Based on the preceding analysis, we reach a land value conclusion as follows: Land Value Conclusion Indicated Value per Unit $300,000 Subject Units 159 Indicated Value $47,700,000 Rounded $47,700,000 irr. Uptown Newport (Phase 1) Reconciliation and Conclusion of Land Value The land value conclusions indicated by the land residual analysis and sales comparison approach to value are presented below. Reconciliation of Land Value Land Residual Analysis Sales Comparison Appraoch Conclusion $49,560,000 $47,700,000 $49,500,000 In our opinion, when considered together, both the sales comparison approach and land residual analysis provide reliable indicators of market value for the subject. Overall, slightly more reliance is placed on the land residual analysis. Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of value of the appraised property, in bulk, subject to the hypothetical condition all public capital facilities and improvements to be financed by the CFD Special Tax have been completed, as well as the Assessed Value of Lot 2 not appraised, is as follows: Value Conclusions Appraisal Premise Market Value of Lot 1, As If Public Capital Facilities and Improvements Have Been Completed Assessed Value of Lot 2 Total Aggregate Value of Appraised and Assessed Properties in the District Interest Appraised Date of Value Value Conclusion Fee Simple December 22, 2018 $49,500,000 S1,721,636 $51,221,636 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. None The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. We have been requested to provide the market value of the fee simple interest in the appraised property, subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. The opinions of value expressed in this report are based on estimates and forecasts that are prospective in nature and subject to considerable risk and uncertainty. Events may occur that could irr. Uptown Newport (Phase 1) cause the performance of the property to differ materially from our estimates, such as changes in the economy, interest rates, capitalization rates, financial strength of tenants, and behavior of investors, lenders, and consumers. Additionally, our opinions and forecasts are based partly on data obtained from interviews and third party sources, which are not always completely reliable. Although we are of the opinion that our findings are reasonable based on available evidence, we are not responsible for the effects of future occurrences that cannot be reasonably foreseen at this time. Exposure Time Exposure time is the length of time the subject property would have been exposed for sale in the market had it sold on the effective valuation date at the concluded market value. Exposure time is always presumed to precede the effective date of the appraisal. Based on our review of recent sales transactions for similar properties and our analysis of supply and demand in the local market, it is our opinion that the probable exposure time for the subject at the concluded market value stated previously is 12 months. Marketing Time Marketing time is an estimate of the amount of time it might take to sell a property at the concluded market value immediately following the effective date of value. As we foresee no significant changes in market conditions in the near term, it is our opinion that a reasonable marketing period for the subject is likely to be the same as the exposure time. Accordingly, we estimate the subject's marketing period at 12 months. irr. Uptown Newport (Phase 1) Certification 77 Certification We certify that, to the best of our 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 our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. We have not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. S. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 8. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice as well as applicable state appraisal regulations. 9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 11. Eric Segal, MAI, made a personal inspection of the property that is the subject of this report. Sara Gilbertson has not personally inspected the subject. 12. No one provided significant real property appraisal assistance to the person(s) signing this certification. 13. We have experience in appraising properties similar to the subject and are in compliance with the Competency Rule of USPAP. 14. As of the date of this report, Eric Segal, MAI, has completed the continuing education program for Designated Members of the Appraisal Institute. irr. Uptown Newport (Phase 1) Certification 78 15. As of the date of this report, Sara Gilbertson has completed the Standards and Ethics Education Requirements for Candidates/Practicing Affiliates of the Appraisal Institute. Eric Segal, MAI Certified General Real Estate Appraiser California Certificate # AG026558 Sara Gilbertson Certified General Real Estate Appraiser California Certificate # 3002204 Uptown Newport (Phase 1) irr. Assumptions and Limiting Conditions 79 Assumptions and Limiting Conditions This appraisal and any other work product related to this engagement are limited by the following standard assumptions, except as otherwise noted in the report: 1. The title is marketable and free and clear of all liens, encumbrances, encroachments, easements and restrictions. The property is under responsible ownership and competent management and is available for its highest and best use. 2. There are no existing judgments or pending or threatened litigation that could affect the value of the property. 3. There are no hidden or undisclosed conditions of the land or of the improvements that would render the property more or less valuable. Furthermore, there is no asbestos in the property. 4. The revenue stamps placed on any deed referenced herein to indicate the sale price are in correct relation to the actual dollar amount of the transaction. 5. The property is in compliance with all applicable building, environmental, zoning, and other federal, state and local laws, regulations and codes. 6. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy. This appraisal and any other work product related to this engagement are subject to the following limiting conditions, except as otherwise noted in the report: 1. An appraisal is inherently subjective and represents our opinion as to the value of the property appraised. 2. The conclusions stated in our appraisal apply only as of the effective date of the appraisal, and no representation is made as to the effect of subsequent events. 3. No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated. 4. No environmental impact studies were either requested or made in conjunction with this appraisal, and we reserve the right to revise or rescind any of the value opinions based upon any subsequent environmental impact studies. If any environmental impact statement is required by law, the appraisal assumes that such statement will be favorable and will be approved by the appropriate regulatory bodies. 5. Unless otherwise agreed to in writing, we are not required to give testimony, respond to any subpoena or attend any court, governmental or other hearing with reference to the property without compensation relative to such additional employment. 6. We have made no survey of the property and assume no responsibility in connection with such matters. Any sketch or survey of the property included in this report is for illustrative purposes only and should not be considered to be scaled accurately for size. The appraisal irr. Uptown Newport (Phase 1) Assumptions and Limiting Conditions 80 covers the property as described in this report, and the areas and dimensions set forth are assumed to be correct. 7. No opinion is expressed as to the value of subsurface oil, gas or mineral rights, if any, and we have assumed that the property is not subject to surface entry for the exploration or removal of such materials, unless otherwise noted in our appraisal. 8. We accept no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal descriptions and other legal matters such as legal title, geologic considerations such as soils and seismic stability; and civil, mechanical, electrical, structural and other engineering and environmental matters. Such considerations may also include determinations of compliance with zoning and other federal, state, and local laws, regulations and codes. 9. The distribution of the total valuation in the report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. The appraisal report shall be considered only in its entirety. No part of the appraisal report shall be utilized separately or out of context. 10. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraisers, or any reference to the Appraisal Institute) shall be disseminated through advertising media, public relations media, news media or any other means of communication (including without limitation prospectuses, private offering memoranda and other offering material provided to prospective investors) without the prior written consent of the persons signing the report. 11. Information, estimates and opinions contained in the report and obtained from third -party sources are assumed to be reliable and have not been independently verified. 12. Any income and expense estimates contained in the appraisal report are used only for the purpose of estimating value and do not constitute predictions of future operating results. 13. If the property is subject to one or more leases, any estimate of residual value contained in the appraisal may be particularly affected by significant changes in the condition of the economy, of the real estate industry, or of the appraised property at the time these leases expire or otherwise terminate. 14. Unless otherwise stated in the report, no consideration has been given to personal property located on the premises or to the cost of moving or relocating such personal property; only the real property has been considered. 15. The current purchasing power of the dollar is the basis for the values stated in the appraisal; we have assumed that no extreme fluctuations in economic cycles will occur. 16. The values found herein are subject to these and to any other assumptions or conditions set forth in the body of this report but which may have been omitted from this list of Assumptions and Limiting Conditions. 17. The analyses contained in the report necessarily incorporate numerous estimates and assumptions regarding property performance, general and local business and economic irr. Uptown Newport (Phase 1) Assumptions and Limiting Conditions 81 conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our analysis will vary from our estimates, and the variations may be material. 18. The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific survey or analysis of the property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. We claim no expertise in ADA issues, and render no opinion regarding compliance of the subject with ADA regulations. Inasmuch as compliance matches each owner's financial ability with the cost to cure the non- conforming physical characteristics of a property, a specific study of both the owner's financial ability and the cost to cure any deficiencies would be needed for the Department of Justice to determine compliance. 19. The appraisal report is prepared for the exclusive benefit of the Client, its subsidiaries and/or affiliates. It may not be used or relied upon by any other party. All parties who use or rely upon any information in the report without our written consent do so at their own risk. 20. No studies have been provided to us indicating the presence or absence of hazardous materials on the subject property or in the improvements, and our valuation is predicated upon the assumption that the subject property is free and clear of any environment hazards including, without limitation, hazardous wastes, toxic substances and mold. No representations or warranties are made regarding the environmental condition of the subject property. Integra Realty Resources — Sacramento, Integra Realty Resources, Inc., Integra Strategic Ventures, Inc. and/or any of their respective officers, owners, managers, directors, agents, subcontractors or employees (the "Integra Parties"), shall not be responsible for any such environmental conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because we are not experts in the field of environmental conditions, the appraisal report cannot be considered as an environmental assessment of the subject property. 21. The persons signing the report may have reviewed available flood maps and may have noted in the appraisal report whether the subject property is located in an identified Special Flood Hazard Area. We are not qualified to detect such areas and therefore do not guarantee such determinations. The presence of flood plain areas and/or wetlands may affect the value of the property, and the value conclusion is predicated on the assumption that wetlands are non- existent or minimal. 22. Integra Realty Resources — Sacramento is not a building or environmental inspector. Integra Sacramento does not guarantee that the subject property is free of defects or environmental problems. Mold may be present in the subject property and a professional inspection is recommended. 23. The appraisal report and value conclusions for an appraisal assume the satisfactory completion of construction, repairs or alterations in a workmanlike manner. 24. It is expressly acknowledged that in any action which may be brought against any of the Integra Parties, arising out of, relating to, or in any way pertaining to this engagement, the Uptown Newport (Phase 1) Assumptions and Limiting Conditions 82 appraisal reports, and/or any other related work product, the Integra Parties shall not be responsible or liable for any incidental or consequential damages or losses, unless the appraisal was fraudulent or prepared with intentional misconduct. 25. Integra Realty Resources — Sacramento, an independently owned and operated company, has prepared the appraisal for the specific intended use stated elsewhere in the report. The use of the appraisal report by anyone other than the Client is prohibited except as otherwise provided. Accordingly, the appraisal report is addressed to and shall be solely for the Client's use and benefit unless we provide our prior written consent. We expressly reserve the unrestricted right to withhold our consent to your disclosure of the appraisal report or any other work product related to the engagement (or any part thereof including, without limitation, conclusions of value and our identity), to any third parties. Stated again for clarification, unless our prior written consent is obtained, no third party may rely on the appraisal report (even if their reliance was foreseeable). 26. The conclusions of this report are estimates based on known current trends and reasonably foreseeable future occurrences. These estimates are based partly on property information, data obtained in public records, interviews, existing trends, buyer -seller decision criteria in the current market, and research conducted by third parties, and such data are not always completely reliable. The Integra Parties are not responsible for these and other future occurrences that could not have reasonably been foreseen on the effective date of this assignment. Furthermore, it is inevitable that some assumptions will not materialize and that unanticipated events may occur that will likely affect actual performance. While we are of the opinion that our findings are reasonable based on current market conditions, we do not represent that these estimates will actually be achieved, as they are subject to considerable risk and uncertainty. Moreover, we assume competent and effective management and marketing for the duration of the projected holding period of this property. 27. All prospective value opinions presented in this report are estimates and forecasts which are prospective in nature and are subject to considerable risk and uncertainty. In addition to the contingencies noted in the preceding paragraph, several events may occur that could substantially alter the outcome of our estimates such as, but not limited to changes in the economy, interest rates, and capitalization rates, behavior of consumers, investors and lenders, fire and other physical destruction, changes in title or conveyances of easements and deed restrictions, etc. It is assumed that conditions reasonably foreseeable at the present time are consistent or similar with the future. 28. The appraisal is also subject to the following: irr. Uptown Newport (Phase 1) Assumptions and Limiting Conditions 83 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. None The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. We have been requested to provide the market value of the fee simple interest in the appraised property, subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. irr. Uptown Newport (Phase 1) Addenda Addendum A Appraiser Qualifications Uptown Newport (Phase 1) i.71 Eric Segal, MAI Experience Mr. Segal is a Certified General real estate appraiser and holds the Appraisal Institute's MAI designation. In 1998, Mr. Segal began his career in real estate as a research analyst/appraiser trainee for Richard Seevers and Associates. By 1999, he began writing narrative appraisal reports covering a variety of commercial properties, with an emphasis on residential master planned communities and subdivisions. Today, Mr. Segal is a partner in the firm and is involved in appraisal assignments covering a wide variety of properties including office, retail, industrial, multifamily housing, master planned communities, and specializes in the appraisal of Mello -Roos Community Facilities Districts and Assessment Districts for land -secured municipal financings, as well as multifamily developments under the U.S. Department of Housing and Urban Development's Multifamily Accelerated Processing (MAP) Guide. He has developed the experience and background necessary to deal with complex assignments covering an array of property types, with a particular focus on urban redevelopment in the cities of San Francisco, Monterey, Alameda and San Mateo. He has developed the experience and background necessary to deal with complex assignments covering an array of property types. Eric is currently Managing Director of the Integra -San Francisco office and Senior Managing Director of the Integra -Sacramento office. Professional Activities & Affiliations Appraisal Institute, Member (MAI) Appraisal Institute, January 2016 Licenses California, Certified General, AG026558, Expires February 2021 Nevada, Certified General, A.0207666-CG, Expires January 2019 Education Academic: Bachelor of Science in Business Administration (Concentrations in Finance and Real Estate & Land Use Affairs), California State University, Sacramento Appraisal and Real Estate Courses: Uniform Standards of Professional Appraisal Practice Appraisal Principles Basic Income Capitalization Highest & Best Use and Market Analysis Advanced Income Capitalization Report Writing and Valuation Analysis Self -Storage Economics and Appraisal Seminar Appraisal Litigation Practice and Courtroom Management Hotel Valuations: New Techniques for today's Uncertain Times Computer Enhanced Cash Flow Modeling Advanced Sales Comparison & Cost Approaches Advanced Applications Supervisor -Trainee Course for California esegal@irr.com - 916-435-3883 x228 Integra Realty Resources Sacramento 3825 Atherton Rd # 500 Rocklin, CA 95765 T 916-435-3883 F 916-435-4774 irr.com irr. ''`;-vorfir p�� VJ' Ir �llsl+ II .I l II�I�IIII VIIIIII •,Ty ^ I'`VlI1 II � �Fwl ill1pp11; I'�I�IIIII�Ii�l�lll�il�lll«4 ���5. C%] co ;1 OF il�l�llul�l II'lII IIIIII p -� J yS�(I � # III��I IlYigl�i i�l o�u'IUIII IIVII�'IJ u1,P: � _� � • I �� y,� B Z JW II'li�illil°iil`iV iiilillJ. #1.^r'$" a��� 'I�III�,�I ��IIIIIIIVI�II��llill�ipll� '�'0. " �j S o. IIIIIII IIIIII11VIOl' W „Cti y� V.l II` ,�1i1111 'I I`I�IIIIIII16 i� Y ,�€ _ I \rb� +i. / III'IIII III j11 `�1111' & IIIIIII I � I I SC II IIII�j II � by / IIIII,'illilll `lili�l'''d'ill,l,l�{ �' ��@� � II IIIIIIIL I�lllll�l I A �' uFr-: Sara Gilbertson Experience Ms. Gilbertson is a licensed appraiser with Integra Realty Resources, a real estate appraisal firm that engages in a wide variety of real estate valuation and consultation assignments. She joined the firm in April 2011 after completing her bachelor's degree at California State University, Sacramento and has been writing narrative appraisal reports for a variety of commercial properties. She has experience in writing narrative appraisal reports covering a variety of commercial properties, as well as special -use properties including self -storage facilities, hotels and mobile home parks. She also specialized in the appraisal of residential master planned communities and subdivision, as well as Mello -Roos and Assessment Districts for land -secured municipal financings. Ms. Gilbertson has developed the experience and background necessary to deal with complex assignments covering an array of property types. Licenses California, Certified General Real Estate Appraiser, 3002204, Expires May 2020 Education Academic: Bachelor of Science in Business Administration (Concentration in Real Estate and Land Development), California State University, Sacramento Appraisal Institute Courses: Basic Appraisal Principles Basic Appraisal Procedures Uniform Standards of Professional Appraisal Practice Real Estate Finance and Statistics and Valuation Modeling Sales Comparison Approach Report Writing and Case Studies Market Analysis and Highest and Best Use Site Valuation and Cost Approach Basic Income Capitalization Expert Witness for Commercial Appraisers Commercial Appraisal Review sgilbertson@irr.com - 916-435-3883 x248 Integra Realty Resources Sacramento 3825 Atherton Rd # 500 Rocklin, CA 95765 T 916-435-3883 F 916-435-4774 irr.com irr. 'J. 3 fisk to �rfi *rU' H0 H1 • I SER LICENSE Sara A. Gilbertson 1 BRE.A APPRAISER IDENTIFICATION NUMBER: r.. ct 0 'Th G i About IRR Integra Realty Resources, Inc. (IRR) provides world -class commercial real estate valuation, counseling, and advisory services. Routinely ranked among leading property valuation and consulting firms, we are now the largest independent firm in our industry in the United States, with local offices coast to coast and in the Caribbean. IRR offices are led by MAI-designated Senior Managing Directors, industry leaders who have over 25 years, on average, of commercial real estate experience in their local markets. This experience, coupled with our understanding of how national trends affect the local markets, empowers our clients with the unique knowledge, access, and historical perspective they need to make the most informed decisions. Many of the nation's top financial institutions, developers, corporations, law firms, and government agencies rely on our professional real estate opinions to best understand the value, use, and feasibility of real estate in their market. Local Expertise...Nationally! irr.com irr® Addenda Addendum B Definitions Uptown Newport (Phase 1) i.71 Definitions The source of the following definitions is the Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), unless otherwise noted. As Is Market Value The estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date. Disposition Value The most probable price that a specified interest in property should bring under the following conditions: 1. Consummation of a sale within a specified time, which is shorter than the typical exposure time for such a property in that market. 2. The property is subjected to market conditions prevailing as of the date of valuation. 3. Both the buyer and seller are acting prudently and knowledgeably. 4. The seller is under compulsion to sell. 5. The buyer is typically motivated. 6. Both parties are acting in what they consider to be their best interests. 7. An adequate marketing effort will be made during the exposure time. 8. Payment will be made in cash in U.S. dollars (or the local currency) or in terms of financial arrangements comparable thereto. 9. 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. This definition can also be modified to provide for valuation with specified financing terms. Effective Date 1. The date on which the appraisal or review opinion applies. 2. In a lease document, the date upon which the lease goes into effect. Entitlement In the context of ownership, use, or development of real estate, governmental approval for annexation, zoning, utility extensions, number of lots, total floor area, construction permits, and occupancy or use permits. Entrepreneurial Profit 1. A market -derived figure that represents the amount an entrepreneur receives for his or her contribution to a project and risk; the difference between the total cost of a property (cost of irr. Uptown Newport (Phase 1) development) and its market value (property value after completion), which represents the entrepreneur's compensation for the risk and expertise associated with development. An entrepreneur is motivated by the prospect of future value enhancement (i.e., the entrepreneurial incentive). An entrepreneur who successfully creates value through new development, expansion, renovation, or an innovative change of use is rewarded by entrepreneurial profit. Entrepreneurs may also fail and suffer losses. 2. In economics, the actual return on successful management practices, often identified with coordination, the fourth factor of production following land, labor, and capital; also called entrepreneurial return or entrepreneurial reward. Exposure Time 1. The time a property remains on the market. 2. The estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based on an analysis of past events assuming a competitive and open market. Fee Simple Estate 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. Floor Area Ratio (FAR) The relationship between the above -ground floor area of a building, as described by the zoning or building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area. Highest and Best Use 1. 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. 2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an asset's existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid. (ISV) 3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal Land Acquisitions) Uptown Newport (Phase 1) Investment Value 1. The value of a property to a particular investor or class of investors based on the investor's specific requirements. Investment value may be different from market value because it depends on a set of investment criteria that are not necessarily typical of the market. 2. The value of an asset to the owner or a prospective owner for individual investment or operational objectives. Lease A contract in which rights to use and occupy land, space, or structures are transferred by the owner to another for a specified period of time in return for a specified rent. Leased Fee Interest The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires. Leasehold Interest The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease. Liquidation Value The most probable price that a specified interest in real property should bring under the following conditions: 1. Consummation of a sale within a short time period. 2. The property is subjected to market conditions prevailing as of the date of valuation. 3. Both the buyer and seller are acting prudently and knowledgeably. 4. The seller is under extreme compulsion to sell. S. The buyer is typically motivated. 6. Both parties are acting in what they consider to be their best interests. 7. A normal marketing effort is not possible due to the brief exposure time. 8. Payment will be made in cash in U.S. dollars (or the local currency) or in terms of financial arrangements comparable thereto. 9. 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. This definition can also be modified to provide for valuation with specified financing terms. Marketing Time An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal. Uptown Newport (Phase 1) Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal. Market Value 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 and 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: • buyer and seller are typically motivated; • both parties are well informed or well advised, and acting in what they consider their own best interests; • a reasonable time is allowed for exposure in the open market; • payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and • 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. (Source: Code of Federal Regulations, Title 12, Chapter 1, Part 34.42[g]; also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472) Prospective Opinion of Value A value opinion effective as of a specified future date. The term does not define a type of value. Instead, it identifies a value opinion as being effective at some specific future date. An opinion of value as of a prospective date is frequently sought in connection with projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy. irr. Uptown Newport (Phase 1) Addenda Addendum C Preliminary Title Report Uptown Newport (Phase 1) i.71 CLTA Preliminary Report Form Order Number: NHSC-5064254 (mw) (Rev. 11/06) Page Number: 1 Updated First American Title First American Title Company 1250 Corona Pointe Court, Suite 200 Corona, CA 92879 Terri Hovdestad Shopoff Realty Investments, L.P. 2 Park Plaza, Suite 700 Irvine, CA 92614 Customer Reference: Uptown Newport Order Number: NHSC-5064254 (mw) Title Officer: Mark Wardle Phone: (951)256-5830 Fax No.: E-Mail: MWardle@firstam.com Buyer: Owner: Uptown Newport PRELIMINARY REPORT In response to the above referenced application for a policy of title insurance, this company hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a Policy or Policies of Title Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referred to as an Exception below or not excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations of said Policy forms. The printed Exceptions and Exclusions from the coverage and Limitations on Covered Risks of said policy or policies are set forth in Exhibit A attached. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on Covered Risks applicable to the CLTA and ALTA Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limit of Liability for certain coverages are also set forth in Exhibit A. Copies of the policy forms should be read. They are available from the office which issued this report. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit A of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered. It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land. This report (and any supplements or amendments hereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance, a Binder or Commitment should be requested. First American Title Order Number: NHSC-5064254 (mw) Page Number: 2 Dated as of May 11, 2017 at 7:30 A.M. The form of Policy of title insurance contemplated by this report is: To Be Determined A specific request should be made if another form or additional coverage is desired. Title to said estate or interest at the date hereof is vested in: TSG — PARCEL 1, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS TO LOT 1, A PORTION OF LETTERED LOTS B, M, N, 0, LETTERED LOTS C, D AND P; UPTOWN NEWPORT JAMBOREE, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS TO LOT 2, A PORTION OF LOT 4, A PORTION OF LETTERED LOTS B, L, M, N, AND 0, LETTERED LOTS E, F, J AND K; TPG/TSG VENTURE I ACQUISITION, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS TO A PORTION OF LETTERED LOTS L, M AND 0, LETTERED LOTS G, H AND I; UPTOWN NEWPORT BUILDING OWNER, LP, A DELAWARE LIMITED PARTNERSHIP, AS TO LOT 3, A PORTION OF LOT 4; THE CITY OF NEWPORT BEACH, AS TO LOT A The estate or interest in the land hereinafter described or referred to covered by this Report is: A fee. The Land referred to herein is described as follows: (See attached Legal Description) At the date hereof exceptions to coverage in addition to the printed Exceptions and Exclusions in said policy form would be as follows: 1. General and special taxes and assessments for the fiscal year 2017-2018, a lien not yet due or payable. 2. The lien of supplemental taxes, if any, assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code. 3. An easement for avigation purposes in and through the air above and incidental purposes, recorded March 17, 1964 as Book 6965, Page 721 of Official Records. In Favor of: The County of Orange Affects: A portion of said land First American Title Order Number: NHSC-5064254 (mw) Page Number: 3 The location of the easement cannot be determined from record information. 4. An easement for pole lines, conduits and incidental purposes, recorded February 18, 1974 as Book 11074, Page 182 of Official Records. In Favor of: Southern California Edison Company, a corporation Affects: Lettered Lots E, F, G, H and M 5. An easement for pole lines, conduits and incidental purposes, recorded February 19, 1974 as Book 11077, Page 1117 of Official Records. In Favor of: Southern California Edison Company, a corporation Affects: Lettered Lots H, I, J and L 6. A non-exclusive easement for purposes of ingress and egress as reserved in the deed recorded May 7, 1974 in Book 11137, Page 1008 of Official Records. Note 1: Said document recites the following: "Said reservation is subject to: Grantee's right to relocate said easement at Grantee's expense, at any time, and from time to time". Note 2: Said easements is 25 and 30 feet in width at different locations. Affects: Lot 2 and Lettered Lots M and 0 7. An easement for electrical supply systems and communication systems and incidental purposes, recorded March 7, 1990 as Instrument No. 90-120897 of Official Records. In Favor of: Southern California Edison Company, a corporation Affects: Lettered Lot H 8. An easement for communication facilities and incidental purposes, recorded July 3, 1991 as Instrument No. 91-346219 of Official Records. In Favor of: Pacific Bell Affects: Lots 3 and 4 and Lettered Lot H 9. An easement for maintenance and operation of an electrical substation and incidental purposes, recorded September 3, 1992 as Instrument No. 92-594041 of Official Records. In Favor of: Southern California Edison Company, a corporation Affects: Lot 2 and Lettered Lot E 10. The terms and provisions contained in the document entitled "Sound Mitigation Agreement" recorded June 30, 1997 as Instrument No. 19970303268 of Official Records. 11. An easement for telecommunications facilities and incidental purposes, recorded November 15, 2005 as Instrument No. 2005000916240 of Official Records. In Favor of: Affects: 12. Intentionally Deleted CoxCom Inc., d/b/a Cox Communications Orange County Lots 3 and 4 and Lettered Lot H First American Title Order Number: NHSC-5064254 (mw) Page Number: 4 13. The terms and provisions contained in the document entitled "Development Agreement" recorded March 26, 2013 as Instrument No. 2013000180939 of Official Records. The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Development Agreement" recorded February 14, 2014 as Instrument No. 2014000060352 of Official Records. Affects: Lot 2, A Portion of Lot 4, A Portion of Lettered Lots A, B, L, M, N, and 0, Lettered Lots E, F, J and K The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Development Agreement" recorded February 14, 2014 as Instrument No. 2014000060354 of Official Records. Affects: Lot 1, A Portion of Lettered Lots A, B, M, N, 0, Lettered Lots C, D and P The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Development Agreement" recorded February 14, 2014 as Instrument No. 2014000060356 of Official Records. Affects: Lot 3, A Portion of Lot 4, A Portion of Lettered Lots L, M and 0, Lettered Lots G, H and I Document(s) declaring modifications thereof recorded July 6, 2015 as Instrument No. 2015000349840 of Official Records. The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Development Agreement" recorded March 6, 2017 as 2017000091827 of Official Records. Affects: Lots 3 and 4 and other property The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Developement Agreement" recorded April 10, 2017 as 2017000143133 of Official Records. Affects: Lots 3 and 4 and other property 14. The terms and provisions contained in the document entitled "Memorandum of Agreement" recorded June 13, 2013 as Instrument No. 2013000359252 and rerecorded July 18, 2013 as Instrument No. 2013000429555, both of Official Records. 15. The terms and provisions contained in the document entitled "Amended and Restated Declaration of Reciprocal Easements" recorded February 13, 2014 as Instrument No. 2014000059221 of Official Records. 16. The terms and provisions contained in the document entitled "Inter -Phase Agreement" recorded February 14, 2014 as Instrument No. 2014000060494 of Official Records. First American Title Order Number: NHSC-5064254 (mw) Page Number: 5 17. The terms and provisions contained in the document entitled "Grant of Easements (Water, Fire, Gas, Sewer and Storm Drain)" recorded February 14, 2014 as Instrument No. 2014000060495 of Official Records. 18. The terms and provisions contained in the document entitled "Development Cooperation Agreement" recorded February 14, 2014 as Instrument No. 2014000060496 of Official Records. 19. The terms and provisions contained in the document entitled "Memorandum of Shared Infrastructure Agreement" recorded February 14, 2014 as Instrument No. 2014000060929 of Official Records. Affects: Lots 1 and 2, A Portion of Lot 4, A Portion of Lettered Lots A, B, L, M, N, 0, Lettered Lots C, D, E, F, J, K and P The terms and provisions contained in the document entitled "Memorandum of Second Amendment to Shared Infrastructure Construction Agreement" recorded March 6, 2017 as 2017000091828 of Official Records. Affects: Lots 1, 3, 4, A and B (portion) C, D, G, H, I, L (portion), M (portion), N, 0 (portion), P of Tract No. 17763 20. An option in favor of TPG/TSG Venture I Acquisition LLC, a Delaware limited liability company as contained in or disclosed by a document recorded February 14, 2014 as Instrument No. 2014000060972 of Official Records. Affects: Lot 2, A Portion of Lot 4, A Portion of Lettered Lots A, B, L, M, N, and 0, Lettered Lots E, F, J and K 21. The terms and provisions contained in the document entitled "License Agreement" recorded February 14, 2014 as Instrument No. 2014000061108 of Official Records. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F A document recorded June 5, 2015 as Instrument No. 2015000292781 of Official Records provides that the lien or charge of the deed of trust was subordinated to the lien or charge of the deed of trust recorded March 21, 2014 as Instrument No. 2014000107704 of Official Records. The terms and provisions contained in the document entitled "Amendment, Assignment and Assumption of License Agreement" recorded March 6, 2017 as 2017000091826 of Official Records. 22. Intentionally Deleted 23. A document entitled "Assignment of Contract Rights and Agreements" recorded February 14, 2014 as Instrument No. 2014000061175 of Official Records, as additional security for the payment of the indebtedness secured by the deed of trust recorded February 14, 2014 as Instrument No. 2014000061109 of Official Records. First American Title Order Number: NHSC-5064254 (mw) Page Number: 6 Affects: Lot 3, A Portion of Lot 4, A Portion of Lettered Lots L, M and 0, Lettered Lots G, H and I 24. A notice of nonresponsibility, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company, recorded August 12, 2014 as Instrument No. 2014000323937 of Official Records. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F 25. A notice of nonresponsibility, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company, recorded September 19, 2014 as Instrument No. 2014000382172 of Official Records. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F 26. A notice of nonresponsibility, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company, recorded January 14, 2015 as Instrument No. 2015000023703 of Official Records. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F 27. An easement dedicated to the City of Newport Beach on the Map of Tract 17763 as referred to in the legal description For: Emergency access, ingress, egress, public pedestrian walkway, paseo, open space, parking, public utility and public access and incidental purposes. 28. Easements reserved on the Map of Tract 17763 as referred to in the legal description: For: Public pedestrian, private street, walkway, paseo, open space, landscape, temporary access, parking, public utility and public access and incidental purposes. 29. A temporary easement reserved on the Map of Tract 17763 as referred to in the legal description For: project construction staging, stockpiling and installation of park improvements and incidental purposes. Affects: Lot A 30. A permanent easement reserved on the Map of Tract 17763 as referred to in the legal description For: operation, maintenance and repair of installed park improvements and incidental purposes. Affects: Lot A First American Title Order Number: NHSC-5064254 (mw) Page Number: 7 31. The following matters shown or disclosed by the Map of Tract 17763 referred to in the legal description: All lettered Lots are "Not a Separate Building Site" Lot "A" is for "Park" purposes and "Water Treatment" purposes. Lot "B" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "C" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "D" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "E" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "F" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "G" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "H" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "I" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "J" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "K" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "L" is for "Emergency Access", "Public Access", "Private Street" and "Utility" purposes. Lot "M" is for "Emergency Access", "Public Access", "Private Street" and "Utility" purposes. Lot "N" "Access", "Paseo", "Open Space", "Utility" and "Landscape" purposes. Lot "0" is for "Emergency Access", "Public Access", "Private Street" and "Utility" purposes. Lot "P" is for "Emergency Access", "Public Access", "Private Street" and "Utility" purposes. 32. Abutter's rights of ingress and egress to or from Jamboree Road have been dedicated or relinquished on the filed Map, except at the "access openings" shown on the map of Tract 17763. 33. A deed of trust to secure an original indebtedness of $18,000,000.00 recorded July 10, 2015 as Instrument No. 2015000361484 of Official Records. Dated: July 10, 2015 Trustor: TSG — Parcel 1, LLC, a Delaware limited liability company Trustee: First American Title Beneficiary: Terra Secured Income Fund 5, LLC, a Delaware limited liability company Affects: Lot 1 First American Title Order Number: NHSC-5064254 (mw) Page Number: 8 A document recorded March 31, 2016 as 2016000136850 of Official Records provides that the above document was subordinated to the document recorded March 31, 2016 as 20160000136850 of Official Records. A document recorded April 28, 2016 as 2017000187274 of Official Records provides that the above document was subordinated to the document recorded April 28, 2016 as 2016000187274 of Official Records. 34. A deed of trust to secure an original indebtedness of $25,750,000.00 recorded August 14, 2015 as Instrument No. 2015000424863 of Official Records. Dated: August 14, 2015 Trustor: Uptown Newport Jamboree, LLC, a Delaware limited liability company Trustee: First American Title Insurance Company Beneficiary: Fidelity & Guarantee Life Insurance Company, an Iowa corporation A document entitled "Assignment of Leases and Rents" recorded August 14, 2015 as Instrument No. 2015000424864 of Official Records, as additional security for the payment of the indebtedness secured by the deed of trust. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F and other property 35. An unrecorded lease dated March 12, 2002, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company as lessor and Newport FAB, LLC, a Delaware limited liability company doing business as Jazz Semiconductor as lessee, as disclosed by a "Subordination, Non - Disturbance and Attornment Agreement" recorded August 14, 2015 as Instrument No. 2015000424867 of Official Records. Defects, liens, encumbrances or other matters affecting the leasehold estate, whether or not shown by the public records. 36. An unrecorded lease dated November 23, 2011, as amended on June 11, 2015, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company as lessor and Skyworks Solutions, Inc., a Delaware corporation as lessee, as disclosed by a "Subordination, Non - Disturbance and Attornment Agreement" recorded August 14, 2015 as Instrument No. 2015000424868 of Official Records. Defects, liens, encumbrances or other matters affecting the leasehold estate, whether or not shown by the public records. 37. The terms and provisions contained in the document entitled "Affordable Housing Agreement" recorded September 09, 2015 as Instrument No. 2015000465265 of Official Records. The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Affordable Housing Agreement" recorded March 6, 2017 as 2017000091825 of Official Records. First American Title Order Number: NHSC-5064254 (mw) Page Number: 9 Affects: Lots 3 and 4 and other property The terms and provisions contained in the document entitled Partial Assignment and Assumption of Affordable Housing Agreement recorded April 10, 2017 as 2017000143134 of Official Records. Affects: Lots 3 and 4 and other property 38. An easement for storm drain and incidental purposes, recorded June 19, 2015 as Instrument No. 2015000320678 of Official Records. In Favor of: TSG — Parcel 1, LLC, a Delaware limited partnership Affects: Lettered Lot A 39. A document entitled Tract Map Certificate of Correction recorded February 2, 2016 as 2016000045179 of Official Records. 40. Covenants, conditions, restrictions, easements, assessments, liens, charges, terms and provisions in the document recorded March 31, 2016 as 2016000136850 of Official Records, which provide that a violation thereof shall not defeat or render invalid the lien of any first mortgage or deed of trust made in good faith and for value, but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, sexual orientation, familial status, disability, handicap, national origin, genetic information, gender, gender identity, gender expression, source of income (as defined in California Government Code § 12955 (p)) or ancestry, to the extent such covenants, conditions or restrictions violate 42 U.S.C. § 3604(c), or California Government Code § 12955. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status. Note: You may wish to contact the homeowners association referred to in the above document for information regarding assessments, transfer requirements or other matters. Affects: Lots 1, 3 and 4, and Lots B to P and Lot 2 (annexable territory) with other property 41. Covenants, conditions, restrictions, easements, assessments, liens, charges, terms and provisions in the document recorded April 28, 2016 as 2016000187274 of Official Records, which provide that a violation thereof shall not defeat or render invalid the lien of any first mortgage or deed of trust made in good faith and for value, but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, sexual orientation, familial status, disability, handicap, national origin, genetic information, gender, gender identity, gender expression, source of income (as defined in California Government Code § 12955 (p)) or ancestry, to the extent such covenants, conditions or restrictions violate 42 U.S.C. § 3604(c), or California Government Code § 12955. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status. Note: You may wish to contact the homeowners association referred to in the above document for information regarding assessments, transfer requirements or other matters. First American Title Order Number: NHSC-5064254 (mw) Page Number: 10 Affects: Lots 1, 3 and 4 and Lots B to P and Lot 2 (annexable territory) with other property 42. An easement for underground communication facilities and incidental purposes, recorded February 22, 2017 as 2017000075078 of Official Records. In Favor of: Pacific Bell Telephone Company, a California corporation dba AT&T California Affects: Lots 1 through 4, inclusive and Lettered Lots C, L, M, 0, P of Tract 17763 43. An easement for water pipeline and access purposes and incidental purposes, recorded February 27, 2017 as 2017000082310 of Official Records. In Favor of: Irvine Ranch Water District Affects: Lot A 44. An easement for water pipeline and access purposes and incidental purposes, recorded February 27, 2017 as 2017000082311 of Official Records. In Favor of: Irvine Ranch Water District Affects: Lots 3 and 4 and Lettered Lots L and M, and portions of Lots D, 0 and P 45. An easement for water pipeline and access purposes and incidental purposes, recorded February 27, 2017 as 2017000082312 of Official Records. In Favor of: Irvine Ranch Water District Affects: Lot 1 and Lettered Lots L and M and portions of Lots D, 0 and P 46. An easement for water pipeline and access purposes and incidental purposes, recorded February 27, 2017 as 2017000082313 of Official Records. In Favor of: Irvine Ranch Water District Affects: Lot 2 and Lettered Lots L and M and portions of Lots D, 0 and P 47. The terms and provisions contained in the document entitled Regulatory Agreement and Declaration of Restrictive Covenants recorded March 6, 2017 as 2017000091829 of Official Records. Affects: Lots 3 and 4 48. A deed of trust to secure an original indebtedness of $161,620,000.00 recorded March 6, 2017 as 2017000091830 of Official Records. Dated: March 1, 2017 Trustor: UPTOWN NEWPORT BUILDING OWNER, LP, a Delaware limited partnership Trustee: Fidelity National Title Insurance Company Beneficiary: Wilmington Trust, National Association, a national association Affects: Lots 3 and 4 First American Title 49. A deed of trust to secure 2017 as 2017000091831 Dated: Trustor: Trustee: Beneficiary: Affects: Order Number: NHSC-5064254 (mw) Page Number: 11 an original indebtedness of $163,692,302.00 recorded March 6, of Official Records. March 1, 2017 UPTOWN NEWPORT BUILDING OWNER, LP, a Delaware limited partnership Fidelity National Title Insurance Company Comerica Bank, in its capacity as Agent for Lenders Lots 3 and 4 50. A document entitled Intercreditor Agreement recorded March 6, 2017 as 2017000091833 of Official Records. Affects: Lots 3 and 4 51. An easement for pipelines and conduits, together with devices for metering, measuring, regulating, cathodic protection, communications and other appurtenances and incidental purposes, recorded May 2, 2017 as 2017000176218 of Official Records. In Favor of: Southern California Gas Company, a California corporation, its successors and assigns Affects: Lots L, M and 0 52. An easement for pipelines and conduits, together with devices for metering, measuring, regulating, cathodic protection, communications and other appurtenances and incidental purposes, recorded May 2, 2017 as 2017000176219 of Official Records. In Favor of: Southern California Gas Company, a California corporation, its successors and assigns Affects: Lot 1 53. An easement for pipelines and conduits, together with devices for metering, measuring, regulating, cathodic protection, communications and other appurtenances and incidental purposes, recorded May 2, 2017 as 2017000176220 of Official Records. In Favor of: Southern California Gas Company, a California corporation, its successors and assigns Affects: Lot 2, with other property 54. Rights of the public in and to that portion of the land lying within Road, Street, Alley or Highway. 55. Water rights, claims or title to water, whether or not shown by the public records. 56. Rights of parties in possession. Prior to the issuance of any policy of title insurance, the Company will require: First American Title Order Number: NHSC-5064254 (mw) Page Number: 12 57. With respect to TSG — Parcel 1, LLC, a Delaware limited liability company, Uptown Newport Jamboree, LLC, a Delaware limited liability company and TPG/TSG Venture I Acquisition, LLC, a Delaware limited liability company: a. A copy of its operating agreement and any amendments thereto; b. If it is a California limited liability company, that a certified copy of its articles of organization (LLC-1) and any certificate of correction (LLC-11), certificate of amendment (LLC-2), or restatement of articles of organization (LLC-10) be recorded in the public records; c. If it is a foreign limited liability company, that a certified copy of its application for registration (LLC-5) be recorded in the public records; d. With respect to any deed, deed of trust, lease, subordination agreement or other document or instrument executed by such limited liability company and presented for recordation by the Company or upon which the Company is asked to rely, that such document or instrument be executed in accordance with one of the following, as appropriate: (i) If the limited liability company properly operates through officers appointed or elected pursuant to the terms of a written operating agreement, such document must be executed by at least two duly elected or appointed officers, as follows: the chairman of the board, the president or any vice president, and any secretary, assistant secretary, the chief financial officer or any assistant treasurer; (ii) If the limited liability company properly operates through a manager or managers identified in the articles of organization and/or duly elected pursuant to the terms of a written operating agreement, such document must be executed by at least two such managers or by one manager if the limited liability company properly operates with the existence of only one manager. e. Other requirements which the Company may impose following its review of the material required herein and other information which the Company may require 58. With respect to UPTOWN NEWPORT BUILDING OWNER, LP, a Delaware limited partnership, a limited partnership: a. That a certified copy of the application for registration, foreign limited partnership (form LP-5) and any amendments thereto (form LP-6) be recorded in the public records; b. A full copy of the partnership agreement and any amendments; c. Satisfactory evidence of the consent of a majority in interest of the limited partners to the contemplated transaction; d. Other requirements which the Company may impose following its review of the material required herein and other information which the Company may require. First American Title Order Number: NHSC-5064254 (mw) Page Number: 13 INFORMATIONAL NOTES Note: The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than the certain dollar amount set forth in any applicable arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. If you desire to review the terms of the policy, including any arbitration clause that may be included, contact the office that issued this Commitment or Report to obtain a sample of the policy jacket for the policy that is to be issued in connection with your transaction. 1. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $no taxes due, Penalty: $0.00 Second Installment: $no taxes due, Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-01 through 445-134-07 and 445-134-10 through 445- 134-16 and 445-134-18 through 445-134-21 and 445-134-23 through 445-134-28 and 445-134-30 through 445-134-32 Affects: Lots A through P 2. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $no taxes due, Penalty: $0.00 Second Installment: $no taxes due, Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-22 Affects: Portion Lot 2 3. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $40,567.81, PAID Penalty: $0.00 Second Installment: $40,567.81, PAID Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-08 Affects: Lot 3 First American Title Order Number: NHSC-5064254 (mw) Page Number: 14 4. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $40,418.18, PAID Penalty: $0.00 Second Installment: $40,418.18, PAID Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-09 Affects: Lot 4 5. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $65,793.84, PAID Penalty: $0.00 Second Installment: $65,793.84, PAID Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-17 Affects: Lot 1 6. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $9,249.53, PAID Penalty: $0.00 Second Installment: $9,249.53, PAID Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-29 Affects: Portion Lot 2 7. According to the latest available equalized assessment roll in the office of the county tax assessor, there is located on the land a(n) Commercial Structure known as 4311 Jamboree Road, Newport Beach, California. Affects: Lot 1 The map attached, if any, may or may not be a survey of the land depicted hereon. First American expressly disclaims any liability for loss or damage which may result from reliance on this map except to the extent coverage for such loss or damage is expressly provided by the terms and provisions of the title insurance policy, if any, to which this map is attached. First American Title Order Number: NHSC-5064254 (mw) Page Number: 15 First American Title Company 1250 Corona Pointe Court, Suite 200 Corona, CA 92879 (951)256-5880 Fax - (909)476-2401 WIRE INSTRUCTIONS for First American Title Company, Demand/Draft Sub -Escrow Deposits Riverside County, California First American Trust, FSB 5 First American Way Santa Ana, CA 92707 Banking Services: (877) 600-9473 ABA 122241255 Credit to First American Title Company Account No. 3097840000 Reference Title Order Number 5064254 and Title Officer Mark Wardle Please wire the day before recording. First American Title Order Number: NHSC-5064254 (mw) Page Number: 16 LEGAL DESCRIPTION Real property in the City of Newport Beach, County of Orange, State of California, described as follows: LOTS 1 THROUGH 4, INCLUSIVE, AND LETTERED LOTS A THROUGH P, INCLUSIVE, OF TRACT NO. 17763 IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA AS SHOWN ON A MAP FILED IN BOOK 937, PAGES 17 THROUGH 23, INCLUSIVE, OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM ALL OIL, GAS, HYDROCARBONS AND OTHER MINERALS OF EVERY KIND AND NATURE BELOW A DEPTH OF FIVE HUNDRED (500) FEET BENEATH THE SURFACE OF THE ABOVE DESCRIBED PROPERTY, WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED IN THE DEED RECORDED MAY 7, 1974 IN BOOK 11137, PAGE 1008 OF OFFICIAL RECORDS. APN: 445-134-01 through 445-134-30 APN: Portions of 445-133-01, 445-133-02, 445-133-03 and 445-133-04 First American Title \6 4 Order Number: NHSC-5064254 (mw) Page Number: 17 44,M33N3 &VW 730 VN06107, 011,244 _eFEI 0 dP""O�RE� `,ads o 'H06 ti La MARCH 1973 First American Title Order Number: NHSC-5064254 (mw) Page Number: 18 NOTICE Section 12413.1 of the California Insurance Code, effective January 1, 1990, requires that any title insurance company, underwritten title company, or controlled escrow company handling funds in an escrow or sub -escrow capacity, wait a specified number of days after depositing funds, before recording any documents in connection with the transaction or disbursing funds. This statute allows for funds deposited by wire transfer to be disbursed the same day as deposit. In the case of cashier's checks or certified checks, funds may be disbursed the next day after deposit. In order to avoid unnecessary delays of three to seven days, or more, please use wire transfer, cashier's checks, or certified checks whenever possible. First American Title Order Number: NHSC-5064254 (mw) Page Number: 19 EXHIBIT A LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (BY POLICY TYPE) CLTA/ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE (02-03-10) EXCLUSIONS In addition to the Exceptions in Schedule B, You are not insured against loss, costs, attorneys' fees, and expenses resulting from: 1. Governmental police power, and the existence or violation of those portions of any law or government regulation concerning: (a) building; (b) zoning; (c) land use; (d) improvements on the Land; (e) land division; and (f) environmental protection. This Exclusion does not limit the coverage described in Covered Risk 8.a., 14, 15, 16, 18, 19, 20, 23 or 27. 2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not limit the coverage described in Covered Risk 14 or 15. 3. The right to take the Land by condemning it. This Exclusion does not limit the coverage described in Covered Risk 17. 4. Risks: (a) that are created, allowed, or agreed to by You, whether or not they are recorded in the Public Records; (b) that are Known to You at the Policy Date, but not to Us, unless they are recorded in the Public Records at the Policy Date; (c) that result in no loss to You; or (d) that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.e., 25, 26, 27 or 28. 5. Failure to pay value for Your Title. 6. Lack of a right: (a) to any land outside the area specifically described and referred to in paragraph 3 of Schedule A; and (b) in streets, alleys, or waterways that touch the Land. This Exclusion does not limit the coverage described in Covered Risk 11 or 21. 7. The transfer of the Title to You is invalid as a preferential transfer or as a fraudulent transfer or conveyance under federal bankruptcy, state insolvency, or similar creditors' rights laws. LIMITATIONS ON COVERED RISKS Your insurance for the following Covered Risks is limited on the Owner's Coverage Statement as follows: For Covered Risk 16, 18, 19, and 21 Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A. Covered Risk 16: Covered Risk 18: Covered Risk 19: Covered Risk 21: Your Deductible Amount 1% of Policy Amount or $2,500.00 (whichever is less) 1% of Policy Amount or $5,000.00 (whichever is less) 1% of Policy Amount or $5,000.00 (whichever is less) 1% of Policy Amount or $2,500.00 (whichever is less) Our Maximum Dollar Limit of Liability $10,000.00 $25,000.00 $25,000.00 $5,000.00 ALTA RESIDENTIAL TITLE INSURANCE POLICY (6-1-87) EXCLUSIONS In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees, and expenses resulting from: 1. Governmental police power, and the existence or violation of any law or government regulation. This includes building and zoning ordinances and also laws and regulations concerning: (a) and use (b) improvements on the land (c) and division (d) environmental protection This exclusion does not apply to violations or the enforcement of these matters which appear in the public records at Policy Date. First American Title Order Number: NHSC-5064254 (mw) Page Number: 20 This exclusion does not limit the zoning coverage described in Items 12 and 13 of Covered Title Risks. 2. The right to take the land by condemning it, unless: (a) a notice of exercising the right appears in the public records on the Policy Date (b) the taking happened prior to the Policy Date and is binding on you if you bought the land without knowing of the taking 3. Title Risks: (a) that are created, allowed, or agreed to by you (b) that are known to you, but not to us, on the Policy Date -- unless they appeared in the public records (c) that result in no loss to you (d) that first affect your title after the Policy Date -- this does not limit the labor and material lien coverage in Item 8 of Covered Title Risks 4. Failure to pay value for your title. 5. Lack of a right: (a) to any land outside the area specifically described and referred to in Item 3 of Schedule A OR (b) in streets, alleys, or waterways that touch your land This exclusion does not limit the access coverage in Item 5 of Covered Title Risks. 2006 ALTA LOAN POLICY (06-17-06) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 13, or 14); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing - business laws of the state where the Land is situated. 5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth -in -lending law. 6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 13(b) of this policy. 7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the Insured Mortgage in the Public Records. This Exclusion does not modify or limit the coverage provided under Covered Risk 11(b). The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) that arise by reason of: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such First American Title Order Number: NHSC-5064254 (mw) Page Number: 21 proceedings, whether or not shown by the records of such agency or by the Public Records. 2. 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 or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4. 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 by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 6. Any lien or right to a lien for services, labor or material not shown by the public records. 2006 ALTA OWNER'S POLICY (06-17-06) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 9 or 10); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title. 4. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction vesting the Title as shown in Schedule A, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 9 of this policy. 5. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A. The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) that arise by reason of: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records. 2. 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 or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4. 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 by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 6. Any lien or right to a lien for services, labor or material not shown by the public records. First American Title ALTA EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (07-26-10) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 16, 17, 18, 19, 20, 21, 22, 23, 24, 27 or 28); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing - business laws of the state where the Land is situated. 5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth -in -lending law. This Exclusion does not modify or limit the coverage provided in Covered Risk 26. 6. Any claim of invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to Advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11. 7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching subsequent to Date of Policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11(b) or 25. 8. The failure of the residential structure, or any portion of it, to have been constructed before, on or after Date of Policy in accordance with applicable building codes. This Exclusion does not modify or limit the coverage provided in Covered Risk 5 or 6. 9. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 27(b) of this policy. First American Title w '° First American Title Privacy Information We Are Committed to Safeguarding Customer Information In order to better serve your needs now and in the future, we may ask you to provide us with certain information. We understand that you may be concerned about what we will do with such information - particularly any personal or financial information. We agree that you have a right to know how we will utilize the personal information you provide to us. Therefore, together with our subsidiaries we have adopted this Privacy Policy to govern the use and handling of your personal information. Applicability This Privacy Policy governs our use of the information that you provide to us. It does not govern the manner in which we may use information we have obtained from any other source, such as information obtained from a public record or from another person or entity. First American has also adopted broader guidelines that govern our use of personal information regardless of its source. First American calls these guidelines its Fair Information Values. Types of Information Depending upon which of our services you are utilizing, the types of nonpublic personal information that we may collect include: • Information we receive from you on applications, forms and in other communications to us, whether in writing, in person, by telephone or any other means; • Information about your transactions with us, our affiliated companies, or others; and • Information we receive from a consumer reporting agency. Use of Information We request information from you for our own legitimate business purposes and not for the benefit of any nonaffiliated party. Therefore, we will not release your information to nonaffiliated parties except: (1) as necessary for us to provide the product or service you have requested of us; or (2) as permitted by law. We may, however, store such information indefinitely, including the period after which any customer relationship has ceased. Such information may be used for any internal purpose, such as quality control efforts or customer analysis. We may also provide all of the types of nonpublic personal information listed above to one or more of our affiliated companies. Such affiliated companies include financial service providers, such as title insurers, property and casualty insurers, and trust and investment advisory companies, or companies involved in real estate services, such as appraisal companies, home warranty companies and escrow companies. Furthermore, we may also provide all the information we collect, as described above, to companies that perform marketing services on our behalf, on behalf of our affiliated companies or to other financial institutions with whom we or our affiliated companies have joint marketing agreements. Former Customers Even if you are no longer our customer, our Privacy Policy will continue to apply to you. Confidentiality and Security We will use our best efforts to ensure that no unauthorized parties have access to any of your information. We restrict access to nonpublic personal information about you to those individuals and entities who need to know that information to provide products or services to you. We will use our best efforts to train and oversee our employees and agents to ensure that your information will be handled responsibly and in accordance with this Privacy Policy and First American's Fair Information Values. We currently maintain physical, electronic, and procedural safeguards that comply with federal regulations to guard your nonpublic personal information. Information Obtained Through Our Web Site First American Financial Corporation is sensitive to privacy issues on the Internet. We believe it is important you know how we treat the information about you we receive on the Internet. In general, you can visit First American or its affiliates' Web sites on the World Wide Web without telling us who you are or revealing any information about yourself. Our Web servers collect the domain names, not the e-mail addresses, of visitors. This information is aggregated to measure the number of visits, average time spent on the site, pages viewed and similar information. First American uses this information to measure the use of our site and to develop ideas to improve the content of our site. There are times, however, when we may need information from you, such as your name and email address. When information is needed, we will use our best efforts to let you know at the time of collection how we will use the personal information. Usually, the personal information we collect is used only by us to respond to your inquiry, process an order or allow you to access specific account/profile information. If you choose to share any personal information with us, we will only use it in accordance with the policies outlined above. Business Relationships First American Financial Corporation's site and its affiliates' sites may contain links to other Web sites. While we try to link only to sites that share our high standards and respect for privacy, we are not responsible for the content or the privacy practices employed by other sites. Cookies Some of First American's Web sites may make use of "cookie" technology to measure site activity and to customize information to your personal tastes. A cookie is an element of data that a Web site can send to your browser, which may then store the cookie on your hard drive. FirstAm.com uses stored cookies. The goal of this technology is to better serve you when visiting our site, save you time when you are here and to provide you with a more meaningful and productive Web site experience. Fair Information Values Fairness We consider consumer expectations about their privacy in all our businesses. We only offer products and services that assure a favorable balance between consumer benefits and consumer privacy. Public Record We believe that an open public record creates significant value for society, enhances consumer choice and creates consumer opportunity. We actively support an open public record and emphasize its importance and contribution to our economy. Use We believe we should behave responsibly when we use information about a consumer in our business. We will obey the laws governing the collection, use and dissemination of data. Accuracy We will take reasonable steps to help assure the accuracy of the data we collect, use and disseminate. Where possible, we will take reasonable steps to correct inaccurate information. When, as with the public record, we cannot correct inaccurate information, we will take all reasonable steps to assist consumers in identifying the source of the erroneous data so that the consumer can secure the required corrections. Education We endeavor to educate the users of our products and services, our employees and others in our industry about the importance of consumer privacy. We will instruct our employees on our fair information values and on the responsible collection and use of data. We will encourage others in our industry to collect and use information in a responsible manner. Security We will maintain appropriate facilities and systems to protect against unauthorized access to and corruption of the data we maintain. Form 50-PRIVACY (9/1/10) Page 1 of 1 Privacy Information (2001-2010 First American Financial Corporation) (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX C RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX (THIS PAGE INTENTIONALLY LEFT BLANK) RATE AND METHOD OF APPORTIONMENT CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of CSCDA Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California ("CFD No. 2018-03") and collected each Fiscal Year commencing in Fiscal Year 2019-2020, in an amount determined by the CSCDA Program Manager, through the application of the Rate and Method of Apportionment as described below. All Taxable Property in CFD No. 2018-03, 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 The terms hereinafter set forth have the following meanings: "Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final subdivision map, parcel map, condominium plan, record of survey, or other recorded County parcel map. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 2018-03 including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax Levy collection schedules (whether by the CSCDA Program Manager or designee thereof or both); the costs of collecting the Special Tax Levies (whether by the County or otherwise); the costs of remitting the Special Tax Levies to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to CSCDA, CFD No. 2018-03, or any designee thereof of complying with arbitrage rebate requirements, or responding to questions from the Securities and Exchange Commission or Internal Revenue Service pertaining to any CFD No. 2018-03 Bonds or any audit of any CFD No. 2018-03 Bonds by the Securities and Exchange Commission or Internal Revenue Service; the costs to CSCDA, CFD No. 2018-03, the Trustee or any designee thereof of complying with CSCDA, CFD No. 2018-03, or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax Levy disclosure statements and responding to public inquiries regarding the Special Tax Levies; the costs to CSCDA, CFD No. 2018-03, or any designee thereof related to an appeal of the levy or application of the Special Tax; the costs associated with the release of funds from an escrow account; and CSCDA's annual administration fees and third California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 1 party expenses. Administrative Expenses shall also include amounts estimated or advanced by CSCDA or CFD No. 2018-03 for any other administrative purposes of CFD No. 2018-03, including, but not limited to, attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tax Levies. "Apartment Floor Area" means all of the square footage of living area within the perimeter of the Apartment Property, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Apartment Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the Building Division of the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Apartment Property. "Apartment Property" means an Assessor's Parcel of Developed Property on which all or any portion of a structure or structures with multiple Apartment Units are located, and such Apartment Units are offered for rent and are not available for sale to individual owners. If Apartment Property is subsequently reclassified as Residential Property, Special Taxes levied on such reclassified Assessor's Parcels shall be modified to match those of Residential Property. "Apartment Unit" means one (1) for -rent residential unit on Apartment Property. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C.a.(2), below. "Authorized Facilities" means the facilities authorized to be financed by CFD No. 2018-03. "Backup Special Tax" means the Backup Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.a.(3), below. "Building Permit" means a permit issued by the City or other governmental agency for the construction of a residential or non-residential building on an Assessor's Parcel. "Buildout" means, for CFD No. 2018-03, that all expected Building Permits for Residential Property, Apartment Property, and Non -Residential Property to be constructed within CFD No. 2018-03 have been issued, as determined by the CSCDA Program Manager. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 2 "CFD No. 2018-03" means California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California. "CFD No. 2018-03 Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one (1) or more series, authorized by CFD No. 2018-03 under the Act and issued by CSCDA and secured by the Special Taxes. "City" means the City of Newport Beach. "Commission" means the governing board of CSCDA. "County" means the County of Orange. "CSCDA" means the California Statewide Communities Development Authority. "CSCDA Program Manager" means the program manager for CSCDA, or its designee. "Developed Property" means, for each Fiscal Year, all Taxable Property in Tax Zone 1 and Tax Zone 2, for which a Building Permit for new construction was issued after January 1, 2018 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied. For purposes of this Rate and Method of Apportionment, any Developed Property for which Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area is removed, shall be considered Developed Property under the previously assigned Land Use Class with the previously assigned Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area, until a new Building Permit is issued, and a new Land Use Class and Special Tax can be assigned. Notwithstanding the above, a reclassification shall not occur, unless the CSCDA Program Manager determines that the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after such reclassification, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds is each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. "Developer" means TSG-Parcel 1, LLC or Uptown Newport Jamboree, LLC and its successors and assigns. The term "successors" does not refer to the successors to all or any portion of the property within CFD No. 2018-03 unless the new property owner receives an assignment of the Developer's rights and obligations described in an assignment agreement or similar agreement. "Dwelling Unit" means one (1) for -sale residential unit of any configuration, including, but not limited to, a single family attached or detached dwelling, condominium, mobile home, or otherwise, but excluding Apai tiiient Units on Apartment Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 3 "Final Mapped Property" means, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, and Taxable Public Property, located in a Final Subdivision as of January 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied, but no earlier than January 1, 2018. "Final Subdivision" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, approved by the County 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, in either case, creates individual lots for which Building Permits may be issued without further subdivision. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution, or other instrument pursuant to which CFD No. 2018-03 Bonds are issued, as modified, amended, and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the land use classes listed in Table 1 below. "Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C.a.1 below, that can be levied by CSCDA in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Non -Residential Floor Area" means the total gross building square footage of non- residential property lying within an Assessor's Parcel for which one (1) or more non- residential Building Permits have been issued. Such square footage shall be measured from outside wall to outside wall, exclusive of overhangs, porches, patios, carports, or similar spaces attached to the building but generally open on at least two (2) sides, as determined by reference to the Building Permit(s) issued for that Assessor's Parcel, or if these are not available, as otherwise determined by the CSCDA Program Manager. "Non -Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit permitting the construction of one (1) or more non-residential units or facilities has been issued by the City or other governmental agency. "Outstanding Bonds" means all CFD No. 2018-03 Bonds which remain outstanding under the Indenture. "Property Owner Association Property" means, for each Fiscal Year (i) any property within the boundaries of CFD No. 2018-03 that was owned by a property owner association, including any master or sub -association, as of January 1 of the prior Fiscal Year, (ii) any property located in a Final Subdivision that was recorded as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determined from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street, or (iii) any property which, as of the May 1 California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 4 preceding the Fiscal Year for which the Special Tax is being levied, has been conveyed to a property owner's association, including any master or sub -association, provided evidence of such conveyance is submitted to the CSCDA Program Manager by May 1 preceding the Fiscal Year for which the Special Tax is being levied. The total number of acres to be classified as Property Owner Association Property or Public Property, shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax Levy within Tax Zone 1 and Tax Zone 2, to the Assigned Special Tax or the Maximum Special Tax of the respective Tax Zone, is equal for all Assessor's Parcels of Developed Property. For Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property categories, "Proportionately" means that the ratio of the actual Special Tax Levy per Acre within Tax Zone 1 and Tax Zone 2, to the Maximum Special Tax per Acre of their respective Land Use Class and Tax Zone, is equal. "Public Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2018-03 that, as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied, was (i) owned by, irrevocably offered, or dedicated to the federal government, the State, the County, the City, or any local government or other public agency, provided that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use; or (ii) encumbered by a public utility easement making impractical its use for any purpose other than that set forth in the easement. The total number of acres to be classified as Property Owner Association Property or Public Property shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Rate and Method of Apportionment" means this Rate and Method of Apportionment for CFD No. 2018-03. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Dwelling Unit. "Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued by the Building Division of the City for purposes of constructing one (1) or more Dwelling Units. Residential Property does not include Apartment Property for purposes of this Rate and Method of Apportionment. "Special Tax" or "Special Taxes" means the special tax to be levied in each Fiscal Year to fund the Special Tax Requirement for Facilities. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 5 "Special Tax Levy" or "Special Tax Levies" means the Special Tax to be levied in each Fiscal Year on Assessor's Parcel of Taxable Property to fund the Special Tax Requirement for Facilities, as applicable. "Special Tax Requirement" means that amount of Special Taxes required, if any, in any Fiscal Year for CFD No. 2018-03 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the CFD No. 2018-03 Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2018-03 Bonds; (iii) pay all or a portion of the Administrative Expenses as determined by the CSCDA Program Manager; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of Authorized Facilities to the extent that the inclusion of such amount does not increase the Special Tax Levy on Undeveloped Property; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax Levy, as determined by the CSCDA Program Manager pursuant to the Indenture. "State" means the State of California. "Tax Zone" means one of the two (2) mutually exclusive geographic areas defined below and identified in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 1" means the geographic area specifically identified as Zone 1 in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 2" means the geographic area specifically identified as Zone 2 in Attachment 1 of this Rate and Method of Apportionment. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2018-03 that are not exempt Property Owner Association Property or exempt Public Property or other property exempted pursuant to Section E herein. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E herein. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E herein. "Total Floor Area" means the sum of the Residential Floor Area, Apartment Floor Area, and the Non- Residential Floor Area located on an Assessor's Parcel. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, or Taxable Public Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 6 B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2018-03 shall be classified as Developed Property, Final Mapped Property, Undeveloped Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, or Taxable Public Property and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D below. C. MAXIMUM SPECIAL TAX RATE a. Developed Property (1) Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax and (ii) the amount derived by application of the Backup Special Tax. (2) Assigned Special Tax Residential Property shall be assigned to Land Use Classes 1 and 2 as listed in Table 1 below based on the description associated with each Dwelling Unit or Apartment Unit and its determined Tax Zone. Non -Residential Property shall be assigned to Land Use Class 3 as listed in Table 1 below based on the description associated with square feet of Non -Residential Floor Area and it's determined Tax Zone. The Assigned Special Tax that shall be levied in Fiscal Year 2019-2020 for each Assessor's Parcel classified as Developed Property is shown on the following page in Table 1. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 7 TABLE 1 Assigned Special Tax for Developed Property CFD No. 2018-03 Fiscal Year 2019-2020 LAND USE CLAS 1 ESCRIPTION ASSIGNED SPECIAL TAX • ` - ASSIGNED SPECIAL TAX h. 1 Residential Property $750 per Dwelling Unit $950 per Dwelling Unit 2 Apartment Property $0 per Apartment Unit $260 per Apartment Unit 3 Non -Residential Property $5.35 per Square Foot of Non -Residential Floor Area $5.35 per Square Foot of Non -Residential Floor Area (3) Backup Special Tax The Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $50,028 per Acre of the Assessor's Parcel. If a Final Subdivision includes Assessor's Parcels of Taxable Property for which Building Permits have been issued, exclusive of Taxable Property Owner Association Property and Taxable Public Property, then the Backup Special Tax for each residential Dwelling Unit shall be calculated according to the following formula: Residential Dwelling Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Residential Floor Area/(Total Floor Area)) / Number of residential Dwelling Units) In this case, the Backup Special Tax for each Apartment Unit shall be calculated according to the following formula: Apartment Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Apartment Floor Area/(Total Floor Area)) / Number of Apartment Units) Finally, the Backup Special Tax for each square foot of Non -Residential Floor Area shall be calculated according to the following formula: Non -Residential Square Foot Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Non -Residential Floor Area/(Total Floor Area)) / Non -Residential Floor Area) California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 8 Furthermore, all Assessor's Parcels within CFD No. 2018-03 shall be relieved simultaneously and permanently from the obligation to pay and disclose the Backup Special Tax if the CSCDA Program Manager calculates that (i) the annual debt service required for the Outstanding Bonds, when compared to the Assigned Special Tax that shall be levied against all Assessor's Parcels of Developed Property in CFD No. 2018-03, results in 110% debt service coverage (i.e., the Assigned Special Tax that shall be levied against all Developed Property in CFD No. 2018-03 in each remaining Fiscal Year based on the then existing development is at least equal to the sum of (a) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (b) the Administrative Expenses as defined in Section A herein), or (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it shall not issue any additional CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Assigned Special Tax in CFD No. 2018-03. (4) Increase in the Assigned Special Tax and Backup Special Tax On each July 1, commencing on July 1, 2020, the Assigned Special Tax and the Backup Special Tax shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. (5) Multiple Land Use Classes In some instances, an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Special Tax levied on an Assessor's Parcel shall be the sum of the Special Tax for all Land Use Classes located on that Assessor's Parcel. Furthermore, if only a portion of Building Permits have been issued on an Assessor's Parcel, the remaining portion of the Assessor's Parcel shall be considered Final Mapped Property. The CSCDA Program Manager's allocation to each type of property shall be final. b. Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property (1) Maximum Special Tax The Fiscal Year 2019-2020 Maximum Special Tax for each Assessor's Parcel of Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be $50,028 per Acre. (2) Increase in the Maximum Special Tax On each July 1, commencing on July 1, 2020, the Maximum Special Tax for Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property within each respective Tax Zone, shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 9 D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2019-2020 and for each following Fiscal Year, the CSCDA Program Manager shall determine the Special Tax Requirement and shall (i) levy 100% of the Assigned Special Taxes on Developed Property, and (ii) levy the remaining Special Taxes as prioritized below until the total Special Taxes levied equal the Special Tax Requirement. The Special Taxes shall be levied in each Fiscal Year as follows: 1. Annual Levy First: The Special Tax shall be levied on each Assessor's Parcel of Residential Property and Apaitiiient Property, within all Tax Zones, in an amount equal to 100% of the applicable Assigned Special Tax for Residential Property and Apartment Property respectively. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied on each Assessor's Parcel of Non -Residential Property, within all Tax Zones, until (i) the total Special Tax levied under the first two steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Non -Residential Property equals 100% of the applicable Assigned Special Tax, whichever comes first. Third: If additional monies are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Final Mapped Property, within all Tax Zones, until (i) the total Special Tax levied under the first three steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Final Mapped Property equals 100% of the applicable Maximum Special Tax, whichever comes first. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, within all Tax Zones, until (i) the total Special Tax levied under the first four steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Undeveloped Property equals 100% of the applicable Maximum Special Tax, whichever occurs first. Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property for which the Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to 100% of the Maximum Special Tax for each such Assessor's Parcel of Developed Property, within all Tax Zones, until (i) the total Special Tax levied under the first five steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Developed Property equals 100% of the Maximum Special Tax for Developed Property, whichever occurs first. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 10 Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property, within all Tax Zones, until (i) the total Special Tax levied under the first six steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Property Owner Association Property equals 100% of the Maximum Special Tax for Property Owner Association Property, whichever occurs first. Seventh: If additional monies are needed to satisfy the Special Tax Requirement after the first six steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property, within all Tax Zones, until (i) the total Special Tax levied under the first seven steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Public Property equals 100% of the Maximum Special Tax for Taxable Public Property, whichever occurs first. Notwithstanding the above, the CSCDA Program Manager or its designee may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax in the first step (above), when (i) CSCDA is no longer required to levy the Special Tax beyond the first step (above) in order to meet the Special Tax Requirement; and (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it will not issue any additional CFD No. 2018-03 Bonds (except refunding bonds), to be supported by the Special Tax. E. EXEMPTIONS No Special Tax shall be levied on Public Property or Property Owner Association Property in CFD No. 2018-03 provided that no such exemption shall reduce the total Acreage of Taxable Property to less than 12.88 Acres. Tax-exempt status shall be assigned by the CSCDA Program Manager in the chronological order in which property in CFD No. 2018-03 becomes Public Property or Property Owner Association Property. However, should an Assessor's Parcel of Public Property or Property Owner Association Property no longer be classified as tax-exempt, it will, from that point forward, be subject to the Special Tax. Furthermore, any Assessor's Parcel designated as Public Property or Property Owner Association Property that cannot be exempt from the Special Tax because such exemption would reduce the Acreage of all Taxable Property within CFD No. 2018-03 to less than 12.88 Acres shall be designated as Taxable Public Property or Taxable Property Owner Association Property. Prior to sixty (60) days before the issuance of a first series of CFD No. 2018-03 Bonds, the CSCDA Program Manager may increase or decrease the final number of minimum taxable Acres in CFD No. 2018-03 to better reflect the actual tax-exempt acreage within CFD No. 2018-03. However, notwithstanding the above, the final number of taxable Acres in CFD No. 2018-03 shall not be decreased if it causes an increase in the Special Tax levied on any existing Assessor's Parcel of Developed Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 11 F. REVIEW/APPEAL PROCESS Any taxpayer may file a written appeal of the Special Tax on his/her property with CSCDA, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CSCDA Program Manager or its designee shall review the appeal, meet with the appellant if the CSCDA Program Manager deems necessary, and advise the appellant of its determination within sixty (60) days after receipt of the appeal. If the CSCDA Program Manager agrees with the appellant, the CSCDA Program Manager shall make a recommendation to CSCDA to eliminate or reduce the Special Tax on the appellant's property or to provide a refund to appellant. The approval of CSCDA or its designee must be obtained prior to any such elimination or reduction. If the CSCDA Program Manager disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has thirty (30) days in which to appeal to CSCDA by filing a written notice of appeal with the CSCDA Program Manager, provided that the appellant is current in his/her payments of the Special Taxes. The second appeal must specify the reasons for the appellant's disagreement with the CSCDA Program Manager's determination. The CSCDA Program Manager shall schedule the appeal to be heard before CSCDA within sixty (60) days after receipt of the second appeal. Interpretations may be made by CSCDA, without Resolution or Ordinance of the Commission, for purposes of clarifying any vagueness or ambiguity as it relates to the Special Taxes, the Rate and Method of Apportionment, Land Use Classes, or any other definition applicable to CFD No. 2018-03. Without Commission approval, the CSCDA Program Manager may make minor, non - substantive administrative and technical changes to the provisions of this document that do not materially affect the rate, method of apportionment, and manner of collection of the Special Tax for purposes of administrative efficiency or convenience or to comply with new applicable federal, state, or local law. G. MANNER OF COLLECTION The Special Tax Levy will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2018-03 may directly bill the Special Tax Levy, may collect Special Tax Levies 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. H. PREPAYMENT OF SPECIAL TAX Under this Rate and Method of Apportionment, an Assessor's Parcel within CFD No. 2018-03 is permitted to prepay the Special Tax. The obligation of the owner of an Assessor's Parcel to pay the Special Tax may be fully or partially prepaid and permanently satisfied as described herein, California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 12 provided that a prepayment may be made only for Assessor's Parcels of Developed Property, or for an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2019, and only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CSCDA Program Manager with written notice of intent to prepay. Within thirty (30) days of receipt of such written notice, the CSCDA Program Manager shall notify such owner of the Special Tax Prepayment Amount (defined below) for such Assessor's Parcel. The CSCDA Program Manager may charge such owner a reasonable fee for providing this service. If there are Outstanding Bonds, prepayment must be made not less than thirty (30) days prior to a date that notice of redemption of CFD No. 2018-03 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The following additional definitions apply to this Section H: "CFD Public Facilities Costs" means either $7,500,000 in 2018 dollars, which shall increase by the Construction Inflation Index on July 1, 2019, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CSCDA Program Manager as sufficient to provide funding for the Authorized Facilities under the authorized bonding program for CFD No. 2018- 03, or (ii) shall be determined by CSCDA concurrently with a covenant that it shall not issue any more CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Special Tax levy under this Rate and Method of Apportionment. "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 month of December in 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 CSCDA Program Manager 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 Costs minus (i) costs of Authorized Facilities previously paid from the Improvement Fund, (ii) monies currently on deposit in the Improvement Fund available to pay costs of Authorized Facilities, (iii) monies currently on deposit in an escrow fund established pursuant to the Indenture and expected to be available to fund Authorized Facilities and (iv) the amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of these funds. "Improvement Fund" means a fund or account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct Authorized Facilities. "Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 13 1. Prepayment in Full The Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Equals Special Tax Prepayment Amount As of the proposed date of prepayment, the Special Tax Prepayment Amount shall be calculated according to the following paragraphs: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2018, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the Building Permit which has already been issued for such Assessor's Parcel. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Tax levy for CFD No. 2018-03 based on the Assigned Special Tax for Developed Property which could be levied on all expected development assuming Buildout of CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the total estimated Backup Special Taxes at Buildout for the entire CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be redeemed (the "Bond Redemption Amount"). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Previously Issued Bonds to be redeemed (the "Redemption Premium"). 6. Compute the current Future Facilities Costs. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 14 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Previously Issued Bonds. 9. Determine the Special Tax levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 10. Compute the minimum amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of the Special Tax Prepayment Amount, less any interest earnings attributed to the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount"). 12. The administrative fees and expenses of CFD No. 2018-03 are as calculated by the CSCDA Program Manager and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 2018-03 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% of the reserve requirement (as defined in the Indenture). 14. If any capitalized interest for the Previously Issued 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 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment date (the "Capitalized Interest Credit"). 15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11, and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Special Tax Prepayment Amount"). California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 15 2. Prepayment in Part The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP = (PE — A) x F + A. These terms have the following meaning: PP = the partial prepayment PE = the Special Tax Prepayment Amount calculated according to Section H.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. A = the Administration Fees and Expenses from Section H.1. The owner of any Assessor's Parcel who desires such prepayment shall notify the CSCDA Program Manager of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. With respect to any Assessor's Parcel that is partially prepaid, CSCDA shall (i) distribute the funds remitted to it according to Section H.3, and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D. 3. General Provisions Applicable to the Prepayment of Special Tax (a). Use of the Special Tax Prepayment Amount The Special Tax Prepayment Amount, less the Administrative Fees and Expenses calculated according to Sections H.1 and H.2 which shall be retained by CFD No. 2018- 03, and less the Future Facilities Amount calculated according to Section H.1 which shall be deposited into the Improvement Fund, shall be deposited into specific funds established under the Indenture, to fully or partially redeem as many Outstanding Bonds as possible, and, if amounts are less than $5,000, to make debt service payments on the Outstanding Bonds (collectively designated as the "Bond Retirement Funds"). (b). Full Prepayment of Special Tax Upon confirmation of the payment of the current Fiscal Year's entire Special Tax obligation, the CSCDA Program Manager may remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 16 Assessor's Parcel that is prepaid in accordance with Section H.1, the CSCDA Program Manager shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, and the obligation to pay the Special Tax for such Assessor's Parcel shall cease. (c). Partial Prepayment of Special Tax With respect to any Assessor's Parcel that is partially prepaid, the CSCDA Program Manager shall (i) distribute or cause to be distributed the funds remitted to it according to Section H.2. and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's parcel, equal to the outstanding percentage (1.00 — F) of the Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D herein. (d). Debt Service Coverage Notwithstanding the foregoing, no prepayment of the Special Tax shall be allowed unless the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after the proposed prepayment, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. I. TERM OF SPECIAL TAX The Special Tax shall be levied until the final series of CFD No. 2018-03 Bonds have matured, provided that the Special Tax shall not be levied after Fiscal Year 2069-2070. The Special Taxes will cease to be levied in an earlier Fiscal Year if the CSCDA Program Manager has determined that all required interest and principal payments on the CFD No. 2018-03 Bonds have been paid and CSCDA has covenanted that it will not issue any more CFD No. 2018-03 Bonds (other than refunding Bonds) to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 17 ATTACHMENT 1 PROPOSED BOUNDARIES & IDENTIFICATION OF TAX ZONES OF CFD NO. 2018-03 SHEET 1 OF 1 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA For particulars of lines and dimensions. reference is made to the parcels maps of the Orange County Assessor. California. and to Tract map No. 17763 recorded on June 19, 2015 as insvument No. 201500320061 at Pages 17 through 23 in Book 937 of maps in the office of the County Recorder of Orange County, California. LEGEND Proposed Boundaries of Califomia Statewide Communities Development • Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, California 11111111 Parcel Line Tax Zone 1 Tax Zone 2 445-13n-nn Assessor Parcel Number F .EPA0.ED BY WIYID TA U9510 ANO AiSOC IATE9% INC. (1) Filed in the office of the Secretary of California Statewide Communities Development Authority this day of , 2018. Secretary, California Statewide Communities Development Authority (2) I hereby certify that the within map showing proposed boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport). City of Newport Beach. County of Orange, Stale of California, was approved by the Commission of the California Statewide Communities Development Authority at a regular meeting thereof. held on this day of , 2018, by its resolution No. Secretary, California Statewide Communities Development Authority (3) Filed this day of 2018, at the hour of o'clock _ m., in Book of Maps of Assessment. and Community Facilities Districts at page and as Instrument No. in the office of the County Recorder of Orange County. State of California_ Hugh Nguyen Clerk -Recorder, County of Orange By Deputy Fee (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX D PROPOSED FORM OF OPINION OF BOND COUNSEL [Closing Date] California Statewide Communities Development Authority Sacramento, California California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (Final Opinion) Ladies and Gentlemen: We have acted as bond counsel to the California Statewide Communities Development Authority (the "Authority") in connection with the issuance by the Authority of $ aggregate principal amount of its Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds") pursuant to the provisions of the Mello -Roos Community Facilities Act of 1982 of the State of California (being Sections 53311 et seq. of the Government Code of the State of California, as amended) and an Indenture by and between the Authority and Wilmington Trust, National Association, as trustee (the "Trustee"), dated as of March 1, 2019 (the "Indenture"). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture. In such connection, we have reviewed the Indenture, the Tax Certificate, opinions of counsel to the Authority, the Developers and the Trustee, certificates of the Authority, the Developers, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not be relied upon or otherwise used in connection with any such actions, events or matters. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Authority. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax purposes. We call attention to the fact that the rights and obligations under the Bonds, the Indenture and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against joint powers authorities in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non -exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any of the assets described in or as subject to the lien of the Indenture or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets. We express no opinion regarding the plans, specifications, maps, financial report or other engineering or financial details of the proceedings, or upon the Rate and Method or the validity of the Special Tax levied upon any individual parcel. Our services did not include financial or other non -legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion with respect thereto. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions: 1. The Bonds constitute the valid and binding special tax obligations of the Authority, payable solely from the proceeds of the Special Tax and certain funds held under the Indenture. 2. The Indenture has been duly executed and delivered by, and constitutes the valid and binding obligation of, the Authority. 3. Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds. Faithfully yours, ORRICK, HERRINGTON & SUTCLIFFE LLP per D-2 APPENDIX E SUMMARY OF THE INDENTURE The following is a brief summary of certain provisions of the Indenture. Additional provisions of the Indenture are summarized in the body of the Official Statement. This summary does not purport to be complete and is qualified in its entirety by reference to the Indenture. Definitions Unless the context otherwise requires, the terms defined below will for all purposes of the Indenture and of any Supplemental Indenture and of the Bonds and of any certificate, opinion, report, request or other document mentioned in the Indenture or in any Supplemental Indenture or in the Bonds have the meanings defined below. The following definitions will be equally applicable to both the singular and plural forms of any of the terms defined in the Indenture. "Acquisition Agreement" means that certain Acquisition Agreement, between the City of Newport Beach and TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC, as the same may be further amended from time to time in accordance with its terms. "Acquisition and Construction Fund" means the "CSCDA/Uptown Newport Community Facilities District Acquisition and Construction Fund" established pursuant to the Indenture and maintained by the Trustee. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of the Community Facilities District: the costs of computing the Special Tax and preparing the annual Special Tax collection schedules; the costs of remitting the Special Tax to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the Authority or any designee thereof of complying with arbitrage rebate requirements; the costs to the Authority or any designee thereof of complying with disclosure requirements associated with applicable federal and state securities laws and of the Law; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Tax, the costs of the Authority or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from an escrow account; and the Authority's annual administration fees and third party expenses. Administrative Expenses will also include amounts estimated or advanced by the Authority for any other administrative purposes of the Community Facilities District, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tax. "Authority" means the California Statewide Communities Development Authority. "Authorized Signatory" means any member of the Commission of the Authority and any other person as may be designated and authorized to sign on behalf of the Authority pursuant to a resolution adopted thereby. "Average Annual Debt Service" means the average over all Bond Years of the annual debt service from the date of the Bonds to their maturity, including: (1) the principal amount of all such Outstanding Bonds payable in such Bond Year either at maturity or pursuant to a Sinking Fund Payment; and E- 1 (2) the interest payable on the aggregate principal amount of such Bonds Outstanding in such Bond Year assuming such Bonds are retired as scheduled. "Bond Year" means the period from September 2 through the following September 1. "Bonds" means the special tax bonds of the Authority at any time Outstanding under the Indenture or under any Supplemental Indenture that are executed, issued and delivered in accordance with the provisions of the Indenture or of any Supplemental Indenture and that were authorized at the special election held in the Community Facilities District on December 20, 2018. "Serial Bonds" means the Bonds for which no Mandatory Sinking Account Payments are established. "Term Bonds" means the Bonds which are redeemable or payable on or before their specified maturity date or dates from the Mandatory Sinking Account Payments established for the purpose of redeeming or paying such Bonds on or before their specified maturity date or dates. "Capitalized Interest Account" means the account of that name in the Redemption Fund established pursuant to the Indenture and maintained by the Trustee. "Certificate of the Authority" means an instrument in writing signed by an Authorized Signatory. "Certificate of the City" means an instrument in writing signed by an officer of the City or such officer's designee. "City" means the City of Newport Beach, California. "Closing Date" means, with respect to the Series 2019 Bonds, the date upon which the Series 2019 Bonds are delivered and, with respect to any Refunding Bonds, will have the meaning given to such term in the Supplemental Indenture providing for the issuance of such Refunding Bonds. "Code" means the Internal Revenue Code of 1986 and the regulations issued thereunder from time to time, and in this regard reference to any particular Section of the Code will include reference to any successor to such Section of the Code. "Commission" means the governing board of the Authority. "Community Facilities District" means the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), a community facilities district duly organized by the Authority and existing in the County of Orange under and by virtue of the Law. "Costs of Issuance" means all costs and expenses payable by or reimbursable to the Authority that are related to the formation of the Community Facilities District or the authorization, sale, execution, authentication, or initial delivery of Bonds, including costs of preparation and reproduction of documents, rating agency fees (if any), filing fees, fees, and charges of the Trustee (including fees and expenses of its counsel), legal fees and charges and fees and charges of other consultants and professionals, together with all costs for the preparation of Bonds, and any other cost or expense in connection with the formation of the Community Facilities District or the authorization, sale, execution, authentication, or initial delivery of Bonds. "Costs of Issuance Account" means the CSCDA/Uptown Newport Community Facilities District Costs of Issuance Account established pursuant to the Indenture and maintained by the Trustee. E-2 "Debt Service" means, for any period, the sum of (1) the interest payable during such period on all Outstanding Bonds, assuming that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds are redeemed or paid as scheduled at the times of and in amounts equal to the sum of all Mandatory Sinking Account Payments (but excluding the amount of any such interest funded from the proceeds of the sale of Bonds or investment earnings thereon), plus (2) the principal amount of all Outstanding Serial Bonds maturing by their terms in such period, plus (3) the aggregate amount of all Mandatory Sinking Account Payments required to be deposited in all Sinking Accounts in such period. For purposes of any test for the issuance of Bonds to refund Outstanding Bonds, Debt Service will be deemed to include Debt Service on the proposed refunding Bonds but will not include Debt Service on any Bonds proposed to be defeased concurrently. "Developer" means, collectively, TSG-Parcel 1, LLC, a Delaware limited liability company and Uptown Newport Jamboree, LLC, a Delaware Limited Partnership. "Event of Default" means an event described as such in the Indenture. "Expense Fund" means the CSCDA/Uptown Newport Community Facilities District Expense Fund established pursuant to the Indenture and maintained by the Trustee. "Federal Securities" means (a) any securities now or hereafter authorized both the interest on and principal of which are guaranteed by the full faith and credit of the United States of America, and (b) any of the following obligations of federal agencies not guaranteed by the United States of America: (1) participation certificates or senior debt obligations of the Federal Home Loan Mortgage Corporation, (2) bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act and bonds of any federal home loan bank established under such act, and (3) stocks, bonds, debentures, participations and other obligations of or issued by the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National Mortgage Association or the Federal Home Loan Mortgage Corporation, as and to the extent that such securities or obligations are eligible for the legal investment of Authority funds, together with any repurchase agreements which are secured by any of such securities or obligations that (a) have a fair market value (determined at least daily) at least equal to one hundred two percent (102%) of the amount invested in the repurchase agreement, (b) are in the possession of the Trustee or a third party acting solely as agent for the Trustee who holds a perfected first lien therein, and (c) are free from all third party claims. "Fiscal Year" means the twelve-month period terminating on June 30 of each year, or any other annual accounting period hereafter selected and designated by the Authority as its Fiscal Year in accordance with applicable law. "Generally Accepted Accounting Principles" means the uniform accounting and reporting procedures set forth in publications of the American Institute of Certified Public Accountants or its successor, or by any other generally accepted authority on such procedures, and includes, as applicable, the standards set forth by the Governmental Accounting Standards Board or its successor. "Holder" means any person who is the registered owner of any Outstanding Bond, as shown on the registration books maintained by the Trustee pursuant to the Indenture. "Improvements" means the public capital improvements and utility undergrounding authorized to be financed by the Community Facilities District, and to which the Community Facilities District is authorized to contribute, as more particularly described in the Resolution of Formation. "Indenture" means the Indenture and all Supplemental Indentures. E-3 "Independent Certified Public Accountant" means any certified public accountant or firm of such accountants duly licensed and entitled to practice and of recognized national reputation as a verification agent, appointed and paid by the Authority, and who, or each of whom: (1) is in fact independent and not under the domination of the Authority; (2) does not have a substantial financial interest, direct or indirect, in the operations of the Authority; and (3) is not connected with the Authority as an officer or employee of the Authority, but who may be regularly retained to audit the accounting records of and make reports thereon to the Authority. "Interest Payment Date" means March 1 and September 1 of each year, commencing September 1, 2019, as well as any date on which the Bonds are redeemed prior to their maturity. "Law" means the Mello -Roos Community Facilities Act of 1982, as amended (being Sections 53311 et seq. of the Government Code of the State of California) and all laws amendatory thereof or supplemental thereto. "Legal Investments" means any securities in which funds of the Authority may be legally invested in accordance with the applicable law in effect at the time of such investment and in accordance with the then current investment policy of the Authority as determined by the Commission, including without limitation the California Asset Management Program pooled investment fund. "Lien Amount" means, with respect to any parcel subject to the lien of the Special Tax, the sum of (A) the aggregate principal amount of the Bonds attributable to such parcel plus (B) the aggregate principal amount of bonds, notes or other evidences of indebtedness other than the Bonds then outstanding and payable from assessments or reassessments to be levied on such parcel, plus (C) a portion of the aggregate principal amount of bonds, notes or other evidences of indebtedness issued under the Law and payable at least partially from special taxes to be levied on the parcel (except to the extent such special taxes are made expressly subordinate to the special taxes securing Bonds) (the "Other Mello -Roos Bonds") equal to the aggregate principal amount of the Other Mello -Roos Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other Mello -Roos Bonds on the parcel and the denominator of which is the total amount of special taxes levied for the Other Mello -Roos Bonds on all parcels of land securing the Other Mello -Roos Bonds (such fraction to be determined based upon the maximum special taxes which could be levied the year in which maximum annual debt service on the Other Mello -Roos Bonds occurs), based upon information from the most recent available fiscal year. "Mandatory Sinking Account Payments" means the payments required by the Indenture and by all Supplemental Indentures to be deposited in all Sinking Accounts established for the payment of all Term Bonds. "Maximum Annual Debt Service" means the maximum sum obtained for any Bond Year prior to the final maturity of Bonds by totaling the following for each Bond Year: (1) The amount of all such Outstanding Bonds payable in such Bond Year; (2) The principal amount of any such Bonds scheduled to be called and redeemed in such Bond Year; and E-4 (3) The interest payable on the aggregate principal amount of such Outstanding Bonds in such Bond Year if such Outstanding Bonds are retired as scheduled. "Moody's" means Moody's Investors Service, Inc., a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors or assigns, except that if such entity is dissolved or liquidated or no longer performs the functions of a securities rating agency, then the term "Moody's" will be deemed to refer to any other nationally recognized securities rating agency selected by the Authority. "Opinion of Counsel" means a written opinion of counsel retained or employed by the Authority. "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of the Indenture) all Bonds except: (1) Bonds cancelled and destroyed by the Trustee or delivered to the Trustee for cancellation and destruction; (2) Bonds paid or deemed to have been paid within the meaning of the Indenture; and (3) Bonds in lieu of or in substitution for which other Bonds have been executed by the Authority and authenticated and delivered by the Trustee pursuant to the Indenture. "Park Improvement Subaccount" means the subaccount by that name in the Acquisition and Construction Fund and established pursuant to the Indenture. "Prepayment Fund" means the CSCDA/Uptown Newport Community Facilities District Prepayment Fund established pursuant to the Indenture and maintained by the Trustee. "Principal Corporate Trust Office" means the corporate trust office of the original Trustee in Los Angeles or San Francisco, California, at which at any particular time corporate trust business is administered, or such other office as it designates; and any such office designated by any successor Trustee, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term will mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business will be conducted. "Rate and Method" means the "Rate and Method of Apportionment California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport)" adopted by the Commission as part of the Resolution of Formation, as the same may be amended from time to time. "Rebate Fund" means the CSCDA/Uptown Newport Community Facilities District Rebate Fund established pursuant to the Indenture (to be maintained by the Treasurer of the Authority). "Redemption Fund" means the CSCDA/Uptown Newport Community Facilities District Redemption Fund established pursuant to the Indenture and maintained by the Trustee. "Refunding Bonds" means Bonds other than the Series 2019 Bonds that are issued pursuant to the Indenture. "Required Bond Reserve" means, as of any date of calculation, an amount equal to the lesser of (a) Maximum Annual Debt Service, (b) 10% of the proceeds (within the meaning of Section 148 of the E-5 Code) of such Bonds, or (c) 125% of Average Annual Debt Service; provided that upon the issuance of any Series of Refunding Bonds, the Required Bond Reserve will not be required to be funded or increased by an amount greater than 10% of the proceeds of that Series. "Reserve Fund" means the CSCDA/Uptown Newport Community Facilities District Reserve Fund established pursuant to the Indenture and maintained by the Trustee. "Resolution of Formation" means Resolution No. 18SCIP-117, adopted by the Commission on December 20, 2018. "Series" means all Bonds of like designation authenticated and delivered on original issuance at the same time pursuant to the Indenture or a Supplemental Indenture and any Bond or Bonds thereafter delivered in lieu of or as substitution for any of such Bonds pursuant to the Indenture. "Sinking Account" means the accounts referred to by that name in the Redemption Fund established pursuant to the Indenture. "Special Tax" means the special tax levied within the Community Facilities District to fund the Special Tax Requirement. "Special Tax Fund" means the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Fund established pursuant to the Indenture and maintained by the Trustee. "Special Tax Requirement" has the meaning given in the Rate and Method. "Special Tax Revenues" means the proceeds of the Special Tax received by or on behalf of the Community Facilities District, including any prepayments thereof, interest and penalties thereon, and proceeds of the redemption or sale of property sold as a result of the foreclosure of the lien of the Special Tax, which will be limited to the amount of said lien and interest and penalties thereon. "Standard & Poor's" means S&P Global Ratings, a business of Standard & Poor's Financial Services LLC, a corporation duly organized and existing under and by virtue of the laws of the State of New York, and its successors and assigns, or, if such entity will be dissolved or liquidated or will no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency selected by the Authority. "Supplemental Indenture" means any indenture then in full force and effect that has been made and entered into by the Authority and the Trustee, amendatory of or supplemental to the Indenture; but only to the extent that such Supplemental Indenture is specifically authorized under the Indenture. "Tax Certificate" means each certificate delivered upon the issuance of Bonds relating to Section 148 of the Code. "Taxable Property" has the meaning given in the Rate and Method. "Trustee" means Wilmington Trust, National Association, a national banking association duly organized and existing under and by virtue of the laws of the United States of America and authorized to accept and execute trusts of the character set forth in the Indenture, at its Principal Corporate Trust Office, or any other bank, national banking association or trust company having a corporate trust office in Los E-6 Angeles or San Francisco, California, which may at any time be substituted in its place as provided in the Indenture at its Principal Corporate Trust Office. "Undergrounding Subaccount" means the subaccount by that name in the Acquisition and Construction Fund and established pursuant to the Indenture. "Written Request of the Authority" means an instrument in writing signed by an Authorized Signatory. Equal Security In consideration of the acceptance of the Bonds by the Holders thereof, the Indenture will be deemed to be and will constitute a contract between the Authority and the Holders from time to time to secure the full and final payment of the interest on and principal of and redemption premiums, if any, on all Bonds which may from time to time be authorized, sold, executed, authenticated and delivered under the Indenture, subject to the agreements, conditions, covenants and terms contained in the Indenture; and all agreements, conditions, covenants and terms contained in the Indenture required to be observed or performed by or on behalf of the Authority will be for the equal and proportionate benefit, security and protection of all Holders without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number thereof or the time of execution, authentication or delivery thereof or otherwise for any cause whatsoever, except as expressly provided therein or in the Indenture. Various Provision Relating to the Bonds Authentication by the Trustee Only those Bonds that bear thereon a certificate of authentication manually executed by the Trustee will be entitled to any benefit, protection or security under the Indenture or be valid or obligatory for any purpose, and such certificate of the Trustee will be conclusive evidence that the Bonds so authenticated have been duly authorized, sold, executed, authenticated and delivered under the Indenture and are entitled to the benefits of the Indenture. Transfer and Exchange of Bonds The Trustee is required to keep at its Principal Corporate Trust Office sufficient books for the transfer and exchange of the Bonds, which books are required to at all times during normal business hours with reasonable prior notice be open to inspection by the Authority or by any Holder. Any Bond may, in accordance with its terms, be transferred or exchanged on such books by the person in whose name it is registered, in person or by his duly authorized attorney, upon payment by the Holder requesting such transfer or exchange of any tax or other governmental charge required to be paid with respect to such transfer or exchange and upon surrender of such Bond for cancellation accompanied by delivery of a duly executed written instrument of transfer or exchange in a form acceptable to the Trustee. Whenever any Bond or Bonds are surrendered for transfer or exchange, the Authority is required to execute and the Trustee to authenticate and deliver a new Bond or Bonds of the same maturity date and of authorized denominations for the same aggregate principal amount, except that neither the Authority nor the Trustee will be required (i) to transfer or exchange any Bonds during the fifteen -day period prior to the selection of any Bonds for redemption under the Indenture, or (ii) to transfer or exchange any Bond which has been selected for redemption in whole or in part, except the unredeemed portion of such Bond selected for redemption in part, from and after the day that such Bond has been selected for redemption in whole or in part under the Indenture. E-7 Mutilated, Destroyed, Stolen or Lost Bonds In case any Bond becomes mutilated in respect of the body of such Bond or is be believed by the Authority to have been destroyed, stolen or lost, upon proof of ownership satisfactory to the Authority and the Trustee and upon the surrender of such mutilated Bond at the Principal Corporate Trust Office of the Trustee, or upon the receipt of evidence satisfactory to the Authority and the Trustee of such destruction, theft or loss and upon receipt of indemnity satisfactory to the Authority and the Trustee, and also upon payment of all Administrative Expenses incurred by the Authority and the Trustee related to the replacement of any Bond so mutilated, destroyed, stolen or lost, the Authority is required to execute and the Trustee to authenticate and deliver at its Principal Corporate Trust Office a new Bond or Bonds of the same maturity date for the same aggregate principal amount in authorized denominations of like tenor and date and bearing such numbers and notations as the Trustee will determine in exchange and substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution for the Bond so destroyed, stolen or lost. If any such destroyed, stolen or lost Bond will have matured or been called for redemption, payment of the amount due thereon may be made by the Trustee upon receipt of like proof, indemnity and payment of Administrative Expenses. Any replacement Bonds issued will be entitled to equal and proportionate benefits with all other Bonds issued under the Indenture, and the Authority and the Trustee will not be required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued under the Indenture or for the purpose of determining any percentage of Bonds Outstanding under the Indenture, but both the original and the replacement Bond will be treated as one and the same. Use of Depository for Bonds The Depository Trust Company, in New York, New York, has been appointed depository for the Bonds, and the Bonds will be initially registered in the name of "Cede & Co.," as nominee of The Depository Trust Company, and will be initially issued as one Bond for each of the maturities in the principal amounts set forth in the Indenture, and registered ownership of the Bonds, or any portion thereof, may not thereafter be transferred except: • To any successor of Cede & Co., as nominee of The Depository Trust Company, or its nominee, or to any substitute depository designated pursuant to the Indenture (a "substitute depository"); provided, that any successor of Cede & Co., as nominee of The Depository Trust Company, or any substitute depository, will be qualified under any applicable laws to provide the services proposed to be provided by it; • To any substitute depository not objected to by the Trustee, upon (1) the resignation of The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository, or (2) a determination by the Authority to substitute another depository for The Depository Trust Company or its successor because The Depository Trust Company or its successor (or any substitute depository or its successor) is no longer able to carry out its functions as depository; provided, that any such substitute depository will be qualified under any applicable laws to provide the services proposed to be provided by it; or • To any person as provided below, upon (1) the resignation of The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository, or (2) a E-8 determination by the Authority to remove The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository. In the case of any transfer pursuant to one of the first two of the bulleted paragraphs, immediately above, upon receipt of the Bonds by the Trustee, together with a Written Request of the Authority to the Trustee, a new Bond for each maturity date of the Bonds are required to be executed by the Authority and authenticated and delivered by the Trustee in the aggregate principal amount of the Bonds so received, in such denominations and registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such Written Request of the Authority. In the case of any transfer pursuant to the third of the bulleted paragraphs, immediately above, upon receipt of the Bonds by the Trustee, together with a Written Request of the Authority to the Trustee, a new Bond or Bonds for each maturity date of the Bonds are required to be executed by the Authority and authenticated and delivered by the Trustee in the aggregate principal amount of the Bonds so received, in such denominations and registered in the names of such persons as are requested in such Written Request of the Authority, subject to the $5,000 minimum denomination and the maximum amount to mature in any one year, and thereafter, the Bonds will be transferred pursuant to the Indenture; provided, that the Trustee will not be required to deliver such new Bonds on a date prior to sixty (60) days after receipt of such Written Request of the Authority. The Authority and the Trustee will be entitled to treat the person in whose name any Bond is registered as the owner thereof for all purposes of the Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Authority or the Trustee; and the Authority and the Trustee will have no responsibility for transmitting payments to, communication with, notifying, or otherwise dealing with any beneficial owners of the Bonds, and neither the Authority nor the Trustee will have any responsibility or obligation, legal or otherwise, to the beneficial owners or to any other party, including The Depository Trust Company or its successor (or any substitute depository or its successor), except to The Depository Trust Company or its successor (or any substitute depository or its successor) as a Holder of the Bonds. So long as any Bonds are registered in the name of Cede & Co. or its registered assigns, the Authority and the Trustee are required to cooperate with Cede & Co., as sole Holder, or its registered assigns, in effecting payment of the interest on and principal of and redemption premiums, if any, on such Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made immediately available on the date they are due. Bond Proceeds Upon the receipt of payment of the proceeds of sale of the Series 2019 Bonds when the same have been duly sold by the Authority, the Trustee is required to establish and maintain the following funds and accounts: The Reserve Fund The "CSCDA/Uptown Newport Community Facilities District Reserve Fund," (the "Reserve Fund") into which is required to be deposited an amount equal to the Required Bond Reserve. Subject to the Indenture, moneys in the Reserve Fund are required to be used solely for the purpose of paying the principal of and interest on the Bonds in the event that the moneys in the Redemption Fund are insufficient therefor, and for that purpose the Trustee will withdraw from the Reserve Fund, for deposit in the Redemption Fund, moneys necessary for such purpose. Amounts in the Reserve Fund will only be withdrawn to pay principal and interest on the Bonds; provided, that if the amount on deposit in the Reserve Fund is less than the Required Bond Reserve, the Trustee is required to notify the Authority of E-9 the amount needed to replenish the Reserve Fund to the Required Bond Reserve and the Authority will collect the deficiency by including it in the next annual Special Tax levy, to the extent permitted by law and as necessary. The Costs of Issuance Account The "CSCDA/Uptown Newport Community Facilities District Costs of Issuance Account," (the "Costs of Issuance Account") into which account is required to be deposited the amount shown above. All money in the Costs of Issuance Account will be applied by the Trustee in the manner provided by law for payment of Costs of Issuance as directed by the Written Request of the Authority; provided, that any money remaining in the Costs of Issuance Account after the completion of the payment of the Costs of Issuance (but not later than as permitted in the Indenture in respect of the Series 2019 Bonds) will be withdrawn by the Trustee from the Costs of Issuance Account and deposited by the Trustee in the Special Tax Fund, and the Costs of Issuance Account will be closed. Any Supplemental Indenture may reopen or create a new Costs of Issuance Account with respect to Refunding Bonds. The Acquisition and Construction Fund The Trustee is required to establish and maintain a fund to be known as the "CSCDA/Uptown Newport Community Facilities District Acquisition and Construction Fund" (the "Acquisition and Construction Fund") and within the Acquisition and Construction Fund, the Park Improvement Subaccount and the Undergrounding Subaccount, into which fund and account will be deposited the amounts required to be deposited therein by the provisions of the Indenture. All money in the Acquisition and Construction Fund will be applied by the Trustee in accordance with the following paragraph for financing the acquisition and construction of the Improvements (or for making reimbursements to the Developer for such costs theretofore paid by it), including payment of costs incidental to or connected with financing such acquisition and construction, or for the payment of development fees, or for the repayment of funds advanced to or for the Community Facilities District, not to exceed the amount on deposit in the Acquisition and Construction Fund. Amounts in the Acquisition and Construction Fund will be applied by the Trustee as directed in a Disbursement Request. Any amount remaining in any subaccount of the Acquisition and Construction Fund after the completion of its purpose, which completion will be conclusively evidenced by a Certificate of the City, will be transferred by the Trustee to the Special Tax Fund, except that any amounts remaining in the Acquisition and Construction Fund after all Series 2019 Bonds and all Refunding Bonds have been paid and retired is required to be deposited in the Expense Fund. Special Tax Revenues Deposit of Special Tax Revenues in the Special Tax Fund The Trustee is required to establish and maintain a fund to be known as the "CSCDA/ Uptown Newport Community Facilities District Special Tax Fund" (the "Special Tax Fund"), which fund is required to be held and maintained in trust by the Trustee, and the Authority agrees and covenants that all Special Tax Revenues (including any prepayments thereof and including any amounts, net of any costs of collection and enforcement, received as a result of foreclosure of the lien securing the Special Tax or other actions by the Authority to collect delinquent Special Tax), when and as received, will be immediately transferred to the Trustee, and the Trustee agrees and covenants to deposit all such transfers in the Special Tax Fund, and all money in the Special Tax Fund will be disbursed, allocated and applied solely to the uses and purposes set forth in the Indenture. E-10 Except for money held in the Acquisition and Construction Fund, the Prepayment Fund, the Expense Fund and the Rebate Fund, all of the Special Tax Revenues, all funds and accounts established to hold Special Tax Revenues under the Indenture, and any investment earnings thereon, are pledged to, and constitute a trust fund for, the payment of the principal of and interest on the Bonds. So long as the principal of and interest on the Bonds remains unpaid, the Special Tax Revenues, the funds and accounts established to hold Special Tax Revenues, and any investment earnings thereon will not be used for any other purpose, except as otherwise permitted by the Indenture, and is required to be held in trust for the benefit of the owners of the Bonds and will be applied pursuant to the Indenture. The Prepayment Fund is pledged for the payment of principal and redemption premiums, if any, on the Bonds in accordance with the Indenture; but is pledged to pay interest on the Bonds only to the extent of accrued interest included in the calculations of the prepayment amounts under the Rate and Method and in accordance with the Indenture. Covenants of the Authority Punctual Payment and Performance The Authority will punctually pay the interest on and principal of and redemption premium, if any, to become due on every Bond issued under the Indenture in strict conformity with the terms of the Law and the Indenture and of the Bonds, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained in the Indenture and in the Bonds required to be observed and performed by it. Against Indebtedness and Encumbrances The Authority will not issue any evidences of indebtedness payable from the Special Tax Revenues except as provided in the Indenture, and will not create, nor permit the creation of, any pledge, lien, charge or other encumbrance upon any money in the Special Tax Fund other than as provided in the Indenture; provided, that the Authority may at any time, or from time to time, issue evidences of indebtedness for any lawful purpose of the Community Facilities District so long as any payments due thereunder will be subordinate in all respects to the use of the Special Tax Revenues as provided in the Indenture. Against Federal Income Taxation The Authority will not take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, and specifically the Authority will not directly or indirectly use or make any use of the proceeds of the Bonds or any other funds of the Authority or take or omit to take any action that would cause the Bonds to be "arbitrage bonds" subject to federal income taxation by reason of Section 148 of the Code or "private activity bonds" subject to federal income taxation by reason of Section 141(a) of the Code or obligations subject to federal income taxation because they are "federally guaranteed" as provided in Section 149(b) of the Code; and to that end the Authority, with respect to the proceeds of the Bonds and such other funds, will comply with all requirements of such sections of the Code; provided, that if the Authority will obtain an opinion of nationally recognized bond counsel to the effect that any action required under this covenant is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, the Authority may rely conclusively on such opinion in complying with the provisions of this covenant. In the event that at any time the Authority is of the opinion that for purposes of this covenant it is necessary to restrict or limit the yield on the investment of any money held by the Treasurer of the Authority or the Trustee under the Indenture or otherwise the Authority will so instruct the E-11 Treasurer of the Authority or the Trustee, as the case may be, in writing, and the Treasurer of the Authority or the Trustee, as the case may be, will take such action as may be necessary in accordance with such instructions. Without limiting the generality of the foregoing, the Authority will pay from time to time all amounts required to be rebated to the United States of America pursuant to Section 148(f) of the Code and all regulations of the United States Department of the Treasury issued thereunder to the extent that such regulations are, at the time, applicable and in effect, which obligation will survive payment in full or defeasance of the Bonds, and to that end, there is established in the treasury of the Authority a fund to be known as the "CSCDA/Uptown Newport Community Facilities District Rebate Fund" (the "Rebate Fund") to be held in trust and administered by the Treasurer of the Authority. The Authority will comply with the provisions of the Tax Certificate with respect to making deposits in the Rebate Fund, and all money held in the Rebate Fund is pledged to provide payments to the United States of America as provided in the Indenture and in the Tax Certificate and no other person will have claim to such money except as provided in the Tax Certificate. The Trustee may rely conclusively upon the Authority's determinations, calculations and certifications required by this covenant. The Trustee will have no responsibility to independently make any calculation or determination or to review the Authority's calculations required by this covenant. The provisions of this covenant will survive the defeasance of the Bonds. Payment of Claims The Authority will pay and discharge any and all lawful claims which, if unpaid, might become payable from the Special Tax Revenues or any part thereof or upon any funds in the hands of the Trustee allocated to the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, or which might impair the security of the Bonds. Expense Budgets The Authority will, on or before September 2 in each year, prepare and approve a budget setting forth the estimated Administrative Expenses for the period from such September 2 through the next succeeding September 1. Any budget approved in accordance with this covenant may be amended at any time. Accounting Records; Financial Statements and Other Reports The Authority will keep, and pursuant to the Indenture requires the Trustee to keep, appropriate accounting records in which complete and correct entries are required to be made of all transactions relating to the receipt, investment, disbursement, allocation and application of the Special Tax Revenues and of the proceeds of the Bonds, which accounting records are required at all times during business hours with reasonable prior notice be subject to the inspection of any Holder (or his representative authorized in writing) and (upon the prior written consent of the Authority) of any investment banker, security dealer or other person interested in the Bonds. The Authority will prepare annually, no later than January 1, a summary report showing in reasonable detail the proceeds of the Special Tax levied and collected and the Administrative Expenses for the preceding Fiscal Year and containing a general statement of the physical condition of the Improvements. The Authority will furnish a copy of such summary report without charge to any Holder (or his representative authorized in writing) and to any investment banker, security dealer or other person interested in the Bonds requesting a copy thereof. E-12 The Authority will prepare annually not later than October 30 of each year, commencing October 30, 2020, and file with the California Debt and Investment Advisory Commission by mail, postage prepaid, all necessary information required to be filed under the Law(see Section 53359.5), including: • The principal amount of the Outstanding Bonds; • The balance in the Reserve Fund; • The balance in the Capitalized Interest Account, if any; • The number of parcels securing the Bonds which are delinquent with respect to their Special Tax payments, the amount that each delinquent parcel is delinquent, the total amount of Special Tax due on the delinquent parcels, the length of time that each delinquent parcel has been delinquent, when foreclosure was commenced for each delinquent parcel, the total number of foreclosure parcels for each date specified, and the total amount of tax due on the foreclosure parcels for each date specified; • The balance in the Acquisition and Construction Fund; • The assessed value of all parcels subject to the levy of the Special Tax to repay the Bonds, as shown on the most recent equalized assessment roll, the date of assessed value reported, and that the information comes from the County Assessor's Office of the County of Orange; • The total amount of Special Tax due, the total amount of unpaid Special Tax, and whether the Special Tax is paid under the County's Teeter Plan; and • Contact information for the Authority official providing the information. Additionally, the Authority will notify the California Debt and Investment Advisory Commission by mail, postage prepaid, within ten (10) days if the Authority or the Trustee fails to pay any interest on or principal of any of the Bonds on any scheduled payment date. Protection of Security and Rights of Holders The Authority will preserve and protect the security of the Bonds and the rights of the Holders and will warrant and defend their rights against all claims and demands of all persons. Levy and Collection of the Special Tax The Authority, so long as any Bonds are Outstanding, will annually levy the Special Tax against all Taxable Property in the Community Facilities District and make provision for the collection of the Special Tax in amounts which will be sufficient, after making reasonable allowances for contingencies and errors in the estimates, to yield proceeds equal to the amounts required for compliance with the agreements, conditions, covenants and terms contained in the Indenture, and which in any event will be sufficient to pay the interest on and principal of and all Mandatory Sinking Account Payments for and redemption premiums, if any, on the Bonds as they become due and payable and to pay all current Administrative Expenses as they become due and payable in accordance with the provisions and terms of the Indenture. The Special Tax will be collected in the same manner as ordinary ad valorem property taxes are collected and, except as otherwise provided in the following covenant and in the Law, will be subject to the same penalties and the same collection procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes. E-13 Foreclosure of Special Tax Liens On or before October 1 of each year, the Authority will review the public records of the County of Orange relating to the collection of the Special Tax in the Community Facilities District in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and on the basis of such review the Authority will, not later than December 1 of such year, institute foreclosure proceedings as authorized by the Law (a) against any single parcel within the Community Facilities District with aggregate delinquent Special Taxes (including prior years) of $5,000 or more in any year in which such Special Tax payments were due, (b) against all parcels owned within the Community Facilities District by any single owner with delinquent Special Taxes in the aggregate amount (including prior years) of $5,000 or more, and (c) against all parcels with delinquent Special Tax payments regardless of their delinquent amount in any fiscal year in which it receives Special Tax payments in an amount which is less than 95% of the total Special Tax levy, and will diligently prosecute and pursue the foreclosure proceedings to judgment and sale; provided that any actions taken to enforce delinquent Special Tax liens will be taken only consistent with Sections 53356.1 through 53356.7, both inclusive, of the Law. Continuing Disclosure Certificate The Authority will comply with and carry out all of the provisions of the Continuing Disclosure Certificate executed by the Authority and dated the date of the execution, authentication and initial delivery of any Series of Bonds issued under the Indenture, as originally executed and as it may be amended from time to time in accordance with the terms thereof, and notwithstanding any other provision of the Indenture, failure of the Authority to comply with such Continuing Disclosure Certificate will not be considered a default under the Indenture; provided, that any Holder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Authority to comply with its obligations under the Indenture. Further Assurances The Authority will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Indenture and for the better assuring and confirming unto the Holders of the rights and benefits provided in the Indenture. The Trustee Wilmington Trust, National Association at its Principal Corporate Trust Office is Trustee for the purpose of receiving all money which the Authority is required to transfer to it under the Indenture and for applying and using such money as provided in the Indenture for the purpose of paying the interest on and principal of and redemption premiums, if any, on the Bonds. The Authority agrees that it will at all times maintain a Trustee having a corporate trust office in Los Angeles or San Francisco, California. The Authority may remove the Trustee initially appointed and any successor thereto and may appoint a successor or successors thereto by an instrument in writing; provided, that any such successor will be a bank, national banking association or trust company doing business and having a corporate trust office in Los Angeles or San Francisco, California, having a combined capital (exclusive of borrowed capital) and surplus of at least fifty million dollars ($50,000,000) and subject to supervision or examination by a federal or state banking authority. If such bank, national banking association or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then the combined capital and surplus of such bank, national banking association or trust company will be deemed to be its combined capital and surplus as E- 14 set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the Authority and by giving notice of such resignation by mail pursuant to the Indenture to the Holders, and upon receiving such notice of resignation, the Authority will promptly appoint a successor Trustee by an instrument in writing having the qualifications required. Any resignation or removal of a Trustee and appointment of a successor Trustee will become effective only upon the acceptance of appointment by the successor Trustee. If within thirty (30) days after notice of the removal or resignation of the Trustee no successor Trustee will have been appointed by the Authority and will have accepted such appointment, the removed or resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, which court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by law, appoint a successor Trustee having the qualifications required by the Indenture. Liability of the Trustee The recitals of facts, agreements and covenants contained in the Indenture and in the Bonds will be taken as statements, agreements and covenants of the Authority, and the Trustee does not assume any responsibility for the correctness of the same and does not make any representation as to the sufficiency or validity thereof or of the Bonds or of the Special Tax, or as to the financial or technical feasibility of the Improvements, and will not incur any responsibility in respect thereof other than in connection with the rights and obligations expressly assigned to or imposed upon it in the Indenture or in the Bonds, and will not be liable in connection with the performance of its duties under the Indenture except for its own negligence or willful misconduct. The Trustee will not be liable for any error of judgment made in good faith, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts, and no provision of the Indenture will require the Trustee to expend or risk its own funds or otherwise incur any liability for the performance of its duties under the Indenture, or in the exercise of any of its rights or powers under the Indenture. The Trustee will not be liable for any error of judgment made in good faith by a responsible officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee may execute any of the trusts or powers of the Indenture and perform the duties required of it under the Indenture by or through attorneys, agents, or receivers, and will be entitled to advice of counsel concerning all matters of trust and its duty under the Indenture, but the Trustee will not be answerable for the negligence or misconduct of any such attorney, agent, receiver or certified public accountant selected by it with due care. The Trustee is required to perform only those duties expressly set forth in the Indenture and no implied duties or obligations will be read into the Indenture against the Trustee. The Trustee will not have any responsibility with respect to any information, statement or recital contained in any official statement, offering memorandum or any other disclosure material prepared or distributed by the Authority with respect to any of the Bonds. The Trustee agrees to accept and act upon instructions or directions pursuant to the Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods, provided, however, that, the Trustee will have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which such incumbency certificate will be amended and replaced whenever a person is to be added or deleted from the listing. If the Authority or the City elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee's understanding of such instructions will be deemed controlling. The Trustee will not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance E-15 upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Authority and the City agree to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties. The Trustee will 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 will include but not be limited to acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences. 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 will be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company will be eligible under the Indenture, will be the successor to such Trustee without the execution or filing of any paper or any further act, anything to the contrary notwithstanding. The permissive right of the Trustee to do things enumerated in the Indenture will not be construed as a duty and it will not be answerable for other than its negligence or willful misconduct. The Trustee will hold any financial statements of the Authority solely as an accommodation to the Bondholders and will have no duty or obligation to review such financial statements. The Trustee will not be responsible for or accountable to anyone for the subsequent use or application of any moneys which will be released or withdrawn in accordance with the provisions hereof. Notice to the Trustee The Trustee will be protected in acting upon any Bond, Certificate of the Authority, consent, notice, opinion, report, resolution, Written Request of the Authority or other document or paper believed by it to be genuine and to have been signed or presented by the proper party or parties. Each such Bond, Certificate of the Authority, consent, notice, opinion, report, resolution, Written Request of the Authority or other document or paper will be sufficient evidence to the Trustee of the facts stated therein and the Trustee will have no duty to confirm the accuracy of such facts. The Trustee may consult with counsel, including, without limitation, counsel to the Authority, with regard to legal questions, and the opinion of such counsel will be full and complete authorization and protection with respect to any action taken or suffered in good faith and in accordance therewith. Whenever in the administration of its rights and obligations the Trustee deems it necessary or desirable that a matter be established or proved prior to taking or suffering any action, such matter (unless other evidence in respect thereof be specifically prescribed in the Indenture) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively established or proved by a Certificate of the Authority, which will be full warrant to the Trustee for any action taken or suffered under the provisions of the Indenture upon the faith thereof, and on which the Trustee may conclusively rely, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable. Amendment or Supplement to the Indenture E-16 Amendment or Supplement by Consent of Holders The Indenture and the rights and obligations of the Authority and of the Holders may be amended or supplemented at any time by the execution and delivery of a Supplemental Indenture by the Authority and the Trustee, which Supplemental Indenture will become binding when the written consents of the Holders of sixty percent (60%) or more in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided below, are filed with the Trustee. No such amendment or supplement will (1) extend the maturity of or reduce the interest rate on or otherwise alter or impair the obligation of the Authority to pay the interest on or principal of or Mandatory Sinking Account Payment for or redemption premium, if any, on any Bond at the time and place and at the rate and in the currency and from the funds provided in the Indenture without the express written consent of the Holder of such Bond, or (2) permit the issuance by the Authority of any other obligations payable from the Special Tax Revenues except as provided in the Indenture, or jeopardize the ability of the Authority to levy and collect the Special Tax, or (3) reduce the percentage of Bonds required for the written consent to any such amendment or supplement, or (4) modify any rights or obligations of the Trustee without its prior written assent thereto. Amendment or Supplement Without Consent of Holders The Indenture and the rights and obligations of the Authority and of the Holders may also be amended or supplemented at any time by the execution and delivery of a Supplemental Indenture by the Authority and the Trustee, which Supplemental Indenture will become binding upon execution without the prior written consent of any Holders, but only to the extent permitted by law and after receiving an approving Opinion of Counsel and only for any one or more of the following purposes: • To add to the agreements and covenants required to be performed by the Authority other agreements and covenants thereafter to be performed by the Authority which will not (in the opinion of the Authority) adversely affect the interests of the Holders, or to surrender any right or power reserved to or conferred upon the Authority which will not (in the opinion of the Authority) adversely affect the interests of the Holders; • To make such provisions for the purpose of curing any ambiguity or of curing, correcting or supplementing any defective provision contained in the Indenture or in regard to questions arising under the Indenture which the Authority may deem desirable or necessary and not inconsistent with the Indenture and which will not (in the opinion of the Authority) adversely affect the interests of the Holders; • To authorize the issuance under and subject to the Law of any Refunding Bonds for any of the Bonds and to provide the conditions and terms under which such Refunding Bonds may be issued subject to the Indenture; • To make such additions, deletions or modifications as may be necessary or appropriate to insure exclusion from gross income for purposes of federal income taxation of the interest on the Bonds; • To make such additions, deletions or modifications as may be necessary or appropriate to maintain any then current rating on the Bonds; or • To make such additions, deletions or modifications as may be necessary or appropriate to effectuate amendments to the Rate and Method in the form attached to the Indenture. E-17 Disqualified Bonds Bonds owned or held for the account of the Authority will not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Bonds provided for in the Indenture, and will not be entitled to consent to or take any other action provided for in the Indenture. Upon request of the Trustee, the Authority will specify in a certificate to the Trustee those Bonds disqualified pursuant to the Indenture and the Trustee may conclusively rely on such certificate. Endorsement or Replacement of Bonds After Amendment or Supplement After the effective date of any action taken as above provided, the Authority may determine that the Bonds may bear a notation by endorsement in form approved by it as to such action, and in that case upon demand of the Holder of any Bond Outstanding on such effective date and presentation of his Bond for such purpose at the Principal Corporate Trust Office of the Trustee a suitable notation as to such action will be made on such Bond. If the Authority so determines, new Bonds so modified as, in the opinion of the Authority, will be necessary to conform to such action will be prepared and executed, and in that case upon demand of the Holder of any Bond Outstanding on such effective date such new Bonds will, upon surrender of such Outstanding Bonds, be exchanged at the Principal Corporate Trust Office of the Trustee, without cost to each Holder, for Bonds then Outstanding. Amendment or Supplement by Mutual Consent The provisions of the Indenture will not prevent any Holder from accepting any amendment or supplement as to any particular Bonds held by him; provided, that due notation thereof is made on such Bonds. Events of Default and Remedies of Holders Events of Default; Remedies of Holders If one or more of the following events (herein "Events of Default") should happen, that is to say - • if default is made by the Authority in the due and punctual payment of any interest on or principal of or Mandatory Sinking Account Payment for any of the Bonds when and as the same becomes due and payable; or • if default is made by the Authority in the observance or performance of any of the other agreements or covenants contained in the Indenture required to be observed or performed by it, and such default continues for a period of thirty (30) days after the Authority has been given notice in writing of such default by the Trustee; then in each and every such case during the continuance of such Event of Default any Holder will have the right for the equal benefit and protection of all Holders similarly situated: • by mandamus or other suit or proceeding at law or in equity to enforce his rights against the Authority, its Commission, or any of the officers or employees of the Authority, and to compel the Authority, its Commission, or any such officers or employees to perform and carry out their duties under the Law and the agreements and covenants with the Holders contained in the Indenture; E-18 • by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Holders; or • by suit in equity upon the nonpayment of the Bonds to require the Authority, its Commission or its officers and employees to account as the trustee of an express trust. Non -waiver Nothing in the Indenture or in the Bonds will affect or impair the obligation of the Authority, which is absolute and unconditional, to pay the interest on and principal of and redemption premiums, if any, on the Bonds to the respective Holders of the Bonds at the respective dates of maturity or upon redemption prior to maturity from the Special Tax Revenues and the other funds as provided in the Indenture, or will affect or impair the right of such Holders, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied in the Indenture and in the Bonds. A waiver of any default or breach of duty or contract by any Holder will not affect any subsequent default or breach of duty or contract and will not impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by any Holder to exercise any right or remedy accruing upon any default or breach of duty or contract will impair any such right or remedy or will be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right and remedy conferred upon the Holders by the Law or by the Indenture may be enforced and exercised from time to time and as often as will be deemed expedient by the Holders. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to any Holder, the Authority and such Holder will be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Remedies Not Exclusive No remedy conferred upon or reserved to the Holders by the Indenture is intended to be exclusive of any other remedy, and every such remedy will be cumulative and will be in addition to every other remedy given under the Indenture 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 Law or any other law. Defeasance Discharge of the Bonds. If the Authority is required to pay or cause to be paid or there is otherwise required be paid to the Holders of all Outstanding Bonds the interest thereon and the principal thereof and the redemption premiums, if any, thereon at the times and in the manner stipulated therein and pursuant to the Indenture, then all agreements, covenants and other obligations of the Authority to the Holders of such Bonds under the Indenture will thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee is required to execute and deliver to the Authority all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee is required to deposit in accordance with a written direction of the Authority all money or securities held by it pursuant hereto which are not required for the payment of the interest on and principal of and redemption premiums, if any, on the Bonds. E-19 Any Outstanding Bonds will on the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in the preceding paragraph if there will be on deposit with the Trustee money which is sufficient to pay the interest due on such Bonds on such date and the principal and redemption premiums, if any, due on such Bonds on such date. Any Outstanding Bonds will prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed above if (1) in case any of the Bonds are to be redeemed on any date prior to their maturity date, the Authority will have irrevocably instructed the Trustee to mail pursuant to the Indenture a notice of redemption to the respective Holders of all such Outstanding Bonds, (2) there will have been deposited with an escrow agent or the Trustee either (i) money in an amount which will be sufficient or (ii) as evidenced by a report of an Independent Certified Public Accountant or nationally recognized, independent municipal finance consultant, on file with the Authority and the Trustee, Federal Securities which are not subject to redemption except by the holder thereof prior to maturity (including any Federal Securities issued or held in book -entry form on the books of the Department of the Treasury of the United States of America) or municipal obligations which have been defeased with Federal Securities and which are rated in the highest rating category by either Moody's or Standard & Poor's, the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with such escrow agent or the Trustee at the same time, will be sufficient to pay when due the interest to become due on such Bonds on and prior to the maturity dates or redemption dates thereof, as the case may be, and the principal of and redemption premiums, if any, on such Bonds on and prior to the maturity dates or the redemption dates thereof, as the case may be, and (3) in the event such Bonds are not by their terms subject to redemption within the next succeeding ninety (90) days, the Authority will have agreed to mail pursuant to the Indenture a notice to the Holders of such Bonds that the deposit required above has been made with such escrow agent or the Trustee and that such Bonds are deemed to have been paid in accordance with the Indenture and stating the maturity dates or redemption dates, as the case may be, upon which money is to be available for the payment of the principal of and redemption premiums, if any, on such Bonds. Unclaimed Money. Anything contained in the Indenture to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Bonds or any interest thereon which remains unclaimed for two (2) years after the date when such Bonds or interest thereon have become due and payable, either at their stated maturity dates or by call for redemption prior to maturity, if such money was held by the Trustee on such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when such Bonds or interest thereon became due and payable, will be repaid by the Trustee to the Authority as its absolute property free from trust for use in accordance with the Law, and the Trustee will thereupon be released and discharged with respect thereto and the Holders will look only to the Authority for the payment of such Bonds and interest thereon; provided, that before the Trustee will be required to make any such repayment the Authority will mail pursuant to the Indenture a notice to the Holders of all Outstanding Bonds and to such securities depositories and securities information services selected by it pursuant to the Indenture that such money remains unclaimed and that after a date named in such notice, which date will not be less than thirty (30) days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the Authority. Miscellaneous Liability of Authority Limited to Special Tax Revenues Notwithstanding anything contained in the Indenture, the Authority will not be required to advance any money derived from any source of income other than the Special Tax Revenues and the E-20 other funds as provided in the Indenture for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds. The Bonds are special tax obligations of the Authority and the interest on and principal of and redemption premiums, if any, on the Bonds are payable solely from the Special Tax Revenues and such other funds, and the Authority is not obligated to pay them except from the Special Tax Revenues and such other funds. The general funds and assets of the Authority are not liable and the full faith and credit of the Authority is not pledged for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, and no tax or assessment other than the Special Tax will ever be levied or collected to pay the interest on or principal of or redemption premiums, if any, on the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the Authority or any of its income or receipts except the Special Tax Revenues and such other funds as provided in the Indenture, and neither the payment of the interest on or principal of or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the Authority. The Bonds do not constitute an indebtedness of the Authority within the meaning of any constitutional or statutory debt limitation or restriction, and neither the Commission nor the Authority nor any officer or employee thereof will be liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds otherwise than from the Special Tax Revenues and the other funds as provided in the Indenture. Benefits of the Indenture Limited to Certain Parties Nothing contained in the Indenture, express or implied, is intended to give to any person other than the Authority, the Trustee and the Holders any right, remedy or claim under or by reason of the Indenture, and any agreement or covenant required under the Indenture to be performed by or on behalf of the Authority or any officer or employee thereof will be for the sole and exclusive benefit of the Trustee and the Holders. Execution of Documents by Holders Any declaration, request or other instrument which is permitted or required in the Indenture to be executed by Holders may be in one or more instruments of similar tenor, and may be executed by Holders in person or by their attorneys duly authorized in writing. The fact and date of the execution by any Holder or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness to such execution duly sworn to before such notary public or other officer. The ownership of Bonds and the amount, maturity, number and date of holding the same will be proved by the registration books required to be kept by the Trustee pursuant to the Indenture. Any declaration, request or other instrument or writing of the Holder of any Bond will bind all future Holders of such Bond with respect to anything done or suffered to be done by the Authority in good faith and in accordance therewith. Deposit and Investment of Moneys in Funds All money held by the Trustee in any fund established in the Indenture is required to be deposited by the Trustee in Legal Investments at the written direction of the Authority, and is required to be secured at all times by such obligations as are required by law to the fullest extent required by law. All money E-2 1 held by the Trustee in the Redemption Fund, Expense Fund and Acquisition and Construction Fund are required to be invested by the Trustee in Legal Investments upon the written direction of the Authority. In the absence of a written investment direction of the Authority, the Trustee is required to invest such moneys in a taxable money market portfolio composed of or fully secured by U.S. government securities; provided, however, that any such investment will be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee will have received a written direction of the Authority specifying a specific money market fund and, if no such written direction of the Authority is so received, the Trustee is required to hold such moneys uninvested. The Trustee may rely upon any investment direction from the Authority as a certification to the Trustee that such investment constitutes a Legal Investment. The Trustee (or any of its affiliates) may act as principal or agent or as sponsor, advisor or manager in connection with the making of any investment by the Trustee and may impose its customary charges therefor, and the Trustee will not be responsible for any loss suffered in connection with any investment made in accordance with these provisions. The Authority acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority the right to receive brokerage confirmations of security transactions as they occur, the Authority specifically waives receipt of such confirmations to the extent permitted by law; provided, that the Trustee will furnish the Authority periodic cash transaction statements which include details for all investment transactions made by the Trustee under the Indenture. All interest received on any such money so deposited or invested is required to (subject to the Authority's covenant to preserve the tax-exempt status of the Bonds) be retained within the fund from which the deposit or investment was made, and all losses on any such money so deposited or invested will be borne by the fund from which the deposit or investment was made. Waiver of Personal Liability No member of the Authority Commission or officer or employee of the Authority will be individually or personally liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, but nothing contained in the Indenture will relieve any member of the Authority Commission or officer or employee of the Authority from the performance of any official duty provided by the Indenture or by the Law or by any other applicable provisions of law. Governing Law The Indenture will be governed by and construed and interpreted in accordance with the laws of the State of California. E-22 APPENDIX F FORMS OF CONTINUING DISCLOSURE CERTIFICATES CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CONTINUING DISCLOSURE CERTIFICATE (Authority) This Continuing Disclosure Certificate (this "Disclosure Certificate") is executed and delivered by the California Statewide Communities Development Authority (the "Authority") in connection with the issuance by the Authority of its California Statewide Communities Development Authority Community Facilities District No. 2018- 03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of March 1, 2019 (the "Indenture"), by and between the Authority and Wilmington Trust, National Association, as Trustee (the "Trustee"). The Authority covenants and agrees as follows: SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Authority for the benefit of the Holders and Beneficial Owners (as defined below) of the Bonds, and in order to assist the Underwriter (as defined below) in complying with the Rule (as defined below), but shall not be deemed to create any monetary liability on the part of the Authority to any other persons, including Holders or Beneficial Owners of the Bonds based on the Rule. The sole remedy in the event of any failure of the Authority to comply with this Disclosure Certificate shall be an action to compel performance of any act required hereunder. 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 Authority pursuant to, and as described in, Sections 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 tax purposes. "Community Facilities District" shall mean the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange. "Dissemination Agent" shall mean any dissemination agent designated in writing by the Authority and which has filed with the Authority a written acceptance of such designation. The initial Dissemination Agent shall be David Taussig & Associates, Inc. "Financial Obligation" shall mean, for purposes of the Listed Events set out in Section 5(a)(x) and Section (5)(b)(viii), a (a) debt obligation, (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation, or (c) guarantee of (a) or (b). The term "Financial Obligation" shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule. "Holder" shall mean the person in whose name any Bond shall be registered. "Listed Event" shall mean any of the events listed in Section 5(a) or 5(b) of this Disclosure Certificate. F-1 "MSRB" shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org. "Official Statement" shall mean the official statement relating to the Bonds, dated , 2019. "Report Date" shall mean January 15 in each year. "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. "Special Taxes" shall mean the annual special taxes for facilities of the Community Facilities District levied on taxable property within the Community Facilities District. "Underwriter" shall mean RBC Capital Markets, LLC, as original underwriter of the Bonds and any other 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 Authority shall, or shall cause the Dissemination Agent to, not later than January 15 in each year, commencing January 15, 2020, provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided, that the audited financial statements of the Authority may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. The Annual Report shall be submitted on a standard form in use by industry participants or other appropriate form and shall identify the Bonds by name and CUSIP number. (b) Not later than fifteen (15) business days prior to said date, the Authority shall provide the Annual Report to the Dissemination Agent (if other than the Authority). If the Authority is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the Authority shall send a notice in a timely manner to the MSRB in substantially the form attached as Exhibit A hereto. (c) The Dissemination Agent shall (if the Dissemination Agent is other than the Authority) file a report with the Authority certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to the MSRB. SECTION 4. Content of Annual Reports. The Authority's Annual Report shall contain or include by reference the following: (a) The Authority's comprehensive audited financial report for the prior fiscal year (subject to 3(a) above). (b) A maturity schedule for the outstanding Bonds, and a listing of Bonds redeemed prior to maturity during the prior fiscal year. (c) Balances in each of the following funds established pursuant to the Indenture as of the close of the prior fiscal year: (i) the Redemption Fund (with a statement of the debt service requirement to be discharged by said fund prior to the receipt of expected additional Special Tax Revenues); and (ii) the Reserve Fund. F-2 (d) A current debt service schedule for the Bonds. (e) A statement of the total Special Tax levied in the prior fiscal year, listing the Special Tax components and broken down by land use classification, as provided in the Rate and Method (as such term is defined in the Official Statement). (f) A statement of the maximum annual Special Tax for the current fiscal year broken down by land use classification. (g) A statement of majority taxpayers within the Community Facilities District. (h) A statement of the assessed value of the Taxable Property (as defined in the Official Statement) within the Community Facilities District. (i) A statement of the actual Special Tax received for the Community Facilities District for the prior fiscal year. (j) The following information (to the extent that it is no longer reported in the Authority's annual filings with the California Debt and Investment Advisory Commission regarding the Bonds): (i) the Required Bond Reserve for the prior fiscal year; and (ii) a statement as to the status of any foreclosure actions with respect to delinquent payments of the Special Tax. Any or all of the items listed above may be set forth in one or a set of documents or may be included by specific reference to other documents, including official statements of debt issues of the Authority or related public entities, which have been made available to the public on the MSRB's website. The Authority 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 Authority shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not later than ten (10) business days after the occurrence of the event to the MSRB: (i) principal and interest payment delinquencies; (ii) unscheduled draws on debt service reserves reflecting financial difficulties; (iii) unscheduled draws on credit enhancements reflecting financial difficulties; (iv) substitution of credit or liquidity providers, or their failure to perform; (v) adverse tax opinions or issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB); (vi) tender offers; (vii) defeasances; (viii) rating changes; (ix) bankruptcy, insolvency, receivership or similar event of the obligated person; or F-3 (x) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the Community Facilities District, any of which reflect financial difficulties. Note: for the purposes of the event identified in subparagraph (ix), 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 court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b) The Authority shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material, in a timely manner not later than ten (10) business days after the occurrence of the event to the MSRB: (i) unless described in paragraph 5(a)(v), other material 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; (ii) modifications to rights of Bond holders; (iii) Bond calls; (iv) release, substitution, or sale of property securing repayment of the Bonds; (v) non-payment related defaults; (vi) 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; or (vii) appointment of a successor or additional trustee or the change of name of a trustee; or (viii) incurrence of a Financial Obligation of the Community Facilities District, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the Community Facilities District, any of which affect security holders. (c) Whenever the Authority obtains knowledge of the occurrence of a Listed Event described in Section 5(b), the Authority shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) Notwithstanding the foregoing, notice of the Listed Event described in subsections (a)(vii) or (b)(iii) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Indenture. (e) The Authority intends to comply with the Listed Events described in Section 5(a)(x) and Section 5(b)(viii), and the defmition of "Financial Obligation" in Section 2, with reference to the Rule, any other applicable federal securities laws and the guidance provided by the Securities and Exchange F-4 Commission in Release No. 34-83885 dated August 20, 2018 (the "2018 Release"), and any further amendments or written guidance provided by the Securities and Exchange Commission or its staff with respect the amendments to the Rule effected by the 2018 Release. SECTION 6. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB. SECTION 7. Termination of Reporting Obligation. The Authority's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination or substitution occurs prior to the final maturity of the Bonds, the Authority shall give notice of such termination or substitution to the MSRB. SECTION 8. Dissemination Agent. The Authority may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent (if other than the Authority) shall not be responsible in any manner for the content of any notice or report prepared by the Authority pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be David Taussig & Associates, Inc. SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Authority may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied (provided, however, that the Dissemination Agent shall not be obligated under any such amendment that modifies or increases its duties or obligations hereunder without its written consent thereto): (a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, 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, 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 Holders of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Authority 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 Authority. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given to the MSRB, and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Authority 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 Authority chooses to include any information in any Annual Report or notice of occurrence of a Listed Event, in addition to that F-5 which is specifically required by this Disclosure Certificate, the Authority 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 11. Authority Not Responsible for Continuing Disclosure by Other Parties. Nothing contained herein shall be construed to require the Authority to enforce the obligation of any other party, including any owner or property within the Community Facilities District, to provide information to the MSRB, or the Underwriter or otherwise to comply with such other party's continuing disclosure undertaking entered into in connection with the issuance of the Bonds. SECTION 12. Default. In the event of a failure of the Authority to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Authority to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the Authority to comply with this Disclosure Certificate shall be an action to compel performance. SECTION 13. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and if the Authority is not the Dissemination Agent, the Authority agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Authority under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 14. Notices. Any notices or communications to or among any of the parties to this Disclosure Certificate may be given as follows: To the Authority: To the Underwriter: California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, California 95814 Attention: Chair RBC Capital Markets, LLC Two Embarcadero Center, Suite 1200 San Francisco, CA 94111 Attn: Bob Williams, Managing Director Any person may, by written notice to the other persons listed above, designate a different address to which subsequent notices or communications should be sent. SECTION 15. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Authority, the Underwriter, Holders and Beneficial Owners of the Bonds from time to time, and shall create no rights in any other person or entity. SECTION 16. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. Date: , 2019 F-6 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory F-7 EXHIBIT A FORM OF NOTICE TO THE MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: California Statewide Communities Development Authority Name of Bond Issue: California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 Date of Issuance: , 2019 NOTICE IS HEREBY GIVEN that the California Statewide Communities Development Authority (the "Authority") has not provided an Annual Report with respect to the above named Bonds as required by the Continuing Disclosure Certificate, dated the date of issuance of such Bonds. The Authority anticipates that the Annual Report will be filed by , 20. Date: , 20 . CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory F-8 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CONTINUING DISCLOSURE CERTIFICATE — DEVELOPER This Continuing Disclosure Certificate — Developer (the "Disclosure Certificate") is executed on 2019, by TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC (collectively, the "Developers"), in connection with the issuance by the California Statewide Communities Development Authority (the "Authority") of its California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of March 1, 2019 (the "Indenture"), by and between the Authority and Wilmington Trust, National Association, as Trustee (the "Trustee"). The Developers covenant and agree as follows: SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Developers for the benefit of the Holders and Beneficial Owners, but shall not be deemed to create any monetary liability on the part of the Developers to any other persons, including Holders or Beneficial Owners of the Bonds. The sole remedy in the event of any failure of the Developers to comply with this Disclosure Certificate shall be an action to compel performance of any act required hereunder. SECTION 2. Definitions. In addition to the definitions set forth in the preamble above and 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 when used herein: "Annual Report" shall mean any Annual Report provided by the Developers pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Assumption Agreement" shall mean an undertaking of a Major Owner, for the benefit of the Holders and Beneficial Owners of the Bonds containing terms substantially similar to this Disclosure Certificate (as modified for such Major Owner's development and financing plans with respect to the Community Facilities District), whereby such Major Owner agrees to provide Annual Reports and notices of significant events, setting forth the information described in Sections 4 and 5 hereof, respectively, with respect to the portion of the property in the Community Facilities District owned by such Major Owner. "Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of the Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). "Business Day" shall mean any day other than (i) a Saturday or a Sunday or (ii) a day which is a federal or State of California holiday. "Community Facilities District" shall mean California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange. "Developer Improvements" is defined in Section 4(a)(4) herein. "Dissemination Agent" shall mean any dissemination agent designated in writing by the Developers and which has filed with the Developers a written acceptance of such designation. The initial Dissemination Agent shall be David Taussig & Associates. "EMMA" shall mean the Electronic Municipal Market Access system of the MSRB, currently located at http://emma.msrb.org. F-9 "Fiscal Year" shall mean the period beginning on July 1 of each year and ending on the next succeeding June 30. "Government Authority" shall mean any national, state or local government, any political subdivision thereof, any department, agency, authority or bureau of any of the foregoing, or any other Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Holder" shall mean the person in whose name any Bond shall be registered. "Listed Event" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "Major Owner" shall mean an owner of property in the Community Facilities District responsible, by itself or in conjunction with affiliates, in the aggregate for 20% or more of the Special Taxes in the Community Facilities District in the Fiscal Year following the transfer of such property. "MSRB" shall mean the Municipal Securities Rulemaking Board. "Official Statement" shall mean the Official Statement, dated , 2019, relating to the Bonds. "Participating Underwriter" shall mean RBC Capital Markets, LLC, as original underwriter of the Bonds and any other underwriter of the Bonds. "Person" shall mean any natural person, corporation, partnership, firm, association, Government Authority or any other Person whether acting in an individual fiduciary, or other capacity. "Repository" shall mean the MSRB or any other entity designated or authorized by the MSRB or the Securities and Exchange Commission to receive reports. Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through EMMA. "Special Taxes" shall mean the annual special taxes for facilities of the Community Facilities District levied on taxable property within the Community Facilities District. "State" shall mean the State of California. "Undeveloped Property" has the meaning given to such term in the Rate and Method of Apportionment of Special Tax for the Community Facilities District. SECTION 3. Provision of Annual Reports. (a) The Developers shall, or shall cause the Dissemination Agent to, not later than December 15 of each year, commencing December 15, 2019, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. If, in any year, December 15 does not fall on a Business Day, then such deadline shall be extended to the following Business Day. 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. (b) Not later than fifteen (15) calendar days prior to the date specified in subsection (a) for providing the Annual Report to the Repository, the Developers shall provide the Annual Report to the Dissemination Agent or shall provide notification to the Dissemination Agent that the Developers are preparing, or causing to be prepared, the Annual Report and the date which the Annual Report is expected to be available. If by such date, the Dissemination Agent has not received a copy of the Annual Report or notification as described in the preceding sentence, the Dissemination Agent shall notify the Developers of such failure to receive the report. (c) If the Dissemination Agent is unable to provide an Annual Report to the Repository by the date required in subsection (a) or to verify that an Annual Report has been provided to the Repository by the date required in subsection (a), the Dissemination Agent shall send in a timely manner a notice (in the form of Exhibit A) to the Repository in a form that is accepted by the Repository. F-10 (d) The Developers shall, or shall cause the Dissemination Agent to: (i) determine each year prior to the date for providing the Annual Report the name and address of the Repository; and (ii) promptly file a report with the Developers and the Authority certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to the Repository. (e) Notwithstanding any other provision of this Disclosure Certificate, any of the required filings hereunder shall be made in accordance with the MSRB's EMMA system or in another manner approved under Rule 15c2-12. SECTION 4 Content of Annual Report. (a) The Developers' Annual Report shall contain or include by reference the information which is available not more than sixty (60) days prior to the Annual Report relating to the following: 1. A discussion of the sources of funds to finance development of property owned by the Developers within the Community Facilities District, and whether any material defaults exist under any loan arrangement related to such financing. 2. A summary of development activity conducted by the Developers within the Community Facilities District, including the number of building permits that have been issued and a description of the uses for which such permits have been pulled (i.e. residential or commercial units), and as to property owned by the Developers, the number of parcels or units for which sales have closed to end users. 3. Any sale by the Developers of property in the Community Facilities District to another Person, other than to buyers of completed homes or condominium units, including a description of the property sold (acreage, number of units, etc.) and the identity of the Person that so purchased the property. 4. Status of completion of the development being undertaken by the Developers with respect to the Undeveloped Property, including the property identified as Phase 2 in the Official Statement until such time as that property is classified as "Developed Property" according to the Rate and Method of Apportionment for the Community Facilities District, and any major legislative, administrative and judicial challenges known to the Developers to or affecting the construction of the development or the time for construction of any public or private improvements to be made by the Developers within the Community Facilities District (the "Developer Improvements"). 5. Information regarding any failure by the Developers to pay, prior to delinquency, any real property taxes (including Special Taxes) levied on a parcel of property in the Community Facilities District which was, at the time of the levy, owned by the Developers. 6. Unless such information has previously been included or incorporated by reference in an Annual Report or otherwise provided pursuant to 1 through 5 above, describe any other significant changes in the information relating to the Developers and any property owned by the Developers in the Community Facilities District contained in the Official Statement under the heading "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS" that would materially and adversely interfere with the Developers' ability to develop the property as described in the Official Statement and an update of any significant changes to the information in Table 1 in the Official Statement. (b) Any and all of the items listed above may be included by specific reference to other documents, including official statements of debt issues which have been submitted to the Repository or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Developers shall clearly identify each such other document so included by reference. F-11 SECTION 5. Reporting of Listed Events. (a) Pursuant to the provisions of this Section 5, the Developers shall give, or cause to be given, within ten Business Days of obtaining actual knowledge thereof, notice to the Repository of the occurrence of any of the following events with respect to the Bonds, if material: 1. Failure to pay any real property taxes, special taxes or assessments levied within the Community Facilities District on a parcel owned by the Developers. 2. Damage to or destruction of any of the improvements within the Community Facilities District which has a material adverse effect on the value of the parcels owned by the Developers within the Community Facilities District. 3. Material default by the Developers on any loan with respect to the construction or permanent financing of improvements within the Community Facilities District. 4. Material default by the Developers on any loan secured by property within the Community Facilities District owned by the Developers. 5. Material payment default by the Developers on any loan of the Developers (whether or not such loan is secured by property within the Community Facilities District) which is beyond any applicable cure period in such loan. 6. The filing of any proceedings with respect to the Developers, in which the Developers may be adjudicated as bankrupt or discharged from any or all of its respective debts or obligations or granted an extension of time to pay debts or a reorganization or readjustment of debts. 7. The filing of any lawsuit against the Developers (with service of process on the Developers having occurred) which, in the reasonable judgment of the Developers, will materially adversely affect the completion of the Developer Improvements or the development of parcels owned by the Developers within the Community Facilities District, or litigation which if decided against the Developers, in the reasonable judgment of the Developers, would materially adversely affect the financial condition of the Developers in a manner that would materially adversely affect the completion of the improvements within the Community Facilities or the development of parcels owned by the Developers within the Community Facilities District. 8. The termination of that certain lease, by and between Uptown Newport Jamboree, LLC and Newport Fab, LLC dba Jazz Semiconductor for the real property located at 432 Jamboree Road, Newport Beach, California 92660 prior to March 12, 2027. 9. A sale or transfer of all or substantially all of either Developers' assets or a sale of a majority of the partnership interests, membership interests or outstanding stock of either Developer (it being understood that if the Developer is a publicly traded company, such majority sale is not meant to include an aggregation of routine, unrelated market trades). (b) Whenever the Developers obtain knowledge of the occurrence of a Listed Event described in Section 5(a), the Developers shall as soon as possible determine if such event would be material under applicable federal securities laws. SECTION 6. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB. SECTION 7. Termination of Reporting Obligation. The Developers' obligations hereunder shall terminate upon the following events: (a) the legal defeasance, prior redemption or payment in full of all of the Bonds, (b) if on any date the property in the Community Facilities District owned by the Developers, F-12 in aggregate is no longer responsible for payment of 20% or more of the Special Taxes or all of the condominiums to be developed are completed and sold to homeowners, all apartments are completed and all commercial/retail space is completed and at least 50% leased to end -users; provided, however, that the Developers' obligations under this Disclosure Certificate shall remain in force with respect to any transferred property for which the purchaser is a Major Owner who has not executed an Assumption Agreement unless such Major Owner is a foreclosing creditor and/or lender, or (c) upon the delivery by the Developers to the Authority of an opinion of nationally recognized bond counsel to the effect that the information required by this Disclosure Certificate is no longer required. Such opinion shall be based on information publicly provided by the Securities and Exchange Commission or a private letter ruling obtained by the Developers or a private letter ruling obtained by a similar entity to the Developers. If such termination occurs prior to the final maturity of the Bonds, the Developers shall give notice of such termination in the same manner as for a Listed Event hereunder. SECTION 8. Dissemination Agent. The Developers 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 Developers) shall not be responsible in any manner for the content of any notice or report prepared by the Developers pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be David Taussig & Associates, Inc. SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Developers may agree to amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the Developers, or the type of business conducted; (b) The amendment or waiver either (i) is approved by the Holders in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Bondowners, or (ii) does not, in the opinion of nationally recognized bond counsel addressed to the Authority and the Trustee, materially impair the interests of the Holders or Beneficial Owners of the Bonds; and (c) The Developers, or the Dissemination Agent, shall have delivered copies of the amendment and any opinions delivered under (a) and (b) above to the Repository. SECTION 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Developers 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 Developers choose 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 Developers shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 11. Default. In the event of a failure of the Developers to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developers to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture (as such term is defined therein), and the sole remedy under this Disclosure Certificate in the event of any failure of the Developers to comply with this Disclosure Certificate shall be an action to compel performance. Neither the Developers nor the Dissemination Agent shall have any liability to the Holders of the Bonds or the Beneficial Owners of the Bonds or any other party for monetary damages or financial liability of any kind whatsoever arising from or relating to this Disclosure Certificate. F-13 SECTION 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate and in any agreement between the Developers and Dissemination Agent, and the Developers agree to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder during the time that the Developers collectively constitute a Major Owner obligated to comply with the Disclosure Certificate, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Developers under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 13. Reporting Obligation of Developers' Transferees. The Developers shall, in connection with any sale or transfer of ownership of land within the Community Facilities District to a transferee that is not an affiliate of the Developers which will result in the transferee (which term shall include any successors and assigns of such party) becoming a Major Owner, cause such transferee to enter into an Assumption Agreement provided that such transferee's obligations under such Assumption Agreement shall terminate upon the sold or transferred land being improved with structures, or the land owned by the transferee becoming responsible for the payment of less than twenty (20) percent of the annual Special Taxes. SECTION 14. Developers as Independent Contractor. In performing under this Disclosure Certificate, it is understood that the Developers are independent contractors and not an agent of the City of Newport Beach or the Authority. SECTION 15. Notices. Notices should be sent in writing to the following addresses. The following information may be conclusively relied upon until changed in writing. To the Developer: To the Underwriter: To the Authority: TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC 2 Park Plaza, Suite 700 Irvine, CA 92614 Attn: Shopoff Realty Investments, L.P. RBC Capital Markets, LLC Two Embarcadero Center, Suite 1200 San Francisco, CA 94111 Attn: Bob Williams, Managing Director California Statewide Communities Development Authority 1100 K Street, Suite 1001 Sacramento, CA 95814 Attn: Chair Email: info@cscda.org Phone: (925) 391-3590 SECTION 16. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Developers, the Dissemination Agent, the Trustee, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 17. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof. F-14 SECTION 18. Governing Law. The validity, interpretation and performance of this Disclosure Certificate shall be governed by the laws of the State of California applicable to contracts made and performed in California. IN WITNESS WHEREOF, the Developers hereto have each executed this Continuing Disclosure Certificate — Developer as of the date first above written. UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited liability company By: Name: Title: TSG-PARCEL 1, LLC, a Delaware limited liability company By: Name: Title: F-15 EXHIBIT A FORM OF NOTICE TO THE MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: California Statewide Communities Development Authority Name of Bond Issue: California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 Date of Issuance: , 2019 NOTICE IS HEREBY GIVEN that TSG-PARCEL 1, LLC and UPTOWN NEWPORT JAMBOREE, LLC (the "Developers") have not provided an Annual Report with respect to the above named bonds as required by the Continuing Disclosure Certificate, dated the date of issuance of such Bonds. The Developers anticipate that the Annual Report will be filed by , 20. Date: , 20 . cc: The Developers Underwriter DISSEMINATION AGENT: By: Its: F-16 APPENDIX G BOOK -ENTRY SYSTEM The information in this APPENDIX G has been provided by DTC for use in securities offering documents, and the Authority takes no responsibility for the accuracy or completeness thereof. The Authority cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the beneficial owners either (a) payments of interest, principal or premium, if any, with respect to the Bonds or (b) certificates representing ownership interest in or other confirmation of ownership interest in the Bonds, or that they will so do on a timely basis or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in the Official Statement. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the bonds (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 certificate will be issued for each series and maturity of the Bonds, each in the principal amount of such series and maturity, and will be deposited with DTC. If, however, the aggregate principal amount of any series and maturity exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such series and maturity. 2. 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. 3. 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 Bonds, except in the event that use of the book -entry system for the Bonds is discontinued. 4. 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 G-1 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. 5. 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 the 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 defaults and proposed amendments to the Bond documents. For example, Beneficial Owners of the 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 Trustee and Paying Agent and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. 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 Authority 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). 8. 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 Authority or Paying Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Paying Agent, or Authority, 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 Authority or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to Authority or Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 10. The Authority may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. G-2 OP, M FOR ADDITIONAL BOOKS: ELABRA.COM OR (888) 935-2272 BOND PURCHASE CONTRACT $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 February 27, 2019 California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, California 95814 Attention: Chair Ladies and Gentlemen: The undersigned, RBC Capital Markets, LLC (the "Underwriter") offers to enter into the following agreement (this "Purchase Contract") with the California Statewide Communities Development Authority (the "Authority"), which, upon the acceptance of the Authority of this offer, will be binding upon the Authority and the Underwriter. This offer is made subject to the Authority's written acceptance hereof on or before 11:59 p.m. Pacific time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the Authority at any time prior to the acceptance hereof by the Authority. Terms not otherwise defined in this Purchase Contract shall have the same meanings set forth in the Indenture (as defined herein) or in the Official Statement (as defined herein). 1. Purchase and Sale of the Bonds. Subject to the terms and conditions and in reliance upon the representations and agreements set forth herein, the Underwriter hereby agrees to purchase from the Authority, and the Authority hereby agrees to sell and deliver to the Underwriter, all, but not less than all, of the Authority's Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"). The principal amount of the Bonds to be issued, the dated date therefor, the maturities, redemption provisions and interest rates per annum are set forth in Exhibit A hereto and as further described in the Official Statement (as defined herein). The Bonds shall be as described in, and shall be issued and secured under and pursuant to the provisions of an Indenture, dated as of March 1, 2019 (the "Indenture"), by and between the Authority and Wilmington Trust, National Association, as trustee (the "Trustee"). The Bonds are being issued pursuant to the Indenture and the Mello -Roos Community Facilities Act of 1982, as amended, being California Government Code Section 53311, et seq. (the "Act"). The Underwriter has agreed to purchase all (but not less than all) of the Bonds from the Authority at a purchase price of $8,714,972.40 (being 100% of the aggregate principal amount thereof, plus original issue premium of $539,472.40 and less an Underwriter's discount of $124,500.00). The Bonds are being issued to (a) finance the acquisition and construction of certain public capital improvements and certain utility undergrounding authorized to be financed in connection with the development of property within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) (the "Community Facilities District"), (b) make a deposit to the Reserve Fund, (c) capitalize a portion of the interest on the Bonds through September 1, 2020, and (d) pay certain costs of issuing the Bonds. 2. Public Offering. The Underwriter agrees to make a bona fide public offering of all of the Bonds at a price not to exceed the public offering price set forth on the inside cover of the Official Statement (as defined herein) and as set forth in Exhibit A. The Underwriter may offer and sell Bonds to certain dealers (including dealers depositing Bonds into investment trusts) and others at prices lower than the public offering price stated on the cover of the Official Statement (as defined herein). The Underwriter shall indemnify and hold harmless the Authority and its members, officers, directors, employees, agents and attorneys against any and all claims, damages, liabilities, costs and expenses (including fees and disbursements of counsel) incurred by them or any of them, which arise out of a breach by the Underwriter of the representations and warranties contained in this paragraph. The Underwriter has been duly authorized to execute this Purchase Contract and to act hereunder. Inasmuch as this purchase and sale represents a negotiated transaction, the Authority acknowledges and agrees that (i) the transaction contemplated by this Purchase Contract is an arm's length, commercial transaction between the Authority and the Underwriter in which the Underwriter is acting solely as a principal and is not acting as a municipal advisor, financial advisor or fiduciary to the Authority; (ii) the Underwriter has not assumed any advisory or fiduciary responsibility to the Authority with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the Authority on other matters); (iii) the Underwriter is acting solely in its capacity as Underwriter for its own account; (iv) the only contractual obligations the Underwriter has to the Authority with respect to the transaction contemplated hereby expressly are set forth in this Purchase Contract; and (v) the Authority has consulted its own legal, accounting, tax, financial and other advisors, as applicable, to the extent it has deemed appropriate. Nothing in the foregoing paragraph is intended to limit the Underwriter's obligations of fair dealing under MSRB Rule G-17 of the MSRB. 3. The Official Statement. (a) The Authority hereby ratifies, confirms and approves of the use and distribution by the Underwriter prior to the date hereof of the preliminary official statement relating to the Bonds, dated February 13, 2019 (including the cover page and all appendices thereto, the "Preliminary Official Statement"). The Authority hereby confirms that the Authority has deemed final the Preliminary Official Statement for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 ("Rule 15c2-12"). The Authority hereby agrees to deliver or cause to be delivered to the Underwriter, within seven (7) business days of the date hereof, copies of the final official statement, dated the date hereof, relating to the Bonds (including all information previously permitted to have been omitted by Rule 15c2-12 and any amendments or supplements as have been approved by the Authority and the Underwriter) (the "Official Statement") in such quantity as the Underwriter shall request in order to permit the Underwriter to comply with Rule 15c2-12. The Authority hereby approves of the use and distribution by the Underwriter of the Official Statement in connection with the offer and sale of the Bonds. 2 (b) The Underwriter hereby agrees to file the Official Statement with the MSRB. 4. Representations and Agreements of the Authority. The Authority hereby represents to and agrees with the Underwriter that: (a) The Authority is a joint powers agency organized and existing under the laws of the State of California and has full power and authority to adopt its Resolution No. 19SCIP-5 (the "Resolution") authorizing the issuance of the Bonds, and to enter into and to perform its obligations under the Indenture, the Authority Continuing Disclosure Certificate and this Purchase Contract (collectively, the "Authority Documents"); and when executed and delivered by the respective parties thereto, the Authority Documents will constitute the legal, valid and binding obligations of the Authority enforceable in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against joint powers agencies in the State of California; (b) By official action of the Authority prior to or concurrently with the acceptance hereof, the Authority has approved and authorized the distribution of the Preliminary Official Statement and the Official Statement and authorized and approved the execution and delivery of the Authority Documents and the consummation by the Authority of the transactions contemplated thereby; (c) To the knowledge of the Authority, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body pending against the Authority seeking to restrain or enjoin the sale or issuance of the Bonds, or in any way contesting or affecting any proceedings of the Authority taken concerning the sale thereof, the pledge or application of any moneys or security provided for the payment of the Bonds, in any way contesting the validity or enforceability of the Authority Documents or contesting in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement or the existence or powers of the Authority relating to the sale of the Bonds; (d) To the knowledge of the Authority, the statements and information relating to the Authority and the Community Facilities District (excluding statements and information relating to TSG-Parcel 1, LLC, a Delaware limited liability company ("TSG Parcel 1") and Uptown Newport Jamboree, LLC, a Delaware limited liability company ("Uptown Newport Jamboree" and, together with TSG Parcel 1, the "Developers") and their property and activities in the Community Facilities District contained in the Preliminary Official Statement, as of the date thereof, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading in any material respect; (e) To the knowledge of the Authority, the statements and information relating to the Authority and the Community Facilities District (excluding statements and information relating to the Developers and their property and activities in the Community Facilities District) contained in the Official Statement are true and correct in all material respects, and the information relating to the Authority and the Community Facilities District (excluding statements and information relating to the Developers and their property and activities in the Community Facilities District) contained in the Official Statement does not contain an untrue statement of a material fact or omit any statement 3 or information relating to the Authority and the Community Facilities District (excluding statements and information relating to the Developers and their property and activities in the Community Facilities District ) which is necessary to make such statements and information therein, in the light of the circumstances under which they were made, not misleading in any material respect; (f) The Authority will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter, at the expense of the Underwriter as the Underwriter may reasonably request in endeavoring (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualification in effect so long as required for distribution of the Bonds; provided, however, that in no event shall the Authority be required to take any action which would subject it to general or unlimited service of process in any jurisdiction in which it is not now so subject; (g) To the knowledge of the Authority, the execution and delivery by the Authority of the Authority Documents and compliance with the provisions on the Authority's part contained therein will not conflict with or constitute a material breach of or default under any law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Authority is a party or is otherwise subject, nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets of the Authority under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Authority Documents; (h) If before the earlier of the date 25 days from the "end of the underwriting period" (as defined in S.E.C. Rule 15c2-12) or the date all of the Bonds are sold (which the Authority may assume is the closing date unless otherwise informed in writing by the Underwriter), an event occurs which, in the reasonable opinion of the Underwriter or its counsel, might or would cause the information contained in the Official Statement as then supplemented or amended, to contain an untrue statement of a material fact or to omit to state a material fact necessary to make such information therein, in the light of the circumstances under which it was presented, not misleading, the Authority, if requested by the Underwriter, or if the Authority is informed of need to amend or supplement the Official Statement by the Developers, the Authority will cooperate in amending or supplementing the Official Statement in a form and in a manner approved by the Underwriter. Unless the Authority receives written notice from the Underwriter otherwise, the Authority may treat the Closing Date (defined herein) as the "end of the underwriting period." (i) During the period described in the preceding paragraph, (i) the Authority will not participate in the issuance of any amendment of or supplement to the Official Statement to which, after being furnished with a copy, the Underwriter shall reasonably object in writing or which shall be disapproved by any of their respective counsel and (ii) if any event relating to or affecting the Authority shall occur as a result of which it is necessary, in the opinion of counsel for the Underwriter, 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 is delivered to a purchaser, the Authority will cooperate with the Underwriter to prepare and furnish to the Underwriter a reasonable number of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to counsel for the Underwriter) which will amend or supplement the Official Statement 4 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 light of the circumstances existing at the time the Official Statement is delivered to a purchaser, not misleading. The execution and delivery of this Purchase Contract by the Authority shall constitute a representation by the Authority to the Underwriter that the representations and agreements contained in this Section are true as of the date hereof; provided, however, that as to all matters of law the Authority is relying on the advice of bond counsel to the Authority; and provided further, that no member, officer, agent or employee of the governing body of the Authority shall be individually liable for the breach of any representation, warranty or agreement contained herein. 5. Closing. At 8:00 a.m., California time, on March 12, 2019, (the "Closing Date") or at such other time and date as shall have been mutually agreed upon by the Authority and the Underwriter (the "Closing"), the Authority will, subject to the terms and conditions hereof, deliver to the Underwriter the Bonds in definitive fully registered form, bearing CUSIP numbers without coupons, with one Bond for each maturity of the Bonds, registered in the name of Cede & Co., as nominee of DTC, and subject to the terms and conditions hereof and as provided in the Indenture, the Underwriter will accept such delivery and pay the purchase price of the Bonds by wire transfer payable in immediately available Federal funds. The Bonds shall be made available for inspection by the Underwriter at least one business day before the Closing. 6. Closing Conditions. The Underwriter has entered into this Purchase Contract in reliance upon the representations and agreements of the Authority contained herein, and in reliance upon the representations, warranties and agreements to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the Authority of its obligations hereunder, both as of the date hereof and as of the date of the Closing. Accordingly, the Underwriter's obligations under this Purchase Contract to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the Authority of its obligations to be performed hereunder and under such documents and instruments at or prior to the Closing, and shall also be subject to the following additional conditions, including the delivery by the Authority of such documents as are enumerated herein, in form and substance reasonably satisfactory to the Underwriter: (a) The Authority shall be in compliance with each of the agreements made by it in this Purchase Contract (unless such agreements are waived by the Underwriter); there shall not have occurred an adverse change in the financial position, results of operations or financial condition of the Authority or the Community Facilities District that materially adversely affects the ability of the Authority to levy the Special Taxes, to pay principal and interest with respect to the Bonds when due or otherwise perform any of its obligations under the Indenture or any related agreement; (b) The Authority Documents shall be in full force and effect, and shall not have been amended, modified or supplemented in any material respect from the forms of such documents which have been provided to the Underwriter as of the date hereof (except as may be agreed to by the Underwriter); all actions which shall be necessary in connection with the transactions contemplated hereby shall have been duly taken and shall be in full force and effect; and the Authority shall perform or shall have performed its obligations required under or specified in this Purchase Contract to be performed at or prior to the Closing; 5 (c) At the time of the Closing, the Official Statement (as amended and supplemented) shall be true and correct in all material respects, and shall not contain any untrue statement of a material fact or omit any statement or information necessary to make the statements therein, in the light of circumstances under which they were made, not misleading; (d) Except as disclosed in the Official Statement, no decision, ruling or finding shall have been entered by any court or governmental entity since the date of this Purchase Contract (and not reversed on appeal or otherwise set aside) which in the reasonable opinion of the Underwriter materially adversely affects the market for the Bonds; (e) (i) No default by the Authority shall have occurred and be continuing in the payment of the principal of or premium, if any, or interest on any bond, note or other evidence of indebtedness issued by the Authority, and (ii) no bankruptcy, insolvency or other similar proceeding in respect of the Authority shall be pending nor to the knowledge of the Authority, contemplated; (f) At or prior to the Closing, the Underwriter shall receive the following documents: (1) Bond Counsel Opinion. The opinion of Orrick, Herrington & Sutcliffe LLP ("Bond Counsel"), dated the Closing Date, in substantially the form included in the Official Statement as Appendix D, addressed to the Authority. (2) Supplemental Opinion. A supplemental opinion of Bond Counsel, substantially in the form attached hereto as Exhibit B. (3) Opinion of Authority Counsel. An opinion of counsel to the Authority, in form and substance satisfactory to the Underwriter dated the Closing Date, addressed to the Underwriter, substantially to the effect that: (i) the Authority is a joint powers agency duly organized and validly existing under the laws of the State; and (ii) the Resolution was duly adopted at a meeting of the governing body of the Authority, and the Resolution is in full force and effect, and has not been modified, amended or superseded. (4) Closing Certificate of Authority. A certificate of the Authority, dated the date of the Closing, signed on behalf of the Authority by a duly authorized representative of the Authority to the effect that, such representative's knowledge, the representations contained in Section 4 of this Purchase Contract are true and correct in all material respects as of the Closing Date. (5) 15c2-12 Certificate. A certificate, dated the date of the Preliminary Official Statement, from the Authority deeming the Preliminary Official Statement final for purposes of the Rule. (6) Certificate of Trustee. A certificate, dated the Closing Date, signed by a duly authorized officer of the Trustee, to the effect that (i) the Trustee is a national banking association, duly organized and validly existing and in good standing under the laws of the United States, having full power and being qualified to enter, accept and administer the trust created under the Indenture and, (ii) all approvals, consents and orders of any governmental 6 authority or agency having jurisdiction in the matter that would constitute a condition precedent to the performance by the Trustee of its duties and obligations under the Indenture have been obtained and are in full force and effect, and (iii) the acceptance of the duties and obligations of the Trustee under the Indenture and the consummation of the transactions on the part of the Trustee contemplated therein, and the compliance by the Trustee with the terms, conditions and provisions of such documents do not contravene any provisions of applicable law of regulation or any order or decree, writ or injunction of the Articles of Incorporation or Bylaws of the Trustee, and, to the best of such officer's knowledge, will not require the consent under, or result in a beach of or default under, any resolution, agreement or other instrument to which the Trustee is a party or by which it may be bound. (7) Opinion of Counsel to Trustee. An opinion of counsel to the Trustee, dated the Closing Date, addressed to the Underwriter and the Authority, to the effect that (i) the Trustee is duly organized and validly existing under the laws of the United States of America, having full power and being qualified to enter into, accept and agree to the provisions of the Indenture and (ii) the Indenture has been duly authorized, executed and delivered by the Trustee and, assuming due authorization, execution and delivery by the other respective parties thereto, constitute the valid and binding obligations of the Trustee enforceable in accordance with its respective terms, subject to laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors' rights generally, to the application of equitable principles and to the exercise of judicial discretion in appropriate cases. (8) Resolution. A certified copy of the Resolution and a resolution or bylaws of the Trustee authorizing the execution and delivery of the Indenture. (9) Legal Documents. Two copies of each of the Authority Documents and the Official Statement, duly executed and delivered by the respective parties thereto. (10) Tax Certificate. Tax Certificate of the Authority, in form satisfactory to Bond Counsel. (11) Continuing Disclosure. A Continuing Disclosure undertaking of each of the Authority and TSG Parcel 1 and Uptown Newport Jamboree substantially in the forms presented in the Official Statement. (12) Developers' Counsel Opinions. An opinion dated the Closing Date from legal counsel to each of the Developers in a form acceptable to the Authority and the Underwriter. (13) Developers' Certificates. Prior to and in connection with printing and distribution of the Preliminary Official Statement, an executed certificate of each of the Developers in the form attached hereto as Exhibit C. (14) Developers' Closing Certificates. A closing certificate of each of the Developers in the form attached as Appendix A to the Developer's Certificate attached hereto as Exhibit C. 7 (15) CDIAC Statements. Copies of the Notices of Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 53583 of the California Government Code and Section 8855(g) of the California Government Code. (16) Other Items Requested by Counsel. Such additional certificates, instruments and other documents as the Underwriter or its counsel, or Bond Counsel may reasonably deem necessary to evidence the truth and accuracy as of the time of the Closing of the representations of the Authority under this Purchase Contract and the due performance or satisfaction by the Authority at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Authority. 7. Condition to the Obligations of the Authority. (a) The Indenture, Continuing Disclosure Certificate of the Developer, applicable appendices to the Tax Certificate and this Purchase Contract shall have been executed and delivered by the other parties thereto. (b) No order, decree, injunction, ruling or regulation of any court, regulatory agency, public board or body shall have been issued nor shall any legislation have been enacted with the purpose of effect, directly or indirectly, of prohibiting the offering, sale or issuance of the Bonds as contemplated hereby or by the Official Statement. (c) The Authority's closing fee shall have been paid by wire transfer or in other immediately available funds or arrangements reasonably satisfactory to the Authority shall have been made to pay such fees from proceeds of the Bonds or otherwise. (d) The Underwriter shall provide information to which it has access in its ordinary course of business that is requested by the Authority for purposes of its compliance with California Government Code Section 8855. 8. Termination. The Underwriter shall have the right to cancel its obligation to purchase the Bonds if, between the date of this Purchase Contract and the Closing, the market price or marketability of the Bonds shall be materially adversely affected, in the reasonable judgment of the Underwriter, by the occurrence of any of the following: (a) Legislation shall be enacted by or introduced in the Congress of the United States or recommended to the Congress for passage by the President of the United States, or the Treasury Department of the United States or the Internal Revenue Service or any member of the Congress or the Legislature of the State or favorably reported for passage to either House of the Congress by any committee of such House to which such legislation has been referred for consideration, a decision by a court of the United States or of the State or the United States Tax Court shall be rendered, or an order, ruling, regulation (final, temporary or proposed), press release, statement or other form of notice by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency shall be made or proposed, the effect of any or all of which would be to impose, directly or indirectly, federal income taxation or state income taxation upon interest received on obligations of the general character of the Bonds or, with respect to state taxation, of the interest on the Bonds as described in the Official Statement, or other action or events shall have transpired which may have the purpose or effect, directly or indirectly, of changing the federal 8 income tax consequences or state income tax consequences of any of the transactions contemplated herein; (b) 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, 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, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering, or sale of obligations of the general character of the Bonds, 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 law as amended and then in effect; (c) Any state Blue Sky or securities commission or other governmental agency or body shall have withheld registration, exemption or clearance of the offering of the Bonds as described herein, or issued a stop order or similar ruling relating thereto; (d) A general suspension of trading in securities on the New York Stock Exchange or the American Stock Exchange, the establishment of minimum prices on either such exchange, the establishment of material restrictions (not in force as of the date hereof) upon trading securities generally by any governmental authority or any national securities exchange, a general banking moratorium declared by federal, State of New York, or State officials authorized to do so; (e) The New York Stock Exchange or other national securities exchange or any governmental authority, shall impose, as to the Bonds or as to 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, Underwriter; (f) Any amendment to the federal or State Constitution or action by any federal or state court, legislative body, regulatory body, or other authority materially adversely affecting the tax status of the Authority, its property, income securities (or interest thereon), or the validity or enforceability of the special taxes to pay principal of and interest on the Bonds; (g) Any event occurring, or information becoming known which, in the reasonable judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Official Statement, or has the effect that the Official Statement contains any untrue statement of material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (h) There shall have occurred any materially adverse change in the affairs or financial condition of the Authority or the Community Facilities District; (i) The United States shall have become engaged in hostilities which have resulted in a declaration of war or a national emergency or there shall have occurred any other outbreak or escalation of hostilities; 9 (j) There shall have occurred any national or international calamity or crisis in the financial markets or otherwise of the United States or elsewhere; (k) Any fact or event shall exist or have existed that, in the Underwriter's reasonable judgment, requires or has required an amendment of or supplement to the Official Statement; (1) There shall have occurred or any notice shall have been given of any intended review, downgrading, suspension, withdrawal, or negative change in credit watch status by any national rating service to any of the Authority's obligations secured in a like manner; or (m) A material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred; or (n) The purchase of and payment for the Bonds by the Underwriter, or the resale of the Bonds by the Underwriter, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission. 9. Expenses. The costs and expenses incurred by the parties hereto with respect to the Bonds and the proceedings for the sale and issuance thereof shall be paid as follows: (a) Authority. The Authority acknowledges that it has had an opportunity, in consultation with such advisors as it may deem appropriate, if any, to evaluate and consider the fees and expenses being incurred as part of the issuance of the Bonds. The Authority shall pay or cause to be paid (but solely from the proceeds of the Bonds and not otherwise) the expenses incident to the performance of the obligations of the Authority hereunder, including but not limited to: (1) the cost of preparation and printing of the Preliminary Official Statement and the final Official Statement in reasonable quantities and all other documents (other than as set forth in subsection (b) below) prepared in connection with the transactions contemplated hereby; (2) the fees and disbursements of the Trustee and counsel to the Trustee in connection with the issuance of the Bonds; (3) the fees and disbursements of Bond Counsel and any other experts or consultants retained by the Authority in connection with the transactions contemplated hereby; (4) the fees and expenses of disclosure counsel in connection with its preparation of the Official Statement and the rendering of its opinion; (5) all expenses incurred by it or the Underwriter in connection with the preparation of the Official Statement, including expenses of obtaining information from information suppliers; and (6) the Authority shall also pay for any expenses (by means of its being included in the expense component of the Underwriter's discount) incurred by the Underwriters which are incidental to implementing this Purchase Contract and the issuance of the Bonds, including, but not limited to meals, transportation and lodging, if any, and any other miscellaneous closing costs. 10 (b) Underwriter. The Underwriter shall pay: (1) the cost of preparation and printing of Blue Sky and Legal Investment Memoranda if any, to be used by it; and (2) all advertising expenses in connection with the public offering of the Bonds; (3) CDIAC fees. 10. Establishment of Issue Price. (a) The Underwriter agrees to assist the Authority in establishing the issue price of the Bonds and shall execute and deliver to the Authority 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 D, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority 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. (b) Except as otherwise set forth in Exhibit A attached hereto, the Authority will treat the first price at which 10% of each maturity of the Bonds (the "10% test") is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Contract, the Underwriter shall report to the Authority 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 Authority 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 either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that, the Underwriter's reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Authority or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds. (c) The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Contract 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, as of the date of this Purchase Contract, 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 Contract) and (ii) the 10% test has not been satisfied and for which the Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority 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: (A) the close of the fifth (5th) business day after the sale date; or 11 (B) 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 will advise the Authority promptly after the close of the fifth (5th) business day after the sale date whether 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. (d) 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: a. "public" means any person other than an underwriter or a related party; b. "underwriter" means (A) any person that agrees pursuant to a written contract with the Authority (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); c. 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 d. "sale date" means the date of execution of this Purchase Contract by all parties. 11. Notices. Any notice or other communication to be given under this Purchase Contract to the Authority or the Underwriter may be given by delivering the same in writing at the addresses set forth below: If to the Authority: California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, California 95814 Attention: Treasurer 12 If to the Underwriter: RBC Capital Markets, LLC Two Embarcadero Center, Suite 1200 San Francisco, California 94111 Attention: Municipal Finance Department 12. Entire Agreement. This Purchase Contract, when accepted by the Authority, shall constitute the entire agreement among the Authority and the Underwriter and is made solely for the benefit of the Authority and the Underwriter (including the successors or assigns of any Underwriter). Except for Bond Counsel, no other person shall acquire or have any right hereunder by virtue hereof. All the Authority's representations, warranties and agreements in this Purchase Contract shall remain operative and in full force and effect, regardless of (a) any investigation made by or on behalf of the Underwriter, (b) delivery of and payment for the Bonds hereunder, and (c) any termination of this Purchase Contract. 13. Counterparts. This Purchase Contract 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. 14. Reliance on Representations. The Authority hereby acknowledges that the Underwriter, in executing this Purchase Contract and in paying for the Bonds as provided herein, is relying upon the representations of the Authority set forth herein. 15. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof, but this Purchase Contract shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. 13 16. State of California Law Governs. The validity, interpretation and performance of this Purchase Contract shall be governed by the laws of the State of California. Very truly yours, RBC CAPITAL M) RJ ETS, LLC anaging Dir='tor The foregoing is hereby agreed to and accepted as of the date first above written: CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory Time of Execution: p.m. California time [EXECUTION PAGE OF BOND PURCHASE CONTRACT] S-1 16. State of California Law Governs. The validity, interpretation and performance of this Purchase Contract shall be governed by the laws of the State of California, The foregoing is hereby agreed to and accepted as of the date first above written: CALIFORNIA STATEWIDE COMMUNITIES »EVELOPMENT AUTHORITY orized Signatory Very truly yours, RBC CAPITAL MARKETS, LLC By: Managing Director Time of Execution: 2:55 p.m. California time [EXECUTION PAGE OF BOND PURCHASE CONTRACT] S- 1 EXHIBIT A $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 MATURITY SCHEDULE Subject to 10% Test Hold -The - Maturity Principal Interest 10% Test Not Offering - (September 1) Amount Rate Yield Price Satisfied* Satisfied Price Rule 2039M $3,295,000 5.000% 4.060% 107.327%«> X 2048M 5,005,000 5.000 4.230 105.955P X (T) Term Bond. «> Priced to optional call at par on September 1, 2028. * At the time of execution of this Purchase Contract and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Contract. A-1 REDEMPTION PROVISIONS Optional Redemption. The Bonds are subject to optional redemption by the Authority prior to their respective maturity dates as a whole or in part on any date on or after September 1, 2028, from money derived by the Authority from any source other than Mandatory Sinking Account Payments or prepayments of the Special Tax, at the principal amount of the Bonds or portions thereof called for redemption, together with accrued interest to the date fixed for redemption, without premium. Extraordinary Redemption from Prepayment of Special Tax. The Bonds are subject to extraordinary redemption by the Authority prior to their respective maturity dates as a whole or in part on any Interest Payment Date solely from money derived by the Authority from prepayments of the Special Tax under the Act at the following redemption prices (computed upon the principal amount of the Bonds or portions thereof called for redemption), together with accrued interest to the date fixed for redemption, as follows: Redemption Date Any Interest Payment Date on and after September 1, 2019 through March 1, 2027 Any Interest Payment Date on and after September 1, 2027 through March 1, 2028 September 1, 2028 and any Interest Payment Date thereafter Redemption Price 102% 101% 100% Mandatory Redemption from Mandatory Sinking Account Payments. The Authority will establish and maintain with the Trustee the 2039 Sinking Account in the Redemption Fund for the Bonds maturing on September 1, 2039 (the "2039 Term Bonds"), to receive payments (the "2039 Mandatory Sinking Account Payments") for the mandatory redemption of the 2039 Term Bonds. The 2039 Term Bonds are subject to mandatory redemption by the Authority prior to their maturity date in part on any September 1 on and after September 1, 2021, in the principal amounts thereof together with accrued interest thereon to the date fixed for redemption, without premium, solely from 2039 Mandatory Sinking Account Payments deposited into the 2039 Sinking Account, as follows except that if any Bonds maturing on September 1, 2039, shall have been extraordinarily and/or optionally redeemed pursuant to the Indenture, the amounts of the Mandatory Sinking Account Payments shall be reduced proportionately by the principal amount of all such Bonds so redeemed: Term Bonds Maturing September 1, 2039 Mandatory Sinking Account Payment Date September 1 2021 2022 2023 2024 2025 2026 2027 2028 2029 Mandatory Sinking Account Payments $30,000 40,000 55,000 65,000 80,000 95,000 105,000 125,000 140,000 A-2 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039* * Maturity 155,000 175,000 195,000 215,000 240,000 265,000 290,000 315,000 340,000 370,000 Mandatory Redemption from Mandatory Sinking Account Payments. The Authority will establish and maintain with the Trustee the 2048 Sinking Account in the Redemption Fund for the Bonds maturing on September 1, 2048 (the "2048 Term Bonds"), to receive payments (the "2048 Mandatory Sinking Account Payments") for the mandatory redemption of the 2048 Term Bonds. The 2048 Term Bonds are subject to mandatory redemption by the Authority prior to their maturity date in part on any September 1 on and after September 1, 2040, in the principal amounts thereof together with accrued interest thereon to the date fixed for redemption, without premium, solely from 2048 Mandatory Sinking Account Payments deposited into the 2048 Sinking Account, as follows except that if any Bonds maturing on September 1, 2048, shall have been extraordinarily and/or optionally redeemed pursuant to the Indenture, the amounts of the Mandatory Sinking Account Payments shall be reduced proportionately by the principal amount of all such Bonds so redeemed: Term Bonds Maturing Mandatory Sinking Account Payment Date September 1 2040 2041 2042 2043 2044 2045 2046 2047 2048* * Maturity September 1, 2048 Mandatory Sinking Account Payments $405,000 435,000 470,000 510,000 550,000 590,000 635,000 680,000 730,000 A-3 EXHIBIT B FORM OF SUPPLEMENTAL OPINION OF BOND COUNSEL [Closing Date] RBC Capital Markets, LLC San Francisco, California California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (Supplemental Opinion) Ladies and Gentlemen: This letter is addressed to you, as Underwriter, pursuant to Section 6(0(2) of the Purchase Contract, dated February 27, 2019 (the "Purchase Contract"), between you and the California Statewide Communities Development Authority (the "Authority"), providing for the purchase of $8,300,000 principal amount of its Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of March 1, 2019 (the "Indenture"), by and between the Authority and Wilmington Trust, National Association, as trustee (the "Trustee"). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture or, if not defined in the Indenture, in the Purchase Contract. We have delivered our final legal opinion (the "Bond Opinion") as bond counsel to the Authority concerning the validity of the Bonds and certain other matters, dated the date hereof and addressed to the Authority. You may rely on such opinion as though the same were addressed to you. In connection with our role as bond counsel and disclosure counsel to the Authority, we have reviewed the Purchase Contract, the Indenture, the Tax Certificate, certain portions of the official statement of the Issuer dated February 27, 2019, with respect to the Bonds (the "Official Statement"), opinions of counsel to the Authority, the Developer and the Trustee, certificates of the Authority, the Developer, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to provide the opinions or conclusions set forth herein. The opinions and conclusions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions or conclusions may be affected by actions taken or omitted or events occurring after the date hereof We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Authority. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the third paragraph hereof. We have further assumed compliance with all covenants and agreements contained in such B-1 documents. In addition, we call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Tax Certificate and the Purchase Contract and their enforceability may be subject to bankruptcy, insolvency, reorganization, receivership, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against joint powers authorities in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non -exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any assets described in or as subject to the lien of the Indenture or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets. We express no opinion with respect to the plans, specifications, maps, financial report or other engineering or financial details of the proceedings, or upon the Rate and Method or the validity of the Special Tax levied upon any individual parcel. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions or conclusions: 1. The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended. 2. The Purchase Contract has been duly executed and delivered by, and is a valid and binding agreement of, the Authority. 3. The statements contained in the Official Statement under the captions "THE BONDS," "TAX MATTERS," "APPENDIX D - PROPOSED FORM OF OPINION OF BOND COUNSEL" and "APPENDIX E — SUMMARY OF THE INDENTURE," excluding any material that may be treated as included under such captions by cross reference or reference to other documents or sources, insofar as such statements expressly summarize certain provisions of the Indenture and the form and content of our Bond Opinion, are accurate in all material respects. 4. We are not passing upon and do not assume any responsibility for the accuracy (except as explicitly stated in paragraph 3 above), completeness or fairness of any of the statements contained in the Official Statement, and make no representation that we have independently verified the accuracy, completeness or fairness of any such statements. We do not assume any responsibility for any electronic version of the Official Statement, and assume that any such version is identical in all respects to the printed version. In our capacity as bond counsel and disclosure counsel to the Authority in connection with issuance of the Bonds, we participated in conferences with your representatives, your counsel, representatives of the Authority, the Developers, special tax consultants and others, during which conferences the contents of the Official Statement and related matters were discussed. Based on our participation in the above -referenced conferences (which did not extend beyond the date of the Official Statement), and in reliance thereon, on oral and written statements and representations of the Authority and others and on the records, documents, certificates, opinions and matters herein mentioned, subject to the limitations on our role as bond counsel, we advise you as a matter of fact and not opinion that no facts came to the attention of the attorneys in our firm rendering legal services with respect to the Official Statement which caused us to believe that the Official Statement as of its date (except for any CUSIP numbers, B-2 financial, accounting, statistical or economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, any information about feasibility, valuation, appraisals, absorption, real estate or environmental matters, litigation, any statements about compliance with prior continuing disclosure undertakings, relationships among the parties, any information about book -entry, DTC, ratings, rating agencies, the underwriter, underwriting, and the information contained in Appendices A, B, C, F, and G, included or referred to therein or omitted therefrom, which we expressly exclude from the scope of this paragraph and as to which we express no opinion or view) contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. No responsibility is undertaken or view expressed with respect to any other disclosure document, materials or activity, or as to any information from another document or source referred to by or incorporated by reference in the Official Statement. This letter is furnished by us as bond counsel and disclosure counsel to the Authority. No attorney -client relationship has existed or exists between our firm and you in connection with the Bonds or by virtue of this letter. We disclaim any obligation to update this letter. This letter is delivered to you as Underwriter of the Bonds, is solely for your benefit as such Underwriter in connection with the original issuance of the Bonds on the date hereof and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. This letter is not intended to, and may not, be relied upon by owners of Bonds or by any other party to whom it is not specifically addressed. Very truly yours, ORRICK, HERRINGTON & SUTCLIFFE LLP B-3 EXHIBIT C FORM OF DEVELOPER CERTIFICATE CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CERTIFICATE OF [TSG-PARCEL 1, LLC] [UPTOWN NEWPORT JAMBOREE, LLC] [POS Date] RBC Capital Markets, LLC San Francisco, California California Statewide Communities Development Authority Sacramento, California Ladies and Gentlemen: This Developer Certificate is delivered to each of you by , a Delaware limited liability company (the "Developer") pursuant to, and in satisfaction of Section 6(0(13) of that certain Bond Purchase Contract (the "Bond Purchase Contract") to be executed by and between the California Statewide Communities Development Authority (the "Authority") and RBC Capital Markets, LLC (the "Underwriter") with respect to the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"). Capitalized terms not otherwise defined herein have the meaning ascribed to them in the Bond Purchase Contract. As used herein, the phrase "Actual Knowledge of the Developer" shall mean the knowledge that the undersigned has or has obtained through (i) interviews with such officers and responsible employees of the Developer and its Relevant Entities 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 Certificate, and/or (ii) inspection of documents in the possession of the Developer that were reasonably available to the undersigned and which the undersigned has determined are necessary for the undersigned to sign this Certificate. With your permission, the undersigned has not conducted any additional or extraordinary inspection or inquiry other than such inspections and inquiries as are prudent and customary in connection with the ordinary course of the Developer's business and operations. Individuals who are no longer employed by the Developer or its Relevant Entities have not been contacted. As used herein, "Relevant Entity" means, with respect to the Developer, any other person or entity (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 C-1 information, including financial information or operating data, concerning such person or entity is material to an evaluation of the Bonds (i.e. such person or entity's assets or funds would materially affect the Developer's ability to develop the property within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) (the "Community Facilities District") owned by the Developer as of the date hereof (the "Property") or to pay its Special Taxes on the Property prior to delinquency). The undersigned certifies that he or she is familiar with the facts herein certified and is authorized and qualified to certify the same on behalf of the Developer, and the undersigned, on behalf of the Developer, further certifies as follows: 1. The Developer is duly organized, validly existing and in good standing under the laws of the State of Delaware and has the authority to transact business in the State of California, and has all requisite right, corporate power, and authority (i) to enter into, execute as of the Closing Date, deliver and perform its obligations under the Developer Continuing Disclosure Certificate (the "Disclosure Certificate"), the form of which is attached as part of Appendix F to the Preliminary Official Statement relating to the Bonds (the "Preliminary Official Statement"), (ii) when negotiated and approved by all parties thereto, to enter into, execute, deliver and perform its obligations under the Acquisition Agreement (the "Acquisition Agreement" and together with the Disclosure Certificate, the "Developer Documents") to be entered into by and between the Developer, the Authority, [TSG Parcel 1, LLC] [Uptown Newport Jamboree, LLC] and the City of Newport Beach (the "City"), and (iii) to own the Property and to conduct its business with respect to the Property as described in the Preliminary Official Statement. 2. The Developer (i) has or will have prior to the Closing Date, duly and validly authorized and approved the execution and delivery of the Developer Documents, and (ii) has or will have prior to the Closing Date, duly authorized and approved the performance by the Developer of its obligations contained in, and the taking of any and all action as may be necessary to carry out, give effect to and perform its obligations under, the Developer Documents and assuming due authorization, execution and delivery by all parties thereto, from and after the Closing Date, the Developer Documents will constitute the valid, legal and binding obligations of the Developer and, when executed will be enforceable against the Developer in accordance with their terms, subject to laws relating to bankruptcy, insolvency, other laws affecting the enforcement of creditors' rights generally, and the application of equitable principles if equitable remedies are sought. . 3. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, (a) the Developer is not in breach of or in default under any applicable law or administrative rule or regulation of the State of California or 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, line of credit, note, bond, indenture, fiscal agent agreement, development agreement (including mitigation agreements or joint community facilities agreements) (collectively, the "Material Agreements") to which the Developer is a party or is otherwise subject or bound, which breach or default could reasonably be expected to materially and adversely affect the ability of the Developer to perform its obligations under the Developer Documents or to C-2 develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes prior to delinquency with respect to the Property (to the extent the responsibility of the Developer) and (b) no event has occurred and is continuing that with the passage of time or giving of notice, or both, would constitute such a breach of or default under any Material Agreement which could reasonably be expected to materially and adversely affect the ability of the Developer to perform its obligations under the Developer Documents or to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes prior to delinquency with respect to the Property (to the extent the responsibility of the Developer). To the Actual Knowledge of the Developer, neither the execution and delivery of the Developer Documents by the Developer and compliance by the Developer on its part with the provisions thereof, nor the consummation of any material transactions contemplated in the Preliminary Official Statement with respect to the Property, will conflict with or constitute such a breach of or default under any applicable law or administrative rule or regulation of the State of California or 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 Material Agreement. 4. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, 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 Developer of its obligations under the Developer Documents have been obtained and are in full force and effect, except as such may be required by state securities or blue sky laws governing the sale and distribution of the Bonds by the Underwriter. 5. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, there are no material loans outstanding and unpaid and no material lines of credit of the Developer or its Relevant Entities that are secured by an interest in the Property. To the Actual Knowledge of the Developer, the Developer is not currently in default on any loans, lines of credit or other financial obligation, the result of which could reasonably be expected to materially and adversely affect the development of the Property as described in the Preliminary Official Statement. 6. To the Actual Knowledge of the Developer, the Developer is not currently delinquent in any material amount in the payment of ad valorem property taxes, special assessments or special taxes on the Property. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, the Developer has not been delinquent in the last five years in the payment of special assessments or special taxes on property in California owned by the Developer during the period of its ownership included within the boundaries of a community facilities district or assessment district within California that caused a draw on a reserve fund relating to such assessment district or community facilities district financing. 7. As of the date of the Preliminary Official Statement , the statements in the Preliminary Official Statement with respect to the Developer, the Property and the proposed development of the Property as described under the captions entitled "THE PROJECT, THE C-3 DEVELOPERS AND THE IMPROVEMENTS" and "CONTINUING DISCLOSURE — The Developers" (but, in all captions, excluding the information regarding the appraisal, market value ratios and annual special tax ratios, and information which is identified as having been provided by a source other than the Developer, and except that no belief is expressed as to any information about valuation, appraisals, market absorption, archaeological or environmental matters), are true and correct in all material respects and do not contain any untrue statement of any material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 8. Except as disclosed 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 Developer, is overtly threatened in writing against the Developer, (i) in any way questioning the due formation and valid existence of the Developer, (ii) in any way seeking to challenge or affect the validity and enforceability of any governmental agreements or approvals necessary for the development of the Property, or seeking to restrain or enjoin continuation and/or completion of the development of the Property as described in the Preliminary Official Statement, (iii) in any way seeking to invalidate or set aside any agreement relating to the development of the Property, (iv) in any way seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture, or the collection or application of the Special Taxes pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, (v) in any way contesting or affecting the validity or enforceability of the Bonds, the Resolution, the Indenture, or the Developer Documents, or any action of the Developer contemplated by any of said Developer Documents, or (vi) in any way contesting the completeness or accuracy of the Preliminary Official Statement or the powers of the Developer or its authority with respect to the Developer Documents or any action of the Developer contemplated by any of said Developer Documents. 9. To the Actual Knowledge of the Developer, all written information submitted by the Developer's employees as authorized by the Developer to the Authority, the Special Tax Consultant, Disclosure Counsel or the Underwriter in connection with the preparation of the Preliminary Official Statement relating to the issuance of the Bonds, and to Integra Realty Resources (the "Appraiser") in connection with the preparation of the Appraisal of the property in the Community Facilities District attached as Appendix B to the Preliminary Official Statement, was, at the time of submission, and is as of the date hereof, except as modified by later written information submitted by, or on behalf of and authorized by, the employees of the Developer involved in the issuance of the Bonds (including information set forth in the Preliminary Official Statement), fair and accurate in all material respects. 10. To the Actual Knowledge of the Developer, 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 Developer, overtly 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. C-4 11. The Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and its Relevant Entities 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 which seeks to challenge or overturn the formation or existence of the Community Facilities District, the authorization of the Special Taxes or the validity of the Bonds or the pledge and assignment of the Special Taxes to secure payment of the Bonds or the proceedings taken for their issuance. The foregoing covenant shall not prevent the Developer from bringing any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, (a) contending that the Special Taxes have not been levied in accordance with the methodologies contained in the Rate and Method of Apportionment of Special Taxes for the Community Facilities District pursuant to which the Special Taxes are levied, (b) with respect to the application or use of the Special Taxes levied and collected, or (c) enforcing the obligations of the Community Facilities District, the Authority and the City under the formation resolutions or any agreement including without limitation, the Resolution of Formation, the Indenture, the Developer Documents, the Bond Purchase Contract, or any other agreements between the Developer and/or the Community Facilities District, Authority, or the City to which the Developer is a party or beneficiary. 12. To the Actual Knowledge of the Developer, there are no claims, disputes, suits, actions pending against the Developer (with proper service of process or notice to the Developer having been accomplished) or overtly threatened in writing against the Developer, nor, to the Actual Knowledge of the Developer, are there any contingent liabilities of, among, by or between the Developer or any Relevant Entity, in each such case which is reasonably expected to materially and adversely affect the ability of the Developer to develop the Property as described in the Preliminary Official Statement, or, when executed, to comply with its obligations under the Developer Documents. 13. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, the Developer is not aware of any State of California or federally classified hazardous substances located on the Property, and does not believe that such a current liability exists with respect to any portion of the Property owned by the Developer. 14. Except as disclosed in the Preliminary Official Statement, the Developer has not submitted an application for, nor received actual notice of, (a) the formation or authorization of any assessment district or community facilities district which would include any portion of the Property, or (b) the authorization or issuance of any debt secured by a special tax or assessment to be levied on any portion of the Property. 15. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, the Developer is not aware of any material failures by it to comply in all material respects with previous continuing disclosure undertakings in a written certificate or agreement executed by it to provide periodic continuing disclosure reports or notices of material events respecting securities offerings in California within the past five years. C-5 16. The Developer agrees to deliver a Closing Certificate dated the date of the issuance of the Bonds at the time of issuance of the Bonds in substantially the form attached as Appendix A. 17. The Developer has received a copy of the Bond Purchase Contract and acknowledges and agrees that the representations and covenants on its part contained in this Certificate are given as a condition to the issuance of the Bonds by the Authority and the underwriting of the Bonds by the Underwriter, and that the Authority and the Underwriter would not so issue and so underwrite the Bonds, respectively, without the representations and covenants contained herein. C-6 The undersigned has executed this Certificate solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability, individually or collectively, arising from or relating to this Certificate. Any liability arising from or relating to this Certificate may only be asserted against the Developer. This Certificate has been executed as of the date first written above. [DEVELOPER] By: C-7 APPENDIX A CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CLOSING CERTIFICATE OF [TSG-PARCEL 1, LLC] [UPTOWN NEWPORT JAMBOREE, LLC] [Closing Date] RBC Capital Markets, LLC San Francisco, California California Statewide Communities Development Authority Sacramento, California Ladies and Gentlemen: Reference is made to the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds") and to the Bond Purchase Contract (the "Bond Purchase Contract") to be executed by and between the California Statewide Communities Development Authority (the "Authority") and RBC Capital Markets, LLC (the "Underwriter"), entered into in connection therewith. This Closing Certificate is delivered by , a Delaware limited liability company (the "Developer") pursuant to the Bond Purchase Contract. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Certificate of , dated February 13, 2019 (the "Certificate"), delivered by the Developer, a copy of which is attached hereto as Exhibit A. The undersigned certifies that he or 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 final Official Statement relating to the Bonds, dated February 27, 2019 (the "Official Statement"). Each statement, representation and warranty made in the Certificate 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 Official Statement. 2. To the Actual Knowledge of the Developer, no event has occurred since the date of the Preliminary Official Statement affecting the statements and information contained in the Sections of the Official Statement described in Paragraph 7 of the Certificate relating to the Developer, the Property and the proposed development of the Property, which should be disclosed in the Official Statement for the 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. C-8 3. For the period through 25 days after the "End of the Underwriting Period" as referenced in Section 4(g) of the Bond Purchase Contract (provided the Developer may assume the End of the Underwriting Period is the Closing Date (as defined in the Bond Purchase Contract), unless it receives written notice from the Underwriter that the End of the Underwriting Period is later than the Closing Date), if any event relating to or affecting the Developer, its Relevant Entities, or the development of the Property shall occur as a result of which the information contained in the sections of the Official Statement referred to in Paragraph 7 of the Certificate contains an untrue statement of a material fact or omits 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 Authority, and the Underwriter, and if, in the opinion of counsel to the Authority or the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Developer shall reasonably cooperate with the Authority and the Underwriter in the preparation of an amendment or supplement to the Official Statement in form and substance satisfactory to counsel to the Authority and the Underwriter. 4. The Developer has duly executed and delivered the Disclosure Certificate, and the Disclosure Certificate 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. The undersigned has executed this Closing Certificate solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability, individually or collectively, arising from or relating to this Closing Certificate. Any liability arising from or relating to this Closing Certificate may only be asserted against the Developer. This Closing Certificate has been executed as of the date first written above. [DEVELOPER] By: C-9 EXHIBIT D FORM OF CERTIFICATE OF THE UNDERWRITER CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CERTIFICATE OF THE UNDERWRITER RBC Capital Markets, LLC has acted as the Underwriter in connection with the sale and issuance by the California Statewide Communities Development Authority (the "Issuer") of its $8,300,000 Community Facilities District No. 2018-03 (Uptown Newport), Special Tax Bonds, Series 2019 (the "Bonds"), being issued on the date hereof, and the Underwriter, hereby certifies and represents the following: Issue Price. 1. As of the date hereof, the first price or yield at which at least 10% of each Maturity of the Bonds was sold by the Underwriter to the Public was the Initial Offering Price set forth on Schedule 1 hereto.] Defined Terms. "Initial Offering Price" means the prices or yields set forth on the inside cover page of the Issuer's Official Statement in respect of such Bonds dated February 27, 2019. "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. "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. "Related Party" means any entity if an Underwriter and such entity are subject, directly or indirectly, to (i) at least 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), (ii) more than 50% common ownership of their capital interests or profit interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) 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). "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). D-1 The Underwriter 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 to which this certificate is included as an exhibit and with respect to compliance with the federal income tax rules affecting the Bonds, and by Orrick, Herrington & Sutcliffe LLP, in connection with its opinion as to the exclusion of interest on the Bonds from federal gross income, 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. The Underwriter is certifying only as to facts in existence on the date hereof. Nothing herein represents the Underwriter's interpretation of any laws; in particular the Treasury Regulations under the Internal Revenue Code of 1986, or the application of any laws to these facts. The certifications contained herein are not necessarily based on personal knowledge, but may instead be based on either inquiry deemed adequate by the undersigned or institutional knowledge (or both) regarding the matters set forth herein. Dated: March 12, 2019 RBC CAPITAL MARKETS, LLC, as Underwriter By: Its: D-2 NEW ISSUE — BOOK -ENTRY ONLY NOT RATED In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of or the amount, accrual or receipt of interest on, the Bonds. See "TAX MATTERS" herein. $8,300,000 CSC DA CALIFORNIA STATEWIDE COMMUNITIES COMMUNITY FACILITIES DISTRICT NO. 2I018 03 ENT AUTHORITY (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CAUFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY Dated: Date of Delivery Due: September 1, as shown on the Inside Cover The California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), Special Tax Bonds, Series 2019 (the "Bonds") are being issued under the Mello -Roos Community Facilities Act of 1982 (the "Act") to (a) finance the acquisition and construction of certain public capital improvements and certain utility undergrounding authorized to be financed in connection with the development of property within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "Community Facilities District"), (b) make a deposit to the Reserve Fund, (c) capitalize a portion of the interest on the Bonds through March 1, 2021, and (d) pay certain costs of issuing the Bonds. See "ESTIMATED SOURCES AND USES OF BOND PROCEEDS" herein. The Bonds will be issued in accordance with the provisions of an Indenture (the "Indenture"), between the California Statewide Communities Development Authority (the "Authority") and Wilmington Trust, National Association, as trustee (the "Trustee"). Bonds may be purchased in the principal amount of $5,000 or integral multiples thereof. Interest is payable semiannually on March 1 and September 1 of each year, commencing September 1, 2019. The Trustee pays interest to the Holders as their names appear, at the close of business as of the fifteenth day of the calendar month preceding the calendar month in which the applicable Interest Payment Date falls. The Bonds are being issued as fully registered bonds in book -entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Purchasers will not receive certificates representing their interest in the Bonds. See Appendix G — "BOOK -ENTRY SYSTEM." THE BONDS REPRESENT A HIGH DEGREE OF SPECULATIVE RISK. Investment in the Bonds involves risks which may not be appropriate for some investors. See "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 information for general reference only. It is not a complete summary of the Bonds. Investors should read the entire Official Statement to obtain information essential to the making of an informed investment decision. The Bonds are subject to redemption prior to maturity as described herein. See "THE BONDS — Redemption" herein. The Bonds are secured by a pledge of and are payable from the Special Tax (as defined herein) to be levied on certain real property within the Community Facilities District, including any prepayments thereof and any amounts received, net of costs of collection, as a result of foreclosure or other actions by the Authority to collect delinquent Special Tax, and amounts held in certain funds pursuant to the Indenture. Following the issuance of the Bonds, Refunding Bonds are permitted pursuant to the Indenture, which Refunding Bonds will be secured by a lien on the Special Tax on parity with the Bonds. See "SECURITY FOR THE BONDS." THE PRINCIPAL OF AND INTEREST AND REDEMPTION PREMIUMS, IFANY, ON THE BONDS ARE LIMITED OBLIGATIONS PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX. THE AUTHORITY IS NOT OBLIGATED TO PAY THE BONDS EXCEPT FROM THE PROCEEDS OF THE SPECIAL TAX. THE GENERAL FUNDS AND ASSETS OF THE AUTHORITY ARE NOT LIABLE AND THE FULL FAITH AND CREDIT OF THE AUTHORITY IS NOT PLEDGED FOR THE PAYMENT OF THE PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUMS, IFANY, ON THE BONDS. NO TAX OR ASSESSMENT OTHER THAN THE SPECIAL TAX SHALL EVER BE LEVIED OR COLLECTED TO PAY THE PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS. THE BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF OR CHARGE, LIEN OR ENCUMBRANCE UPON ANY OF THE PROPERTY OF THE AUTHORITY OR ANY OF ITS INCOME OR RECEIPTS EXCEPT THE MONEY HELD IN THE SPECIAL TAX FUND PURSUANT TO THE INDENTURE. NEITHER THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS IS A GENERAL DEBT, LIABILITY OR OBLIGATION OF THE AUTHORITY. The Bonds are offered when, as and if issued and delivered to the Underwriter, subject to the approval as to their validity by Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, and subject to certain other conditions. Certain legal matters will be passed upon for the Underwriter by Kutak Rock LLP, Irvine, California. Orrick, Herrington & Sutcliffe LLP is also acting as Disclosure Counsel to the Authority. Latham & Watkins LLP, Los Angeles, California, is serving as counsel to the Developers (as defined herein). It is anticipated that the Bonds will be available for delivery in book - entry form through the facilities of DTC on or about March 12, 2019. RBC Capital Markets® This Official Statement is dated February 27, 2019. MATURITY SCHEDULE RELATING TO $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 MATURITY SCHEDULE (Base CUSIPt Number 13077E) $3,295,000 5.00% Term Bond due September 1, 2039; Priced to Yield$ 4.060%; CUSIPt Suffix GC8 $5,005,000 5.00% Term Bond due September 1, 2048; Priced to Yield$ 4.230%; CUSIPt Suffix GD6 CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright© 2019 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP numbers are provided for convenience of reference only. The Authority and the Underwriter take no responsibility for the accuracy of such numbers. Yield to optional call at par on September 1, 2028. Reoffering prices/yields furnished by the Underwriter. The Authority takes no responsibility for the accuracy thereof. No dealer, broker, salesperson or other person has been authorized by the Authority or the Underwriter to give any information or to make any representations with respect to the Authority, the Community Facilities District or the Bonds other than the information contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by the Authority 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 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 a representation of facts. Certain of the information set forth herein has been obtained from sources which the Authority believes to be reliable, but such information is not guaranteed as to accuracy or completeness. All summaries of the Indenture or other documents are made subject to the provisions thereof 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 Authority for further information in connection therewith. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement includes forward -looking statements that are based on the current expectations and projections of the Authority or the developers of the land within the Community Facilities District about future events. These forward -looking statements are subject to risks and uncertainties, including risks and uncertainties outside the control of the Authority, the Developers or all of them. Such statements generally are identifiable by the terminology used, such as "project," "plan," "expect," "anticipate," "estimate," "budget," "believe" or other similar words. The achievement of certain results or other expectations contained in such forward -looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward - looking statements. No assurance is given that actual results will meet the Authority's or the Developers' forecasts in any way. Except as set forth in the continuing disclosure undertakings, forms of which are attached as Appendix F hereto, the Authority and the Developers do not plan to issue any updates or revisions to those forward -looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur or change. 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. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE 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 UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENT AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE INSIDE COVER PAGE HEREOF AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. (THIS PAGE INTENTIONALLY LEFT BLANK) CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY Commission Larry Combs, Chair Kevin O'Rourke, Vice Chair Brian Moura, Treasurer Tim Snellings, Secretary Jordan Kaufman, Member Dan Mierzwa, Member Marcia Raines, Member Michael Cooper, Alternate Member Niroop Srivatsa, Alternate Member Officers Cathy Bando, Executive Director PROFESSIONAL SERVICES Special Tax Consultant David Taussig & Associates, Inc. Appraiser Integra Realty Resources Bond and Disclosure Counsel Orrick, Herrington & Sutcliffe LLP Trustee Wilmington Trust, National Association (THIS PAGE INTENTIONALLY LEFT BLANK) TABLE OF CONTENTS Page INTRODUCTION 1 THE BONDS 6 Description of the Bonds 6 Redemption 6 Transfer and Exchange of Bonds 9 Debt Service Schedule 9 THE CITY OF NEWPORT BEACH 10 THE COMMUNITY FACILITIES DISTRICT 10 General Information 10 The Community Facilities District 10 THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS 11 Ownership 11 The Project, Planned Development and Status of Construction 12 Development Entitlements 15 Utilities 15 Project Plan of Finance 16 The Developers and Shopoff Realty Investments, L.P 17 Surrounding Area 18 Acquisition Agreement and Facilities Relocation Agreement 18 The Improvements and Undergrounding 20 ESTIMATED SOURCES AND USES OF BOND PROCEEDS 20 SECURITY FOR THE BONDS 21 General 21 The Special Tax 21 Rate and Method of Apportionment of Special Tax 22 Special Tax Calculations 25 Debt Service Coverage 27 Authority Policy Regarding Assessments and Special Tax 28 Funds and Accounts; Flow of Funds 28 Refunding Bonds 29 Covenant for Superior Court Foreclosure 30 Property Values 31 Direct and Overlapping Debt 32 Estimated Value -to -Lien Debt Ratios 33 -i- TABLE OF CONTENTS (continued) Page Other Potential Debt 37 SPECIAL RISK FACTORS 37 Insufficiency of Special Tax 37 Limited Obligation to Pay Bonds 37 Non -Recourse Obligation to Pay Special Tax 38 Special Tax Delinquencies 38 Shapiro v. San Diego 38 Failure to Develop 39 Construction Risk 39 Concentration of Ownership and Risks Relating to Future Owners 40 Extraordinary Redemption from Prepaid Special Taxes 40 Appraisal Risks 40 Assessed Valuation Risks 41 Bankruptcy and Foreclosure Delays 41 Disclosures to Future Purchasers 41 Billing of Special Tax 42 Endangered and Threatened Species 42 Natural Disasters 42 Hazardous Substances 43 FDIC/Federal Government Interests in Properties 43 Parity Taxes and Special Assessments 44 Value -to -Lien Debt Ratios 45 Limitations on Remedies; No Acceleration 45 Right to Vote on Taxes Act 45 Tax Cuts and Jobs Act of 2017 46 Risks Relating to Tax -Exempt Status of the Bonds 46 THE AUTHORITY 47 LITIGATION 47 CONTINUING DISCLOSURE 47 The Authority 47 The Developers 47 LEGAL OPINIONS 48 TAX MATTERS 48 UNDERWRITING 49 TABLE OF CONTENTS (continued) Page NO RATINGS 50 MISCELLANEOUS 51 APPENDIX A GENERAL INFORMATION ABOUT THE CITY OF NEWPORT BEACH AND VICINITY APPENDIX B APPRAISAL APPENDIX C RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX APPENDIX D PROPOSED FORM OF OPINION OF BOND COUNSEL APPENDIX E SUMMARY OF THE INDENTURE APPENDIX F FORMS OF CONTINUING DISCLOSURE CERTIFICATES APPENDIX G BOOK -ENTRY SYSTEM (THIS PAGE INTENTIONALLY LEFT BLANK) OFFICIAL STATEMENT $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 INTRODUCTION The purpose of this Official Statement, including the cover, table of contents and the Appendices, is to provide certain information concerning the $8,300,000 aggregate principal amount of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), Special Tax Bonds, Series 2019 (the "Bonds"). This introduction is not a summary of this Official Statement. It is only a general description of and guide to, and is qualified by, the more complete and detailed information contained in the entire Official Statement, including the cover page and Appendices hereto, and the documents summarized or described herein. Investors should review the entire Official Statement. The sale and delivery of the Bonds to investors is made only by means of the entire Official Statement. The Bonds are being issued under the Mello -Roos Community Facilities Act of 1982 (the "Act") to (a) finance the acquisition and construction of certain public capital improvements and certain utility undergrounding authorized to be financed in connection with the development of property within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California (the "Community Facilities District"), (b) make a deposit to the Reserve Fund, (c) capitalize a portion of the interest on the Bonds through March 1, 2021, and (d) pay certain costs of issuing the Bonds. See "ESTIMATED SOURCES AND USES OF BOND PROCEEDS" herein. Bonds may be purchased in principal amounts of $5,000 or integral multiples thereof. Interest is payable semiannually on March 1 and September 1 of each year, commencing September 1, 2019. The Trustee pays interest to the Holders as their names appear, at the close of business as of the fifteenth day of the calendar month preceding the calendar month in which the applicable Interest Payment Date falls. The Bonds are being issued as fully registered bonds in book -entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). Purchasers will not receive certificates representing their interest in the Bonds. See Appendix G — "BOOK -ENTRY SYSTEM." The Bonds are subject to redemption prior to maturity as described herein. See "THE BONDS — Redemption" herein. The Bonds will be issued in accordance with the provisions of an Indenture (the "Indenture"), between the California Statewide Communities Development Authority (the "Authority") and Wilmington Trust, National Association, as trustee (the "Trustee"). The Commission of the Authority, through proceedings conducted under the Act, has become authorized to issue special tax bonds for the Community Facilities District in an aggregate principal amount not to exceed $8,800,000. Following the issuance of the Bonds, Refunding Bonds are permitted pursuant to the Indenture, which Refunding Bonds will be secured by a lien on the Special Tax (as defined below) on parity with the Bonds. See "SECURITY FOR THE BONDS — Refunding Bonds." The Community Facilities District is located within the Airport Area (near John Wayne Airport) of the City of Newport Beach (the "City") in Orange County, California (the "County"). The City is located in the coastal center of the County, approximately 89 miles north of San Diego, 15 miles south of Long Beach and 45 miles southwest of Los Angeles. For additional information regarding the City, see "THE CITY OF NEWPORT BEACH" and Appendix A — "GENERAL INFORMATION ABOUT THE CITY OF NEWPORT BEACH AND VICINITY." 1 The Community Facilities District consists of approximately 15.8 net taxable acres of land and is currently expected to be developed into 472 condominiums, 314 apartments and 11,500 cumulative square feet of commercial space. The Community Facilities District is expected to be developed in two primary phases. Phase 1 is currently planned to consist of the development of approximately 3.24 net taxable acres (total of approximately 7.6 gross acres), comprised of 158 condominiums and approximately 7,500 square feet of commercial space. Phase 2 is currently planned to consist of the development of approximately 12.56 acres, comprised of approximately 628 residential units, including 314 apartments and 314 condominiums, and approximately 4,000 square feet of commercial space. The property anticipated to be developed for Phase 2 is currently improved with a 320,510 square foot industrial building, and subject to an existing lease by and between Uptown Newport Jamboree, LLC ("Uptown Newport Jamboree") and Newport Fab, LLC, doing business as Jazz Semiconductor ("TowerJazz"), a semi -conductor chip manufacturer. Upon expiration of such lease (currently scheduled to expire in March 2027), demolition of the current improvements will commence and is currently anticipated to be completed by the end of 2027 with Phase 2 development of the site for residential and commercial uses planned to begin in the first quarter of 2028. See additional detail on the lease in "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — Ownership" below. The Community Facilities District comprises a portion of the Uptown Newport Planned Community Development Plan, which is a mixed -use development expected to include 1,244 residential units, including apartments (including affordable units) and condominiums, retail and commercial space, recreational parks and open space. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS" herein. TSG-Parcel 1, LLC, a Delaware limited liability company ("TSG Parcel 1" and together with Uptown Newport Jamboree, the "Developers"), the current owners of all of the property within the Community Facilities District, are coordinating the installation of the improvements for the Community Facilities District, including grading, wet and dry utilities and roadway improvements. Construction of the improvements within the Community Facilities District is underway and is further described under "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS." The Community Facilities District is subject to the levy of the Special Tax for payment of the Bonds, as described under "SECURITY FOR THE BONDS." For additional information regarding the Community Facilities District and its development, see "THE COMMUNITY FACILITIES DISTRICT." Pursuant to the Act, the qualified electors of the Community Facilities District were the owners of the Taxable Property (as defined in Appendix C — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX") within the Community Facilities District. The property owners approved the levy of a special tax (the "Special Tax") on their real property within the boundaries of the Community Facilities District. See "THE COMMUNITY FACILITIES DISTRICT — General Information." The Bonds are limited obligations payable solely from and secured by a pledge of the Special Tax, including any prepayments thereof and any amounts received, net of costs of collection, as a result of foreclosure or other actions by the Authority to collect delinquent Special Tax, and amounts held in certain funds pursuant to the Indenture. See "SECURITY FOR THE BONDS." The Bonds will be further secured by amounts on deposit in a Reserve Fund. See "SECURITY FOR THE BONDS — Funds and Accounts; Flow of Funds." THE PRINCIPAL OF AND INTEREST AND REDEMPTION PREMIUMS, IF ANY, ON THE BONDS ARE LIMITED OBLIGATIONS PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX. THE AUTHORITY IS NOT OBLIGATED TO PAY THE BONDS EXCEPT FROM THE PROCEEDS OF THE SPECIAL TAX. THE GENERAL FUNDS AND ASSETS OF THE AUTHORITY ARE NOT LIABLE AND THE FULL FAITH AND CREDIT OF THE AUTHORITY IS NOT PLEDGED FOR THE PAYMENT OF THE PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS. NO TAX OR ASSESSMENT OTHER THAN THE SPECIAL TAX SHALL EVER BE LEVIED OR COLLECTED TO PAY THE PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS. THE BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF OR CHARGE, LIEN OR ENCUMBRANCE UPON ANY OF THE PROPERTY OF THE AUTHORITY OR ANY OF ITS INCOME OR RECEIPTS EXCEPT THE MONEY HELD IN THE SPECIAL TAX FUND PURSUANT TO THE INDENTURE. NEITHER THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS IS A GENERAL DEBT, LIABILITY OR OBLIGATION OF THE AUTHORITY. THE BONDS REPRESENT A HIGH DEGREE OF SPECULATIVE RISK. Investment in the Bonds involves risks that may not be appropriate for some investors. Certain risk factors should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. See "SPECIAL RISK FACTORS." 2 General descriptions of the Bonds, the Indenture, the security for the Bonds, the Community Facilities District, the status of development within the Community Facilities District, the Developers and certain other information are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. The descriptions herein of the Bonds, the Indenture and other documents are qualified in their entirety by reference to the complete terms thereof. Capitalized terms used but not defined herein have the meanings given in the Indenture, certain provisions of which, including certain definitions, are summarized in Appendix E hereto. Copies of the Indenture and such other documents may be obtained from the Trustee. [Remainder of page intentionally left blank] 3 Regional Map of CSCDA CFD No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California I Costa Mesa % John Wayne Airport Site Boundary ------ City Boundary AND W -edit* t*k San Diego Creek Chann 4r. 0 2, COO Scale (Feet) m 4 Boundary Map of CSCDA CFD No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California Far particu63s of linca and dimcnaiona. reference is made In 1ho parcels maps of me orange tWriry ASseSSOr_ caliimia, and to Tract map hb_ 17769 recorded 31 June 19. 2415 as Instrument fvo. 291500320061 at Paces 17 through 23 In Book 937 of maps n the Mize of the County Rrrnrrler of Crzrige County. CaWr9111I9. LEGEND Proposed Boundaries of California Starcwide Cornmunil s Ocvelopment ■•MINN■ Autt.yitt Cei irpuilily F is ics O 1rIC1 NO 201E-931Upwnil Nverrpurq. Cfyur Newpur. Beads. Gounry or oranoe Callum a 111 11111 Parcel Una Ts&Zoos 1 ist Zooe 2 415-13o-1n Assessor Parcel Monter rtrawmcs GLllnTLLKIY, SH6. aacllfgIM 5 THE BONDS Description of the Bonds The Bonds will be issued pursuant to the Act and the Indenture as fully registered Bonds without coupons in denominations of $5,000, or any integral multiple thereof (not exceeding the principal amount maturing at any one time). The Bonds will be issued in book -entry only form. The Depository Trust Company, New York, New York ("DTC") will act as securities depository for the Bonds. So long as the Bonds are held in book -entry only form, principal of and interest on the Bonds will be paid directly to DTC for distribution to the beneficial owners of the Bonds in accordance with DTC's procedures. See Appendix G — "BOOK -ENTRY SYSTEM." The Bonds will be dated the date of delivery and will mature on September 1 in the years and in the principal amounts shown on the inside cover of this Official Statement. The Bonds will bear interest at the per annum rates shown on the inside cover of this Official Statement. Such interest will be payable semiannually on March 1 and September 1 of each year, commencing September 1, 2019 (each, an "Interest Payment Date") and will be computed on the basis of a 360-day year consisting of twelve 30-day months. The Trustee pays interest to the Holders as their names appear, at the close of business as of the fifteenth day of the calendar month preceding the calendar month in which the applicable Interest Payment Date falls. Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (i) it is authenticated on a day during the period from the sixteenth (16th) day of the calendar month next preceding an Interest Payment Date to such Interest Payment Date, both days inclusive, in which event it will bear interest from such Interest Payment Date, or (ii) it is authenticated on a day on or before the fifteenth (15th) day of the month preceding the first Interest Payment Date, in which event it will bear interest from its date; provided, that if at the time of authentication of any Bond interest is then in default on the Bonds, the Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment of interest on the Bonds. Interest and redemption premiums, if any, on, and the principal of, the Bonds will be payable in lawful money of the United States of America at the principal corporate trust office of the Trustee in Los Angeles or San Francisco, California, or at such other place as designated by the Trustee. Payment of interest on the Bonds due on or before the maturity or prior redemption thereof will be made only to the person named in the Trustee's registration books as the registered owner thereof at the close of business on the fifteenth (15th) day of the month next preceding the Interest Payment Date. Interest will be paid by check mailed by first class mail to the registered owner at the address appearing in such registration books, except that a registered owner of $1,000,000 or more in principal amount of Bonds then Outstanding may elect to receive payment on any Interest Payment Date by wire transfer of immediately available funds to an account in a bank or trust company or savings bank that is a member of the Federal Reserve System and that is located in the United States of America by delivering written instructions to the Trustee at least fifteen (15) days before each such Interest Payment Date. Payment of the principal of and redemption premium, if any, on the Bonds shall be made only to the person named in such registration books as the registered owner thereof. Principal and redemption premiums, if any, will be paid only on the surrender of the Bonds at the principal corporate trust office of the Trustee at maturity or on redemption prior to maturity. So long as Cede & Co. is the registered owner of the Bonds, payments of the principal of, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co., by the Trustee. Disbursements of such payments to DTC's Participants is the responsibility of DTC and disbursements of such payments to the beneficial owners is the responsibility of DTC's Participants and Indirect Participants, as more fully described herein. See Appendix G — `BOOK - ENTRY SYSTEM," herein. Redemption Extraordinary Redemption from Prepayment of Special Tax The Bonds are subject to extraordinary redemption by the Authority prior to their respective maturity dates as a whole or in part on any Interest Payment Date solely from money derived by the Authority from prepayments of the Special Tax under the Act at the following redemption prices (computed upon the principal amount of the Bonds or portions thereof called for redemption), together with accrued interest to the date fixed for redemption, as follows: 6 Redemption Date Any Interest Payment Date on and after September 1, 2019 through March 1, 2027 Any Interest Payment Date on and after September 1, 2027 through March 1, 2028 September 1, 2028 and any Interest Payment Date thereafter Redemption Price 102% 101% 100% Transfers of property ownership and certain other circumstances could result in prepayments of the Special Tax by the Developers or any individual owner. The Special Taxes could also be prepaid by the proceeds of bonds issued by or on behalf of an over -lapping special assessment district or community facilities district. Such prepayments would result in redemption of all or a portion of the Bonds prior to their stated maturity, at the redemption prices corresponding to the redemption dates as shown herein and would thus cause a proportionate reduction of the amount on deposit in the Reserve Fund. See "SECURITY FOR THE BONDS — Funds and Accounts; Flow of Funds" and "SPECIAL RISK FACTORS — Extraordinary Redemption from Prepaid Special Taxes." Optional Redemption. The Bonds are subject to optional redemption by the Authority prior to their respective maturity dates as a whole or in part on any date on or after September 1, 2028, from money derived by the Authority from any source other than Mandatory Sinking Account Payments (defined herein) or prepayments of the Special Tax (described herein), at the principal amount of the Bonds or portions thereof called for redemption, together with accrued interest to the date fixed for redemption, without premium. Mandatory Redemption from Mandatory Sinking Account Payments. The Authority will establish and maintain with the Trustee the 2039 Sinking Account in the Redemption Fund for the Bonds maturing on September 1, 2039 (the "2039 Term Bonds"), to receive payments (the "2039 Mandatory Sinking Account Payments") for the mandatory redemption of the 2039 Term Bonds. The 2039 Term Bonds are subject to mandatory redemption by the Authority prior to their maturity date in part on any September 1 on and after September 1, 2039, in the principal amounts thereof together with accrued interest thereon to the date fixed for redemption, without premium, solely from 2039 Mandatory Sinking Account Payments deposited into the 2039 Sinking Account, as follows except that if any Bonds maturing on September 1, 2039, shall have been extraordinarily and/or optionally redeemed pursuant to the Indenture, the amounts of the Mandatory Sinking Account Payments shall be reduced proportionately by the principal amount of all such Bonds so redeemed: Term Bonds Maturing September 1, 2039 Mandatory Sinking Account Payment Date (September 1) Mandatory Sinking Account Payments 2021 $30,000 2022 40,000 2023 55,000 2024 65,000 2025 80,000 2026 95,000 2027 105,000 2028 125,000 2029 140,000 2030 155,000 2031 175,000 2032 195,000 2033 215,000 2034 240,000 2035 265,000 2036 290,000 2037 315,000 7 203 8 340,000 2039* 370,000 * Maturity The Authority will establish and maintain with the Trustee the 2048 Sinking Account in the Redemption Fund for the Bonds maturing on September 1, 2048 (the "2048 Term Bonds"), to receive payments (the "2048 Mandatory Sinking Account Payments") for the mandatory redemption of the 2048 Term Bonds. The 2048 Term Bonds are subject to mandatory redemption by the Authority prior to their maturity date in part on any September 1 on and after September 1, 2048, in the principal amounts thereof together with accrued interest thereon to the date fixed for redemption, without premium, solely from 2048 Mandatory Sinking Account Payments deposited into the 2048 Sinking Account, as follows except that if any Bonds maturing on September 1, 2048, shall have been extraordinarily and/or optionally redeemed pursuant to the Indenture, the amounts of the Mandatory Sinking Account Payments shall be reduced proportionately by the principal amount of all such Bonds so redeemed: Term Bonds Maturing September 1, 2048 Mandatory Sinking Account Payment Date (September 1) Mandatory Sinking Account Payments 2040 $405,000 2041 435,000 2042 470,000 2043 510,000 2044 550,000 2045 590,000 2046 635,000 2047 680,000 2048* 730,000 * Maturity Selection of Bonds for Redemption. If less than all the Outstanding Bonds are to be redeemed at the option of the Authority or from prepayments of the Special Tax, the Authority will select the maturity dates from which the Bonds shall be redeemed, and if less than all the Outstanding Bonds of any one maturity are to be redeemed at any one time, the Trustee will select the Bonds of such maturity or the portions thereof to be redeemed in integral multiples of five thousand dollars ($5,000) by lot in any manner that it deems appropriate. Notice of Redemption. The Trustee will mail a notice of redemption to the registered owners of the Bonds selected for redemption, at the addresses appearing on the registration books, at least 30 days but not more than 60 days prior to the date fixed for redemption; however, neither the failure to receive a notice of redemption nor any immaterial defect therein shall affect the sufficiency or validity of the redemption proceedings. So long as the Bonds are held in book -entry only form, the Trustee will send notices of redemption exclusively to DTC, as registered owner of the Bonds, and will not send any such notices to any beneficial owners. DTC is to distribute such notices to the beneficial owners of the Bonds in accordance with its procedures. See Appendix G — "BOOK - ENTRY SYSTEM." Upon written direction of the Authority received at least five (5) days prior to the date fixed for the redemption of Bonds pursuant to the Indenture, the Trustee shall promptly rescind, cancel and annul such redemption by giving notice of such rescission, cancellation and annulment to the same persons and in the same manner as the original notice of redemption. 8 Notwithstanding anything to the contrary contained in the Indenture, with respect to any notice of optional or extraordinary redemption of Bonds, unless, upon the giving of such notice, such Bonds are deemed to have been paid within the meaning of the Indenture, such notice will state that such redemption is conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of amounts sufficient to pay the principal of, and premium, if any, and interest on, such Bonds to be redeemed, and that if such amounts are not received the notice will be of no force and effect and the Authority will not be required to redeem such Bonds. In the event that any such notice of redemption contains such a condition and such amounts are not so received, the redemption will not be made and the Trustee will within a reasonable time thereafter give notice to the effect that such amounts were not so received and such redemption was not made, such notice to be given by the Trustee in the same manner, and to the same parties, as the notice of redemption was given. Such failure to redeem such Bonds shall not constitute an event of default under the Indenture. Effect of Redemption of Bonds. If notice of redemption has been duly given, and has not been rescinded as described in the preceding paragraph, and the Trustee holds money for the payment of the principal of and redemption premiums, if any, on, together with interest to the redemption date on, the Bonds to be redeemed, then on the redemption date such Bonds to be redeemed shall become due and payable, and from and after the date fixed for redemption interest on the Bonds to be redeemed will cease to accrue and the Holders of such Bonds shall have no rights except to receive payment of principal, redemption premiums, if any, thereon and interest accrued thereon to the date fixed for redemption. Such Bonds are required to be surrendered on the date fixed for redemption at the address or addresses of the Trustee so designated. If any Bond chosen for redemption will not be redeemable in whole, upon presentation of such Bond for redemption there will be issued in lieu of the unredeemed portion of principal thereof a new Bond or Bonds of the same maturity date, of authorized denominations equal in aggregate principal amount to such unredeemed portion. Transfer and Exchange of Bonds So long as DTC or Cede & Co. is the registered owner of the Bonds, transfers of beneficial interests in the Bonds shall be according to the DTC book -entry system, as more fully described herein. See Appendix G — `BOOK - ENTRY SYSTEM." The Indenture provides that the Trustee will keep at its principal corporate trust office books for the transfer and exchange of the Bonds, which books at all times during normal business hours with reasonable prior notice shall be open to inspection by the Authority or by any Owner. Any Bond may, in accordance with its terms, be transferred or exchanged on such books by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon payment by the Owner requesting such transfer or exchange of any tax or other governmental charge required to be paid with respect to such transfer or exchange, and upon surrender of such Bond for cancellation accompanied by delivery of a duly executed written instrument of transfer or exchange in a form approved by the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the Authority shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds of the same maturity date and of authorized denominations for the same aggregate principal amount, except that neither the Authority nor the Trustee shall be required (i) to transfer or exchange any Bonds during the 15-day period prior to the selection of any Bonds for redemption, or (ii) to transfer or exchange any Bond which has been selected for redemption in whole or in part, except the unredeemed portion of such Bond selected for redemption in part, from and after the day that such Bond has been selected for redemption in whole or in part. Debt Service Schedule The annual debt service schedule for the Bonds (assuming no early redemptions) is set forth as follows: Period Ending (September 1) Principal Interest Debt Service 2019 $194,819.44 $194,819.44 2020 - 415,000.00 415,000.00 2021 $30,000 415,000.00 445,000.00 2022 40,000 413,500.00 453,500.00 2023 55,000 411,500.00 466,500.00 2024 65,000 408,750.00 473,750.00 9 Period Ending (September 1) Principal Interest Debt Service 2025 80,000 405,500.00 485,500.00 2026 95,000 401,500.00 496,500.00 2027 105,000 396,750.00 501,750.00 2028 125,000 391,500.00 516,500.00 2029 140,000 385,250.00 525,250.00 2030 155,000 378,250.00 533,250.00 2031 175,000 370,500.00 545,500.00 2032 195,000 361,750.00 556,750.00 2033 215,000 352,000.00 567,000.00 2034 240,000 341,250.00 581,250.00 2035 265,000 329,250.00 594,250.00 2036 290,000 316,000.00 606,000.00 2037 315,000 301,500.00 616,500.00 2038 340,000 285,750.00 625,750.00 2039 370,000 268,750.00 638,750.00 2040 405,000 250,250.00 655,250.00 2041 435,000 230,000.00 665,000.00 2042 470,000 208,250.00 678,250.00 2043 510,000 184,750.00 694,750.00 2044 550,000 159,250.00 709,250.00 2045 590,000 131,750.00 721,750.00 2046 635,000 102,250.00 737,250.00 2047 680,000 70,500.00 750,500.00 2048 730,000 36,500.00 766,500.00 Total $8,300,000 $8,917,569.44 $17,217,569.44 THE CITY OF NEWPORT BEACH The City of Newport Beach (the "City") is a city located within Orange County (the "County"). The City is located in the coastal center of the County, approximately 89 miles north of San Diego, 15 miles south of Long Beach and 45 miles southwest of Los Angeles. The City encompasses approximately 24 square miles of land and has an estimated population of 87,182 as of January 1, 2018. For additional information regarding the City, see Appendix A — "GENERAL INFORMATION ABOUT THE CITY OF NEWPORT BEACH AND VICINITY." The Bonds are not a debt or obligation of the City. THE COMMUNITY FACILITIES DISTRICT General Information On December 20, 2018, the Authority conducted proceedings to establish the Community Facilities District. At a special election held on the same date, the owners of the property within the boundaries of the Community Facilities District authorized the Authority, on behalf of the Community Facilities District, to incur a bonded indebtedness in an amount not to exceed $8,800,000 and approved the Rate and Method of Apportionment (the "Rate and Method"). See "SECURITY FOR THE BONDS — Rate and Method of Apportionment of Special Tax." The Community Facilities District The Community Facilities District is located within the City. Regional maps showing the location of the City appear herein under the caption "INTRODUCTION." Specifically, the Community Facilities District is located within the City of Newport Beach Airport Area near John Wayne Airport, bounded by Jamboree Road to the east and between Birch Street to the north, and Von Karman Avenue and MacArthur Boulevard to the west. The Community Facilities District consists of approximately 15.80 net taxable acres of land and is expected to be developed to include 10 approximately 472 condominiums, 314 apartments and 11,500 square feet of commercial space. The Community Facilities District is currently expected to be developed in two primary phases. Phase 1 is currently anticipated to consist of the development of approximately 3.24 net taxable acres (total of 7.6 gross acres), comprised of 158 condominiums and approximately 7,500 square feet of commercial space. Phase 2 is currently anticipated to consist of the development of approximately 12.56 acres, comprised of approximately 628 residential units, including 314 apartments and 314 condominiums, and approximately 4,000 square feet of commercial space. Vertical construction of Phase 2 is currently expected to commence in early 2028 after termination of the existing lease with TowerJazz, which currently occupies the building located on land within the expected Phase 2 development, and demolition of the existing building on site. The Community Facilities District comprises a portion of the Uptown Newport Planned Community Development Plan (the "Uptown Newport Project"), which is a mixed -use community expected to include 1,244 residential units, including apartments and condominiums, retail and commercial space, recreational parks and open space. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Project, Planned Development and Status of Construction" below. David Taussig & Associates, Inc., as the special tax consultant for the Community Facilities District, has prepared a Community Facilities District Report (the "Hearing Report") relating to the Community Facilities District. Certain additional information regarding the improvements to be financed, including descriptions, cost estimates and related information, can be found in the Hearing Report, which is available for review at the offices of the Authority. THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS A description of the Project is set forth below. The following information has been obtained by the Authority from representatives of the Developers and other sources believed by the Authority to be reliable, but has not been independently verified by the Authority or any of its consultants or the Underwriter. Ownership Current Ownership. TSG-Parcel 1, LLC, a Delaware limited liability company ("TSG Parcel 1"), and Uptown Newport Jamboree, LLC, a Delaware limited liability company ("Uptown Newport Jamboree" and, together with TSG Parcel 1, the "Developers"), are the owners and developers of the property within the Community Facilities District. TSG Parcel 1 is the owner of Lot 1 of Phase 1 and Uptown Newport Jamboree is the owner of Lot 2 of Phase 1 and all of the property to be developed in Phase 2. TSG Parcel 1 is providing backbone infrastructure to Phase 1 of the Uptown Newport Project. See "— The Developers and Shopoff Realty Investments, L.P." for a discussion of the Developers. TowerJazz Lease. Uptown Newport Jamboree (the "Landlord") and Newport Fab, LLC dba Jazz Semiconductor (the "Tenant") are parties to a lease (the "Lease") for the real property located at 4321 Jamboree Road, Newport Beach, California 92660 (the "Leased Premises" or the "Property"). The Leased Premises are improved with a 320,510 square foot industrial building, in which the Tenant (known as Jazz Semiconductor or TowerJazz) manufactures semiconductor computer chip wafers. Shopoff Management, Inc. (the "Agent") is the Landlord's property manager and oversees maintenance of the parking lot and landscaping that are part of the Leased Premises. The Tenant maintains the interior of the building. The Lease term commenced on March 12, 2002 and had an initial 15-year period. The Tenant exercised the first of two 5-year options, extending the lease term to March 12, 2022. The Tenant has the second (and last) 5-year option remaining, which if timely exercised may extend the term to March 12, 2027. The Lease is a triple net lease, and the Tenant is obligated to pay base rent, maintenance costs and utilities at the Leased Premises. The Tenant's pro rata share of water, electric, gas and property taxes is 100%. The Tenant pays water, electricity and natural gas directly to utility providers. The Landlord pays real property taxes and maintenance, but the Tenant is obligated to reimburse the Landlord for such costs through CAM (common area maintenance) charges, paid based on estimated costs with quarterly CAM charge reconciliations. 11 Under the Lease, the Tenant is responsible for reimbursing Landlord for real property taxes, including the Special Taxes, allocable to the Leased Premises based on the tax bill received from the Orange County Treasurer -Tax Collector. Under the Lease, the failure by the Tenant to timely pay or reimburse real property taxes is a default by the Tenant under the Lease. The Landlord's remedies for such default if not timely cured include seeking reimbursement of the unpaid taxes/reimbursement through legal action, whether the Landlord elects the Lease to stay in effect or to terminate due to such monetary default. A default by the Tenant under the Lease does not discharge the Landlord's responsibility to pay real property taxes. TowerJazz Lease Litigation. There is a pending lawsuit in Orange County Superior Court wherein the Landlord is seeking Declaratory Relief against the Tenant citing allegations of breach of the Lease due to excessive noise and compliance items not completed by the Tenant, in accordance with the Lease and any and all amendments thereto. The pending action will not hinder the Landlord's ability to develop Phase 2. In the event the Landlord prevails in the action, the Landlord could accelerate the development timeline for Phase 2 if the Lease is terminated prior to its term. Unpaid Special Tax does not constitute a personal indebtedness of the owners of the parcels within the Community Facilities District, and the property owners and lessees have made no commitment to pay the principal of or interest on the Bonds or to support payment of the Bonds in any manner. There is no assurance that the owners have the ability to pay the Special Tax or that, even if they have the ability, they will choose to pay such Special Tax. An owner may elect not to pay the Special Tax when due and cannot be legally compelled to do so. Neither the Authority nor any Bondholder will have the ability at any time to seek payment from the owners of property within the Community Facilities District of any Special Tax or any principal or interest due on the Bonds, or the ability to control who becomes a subsequent owner of any property within the Community Facilities District The Authority's only remedy for the failure of a landowner to pay Special Tax on a parcel of land within the Community Facilities District is to foreclose on such parcel. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure" and "SPECIAL RISK FACTORS — Non -Recourse Obligation to Pay Special Tax" and "— Special Tax Delinquencies." The Project, Planned Development and Status of Construction The Community Facilities District consists of approximately 15.8 net taxable acres of land within the Uptown Newport Project and is expected to be developed to include approximately 472 condominiums, 314 apartments and 11,500 square feet of commercial space. The property within the Community Facilities District is expected to be developed in the following two phases: Phase 1. Phase 1 consists of the development of two lots in the westerly portion of the Uptown Newport Project. Lot 1 is expected to be developed to include 158 condominiums and approximately 3,000 square feet of neighborhood -serving retail uses. Lot 1 is an approximately 2.6-acre parcel adjacent to the public park (which is currently under construction and discussed below in "—The Improvements and Undergrounding"). The site development review process for the Lot 1 development is underway with the initial site development review application submitted to and reviewed by the City of Newport Beach. The design plans include 158 high -end luxury condominiums, contained in 2 buildings, one 6 and one 7 story building, with structured parking, some of which is subterranean parking. The condominiums will share common amenities and have convenient access to up to 3,000 square feet of retail space. The retail space is anticipated to cater to a higher -end market and will be easily accessible not only to the owners of the condominiums but to the general public as well. The Developers currently anticipate pulling initial building permits in the 4th quarter of 2019 and an estimated 18 to 24 month construction period, with completion of the condominiums currently anticipated to be in late-2021. The Developers are currently in negotiations with potential equity partners, with the goal of forming a joint venture to fund the development and construction of Lot 1 condominiums The Developers have received preliminary indications of interest from financial institutions for the construction financing. It is anticipated that the financing will consist of a construction loan to finance approximately 80% of the total costs with the remainder financed by joint venture equity participants. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — Project Plan of Finance" 12 Lot 2 is currently anticipated to be developed into two commercial/retail spaces. The Developers currently have an executed letter of intent from a restaurant user for a long-term lease and, in conjunction with such restaurant user, have commenced design of an approximately 3,100 square foot restaurant with an up to 1,300 square foot roof top deck, which is not included in the calculation of entitlement square footage. The restaurant is anticipated to be located on the corner of Uptown Newport Drive and Jamboree Road to provide high visibility and easy access to the public. The restaurant user is currently developing building/architectural renderings which will be assembled and submitted as part of a site development review application currently anticipated to be submitted to the City in late February 2019. The second retail space on Lot 2 is approximately 1,200 square feet and has been designated for a boutique coffee house. Several letters of intent have been provided, but no tenant has been selected as the building may initially be leased first as the sales center for the condominiums on Lot 1. It is anticipated that Uptown Newport Jamboree will continue to own the commercial space as long term investment properties. Improvement plans (grading, sewer, water, drainage) have also been developed for the site with expected approval anticipated to be received by the end of the second quarter of 2019. The review and approval of the architectural design will occur at a City staff level with no public hearing required. The Developers currently anticipate final review and approvals from the City by mid-2019, with completion of the restaurant building "shell" in the 4th quarter of 2019. Thereafter, the restaurant user will submit application for approvals for their tenant improvements and anticipates commencing tenant improvements in early 2020. All tenant improvements will be financed by the restaurant user while the Developers will fund the improvement development and shell building construction for Lot 2. It is currently anticipated that the construction loan will finance 100% of the Developer's costs of development of Lot 2 with the value of the land in Lot 2 providing the equity requirement for the financing. Phase 2. Phase 2 consists of the development of approximately 12.56 acres in the easterly portion of the Uptown Newport Project. This site is currently expected to be developed into approximately 628 residential units, including apartments and condominiums, including 10 affordable housing units, and approximately 4,000 square feet of commercial use. TowerJazz is a semi -conductor chip manufacturer that currently occupies the existing 320,510 square foot industrial building within the expected Phase 2 development. If the TowerJazz lease is not earlier terminated due to the pending legal action described above, and TowerJazz exercises its last 5-year extension option, Phase 2 development will commence following TowerJazz's vacating the Leased Premises in March of 2027. See "— Ownership" above for a discussion of the TowerJazz lease. If the TowerJazz lease is terminated early, the Developers anticipate commencing Phase 2 development immediately thereafter. Although development of Phase 2 is expected to commence immediately upon the expiration or earlier termination of the TowerJazz lease, there can be no assurance that construction will in fact commence at such time. Nor can there be any assurance that in 2027 (or sooner if the Lease is terminated earlier), plans for the development or financing of Phase 2 will materialize. See "SPECIAL RISK FACTORS — Failure to Develop." An affiliate of Uptown Newport Jamboree is expected to develop the retail space and to own and manage the retail space for a long-term investment. The Developers are currently exploring options for a joint venture to develop the condominiums and apartments within Phase 2, but do not yet have detailed plans in place. It is currently anticipated that the Developers will sell the condominiums and lease the apartments within the Community Facilities District but will continue to own the apartment buildings and commercial space in Phase 2 under the new joint venture structure. In the future however, the Developers may decide to own, sell or lease any of the apartments, condominiums or commercial spaces in the Community Facilities District. According to the Rate and Method, the TowerJazz site is treated as Undeveloped Property until a new building permit is pulled. See "SECURITY FOR THE BONDS — Rate and Method of Apportionment of Special Tax." The following table shows the development of the Community Facilities District and status of construction or expected construction commencement dates. 13 Portion of Community Facilities District Phase 1 Lot 1 Lot 2 Phase 2 Table 1 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Status of Construction, as of January 9, 2019 Expected Land Development 158 condominiums and 3,000 square feet of commercial use 4,500 square feet of commercial use 628 residential units (314 apartments and 314 condominiums) and approximately 4,000 square feet mixed commercial use Source: Developers. Expected Development Schedule Site development approvals expected first quarter of 2019, construction to begin fourth quarter of 2019 and completion by fourth quarter of 2021. Site development approvals expected first quarter of 2019, construction of "shell" restaurant building and smaller retail building to begin second quarter of 2019 and completion of "shell" and smaller building by the end of 2019; Tenant improvements in restaurant space to follow in early 2020. Demolition expected to commence upon the expiration of the existing lease of the TowerJazz semiconductor facility in 2027; vertical construction of residential and commercial space expected to commence in first quarter of 2028. The Planned Development and Status of Construction. A final tract map (Tract Map No. 17763), encompassing Lot 1 of Phase 1 and a portion of Phase 2 of the Uptown Newport Project was recorded on June 19, 2015. The planned development of Lot 1 in Phase 1 contemplates an average condominium unit size of 1,670 square feet. As of January 9, 2019, the Developers have performed the following improvements to property within the Community Facilities District: rough and fine grading, installation of sewer lines, water lines, storm drain lines, curbs and gutters, street paving, and dry utilities. Remaining public improvements required for completion of development of the property within the Community Facilities District consist of removal and replacement of a portion of the Jamboree Road street median, and the installation of a new traffic signal, median landscaping, on -site street lighting, enhanced project street entries, project perimeter landscaping, the City park (construction is underway and will be financed from the proceeds of the Bonds), final lift of asphalt street paving, completion of the relocation of an ammonia tank serving TowerJazz business operations at the Leased Premises, and completion of electrical undergrounding pursuant to the 20B Contract discussed below. The Developers currently anticipate all the above improvements to be completed no later than end of 4th quarter, 2019. The Developers have funded all horizontal improvements on site, including demolition work, and will continue to finance the remainder of such improvements with cash on hand (except to the extent anticipated to be financed from Bond proceeds). As of January 9, 2019, no building permits have been issued for lots within the Community Facilities District. Development Conditions. The Development Agreement, dated as of February 26, 2013 (the "Development Agreement"), by and between the Developers and the City requires the Developers to prepare an annual development report to the City as a condition of development of the Uptown Newport Project. The Developers last prepared their development report on May 13, 2018. Prior to the issuance of certificates of occupancy for Lot 1, the Developers must complete the City park improvements that will be funded with a portion of the proceeds of the Bonds. The park improvements are currently anticipated to be completed in May of 2019. Other development conditions of approval to enable the issuance of building permits have been met with the exception of paying development and mitigation fees, which are not due until building permit issuance. 14 Development of Phase 2 is planned to commence upon the expiration or earlier termination of the TowerJazz lease on the Phase 2 portion of the Uptown Newport property, and is currently anticipated to include 628 residential units, including 314 apartments and 314 condominiums, and approximately 4,000 square feet of neighborhood -serving retail uses. Demolition of the existing semiconductor fabrication building is expected to commence upon the expiration of the Lease in 2027. Preparation of demolition plans will begin in 2026 (or sooner if the Lease is terminated earlier) to allow for issuance of a demolition permit from the City such that demolition can begin shortly after the Tenant vacates the premises. Demolition activities include salvaging of existing HVAC equipment, copper and stainless steel piping, demolition of the building and foundation and recycling and disposal of materials. In addition, during the demolition phase, approximately 29,000 cubic yards of soil is expected to be removed as a part of site remediation in the area to the north and northwest of the TowerJazz building. This remediation is necessary to remove soil and groundwater contamination relating to volatile organic compounds. In connection with such remediation, the Developers will be required to obtain a "No Further Action Letter" from the Regional Water Quality Control Board before the first building permit is pulled for Phase 2 development. Phase 2 is fully entitled and no discretionary approvals for the development of Phase 2 are required from the City. Final engineering plans will be prepared to allow for site development to commence the first quarter 2028 (or sooner if the Lease is terminated earlier), and Site Development Review by City staff will be initiated to allow for vertical construction to commence nine months later. Although development is expected to commence upon the expiration or earlier termination of the Lease, there is no assurance that construction or demolition activities will begin at such time. See "SPECIAL RISK FACTORS — Failure to Develop." Final engineering plans and the Site Development Review approvals are outlined in the Uptown Newport Planned Community Development Plan. These approvals are authorized at staff level, and do not require Planning Commission or City Council approval. Development Entitlements The Uptown Newport Project has a General Plan designation of MU-H2 (Mixed -Use Horizontal - 2), which is intended to allow for the horizontal intermixing of uses, including the development of free standing multi -family residential units. The Uptown Newport Project is also currently zoned PC-58 (Planned Community), which is intended to allow for diverse uses otherwise allowable within the General Plan. Entitlement approvals for the Uptown Newport Project were obtained through Tentative Tract Map #17348, the Uptown Newport Planned Community Development Plan, a Certified EIR, architectural and landscape design guidelines, an affordable housing implementation plan and the Development Agreement. The Tract Map approval duration runs with the Development Agreement, 15 years from February 26, 2013. Under the terms of the Uptown Newport Development Agreement, the City shall grant two (2) five (5) year extensions that extend the term of the Development Agreement for a total of ten (10) additional years provided that the Developers have submitted a written request to extend the Development Agreement and the following has occurred: (1) for the first five (5) year extension, building permits for the two hundred fiftieth (250th) units have been issued; and (2) for the second five (5) year extension, building permits for the five hundredth (500th) unit have been issued. As such, the life of the Tentative Tract Map and Development Agreement can be extended to February 26, 2038. Tract Map 17763, a four lot tract map covering a portion of approved Tentative Tract Map 17348, was recorded on the 12.47 acres in Phase 1 of the Uptown Newport Project in June 2015 (which includes Lot 1 of Phase 1 and a portion of Phase 2 in the Communities Facilities District as well as the adjacent apartment development that is not within the Community Facilities District). The Developers believe they have satisfied all conditions to recordation of a condominium map on Lot 1 of Phase 1. Other than permits required in the ordinary course of construction, there are no other discretionary approvals required to develop the Uptown Newport Project. Utilities Public utilities, including electricity, natural gas, water, sewer, and telephone service, are available to the property in the Community Facilities District. Electricity services will be provided by SCE (defined below) and gas services will be provided by the Southern California Gas Company. Water services will be provided by the Irvine Ranch Water District and sewer services will be provided by the City and Orange County Sanitation District. Onsite storm drain services will be provided by Uptown Newport HOA and offsite storm drain services will be provided by 15 the City. CATV (community access television) services will be provided by Cox Communications. All "Will Serve" letters for these public utilities have been obtained. Project Plan of Finance The information in this section has been provided by the Developers. The Authority believes this information to be reliable, but can give no assurances that the Uptown Newport Project will be financed in the manner described in this section. The Community Facilities District consists of approximately 15.80 net acres of land and is expected to be developed into approximately 472 condominiums, 314 apartments and 11,500 square feet of commercial space. As of January 25, 2019, the Developers have expended approximately $52.20 million in land acquisition costs, $16.18 million in site development, consultants and City permits and fees, and $5.95 million in various carry costs related to the horizontal development of the property for the Uptown Newport Project (including the property within the Community Facilities District and the adjacent 458 apartment development). The Developers estimate that it will require an additional approximately $9.6 million to complete land development within Phase 1 of the Community Facilities District to a finished lot condition and approximately $16.46 million to complete Phase 2 of the Community Facilities District to a finished lot condition. For vertical construction, the Developers estimate additional costs of approximately $237.27 million to develop Phase 1 condominium and commercial products and approximately $4.9 million for Lot 2 commercial improvements and buildings. To date, the Developers have financed their land acquisition and various site development costs related to its property within the Community Facilities District through equity contributions from entities affiliated with Shopoff Realty Investments, L.P, an affiliate of the Developers. In addition, TSG — Parcel 1, LLC has an outstanding loan in the amount of $18,000,000 from Terra Property Trust, Inc., a Maryland corporation, secured by Lot 1 and Uptown Newport Jamboree, LLC has an outstanding loan in the amount of $25,750,000 from Fidelity & Guaranty Life Insurance Company, an Iowa corporation, secured in part by Lot 2 and in part by the property in Phase 2. The foregoing loans were used by the Developers to finance the acquisition of the subject property. The Developers are currently in negotiations with potential equity partners, with the goal of forming a joint venture to fund the development and construction of the planned condominiums for Lot 1 of Phase 1. The Developers have received preliminary indications of interest from financial institutions for the construction financing. It is anticipated that the financing will consist of a construction loan to finance approximately 80% of the total costs with the remainder financed by joint venture equity participants. The Developers are currently exploring options for a joint venture to develop the condominiums and apartments within Phase 2, but do not yet have detailed plans in place. In the future, the Developers intend to use a combination of equity and debt contributions, as discussed above, sales revenues, and proceeds from the Bonds, to finance the required improvements to the Community Facilities District. The Developers believe that they will have sufficient funds available to complete their proposed development in the Community Facilities District commensurate with the development timing described in this Official Statement. However, at this time, the negotiations with potential equity partners and lenders are in the early stages, and for Phase 2, will not be completed in earnest until closer to commencement of development for Phase 2. There can be no assurance that the potential third -party loans and equity joint ventures described above, or any renewals or replacements thereof, will be forthcoming or that future sales revenues from the sale of condominiums and/or operations of the property within the Community Facilities District will actually materialize. See "SPECIAL RISK FACTORS — Failure to Develop." All expectations of the Developers described above are based upon the current and actual knowledge of the Developers and the present facts and circumstances, and such expectations may change as the result of facts and circumstances occurring, or discovered, after the date of this Official Statement. Although the Developers expect to have sufficient funds available to complete their development in the Community Facilities District, commensurate with the development timing described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining development costs will be available from the Developers or any other source when needed. Neither the Developers nor any of their related entities are under any legal obligation of any 16 kind to expend funds for the remaining development of and construction on their property in the Community Facilities District. Any contributions by the Developers and any of their affiliates to fund the costs of such development are entirely voluntary. The Developers and Shopoff Realty Investments, L.P. Information in this section is included because it may be considered relevant by some investors to make an informed evaluation and analysis of the Taxable Property within the Community Facilities District and any existing or future improvements thereon as security for the Bonds. The information contained in this section does not guarantee that ownership will not change or that the current or any subsequent property owners will pay the Special Tax when due. The Special Tax will constitute a lien on parcels subject to taxation within the Community Facilities District and is not a personal indebtedness of the owners of property within the Community Facilities District. Information in this section has been provided by the Developers, and neither the Authority nor the Underwriter can ensure, and do not ensure, its completeness or accuracy. As previously defined in this Official Statement, "TSG Parcel 1" is a Delaware limited liability company formed on January 1, 2014, for the purpose of acquiring and developing property in the Uptown Newport Project. TSG Parcel 1 is a wholly -owned subsidiary of Parcel 1 Venture Member, LLC, a Delaware limited liability company. As previously defined in this Official Statement, "Uptown Newport Jamboree" is a Delaware limited liability company formed on February 4, 2014, for the purpose of acquiring and developing property in the Uptown Newport Project. Uptown Newport Jamboree is a wholly -owned subsidiary of Uptown Newport LP, a Delaware limited partnership. William A. Shopoff, Chief Executive Officer and President of Shopoff Realty Investments, L.P. ("Shopoff Realty Investments"), has a controlling ownership interest in both TSG Parcel 1 and Uptown Newport Jamboree. Shopoff Realty Investments is a private real estate investment company currently headquartered in Irvine, California, a short distance from the Uptown Newport Project. The Developers have reported that Shopoff Realty Investments and its subsidiaries have over 20 years of experience in private real estate and development. The Developers have further advised that Shopoff Realty Investments is one of the County's fastest growing private companies, with in-depth knowledge of entitling and developing land as well as a unique understanding of the complexities of the real estate marketplace. Shopoff Realty Investments specializes in offering long-term investment products and opportunities to banks, developers, builders, high -net worth individuals and the public in general. Shopoff Realty Investments provides access to strategic investments in residential, multi -family, commercial and retail properties, mortgage banking products and real estate investment trusts. Shopoff Realty Investments maintains a website at www.shopoff.com. This internet address is included for reference only and the information on the Internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on the internet site. Among other projects, affiliates of Shopoff Realty Investments (collectively referred to as "Shopoff' below) have completed and are in development of the following projects: • 333 North Prairie, Inglewood, California is a residential development site that Shopoff entitled for 310 residential units. Shopoff managed the site planning, engineering, preliminary architecture, landscape architecture and environmental approvals as part of the entitlements. The property was sold to a home builder on May 8, 2017. • San Gorgonio Crossing Commercial Development, located in the Calimesa/Cherry Valley unincorporated area of Riverside County, California is a 229-acre commercial development site that Shopoff entitled for two industrial warehouse buildings, totaling approximately 1,800,000 square feet. Shopoff managed the site planning, engineering, preliminary architecture, landscape architecture and environmental approvals as part of the entitlements. • 901 South Street, Anaheim, Orange County, California is a 20.49-acre site that Shopoff entitled for the development of 160 for sale townhomes and 314 apartments. Shopoff managed the site planning, 17 engineering, preliminary architecture, landscape architecture and environmental approvals as part of the entitlements. The townhome site was sold in July 2018 to a public homebuilder. • Adams Street, La Quinta, Riverside County, California is a 22.02-acre site that Shopoff entitled for the development of a 2-acre, 125 room hotel site and 131 single family residential for sale units. Shopoff managed the site planning, engineering, preliminary architecture, landscape architecture and environmental approvals as part of the entitlements. The residential property site is currently being marketed for a sale to a homebuilder. • 21845 Magnolia Street, Huntington Beach, Orange County, California is a coastal 28.6-acre site planned for the entitlement of a 215 room hotel with commercial and retail uses as well as a 250 single-family residential units. The site will feature public open space and park areas for use by residences and hotel guests. The project is currently undergoing environmental review with circulation of the Draft Environmental Impact Report. Shopoff is managing the site planning, engineering, preliminary architecture, landscape architecture and environmental approvals as part of the entitlements. Shopoff expects development entitlement approvals in the 4th quarter of 2020. Surrounding Area The Community Facilities District is part of the Uptown Newport Project. The Uptown Newport Project was originally developed as part of The Koll Center Newport, a mixed -use office park campus located in the City's Airport Area, and has been used for manufacturing telecommunications equipment and computer chips since the 1970's. Pursuant to the City's General Plan, which calls for the infill development and redevelopment of the Airport Area, the City approved the redevelopment of the Uptown Newport Project and The Koll Center Newport into high -density mixed use residential projects in September 2010. The Uptown Newport Project is expected to be developed into a mixed -use community, consisting of 1,244 residential units, including apartments and condominiums, 11,500 square feet of commercial space, recreational parks and open space on a total of approximately 25.04 acres. The Community Facilities District covers only a portion of the Uptown Newport Project, excluding, among other things, a 458-unit apartment site, including 92 affordable housing apai ltitent units, that is nearly completed with occupancy expected in March 2019. Only the property in the Community Facilities District is subject to the lien of the Special Tax that secures payment on the Bonds. The Uptown Newport Project is located adjacent to John Wayne Airport, in an area generally comprised of high-rise, mid -rise and low-rise office buildings, a private social club, a hotel, parking stalls and structures and a common area that includes landscaping, lakes, surface parking areas and water features. The area to the north and northeast of the Community Facilities District consists of light industrial and commercial use. The area to the south and southwest of the Community Facilities District consists of office and commercial use. East across Jamboree Road, is vacant land owned by the University of California, Irvine, for which there are no current known plans for development. Acquisition Agreement and Facilities Relocation Agreement Acquisition Agreement In connection with the formation of the Community Facilities District, TSG Parcel 1, Uptown Newport Jamboree, the Authority, and the City are expected to enter into an Acquisition Agreement (the "Acquisition Agreement"). Pursuant to the Acquisition Agreement, the City will purchase certain park improvements from the Developers (the "Authorized Improvements"), but solely from the net proceeds of bonds issued for the Community Facilities District (including the Bonds), certain investment earnings thereon and the special tax within the Community Facilities District. When the Developers have completed an Authorized Improvement, they may submit an Actual Cost Certificate to the City Engineer requesting payment of their "Actual Costs" incurred (as defined in the Acquisition Agreement). The City Engineer will determine if the Authorized Improvement thereof has been completed to City standards and whether all required documentation, such as proper conveyance of title (where that is required), lien releases, title insurance, etc. has been submitted. If the City Engineer so determines, the City Engineer will review the Actual Cost Certificate, and may request additional information to substantiate the Actual Cost Certificate, and may disallow portions not properly substantiated. To the extent the Actual Cost Certificate is approved by the City Engineer, the City Engineer will submit a Disbursement Request Form to the Trustee, requesting the Trustee to make payment 18 for the approved costs to the extent funds are available in the Acquisition and Construction Fund. The Acquisition Agreement contains requirements restricting the use of Bond proceeds to ensure that the undergrounding described in the 20B Contract below will be fully funded. To the extent that the proceeds of the Bonds are not sufficient to finance the costs of the Authorized Improvements as well the costs incurred by the City pursuant to the 20B Contract (described below), the Developers will be required to finance such shortfall. In addition, the Acquisition Agreement requires the Developers to post business interruption insurance to protect against any disruption in the Tenant's business operations as a result of the undergrounding of the electrical transmission facilities described below in "— Facilities Relocation Agreement." Facilities Relocation Agreement. As a result of the development of the Uptown Newport Project, certain of the electrical transmission facilities that run along Jamboree road, to the east of the Community Facilities District, that are owned and operated by Southern California Edison ("SCE") will need to be relocated underground. Pursuant to a Facilities Relocation Agreement (the "20B Contract") approved by the City on February 12, 2019 by and between SCE and the City, and in conjunction with SCE's Tariff Rule 20 Section B, the City has applied to and received approval from SCE to underground such facilities. In conjunction with the Developers, the City and SCE have agreed to plans and design for the relocation of the facilities in a manner that is consistent with plans for development of the Uptown Newport Project. The 20B Contract allows for adjustment to the plans of relocation in order to ensure that the relocation does not conflict with the intended development of the Uptown Newport Project. Pursuant to the 20B Contract, the City is responsible for all costs related to the relocation and to the acquisition of any land or rights of way required for the relocation. As of the date hereof, the relocation plans are in substantially final form and all property and/or rights of way required for the relocation of the SCE facilities is owned by the City and/or the Developers and appropriate easements are in the process of being granted to SCE. Pursuant to the 20B Contract, the City is required to at no cost to SCE to: (i) provide SCE with any required street improvement or site plans reflecting the location of all existing and proposed underground and/or overhead structures and/or facilities, (ii) procure and install the pads and vaults for transformers and associated equipment, conduits, ducts, boxes, and poles bases, and perform other work related to structures and substructures including breaking of pavement, trenching, backfilling, and repaving in connection with the installation of the underground system, all in accordance with the plans for relocation (subject to inspection and approval by SCE), (iii) notify SCE 48 hours prior to construction or installation of the ducts and substructures so that SCE can schedule the required inspection, (iv) provide SCE with "As -Built" drawings, and (v) subject to SCE's approval and acceptance, grant SCE, in writing, ownership of all ducts and substructures installed pursuant to the 20B Contract (collectively, the "Applicant Work"). Pursuant to an agreement between the City and the Developers, the Developers have expended approximately $500,000 to date and have completed all but a minor portion of the Applicant Work, with the remainder to be completed once the amounts remaining due and owing to SCE are paid (see discussion below). After completion of the Applicant Work, SCE: (i) shall procure and install all materials related to its electrical system (i.e. cable, transformers, switches, capacitors, meters, and connectors) except certain ducts and substructures which are to be procured and installed as part of the Applicant Work, (ii) shall provide all engineering work related to the relocation of said electrical facilities, (iii) shall inspect and approve all ducts and substructures procured and installed as part of the Applicant Work before SCE begins the installation of the underground facilities, and (iv) at no cost to the City, remove its overhead electrical facilities after the underground facilities have been installed, energized, and placed into permanent service (collectively, the "SCE Work"). The initial cost estimate, as stated in the 20B Contract, for the SCE Work to be funded by the City (via proceeds of the Bonds) is $1,093,000 and to date SCE has received $344,000 towards construction costs for the relocation and approximately $5,000 for various plan and document inspection fees (all of which were funded by the Developers pursuant to a reimbursement arrangement between the City and the Developers). The outstanding balance due to SCE as of the date hereof is $749,000. Pursuant to the Rule 20B Contract, SCE will not begin the SCE Work until it receives the balance of the amount due and owing thereunder. Should the final costs of the SCE Work exceed the initial cost estimate noted above, the City will be responsible for paying SCE any additional cost overruns related to the relocation within 30 days after receipt of invoice for such amounts (and such amounts will be funded either from any Bond proceeds available therefor and/or the Developers). The City will have no liability for any amounts due under or obligations arising from the 20B Contract, rather, pursuant to the Acquisition Agreement, the Developers will be required to fund any shortfalls from Bond proceeds and to indemnity and hold the City harmless with respect thereto. 19 It is currently anticipated that the remaining amounts due and owing to SCE ($749,000) will be funded directly to SCE from the proceeds of the Bonds upon their issuance. Costs estimated for the acquisition price of the park improvements (described below) and the direct costs incurred by the City for the SCE Work included a contingency to ensure that proceeds from the Bonds would be sufficient to cover all costs of such facilities and/or work including any unanticipated cost overruns. To the extent that the proceeds from the Bonds are not sufficient to cover any of such amounts, the Developers will be responsible for any such shortfall. The City required that, prior to execution of the 20B Contract, the Developers advance all funds paid to SCE to date (i.e. the $344,000 deposit noted above) and that the Community Facilities District was formed with enough capacity to finance the amounts due and owing to SCE under the 20B Contract. The Improvements and Undergrounding A portion of the proceeds of the Bonds will be used to finance City park improvements. The park improvements consist of landscaping, utilities, irrigation and recreational amenities. As of January 9, 2019, the Developers anticipate that construction of the park improvements will cost approximately $3,870,000. A portion of the proceeds of the Bonds will also be used to finance the undergrounding of overhead utilities owned and operated by SCE pursuant to the 20B Contract discussed above. As of January 9, 2019, the Developers anticipate that the undergrounding (including those portions of the Applicant Work that has been or will be completed separately by the Developers) will cost approximately $1,940,067. To date, the Developers have expended $175,000 in hard costs for construction of the park improvements and $531,510 in hard costs for the utility undergrounding. The net proceeds of the Bonds, certain investment earnings thereon and the Special Tax are currently expected to be sufficient to fund all of the park improvements and undergrounding. ESTIMATED SOURCES AND USES OF BOND PROCEEDS The estimated sources and uses of funds with respect to the Bonds are set forth in the following table. Table 2 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Estimated Sources and Uses of Bond Proceeds Sources: Principal Amount of Bonds $8,300,000.00 Plus Original Issue Premium 539,472.40 Total Sources: $8,839,472.40 Uses: Deposit to Acquisition and Construction Fund $6,840,522.67 Deposit to Reserve Fund 730,314.47 Deposit to Capitalized Interest Account of Redemption Fund(1) 817,319.44 Underwriter's Discount 124,500.00 Costs of Issuance) 326,815.82 Total Uses: $8,839,472.40 (1) Represents capitalized interest on a portion of the Bonds through March 1, 2021. (2) Includes administrative expenses for the first two years after bond issuance, legal, disclosure, trustee, special tax consultant, appraiser, issuer, printing and other issuance fees and costs. 20 SECURITY FOR THE BONDS General The Bonds are authorized pursuant to the Act and are issued under the Indenture pursuant to a resolution of the Authority. The Act was enacted by the California Legislature to provide an alternate method of financing certain essential public capital facilities and services, especially in developing areas of the State. Subject to approval by a two-thirds vote of qualified electors and compliance with the provisions of the Act, a legislative body of a city, county or joint exercise of power authority may issue bonds for a community facilities district and may levy and collect a special tax within such community facilities district to repay such indebtedness. THE PRINCIPAL OF AND INTEREST AND REDEMPTION PREMIUMS, IF ANY, ON THE BONDS ARE LIMITED OBLIGATIONS PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL TAX. THE AUTHORITY IS NOT OBLIGATED TO PAY THE BONDS EXCEPT FROM THE PROCEEDS OF THE SPECIAL TAX. THE GENERAL FUNDS AND ASSETS OF THE AUTHORITY ARE NOT LIABLE AND THE FULL FAITH AND CREDIT OF THE AUTHORITY IS NOT PLEDGED FOR THE PAYMENT OF THE PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS. NO TAX OR ASSESSMENT OTHER THAN THE SPECIAL TAX SHALL EVER BE LEVIED OR COLLECTED TO PAY THE PRINCIPAL OF OR INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS. THE BONDS ARE NOT SECURED BY A LEGAL OR EQUITABLE PLEDGE OF OR CHARGE, LIEN OR ENCUMBRANCE UPON ANY OF THE PROPERTY OF THE AUTHORITY OR ANY OF ITS INCOME OR RECEIPTS EXCEPT THE MONEY HELD IN THE SPECIAL TAX FUND PURSUANT TO THE INDENTURE. NEITHER THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST OR REDEMPTION PREMIUMS, IF ANY, ON THE BONDS IS A GENERAL DEBT, LIABILITY OR OBLIGATION OF THE AUTHORITY. Although the Special Tax will constitute a lien on Taxable Property in the Community Facilities District, it will not constitute a personal indebtedness of the owners of such property. There is no assurance that the owners will be financially able to pay the annual Special Tax or that they will pay such tax even if financially able to do so. The risk of nonpayment by property owners is more fully described in "SPECIAL RISK FACTORS — Non -Recourse Obligation to Pay Special Tax." The Special Tax In accordance with the provisions of the Act and a Joint Community Facilities Agreement, between the Authority and the City, the Authority established the Community Facilities District on December 20, 2018 for the purpose of providing for the financing of the acquisition and construction of certain public capital improvements and certain utility undergrounding, funding the Reserve Fund and the capitalized interest and paying certain costs of issuance of the Bonds. At an election conducted on that date, the qualified electors within the Community Facilities District authorized the issuance of special tax bonds in the principal amount not to exceed $8,800,000 for the purpose of financing such public facilities and undergrounding and the levy of the Special Tax (as defined herein) in the Community Facilities District to be used for the purpose, among others, of paying the interest on and principal of and redemption premiums, if any, on the Bonds. Principal of and interest on the Bonds is payable from the annual Special Tax to be levied and collected on Taxable Property within the Community Facilities District and from the proceeds, if any, from the foreclosure and sale of such property for delinquency of such Special Tax. The amount of Special Tax may be levied in any year is strictly limited by the maximum rates approved by the qualified electors within the Community Facilities District. The Special Tax, all funds and accounts established under the Indenture (other than the Acquisition and Construction Fund, the Prepayment Fund, Expense Fund and the Rebate Fund) and any interest earned thereon are pledged to the payment of and constitute a trust fund for the payment of principal and interest on the Bonds. So long as the principal of and interest on the Bonds remains unpaid, the Special Tax, such funds and accounts, and investment earnings thereon shall not be used for any other purpose, except as permitted by the Indenture, and shall be held in trust for the benefit of the owners of any Bonds and shall be applied pursuant to the Indenture and any authorized supplement thereto. 21 Pursuant to the Indenture, so long as any Bonds are outstanding, the Authority is required annually to levy the Special Tax against all Taxable Property (as defined in Appendix C — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX") in the Community Facilities District and make provision for the collection of the Special Tax in amounts which will be sufficient, after making reasonable allowances for contingencies and errors in the estimates, to yield proceeds equal to the amounts required for compliance with the agreements, conditions, covenants and terms contained in the Indenture, and which in any event will be sufficient to pay the interest on, principal (including Mandatory Sinking Account Payments, if any) and redemption premiums, if any, on all Outstanding Bonds as they become due and payable, and to pay all current Expenses for the Bonds as they become due and payable. The Special Tax is to be levied and collected against all Taxable Property within the Community Facilities District in accordance with the Rate and Method, approved at the election held on December 20, 2018. The Rate and Method is summarized herein and attached as Appendix C. Although the Special Tax will constitute a lien on Taxable Property, it will not constitute a personal indebtedness of the owners of such property. There is no assurance that the owners will be financially able to pay the annual Special Tax or that they will pay such tax even if financially able to do so. The risk of nonpayment by property owners is more fully described in "SPECIAL RISK FACTORS — Non -Recourse Obligation to Pay Special Tax." Rate and Method of Apportionment of Special Tax General. The Authority has covenanted to cause the levy of the Special Tax in an amount determined according to the Rate and Method contained in the Authority's Resolution of Formation adopted December 20, 2018. The Rate and Method apportions the total amount of Special Tax to be collected among the Taxable Property in the Community Facilities District as more particularly described herein. Capitalized terms not otherwise defined under this heading shall have the meaning given such terms in Appendix C — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX." Further, this description of the Rate and Method is qualified in all respects by the full text thereof, set forth in Appendix C hereto. Land Use Categories. The Rate and Method declares that for each Fiscal Year, all Taxable Property be classified as Developed Property, Final Mapped Property, Undeveloped Property, Apartment Property, Non - Residential Property, Taxable Property Owner Association Property, or Taxable Public Property. "Developed Property" is defined to mean, for each Fiscal Year, all Taxable Property in Tax Zone 1 and Tax Zone 2, for which a Building Permit for new construction was issued after January 1, 2018 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied. "Final Mapped Property" is defined to mean, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, and Taxable Public Property, located in a Final Subdivision as of January 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied, but no earlier than January 1, 2018. "Undeveloped Property" is defined to mean, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, or Taxable Public Property. "Apartment Property" is defined to mean an Assessor's Parcel of Developed Property on which all or any portion of a structure or structures with multiple Apaittiient Units are located, and such Apartment Units are offered for rent and are not available for sale to individual owners. If Apartment Property is subsequently reclassified as Residential Property, Special Taxes levied on such reclassified Assessor's Parcels shall be modified to match those of Residential Property. "Non -Residential Property" is defined to mean all Assessor's Parcels of Developed Property for which a Building Permit permitting the construction of one (1) or more non-residential units or facilities has been issued by the City or other governmental agency. 22 "Taxable Property Owner Association Property" is defined to mean all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to the terms of the Rate and Method. "Taxable Public Property" is defined to mean all Assessor's Parcels of Public Property that are not exempt pursuant to the Rate and Method. Maximum Special Tax, Assigned Special Tax and Backup Special Tax. The Maximum Special Tax is defined in the Rate and Method as follows: Developed Property: The Maximum Special Tax for each Assessor's Parcel classified as Developed Property is the greater of (a) the amount derived by application of the Assigned Special Tax and (b) the amount derived by application of the Backup Special Tax. The Assigned Special Tax that will be levied in Fiscal Year 2019-2020 for each Assessor's Parcel classified as Developed Property is shown as follows: Land Use Class 1 2 3 Assigned Special Tax for Developed Property Description Assigned Special Tax — Zone 1 Assigned Special Tax — Zone 2 Residential Property Apartment Property Non -Residential Property $750 per Dwelling Unit $0 per Apartment Unit $5.35 per Square Foot of Non -Residential Floor Area $950 per Dwelling Unit $260 per Apartment Unit $5.35 per Square Foot of Non -Residential Floor Area On each July 1, commencing on July 1, 2020, the Assigned Special Tax will be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. The Backup Special Tax for an Assessor's Parcel of Developed Property equals $50,028 per Acre of the Assessor's Parcel. On each July 1, commencing on July 1, 2020, the Backup Special Tax will be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. The Rate and Method provides that the Backup Special Tax may be reduced or eliminated in certain circumstances, as further described in the Rate and Method. Multiple Land Use Categories: In some instances, an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Special Tax levied on an Assessor's Parcel will be the sum of the Special Tax for all Land Use Classes located on that Assessor's Parcel. Furthermore, if only a portion of Building Permits have been issued on an Assessor's Parcel, the remaining portion of the Assessor's Parcel will be considered Final Mapped Property. The CSCDA Program Manager's allocation to each type of property will be final. Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property: The Fiscal Year 2019-2020 Maximum Special Tax for each Assessor's Parcel of Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property is $50,028 per Acre. On each July 1, commencing on July 1, 2020, the Maximum Special Tax for Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property within each respective Tax Zone, will be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. Method of Apportionment. Under the Rate and Method, the Special Tax shall be levied in the following order of priority: First: The Special Tax shall be levied on each Assessor's Parcel of Residential Property and Apartment Property, within all Tax Zones, in an amount equal to 100% of the applicable Assigned Special Tax for Residential Property and Apartment Property respectively. 23 Second: If additional moneys are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax will be levied on each Assessor's Parcel of Non -Residential Property, within all Tax Zones, until (i) the total Special Tax levied under the first two steps listed in this priority equals the Special Tax Requirement, or (ii) the Special Tax levied on Non -Residential Property equals 100% of the applicable Assigned Special Tax, whichever comes first. Third: If additional moneys are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax will be levied Proportionately on each Assessor's Parcel of Final Mapped Property, within all Tax Zones, until (i) the total Special Tax levied under the first three steps listed in this priority equals the Special Tax Requirement, or (ii) the Special Tax levied on Final Mapped Property equals 100% of the applicable Maximum Special Tax, whichever comes first. Fourth: If additional moneys are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax will be levied Proportionately on each Assessor's Parcel of Undeveloped Property, within all Tax Zones, until (i) the total Special Tax levied under the first four steps listed in this priority equals the Special Tax Requirement, or (ii) the Special Tax levied on Undeveloped Property equals 100% of the applicable Maximum Special Tax, whichever occurs first. Fifth: If additional moneys are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property for which the Maximum Special Tax is determined through the application of the Backup Special Tax will be increased in equal percentages from the Assigned Special Tax up to 100% of the Maximum Special Tax for each such Assessor's Parcel of Developed Property, within all Tax Zones, until (i) the total Special Tax levied under the first five steps listed in this priority equals the Special Tax Requirement, or (ii) the Special Tax levied on all Developed Property equals 100% of the Maximum Special Tax for Developed Property, whichever occurs first. Sixth: If additional moneys are needed to satisfy the Special Tax Requirement after the first five steps have been completed, the Special Tax will be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property, within all Tax Zones, until (i) the total Special Tax levied under the first six steps listed in this priority equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Property Owner Association Property equals 100% of the Maximum Special Tax for Property Owner Association Property, whichever occurs first. Seventh: If additional moneys are needed to satisfy the Special Tax Requirement after the first six steps have been completed, the Special Tax will be levied Proportionately on each Assessor's Parcel of Taxable Public Property, within all Tax Zones, until (i) the total Special Tax levied under the first seven steps listed in this priority equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Public Property equals 100% of the Maximum Special Tax for Taxable Public Property, whichever occurs first. Notwithstanding the above, the CSCDA Program Manager or its designee may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax in the first step (above), when (a) the Authority is no longer required to levy the Special Tax beyond the first step (above) in order to meet the Special Tax Requirement; and (b) all bonds authorized to be issued within the Community Facilities District have already been issued or the Authority has covenanted that it will not issue any additional bonds within the Community Facilities District (except refunding bonds), to be supported by the Special Tax. Pursuant to Section 53321 of the Act as applied to the Community Facilities District, under no circumstances will the Special Tax levied in any Fiscal Year against any parcel used for private residential purposes be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within the Community Facilities 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. For such purposes, a parcel will be considered used for private residential purposes not later than the date on which an occupancy permit for private residential use is issued. Prepayment of Special Tax. An Assessor's Parcel within the Community Facilities District is permitted to prepay the Special Tax in full or in part, provided that a prepayment may be made only for Assessor's Parcels of Developed Property, or for an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2019, and only if there are no delinquent Special Taxes with respect 24 to such Assessor's Parcel at the time of prepayment. The amount of such prepayment for an Assessor's Parcel eligible for prepayment shall be determined in the manner set forth in the Rate and Method. Special Tax Calculations The Projected Fiscal Year 2019-20 maximum Special Tax for the Community Facilities District is reflected in the following table. The projection assumes that no building permits will be pulled prior to May 1, 2019. Table 3 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Calculation — Projected 2019-20 Fiscal Year Undeveloped Property/Final Mapped Property Maximum Special Tax Calculation(1) Expected Taxable AcresP15.8 Max Special Tax (Per Acre) $ 50,028 Total $ 790,442.40 (1) Assumes no building permits issued after January 1, 2018, but before May 1, 2019 within the Community Facilities District. (2) Excludes acres expected to be dedicated to public use that will be exempt from the Special Tax. Source: David Taussig & Associates. The following table reflects what the Assigned and Maximum Special Tax on taxable property within the Community Facilities District would be in Fiscal Year 2019-20, assuming that all property in Phase 1 were Developed Property but Phase 2 remained undeveloped. According to the Developers' development plan, Phase 2 is likely to remain Undeveloped Property through 2027-28 or 2028-29. Table 4 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Representative Special Tax Calculation — Assuming Buildout of Phase Developed Property Assigned Special Tax Calculation — Phase 1 Units/Sq.Ft. Assigned Special Tax Total Tax Class 1 Class 3 Residential Property Non -Residential Property Total 158 $750 $118,500 7,500 $5.35 $40,125 $158,625 Undeveloped Property Maximum Special Tax Calculation — Phase 2 Acres Maximum Special Tax per Acre Total Tax Undeveloped Property 12.555 $50,028 $628,101.54 Grand Total $786,726.54 (1) Assumes all planned building permits issued after January 1, 2018, within Phase 1 of the Community Facilities District and no building permits pulled in Phase 2 after such date. Assumes Phase 1 is developed in accordance with Developers' plans. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Project, Planned Development and Status of Construction". Maximum Special Tax for each Assessor's Parcel classified as Developed Property equals the greater of (i) the Assigned Special Tax shown in this table and (i) the Backup Special Tax of $50,028 per Acre. Excludes classes with zero units. Source: David Taussig & Associates. 25 The following table reflects what the Assigned Special Tax on taxable property within the Community Facilities District would be in Fiscal Year 2019-20, assuming that all property were Developed Property. This table is representative only. Table 5 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Representative Special Tax Calculation — Assuming Full Buildout Developed Property Assigned Special Tax Calculation — Phase 1(1) Class 1 Class 3 Residential Property Non -Residential Property Total Units/Sq.Ft. Assigned Special Tax Total Tax 158 $750 $118,500 7,500 $5.35 $40,125 $158,625 Developed Property Assigned Special Tax Calculation — Phase 2(1) Units/Sq.Ft. Assigned Special Tax Total Tax Class 1 Residential Property 314 $950 $298,300 Class 2 Apartment Property 314 $260 $81,640 Class 3 Non -Residential Property 4,000 $5.35 $21,400 Total $401,340 Developed Property Grand Total $559,965.00 (I) Assumes all building permits issued after January 1, 2018, within the Community Facilities District and all taxable property has been classified as Developed Property and has been developed in accordance with the Developers' plans. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Project, Planned Development and Status of Construction". Maximum Special Tax for each Assessor's Parcel classified as Developed Property equals the greater of (i) the Assigned Special Tax shown in this table and (i) the Backup Special Tax of $50,028 per Acre. Excludes classes with zero units. Source: David Taussig & Associates. 26 Debt Service Coverage The following table shows the debt service coverage for the Bonds based on Assigned Special Tax and assuming full buildout of the Community Facilities District. Table 6 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Projected Annual Assigned Special Tax and Estimated Debt Service Coverage Special Taxes and Proceeds Bond Year Available Ending Assigned CSCDA for Total Debt September Special Administrative Annual Debt Debt Capitalized Net Debt Service 1 Taxo) Expenses Fee Serviceo> Service Interest Serviceo) Coverage 2019 - $194,819 ($194,819) N/A 2020 $559,965 - - $415,000 ($415,000) N/A 2021 $571,164 ($20,000) ($10,000) $541,164 $445,000 ($207,500) $237,500 227.86% 2022 $582,588 ($20,400) ($10,000) $552,188 $453,500 - $453,500 121.76% 2023 $594,239 ($20,808) ($10,000) $563,431 $466,500 $466,500 120.78% 2024 $606,124 ($21,224) ($10,000) $574,900 $473,750 $473,750 121.35% 2025 $618,247 ($21,649) ($10,000) $586,598 $485,500 $485,500 120.82% 2026 $630,612 ($22,082) ($10,000) $598,530 $496,500 $496,500 120.55% 2027 $643,224 ($22,523) ($10,000) $610,701 $501,750 $501,750 121.71% 2028 $656,088 ($22,974) ($10,000) $623,114 $516,500 $516,500 120.64% 2029 $669,210 ($23,433) ($10,000) $635,777 $525,250 $525,250 121.04% 2030 $682,594 ($23,902) ($10,000) $648,692 $533,250 $533,250 121.65% 2031 $696,246 ($24,380) ($10,000) $661,866 $545,500 $545,500 121.33% 2032 $710,171 ($24,867) ($10,000) $675,304 $556,750 $556,750 121.29% 2033 $724,374 ($25,365) ($10,000) $689,009 $567,000 $567,000 121.52% 2034 $738,862 ($25,872) ($10,000) $702,990 $581,250 $581,250 120.94% 2035 $753,639 ($26,390) ($10,000) $717,249 $594,250 $594,250 120.70% 2036 $768,712 ($26,917) ($10,000) $731,795 $606,000 $606,000 120.76% 2037 $784,086 ($27,456) ($10,000) $746,630 $616,500 $616,500 121.11% 2038 $799,768 ($28,005) ($10,000) $761,763 $625,750 $625,750 121.74% 2039 $815,763 ($28,565) ($10,000) $777,198 $638,750 $638,750 121.67% 2040 $832,079 ($29,136) ($10,000) $792,943 $655,250 $655,250 121.01% 2041 $848,720 ($29,719) ($10,000) $809,001 $665,000 $665,000 121.65% 2042 $865,695 ($30,313) ($10,000) $825,382 $678,250 $678,250 121.69% 2043 $883,008 ($30,920) ($10,000) $842,088 $694,750 $694,750 121.21% 2044 $900,669 ($31,538) ($10,000) $859,131 $709,250 $709,250 121.13% 2045 $918,682 ($32,169) ($10,000) $876,513 $721,750 $721,750 121.44% 2046 $937,056 ($32,812) ($10,000) $894,244 $737,250 $737,250 121.29% 2047 $955,797 ($33,468) ($10,000) $912,329 $750,500 $750,500 121.56% 2048 $974,913 ($34,138) ($10,000) $930,775 $766,500 $766,500 121.43% Source: David Taussig & Associates. 0) Reflects Assigned Special Tax assuming Community Facilities District is fully developed as of January 1, 2018. The Maximum Special Tax for each Assessor's Parcel classified as Developed Property equals the greater of (i) the Assigned Special Tax shown in this table and (i) the Backup Special Tax of $50,028 per Acre. (2) Special Taxes less Administrative Expenses less CSCDA Annual Fee. (3) Does not include debt service through March 1, 2021, which will be paid from capitalized interest. 27 Authority Policy Regarding Assessments and Special Tax On February 7, 2019, the Authority adopted its "Further Amended and Restated Local Goals and Policies Concerning the Use of the Mello -Roos Community Facilities Act of 1982" (the "Authority Policy"). The Authority Policy requires that the credit quality of any community facilities district bond issue be such that the requirements of Section 53345.8 of the Act will be met; provided, however, that the Authority requires that the value of the real property that would be subject to the special tax to pay debt service on the community facilities district bonds be at least four times the principal amount of the community facilities district bonds to be sold 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 community facilities district. The Authority expects to remain in full compliance with the Authority Policy after the issuance of the Bonds. See "SECURITY FOR THE BONDS — Estimated Value -to -Lien Debt Ratios." Funds and Accounts; Flow of Funds All proceeds of the Special Tax (including any prepayments thereof and the proceeds from the sale of property collected pursuant to the foreclosure provisions of the Indenture for the delinquency of Special Tax and proceeds from any security for payment of Special Tax, taken in lieu of foreclosure, but excluding amounts held in the Rebate Fund), are required to be deposited into the Special Tax Fund held by the Trustee and, except as otherwise provided in the Indenture, are pledged to the payment of the Bonds. Priority of Deposits. All prepayments of the Special Tax shall be immediately deposited by the Trustee in the Prepayment Fund. Where the Rate and Method provides for use to pay for Authorized Facilities, those funds shall be immediately deposited by the Trustee in the Acquisition and Construction Fund. All other money in the Special Tax Fund shall be set aside by the Trustee in the following respective funds in the following order of priority, and all money in each fund shall be applied, used and withdrawn only for the purposes authorized in the Indenture, namely: (1) Redemption Fund; (2) Expense Fund; (3) Reserve Fund; and (4) Acquisition and Construction Fund. Redemption Fund. On or prior to each March 1 and September 1, the Trustee shall, from the money in the Special Tax Fund, deposit into the Redemption Fund an amount of money equal to the aggregate amount of interest becoming due and payable on all Outstanding Bonds on such dates, except no such transfer need be made to the extent amounts have previously been deposited in the Redemption Fund and set aside therein for the payment of such interest, including without limitation sale proceeds of Bonds deposited in such fund for such purpose. On or prior to September 1 of each year, commencing with the first September 1 on which principal is due on any of the Bonds, the Trustee shall, from the then remaining money in the Special Tax Fund, deposit into the Redemption Fund an amount of money equal to the aggregate amount of principal becoming due and payable on all Outstanding Bonds not subject to Mandatory Sinking Account Payments on such date plus the aggregate of the Mandatory Sinking Account Payments required by the Indenture and by all Supplemental Indentures to be made on such date into the Sinking Accounts. Expense Fund. On or before March 1 and September 1 of each year, the Trustee is required, from the then remaining money in the Special Tax Fund, to transfer to and deposit in the Expense Account a sum equal to the amount required by the Authority for the payment of budgeted Administrative Expenses during the six-month period commencing on such date, or to reimburse the Authority for payment of unbudgeted Administrative Expenses during the prior six-month period. Reserve Fund. The Trustee shall establish and maintain the Reserve Fund into which shall be deposited an amount equal to the Required Bond Reserve. Moneys in the Reserve Fund shall be used solely for the purpose of paying the principal of and interest on the Bonds in the event that the moneys in the Redemption Fund are insufficient 28 therefor, and for that purpose the Trustee shall withdraw from the Reserve Fund, for deposit in the Redemption Fund, moneys necessary for such purpose. Amounts in the Reserve Fund shall only be withdrawn to pay principal and interest on the Bonds; provided, that if the amount on deposit in the Reserve Fund is less than the Required Bond Reserve, the Trustee shall notify the Authority of the amount needed to replenish the Reserve Fund to the Required Bond Reserve and the Authority shall collect the deficiency by including it in the next annual Special Tax levy, to the extent permitted by law and as necessary. The term "Required Bond Reserve" is defined under the Indenture as, for each Series of Bonds, as of any date of calculation, the least of (a) ten percent (10%) of the proceeds (within the meaning of Section 148 of the Code) of such Series of Bonds, or (b) the Maximum Annual Debt Service, or (c) one hundred twenty-five percent (125%) of the Average Annual Debt Service, all as computed by the Authority under the Code and specified in writing by the Trustee, and means for all Outstanding Bonds, the sum of the Required Bond Reserve for each Series of Outstanding Bonds. On the delivery date, proceeds of the Bonds in the amount of $730,314.47 will be deposited in the Reserve Fund, constituting the Required Bond Reserve for the Bonds. The Trustee shall, on or before the first (1st) day in September in each year, from the then remaining money in the Special Tax Fund, deposit into the Reserve Fund the amount of money that is required to restore the Reserve Fund to an amount equal to the Required Bond Reserve. The Trustee is responsible for valuation of all investments in the Reserve Fund. Such investments shall be valued at the face value thereof if such investments mature within twelve (12) months from the date of valuation, or if such investments mature more than twelve (12) months after the date of valuation, at the price at which such investments are redeemable by the Trustee at his option, if so redeemable, or if not so redeemable, at the lesser of (i) the cost of such investments; or (ii) the market value of such investments and in making any valuations under the Indenture, the Trustee may use and rely on computerized securities pricing services that may be available to it, including those available through its regular accounting system; provided, that no deposit need be made into the Reserve Fund if the amount contained therein is at least equal to the Required Bond Reserve. Acquisition and Construction Fund All money remaining in the Special Tax Fund on September 1 of each year after making the foregoing transfers and deposits is required to be deposited by the Trustee into the applicable subaccount of the Acquisition and Construction Fund. All moneys in each subaccount of the Acquisition and Construction Fund are required to be used by the Authority to construct or acquire capital improvements for the benefit of the Community Facilities District, including the use by the Authority to reimburse the Developers for certain capital expenditures related to the Authorized Improvements. Any amount remaining in any subaccount of the Acquisition and Construction Fund after the completion of its purpose, which completion shall be conclusively evidenced by a Certificate of the City, shall be transferred by the Trustee to the Special Tax Fund. Prepayment Fund. All money in the Prepayment Fund constituting proceeds of prepayments of the Special Tax shall be used to redeem the Bonds as provided in the Indenture. Refunding Bonds In addition to the Bonds, the Authority may at any time issue a Series of bonds payable from the Special Tax on parity with the Bonds (the "Refunding Bonds") for the purposes of refunding the Bonds (or any Refunding Bonds), but only subject to the conditions under the Indenture, which are thereby made conditions precedent to the issuance of such Series of Refunding Bonds, which include the following: (a) The issuance of such Series of Refunding Bonds shall have been authorized pursuant to and in accordance with the terms of the Act and pursuant to the Indenture and shall have been provided for by a Supplemental Indenture in accordance with the Act and with the Indenture; (b) The Authority shall be in compliance with all agreements, conditions, covenants and terms contained in the Indenture and in all Supplemental Indentures required to be observed or performed by it, and no default hereunder shall have occurred and shall be then continuing; (c) The Special Tax revenue available to the Authority if the Special Tax were to be levied and collected at the maximum rate and amount in accordance with the Rate and Method on all Taxable Property (as defined in the 29 Rate and Method) during each Fiscal Year that any Bonds will be Outstanding (excluding the estimated Special Tax from any Taxable Property then delinquent in the payment of any Special Tax) would produce a sum equal to at least one hundred ten percent (110%) of the annual Debt Service during the Bond Year which begins in such Fiscal Year; as shown by a certificate of an Independent Certified Public Accountant or nationally recognized, independent municipal finance consultant on file with the Trustee; and (d) The aggregate Value -to -Lien Ratio of all Taxable Property (excluding any Taxable Property then delinquent in the payment of any Special Tax) shall be at least 4:1; and for the purposes of this paragraph of this provision, the term "Value" means either the current assessed valuation of the Taxable Property or the appraised value of the Taxable Property determined by an MAI appraiser, and the term "Value -to -Lien Ratio" means the ratio of the Value of all Taxable Property to the aggregate principal amount of all Bonds and Refunding Bonds that will be Outstanding after the issuance of such Series of Refunding Bonds plus the aggregate principal amount of all other assessment bonds and bonds issued under the Act reasonably allocable to the Taxable Property; and (e) Notwithstanding the limitations contained in the preceding paragraphs (c) and (d), nothing contained in the Indenture shall limit the issuance of any Series of Refunding Bonds thereunder if after the issuance and delivery of such Series of Refunding Bonds none of the Bonds and Refunding Bonds theretofore issued under the Indenture will be Outstanding, and nothing contained in the Indenture shall limit the issuance of any Series of Refunding Bonds under the Indenture if after the issuance and delivery of such Series of Refunding Bonds the annual Debt Service on all Bonds and Refunding Bonds to be Outstanding after the issuance of such Series of Refunding Bonds in each Bond Year thereafter shall not be increased by reason of the issuance of such Series of Refunding Bonds. So long as any Bonds remain Outstanding, the Authority may not issue any obligations payable from Special Tax Revenues on parity with the Bonds except as Refunding Bonds. The Authority may at any time, or from time to time, issue evidences of indebtedness for any lawful purpose of the Community Facilities District so long as any payments due thereunder shall be subordinate in all respects to the use of the Special Tax Revenues as described herein. Covenant for Superior Court Foreclosure The Indenture provides that the Special Tax is to be collected by the County on the secured property tax roll. Except as provided in the special covenant for foreclosure described herein and in the Act, the Special Tax is subject to the same penalties and the same procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes. Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of the Special Tax, the Authority may order the institution of a Superior Court action to foreclose the lien therefor within specified time limits In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Such judicial foreclosure action is not mandatory. However, the Authority has covenanted for the benefit of the Owners of the Bonds that it will annually on or before October 1 review the public records of the County relating to the collection of the Special Tax in the Community Facilities District in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and on the basis of such review the Authority shall, not later than December 1 of such year, institute foreclosure proceedings as authorized by the Act (a) against any single parcel within the Community Facilities District with aggregate delinquent Special Taxes (including prior years) of $5,000 or more in any year in which such Special Taxes were due, (b) against all parcels owned within the Community Facilities District by any single owner with delinquent Special Taxes in the aggregate amount (including prior years) of $5,000 or more, and (c) against all parcels with delinquent Special Taxes regardless of their delinquent amount in any fiscal year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levy, and will diligently prosecute and pursue the foreclosure proceedings to judgment and sale; provided that any actions taken to enforce delinquent Special Tax liens shall be taken only consistent with Sections 53356.1 through 53356.7, both inclusive, of the Act. In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Owners of the Bonds (if the Reserve Fund has been depleted) pending such sales or the prosecution of such foreclosure proceedings and receipt by the Authority of the proceeds of sale. However, within the limits of the Special Tax, the Authority may adjust the Special Tax levied on Taxable Property in the Community Facilities District, subject to the 30 limitation on the Maximum Annual Special Tax, to provide an amount required to pay interest on, principal of, and redemption premiums, if any, on the Bonds, and the amount, if any, necessary to replenish the Reserve Fund to an amount equal to the Required Bond Reserve for the Bonds and to pay all current Administrative Expenses for the Community Facilities District. There is, however, no assurance that the total amount of the Special Tax that could be levied and collected against Taxable Property in the Community Facilities 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 Annual Special Tax rates. See "SPECIAL RISK FACTORS." 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 Authority to purchase or otherwise acquire any lot or parcel of property to be sold 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 at least 75% of the Outstanding Bonds is obtained. After the Authority has ordered a foreclosure action, it shall dismiss the action before judgment if the owner of the subject property (or any other person) pays all of the following amounts: the delinquent Special Tax on the subject property and all penalties, interests and costs accrued; costs of the foreclosure action; authorized attorneys' fees; and the tax collector's authorized costs. Property Values Appraisal. Integra Realty Resources, Rocklin, California (the "Appraiser"), has prepared an appraisal of Lot 1 in Phase 1 in the Community Facilities District, dated February 5, 2019, which estimates the value of the property as of December 22, 2018 (the "Appraisal"). The Appraisal is attached to this Official Statement as Appendix B. The Appraisal estimates only the value of a portion of the Community Facilities District (the "Appraised Parcel"). The Appraisal is based on a number of general assumptions and limiting conditions further described therein. In addition, the Appraisal is subject to the hypothetical condition, which assumes the value based on the hypothetical condition that all public infrastructure, facilities and improvements to be financed by the Bonds are in place and available for use as of the date of inspection, with the lien of the Special Tax securing Bonds serviced by the Community Facilities District development. Using these assumptions and conditions in the Appraisal, the Appraiser estimates that the hypothetical market value of the Appraised Parcel is estimated to be $49,500,000 as of the valuation date of the inspections. Again, the hypothetical market value estimated therein is based on the premise that the Authorized Improvements to be financed by the Bonds were in place as of the date of inspection. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Improvements and Undergrounding" for a discussion of the current status of the Authorized Improvements and undergrounding. The complete Appraisal, including all attachments and appendices, is reproduced in Appendix B. The information contained herein is only a summary of certain information contained in the Appraisal, and such information is qualified in its entirety by the complete Appraisal. See "SPECIAL RISK FACTORS — Appraisal Risks." Assessed Value. The assessed value of the remaining property within the Community Facilities District is $33,352,864, which represents the secured assessed valuation established by the County Assessor. Assessed values do not necessarily represent market values. Article XIIIA of the California Constitution (Proposition 13) defines "full cash value" to mean "the County assessor's valuation of real property as shown on the 1975/76 roll under 'full cash value', or, thereafter, the appraised value of real property when purchased or newly constructed or when a change in ownership has occurred after the 1975 assessment," subject to exemptions in certain circumstances of property transfer or reconstruction. The "full cash value" is subject to annual adjustment to reflect increases, not to exceed 2% for any year, or decreases in the consumer price index or comparable local data, or to reflect reductions in property value caused by damage, destruction or other factors. Because of the general limitation to 2% per year in increases in full cash value of properties which remain in the same ownership, the County tax roll does not reflect values uniformly proportional to actual market values. There can be no assurance that the assessed valuations of the properties within 31 the Community Facilities District accurately reflect their respective market values, and the future fair market values of those properties may be lower than their current assessed valuations. The table below sets forth historical secured assessed values of all property within the Community Facilities District (including the Appraised Parcel) from Fiscal Years 2009-10 through 2018-19. Table 7 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Historical Secured Assessed Values Secured Percentage Fiscal Year Assessed Value Change 2009-10(1) $65,993,184 NA 2010-11 76,018,027 15% 2011-12 16,200,000(3) -79 2012-13 16,524,000 2 2013-14 16,854,479 2 2014-15 16,930,997 0 2015-16(2) 43,197,451(4) 155 2016-17 43,831,115 1 2017-18 44,721,235 2 2018-19 45,608,773 2 Source: Orange County Assessor's Office; David Taussig & Associates. (1) Assessed values for fiscal years 2009-10 through 2014-15 are for the entire Uptown Newport Project property. (2) Assessed values for fiscal years 2015-16 through 2018-19 are for Lots 1 and 2 and the property that is part of Phase 2, and do not include Lots 3 and 4, which are not part of the Community Facilities District. (3) Reduction in assessed value is due to the purchase of the Uptown Newport Project property at $23,500,000 in December 2010, and a further reduction in assessed value is due to anticipated environmental remediation. (4) Increase in assessed value is due to recapitalization of the Uptown Newport Project property after securing entitlements for development into 1,244 residential units and 11,500 square feet of retail uses, and recording of the tract map. Direct and Overlapping Debt The principal of and interest on the Bonds are payable from the Special Tax authorized to be collected within the Community Facilities District, and payment of the Special Tax is secured by a lien on Taxable Property. Such lien is co -equal to and independent of the lien for general taxes and any other liens imposed under the Act. The imposition of additional special taxes, assessments and general property taxes will increase the amount of independent and co -equal liens which must be satisfied in foreclosure. The City, the County and certain other public agencies are authorized by the Act to form other community facilities districts and, under other provisions of State law, to form special assessment districts, either or both of which could include all or a portion of the land within the Community Facilities District. Further, private liens, such as deeds of trust securing loans obtained by the Developers or other merchant builders, have been and may in the future be placed upon property in the Community Facilities District at any time. Under California law, the Special Tax has priority over all existing and future private liens imposed on property subject to the lien of the Special Tax. Set forth below is an overlapping debt table showing the existing authorized indebtedness payable with respect to property within the Community Facilities District. Additional indebtedness could be authorized by other public agencies at any time. This table has been prepared by California Municipal Statistics, Inc. as of February 6, 2019, and is included for general information purposes only. California Municipal Statistics, Inc., allocates overlapping debt based on the assessed value of property and not on taxes paid. Neither the Authority nor the Underwriter has reviewed the data for completeness or accuracy and makes no representations in connection therewith. 32 Table 8 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Overlapping Debt Statement 2018-19 Assessed Valuation: $45,608,773 DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 2/1/19 Metropolitan Water District 0.002% $ 948 Rancho Santiago Community College District 0.059 137,775 Rancho Santiago Community College District School Facilities Improvement District No. 1 0.111 128,556 Santa Ana Unified School District 0.138 326,088 California Statewide Communities Development Authority Community Facilities District No. 2018-03 Uptown Newport(1) 100.000 TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $593,367 OVERLAPPING GENERAL FUND DEBT: Orange County General Fund Obligations 0.008% $ 30,482 Orange County Pension Obligation Bonds 0.008 29,338 Orange County Board of Education Certificates of Participation 0.008 1,078 Santa Ana Unified School District Certificates of Participation 0.138 92,686 City of Newport Beach Certificates of Participation 0.079 82,284 TOTAL OVERLAPPING GENERAL FUND DEBT $235,868 COMBINED TOTAL DEBT(2) $829,235 (1) Excludes issue to be sold. (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non -bonded capital lease obligations. Ratios to 2018-19 Assessed Valuation: Direct Debt - Total Overlapping Tax and Assessment Debt 1.30% Combined Total Debt 1.82% Source: California Municipal Statistics. Other than as described herein, the property in the Community Facilities District is not subject to any other bonded special tax or assessment liens (other than the lien of the Special Tax). There can be no assurance that the Developers, their affiliates, the other property owners within the Community Facilities District, or any subsequent owner will not petition for the formation of other community facilities districts or for a special assessment district or districts and that parity Special Tax or special assessments will not be levied by the City, the County or some other public agency to finance additional public facilities. No other special districts are currently contemplated by the Authority, the City, or the Developers. Estimated Value -to -Lien Debt Ratios The appraised value of Lot 1 in Phase 1 in the Community Facilities District, as estimated by the Appraiser as of December 22, 2018, subject to the methodology and assumptions contained in the Appraisal, is $49,500,000. The 2018-19 assessed valuation of the remaining property within the Community Facilities District is $33,352,864. Based on the foregoing, the value to lien ratio is approximately 9.98 times the aggregate principal amount of the Bonds. No assurance can be given that the foregoing value -to -lien debt ratio will be maintained during the period of time that the Bonds are Outstanding. The Authority has no control over future property values or the amount of additional indebtedness that may be issued in the future by other public agencies, the payment of which, through the 33 levy of a tax or an assessment, is on a parity with the Special Tax. See "SPECIAL RISK FACTORS — Appraisal Risks," "— Assessed Valuation Risks" and "— Value -to -Lien Debt Ratios." The following tables reflect the value to lien ratios by proposed land development, both before and after development of Phase 2. Scenario 2 is representative only, reflecting the value -to -lien ratios in a hypothetical assuming all land is developed in accordance with the Developers' plans. Scenario 1 reflects development status as of January 1, 2019, and assumes that no building permits will be pulled before March 1, 2019. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS" for more information about the Developers' proposed development. 34 Table 9 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Value -to -Lien Ratios by Proposed Development and Phase SCENARIO 1: Current Development Status — All Undeveloped APN Property Owner Phase 1 Acres Existing Appraised Land Use Land Value(') 2018-19 2019-20 % of Assessed Maximum Maximum Land Undeveloped Undeveloped Valuet2> Special Tax(2) Special Tax Bonds Value to Lien Ratio± 445-134-17 TSG-Parcel 1 LLC 2.583 Residential - Multiple $49,500,000 $12,255,909 $129,072 16.33% $1,355,316 36.52 445-134- TSG-Parcel 1 22(4) LLC 0.030 Remainder Parcel $0.00 $1,501 0.19% $15,759 0.00 445-134-29 Uptown Newport Jamboree 0.635 Commercial - $1,721,636 $31,518 3.99% $330,949 5.20 Subtotal Phase I Phase 2 3.248 $49,500,000 $13,977,545 $162,091 20.51% $1,702,025 30.09 445-133-07 Uptown Newport Jamboree 12.555 Industrial (TowerJazz) - $31,631,228 $628,352 79.49% $6,597,975 4.79 Total 15.80 $49,500,000 $45,608,773 $790,442 100.00% $8,300,000 ± Where the appraised value is available for property in the Community Facilities District, the value to lien ratio reflects the appraised value of such such appraised value is available, the value to lien ratio reflects the assessed value of such property. Total value to lien ratio reflects appraised value assessed value where no appraisal was performed in the combined amount of $82,852,864. (1) Source: Integra Realty Resources. See "SECURITY FOR THE BONDS — Property Values" herein. (2) Source: Orange County Assessor's Office. See "SECURITY FOR THE BONDS — Property Values" herein. (3) See "SECURITY FOR THE BONDS — Rate and Method of Apportionment of Special Tax." (4) Parcel 445-134-22 is a remainder parcel that will be transferred to Uptown Newport Jamboree and merged into Parcel 445-134-29. Source: Except where otherwise noted, Developers and David Taussig & Associates. 35 9.98 property. Where no where available and SCENARIO 2: All Land Categorized as Developed (100% Buildout) Proposed 2019-20 Value to Proposed Units / Sq. Appraised Assessed Scenario % of Special Lien APN Property Owner Land Use Ft. Land Value(') Land ValueM Special Tax(3) Tax Bonds Ratio± Phase 1 Condominiums 158 445-134-17 TSG-Parcel 1 LLC Commercial — $49,500,000 $12,255,909 3,000 sq. ft. Retail $118,500 21.16% $1,756,449 $16,050 2.87% $237,899 24.82 445-134-22(4) TSG-Parcel 1 LLC Remainder Parcel N/A N/A N/A 445-134-29 Uptown Newport Jamboree Commercial — Retail 4,500 sq. ft. - $ 1,721,636 $24,075 4.30% $356,848 4.82 Subtotal Phase I Phase 2 $49,500,000 $13,977,545 $158,625 28.33% $2,351,196 29.64 445-133-07 Condominiums 314 $298,300 53.27% $4,421,508 Uptown Newport Apartments Jamboree Commercial — Retail 314 4,000 sq. ft. - $31,631,228 $81,640 14.58% $1,210,097 $21,400 3.82% $317,198 5.32 Total $49,500,000 $45,608,773 $559,965 100.00% $8,300,000 9.98 ± Where the appraised value is available for property in the Community Facilities District, the value to lien ratio reflects the appraised value of such property. Where no such appraised value is available, the value to lien ratio reflects the assessed value of such property. Total value to lien ratio reflects appraised value where available and assessed value where no appraisal was performed in the combined amount of $82,852,864. (1) Source: Integra Realty Resources. See "SECURITY FOR THE BONDS — Property Values" herein. (2) Source: Orange County Assessor's Office. See "SECURITY FOR THE BONDS — Property Values" herein. (3) Hypothetical Assigned Special Tax on all property, assuming all building permits have been pulled and planned development stage has been reached. The Maximum Special Tax for each Assessor's Parcel classified as Developed Property equals the greater of (i) the Assigned Special Tax shown in this table and (i) the Backup Special Tax of $50,028 per Acre. See "SECURITY FOR THE BONDS — Rate and Method of Apportionment of Special Tax." (4) Parcel 445-134-22 is a remainder parcel that will be transferred to Uptown Newport Jamboree and merged into Parcel 445-134-29. Source: Except where otherwise noted, Developers and David Taussig & Associates. 36 Other Potential Debt The Authority has no control over the amount of additional debt payable from taxes or assessments levied on all or a portion of the property within the Community Facilities District which may be incurred in the future by other governmental agencies having jurisdiction over all or a portion of the property within the Community Facilities District. Furthermore, nothing prevents the owners of property within the Community Facilities District from consenting to the issuance of additional debt which would be secured by taxes or assessments on a parity with the Special Tax. To the extent such indebtedness is payable from assessments, other special taxes levied pursuant to the Act or ad valorem taxes, such assessments, special taxes and ad valorem taxes will be secured by liens on the property within the Community Facilities District on a parity with the lien of the Special Tax. Accordingly, the debt on the property within the Community Facilities District could increase, without any corresponding increase in the value of the property therein, and thereby reduce the estimated Value -to -Lien debt ratio that exists at the time the Bonds are issued. The imposition of such additional indebtedness could also reduce the willingness and ability of the property owners within the Community Facilities District to pay the Special Tax when due. See "SPECIAL RISK FACTORS — Parity Taxes and Special Assessments." SPECIAL RISK FACTORS The following is a discussion of certain risk factors which should be considered, in addition to other matters described in this Official Statement, in evaluating the investment quality of the Bonds. This discussion does not purport to be comprehensive or definitive. The occurrence of one or more events discussed herein could adversely affect the value of the property in the Community Facilities District, or could adversely affect the ability or willingness of property owners in the Community Facilities District to pay Special Tax when due. A failure to receive Special Tax could result in the inability of the Authority to pay debt service on the Bonds when due. THE BONDS REPRESENT A HIGH DEGREE OF SPECULATIVE RISK. Investment in the Bonds involves risks that may not be appropriate for some investors. Insufficiency of Special Tax Under the Rate and Method, the annual amount of Special Tax to be levied on each parcel in the Community Facilities District is to be based on whether such parcel is publicly owned or otherwise exempt from Special Tax and, if not so exempt, whether such parcel is Developed Property, Final Mapped Property or Undeveloped Property (as such terms are defined in the Rate and Method). See "SECURITY FOR THE BONDS — Rate and Method of Apportionment of Special Tax." All of the Taxable Property constitutes Undeveloped Property for Fiscal Year 2019- 20. The Authority expects Taxable Property within the Community Facilities District to progress from Undeveloped Property to Final Mapped Property to Developed Property. As such progression occurs, the ratio of value to bond debt of the Taxable Property is expected to increase, as is the landowner's incentive to keep property taxes (including Special Tax) current. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Project, Planned Development and Status of Construction." No assurance can be given with respect to continued progress in developing the Community Facilities District. Other factors may also affect a landowner's willingness and ability to keep Special Tax current. See "SPECIAL RISK FACTORS — Failure to Develop," herein, for a discussion of the risks associated with development of the land within the Community Facilities District. Limited Obligation to Pay Bonds Funds for the payment of the principal of and interest on the Bonds are derived from Special Tax levied against Taxable Property in the Community Facilities District. The Special Tax collected could be insufficient to pay debt service on the Bonds due to delinquencies, non-payment or the failure to receive timely and sufficient proceeds from foreclosure proceedings. The Authority's obligation with respect to delinquent Special Tax is limited to the institution of judicial foreclosure proceedings under the circumstances described in the Indenture. The Authority has no obligation to make any payment on the Bonds except from Special Tax revenues and the other sources pledged under, and subject to the limitations provided in, the Indenture. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure." 37 Non -Recourse Obligation to Pay Special Tax The obligation to pay Special Tax levied within the Community Facilities District does not constitute a personal obligation of the current or subsequent owners of the property in the Community Facilities District. Enforcement of Special Tax payment obligations is limited to judicial foreclosure in the Orange County Superior Court. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure." If the proceeds of any foreclosure sale are insufficient to satisfy the applicable Special Tax lien, the Authority is not entitled to the deficiency from the landowner. There is no assurance that any current or subsequent owner of a parcel subject to Special Tax will be able to pay the Special Tax, or that such owner will choose to pay such installments even if otherwise able to do so. The Developers are the current owners of all of the Taxable Property within the Community Facilities District. Although bondholders should not look to the assets or credit of the Developers as a source of payment for the Bonds, the Developers' ability to pay the Special Tax and to develop the Community Facilities District is subject to the financial resources available to it. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — Project Plan of Finance" for a description of the financial resources available to the Developers. Concentration of ownership increases the risk of a failure to collect sufficient Special Tax to pay debt service on the Bonds, all other things being equal. The members of the Developers have no obligation to contribute additional capital to the Developers in the event of a shortfall of other resources, and the Authority can give no assurance that the Developers or any of their members or eventual joint venture partners will have sufficient funds or be willing to make payments of Special Taxes. Special Tax Delinquencies The Tax Collector of the County will include the Special Tax on the ad valorem property tax bills sent to owners of properties within the Community Facilities District. Such Special Tax installments will be due and payable and bear the same penalties and interest for non-payment as ad valorem property tax installments. Significant delinquencies in the payment of annual Special Tax installments or delays in foreclosure proceedings to collect such Special Tax could result in the depletion of the Reserve Fund and adversely affect the ability to pay debt service on the Bonds when due. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure," for a discussion of the provisions that apply, and the procedures that the Authority is obligated to follow, under the Indenture in the event of delinquencies in the payment of Special Tax. See "SPECIAL RISK FACTORS — FDIC/Federal Government Interests in Properties" and "— Bankruptcy and Foreclosure Delays" herein, for a discussion of the policy of the Federal Deposit Insurance Corporation regarding the payment of special taxes and limitations on the Authority's ability to foreclose on the lien of the Special Tax in certain circumstances. Shapiro v. San Diego On August 1, 2014, the California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in Shapiro v. San Diego City Council, 117 Cal. Rptr. 2d 631, 96 Cal. App. 4th 904 (2002). The case involved a Convention Center Facilities District (the "CCFD") established by the City of San Diego, much like a community facilities district established under the provisions of the Act. The CCFD is comprised of all of the real property in all of the City of San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties. At the election to authorize such special tax, the electorate was limited to owners of hotel properties and lessees of certain of such hotel properties. Thus, the election was a landowner election limited to owners and lessees of properties on which the special tax would be levied, and not a registered voter election. Such approach to determining who would constitute the qualified electors of the CCFD was based on Section 53326(c) of the Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the special tax. The Court held that the CCFD special tax election was invalid under the California Constitution because Article XIII A, Section 4 thereof and Article XIII C, Section 2 thereof require that the electors in such an election be the registered voters within the district. 38 In the case of the CCFD, at the time of the election there were many, many registered voters within the CCFD (viz., all of the registered voters in the City of San Diego). In the case of the Community Facilities District, there were no registered voters within the Community Facilities District at the time of the election to authorize the Special Tax. In City of San Diego, the Court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the Court's holding does not apply to the special tax election in the Community Facilities District. 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." Failure to Develop Land development operations are subject to comprehensive federal, State of California and local regulations. Various federal, state and local agencies have issued approvals within their jurisdictional authority required for the development and additional approvals may be required for certain elements of the development. Future governmental restrictions, including, but not limited to, governmental policies restricting or controlling development within the Community Facilities District, could be enacted, and future land use initiatives approved by the voters in the City could add more restrictions and requirements on development within the Community Facilities District. Moreover, there can be no assurance that the means and incentive to conduct land development operations within the Community Facilities District will not be adversely affected by a deterioration of the real estate market or economic conditions generally, future local, State and federal governmental policies relating to real estate development, the income tax treatment of real property ownership, acts of war or terrorism, or other factors. Certain Taxable Property in the Community Facilities District is presently undergoing active development. Undeveloped property is typically less valuable per acre than a developed property, and therefore provides less security to the Owners of the Bonds should it be necessary for the Authority to foreclose due to the nonpayment of the Special Tax. The Developers plan to demolish and redevelop buildings in a portion of the Community Facilities District in Phase 2, which may result in either temporary or, if development stalls, permanent reduction in property values. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS." The development of Phase 2 is expected to commence upon the expiration or earlier termination of the Lease. There can be no assurance, however, that the construction will in fact begin at such time, or that the Developers will be able to obtain sufficient financing to commence or complete such development of Phase 2. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS." Furthermore, an inability to sell condominiums within the Community Facilities District as currently proposed would result in slower rates of diversification of property ownership within the Community Facilities District. The timely payment of Special Tax levied depends primarily upon the ability and willingness of owners of such property to pay such taxes when due. A slowdown in or cessation of the development of land within the Community Facilities District could reduce the ability and willingness of such owners to make Special Tax payments, and could greatly reduce the value of such property in the event it has to be foreclosed upon to collect delinquent special taxes. See "SPECIAL RISK FACTORS — Bankruptcy and Foreclosure Delays" herein for a discussion of certain limitations on the ability of the Authority to pursue judicial foreclosure proceedings with respect to taxpayers with delinquent Special Tax. Construction Risk Development of property within the Community Facilities District is conditioned upon the construction of certain public infrastructure, including park facilities. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Project, Planned Development and Status of Construction." Such construction is subject to a number of risks, including, without limitation, inclement weather, shortages of or other supply problems relating to labor and materials, design or construction defects, delays in obtaining governmental or agency approvals and permits, compliance with existing permits and approvals and other risks. The realization of one or more of such risks could result in delays to or a failure to complete such required facilities, which could in turn result in delays to or a failure to develop the land within the Community Facilities District. See "SPECIAL RISK FACTORS — Failure to Develop" herein. 39 Cost overruns for public infrastructure to be constructed by the Developers are generally the responsibility of the Developers. The ability to pay for such cost overruns and to complete the applicable construction project is dependent on the availability of funding sources to the Developers. No assurances can be given that the Developers will obtain any such funding in a manner timely enough to avoid delays to the development of the land within the Community Facilities District as described herein. Concentration of Ownership and Risks Relating to Future Owners Generally, the risk of delinquency or nonpayment of Special Tax at levels which do not permit the timely payment of principal of and interest on the Bonds is inversely correlated to the diversity of ownership of Taxable Property within the Community Facilities District. The anticipated sale of condominiums will diversify ownership of real property within the Community Facilities District. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS —Ownership." The Developers currently intend to enter into a joint venture for construction of condominium units in Phase 1 and are negotiating the terms of potential construction financing for development in Phase 1 and expect to hold the property in Phase 2 until it is developed, which development is likely to begin no earlier than 2028. Financing for Phase 2 will not be finally determined until closer to commencement of construction for Phase 2. No representation is made as to the experience, abilities or financial resources of any future owner of property in the Community Facilities District, the willingness of any future owner to pay the Special Tax when due or the likelihood that any such future owner will be successful in developing property within the Community Facilities District beyond the stage of development reached by the Developers. The Authority has not made any investigation of or imposed any restrictions on any prospective owner of property in the Community Facilities District. Extraordinary Redemption from Prepaid Special Taxes The Bonds are subject to extraordinary redemption prior to maturity, as a whole or in part, on any Interest Payment Date from prepaid Special Taxes. Prepayment of the Special Taxes could be made by any of the owners of any of the property within the Community Facilities District, including the Developers or any individual owner; and they could also be made from the proceeds of bonds issued by or on behalf of an over -lapping special assessment district or community facilities district. The resulting extraordinary redemption of Bonds that were purchased at a price greater than the applicable redemption price could reduce the otherwise expected yield on such Bonds. Appraisal Risks The Appraiser has estimated the hypothetical market value of certain property in the Community Facilities District on the basis of certain assumptions which the Appraiser believes to be reasonable under the circumstances. See the Appraisal included in Appendix B hereto. However, certain of the events assumed by the Appraiser have not yet occurred as of the date of this Official Statement or may prove to be untrue. In particular, the value estimates in the Appraisal are based on the assumption that all public infrastructure and utility undergrounding to be funded with proceeds of the Bonds have been completed and are fully operational. In fact, that has not yet occurred, although the sale and delivery of the Bonds would produce the funds expected to be required for such purpose. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Improvements and Undergrounding" for a description of the status of such improvements. Although the Authority believes that the Appraiser's methodology and assumptions are reasonable under the circumstances, the Appraiser's hypothetical market value conclusions are expressions of professional opinion only. No assurance can be given that the market values of property in the Community Facilities District are equal to or greater than the Appraiser's estimated hypothetical market value, nor can any assurance be given that such market values will not decline during the period of time the Bonds are Outstanding. The market values of the property in the Community Facilities District can be adversely affected by a variety of factors, including, but not limited to, the occurrence of one or more of the special risk events discussed herein. A decline in the market value of a parcel in the Community Facilities District could lower the ability or willingness of the owner of such parcel to pay Special Tax when due and would decrease the amount recoverable at a foreclosure sale of such parcel. 40 See "SECURITY FOR THE BONDS — Property Values" for a further discussion of estimated property values in the Community Facilities District. Assessed Valuation Risks In the event that a property owner defaults in the payment of an installment of Special Taxes, the Authority's only remedy is to judicially foreclose on that property in the Community Facilities District. Prospective purchasers of the Bonds should not assume that the property within the Community Facilities District could be sold for the assessed values described in this Official Statement at a foreclosure sale for delinquent Special Taxes or for an amount adequate to pay delinquent Special Taxes. In addition to the foregoing, property values are not evenly distributed throughout the Community Facilities Districts. This disparity of values across the Community Facilities Districts is significant because, in the event of nonpayment of Special Taxes, the Authority's only remedy is to foreclose against the delinquent parcel. See "SECURITY FOR THE BONDS." The assessed values for the property within the Community Facilities District are the property values determined by the County Assessor for property tax purposes. Such assessed value determinations may be subject to appeal by property owners. The resolution of an appeal may result in a reduction to the County Assessor's original taxable value and a tax refund to the applicant/property owner. Although such a result would not reduce the Special Tax levy on the property, any reduction in the assessed taxable values of property within the Community Facilities District would have an adverse impact on the value -to -lien ratios discussed herein, and could lessen the ability or willingness of the owners of such property to pay their Special Taxes. Moreover, assessed values do not necessarily represent the current market value for any parcel. Bankruptcy and Foreclosure Delays The payment of Special Tax and the ability of the Authority to foreclose the lien of a delinquent Special Tax may be limited by bankruptcy, insolvency, or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of Bonds (including Bond Counsel's approving legal opinion) will be qualified, as to the enforceability of the various legal instruments, by bankruptcy, reorganization, insolvency, or other similar laws affecting the rights of creditors generally. Although bankruptcy proceedings would not cause the Special Tax to become extinguished, the amount of any lien on property securing the payment of delinquent Special Tax could be reduced if the value of the property were determined by the bankruptcy court to have become less than the amount of the lien, and the amount of the delinquent Special Tax in excess of the reduced lien would then be treated as an unsecured claim by the court. Further, bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings. Such a delay could adversely affect the payment of the principal of, and interest on, the Bonds when due. The prosecution of foreclosure proceedings could also be delayed by other factors affecting the prosecution of lawsuits generally, including local court calendars and procedural delays. Disclosures to Future Purchasers The Notice of Special Tax Lien has been recorded in the Office of the County Recorder pursuant to the Act. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective landowner or lender will consider such obligation for Special Tax in the purchase of all or a portion of the Community Facilities District or the lending of money thereon. Failure to disclose the existence of the Special Tax or the full amount of the pro rata share of debt on the land in the Community Facilities District may affect the willingness and ability of future owners of land within the Community Facilities District to pay the Special Tax when due. 41 Billing of Special Tax A special tax formula can result in a substantially heavier property tax burden being imposed upon properties within a community facilities district than elsewhere in a city or county, and this in turn can lead to problems in the collection of the special tax. In some community facilities districts, taxpayers have refused to pay the special tax and have commenced litigation challenging the special tax, the community facilities district and the bonds issued by or on behalf of the community facilities district. Under provisions of the Act, the Special Tax is to be billed to the properties within the Community Facilities District which were entered on the assessment roll of the County Assessor by January 1 of the previous fiscal year on the regular property tax bills sent to owners of such properties. Such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as regular property tax installments. These Special Tax installment payments cannot be made separately from property tax payments. Therefore, the unwillingness or inability of a property owner to pay regular property tax bills as evidenced by property tax delinquencies may also indicate an unwillingness or inability to make regular property tax payments and installment payments of Special Tax in the future. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure," for a discussion of the provisions which apply, and procedures which the Authority is obligated to follow, in the event of delinquency in the payment of installments of Special Tax. Endangered and Threatened Species It is illegal to harm or disturb any plants or animals in their natural habitats that have been listed as endangered species by the United States Fish & Wildlife Service under the ESA or by the CDFG under the California Endangered Species Act without a permit. Thus, the presence of an endangered plant or animal could delay development of vacant property in the Community Facilities District or reduce the value of Taxable Property. Failure to develop the vacant property in the Community Facilities District as planned, or substantial delays in the completion of the planned development of the property may increase the amount of Special Tax to be paid by the owners of Taxable Property and affect the willingness and ability of the owners of the property within the Community Facilities District to pay the Special Tax when due. Pursuant to the Environmental Impact Report (EIR), the City Council concluded that development within the Community Facilities District is not likely to cause substantial and considerable damage to the natural environment, including fish, wildlife or their habitat, because the subject property has already previously been developed to urban use. The presence of any rare, endangered or sensitive species in the Community Facilities District is not expected to interfere with the proposed development in the Community Facilities District. Natural Disasters In the future, the Community Facilities District could be subject to earthquakes, wildfire, flooding, acts of terrorism or war, or other calamities or natural disasters. The occurrence of such a calamity or disaster in or around the Community Facilities District could result in damage to properties in the Community Facilities District or could otherwise reduce the value of such properties and affect the ability or willingness of the property owners in the Community Facilities District to pay Special Tax when due. Earthquake. There are several active geological faults in the State that have potential to cause serious earthquakes that could result in damage within the Community Facilities District. According to the Seismic Safety Commission, the Community Facilities District is located within "Zone 4," which is considered to be the highest risk zone in California. There are only two zones in California: (i) Zone 4, which is assigned to areas near major faults; and (ii) Zone 3, which is assigned to all other areas of more moderate seismic activity. It is possible that new geological faults could be discovered in the area and that an earthquake occurring on such faults could result in damage of varying degrees of seriousness to property and infrastructure in the Community Facilities District. Flooding. Property within the Community Facilities District is located within Zone X, which means that it is outside of the 500 year flood plain. 42 Hazardous Substances The market value of the property in the Community Facilities District could decrease if a hazardous substance is discovered or released in the vicinity of the Community Facilities District. 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 "Superfund Act," is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance. Should any of the parcels be affected by a hazardous substance, the value of such parcels could decline, because the purchaser, upon becoming the owner, will become obligated to remedy the condition. The estimated value of the property within the Community Facilities District, as set forth in the Appraisal, assumes there are no hazardous substances and that there is no liability to remedy a hazardous substance condition of the property. The Authority has made no independent investigation as to the environmental condition of the Community Facilities District and the Authority is not aware of the presence of any hazardous substance liabilities with respect to the Community Facilities District except as described herein. However, it is possible that such liabilities do currently exist and that the Authority is not aware of them. Further, it is possible that liabilities may arise in the future with respect to any of the land within the Community Facilities District resulting from the present or future existence of a substance classified as a hazardous substance under the federal or State environmental laws, including the removal of volatile organic compounds described herein. Any of these possibilities could adversely affect the value of a parcel and the willingness or ability of the owner of any parcel to pay the Special Tax when due. See "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — The Project, Planned Development and Status of Construction — Development Conditions" for a discussion of environmental remediation in Phase 2. FDIC/Federal Government Interests in Properties The ability of the Authority to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the "FDIC"), Fannie Mae, Freddie Mac, the Federal National Mortgage Association, the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest. Fannie Mae, Freddie Mac and Mortgage Interests. In the event that a parcel of taxable property in the Community Facilities District is owned by a federal governmental entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or in the event a private deed of trust secured by such parcel is owned by a federal governmental 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. Under the Supremacy Clause of the United States Constitution, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes within the Community Facilities District but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments. Moreover, unless Congress has otherwise provided, if the federal government, such as Fannie Mae or Freddie Mac, has a mortgage interest in the parcel and the Community Facilities District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government's mortgage interest. In Rust v. Johnson, 597 F.2d 174 (1979), the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association ("FNMA") is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States. The Authority has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special Taxes within 43 the Community Facilities District, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Bonds are outstanding. FDIC. In the event that any financial institution making any loan which is secured by real property within the Community Facilities District is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, then the ability of the Authority to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited. The FDIC's policy statement regarding the payment of state and local real property taxes (the "Policy Statement") provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property's value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution's affairs, unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC -owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC's consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent. The Policy Statement states that the FDIC generally will not pay non -ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Mello -Roos Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC's federal immunity. The Ninth Circuit has issued a ruling on August 28, 2001, in which it determined that the FDIC, as a federal agency, is exempt from Mello -Roos special taxes. Currently, the FDIC does not have an interest in any land within the Community Facilities District. The Authority is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the Community Facilities District 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 could reduce or eliminate the number of persons willing to purchase a parcel at foreclosure sale. Such an outcome could cause a draw on the Reserve Fund and could adversely affect the payment when due of debt service on the Bonds. Parity Taxes and Special Assessments The Special Tax constitutes a lien against the parcels of land on which it is levied. Such lien is on parity with all special taxes levied by the Authority or other agencies and is co -equal to and independent of the lien for general property taxes, regardless of when they are imposed upon the same property. The Authority does not have control over the ability of other entities to issue indebtedness secured by ad valorem taxes, special taxes or assessments payable from all or a portion of the property within the Community Facilities District. In addition, the owners of property within the Community Facilities District may, without the consent or knowledge of the Authority, petition other public agencies to issue public indebtedness secured by ad valorem taxes, special taxes or assessments. Any such special taxes may have a lien on such property on parity with the lien of the Special Tax. See "SECURITY FOR THE BONDS — Other Potential Debt." Refunding Bonds are permitted pursuant to the Indenture, which Refunding Bonds will be secured by a lien on the Special Tax on parity with the Bonds. See "SECURITY FOR THE BONDS — Refunding Bonds." 44 Value -to -Lien Debt Ratios The estimated value -to -lien debt ratios set forth herein under the caption "SECURITY FOR THE BONDS — Estimated Value -to -Lien Debt Ratios" are based on the appraised values of certain property in the Community Facilities District as of December 22, 2018 and the assessed values of the remaining property in the Community Facilities District as of February 6, 2019. No assurance can be given that such value -to -lien debt ratios will be maintained over time. As discussed herein, many factors which are beyond the control of the Authority could adversely affect the property values within the Community Facilities District. The Authority also has no control over the amount of additional indebtedness that may be issued by other public agencies, the payment of which, through the levy of a tax or an assessment, is on a parity with the Special Tax. See "SPECIAL RISK FACTORS — Parity Taxes and Special Assessments" and "— SECURITY FOR THE BONDS — Other Potential Debt." The Developers intend to demolish and redevelop buildings in a portion of Phase 2 within the Community Facilities District, which may result in a decrease in the overall property values in the Community Facilities District. A decrease in the property values in the Community Facilities District, or an increase in bond debt liens on property in the Community Facilities District, or both, could result in a lowering of the value -to -lien debt ratios of the property in the Community Facilities District. Limitations on Remedies; No Acceleration The Indenture does not permit the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Indenture. Generally, remedies are limited to legal actions to compel the Authority to perform under the Bonds and the Indenture, to enjoin acts which are unlawful or violate the rights of the Holders, or to account as the trustee of an express trust. See Appendix E — "SUMMARY OF THE INDENTURE — Events of Default and Remedies of Holders." Remedies available to the Owners may be inadequate to assure the timely payment of principal of and interest on the Bonds or to preserve the tax-exempt status of the Bonds. 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. 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, receivership, reorganization, arrangement, fraudulent conveyance, moratorium, or others similar laws affecting generally the enforcement of creditor's rights, by equitable principles, by the exercise of judicial discretion and by limitations on remedies against joint powers authorities in the State of California. Right to Vote on Taxes Act Article XIIIC and Article XIIID to the California Constitution, enacted in 1996, limit the authority of local governments to impose taxes and property -related assessments, fees and charges. Many provisions of Articles XIIIC and XIIID have not yet been interpreted by the courts, although a number of lawsuits have been filed requesting the courts to interpret various aspects thereof. Among other things, Section 3 of Article XIIIC states that "... the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge." The Act provides for a procedure, which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. Although the matter is not free from doubt, it is likely that the exercise by the voters of the initiative power referred to in Article XIIIC to reduce or terminate a Special Tax is subject to the same restrictions as are applicable to the Authority pursuant to the Act. Accordingly, although the matter is not free from doubt, it is likely that Articles XIIIC and XIIID have not conferred on the voters the power to repeal or reduce the Special Tax if such reduction would interfere with the timely retirement of the Bonds. It may be possible, however, for voters to reduce the Special Tax in a manner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amount of Special Tax that may be levied in any year below the existing levels. Therefore, no assurance can be given with respect to the levy of Special Tax for 45 administrative expenses. Furthermore, no assurance can be given with respect to the future levy of the Special Tax in amounts greater than the amount necessary for the timely retirement of the Bonds. The interpretation and application of Articles XIIIC and XIIID will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination or the timeliness of any remedy afforded by the courts. See "SPECIAL RISK FACTORS — Limitations on Remedies; No Acceleration." Tax Cuts and Jobs Act of 2017 Recent changes enacted by federal tax legislation (the Public Law No. 115-97, also referred to as the "Tax Cuts and Jobs Act of 2017") was enacted into law on December 22, 2017. The Tax Cuts and Jobs Act made significant changes to many aspects of the Internal Revenue Code of 1986. For example, the Tax Cuts and Jobs Act reduced the amount of mortgage interest deduction to the first $750,000 of a home loan on new purchases (existing loans are grandfathered in), increased the standard deduction, and put a limit of $10,000 on deductions for state and local income tax, sales tax and property tax expenses that individuals may deduct from their gross income for federal income tax purposes. The changes made by the Tax Cuts and Jobs Act could increase the cost of home ownership within the Community Facilities District. The Authority cannot predict the effect that the Tax Cuts and Jobs Act may have on the cost of home ownership or the price of homes in the Community Facilities District, the rate at which condominiums in the Community Facilities Districts are sold to end users by the Developers or the ability or willingness of home owners to pay Special Taxes or property taxes. Risks Relating to Tax -Exempt Status of the Bonds As further described in "TAX MATTERS" below, failure of the Authority or the City to comply with the requirements of the Internal Revenue Code of 1986 (the "Code") and the related legal authorities, or changes in the federal tax law or its application, could cause interest on the Bonds to be included in the gross income of Holders for federal income tax purposes, possibly from the date of original issuance of the Bonds. Further, the opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of interest on the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. The IRS has an ongoing program of auditing obligations that are issued and sold as bearing tax-exempt interest to determine whether, in the view of the IRS, interest on such obligations is included in the gross income of the owners thereof for federal income tax purposes. The IRS has announced that its audit efforts will focus in part on "developer -driven bond transactions," including certain tax increment financings and certain assessment bond transactions. In recent audits, the IRS has asserted that interest on such "developer -driven" obligations can be taxable, in certain circumstances, even when those transactions otherwise meet all applicable tax law requirements. It cannot be predicted if this IRS focus could lead to an audit of the Bonds or what the result would be of any such audit. If an audit of the Bonds is commenced, under current procedures parties other than the Authority and the City would have little, if any, right to participate in the audit process. Moreover, because achieving judicial review in connection with an audit of tax-exempt obligations is difficult, obtaining an independent review of IRS positions with which the Authority and the City legitimately disagree, may not be practicable. Any action of the IRS, regardless of the outcome, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of obligations presenting similar tax issues, may affect the market price for, or the marketability of, the Bonds. Finally, if the IRS ultimately determines that the interest on the Bonds is not excluded from the gross income of Bondholders for federal income tax purposes, the Authority may not have the resources to settle with the IRS, the Bonds are not required to be redeemed, and the interest rate on the Bonds will not increase. 46 THE AUTHORITY The Authority is a joint powers agency organized pursuant to a Joint Exercise of Powers Agreement among a number of California counties, cities and special districts entered into pursuant to the provisions relating to the joint exercise of powers contained in Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the California Government Code. The Authority is authorized to establish community facilities districts and issue the Bonds under the Act. LITIGATION To the knowledge of the Authority, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental agency, public board or body, pending against the Authority seeking to restrain or enjoin the sale or issuance of the Bonds, or in any way contesting or affecting any proceedings of the Authority taken concerning the sale thereof, the pledge or application of any moneys or security provided for the payment of the Bonds, the validity or enforceability of the documents executed by the Authority in connection with the Bonds, the completeness or accuracy of the Official Statement or the existence or powers of the Authority relating to the sale of the Bonds. CONTINUING DISCLOSURE The Authority The Authority has covenanted for the benefit of the Owners of the Bonds pursuant to a continuing disclosure certificate ("the "Authority Continuing Disclosure Certificate") to provide, each year for so long as the Bonds are Outstanding, certain financial information and operating data relating to the Bonds, the Community Facilities District, ownership of the property in the Community Facilities District that is subject to the Special Tax, the occurrence of delinquencies in payment of the Special Tax, and the status of foreclosure proceedings, if any, respecting Special Tax delinquencies (the "District Disclosure Report"), and to provide notices of the occurrence of certain enumerated events. The fmancial information and operating data will be provided annually on or before January 15 for the twelve months ended on the preceding June 30, commencing January 15, 2020. A form of the Authority's undertaking is included in Appendix F — "FORMS OF CONTINUING DISCLOSURE CERTIFICATES." The Community Facilities District Disclosure Reports are to be filed by the Authority with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access system ("EMMA"). These covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5). The Authority has separately contracted with BLX Group LLC, David Taussig & Associates, Inc., or other consultants, for its continuing disclosure undertakings with respect to its bond issues. Certain event filings related to unscheduled draws on reserve funds, defeasance of bonds and rating changes were not filed in a timely manner but have since been corrected. In certain circumstances, CUSIPs were not linked to appropriate filings but have since been corrected. Certain operating data relating to the Authority's Statewide Community Infrastructure Program Revenue Bonds, Series 2014B was not originally included in the timely filed annual report for fiscal year 2014-15 but was included 7 days after the filing due date. The Developers Pursuant to a separate continuing disclosure certificate (the "Developer Continuing Disclosure Certificate"), the Developers have covenanted for the benefit of the Owners of the Bonds, to provide certain information relating to the development plan and the financing plan for the Community Facilities District (the "Developer Disclosure Report"), and to provide notices of the occurrence of certain enumerated events, until the property owned by the Developers (in aggregate) in the Community Facilities District is responsible for less than 15% of the Special Taxes levied in the Community Facilities District or until the obligation to so provide such information, data and notices is otherwise terminated in accordance with the provisions of Developer Continuing Disclosure Certificate. A form of the Developer Continuing Disclosure Certificate is included in Appendix F — "FORMS OF CONTINUING DISCLOSURE CERTIFICATES." Such information is to be provided or caused to be provided by 47 the Developers annually not later than December 15 of each year, commencing December 15, 2019. Reports are to be filed with EMMA. LEGAL OPINIONS The validity of the Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority ("Bond Counsel"). Bond Counsel has not undertaken any responsibility for the accuracy, completeness or fairness of this Official Statement and expresses no opinion as to the matters set forth herein. A complete copy of the proposed form of Bond Counsel opinion is contained in Appendix D hereto. Payment of the fees and expenses of Bond Counsel are contingent upon the issuance and delivery of the Bonds. From time to time, Bond Counsel may represent the Underwriter on matters unrelated to the Bonds. Certain legal matters will be passed upon for the Underwriter by Kutak Rock LLP, Irvine, California. Orrick, Herrington & Sutcliffe LLP is also acting as Disclosure Counsel to the Authority. TAX MATTERS In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Code and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix D. To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each beneficial owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Beneficial owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of beneficial owners who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public. Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a beneficial owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such beneficial owner. Beneficial owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The Authority has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure 48 that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel's attention after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters. Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Bonds may otherwise affect a beneficial owner's federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the beneficial owner or the beneficial owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel is expected to express no opinion. The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Authority, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Authority has covenanted, however, to comply with the requirements of the Code. Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Authority or the beneficial owners regarding the tax- exempt status of the Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the Authority and their appointed counsel, including the beneficial owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Authority legitimately disagrees may not be practicable. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the Authority or the beneficial owners to incur significant expense. UNDERWRITING The Bonds are being purchased by RBC Capital Markets, LLC (the "Underwriter"). Pursuant to a Bond Purchase Contract between the Underwriter and the Authority (the "Purchase Contract"), the Underwriter has agreed to purchase all of the Bonds for an aggregate purchase price of $8,714,972.40, subject to certain conditions set forth in the Purchase Contract. The purchase price reflects an underwriter's discount of $124,500.00 and an original issue premium of $539,472.40. The initial offering prices stated on the inside cover of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the Bonds to certain dealers (including dealers depositing Bonds into investment trusts), dealer banks, banks acting as agent and others at prices lower than said public offering prices. The Underwriter and its respective affiliates are full -service financial institutions engaged in various activities that may include securities trading, commercial and investment banking, municipal advisory, brokerage and asset 49 management. In the ordinary course of business, the Underwriter and its respective affiliates may actively trade debt and, if applicable, equity securities (or related derivative securities) and provide financial instruments (which may include bank loans, credit support or interest rate swaps). The Underwriter and its respective affiliates may engage in transactions for their own accounts involving the securities and instruments made the subject of this securities offering or other offering of the Authority. The Underwriter and its respective affiliates may make a market in credit default swaps with respect to municipal securities in the future. The Underwriter and its respective affiliates may also communicate independent investment recommendations, market color or trading ideas and publish independent research views in respect of this securities offering or other offerings of the Authority. NO RATINGS The Authority has not made, and does not contemplate making, application to any rating agency for the assignment of a rating to the Bonds. [Remainder of page intentionally left blank] 50 MISCELLANEOUS The quotations from, and the summaries and explanations of the Indenture and other statutes and documents contained herein do not purport to be complete, and reference is made to such documents and statutes for the full and complete statements of their respective provisions. This Official Statement is submitted only in connection with the initial offering of the Bonds by the Authority, and is not to be used for any other purpose. This Official Statement does not constitute a contract with the purchasers of the Bonds. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The execution and delivery of this Official Statement has been duly authorized by the Authority. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: /s/ Sendy Young Authorized Signatory 51 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX A GENERAL INFORMATION ABOUT THE CITY OF NEWPORT BEACH AND VICINITY The following information was obtained from sources the Authority believes to be reliable, but the Authority gives no assurances as to its accuracy or completeness. The City of Newport Beach has not reviewed or approved this Official Statement and the Authority makes no representation as to the finances of the City or the general economic conditions within the City or surrounding region. The California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) (the "Community Facilities District") is located within the City of Newport Beach (the "City") in the County of Orange (the "County"). The City is located in the coastal center of the County, approximately 89 miles north of San Diego, 15 miles south of Long Beach and 45 miles southwest of Los Angeles. The City is a full service city providing its residents and visitors with the following functional services: general governance, legal, financial, information technology, and administrative management; police, fire, paramedic, lifeguard, and emergency medical transport services; engineering, construction, and maintenance of public facilities, public streets, beaches, and parks; planning, zoning, and economic development services; building inspection, plan check and code enforcement services libraries and cultural and arts services; recreation and senior services; and water, wastewater, and street light utility services. The City provides water and wastewater service to most areas within City limits, but it does not provide gas, cable television, electrical, or other utility services. Public elementary and secondary education is provided by the Newport -Mesa Unified School District and the Laguna Beach Unified School District. The City encompasses approximately 24 square miles of land and has an estimated population of 87,182 as of January 1, 2018. The following financial and economic data for the City and the County are presented for information purposes only. The principal of and interest and redemption premiums, if any, on the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), Special Tax Bonds, Series 2019 (the "Bonds") are limited obligations payable solely from the proceeds of the Special Tax. The Authority is not obligated to pay the Bonds except from the proceeds of the Special Tax. The general funds and assets of the Authority are not liable and the full faith and credit of the Authority is not pledged for the payment of the principal of or interest or redemption premiums, if any, on the Bonds. No tax or assessment other than the Special Tax shall ever be levied or collected to pay the principal of or interest or redemption premiums, if any, on the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any of the property of the Authority or of the City or any of their income or receipts except the money held in the Special Tax Fund pursuant to the Indenture. Neither the payment of the principal of or the interest or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the Authority or of the City. Demographic Information Table A sets forth City's population for the last five years. TABLE A CITY OF NEWPORT BEACH City Population 2014-20180) As of January 1 City Population 2014 85,738 2015 85,815 2016 85,782 2017 86,207 2018 87,182 Source: California Department of Finance, E-4 Population Estimates for Cities, Counties, and State, 2011-2018 with 2010 Benchmark. (1) Most recent data available as of the date of this Official Statement. A-1 Table B sets forth the median age of the City's residents for fiscal years 2010-11 to 2015-16. TABLE B CITY OF NEWPORT BEACH Median Age 2010-11 to 2015-16(1) Fiscal Year Median Aget2) 2010-11 42.9 2011-12 43.8 2012-13 43.7 2013-14 44.7 2014-15 45.4 2015-16 45.6 (1) Most recent data available as of the date of this Official Statement. (2) Source: U.S. Census Bureau, American Community Survey estimate for City of Newport Beach. Employment Table C sets forth the civilian labor force, the employed labor force, the unemployed labor force and the unemployment rate for the City, County and State for calendar years 2013 to 2017. City County State TABLE C CITY OF NEWPORT BEACH, ORANGE COUNTY, STATE OF CALIFORNIA Labor Force 2013-2017(1) Year Civilian Employed Unemployed Unemployment Labor Force Labor Force Labor Force Rate 2013 44,300 41,900 2,400 5.4% 2014 44,600 42,600 2,000 4.5 2015 45,200 43,500 1,700 3.7 2016 45,600 44,100 1,500 3.3 2017 44,100 42,900 1,200 2.8 2013 1,565,300 1,462,400 102,900 6.6% 2014 1,572,000 1,485,700 86,200 5.5 2015 1,588,700 1,518,000 70,700 4.4 2016 1,602,400 1,538,000 64,300 4.0 2017 1,619,200 1,562,600 56,600 3.5 2013 18,625,000 16,958,400 1,666,600 8.9% 2014 18,758,400 17,351,300 1,407,100 7.5 2015 18,896,500 17,724,800 1,171,700 6.2 2016 19,093,700 18,048,800 1,044,800 5.5 2017 19,312,000 18,393,100 918,900 4.8 (1) Most recent data available as of the date of the Official Statement. Source: California Employment Development Department, Annual Averages. Table D sets forth the income levels for the City for fiscal years 2011-12 to 2016-17. A-2 TABLE D CITY OF NEWPORT BEACH Personal Income and Per Capita Personal Income Fiscal Years 2011-12 to 2016-17(1) Fiscal Year Per Capita Personal Income Personal Income 2011-12 $5,809,828 $67,564 2012-13 6,995,784 80,936 2013-14 6,926,725 79,733 2014-15 6,848,523 78,494 2015-16 6,574,071 78,012 2016-17 6,736,392 79,331 (1) Most recent data available as of the date of the Official Statement. Source: City of Newport Beach Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2017. Table E sets forth the top ten employers in the City as of June 30, 2017. TABLE E CITY OF NEWPORT BEACH Principal Employers (As of June 30, 2017)(1) Employer Employees Hoag Memorial Hospital 4,800 Glidewell Dental 1,390 Pacific Life Insurance 1,248 PIMCO Advisors 994 Newport -Mesa Unified School District 860 Jazz Semi -Conductor 805 Resort at Pelican Hill 753 City of Newport Beach 724 Balboa Bay Club and Resort 691 Fletcher Jones Motor Cars Inc. 524 Total 12,789 00) Most recent data available as of the date of the Official Statement. Source: City of Newport Beach Comprehensive Annual Financial Report for Fiscal Year Ended June 30, 2017; City of Newport Beach Finance Department. Property Values Table F shows the assessed valuation for the property within the City since fiscal year ending June 2009. Assessed valuation may not be representative of the actual market value of property in the City because Article XIIIA of the California Constitution limits any increase in assessed value to no more than 2% a year unless a property is sold or transferred. As a consequence, assessed values are typically less than actual market values unless the property has recently changed ownership or has been reassessed, and may be greater than actual market values in an environment of falling real estate values. A-3 Fiscal Year Ended June 30 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 TABLE F Historical Assessed Valuation Secured Residential $28,733,809,754 29,057,665,304 30,853,053,683 31,603,505,416 32,522,843,119 34,678,952,381 36,814,891,583 39,263,791,190 41,834,060,284 44,862,969,434 Commercial $4,477,310,761 4,614,669,993 4,711,084,222 4,504,291,343 4,627,463,458 4,688,189,694 5,007,508,388 5,264,898,550 5,539,551,197 5,953,148,011 Other $3,224,940,905 3,406,238,449 1,516,055,361 1,442,600,505 1,435,546,888 1,489,111,147 1,348,136,131 1,394,764,145 1,398,481,252 1,499,414, 812 Unsecured $1,482,083,490 1,580,961,132 1,671,177,215 1,565,104,496 1,597,277,039 1,484,909,241 1,581,520,801 1,465,016,213 1,569,593,832 1,464,683,763 Total Taxable Assessed Value $37,918,144,910 38,659,534,878 38,751,370,481 39,115,501,760 40,183,130,504 42,341,162,463 44,752,056,903 47,388,470,098 50,341,686,565 53,780,216,020 Total Direct Tax Change Rate 5.93% 1.000% 1.96% 1.000% 0.24% 1.000% 0.94% 1.000% 2.73% 1.000% 5.37% 1.000% 5.69% 1.000% 5.89% 1.000% 6.23% 1.000% 6.83% 1.000% Source: Orange County Auditor -Controller. Education Table G summarizes the percentage of the City's population with formal schooling for fiscal years 2010 to 2016. Fiscal Year 2010 2011 2012 2013 2014 2015 2016 TABLE G CITY OF NEWPORT BEACH Education Level 2010 to 2016(1) Percent of Population who are High School Graduates or HigherM 97.7% 97.9 97.9 97.5 97.7 97.7 97.7 (1) Most recent data available as of the date of the Official Statement. (2) Percent of City's population 25 years and over. Source: U.S. Census Bureau estimate for City of Newport Beach Percent of Population who have Bachelor's Degree or Higher(2) 62.5% 63.4 64.2 64.1 64.5 64.6 65.7 A-4 Commercial Activity Table H sets forth information regarding taxable sales in the City for calendar years 2011-2016. TABLE H CITY OF NEWPORT BEACH Taxable Retail Sales 2011-2016(0 (000s) 2011 2012 2013 2014 2015 2016 Motor Vehicles and Parts Dealers $ 500,538 $ 560,506 $ 634,391 $ 747,162 $ 759,863 $ 759,089 Home Furnishings and Appliance Stores 43,129 42,505 40,901 40,878 41,069 44,145 Bldg. Materials & Garden Equip. & Supplies 45,460 48,783 48,481 38,995 40,931 39,559 Food and Beverage Stores 100,179 113,602 122,033 129,045 134,010 138,035 Gasoline Stations 142,269 140,215 128,740 132,068 112,991 95,469 Clothing and Clothing Accessories Stores 234,895 260,005 269,666 277,852 272,188 274,327 General Merchandise Stores 169,586 172,779 183,351 188,016 187,195 170,950 Food Service and Drinking Places 394,299 422,212 436,113 480,509 512,058 527,269 Other Retail Group 143,961 150,758 154,424 165,716 181,457 197,996 Total Retail and Food Services $1,774,317 $1,911,365 $2,018,100 $2,200,243 $2,241,761 $2,246,838 All Other Outlets 616,035 655,257 677,774 743,101 792,631 806,382 Total All Outlets $2,390,352 $2,566,623 $2,695,874 $2,943,344 $3,034,392 $3,053,220 (1) Most recent data available as of the date of the Official Statement. 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: California State Board of Equalization, 2011 - 2016 Taxable Sales in California Reports. A-5 (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX B APPRAISAL (THIS PAGE INTENTIONALLY LEFT BLANK) Integra Realty Resources Sacramento Appraisal of Real Property Uptown Newport (Phase 1) CSCDA Community Facilities District No. 2018-03 Newport Beach, Orange County, California 92660 Prepared For: California Statewide Communities Development Authority Effective Date of the Appraisal: December 22, 2018 Report Format: Appraisal Report — Comprehensive Format IRR - Sacramento File Number: 193-2018-0555 irr I Uptown Newport (Phase 1) CSCDA Community Facilities District No. 2018-03 Newport Beach, California Integra Realty Resources Sacramento February 5, 2019 3825 Atherton Road Suite 500 Rocklin, CA 95765 Mr. James Hamill Mr. Jon Penkower Managing Directors California Statewide Communities Development Authority 1700 N. Broadway Walnut Creek, CA 94596 T 916.435.3883 F 916.435.4774 www.irr.com SUBJECT: Market Value Appraisal Uptown Newport (Phase 1) CSCDA Community Facilities District No. 2018-03 Newport Beach, Orange County, California 92660 IRR - Sacramento File No. 193-2018-0555 Dear Messrs. Hamill and Penkower: Integra Realty Resources — Sacramento is pleased to submit the accompanying appraisal of the referenced property. The purpose of the appraisal is to develop an opinion of the market value of lot 1, as if public capital facilities and improvements have been completed, subject to a hypothetical condition, of the fee simple interest in the property in bulk as of the effective date of the appraisal, December 22, 2018. The client for the assignment is California Statewide Communities Development Authority, and the intended use is for bond underwriting purposes. The appraised property comprises Lot 1 within Phase 1 of the Uptown Newport project. The appraised property herein encompasses 158 condominium units and 3,000 square feet of commercial space. The Uptown Newport project site is located on Jamboree Road and bounded by Birch Street and MacArthur Boulevard in downtown Newport Beach, Orange County, California, within the Newport Beach city limits. A more detailed legal and physical description of the subject property is contained within the attached report. The appraised property comprises the taxable portion of the proposed California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) No. 2018-03 for the Uptown Newport project. In addition to the appraised property, CSCDA CFD No. 2018-03 Mr. James Hamill Mr. Jon Penkower California Statewide Communities Development Authority February 5, 2019 Page 2 (Newport Uptown) also contains a 0.635-acre parcel (identified as Lot 2) and one public/quasi-public parcel, which are not a part of this appraisal. To report the assignment results, we use the Appraisal Report option of Standards Rule 2- 2(a) of USPAP. As USPAP gives appraisers the flexibility to vary the level of information in an Appraisal Report depending on the intended use and intended users of the appraisal, we adhere to the Integra Realty Resources internal standards for an Appraisal Report — Standard Format. This format summarizes the information analyzed, the appraisal methods employed, and the reasoning that supports the analyses, opinions, and conclusions. The appraisal report has been conducted in accordance with appraisal standards and guidelines found in the Uniform Standards of Professional Appraisal Practice (USPAP) and the Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (2004). This document is an Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the 2018-2019 edition of USPAP. Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of value of the appraised property, in bulk, subject to the hypothetical condition all public capital facilities and improvements to be financed by the CFD Special Tax have been completed, as well as the Assessed Value of Lot 2 not appraised, is as follows: Value Conclusions Appraisal Premise Market Value of Lot 1, As If Public Capital Facilities and Improvements Have Been Completed Assessed Value of Lot 2 Total Aggregate Value of Appraised and Assessed Properties in the District Interest Appraised Date of Value Value Conclusion Fee Simple December 22, 2018 $49,500,000 S1,721.636 $51,221,636 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. None The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. We have been requested to provide the market value of the fee simple interest in the appraised property, subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. irr- Mr. James Hamill Mr. Jon Penkower California Statewide Communities Development Authority February 5, 2019 Page 3 Any properties within CFD No. 2018-03 Phase 1 not subject to the Lien of the Special Tax securing the Bonds (for -rent multi -family, public and quasi -public land use sites) are not a part of this appraisal. The opinions of value expressed in this report are based on estimates and forecasts that are prospective in nature and subject to considerable risk and uncertainty. Events may occur that could cause the performance of the property to differ materially from our estimates, such as changes in the economy, interest rates, capitalization rates, financial strength of tenants, and behavior of investors, lenders, and consumers. Additionally, our opinions and forecasts are based partly on data obtained from interviews and third party sources, which are not always completely reliable. Although we are of the opinion that our findings are reasonable based on available evidence, we are not responsible for the effects of future occurrences that cannot reasonably be foreseen at this time. If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service. Respectfully submitted, INTEGRA REALTY RESOURCES - SACRAMENTO Eric Segal, MAI Certified General Real Estate Appraiser California Certificate # AG026558 Telephone: 916-435-3883, ext. 228 Email: esegal@irr.com Sara Gilbertson Certified General Real Estate Appraiser California Certificate # 3002204 Telephone: 916-435-3883, ext. 248 Email: sgilbertson@irr.com irr- Table of Contents Summary of Salient Facts and Conclusions General Information Identification of Subject Sale History Purpose of the Appraisal Definition of Market Value Definition of Property Rights Appraised Intended Use and User Applicable Requirements Report Format Prior Services Scope of Work Economic Analysis Area Analysis — Orange County Area Map Surrounding Area Analysis Residential Market Analysis Retail Market Analysis Property Analysis Land Description and Analysis 9 9 14 14 18 33 37 37 1 Highest and Best Use 50 2 Valuation 52 4 Valuation Methodology 52 5 Land Residual Analysis 54 5 Adjustment Factors 56 5 Sales Comparison Approach 68 5 Adjustment Factors 71 6 Analysis and Adjustment of Sales 72 6 Land Value Conclusion — Sales Comparison 6 Approach 74 6 Reconciliation and Conclusion of Land Value 75 6 Exposure Time 76 Marketing Time 76 Certification 77 Assumptions and Limiting Conditions 79 Addenda A. Appraiser Qualifications B. Definitions C. Preliminary Title Report Uptown Newport (Phase 1) irr. Summary of Salient Facts and Conclusions 1 Summary of Salient Facts and Conclusions Property Name Uptown Newport (Phase 1) Address 4311-4321 Jamboree Rd. Newport Beach, Orange County, California 92660 Property Type Land - Multifamily Owner of Record TSG - Parcel 1, LLC, a Delaware limited liability company, and Uptown Newport Ja mboree, LLC, a Delaware limited liability company (collectively, the "Developer") Tax ID 445-134-17 (Lot 1), 445-134-29 (Lot 2) and 445-134-22 (Remainder) Land Area Zoning Designation Highest and Best Use Exposure Time; Marketing Period Date of the Report 3.248 acres; 141,483 SF PC-58, Planned Community (Uptown Newport), Uptown Newport Planned Community Development Mixed -use (residential with commercial) 12 months; 12 months February 5, 2019 Value Conclusions Appraisal Premise Interest Appraised Date of Value Value Conclusion Market Value of Lot 1, As If Public Capital Facilities and Improvements Have Been Completed Assessed Value of Lot 2 Total Aggregate Value of Appraised and Assessed Properties in the District Fee Simple December 22, 2018 $49,500,000 51,721,636 $51,221,636 The values reported above are subjecttothe definitions, assumptions, and limiting conditions set forth in the accompanying report of which this summary is a part. No party other than California Statewide Communities Development Authority and the associated finance team may use or rely on the information, opinions, and conclusions contained in the report. It is assumed that the users of the report have read the entire report, including all of the definitions, assumptions, and limiting conditions contained therein. Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. None The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. We have been requested to provide the market value of the fee simple interest in the appraised property, subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. irr. Uptown Newport (Phase 1) General Information 2 General Information Project History The Uptown Newport Planned Community Development Plan is located within the City of Newport Beach Airport Area, encompassing a 25-acre project site with access provided by Jamboree Road, Birch Street, Von Karman Avenue, and MacArthur Boulevard. The Uptown Newport project is located in close proximity to the 405, 73 and 55 Freeways via MacArthur Boulevard and Jamboree Road. Uptown Newport is located near regional open space areas, including Upper Newport Bay, Mason Regional Park in Irvine and the San Joaquin Freshwater Marsh. It is also located near the University of California - Irvine (UCI) with immediate adjacency to the UCI North Campus, which is located opposite the Uptown Newport project on Jamboree Road. The Uptown Newport project site was originally developed as part of the Koll Center Newport, and has been used for manufacturing telecommunications equipment and computer chips since the 1970's. The City's General Plan calls for infill development and redevelopment of the Airport Business Area. In September of 2010, the City approved the Integrated Conceptual Development Plan (ICDP) to provide a framework for residential development on both the Koll Center Newport and Uptown Newport properties. The ICDP allocated 1,244 residential units and up to 11,500 square feet of retail to be developed on the Uptown Newport property and up to 260 residential units to be developed on the Koll property. The Uptown Newport Planned Community Development Plan provides the regulatory framework for redevelopment of the Subject Property into a high -density mixed use residential project. Uptown Newport (Phase 1) General Information 3 - till. 4, 1111. � lb'# KOLL CENTER • j 1- '.3, l f ,ti0'I NEWPORT I W 't- LAI(E I r �1 �Peilop....‘ I 2 ¢ KOL1,. CENTER! . � +�� , i` 1 m NEWPQRT * ti _ #I ■ t "i EXISTINi ACCESS ' KOLL CENTER NEWPORT yS,Id ....4311 JAMBOREE RD -. 4321 JAMBOREE RI da— - * ::.JAMBOREE ROAD'.* ISTING SIAALIZED EXISTING ACCESS ACCESS 1 UNIVERSITY OF CALIFORNIA IRVINE"NORTH CAMPUS" SITE BOUNDARY SCALE:1"=400' 0 200' 400' (Source: Uptown Newport Planned Community Development Plan 2-14-13, Figure 1-3: Aerial photo of the Uptown Newport Project site) The Uptown Newport project will be developed in two primary phases. Phase 1, which encompasses a portion of the appraised property, will include demolition of the existing single -story office building at 4311 Jamboree Road and development of the westerly portion of the property, including the frontage along Jamboree Road. Phase 1 development includes 680 residential units (attached single- and multi- family) and 11,500 square feet of retail. The TowerJazz semiconductor facility is an existing semiconductor chip manufacturing facility that operates on the Uptown Newport property. The operation of TowerJazz may continue as an interim use. In accordance with the Uptown Newport Planned Community Development Plan, interim light irr Uptown Newport (Phase 1) General Information 4 industrial uses shall cease to be an allowed use after March 12, 2027. Phase 2 will include demolition of the TowerJazz building and development of approximately 564 residential units on the easterly portion of the property. JAUBORFF ROAD Figure 1-1: Phasing Diagram Phase 1 Phaso2 Total Number of Units: 68D 564 1,244 Developable Area Oa 8-74 9-72 18.46 ParkArea (ac): 1.03 1.02 2.05 Retail (sr): 1 1.303 0 11,500 Right of WayAr a {ack >329 1_3D 4,54 Total Area (ad: 13_01 12.04 25.05 (Source: Uptown Newport Planned Community Development Plan 2-14-13) ,5O ?OD Identification of Subject The appraised property comprises Lot 1 within Phase 1 of the Uptown Newport project. The appraised property herein encompasses 158 condominium units and 3,000 square feet of commercial space. The Uptown Newport project site is located on Jamboree Road and bounded by Birch Street and MacArthur Boulevard in downtown Newport Beach, Orange County, California, within the Newport Beach city limits. A more detailed legal and physical description of the subject property is contained within the attached report. The appraised property comprises the taxable portion of the proposed California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) No. 2018-03 for the Uptown Newport project. In addition to the appraised property, CSCDA CFD No. 2018-03 (Newport Uptown) also contains a 0.635-acre parcel (identified as Lot 2) and one public/quasi-public parcel, which are not a part of this appraisal. A legal description of the property is provided in the preliminary title report, a copy of which is provided in the Addenda. irr. Uptown Newport (Phase 1) General Information 5 Property Identification Property Name Tax ID Owner of Record Uptown Newport (Phase 1) Newport Beach, California 92660 445-134-17 (Lot 1), 445-134-29 (Lot 2) and 445-134-22 (Remainder) TSG - Parcel 1, LLC, a Delaware Iimited IiabiIity company, and Uptown Newport Jamboree, LLC, a Delaware limited liability company (collectively, the "Developer") Sale History To the best of our knowledge, no sale or transfer of ownership has taken place within a three-year period prior to the effective appraisal date. Purpose of the Appraisal The purpose of the appraisal is to develop an opinion of the market value of lot 1, as if public capital facilities and improvements have been completed, subject to a hypothetical condition, of the fee simple interest in the property in bulk as of the effective date of the appraisal, December 22, 2018. The date of the report is February 5, 2019. The appraisal is valid only as of the stated effective date or dates. Definition of Market Value Market value 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 and 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: • Buyer and seller are typically motivated; • Both parties are well informed or well advised, and acting in what they consider their own best interests; • A reasonable time is allowed for exposure in the open market; • Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and • 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." (Source: Code of Federal Regulations, Title 12, Chapter 1, Part 34.42(g]; also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472) Definition of Property Rights Appraised Fee simple estate is defined 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." irr. Uptown Newport (Phase 1) General Information 6 (Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015)) Intended Use and User The intended use of the appraisal is for bond underwriting purposes. The client is California Statewide Communities Development Authority. The intended users are California Statewide Communities Development Authority and the associated finance team. The appraisal is not intended for any other use or user. No party or parties other than California Statewide Communities Development Authority and the associated finance team may use or rely on the information, opinions, and conclusions contained in this report. Applicable Requirements This appraisal is intended to conform to the requirements of the following: • Uniform Standards of Professional Appraisal Practice (USPAP); • Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute; • Applicable state appraisal regulations; • Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (2004); • Interagency Appraisal and Evaluation Guidelines issued December 10, 2010. Report Format This report is prepared under the Appraisal Report option of Standards Rule 2-2(a) of USPAP. As USPAP gives appraisers the flexibility to vary the level of information in an Appraisal Report depending on the intended use and intended users of the appraisal, we adhere to the Integra Realty Resources internal standards for an Appraisal Report — Standard Format. This format summarizes the information analyzed, the appraisal methods employed, and the reasoning that supports the analyses, opinions, and conclusions. Prior Services USPAP requires appraisers to disclose to the client any other services they have provided in connection with the subject property in the prior three years, including valuation, consulting, property management, brokerage, or any other services. We have not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. Scope of Work To determine the appropriate scope of work for the assignment, we considered the intended use of the appraisal, the needs of the user, the complexity of the property, and other pertinent factors. Our concluded scope of work is described below. irr. Uptown Newport (Phase 1) General Information 7 Valuation Methodology This Appraisal Report has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). This analysis is intended to be an "appraisal assignment," as defined by USPAP; the intention is the appraisal service be performed in such a manner that the result of the analysis, opinions, or conclusion be that of a disinterested third party. Several legal and physical aspects of the appraised properties were researched and documented. A physical inspection of the property was completed and serves as the basis for the site description contained in this report. Zoning and entitlement information was collected from the City of Newport Beach Planning Department. The subject's earthquake zones, flood zones and utilities were obtained from the respective agencies, and property tax information was obtained from the Orange County Assessor's Office on-line resources. Data relating to the subject's neighborhood and surrounding market area were analyzed and documented. This information was obtained through personal inspections of portions of the neighborhood and market area; newspaper articles; real estate conferences; and interviews with various market participants, including property owners, property managers, land brokers, developers and local government agencies. In this appraisal we determined the highest and best use of the subject property as vacant based on the four standard tests (legal permissibility, physical possibility, financial feasibility and maximum productivity). As will be shown in the Highest and Best Use Analysis section, the highest and best use of the subject property as vacant is for near term mixed -use development (in accordance with existing entitlements). We have been requested to provide estimates of market value of the appraised property in bulk, subject to the hypothetical condition various public capital facilities and improvements to be financed by the CFD Special Tax have been completed. Appraisers usually consider the use of three approaches to value when developing a market value opinion for real property. These are the cost approach, sales comparison approach, and income capitalization approach. Use of the approaches in this assignment is summarized as follows: Approaches to Value Approach Applicability to Subject Use in Assignment Cost Approach Applicable Utilized Sales Comparison Approach Applicable Utilized Income Capitalization Approach Applicable Utilized We have been requested to estimate the market value of the fee simple estate of the appraised property, in bulk, comprising the California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) No. 2018-03 (Uptown Newport), subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. In order to estimate the market value of the subject property, two approaches to value were utilized: the sales comparison approach and the land residual analysis, which is a form of discounted cash flow analysis. Uptown Newport (Phase 1) General Information 8 In the land residual analysis, the revenue component of the DCF will be based on the probable market value for the average, proposed residential condominium units and the concluded market value of the commercial condominium unit. A number of assumptions were made in the discounted cash flow analysis, not the least of which was the forecast of absorption, or disposition, of the condominium units comprising the subject property. Any properties within CFD No. 2018-03 Phase 1 not subject to the Lien of the Special Tax securing the Bonds (for -rent multi -family, public and quasi -public land use sites) are not a part of this appraisal. Research and Analysis The type and extent of our research and analysis is detailed in individual sections of the report. This includes the steps we took to verify comparable sales, which are disclosed in the comparable sale profile sheets in the addenda to the report. Although we make an effort to confirm the arms -length nature of each sale with a party to the transaction, it is sometimes necessary to rely on secondary verification from sources deemed reliable. Inspection Eric Segal, MAI, conducted an on -site inspection of the property on December 15, 2018. irr. Uptown Newport (Phase 1) Area Analysis — Orange County 9 Economic Analysis Area Analysis — Orange County Introduction Orange County is located in the southern part of California, bordered by Los Angeles County on the north, San Bernardino and Riverside Counties on the northeast and San Diego County on the southeast and the Pacific Ocean on the southwest. It is the smallest county in Southern California, with an area of 948 square miles, 157 square miles of which is water. The Santa Ana River roughly bisects the county into a northwestern and southeastern portion. The southeastern, inland part of the county has higher elevations in the foothills of the Santa Ana Mountains, the topography transitions to lower coastal land in the northwestern part of the county. Most of the population in the county is concentrated within two coastal valleys — the Santa Ana Valley and Saddleback Valley — that lie in the basin. The northern and central portions of the county are more urbanized with dense development, while the southern portion is suburban in nature, with lower density development. The Santa Ana Valley is home to most of the business districts in the county, with Anaheim, Buena Park, Costa Mesa, Fullerton, Irvine, Orange, Placentia, Santa Ana and Yorba Linda among the larger cities located there. Several cities within the county are located on the Pacific Coast: Huntington Beach, Newport Beach, Laguna Beach, Dana Point and San Clemente. In total, there are 34 incorporated towns and cities in the county. Population The county has a population of over 3.2 million and has grown at a moderate rate of 0.8% per year for the past five years. The following table illustrates recent population trends for areas within Orange County over the past several years. irr. Uptown Newport (Phase 1) Area Analysis - Orange County 10 Population Trends City 2013 2014 2015 2016 2017 2018 %/Yr Aliso Viejo 49,812 50,142 50,281 50,335 50,384 51,950 0.9% Anaheim 349,827 351,345 353,211 354,167 356,502 357,084 0.4% Brea 41,826 42,846 43,802 44,175 44,776 44,890 1.5% Buena Park 82,485 82,646 82,869 82,950 83,926 83,995 0.4% Costa Mesa 112,899 113,161 114,423 114,825 115,012 115,296 0.4% Cypress 48,893 49,104 49,347 49,546 49,704 49,978 0.4% Dana Point 33,581 33,595 33,656 33,768 33,897 34,071 0.3% Fountain Valley 56,350 56,683 56,773 56,815 56,916 56,920 0.2% Fullerton 139,364 140,808 141,438 142,406 143,499 144,214 0.7% Garden Grove 174,680 175,302 176,318 176,955 176,784 176,896 0.3% Huntington Beach 194,769 196,546 198,243 200,501 201,981 202,648 0.8% Irvine 232,910 243,906 251,181 256,926 267,097 276,176 3.7% Laguna Beach 23,016 23,040 23,097 23,137 23,248 23,309 0.3% Laguna Hills 30,818 30,872 30,915 30,935 31,829 31,818 0.6% Laguna Niguel 63,545 63,638 63,804 63,850 65,288 65,377 0.6% Laguna Woods 16,468 16,483 16,504 16,513 16,575 16,597 0.2% La Habra 61,597 61,968 62,184 62,270 62,451 62,850 0.4% Lake Forest 78,693 78,911 79,432 81,903 83,414 84,845 1.6% La Palma 15,851 15,874 15,896 15,907 15,933 15,948 0.1% Los Alamitos 11,711 11,782 11,811 11,846 11,860 11,863 0.3% Mission Viejo 94,202 94,433 94,985 95,510 95,985 95,987 0.4% Newport Beach 85,709 85,738 85,815 85,782 86,207 87,182 0.3% Orange 140,118 140,301 140,670 140,792 140,981 141,952 0.3% Placentia 52,179 52,278 52,483 52,709 52,772 52,755 0.2% Rancho Santa Margari 48,884 49,025 49,205 49,258 49,301 49,329 0.2% San Clemente 64,160 64,179 64,468 64,547 65,009 65,543 0.4% San Juan Capistrano 35,536 36,010 36,240 36,412 36,624 36,759 0.7% Santa Ana 333,558 335,441 337,180 337,373 337,843 338,247 0.3% Seal Beach 25,406 25,528 25,909 25,938 25,959 25,984 0.5% Stanton 38,997 39,079 39,233 39,378 39,500 39,470 0.2% Tustin 78,542 78,695 79,975 81,484 82,291 82,344 1.0% Villa Park 5,893 5,905 5,913 5,920 5,944 5,951 0.2% Westminster 92,297 92,653 93,431 93,991 94,353 94,476 0.5% Yorba Linda 66,416 67,126 67,528 67,858 68,781 69,121 0.8% Unincorporated 121,160 121,875 124,094 125,540 126,342 129,278 1.3% Total 3,102,152 3,126,918 3,152,314 3,172,222 3,198,968 3,221,103 0.8% Source: California Department of Finance Orange County is the third most populous county in California, following Los Angeles and San Diego Counties. The majority of residents live within incorporated areas, the largest of which is the city of Anaheim, with a population of just over 357,000. Santa Ana is the second most populous and is also the county seat. The seven largest cities, ranging in population from 141,952 to 357,084, make up over 50% of the total county population. Employment & Economy The California Employment Development Department has reported the following employment data for Orange County over the past few years. Uptown Newport (Phase 1) Area Analysis — Orange County 11 Employment Trends 2012 2013 2014 2015 2016 2017 Labor Force 1,562,100 1,565,300 1,572,700 1,588,800 1,602,500 1,618,800 Employment 1,439,300 1,462,300 1,486,400 1,517,800 1,537,700 1,562,200 Job Growth 32,900 23,000 24,100 31,400 19,900 24,500 Unemployment Rate 7.9% 6.6% 5.5% 4.5% 4.0% 3.5% Source: California Employment Development Department The unemployment rate in Orange County was 2.9% in October 2018, which is lower than California and the U.S., with 4.0% and 3.5% rates, respectively. Most areas within the state and nation, including Orange County, saw declining unemployment rates from 2004 through 2006, increases from 2007 to 2010, and declines from 2011-2017. The following chart indicates the percentage of total employment for each sector within the county as of October 2018. EMPLOYMENT BY SECTOR Professional/Business Services Trade/Transportation/Utilities Educational/Health Services Leisure/Hospitality Government Manufacturing Financial Activities Construction/Mining/Logging Other Services Information Agriculture 0.0% 2.0% 4.0% 6.0% 8.0% 10 0% 12.0% 14.0% 16 0% 18.0% 20.0% Source: California Employment Development Department Orange County has a diverse economy, with the majority of its employment distributed among several sectors of industry, as opposed to one or two key sectors. As illustrated in the chart above, the region's largest employment sectors are Professional and Business Services; Trade/Transportation/ Utilities; Educational and Health Services; and Leisure and Hospitality. The county is home to several Fortune 500 and Fortune 1000 companies, as well as start-up companies and notable technology companies, such as Gateway Inc., Linksys, Blizzard Entertainment irr. Uptown Newport (Phase 1) Area Analysis — Orange County 12 and Panasonic Avionics Corporation. Regional headquarters of several international companies, such as Mazda, Toshiba, Toyota, Samsung, Mitsubishi, Hyundai and others, are also located in the county, as are headquarters for several fashion brands (Oakley, Inc., Hurley International, St. John's) and restaurants (In-N-Out Burger, Marie Callendar's, Claim Jumper, Taco Bell, El Pollo Loco and Wienerschnitzel). The region's largest employers are listed in the following table. Largest Employers Employer Industry Employees 1 Walt Disney Co. Leisure / Hospitality 29,000 2 University of California, Irvine Education 23,605 3 County of Orange Government 18,264 4 St. Joseph Health System Healthcare 11,925 5 Allied Universal Security Services 8,229 6 Kaiser Permanente Healthcare 7,694 7 Boeing Co. Manufacturing 6,103 8 Walmart Retail 6,000 9 California State University Fullerton Education 5,781 10 Bank of America Corp. Financial 5,500 Source: County of Orange, Comprehensive Annual Financial Report, June 30, 2017 Household Income Median household income represents a broad statistical measure of well-being or standard of living in a community. The median income level divides households into two equal segments with one half of households earning less than the median and the other half earning more. The median income is considered to be a better indicator than the average household income as it is not dramatically affected by unusually high or low values. In the year 2016 (most recent data available from the U.S. Census Bureau), Orange County's median household income was $78,145, which was higher than the state of California's median income of $63,783. Transportation Access to and through Orange County is provided by several routes, including three major interstates and several state routes and connector highways. The Santa Ana Freeway (Interstate 5) is one the primary north -south transportation routes in Southern California, connecting all of California, Oregon and Washington to Los Angeles, and Los Angeles to suburbs southeast, terminating in San Diego. It connects to several state highways, including State Route 91, State Route 22, and State Route 55. It also connects with Interstate 405, known as the San Diego Freeway, another primary route through the region, providing access from San Fernando north of Los Angeles, continuing south through Inglewood west of Los Angeles, through Torrance, Fountain Valley and Irvine, where it terminates at the 1-5 junction. Several major east -west freeways provide access to neighboring counties in Southern California. State Route 91, known as the Riverside Freeway, runs from Gardena in Los Angeles County to Riverside county to the east. State Route 22 runs between Long Beach and Orange, through Garden Grove. irr. Uptown Newport (Phase 1) Area Analysis — Orange County 13 State Route 55, also known as the Costa Mesa Freeway, runs from the coast in Newport Beach to Anaheim, where it terminates at State Route 91. Several smaller highways connect to these primary routes to provide ground transportation throughout the county. Public transportation is provided primarily by the Orange County Transportation Authority (OCTA), which manages the county's bus network, maintains local streets and freeways, regulates taxicab services; and manages express toll lanes on State Route 91. The OCTA also collaborates with Southern California's Metrolink to provide commuter rail service via the Orange County Line, the 91 Line and the Inland Empire -Orange County Line. The county has one major airport — the John Wayne Airport, with 14 airlines servicing over 9 million passengers annually. The next closest airports are Los Angeles International Airport approximately 42 miles northwest; Ontario Airport approximately 43 miles northeast; and Hollywood Burbank Airport approximately 54 miles northwest. Recreation & Culture Orange County offers innumerable recreational and cultural opportunities, including world renowned Disneyland, Knotts Berry Farm, beaches, biking paths and hiking trails, golf courses, shopping and dining. Disneyland is ranked as the second most visited theme park in the world and Knotts Berry Farm receives roughly seven million visitors per year. The year-round, mild climate attracts millions of tourists annually, with 40 miles of coastline home to several beaches popular for surfing and sunbathing. Anaheim is home to the largest convention center on the West Coast with major conventions held throughout the year. Several significant shopping malls are located in Orange County, including South Coast Plaza, the largest mall in California and the third largest in the U.S.; Fashion Island, an open-air mall, in Newport Beach; and the Irvine Spectrum Center, an outdoor shopping and entertainment center. There are several historical points of interest in the county, including Mission San Juan Capistrano and the Richard Nixon Presidential Library and Museum, as well as other notable structures/venues, such as Crystal Cathedral and Angel Stadium. Over 28 school districts provide elementary, middle and high school education in the county. Orange County has many higher education institutions ranging from two-year community colleges to private and public universities, including Chapman University, Concordia University, Hope international University, Trinity Law School, Vanguard University, California State University Fullerton, and University of California Irvine. Conclusion Orange County, one of the largest counties in the state, is located in the southern portion of California, with extensive transportation routes; diverse employment opportunities; numerous colleges and universities; and recreational activities ranging from world famous amusement parks, popular beaches, an abundance of shopping centers and dining establishments, and outdoor hiking and biking trails. After a period of contraction in the economy and real estate markets around 2008- 2010, the region has seen improvement in employment and economic conditions over the past few years. The near -term outlook is for sustained growth. Uptown Newport (Phase 1) Area Map 14 Area Map Simi Vallet, Thousand C-:!ks Agoura His Ja Mourn Sgn illn Anhlog...trt Wilson Antonio . .0.064 fr ?,,,,,..... SQ17 Bernardino Pia[Tonal Glerlda[e Arcadld ia Genora /7 _ :•:. Highland West Haywood lea AI:Ian-13'a Baldwin P.arli. 2".10j—IAPIalici Enna Sart Bernardino LOs Angeles El Monte West,COvi 6-2-76ntliira -1 0.• Colton Redlands Santa Mar ica riorencMontebello .. Ponic...,n- a-- —Rubicipux Lorna Linda •yr.lcai.pa e . C,•la ",•=2 Ghino YThittier Riv :side ingiewooci Bell ... Hawthorne ..=■—i..- Norwalk Yorba Linda Cl-den :pillrtc?1CIZ..,:!"Fullertpre Torrance Larson ;ific Ocean bing Long Rancho Palos Verdes Beach 6e?Orit G:izat.c Newport Beach Laguna Niguel Garden Grine Santa Ana 1 Norco Cleveand !Van ol Forest s,,ntkig.,0 ak Huntins.Ron Beach Costa Mesa Mission Viejo I NI Dana Point daN5,46 [Iey Perri Sae 5 Lake EISite Murrieta Ns Tern4ula San Clemente Cone Fa Ilbrciok Penthetun Fob] Mar..neLJ prp5 OUSE rosof Corparal kap 20/8 HERE irr. Uptown Newport (Phase 1) Surrounding Area Analysis 15 Surrounding Area Analysis Location The subject is located in the northern portion of the city of Newport Beach, on the border of the city of Irvine. It is located south of John Wayne Airport and north of the University of California, Irvine campus. Specifically, the subject site is situated along the north side of Jamboree Road, between MacArthur Boulevard and Campus Drive, east of Bristol Street and State Route 73 and west of Interstate 405. Access and Linkages The subject site benefits from excellent access near freeways and major thoroughfares. Both Jamboree Road and MacArthur Boulevard are primary thoroughfares in the neighborhood. The two streets intersect southwest of the subject and both extend southwest towards the coast where they terminate at East Coast Highway/Pacific Coast Highway 1. Heading east from the subject site, Jamboree Road extends northeast through Irvine, past Interstate 5 and northbound until it terminates at East Santiago Canyon Road in the City of Tustin. MacArthur Boulevard extends northeast from the subject site along the southern portion of the John Wayne Airport, past Interstate 405 and then it loops westward intersecting State Route 55 and continuing west until the Santa Ana River. The neighborhood has excellent highway access with Interstate 405 and State Route 55 intersecting north of the subject next to the airport. State Route 55 also intersects State Route 73 northwest of the subject. Interstate 405 is a major north -south interstate in southern California which extends from the San Fernando Valley north of the Los Angeles area to Irvine. State Route 55 runs north -south thorough Orange County extending from Pacific Coast Highway in Newport Beach and ending at State Route 91 in Anaheim. State Route 73 begins at its junction with Interstate 405 and extends south through the San Joaquin Hills to its junction with Interstate 5 in San Juan Capistrano. The majority of this highway is a tollway. Public transportation in the neighborhood is provided by Orange County Transit Authority (OCTA). Bus Routes 178, 472, 213 and 59 are located in close proximity to the subject. Route 59 has a stop at Campus Drive and Jamboree Road, less than one mile east of the subject; the nearest stop on Route 213 is at Michelson Drive and Teller Avenue, approximately 1 mile east of the subject; Route 178 has a station approximately one-half mile northwest of the subject at Von Karman Ave and Birch Street. Route 472 is a Metrolink feeder route. The nearest Metrolink station is Tustin Station, located approximately five miles northeast. The nearest airport for commercial air travel is John Wayne Airport located a few streets north of the subject, within a two-mile driving distance. Demand Generators In the subject's immediate area, major employers include University of California, Irvine; John Wayne Airport; South Coast Plaza mall; UCI Health Gottschalk Medical Plaza; as well as Concordia University and Orange Coast College. The Irvine Business Complex, a predominantly office, industrial and commercial corridor, is located northeast of the subject, east of Interstate 405 with concentration of employment centers. irr. Uptown Newport (Phase 1) Surrounding Area Analysis 16 Demographics A demographic profile of the surrounding area, including population, households, and income data, is presented in the following table. Surrounding Area Demographics Los Angeles -Long Orange County, Beach -Anaheim, 2019 Estimates 5-Mile Radius 10-Mile Radius 15-Mile Radius CA CA Metro Population 2010 415,801 1,399,064 2,410,200 3,010,232 12,828,837 Population 2019 450,435 1,507,246 2,578,795 3,222,381 13,478,088 Population 2024 469,273 1,566,276 2,677,705 3,348,192 13,913,534 Compound %Change 2010-2019 0.9% 0.8% 0.8% 0.8% 0.6% Compound %Change 2019-2024 0.8% 0.8% 0.8% 0.8% 0.6% Households 2010 146,789 457,192 785,153 992,781 4,233,985 Households 2019 159,074 495,174 841,667 1,062,951 4,452,770 Households 2024 165,957 515,466 874,737 1,105,004 4,599,698 Compound %Cha nge 2010-2019 0.9% OS% 0.8% 0.8% 0.6% Compound %Cha nge 2019-2024 0.9% 0.8% 0.8% 0.8% 0.7% Median Household Income 2019 $97,413 $87,468 $88,697 $91,094 $72,264 Average Household Sire 2.8 3.0 3.0 3.0 3.0 College Graduate % 49% 40% 38% 39% 33% Median Age 37 38 38 38 37 ❑wner occupied % 48% 53% 57% 59% 50% Renter occupied % 52% 47% 43% 41% 50% Median owner occupied Housing Value $879,347 $741,206 $715,389 $733,175 5650,973 Median Year Structure Built 1978 1976 1976 1976 1968 Avg. Travel Time to Work in Min. 26 28 30 30 33 Source! Environics Analytics As shown above, the current population within a 10-mile radius of the subject is 1,507,246, and the average household size is 3.0. Population in the area has grown since the 2010 census, and this trend is projected to continue over the next five years. Compared to Orange County overall, the population within a 10-mile radius is projected to grow at a similar rate. Median household income is $87,468, which is lower than the household income for Orange County. Residents within a 10-mile radius have a similar level of educational attainment to those of Orange County, while median owner occupied home values are similar. Land Use The most significant uses in the subject's immediate area are the John Wayne Airport and University of California Irvine campus, with a mix of complementary office, retail/commercial and service uses nearby. Adjacent to the subject site is Von Karman Avenue and office uses to the north, as well as to the west and northwest; and Courthouse Plaza and retail/restaurant to the east. The office uses are part of the Koll Center Newport — a mixed -use office park extending from the northwest corner of MacArthur Boulevard and Jamboree Road to the southeast corner of Campus Drive and MacArthur Boulevard and back to Jamboree Road. To the south of the subject site is the University of California Irvine — North Campus, including the UC Irvine Arboretum. irr. Uptown Newport (Phase 1) Surrounding Area Analysis 17 Uses along the west line of MacArthur Boulevard and Birch Street, Bristol Avenue and Campus Avenue are predominantly retail and neighborhood service uses, including restaurants, banks and financial services, car dealerships, fitness studios and salons. Uses to the east of MacArthur Boulevard are predominantly office uses with several high-rise buildings. The Harbor Justice Center Newport Beach is located at the northeast corner of Birch Street and Jamboree Road, The Irvine Museum is located along the north side of Von Karman Ave, east of Campus Drive. To the east of Campus Drive are also several apartment projects: Carlyle Apartments and the Metropolitan near MacArthur Boulevard; and Toscana Apartments, Watermarke, Avenue One and Villa Sienna Apartment Homes at the southeast quadrant of Campus Avenue and Jamboree Road. The John Wayne Airport is located along the north line of MacArthur Boulevard with direct access from Interstate 405. The airport terminal houses 14 airline carriers and a number of car rental companies. Uses to the north of the airport and south of State Route 55 are varied commercial and office uses. To the east of Interstate 405 is Main Street and the Irvine business district. The San Diego Creek is located south of the subject, parallel to Jamboree Road. Along the north side of the Creek is the San Joaquin Marsh and Wildlife Sanctuary Reserve, which protects some of the last remaining wetlands that once covered Orange County. The reserve supports a variety of habitats, provides a stopping place for migratory birds and serves as a field study site for university students. It is an area bordered by Carlson Ave on the northwest, Michelson Drive on the north, Riparian View on the east and southeast and Campus Drive on the west. It features 11 ponds, an urban forest, the Michelson Wastewater Treatment Plant and various walking trails. To the south of the San Diego Creek is the University of California Irvine campus. The campus encompasses 1,527 acres. The core of the campus resembles a circle with Aldrich Park at the center and a main road encircling the park. Most schools and libraries are located along this road and it is the primary pedestrian road for students and faculty. Northeast of the UC Irvine campus are the Rancho San Joaquin and University Park neighborhoods, which include single family homes, apartments and the Rancho San Joaquin Golf Course. There are several parks in the subject's neighborhood, including the William R. Mason Regional Park, the Crawford Field and Athletics Complex, Aldrich Park within the UC Irvine campus and Stanford Park. The Newport Beach Golf Course is located west of State Route 73 along Irvine Avenue and the Santa Ana Country Club is situated at the southeast corner of Newport Boulevard and Bristol Street. The nearest hospitals are UCI Health Gottschalk Medical Plaza within the University of California Irvine campus and College Hospital Costa Mesa, approximately six miles east of the subject along State Route 55. Outlook and Conclusions The area is in a redevelopment stage of its life cycle. We anticipate that property values will remain stable in the near future. irr. Uptown Newport (Phase 1) Residential Market Analysis 18 Surrounding Area Map FoCic twin Valley lams A4C ltlanta Ave L bing VJELAGL 7J77r5TOL WARNER MEFRO C'L,45SJC Aosdiopt � r m ti�J Anil ms A5+2 p = Costa Mesa `,�� • sn^I 1:;A,QU1N MARSH � s'ty far Victoria St S 1 TA .N i Ht'1frrs Ge� Sy Placentia F\Yr • Dyer Surma Ano SS - Marine x @, C Stratio rr Station raH• Cliff Raven Newport Beach Lido is it E Coo_ r77buoy �sdarld Irvine 2a WOO RSRrOSE :iRTLf ROCK Li ru.4TLF RIDGE S,o San Joaquin Hills Corona del Mar Laguna CGQsf Wr7derness Park NOR F7f WOOD F07NY Kathryn (Taj FAS r IRVJNE Rfi€AR• 4 020n Mir rasaft Carrorafon 2658 HERE Uptown Newport (Phase 1) Residential Market Analysis 19 Residential Market Analysis The subject property is located in the city of Newport Beach, just west of the city of Irvine, approximately five miles northeast of the Newport Beach Yacht Club. There are two projects currently available in Newport Beach (one attached and one detached). Due to the limited number of active projects in the Newport Beach area, as well as the subject's location adjacent to the City of Irvine, we have also included Irvine in our survey. Currently, there are 63 active projects in Irvine, of which 12 are attached projects and 51 detached. Home price points at active attached projects will be described from available projects in an effort to characterize the current status of the residential sector in general. We will begin with a County -wide perspective on incentives and pricing at new home projects; then we will shift to a localized perspective of the subject property and surrounding area. It is important to note price points are highest for those areas located closest to the coast. This also holds true for Orange County as a whole as well; price points are significantly higher the more proximate to coastal areas in comparison to those inland. Thus, while this market overview begins with the analysis of Orange County as a whole (macro overview), the market overview for the subject's location included the inland area of Newport Beach, proximate to Irvine. Single -Family Building Permits Single-family building permits for the cities of Newport Beach and Irvine, as well as Orange County are shown in the following table. Building Permits: Single -Family Year City of Newport Beach City of Irvine Orange County 2008 90 125 1,330 2009 62 188 1,341 2010 58 641 1,624 2011 64 857 1,822 2012 75 943 2271 2013 83 1,608 3,670 2014 84 1,564 3,714 2015 99 1,333 3,809 2016 108 1,461 4,357 2017 119 1,715 4,904 2018* 113 1,687 3,611 • Preliminary data for 2018 through October Future Development According to the City of Newport Beach Planning Division, a summary of the residential development activity with the city is provided on the following pages. irr. Uptown Newport (Phase 1) Residential Market Analysis 20 Newport Crossing Mixed -Use Newport Crossing Mixed -Use is a proposed project consisting of 50 residential dwelling units, 2,000 square feet of 'casual -dining' restaurant space, 5,500 square feet of commercial space, and a 0.5-acre public park will replace the existing MacArthur Square shopping center. A six -story parking structure (one level subterranean and five levels above ground) is proposed in the center of the site and will be surrounded and screened from public views by the residential and commercial buildings on all sides. The project would provide a total of 740 parking stalls for its residential and retail uses. This project is located in the airport area, like the subject, about a half mile from John Wayne Airport. The site is generally bounded by Corinthian Way to the northeast, Martingale Way to the east, Scott Drive to the northwest, and Dove Street to the southwest. Koll Center Residences The Koll Center Residences is located in Koll Center Newport, at 4400 Von Karman Avenue. The site is approximately 13.16 acres and is currently developed with surface parking lots and common landscape areas for Koll Center Newport. The irregularly -shaped site is generally bordered by Birch Street to the northeast, Von Karman Avenue to the west, and existing office uses and associated surface parking lots and garages to the east and south. The proposed project is a mixed -use infill development that includes 260 residential condominiums; 3,000 square feet of ground -floor retail uses, a 1.17-acre public park; a freestanding parking structure; lighting, landscaping, and pedestrian improvements; utility improvements; and the reconfiguration of existing surface parking. The 260 condominium dwelling units would be in three, 13-story buildings with a maximum building height of 160 feet. The buildings would have two levels of above - grade and two to three levels of below -grade structured parking. The public park would be located adjacent to Birch Street. Implementation of the project would require the demolition of existing surface parking and landscaping within the project site. Residential parking would be provided on site in the residential building parking structures. Parking for the public park and retail uses would be provided on site within reconfigured surface parking areas Office parking removed during construction of the project would be provided in a new free-standing parking structure, within one of the proposed residential buildings, and in reconfigured surface parking areas. There are three office buildings located within the boundaries of the project site; however, two of the office buildings are not a part of the project: 4490 Von Karman Avenue and 4910 Birch Street. The 4440 Von Karman Avenue office building is a part of the project site as the applicant proposes new landscaping, irrigation, sidewalk improvements and the reconfiguration of disabled parking. No change to the existing building is proposed as a part of the project. Uptown Newport (Phase 1) Residential Market Analysis 21 Uptown Newport The proposed Uptown Newport project (a portion of which is appraised herein) is a mixed -use development with up to 1,244 residential units, 11,500 square feet of neighborhood -serving retail space, and two acres of park space to be located at 4311-4321 Jamboree Road. The project will be developed in two phases. It encompasses 20.05 acres and is generally located on the east side of Jamboree Road, with Birch Street to the north, and Von Karman Avenue and MacArthur Boulevard to the west. Uptown Newport Back Bay Landing L Balboa Peninsula Legend NeLfvport ',,„Beach BACK BAY LANDING MIXED -USE PROJECT AREA Newport Bay — Project Area (Parcel 3) Back Bay Landing Mixed -Use Project Area — Existing PC-9 Boundary — Proposed PC-9 Boundary Expansion Upper Newport Bay Qa Back Bay Landing The Back Bay Landing project is a proposed integrated, mixed -use waterfront village on an approximately 7-acre portion of a 31.5 acre parcel located adjacent to the Upper Newport Bay in the City of Newport Beach. The majority of the project site (6.415 acres) is located immediately north of East Coast Highway between Bayside Drive and the Bayside Marina adjacent to the Upper Newport Bay. The balance of the project site (0.642-acres) is located under and immediately south of the East Coast Highway bridge. The proposed project involves land use amendments to provide the legislative framework for future development of the site. Amendments to the General Plan and Coastal Land Use Plan are required to change the land use designations to a Mixed -Use Water -Related designation and a Planned Community Development Plan (PCDP) is proposed to establish appropriate zoning regulations and development standards for the site. The requested approvals will provide for a mix of uses, including recreational and marine commercial retail, marine office, marine services, enclosed dry stack boat storage, and limited mixed- use structures with residential uses above the ground floor, as regulated by the proposed Back Bay Landing PCDP. No development is proposed for the De Anza Bayside Marsh Peninsula nor are any changes proposed to the existing Bayside Village Marina. In addition to the land use amendments, other requested approvals are a Lot Line Adjustment and Traffic Study pursuant to the City's Traffic Phasing Ordinance. irr. Uptown Newport (Phase 1) Residential Market Analysis 22 Newport Village Mixed -Use Project A mixed -use development encompassing approximately 11.05 acres on the north and south sides of West Coast Highway in the Mariner's Mile corridor. The project includes 175 residential units, 240,650 square feet of office, retail, and restaurant uses, and a new 75-boat marina. A new signalized intersection would provide primary access to the project. The design includes a new publicly accessible waterfront promenade and 1,343 parking spaces within two underground parking structures. Buildings above grade are 35 feet in height. All existing structures will demolished and existing uses will be discontinued with project implementation. The project includes approximately 1,000 linear feet of new bulkhead along the bay. V.OVERALL SfIE IiLUSTRAT1VE PLAN (aROUNO, PEIOIUM, AND E ROOROP LEVELS OH MORSN 0.1i0 SOUTH PARCELS) be City of Irvine Notable single-family residential development projects in the city of Irvine are summarized below, followed by a project map (see the identification number with each project summarized for location on the map): 2152-2182 Alton (3) — 357 attached residential units on 10.23 acres proposed by Wong Properties Irvine Gateway (8) — 434 apartments and condominiums on 8 acres developed by FF Realty II, LLC 17811 Gillette (9) — 44 residential units on 2.4 acres proposed by Sand Dollar Gillette, LLC 17822 Gillette (13) — 137 condominiums on 6 acres developed by Gillette Development, LLLC Central Park West (21) - 1,275 condominium unit project developed by Lennar 17821 Gillette (23) — 39 condominiums proposed by MLC Holdings, Inc. 2602 McGaw (25) — 120 condominium units developed by Natura City, LLC Uptown Newport (Phase 1) Residential Market Analysis 23 a i ro.u-o i ruo. n Squa . South Coast Pia Borr Coral Park Sunflower Ave. 9' L. Santa Ana country Club CL • ;44 Course - Anton IL ___. L. j •ImEml ‘--- 0 .1 .4 -o •E in laularinoAve 4,. ,..." .1,, 4' .-;- -k:::- ---.:-,----..-----------7 • IBakeF St , — 7- •?, L.,'t' . 4 ,'S ' . e" 7 h q. rE,N John Wayne / .....c Aim° a -Ora rye , ., . Tr' e Count Dr : 4ill. ,,L..... '6 44,zr...0.-5. ,1-.. N..., 44P Nee . tx',.. • ',..„ 3- / c ., % yt / .... ,/, -.4„... -,, 0- 1 Park rd Insvorl = Under Review Lc) .=. Approved ••••• e ,,,e1' 9 ,:- .../../ ;:,-- ..., „,..- 46 .4. ,..0 1 '0 AP q Col Bill Barter I rvi nglernorial Fnrk a alii V liFF Atx2.74, ir 9 Duck Ponds ,•V ...,:!ni...... i N Kai ra. 1. 1 %. Plan! N.. The,c430 IL: Ll. "- - • — ..-1 I Tustin Nn / '- Am 4c. 5 IRanc Iv! San Cour c, 8 b's t cr, A . vb.,3 University Macon Re. onal Park L1/4.71= Under Construction L1/471 Completed Uptown Newport (Phase 1) 10. Residential Market Analysis 24 New Home Pricing and Sales According to the Gregory Group, a firm that publishes new homes prices and absorption statistics for areas in California and Nevada, there are presently 13 active new home projects (attached only) in Newport Beach and Irvine, with a total of 37 attached active projects throughout Orange County (including Anaheim, Brea, Buena Park, Costa Mesa, Cypress, Dana Point, Irvine, La Habra, Lake Forest, Newport Beach, Orange, Rancho Mission Viejo, San Juan Capistrano and Santa Ana). As previously mentioned, price points are highest for those areas located closest to the coast. Therefore, we will analyze the communities of Newport Beach and Irvine, which presently contain 13 active attached projects. Below we present a table depicting average sale prices for active single-family residential projects in the market area for the past three years. The data includes only attached projects. New Home Sales History (Attached Only) Average %Change Average Home Average %Change Quarter Number of Sold Per Proj. Time Period Price Average Price Size (SF} Price/Avg SF Price/SF Said Projects Per Month 20 2015 $898,354 - 1,741 $516.00 - 116 8 4.83 30 2015 $861,174 -4.1% 1.751 $491.82 -4.7% 141 11 4.27 4Q 2015 $881,542 2.4% 1,775 $496.64 1.096 164 11 4.97 1Q 2016 $658,661 -25.3% 1.636 $402.60 -18.9% 78 8 3.25 2Q 2016 $646,905 -1.8% 1,602 $403.81 0.3% 274 11 8.30 3Q 2016 5651,447 0.796 1,623 $401.38 -0.696 176 11 5.33 40 2016 5668,125 2.6% 1.658 $402.97 0.4% 266 15 5.91 1Q 2017 $686,736 2.8% 1,719 $399.50 -0.9% 198 16 4.13 2Q 2017 5732.967 6.796 1.786 $410.40 2.796 349 20 5.82 30 2017 $749,624 2.3% 1,814 $413.24 0.7% 188 16 3.92 4Q 2017 $756,432 0.996 1,796 5421.18 1.996 141 14 3.36 1Q 2018 $862,081 14.0% 1,809 $476.55 13.1% 164 14 3.90 2Q 2018 $969,001 12.4% 1,847 $524.64 10.196 103 12 2.86 3Q 2018 $885.580 -8.6% 1.818 $487.12 -7.296 76 13 1.95 As previously discussed, there are presently 13 active new home projects (attached only) in Newport Beach and Irvine, of which only one is located in Newport Beach and is located on the Balboa Peninsula, closest to the coast. This project is discussed in more detail in the next section. However, the survey period above predominantly consists of active attached projects in Irvine, as opposed to Newport Beach. Thus, providing a deflated average sales price for active projects when comparing to the subject's market area (i.e., inland Newport Beach location). In terms of the number of home sales, there have been ups and downs from quarter to quarter. There were 1.95 sales per project per month in the Third Quarter of 2018, which was down from 2.86 in the previous quarter and from a year earlier (3.92 sales per project per month). Absorption rates (homes sold per project per month) have fluctuated, but have generally stayed within the range of 3.0 to 6.0 sales per project per month. Over the last 12 months (through the Third Quarter of 2018), the average was 3.02 sales per project per month. Over the last three years, the number of home sales has averaged 4.49 per project per month. Active New Home Projects Pricing and Absorption As previously mentioned, there are 13 active attached projects in Newport Beach and Irvine. These projects are summarized in the following table, based on data from the Third Quarter of 2018. irr. Uptown Newport (Phase 1) Residential Market Analysis 25 Active Attached Projects Avg. Home Avgerage Units Units Units Units Project Master Plan Comnwnity Developer Average Price Size (SF) Price/SF Planned Offered Sold Unsold Aldea Trevate Irvine Lennar Homes $716,990 1,588 $451.51 105 24 9 15 Brise Portola Springs Irvine California Pacific Homes $708.903 1,448 5489.57 124 44 29 15 C2E — Irvine Intracorp Companies $802,440 1.648 5485.92 71 30 30 0 Celadon Parasol Park Irvine William Lyon Homes 5757.490 2,193 5345.41 79 79 79 0 Chorus Cadence Park Irvine Lennar Homes $826,490 2,260 $365.70 56 20 14 6 Delano Eastwood ViI[age Irvine Brookfield Residential 5913.333 1,721 5530.70 129 120 111 9 Indigo Portola springs Irvine California Pacific Homes 5735,875 1,577 5466.63 171 171 170 1 Rockefeller Central Park West Irvine Lennar Homes $1,500,990 2,545 5589.78 22 18 18 0 Sterling Parasol Park Irvine TriPointe Homes S697,400 1,763 5395.58 96 96 95 1 Tri beta Central Park West Irvine Lennar Homes $853,323 1,718 $496.70 120 66 61 5 Tristania Cypress Village Irvine California Pacific Homes 5859.709 1,770 5485.71 150 94 80 14 Windchime Parasol Park Irvine Lennar Homes $828,740 1.918 $432.09 118 118 114 4 Vue — Newport Beach Third Pain, Capital $2,300,000 2.149 $1,070.27 27 27 12 15 Minimum 5697,400 1,448 $345.41 Maximum $2,302,000 2,545 $1,070.27 Average 5951,668 1,869 5508.20 6o4 :4 rxpsaewo uyd.M c.M1 wu.eec n=4 ,ti 9 eDunw coa.r .,/ COSICO nw.Fa.Q j •t • ` / ° °I F T A D" ,,.,fir .eG ... saw,Gr.rrinFaQ o f CI el IV 'c •'-'.. la F `\• vawry 6{ 99 Q 3 Jon^ Wet, wr sy Irvine +.wc" i' '^n,� Vue nr. , .n. ••? Q waooteicer • Q i c¢ z` r r me ar•n.e.Q F "r" Pd�0 Tribeca re s ,? ./ ./ ._ j/ s �% 9 Rockefeller OC Fr M1Frei. Center l`7 , t• ,� e��. oe,4 =r 1 QC2E uvr�r Q P+EN.i P m.. 9 Aldea w. gri„e I �, �.1�Eel,,, s,� ryp ��.,_�. I"v„I 9 mg.: Fi�ITIi CWI CIWR t uM wrM1*sioe� cosT.f,,. znro.uv°.n ei'"coi'rrwM.. ✓r ""'fe t — _" 9 Tristania " c goan,e.eua Coats mesa % Jf PF..'" eve. ,i��.,. �,�� i C.d.^e uem,e. j ti Il.. j " 5 Celadon •'•• • , I �. '�+Tp, uaMD^ucvl Tun T li tli �liina.ira - $ O n� n.. 4 » ca, Tw, 9 Sterling wo .r e 9 Windchime Hr., i, ch - 9 4 9 Chorus ,u,e„ 9 Indigo Weals ▪ 9 Brisa • r Q Delano ..•••�Lar„:w�nc The projects most similar to the subject property, albeit limited, are detailed further on the following pages. irr. Uptown Newport (Phase 1) Residential Market Analysis 26 PROJECT INFORMATION 'village 750-8868 - Tues 1- 6, Wed 12-6 : 33.712051 9y: 117.749963 Average Price 5913,333 Average Sq Ft 1,721 Total Inventory 18 Standing Inventory 0 AT A GLANCE 35r Sold 12 Qtr WSR 0.92 Tot WSR 132 Avg Incentives $1,000 Project Name Delano Region Orange County Orange Community Irvine Master Plan East000d Age Restricted No Project Phone (888) Sales Office Hours Thurs GPS Coordinates N Cross Street Finished Lots N/A Open Date 02/15/17 Developer Name Brookleld Residential Developer Phone (714) 427-6868 Product Type Attached Type Description Townhome Lot Size Lot Dimension Blue Top Lots N/A Survey Date 10/1118 Special Tax per Month 3258.00 FDA per Month $30,6.00 Broker Coop $12,000 Special Incentives $0 Project Density Model/Trailer Model PLAN DETAILS Plan Horne Sze Base Pnce Pnce Sq Ft Incentives Net Pnce Net Prrce75q Ft Bed Bath Levels Garage Of r om 1,533 1.714 1:916 9788,000 $514.02 0953,000 $556.01 09990011 $521.40 01,000 51,900 01,000 5787,000 3952,000 5998,000 $513.37 $555.43 $520.88 3 3 4 2 2 2 2.5 2 2 3 2 2 None None None SURVEY INFORMATION Survey Per Units Planned Units Offered Units Sold Oh Sold Tot Inv Unothd Inv Unsold Inv Wkly Traffic Tot WSR Car WSR Avg Price % Charge Qtr 3118 129 0W7118 129 Qtr 1118 129 064117 129 Qtr 3+17 129 Qtr 2117 129 alr 1117 129 129 111 105 99 93 82 72 68 51 51 42 42 12 17 14 17 9 25 18 30 47 61 78 67 9 24 36 57 78 67 9 fi 11 4 0 0 85 80 80 125 150 290 1.32 0.92 $913,333 1.39 131 $920,333 1.41 1.08 5912,000 1-51 1.31 5868,333 1.59 0.69 $846,467 2.21 1.92 5798,000 - 0.76 091 5.03 2.58 6.07 5-32 0.00 18 17 17 112 111 1 200 2.83 1.31 5757,667 COMMENTS This project is located the furthest inland of the three highlighted active projects. Further, as shown in the previous table, Irvine generally achieves a substantially lower average price for new attached homes. Thus, the subject would be expected to achieve higher price points in terms of location (both proximity to the coast and Newport Beach). PROJECT INFORMATION AT A GLANCE 7 Project Name Region County Community Master Plan Age Restricted Project Phone Sales Office Hours GPS Coordinates Cross Street Finished Lots Rockefeller Orange ()range Irvine Central Park West No (949) 296-4775 DaOy 10 - 6 N : 33.675697 N/A w : 117.849243 Average Price Average Sq Ft Total Inventory Standing Inventory 51,53.0 990 2,545 4 0 qtr Sold ON WSR Tot WSR Avg Incentives 0 0.00 0.24 $5,000 Open Date Developer Name Developer Phone Product Type Type Description Lot Size Lot Dimension Blue Top Lots 04/29/17 Lennar Homes (949) 349-8100 Attached Townhome N/A Survey Date 1011118 Special Tax per Month $319.09 HGA per Month 3320.00 Broker Coop 2.0% Special Incentives $0 Project Density Model/Trailer Model PLAN DETAILS P an Home Size Base Price Price Sq Ft Inten4ves Net Pnce Net Pncel3q Ft Bed Bath Levels Garage Other Room 2,496 2,594 51,475,9911 $1.525,990 $591.34 $533.23 55,000 55,000 51,470,990 51,520.990 $589.34 $586.35 2 3 2.55 3 3.5 3 2 2 Loft None SURVEY INFORMATION Survey Per Un Is Planned Units Offered Units Sold Otr Sold Tol Inv Unsold In Unsold Inv Wkly Traffic Tot WSR Otr WSR Avg Price 13 Change 1263+18 22 18 18 0 4 4 0 50 0.24 0.00 51,500.990 0.00 Oh-2/18 22 1291/18 22 Otr4/17 22 Qtr 3/17 22 18 18 18 14 18 18 18 14 0 0 4 0 4 4 4 4 4 4 8 8 0 0 0 0 65 100 100 75 0.3U 0.00 0.38 0.00 0.51 0.31 0.64 0.00 31,500,990 51,500.990 31,500,990 51,500.990 0.00 0.00 0.00 6.27 1202117 22 14 14 14 8 8 0 70 1.56 1.08 31,412,490 0-00 COMMENTS 7 r Rockefeller is located the closest in proximity to the subject, about one mile northeast. Even with its close proximity, this project has an Irvine address as opposed to the subject's Newport Beach address which achieves a premium. While this is deemed the best project to estimate market value of the subject's proposed units, a higher price per square foot for the subject is considered reasonable given the smaller average size (1,671 square feet) and location within the city of Newport Beach. Uptown Newport (Phase 1) Residential Market Analysis 27 PROJECT INFORMATION AT A GLANCE Project Name Vue Average Price S2,3130.000 Qtr Sold 0 Region Orange Average Sq Ft 2,149 Qtr WSR 0.00 County Orange Total Inventory 15 Tot WSR 0.32 Community Newport Beach Standing Inventory 15 Avg Incentives $0 Master Plan No Open Date 01i15i18 Survey Date 10.+1118 Age Restricted No Developer Name Third Palm Capital Special Tax per Month $0.00 Project Phone i949; 485-5506 Developer Phone i214; 615-8590 HDA per Month $1,170.00 Sales Office Hours Tires - Sun 10 - 4 Product Type Attached Broker Coop 2.5% Type Description Condominium Special Incentives $0 GPS Coordinates N : 33.610941 w : 117.9281372 Lot Size Project Density Cross Street Lot Dimension Model,Trailer Model Finished Lots NiA Blue Top Lots NA PLAN DETAILS Plan Home Size Base Pnce Pnce 5q Ft Incentives Net Pnce Net Pnce;Sq Ft Bed Bath Levels Garage Other Room 1,711 52:100,000 51,227.35 $0 52,100.000 $1.227.35 2 2.5 1 None 2,723 52:500,000 $918.11 $0 52,500.000 $918.11 3 3 3 2 None SURVEY INFORMATION Survey Per Units Planned Units Offered Units Sold Qtr Sold Tol Inv Unoffrd Inv Unsold Inv Wily Traffic Tot WSR Qtr WSR Avg Price %Change Qtr 3/18 27 27 12 0 15 0 15 15 0.32 0.00 52,300.000 - 6.60 Qtr 2/18 27 27 12 2 15 0 15 25 0.52 0.15 32,462,500 1.20 Qtr 1118 27 27 10 10 17 0 17 25 1.00 0.77 52,433.333 0.00 COMMENTS and Townhomes This represents the only active attached project in Newport Beach consists of 27 units and is located on the Balboa Peninsula, closest to the coast. Thus, this project is achieving the highest average price for an attached project. Given the subject's inland location in comparison, a lower price point for the subject's proposed units is considered reasonable. According the information provided by the Developer, the appraised property will contain a weighted average residential condominium size of 1,671 square feet, with a weighted average anticipated base price per unit of $1,689,381, or $1,011 per square foot. Considering the subject's location in Newport Beach address, a price point towards the upper end of the range, albeit below the Vue's average price, is considered reasonable. Considering these active project's, as well as resale prices discussed next, a sale price (total consideration) of $1,650,000, or approximately $987 per square foot, is supported and utilized in the valuation herein. Absorption Praicc! Master Plan Builder Alden Irvine Lennar Homes arise Irvine California Pacific Homes C26 Irvine Intracerp Companies Celadon Irvine William Lyon Homes Chorus Irvine Lehner Homes Delano Irvine Brookfleld Residential Indigo Irvine California Pacific Homes Rockefeller Irvine Lennar Homes Sterling Irvine TriPointe Homes Tribeca Irvine Lennar Homes Tristania Irvine California Pacific HorneS Windchime Irvine Lennar Homes Vue Newport Beach Third Palm Capital Avg. Home Avg. Horne Average Average Price Size 12-Month Per Per (3418On1yj {3(318Only} 342018 242018 1122018 442017 Total Quarter Month $716,990 1,588 9 -- -- 9 9.0 3.0 5708,903 1,448 4 9 14 - 27 9.0 3.0 $802,440 1,648 15 15 - - 30 15.0 5.0 $757,490 2,393 1 -1 5 35 40 10.0 3.3 5826.490 2.260 14 - -- -- 14 14.0 4.7 S913,333 1.721 12 17 14 17 60 15.0 5.0 5735,875 1,577 3 5 16 15 39 9.8 3.3 S1,500,990 2,545 0 0 0 4 4 1.0 0.3 3697,400 1,763 1 4 13 27 45 11.3 3.8 S853,323 1,718 5 18 18 0 41 10.3 3A 5859,709 1,770 3 2 13 6 24 6.0 2.0 S828.740 1,918 9 18 49 7 83 20.8 6.9 $2,300,000 2.149 0 2 10 - 12 4.0 1.3 Total 76 89 152 111 No. of Active Projects 13 11 10 8 Quarterly Pro-Rata 5.8 8.1 15-2 13.9 Monthly Pro -Bata 1.9 2.7 5.1 44 3.6 Average Monthly Pro•Rata Based on this information, over the last four quarters the monthly absorption rate per attached project has ranged from 1.9 to 5.1 sales per project per month, with an average rate of 3.6 sales per irr. Uptown Newport (Phase 1) Residential Market Analysis 28 project per month. Generally, the absorption rates have decreased as the number of attached active projects have increased. Focusing on the three highlighted active projects (Delano, Rockefeller and Vue), over the last four quarters the monthly absorption rate per attached project has ranged from 1.3 to 3.5 sales per project per month, with an average rate of 2.4 sales per project per month, also on a decreasing trend, as shown below. Absorption Project Master Plan Delano Irvine Rockefeller Irvine Vue Newport Beach Builder Brookfield Residential Lennar Homes Third Palm Capital Avg. Home Avg. Home Average Average Price Size 12-Month Per Per (3Q 18 Only) (3Q 18 Only) 3Q 2018 2Q 2018 1Q 2018 4Q 2017 Total Quarter Month $913,333 1,721 12 17 14 17 60 15.0 5.0 $1,500,990 2,545 0 0 0 4 4 1.0 0.3 $2,300,000 2,149 0 2 10 -- 12 4.0 1.3 Total 12 19 24 21 No. of Active Projects 3 3 3 2 Quarterly Pro-Rata 4.0 6.3 8.0 10.5 Monthly Pro-Rata 1.3 2.1 2.7 3.5 2.4 Average Monthly Pro-Rata Two additional condominium projects in the immediate area, The Plaza Irvine and Marquee at Park West, albeit 2006/2007 construction, are considered in the absorption analysis. Based on historic data from the Gregory Group, The Plaza Irvine sold out within 15 quarters with an average absorption rate of approximately 3.88 sales per quarter, or 1.29 sales per month. While the Marquee at Park West was not tracked by the Gregory Group, the local multiple listing service (MLS) provided the following annual absorption data: 1.42 sales per month in 2006, 1.33 sales per month in 2007, 0.67 sales per month in 2008 and 1.08 sales per month in 2009, with an overall average of approximately 1.13 sales per month. Given market conditions and the subject's location and physical features, as well as its affordable price point for its Newport Beach location, we estimate the subject could achieve an average absorption rate of about 4.0 sales per month. Resale Market In addition to the preceding analysis, we have analyzed recent trends in the resale market for generally new condominium units. Based on data from the local multiple listing service, the tables on the following page show resale prices in Newport Beach and Irvine for attached homes. irr. Uptown Newport (Phase 1) Residential Market Analysis 29 Condominium Resales: Newport Beach (Closed 9/1/2018-11/20/2018;1,000 - 2,500 SF, Year 2000-2017) Contract Living Last List Sale Price Days on Address Date Area (SF) Sale Price Price /SF Sale/List Year Built Market 20402 Santa Ava Ave #9 8/9/2018 1,457 $650,000 $659,888 $446 98.50% 2007 94 20402 Santa Ava Ave #17 9/28/2018 1,457 $658,000 $668,888 $452 98.379E 2007 36 4 Bluefin Ct 8/8/2018 1,768 $739,900 $765,000 $418 96.72% 2005 243 Total Sales 3 1,561 $682,633 $697,925 $439 97.869E 2006 124 (avg.) (avg.) tavg•1 (avg.) (an-) (avg.) (avg.1 Condominium Resales: Irvine (Closed 10/1/2018- 11/20/2018; 1,500- 2,000 SF, Year 2010-2017) Contract Living Last List Sale Price Days on Address Date Area (SF) Sale Price Price /SF Sale/List Year Built Market 145 Neptune 9/20/2018 1,798 $650,000 $659,000 $362 98.63% 2016 29 156 Borrego 9/9/2018 1,631 $735,000 $738,000 $451 99.59% 2014 16 121 Mighty Oak 9/20/2018 1,500 $730,000 $739,000 $487 98.78% 2016 10 181 Pathway 9/14/2018 1,790 $691,500 $739,000 $386 93.57% 2011 87 48 Peony 10/3/2018 1,665 $740,000 $739,000 $444 100.14% 2010 41 157 Fixie 9/21/2018 1,664 $720,000 $740,000 $433 97.30% 2017 112 274 Rodeo 9/6/2018 1,501 $745,000 $745,000 $496 100.00% 2015 7 79 Kestrel 9/19/2018 1,800 $750,000 $749,999 $417 100.00% 2015 12 118 Walking Stick 10/21/2018 1,542 $735,000 $769,999 $477 95.45% 2016 36 76 Granite 10/24/2018 1,611 $775,000 $788,800 $481 98.25% 2016 50 152 Firefly 10/8/2018 1,746 $780,000 $788,888 $447 98.87% 2015 13 235 Carmine 9/7/2018 1,656 $790,000 $799,800 $477 98.77% 2017 121 229 Kempton 10/21/2018 1,614 $798,000 $814,900 $494 97.93% 2014 24 91 Strawberry Grove 9/17/2018 1,626 $825,000 $829,000 $507 99.52% 2014 66 137 Rose Arch 10/17/2018 1,619 $810,000 $838,000 $500 96.66% 2013 15 239 Carmine 9/11/2018 1,619 $819,000 $849,000 $506 96.47% 2017 12 37 Flowerstalk 9/13/2018 1,823 $850,000 $849,888 $466 100.01% 2011 7 179 Overbrook 10/14/2018 1,777 $847,700 $850,000 $477 99.73% 2013 16 128 Quite Grove 9/23/2018 1,646 $857,500 $869,000 $521 98.68% 2017 10 83 Wildvine 8/29/2018 1,745 $865,000 $886,000 $496 97.63% 2015 12 58 Waterleaf 9/26/2018 1,888 $888,500 $898,500 $471 98.89% 2015 26 94 Desert Pine 10/5/2018 1,873 $880,000 $898,888 $470 97.90% 2016 17 509 Rush Lily 10/14/2018 1,862 $870,000 $899,800 $467 96.69% 2014 10 705 Beacon 8/30/2018 1,897 $880,000 $900,000 $464 97.78% 2017 20 30 Pendant 9/28/2018 1,861 $900,000 $919,880 $484 97.84% 2012 46 126 Barrington 9/6/2018 1,982 $918,000 $935,000 $463 98.18% 2016 44 65 Coleridge 9/6/2018 1,739 $920,000 $939,000 $529 97.98% 2012 13 42 Somerton 10/11/2018 1,859 $978,800 $975,800 $527 100.31% 2012 3 51 Rembrandt 10/25/2018 1,861 $940,000 $987,000 $505 95.24% 2013 34 71 Brandisi 9/27/2018 1,713 $980,000 $998,000 $572 98.20% 2013 84 106 Working Ranch 9/13/2018 1,772 $978,000 $999,500 $552 97.85% 2014 99 302 Rockefeller 11/3/2018 1,832 $995,000 $1,025,000 $543 97.07% 2014 12 206 Holbrook 9/19/2018 1,918 $1,005,000 $1,025,000 $524 98.05% 2014 44 207 Traymore 9/18/2018 1,918 $1,017,000 $1,025,000 $530 99.22% 2013 5 118 Island Coral 10/1/2018 1,879 $988,888 $1,048,000 $526 94.36% 2016 95 62 Bianco 9/22/2018 1,775 $1,035,000 $1,089,888 $583 94.96% 2012 112 80 Lupari 8/24/2018 1,878 $1,088,886 $1,134,900 $580 95.95% 2013 95 Total Sales 37 1,754 $858,832 $877,876 $490 97.90% 2014 39 (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) Uptown Newport (Phase 1) ,71 Residential Market Analysis 30 As shown by the data, MLS reports that there have been three resales in Newport Beach with close dates in the last 2.5 months. The data shows the limited amount of condominium units available within this market area. Further, all of these resales were constructed in 2005 and 2007, with no newer resale construction (2010+). Most homes closed at or near the asking price, and the time on the market has averaged about four months. As for the Irvine resale market for condominium units, there is ample supply, with 37 resales closing since October 1, 2018. Additionally, these homes are of newer construction (2010 to 2017) with sale prices between $659,000 and $1,088,886, which averaged 97.9% of the list price. These statistics indicate a generally healthy resale market. Considering the limited amount of data for similar condominium projects in the market area, we also surveyed the greater Orange County market for resales of newer homes with sale prices over $800 per square foot. It is noted, these consist of both attached and detached units. The results of this survey is provided in the table on the following page. irr. Uptown Newport (Phase 1) Residential Market Analysis 31 Resales: Orange County (Closed 1/1/2018 -11/20/2018; Year 2017+) No. Address 1 415.5 Marguerite 2 309 34th #B 3 503 1/2 Poinsettia AVE 4 6081/2 Heliotrope Ave. 5 608.5 Heliotrope AVE 6 603.5 Marguerite AVE 7 617 .5 Poppy AVE 8 607 .5 Carnation AVE 9 129 34th ST #A 10 712 1/2 Heliotrope AVE 11 518 1/2 Narcissus AVE 12 617 .5 Narcissus AVE 13 424 Larkspur AVE#B 14 415 .5 38th 15 2950 Third Ave 16 615 1/2 Begonia AVE 17 216 .5 33rd 18 129 34th ST #B 19 308 1/2 Fernleaf 20 4405 Channel PL 21 4401 Channel PL 22 2210 Newport BLVD #9 23 415 38th ST 24 400 1/2 Jasmine 25 701 .5 Poppy AVE 26 2210 Newport BLVD #8 27 503 Poinsettia AVE 28 617 Poppy AVE 29 603 Marguerite AVE 30 216 33rd ST 31 708 Heliotrope AVE #A 32 705 Acacia AVE 33 711 Marigold Avenue 34 607 Carnation AVE 35 2270 Newport BLVD #26 36 712 Heliotrope AVE 37 2270 Newport BLVD #20 38 617 Narcissus AVE 39 424 Larkspur AVE 40 2260 Newport BLVD #22 41 615 Begonia 42 308 Fernleaf AVE 43 701 Poppy AVE 44 433 Goldenrod AVE 45 2250 Newport BLVD #21 46 217 Marguerite AVE #1/2 47 2240 Newport BLVD #18 48 2230 Newport BLVD #15 49 2240 Newport BLVD #19 Total Sales Living Last List Sale Price Area (SF) Sale Price Price /SF $1,160,000 $1,198,000 $935 $1,200,000 $1,199,000 $915 $1,275,000 $1,395,000 $1,159 $1,300,000 $1,488,000 $1,086 $1,300,000 $1,490,000 $1,086 $1,500,000 $1,495,000 $1,270 $1,525,000 $1,498,000 $1,218 $1,565,000 $1,575,000 $1,304 $1,580,000 $1,599,000 $1,081 $1,600,000 $1,600,000 $1,348 $1,650,000 $1,650,000 $1,341 $1,515,125 $1,650,000 $1,218 1,240 1,312 1,100 1,197 1,197 1,181 1,252 1,200 1,462 1,187 1,230 1,244 1,370 1,500 1,235 1,213 1,821 1,378 1,220 1,734 1,654 1,916 1,500 1,703 1,300 1,888 1,450 2,332 1,768 2,449 1,705 2,019 1,739 1,940 2,308 1,778 2,160 1,715 1,941 2,262 1,908 1,933 1,700 1,893 2,012 1,982 2,104 2,105 2,105 $1,550,000 $1,575,000 $1,650,000 $1,700,000 $1,725,000 $1,749,000 $1,700,000 $1,775,000 $1,850,000 $1,999,000 $1,862,500 $2,150,000 $2,144,000 $2,250,000 $2,035,000 $2,225,000 $2,367,000 $2,225,000 $2,500,000 $2,490,000 $2,485,000 $2,604,000 $2,548,000 $2,550,000 $2,600,000 $2,550,000 $2,550,000 $2,700,000 $2,667,500 $2,699,000 $2,800,000 $2,725,000 $2,900,000 $2,995,000 $3,075,000 $3,225,000 $3,464,000 $1,695,000 $1,699,000 $1,699,900 $1,740,000 $1,749,000 $1,749,000 $1,795,000 $1,795,000 $1,919,000 $1,999,000 $1,999,999 $2,150,000 $2,150,000 $2,250,000 $2,295,000 $2,348,000 $2,367,000 $2,395,000 $2,495,000 $2,540,000 $2,575,000 $2,580,000 $2,600,000 $2,600,000 $2,600,000 $2,650,000 $2,695,000 $2,700,000 $2,730,000 $2,799,000 $2,850,000 $2,900,000 $2,900,000 $2,995,000 $3,075,000 $3,499,000 $3,649,000 $1,131 $1,050 $1,336 $1,401 $947 $1,269 $1,393 $1,024 $1,119 $1,043 $1,242 $1,262 $1,649 $1,192 $1,403 $954 $1,339 $909 $1,466 $1,233 $1,429 $1,342 $1,104 $1,434 $1,204 $1,487 $1,314 $1,194 $1,398 $1,396 $1,647 $1,440 $1,441 $1,511 $1,462 $1,532 $1,646 1,664 $2,118,962 $2,184,978 $1,272 (avg.) (avg.) (avg.) (avg.) Sale/List 96.83% 100.08% 91.40% 87.37% 87.25% 100.33% 101.80% 99.37% 98.81% 100.00% 100.00% 91.83% 91.45% 92.70% 97.06% 97.70% 98.63% 100.00% 94.71% 98.89% 96.40% 100.00% 93.13% 100.00% 99.72% 100.00% 88.67% 94.76% 100.00% 92.90% 100.20% 98.03% 96.50% 100.93% 98.00% 98.08% 100.00% 96.23% 94.62% 100.00% 97.71% 96.43% 98.25% 93.97% 100.00% 100.00% 100.00% 92.17% 94.93% Year Built 2017 2017 2018 2018 2018 2017 2017 2017 2017 2017 2017 2018 2017 2018 2017 2018 2018 2017 2018 2017 2017 2017 2018 2018 2017 2017 2018 2017 2017 2018 2018 2017 2017 2017 2017 2017 2017 2018 2017 2017 2018 2018 2017 2018 2018 2018 2018 2018 2017 Days on Market 72 27 43 65 50 7 9 175 18 4 300 273 92 183 95 319 147 7 9 91 79 0 43 248 0 0 117 198 24 150 126 26 338 0 0 35 0 54 92 0 326 53 145 46 0 0 0 33 346 96.89% 2017 91 (avg.) (avg.) (avg.) Uptown Newport (Phase 1) Residential Market Analysis 32 Tax Cuts and Jobs Act The U.S. Congress enacted a new law on December 22, 2017, known as the "Tax Cuts and Jobs Act". The Tax Act makes significant changes to many aspects of the Tax 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 California and could adversely affect the sale of homes in the State. However, at this time there is neither a consensus nor a central prediction regarding the effect that the Tax Act may have on the cost of home ownership or the price of homes in the State. Based on input from regional and national homebuilders, they are not adjusting either pricing or sales pace projections due to the Tax Act. This analysis was completed without projections of either an enhancement or a diminution to the price of homes in the State. Conclusions We have summarized some of the key points from this section as follows: • Building permit activity for single-family residences in the market area generally trended upward, with more moderate upward tends in recent years compared to 2009 through 2013. • New home pricing in Newport Beach and Irvine has been in a general increasing pattern since the First Quarter 2016, albeit a "pull -back" in prices as of late. The most recent period indicates the new home pricing generally consistent with those observed in 2015. • New home pricing per square foot of living area in Newport Beach and Irvine has fluctuated, but has generally been on an upward trend since 2016, from a low of $401.38 in the Third Quarter 2016 to a high of $524.64 in the Second Quarter 2018. • There are currently 13 active new attached projects in Newport Beach and Irvine. • Absorption rates at attached projects most similar to the subject in Newport Beach and Irvine have ranged from 1.3 to 3.5 sales per project per month over the past year, with an average of approximately 2.4 sales per month. • Resale homes in Newport Beach and Irvine are transferring at or near the asking price, and the exposure period has averaged from one to four months, both indicators of a healthy market. Overall, demand for new homes in the subject's market area remains stable. The housing market is considered to be in a stage of stability. Uptown Newport (Phase 1) Retail Market Analysis 33 10-91 90 Retail Market Analysis Strong economic conditions and high consumer confidence nationwide has had a positive impact on the retail industry overall, despite several recent bankruptcy announcements and national store closures. Orange County has experienced steady job growth, with levels remaining well below state and national levels in August 2018 at 3.1%. This market is often considered the hypocenter of Southern California's tourism and cutting -edge food and fashion trends; thus, Orange County has perpetually led the pack in terms of the retail market. The information and data obtained for this analysis was provided by the CBRE Orange County Retail Market Report (Q3 2018). k<1/ North County lt0 60� ` [l '1� 110 I I }l 57 39 -�Central:Coun, ty \lli . 91 15 Submarket Avg. Asking SF Overall Current Net YTD Net Under Construction Lease Rates GLA Vacancy (%) Absorption Absorption Construction Deliveries ($PSF/MO/NNN) Central County 29,335,947 3.7 (7,245) 13,121 0 0 2.23 Central Coast 13,227,851 1.3 98,559 170,869 0 0 3.36 North County 14,943,363 3.9 28,045 18,109 115,450 0 2.21 South County 17,942,185 4.0 (17,576) (68,235) 0 0 2.48 West County 10,053,081 2.1 29,018 62,407 0 0 2.92 Orange County 85,502,427 3.3 130,801 196,271 115,450 0 2.40 5ourre: CBRE Resemrh, 03 2018. In the wake of legacy store closures that shook the Southern California region in the first half of the year, the Orange County retail market made an impressive showing over the summer season. In Q3 2018, 130,801 square feet of vacant retail space was absorbed with much of the leasing activity taking Uptown Newport (Phase 1) Retail Market Analysis 34 place in high demand coastal cities. Lease rates dipped slightly quarter over quarter to $2.40 per square feet due to an influx of newly vacated space in South and Central County submarkets. Construction completions remained scarce with only one major project tracked by CBRE that is currently in development and will likely not open until early 2019. As the year draws to a close, the Orange County retail market shows just how resilient a market it can be. Absorption & Vacancy Overall vacancy in Orange County dropped by 20 bps to 3.3% in Q3 2018. Compared with the same period the year prior, vacancy decreased 30 bps. Thanks to strong leasing activity, the vacancy rate in the Central Coast submarket dropped a full percentage point from 2.3% in Q2 2018 to 1.3% in Q3 2018, the lowest level in Central Coast since CBRE began tracking the market. The highest vacancy came from South County at 4.0% an increase of 10 bps since the previous quarter due to the aforementioned vacancies. CBRE EA forecasts that the vacancy rate will stabilize through the end of the year. Figure 6: Overall Vacancy Rate (°I°) 5 4 3 2 0 c c u1 u1 6.n [an. -o -o -O -a r-- r-- r-- 00 Da DO 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 CV CV CV CV CV CV CV CV CV CV CV CV CV CV 0,4 0,1 CV Cri — N cr, — c.. Cr, — — C- c. tV Cr] C3 0 0 C3 0 0 0 0 0 0 0 co co 0 0 0 0 Source: CBRE Research, 03 2018. Figure 1: Vacancy Rote by Center Type (%) - Community Neighborhood S pecialty �SIrip 10 8 6 4 2 0 rowel sr sr u1 u1 .n oo cD ao 4 4 4 4 C. O 4 4 4 0 C. 4 4 4 4 4 4 CV CV CV Cti H N CV CV CV Cti Cti N CV CV CV H N c 0 C] 0 COY d 0 d 000000000 Source: CBRE Research, 03 2018. The end of Q2 2018 was marred by the closing of several legacy big box retailers, namely the prolific Toys/Babies "R" Us brand. The result left a litany of empty big box spaces ranging from 20,000 —50,000 square feet in the Orange County market —but not for very long. As expected, demand for space netted Orange County with 130,801 square feet of absorption for Q3 2018. Approximately 97% of the positive absorption activity took place in the Central Coast submarket where a handful of mid to large deals propelled overall net absorption to 98,559 square feet A pair of transactions in Irvine, Restoration Hardware (40,000 square feet) at Spectrum Crossroads, and an as -of -yet -named tenant at Park Place (38,000 square feet) propelled much of the Central Coast's stellar net absorption. In Santa Ana, shoe store WSS opened a brand-new location in a former Smart & Final supermarket space for 17,676 square feet. Figure 8: Net Absorption (SF) (000's) 800 600 400 200 Net Absorption Rolling 4-Quarter Average 0 U (200) ▪ -. ..n N 41 41 •C •C +O +O 1— ti 1— — CO CO CO O C CC. C. CV CA C. 0 0 0 • 0 • 0 0 0 0 0 ▪ C. 0 0 ▪ CCY alasaaaaaa a`4"cao82 Source: CBRE Reseorch, 03 2018. Uptown Newport (Phase 1) irr Retail Market Analysis 35 South County was hit with a string of small -to mid -sized vacancies, resulting in negative 17,576 square feet of net absorption for Q3 2018. In spite of this, a few transactions of note took place in the submarket during Q3 2018—namely the opening of smaller format Target store (29,851 square feet) and a brand-new lease signed by arts and crafts supply store Michael's (42,000 square feet) both in the city of Mission Viejo. Year to date, net absorption is positive 196,271 square feet Rental Rates The Orange County average asking lease rate Figure 4; Average Asking Lease Rate ($PSFIM0/NNN) decreased slightly by $0.02 to $2.40 per square feet in Q3 2018. Compared with the same period 2.50 last year, asking lease rates were 3.4% higher. 2.40 2.30 The dip can be traced back to two submarkets, 220 Central and South County, both of which had an 2.10 array of newly vacated retail space reenter the 2.00 market at lower than average asking lease rates. 1.90 Asking lease rates in Central County dropped by 1.80 o • o 0 o C. C. o 0 0 0 C.C. 0 n 0 $0.04 per square feet while South County fell as N :� CO ▪ CO ▪ Q CO 4 Q ▪ 0 0 0 O O O O 4 ▪ 4 0 0 low as $0.20 per square feet compared with Q2 2018. Despite this, demand for premiere retail Source:CBRE Reseorch,032018. space pushed asking lease rates higher in Q3 2018, notably in the coastal cities. Asking lease rates in the Central Coast submarket in particular rose by $0.14 per square feet from Q2 2018 to $3.36 per square feet —the highest average asking rates in the county. Meanwhile, West County cities had the largest quarter -to -quarter increase of $0.37 to $2.92 per square feet in Q3 2018. New Construction Though there were no major construction starts or completions during Q3 2018, a handful of projects are still in the planning phase, including the 176,500-sq.-ft. Anaheim Westgate Center and the 91,300- sq.-ft. Cypress City Center. The only center currently under construction is the Yorba Linda Town Center in North Orange County. The 115,450-sq.-ft. neighborhood center has already signed Regal Cinemas (49,500 square feet) and Bristol Farms (26,425 square feet) and is expected to finish construction by Q1 2019. Looking Ahead CBRE Economic Advisors forecasts that the vacancy rate and lease rate for the region will stay relatively stable for the next 12 months. irr Uptown Newport (Phase 1) Retail Market Analysis 36 12-Month Forecast Vacancy (%) 5 4 3 2 Vacancy Rate Asking lease Rate (SPSF/MO/P5C) 2.50 LI7 Ian Lr, Len .o .o -c .O rt r — r — rti ca co CC) CC) Cr, Cr. Cr-, CZD c c = c*D r1 crs cv c+'7 •d▪ - c� ▪ c+7 N cr7 •d- N L-,7 C3 =c3 c3 = {3 r�s === c3 == .:=,C3 = • =!,Ot=5 e3 Source: CBE Econometric Advisors, Q3 24/$_ 2.40 2.30 2.20 2.10 2.00 1.90 1.80 Uptown Newport (Phase 1) Land Description and Analysis 37 Property Analysis Land Description and Analysis Location The property is located on Jamboree Road and bounded by Birch Street and MacArthur Boulevard in downtown Newport Beach, Orange County, California, within the Newport Beach city limits. Land Area The following table summarizes the subject's land area. Land Area Summary Tax ID SF Acres 445-134-17 (Lot 1) 112,515 2.583 445-134-29 (Lot 2) 27,661 0.635 445-134-22 (Remainder) 1,307 0.030 Total 141,483 3.248 Source: Public Records The final large lot tract map (Tract No. 17763) was recorded on March 25, 2015. Final condominium maps for the appraised property (Lot 1) is anticipated in the near term, at which point individual Assessor's parcel numbers will be assigned to each unit. Shape and Dimensions The site of the appraised property (Lot 1) is flag -shaped, with dimensions of approximately 518 feet in width and between 109 and 207 feet in depth. Site utility based on shape and dimensions is average and do not inhibit development. Topography The site is generally level and at street grade. The topography does not result in any particular development limitations. Drainage No particular drainage problems were observed or disclosed at the time of field inspection. This appraisal assumes that there are not any unusual drainage issues that would affect the development of the subject. Flood Hazard Status The following table provides flood hazard information. irr. Uptown Newport (Phase 1) Land Description and Analysis 38 Flood Hazard Status Community Panel Number 06059CO286J Date December 3, 2009 Zone X Description Outside of 500-year fl oodpl a i n Insurance Required? No Environmental Hazards An environmental assessment report was not provided for review, and during our inspection, we did not observe any obvious signs of contamination on or near the subject. However, environmental issues are beyond our scope of expertise. It is assumed that the property is not adversely affected by environmental hazards. Seismic Hazards According to the Seismic Safety Commission, the subject site is located within Zone 4, which is considered to be the highest risk zone in California. There are only two zones in California: Zone 4, which is assigned to areas near major faults; and Zone 3, which is assigned to all other areas of more moderate seismic activity. In addition, the subject is located in a Fault -Rupture Hazard Zone (formerly referred to as an Alquist-Priolo Special Study Zone), as defined by Special Publication 42 (revised January 1994) of the California Department of Conservation, Division of Mines and Geology. In general, a number of faults are located in the Southern California and throughout California; thus, the area is subject to severe ground shaking during earthquakes. Competitive sites face similar seismic risk. Ground Stability A soils report was not provided for our review. Based on our inspection of the subject and observation of development on nearby sites, there are no apparent ground stability problems. However, we are not experts in soils analysis. We assume that the subject's soil bearing capacity is sufficient to support a variety of uses, including those permitted by zoning. Streets, Access and Frontage Details pertaining to street access and frontage are provided in the following table. irr Uptown Newport (Phase 1) Land Description and Analysis 39 Streets, Access and Frontage Street Jamboree Rd. Paving Yes Curbs Yes Sidewalks Yes Lanes 2 way, 3 lanes each way Direction of Traffic Northeast -Southwest Condition Average Traffic Levels Moderate Signals/Traffic Control Turn lane Access/Curb Cuts Average Visibility Average Utilities The availability of utilities to the subject is summarized in the following table. Utilities Service Provider Water Irvine Ranch Water District (IRWD) Sewer City of Newport Beach Electricity Southern California Edison Natural Gas Southern California Gas Company Local Phone Various providers Zoning The following table summarizes our understanding and interpretation of the zoning requirements that affect the subject, with a master site plane and detailed discussion to follow. Zoning Summary Zoning Jurisdiction City of Newport Beach Zoning Designation PC-58, Planned Community (Uptown Newport) Description Uptown Newport Planned Community Development Legally Conforming? Appears to be legally conforming Zoning Change Likely? No Permitted Uses Residential with portion of mixed -use irr. Uptown Newport (Phase 1) Land Description and Analysis 40 1 w' w w- n jal RESIDENTIAL Y, TT i, di' ! Lir- E : ! * 9 0 4 A R D ITESILIPMAL RESIDEMIAL (Source: Uptown Newport Planned Community Development Plan 2-14-13, Figure 1-6: Master Site Plan) The following is information provided in the Uptown Newport Planned Community (PC) Development Plan: Land Uses, Development Standards & Procedures, dated February 14, 2013: Purpose The Uptown Newport coordinates and regulates development of the residential, commercial, open space, circulation and other land uses that may be developed within the Uptown Newport site. It also serves as the implementing zoning document for the property and implements the Newport Beach 2006 General Plan and the approved Integrated Conceptual Development Plan (ICDP). The ICDP encourages the development of coordinated, cohesive and environmentally friendly residential and mixed use projects in the Airport Area, designed to create new urban villages with a distinctive sense of place. The Uptown Newport PC provides a framework for converting the existing industrial uses at the project site into a new village within the Airport Area, with a mix of uses, densities and amenities. The proposed land use intensity is compatible with existing and anticipated development planned in the Airport Area. It also permits the existing industrial development as an allowed interim use until the existing TowerJazz lease expires, or until March 2027, whichever occurs first, and ensures an orderly transition to new residential mixed -use village land uses. The Uptown Newport PC allows for the demolition and replacement of 438,127 square feet of existing industrial and office uses allocated to the Uptown Newport site with a residential and mixed -use development. A new street system will be developed to provide appropriate circulation throughout Uptown Newport (Phase 1) Land Description and Analysis 41 the project site for both pedestrians and vehicles, breaking up the project site into multiple development areas. Land Use The Uptown Newport PC is intended to be a multi -family residential community with neighborhood - serving retail uses. Prior to adoption of the Uptown Newport PC, development on the Uptown Newport property has been controlled by the Koll Center PC-15. The Uptown Newport PC replaces the Koll Center PC with respect to the development of the Uptown Newport site. It is recognized, however, that development and absorption of these elements within the Uptown Newport PC may require a span of several years to commence and complete, and that in the interim, industrial and commercial uses of the site will continue. Existing light industrial and office uses will be phased out as development is implemented. Prior to March 12, 2027 existing uses will continue to be allowed pursuant to the Uptown Newport PC and the Newport Beach Municipal Code (NBMC) relating to non -conforming uses and structures. Permitted uses are detailed in the table on the following page, provided by the Uptown Newport Planned Community Development Plan 2-14-13, Table 2-2: Permitted Land Use Regulation Table. irr. Uptown Newport (Phase 1) Land Description and Analysis 42 RESIDENTIAL i41 Mali-Uf.t Dwellings P Maria Occupations P Live -§errs units P Senor Citieen Housrig P CARE USE# A drR Day Care: Sims [B re fewer. in hornet P Child Day Cane: Small {9 or fewer, is hours) P Day Care, General'commercial) CUP {31 Cargregele Care Home CUP Convalescent Fadlitiy CUP 11:6fAA USES 1111 fJwhol Safes {off -sale) Alcohol Sates I off -sale I Amessary Only AnlIquee LlUP UUP Mum small 9akuln P P Ellodes P Eaaks P Eloutigr.F Shops P Clothing and acaessuifs Can ecn atnel ehologr+pYo Urlaglies Cenveraenee murksrslstores.iaod and be.erages P P P Handcrafted deals P Jewelry P Luggage and leather goads P Musical ins[nmenrs, pads and accessories P Office suppin P Pharmacies P Real estate information center P Shoe sloras P Sporting goads and egaprrnent rotiacao P P rays and Armes P SERVICE U3E5 • BUM SS, FINANCIAL- NIECHICAL AND PROFESSIONAL (II ATM' Pinar ilil Instllutiahs end kelaaed Sery+ors P Meal • Madeal And Mnlil Uptown Newport (Phase 1) SERVICE USE II -GENERAL {1I Animal Graarr ngNeternaay Seruiass fad Marring) Artists Studios P Eating and DrirdUrrg EsLai haler c Aczessory hood sundae {ripen fo pubic F Fast Food (no We hatissl Fast Food {with late -Mum) Food Service Igo late hours) Foal Service myth lace hcers) iake-01AService, Lotted P12} SUP F2) P kIUP 17j P Health Feness Facilities Sall - LDOD sq. ix. OF less Large - Over 2.000 sq. A. P Medical Rata&U $pnsoes EQdr scanning (Dental enhancement treatments Eye exam ereglassicwrtect lens sales SkIn Irealnknts Priori Services Clotlreq Rand Shops pry Cleaners - Agent Only Kew Salons,. &arbre $hops 1-Lorne electrontes and small accoan a repair Leck.n Itr.s Massage Esiablishrrents Manage Essabhhreenb. Acwasary Nai Salons,' Stoney Shops Scars tailors and seamstresses Tahnleg seder,' Travel agenciesrsenrioes PQsral Seryrces P P P F P P F P P MUP MUP P P P P pdnung and Dtlpllcamg Seiceices TRANSPORTATK» . COMMUNICATIONS APIt1INFRA STRUCTURE USES —'IIIIIes k.11nar P Wireless "eleronviwnicatkm Facilities OTIERUSES Accessory Simkins and Uses Iierinnil PrapMy Silas temporary Uen P Ltp LEND P= Permitted Icy -Right CUP. Cared done l Use Permit MUP= Minor Use Perrot LTP= Limited Term Pernik — Not Al lowed (1] US n permit'ed on the hut Floor only. (2) Late hours- FacIlitleswlth Late hours shall mean facilities that cafe r service and are open to the public after 11730 pm. any day of the meek. A Minor Use Perrnit shall be requhied for am/ use that rn Intains late hours. b} Chllld day care that principally serves our site residential uses shall not becounted agalnst the 1 i,500 squaw feet of allowable camrrterclak space. (4] Includes affordable housing In accordance with the Uptown Newport affordable housing Implementation plan. Noter Lard uses that are not listed In tine table above, or are not shown are not allowed, emcept as nthervbse provided by NEVC {hires of Interpretation]. LF such uses are Aoxssory Uses to a Resldantlal Devetaprner[t, such uses shakl rot be counted against the 11,51:1C sf, of allowable commercial Land Description and Analysis 43 Parking Requirements Parking within the Uptown Newport PC shall be provided along internal streets and within structured parking that is integrated with residential and retail buildings. On -street parallel and diagonal parking for visitors, public parks and short-term resident parking shall be provided along internal streets. Structured parking shall be provided for residential and retail uses, and may consist of subterranean or above -grade parking structures. Above -grade parking structures shall be encapsulated or lined with residential units or retail space. Parking requirements are summarized below. LAND USE PARKING REQUIREMENT Residential Studio: 1.1 spaces per dwelling unit (Rental) 1 Bedroom: 1.5 spaces per dwelling unit 2 Bedroom: 1.8 spaces per dwelling unit 3 Bedroom: 2.0 spaces per dwelling unit Visitor Parking: 0.3 spaces per dwelling unit Residential Studio: 1.4 spaces per dwelling unit (Ownership) 1 Bedroom: 1.8 spaces per dwelling unit 2 Bedroom: 1.8 spaces per dwelling unit 3 Bedroom: 2.0 spaces per dwelling unit Visitor Parking: 0.3 spaces per dwelling unit Senior Housing 1 per unit Affordable Housing 0-1 Bedroom: 1.0 spaces per dwelling unit 2+ Bedroom: 2.0 spaces per dwelling unit (Inclusive of handicap and guest parking) Refer to Newport Beach Municipal Code for all uses not listed above. (Source: Uptown Newport Planned Community Development Plan 2-14-13, Table 3-1: Uptown Newport Parking Requirements) According to the local planning department, there are no pending or prospective zoning changes. It appears that the property conforms with zoning requirements. We are not experts in the interpretation of zoning ordinances. An appropriately qualified land use attorney should be engaged if a determination of compliance is required. Entitlements The property appraised herein is entitled for 158 condominium units and 3,000 square feet of commercial space. Other Land Use Regulations We are not aware of any other land use regulations that would affect the property. Easements, Encroachments and Restrictions We were not provided a current title report to review. We are not aware of any easements, encroachments, or restrictions that would adversely affect value. Our valuation assumes no adverse impacts from easements, encroachments, or restrictions, and further assumes that the subject has clear and marketable title. irr. Uptown Newport (Phase 1) Land Description and Analysis 44 Off -Site Improvements Based on the appraiser's inspection and existing construction underway (not a part of the subject), as well as development costs provided by the Developer, a significant amount of the required infrastructure improvements servicing the appraised property has been complete. The valuation herein assumes all public capital facilities and improvements to be financed by the CFD Special Tax have been completed (i.e., undergrounding of overhead utilities and a City park). Based on information provided, the undergrounding of the utilities costs approximately $3,250,000 and the park $3,305,000. Additionally, the Developer's cost budget indicates $2,000,000 remain in off -site improvements. Based on anticipated Bond proceeds of $7,357,770, and $6,555,000 in proceeds amount to $802,770 ($7,357,770 - $6,555,000), which will off -set the $2,000,000 in remaining off -site improvement costs of $1,197,230 and is applied in the first period of the cash flow model. On -Site Development Costs According to the Developer's cost budget, site development costs total $11,817,126, inclusive of on - site development costs and development impact fees, as summarized below: On -Site Development Costs Developer Impact Fees Developer Impact Fees (Retail) Total Site Development Costs $ 1,000,000 $ 10,744,172 $ 72,954 $ 11,817,126 Permits and Fees Based on information provided by the Developer, permits and fees due at building permit total $790,000 for the residential component, or approximately $5,000 per residential unit. Timeline According to information provided, vertical construction is anticipated to begin December 2019 with the first condominium sales closing in December 2021. Vertical construction and sale of the commercial condominium unit is anticipated for the same time frame (construction in December 2019, sale in December 2021). Conclusion of Site Analysis Overall, the subject property is functional in terms of its size, topography, shape and overall location within the market area. There appear to be no unusual or restrictive physical limitations of the properties. The subject property is considered physically suitable for development. With an appropriate marketing campaign, the Uptown Newport project should be competitive with other planned communities in the city of Newport Beach and throughout the Orange County region. irr. Uptown Newport (Phase 1) Land Description and Analysis 45 frinag. a tternc • irr Uptown Newport (Phase 1) Land Description and Analysis 46 Uptown Newport (Phase 1) Land Description and Analysis 47 Parcel Map M LOr B .pC13 27 0.011 AC. LOT C 29 0. 03, AC. LOT D THIS MAP wes PaEPARED FOR ORANGE COUN IY d5SE650F 0£P T. UARANTE ONLY. SfOR MAFEf NO GUARANTEE As i0 O!CLEF!LY NOP l66Is !NY LrdSILITY FOR OTHER USES. NOi 0 B£ REPPOOUCEO. LL Za RESEPVfO. 0 COPYRIGHT DRANC£ COUNTY ASSESSOR 1016 24 n LOT Al 28 r305 AC. 0.01z � Ac. TRACT LOT r 583 aL. 0.030 AC. 0p030 C.e PARK STORM DRAIN 133 LOT P 20 .� Op195 e 41 L. 2 0. 0.706 2t AC. x NEWPORT0 ,0T 0 0.Bv (qAC. TORN DRAIN POP PlRR PUPP06E5. 'H OUCH k ARE S. LANOSCAP£ NI FOP UTIL PURPOSES. LANDSCAPE NANCE PURPOSES. 1.400 AO. LOT O 0.030 LOI 4 1.431 AC. LOTH 14 O.539 AC. LOT 0.09E AC. 1" = 100' NO. 17763 2 6.7 A o. o1e ac. 13 S r.0 445-1 34 PAGE 3 OF 3 13 JANUARY 2016 C. O00. O000B C. JAMBOREE 0.00 0.032 ROAD TRACT NO. 17763 M.M. 937-17 to 23 inol. 07 NOTE - ASSESSOR'S BLOCK 8 PARCEL NUMBERS SHOWN IN CIRCLES ASSESSOR'S MAP BOOK 445 PAGE 134 COUNTY OF ORANGE PRIVATE JrREET Uptown Newport (Phase 1) Land Description and Analysis 48 Real Estate Taxes [The property tax system in California was amended in 1978 by Article XIII to the State Constitution commonly referred to as Proposition 13. It provides for a limitation on property taxes and for a procedure to establish the current taxable value of real property by reference to a base year value, which is then modified annually to reflect inflation (if any). Annual increases cannot exceed 2% per year. The base year was set at 1975-76 or any year thereafter in which the property is substantially improved or changes ownership. When either of these two conditions occurs, the property is to be reappraised at market value, which becomes the new base year assessed value. Proposition 13 also limits the maximum tax rate to 1% of the value of the property, exclusive of bonds and direct charges. Bonded indebtedness approved prior to 1978, and any bonds subsequently approved by a two-thirds vote of the district in which the property is located, can be added to the 1% tax rate. Real estate taxes and assessments for the current tax year are shown in the following table. Taxes and Assessments - 2018-2019 Assessed Value Taxes and Assessments Ad Valorem Tax ID Land Improvements Total Tax Rate Taxes Direct Assessments Total 445-134-17 (Lot 1) $12,255,909 $0 $12,255,909 1.117650% $136,978 $147 $137,125 445-134-29 (Lot 2) $1,721,636 $0 $1,721,636 1.117650% $19,242 $20 $19,262 445-134-22 (Remainder) $0 $0 $0 1.117650% $0 $0 $0 $13,977,545 $0 $13,977,545 $156,220 $167 $156,387 According to the Orange County Treasurer —Tax Collector, the appraised properties are located in Tax Rate Area 07-088, which is subject to a tax rate of 1.11765%. Additional, upon completion of construction, annual direct charges of approximately $60 per unit is also considered in the analysis herein, based on similar projects in the market area. The existing ad valorem taxes are of nominal consequence in this appraisal, primarily due to the fact these taxes will be adjusted substantially as the remaining infrastructure and property improvements are completed and in consideration of the definition of market value employed in this appraisal, which assumes a sale of the appraised property. As referenced, the appraised properties are located within the boundaries of California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) Number 2018-03 (Uptown Newport). According to the Special Tax Bonding Analysis — Projected Debt Service Schedule and Debt Service Coverage provided, the annual special taxes applicable to the subject's facilities are as presented in the table on the next page. irr. Uptown Newport (Phase 1) Land Description and Analysis 49 Assigned special Taxes (2019-20) Land Use & Special Tax Class Class 1- Phase I Condominiums Class 2 - Phase II Condominiums No. of Units 158 314 Assigned Tax $771 $979 Class 3 - Phase II Apartments 314 1284 Total Tax Levy $121,818 $307,406 $89,176 Total Residential 786 Class 4 - Phase I - Non -Res_ Class 5 - Phase II - Non -Res. Total Non -Residential 9,750 sq_ ft. 1,75D sq_ ft. $060 $518,4.00 $5.35/sq. ft_ $5.35 / sq. ft. 5-35 J sq_ fit $52,153 $9,363 $61,525 Total $579,925 (Source: RBC Capital Markets, Special Tax Bonding Analysis — Projected Debt Service Schedule and Debt Service Coverage) The bond indebtedness and direct levies will be considered in the valuation of the subject property. SHEET 1 OF 1 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 / (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA For prkaars d lens and Ilr rsica, milavner 4 mai b re prcah naps of it cage Cam Arians.' Catena and WREN rat No. 17763 mooned or June I. 2015 a Irarulsu No. 201.50332C061 at Pages 17 elrcl*2! nSalk SW Of MOPm arc, efs Cat/itl RateAu CO Oile41 CO, tt Colannia LEGEND NrrrOr ri 11111111 Proposed Bwdanes of Calder. Samoa Camrmles Devebprnsa re61dp6' Canrrlrpiy F#tlpes Oatrct NP 2015.e) Itlp4rnn Neepero l Cif el Nearpel 6arNn Co -my Of [Mg& tasaerr Parer Lana Tea Zwre 1 T. Zara 1431A.4461 r NM* WO., 11I Filed an the &N a die Serseeuy on Caledonia StatewiUe CommWbea Developnners ✓attuney lira day of 201 B Stu -Nary Cm rfomw Sutee de Com munrees Development Adtrar-. y (2) 1 11ereb/ oerbk OM the w,ren map shnwn4 proposed madame d Calk. e Shrenede ammonites Development Rudnonty Community Facile:N DGahbi Ho. 2018413 Rlxkown Newponl. City erf Neeped Beach County al Orange, Sole of COW.. rrs BPINOVetl sY 1 e Cemmasnn Of me Canaan. 5mtewde Comsnmees Developmes Ratio -My al a regutar meeting thereof. held mthe day ad 2018. try do resduaon No. Secretary, C.Yfoma StOreee Corm unntes Development Aurhonty 131 FMB leB dy01 2016. Nuke hodrd &dock m.,nBook dMops dP.. . r1ridCCM,* F wires Oaakrla d page mld w lend Mo. n rte once Of tea Cards Rernee of Orange County. State el Cdtkxnle. %Pr. Gar► Recorder. CdtontYd piing. By Deputy fee irr Uptown Newport (Phase 1) Highest and Best Use 50 Highest and Best Use Process Before a property can be valued, an opinion of highest and best use must be developed for the subject site, both as vacant, and as improved. By definition, the highest and best use must be: • Legally permissible under the zoning regulations and other restrictions that apply to the site. • Physically possible. • Financially feasible. • Maximally productive, i.e., capable of producing the highest value from among the permissible, possible, and financially feasible uses. Highest and Best Use As Vacant Legally Permissible The site is zoned PC-58, Planned Community (Uptown Newport), Uptown Newport Planned Community Development. Permitted uses include residential with portion of mixed -use. To our knowledge, there are no legal restrictions such as easements or deed restrictions that would effectively limit the use of the property. Additionally, the subject is entitled for 158 condominium units and 3,000 square feet of commercial space. The subject property, as proposed, represents a planned community that has undergone extensive planning and review. Based on the difficulties in obtaining the subject's existing approvals, it is doubtful any significant project changes would be allowed and only mixed -use (residential with commercial) is given further consideration in determining the highest and best use of the site as vacant. Physically Possible The physical and locational characteristics of the properties have been previously described in this report. In summary, the physical characteristics of the site, terrain and soils are suitable for the proposed uses. Location considerations include the compatibility of the subject's proposed use(s) and location with respect to surrounding uses. As indicated previously, the subject represents a planned community, which has undergone extensive planning and review. The proposed development has been carefully designed to include an appropriate mix of land uses that are compatible with adjacent uses and uses throughout the planned community. The physical characteristics of the site do not appear to impose any unusual restrictions on development. Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses. Financially Feasible The feasibility of the allowable uses is dependent on the supply and demand conditions, which could influence the competitive position of each proposed type of property use comprising the subject, including residential and commercial development. The subject property is located in an area that has Uptown Newport (Phase 1) Highest and Best Use 51 experienced modest population growth in recent years, with the little population growth a direct result of the limited supply of developable land. As noted in the Residential Market Analysis and Retail Market Analysis sections, the subject's Newport Beach location coupled with the limited supply of land and the upper income level associated with the potential buyer pool, sales of residential and commercial units in the area remain relatively strong. As shown later in this report by the land residual analysis, where the subject's condominium units and remaining site development costs are deducted from current prices, the subject's land value is significantly positive (reflecting its as vacant condition), which demonstrates that mixed -use development as proposed (residential and commercial) is financially feasible. Further, buyers are actively buying homes and builders are actively buying land, reflecting ample demand. Based on the preceding discussion, it appears development consistent with the entitlements approved for Phase 1 of the Uptown Newport Project is financially feasible. It is expected the subject property will be competitive with the other regional redevelopments similar to the subject that have been well received by the market, including currently active Rockefeller project by Lennar, as well as the older, but adjacent projects The Plaza and Marquee Park Place. The subject property's location proximate to transportation routes should bode well for the subject property's various land use components. Maximally Productive Legal, physical and market conditions have been analyzed to evaluate the highest and best use of the subject property. The analysis is presented to evaluate the type of use(s) that will generate the greatest level of future benefits possible to the property. Based on the zoning and entitlements approved for the subject property, a mix of residential and commercial development, are the only land uses that would generate the highest residual land value. Accordingly, it is our opinion that mixed -use (residential with commercial), developed as proposed, is the maximally productive use of the property. Conclusion Development of the site for mixed -use (residential with commercial) is the only use that meets the four tests of highest and best use. Therefore, it is concluded to be the highest and best use of the property as vacant. As Improved As is demonstrated in the valuation section presented later in this report, there is sufficient profit associated with the proposed improvements, suggesting the highest and best use as proposed is the development of the mixed -use project commensurate with the development agreement for the Uptown Newport Project. Most Probable Buyer The definition of market value is based on the components of the subject selling in a single, bulk transaction. The most probable buyer of the subject is a land developer familiar with the regional market area. irr. Uptown Newport (Phase 1) Valuation Methodology 52 Valuation Valuation Methodology Appraisers usually consider three approaches to estimating the market value of real property. These are the cost approach, sales comparison approach and the income capitalization approach. The cost approach assumes that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility. This approach is particularly applicable when the improvements being appraised are relatively new and represent the highest and best use of the land or when the property has unique or specialized improvements for which there is little or no sales data from comparable properties. The sales comparison approach assumes that an informed purchaser would pay no more for a property than the cost of acquiring another existing property with the same utility. This approach is especially appropriate when an active market provides sufficient reliable data. The sales comparison approach is less reliable in an inactive market or when estimating the value of properties for which no directly comparable sales data is available. The sales comparison approach is often relied upon for owner -user properties. The income capitalization approach reflects the market's perception of a relationship between a property's potential income and its market value. This approach converts the anticipated net income from ownership of a property into a value indication through capitalization. The primary methods are direct capitalization and discounted cash flow analysis, with one or both methods applied, as appropriate. This approach is widely used in appraising income -producing properties. Additional analyses often undertaken in the valuation of subdivisions include extraction, land residual analysis, and the subdivision development method. Reconciliation of the various indications into a conclusion of value is based on an evaluation of the quantity and quality of available data in each approach and the applicability of each approach to the property type. The methodology employed in this assignment is summarized as follows: Approaches to Value Approach Applicabiliy to Subject Use in Assignment Cost Approach Applicable Utilized Sales Comparison Approach Applicable Utilized Income Capitalization Approach Applicable Utilized We have been requested to estimate the market value of the fee simple estate of the appraised property, in bulk, comprising the California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) No. 2018-03 (Uptown Newport), subject to the hypothetical irr. Uptown Newport (Phase 1) Valuation Methodology 53 condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. In order to estimate the market value of the subject property, two approaches to value were utilized: the sales comparison approach and the land residual analysis, which is a form of discounted cash flow analysis. In the land residual analysis, the revenue component of the DCF will be based on the probable market value for the average, proposed residential condominium units and the concluded market value of the commercial condominium unit. A number of assumptions were made in the discounted cash flow analysis, not the least of which was the forecast of absorption, or disposition, of the condominium units comprising the subject property. Any properties within CFD No. 2018-03 Phase 1 not subject to the Lien of the Special Tax securing the Bonds (for -rent multi -family, public and quasi -public land use sites) are not a part of this appraisal. Uptown Newport (Phase 1) Land Residual Analysis 54 Land Residual Analysis The land residual analysis is used in estimating land value when subdivision and development are the highest and best use of the land being appraised. All direct and indirect costs are deducted from an estimate of the anticipated gross sales price of the improved product; the resultant net sales proceeds are then discounted to present value at an anticipated rate over the development and absorption period to indicate the value of the land. The land residual analysis is conducted on a semi-annual (six month) basis. As a discounted cash flow analysis, the land residual analysis consists of four primary components summarized as follows: Revenue — the total gross income derived from the disposition of the subject's land components. Absorption Analysis — the time frame required to sell-off the components. Of primary importance in this analysis is the allocation of the revenue over the absorption period — including the estimation of an appreciation factor (if any). Expenses — the expenses associated with the sell-off of the components are calculated in this section — including administration, marketing, expenses, remaining development costs, commission costs and property taxes. Discount Rate — the appropriate discount rate is derived by employing a variety of data. Discussions of these four concepts begin below, with the discounted cash flow analysis offered at the end of this section. Revenue The individual component valuations of the subject property comprise the revenue of the discounted cash flow analysis. Specifically, the subject property represents the taxable portion of the proposed California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) for the Uptown Newport project, which consists of 158 condominium units and a 3,000 square foot retail condominium unit. For purposes of comparison, an average residential unit size of 1,671 square feet will form the basis of the residential land use component. Analysis from the Residential Market Analysis section determined a sale price (total consideration) of $1,650,000, or approximately $987 per square foot, is supported and consistent with current market conditions. In addition, a residential unit premium and upgrade factor of 10% of the sale price is considered reasonable and utilized in this analysis, as well as a 35% model recapture rate which will be discussed in greater detail in the expense section of this approach to value. The sales comparison approach is utilized to estimate the market value of a subject's commercial component. The subject consists of one commercial condominium unit containing 3,000 square feet. On the following pages, we will present and analyze several comparable properties. We will begin by presenting a summary tabulation and location map, followed by a discussion of necessary adjustments, and our conclusion of market value via this approach. These sales are the most recent irr. Uptown Newport (Phase 1) Land Residual Analysis 55 transactions considered reasonably similar to the subject property. This analysis is conducted on a per square foot of rentable area. Improved Commercial sales Summary Grantor Sale Sale Rentable Year Price No. Location Grantee Date Price Area {5f} Built per SI 1 133 The Prominade N. Unit 106 Emerita Garravillas Aug-18 5775,000 2,271 2006 5341.26 Long Beach, Los Angeles County California Holiday Investments. LLC APN: 7280-027-021 Comments: This mmpomble represent the sale of o single tenant, ground floor retail condominium unit looted in the downtown care of tong Beech. Prohibited uses within the space include: medico!/dental office, veterinarian/kennel/animal care facility, tattoo or body piercing service, fortuneteller, banquet facility, adult business, recycling renter, trade or private school religious institution, cafeteria, gymnasium or hearth club, any liquor store of business serving alcohol, end any use or operation which is obnoxious to °rout of harmony with the development or operation of a residentiol/retort project 2 2240 Newport Boulevard. Unit 104 NPBeach Marina LLC Jun-18 51.427,00D 1,057 2017 $1,350.05 Newport Beach, Orange County Berk Properties LLC APN:047.120.33 Comments: This is the sole of on office condominium unit within the VUE Newport mixed -use development offering high -end residential, specialty, retail and eateries. This project is located an the Newport Harbor waterfront 3 727 N. Douglas Street, Unit 7276 Pettus Q tlenekos Dec-17 52,132,000 2,870 2015 5798.50 El Segundo. Los Angeles County Stephanie Lee APN: 4138.031-050 Comments: This condominium unit is improved as a restaurant space located in a Class A creative office campus, Elevon. On the overage day Erevan is projected to hove 600 employees, and abuts another project with 500 employees. The immediate area has limited retail services to support the growing office population. The immediate area is also served by multiple newly developed hotels. 4 139 Hermosa Avenue, Unit 1C Jeffrey 5 & Mercedes C Smith Jun-16 51,310,000 1,2012 2008 $1,091.67 Hermosa Beach, Los Angeles County 139 Hermosa Ave LLC APN: 4183.003-041 Comments: This office condominium unit offers two bathrooms, five parking spaces, expo stroage, an integrates sound and secuirty system, kitchenette and dual zoning heatng and air conditioning system. it is located within less and a block to the beach. Pat Killen designed this two-story office/loft spore, which has been featured in architectural mogazines. 5 2230 Newport Boulevard, Unit 101 NPBeach Marina LLC Listing S1,358,455 1,049 2017 $1,295.00 Newport Beach, Orange County N/Av APN- N/Av Comments: This is a first floor waterfront condominium unit available for sale within the VUE Newport mixed -use development offering high -end residential specialty, retail and eateries. It has been actively marketed for about seven months. In total the VLIE offers II retail/office condominium units within seven buildings. Uptown Newport (Phase 1) 10. Adjustment Factors 56 Comparable Land Sales Map Marina Ladeia Heights I]el Rey Los Angeles International Airport Inglewood O v,ELP huntingtan Park South Gate ▪ Lynwood E!segundo Hawthorne Willowbrook Manhanan Beach _1 Redondo Beach Torrance Car▪ s▪ on Wear Cursor Gardena Ro91np Lomita Hmaealataa r,l ,n Rolling HIIIa Rancho Gales Verdes Subject Property 9 Comparable 1 9 Comparables 2 d 5 9 Comparable 3 9 Comparable Buena Park Lakewood Cerrhtos FET Signal Hill L nggeach Cypress Los Alairdros Stanton O D Seal Beach Go gleMyMaps Garden Grove Westminster Midway City Fountain C Huntington Beach Valley Fullerton Anaheim F.S.11e SCout Reservation Placentia Chino HIIIS 5/ropy Hallow Chino Hills State Park Yorba Linda Q "or Ewe stair" C)r.enr Villa Park P°kD res rr-, r, Orange El Modena lac North Tonga Santiogo Canyon Santa Ana Tustin Costa Mesa Ne n Be h ZIt e Irvine Crystal Co. State Park rQ' Slluereda Limestone Canyon Repronal Perk Whiling Ranch Wilderness Park Lake Forest Rancho Murg� 0 woods Q Laguna Beach Mission Viejo Aksa V. 10 Laguna Nlgual Oliarrandli L adera Ranch Cots Rancho Mission Vlep Wir O San Juan Capistrano irr. Uptown Newport (Phase 1) Adjustment Factors 57 Adjustment Factors The sales are compared to the subject and adjusted to account for material differences that affect value. Adjustments are considered for the following factors, in the sequence shown below. Adjustment Factors Present Value of Bonds Property Rights Conveyed Financing Terms Sale Conditions Market Conditions Location Access/Exposure Size Building Quality Age/Condition Bond debt has a direct impact on the amount for which the end product will sell. In an effort to account for the impact of bond indebtedness on the sales price, we establish a present value amount for the bond encumbrance based on the annual assessment to reflect the total consideration with each transaction. Leased fee, fee simple, leasehold, partial interest, etc. Seller financing, or assumption of existing financing, at non -market terms. Extraordinary motivation of buyer or seller, such as 1031 exchange transaction, assemblage, or forced sale, as well as applicable adjustments for non -stabilized occupancy, above/below market rents, and other economic factors. Excludes differences in rent levels that are already considered in previous adjustments, such as for location or quality. Changes in the economic environment over time that affect the appreciation and depreciation of real estate. Market or submarket area influences on sale price; surrounding land use influences. Convenience to transportation facilities; ease of site access; visibility from main thoroughfares; traffic counts. Inverse relationship that often exists between building size and unit value. Construction quality, amenities, market appeal, functional utility. Effective age; physical condition. irr. Uptown Newport (Phase 1) Adjustment Factors 58 Sales Adjustment Grid - Commercial Condominium Site Characteristics: Subject Comparable Comparable 2 Comparable 3 Comparable 4 Comparable 5 Sale Price per SF $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Bond Encumbrance (Present Value) per SF $0.00 $0.00 $0.00 $0.00 $0.00 Adjusted Price per SF $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Elements of Comparison Property Rights Conveyed Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Adjustment Adjusted Price $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Financing Terms Cash Equiv. Similar Similar Similar Similar Similar Adjustment Adjusted Price $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Sale Conditions Market Market Market Market Market Listing Adjustment Adjusted Price $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Market Conditions Dec-18 Aug-18 Jun-18 Dec-17 Jun-16 Dec-18 Adjustment (Appraisal) Adjusted Price $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Physical Characteristics Location Newport Beach Long Beach Newport Beach El Segundo Hermosa Beach Newport Beach Adjustment Access/Exposure Average Similar Similar Similar Similar Similar Adjustment Rentable Area (SF) 3,000 2,271 1,057 2,670 1,200 1,049 Adjustment Building Quality Good Similar Similar Superor Similar Similar Adjustment .I, .I, Age/Condtion New/Excel. Inferior Similar SI. Inferior Inferior Similar Adjustment TT T TT Net Adjustment Adjusted Price per SF Sig. Upward Downward Upward SI. Upward 51. Downward > $341.26 < $1,350.05 > $798.50 > $1,091.67 < $1,295.00 Given the analysis in the table above and on the preceding pages, a ranking analysis of the subject's commercial condominium unit and the comparable sales is presented below: Improved Commercial Ranking Summary Property Sale Date Price per SF Net Adjustment Comparable2 Jun-18 $1,350.05 Downward Comparable 5 Dec-18 $1,295.00 SI. Downward Subject -- $1,200.00 Comparable4 Jun-16 $1,091.67 SI. Upward Comparable 3 Dec-17 $798.50 Upward Comparable 1 Aug-18 $341.26 Sig. Upward Considering current market conditions and specifics of the subject, an improved market value of $1,200 per square foot is considered reasonable. Applying this unit indicator to the subject's commercial condominium unit results in the following estimate of value via the sales comparison approach: 3,000 square feet x $1,200 per square foot = $3,600,000 irr. Uptown Newport (Phase 1) Adjustment Factors 59 Closing Projections According to the construction schedule provided, and the typical time required for the construction of attached units , it is estimated to take approximately 24 months from start to compete construction and begin sales. It is assumed that closings will occur in the same period as the sales. Changes in Market Conditions (Price Increases or Decreases) Based on market surveys, responses are mixed whether market participants trend revenues and expenses. Generally market participants prefer not to price trend, but sometimes they will trend when trying to justify a sale price when there is strong competition for land. Or, participants have indicated they may trend if the sell-off period is anticipated to be protracted. However, under current market conditions, there is likelihood of some home price appreciation during the sell-off period. We estimate a level appreciation factor of 2.00% per year (1.00% semi-annually) for the subject's sell-off. Absorption Considering our discussion in the Residential Market Analysis section, and for purposes of this analysis, it is estimated the subject can achieve an absorption rate of 4.0 sales per month (24.0 sales semi- annually, or every six months). This estimate is consistent with the average monthly absorption rates observed by similar active residential projects in the immediate market area. With sales beginning in Period 5, the subject's units sell out in seven periods. Expenses Projections As part of an ongoing effort to assemble market information, the table on the next page reflects survey responses and developer budget information for numerous attached single-family residential projects throughout the California region. Attached Residential Budgets Developer Classification RegionaI RegtonaI LOCaI RegionaI Regional National Mrnl7Mlm Maximum Average Budget Date 2018 2018 2018 2018 2017 2015 No. of Unit 63 60 34 29 28 72 Quality Good Good Excellent Good Average/Good Excellent 28 Average/Good 72 Excellent 47.667 Good Avg. Unit Size ]SF] 2,096 2,026 1,133 1,364 2,000 1,079 1.079 2,096 1,616 G&A%of Revenue 1.1% 1.1% N/Av 2.1% 1.2% N/Av I.I% 2.I`% 1.4% Mkt & Sales % of Revenue 1.68% 1.68% NIAv 1.0% 2.6% NIAv 2.696 1.7% Cost per Model 5365,333 5365,333 N/Av 5204,500 581,074 NIAv $81.074 $365.333 5254.060 Site CostsfUnit 580.658 580, 058 552,675 590,074 560,000 NIAv 552,675 590,074 572,573 Permits & Fees/Unit 542,602 541,624 526.034 549,244 543,714 NIAv Direct Costs/SF 5157.69 5157.79 5381.77 S111.92 $89.27 Sass.00 $26,034 $89.27 S381.77 540,044 5179.69 $49, 244 Indirect % of Direct Costs 996 9% 11% 9% 17% WAN 9% 1796 11% Profit % of Revenue IRR 12.5% 20.18% 12.5% 20.18% NIAv N/Av 23.0% NIAv 21.6% NIAv NIAv NIAv 12.5% 20.18% 23.0% 20.18% 17.4% 20.1896 General and Administrative These expenses consist of management fees, liability and fire insurance, inspection fees, appraisal fees, legal and accounting fees and copying or publication costs. This expense category typically ranges from 2.0% to 4.0%, depending on length of project and if all of the categories are included in a builder's budget. We have used 3.0% for general and administrative expenses. This expense category is spread evenly over the entire sellout period. irr. Uptown Newport (Phase 1) Adjustment Factors 60 Marketing and Sales These expenses typically consist of advertising and promotion, closing costs, sales operations, and sales commissions. The expenses are expressed as a percentage of the gross sales revenue. The range of marketing and sales expenses typically found in projects within the subject's market area is 5.0% to 6.5%. A figure of 6.0%, or 3.0% for marketing and 3.0% for sales, is estimated in the marketing and sales expense category. Property Taxes (Ad Valorem and Special Taxes) The subject is located within an area with an effective tax rate of 1.11765%. This amount is applied to the estimated market values and divided by the total number of units to yield an estimate of ad valorem taxes/unit/year. The tax amounts are applied to unclosed inventory over the sell-off period. Property taxes are increased by 2% per year. Direct levies are estimated at $60 per unit per year and are also considered in this analysis. Additionally, as referenced, the appraised properties are located within the boundaries of California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) Number 2018-03 (Uptown Newport). According to the Special Tax Bonding Analysis — Projected Debt Service Schedule and Debt Service Coverage provided, the annual special taxes applicable to the subject's facilities are as presented in the table below. Assigned Special Taxes .r2O19-20? Land Use & Special Tax Class No. of Units Class 1- Phase I Condominiums Class 2 - Phase 11 Condominiums Class 3 - Phase II Apartments 158 314 314 Assigned Tax $771 $979 $284 Total Tax Levy $121.818 $307.40.6 89.176 Total Residential Class 4 - Phase I - Non -Res. Class 5 - Phase II - Nan -Res. Total Non -Residential 786 9,750 sq_ ft. 1,750 sq_ ft. $660 $5.35 / sd. ft. $5.35 / sq. ft. $5.35 / sq. ft. 518,400 $5 2.163 $9,363 $61,525 Total $579,925 (Source: RBC Capital Markets, Special Tax Bonding Analysis — Projected Debt Service Schedule and Debt Service Coverage) The total tax expense is gradually reduced over the absorption period, as the land components are sold off. Homeowner's Association Fee Allocations for HOA fees of approximately $325 per unit per month is applicable to this valuation. The total HOA expense is assumed to be incurred once construction is complete, and is reduced over the absorption period, as units are transferred to homebuyers. irr. Uptown Newport (Phase 1) Adjustment Factors 61 Model Costs Model upgrade expenses can vary widely depending upon construction quality, targeted market and anticipated length of time on the market. These upgrades, exterior and interior, including furniture, can range from $20,000 per model to over $250,000 per model for executive homes. Based on the quality of the subject's proposed improvements and the targeted buyer segment, a model upgrade cost of $150,000 is considered reasonable for the subject's units. Of this amount approximately 35% will be recaptured with the sale of the models reflecting a model recapture of $157,500. Model costs will be applied in the fourth period, at the end of the vertical construction period. Off -Site Improvement Costs Based on the appraiser's inspection and existing construction underway (not a part of the subject), as well as development costs provided by the Developer, a significant amount of the required infrastructure improvements servicing the appraised property has been complete. The valuation herein assumes all public capital facilities and improvements to be financed by the CFD Special Tax have been completed (i.e., undergrounding of overhead utilities and a City park). Based on information provided, the undergrounding of the utilities costs approximately $3,250,000 and the park $3,305,000. Additionally, the Developer's cost budget indicates $2,000,000 remain in off -site improvements. Based on anticipated Bond proceeds of $7,357,770, and $6,555,000 in proceeds amount to $802,770 ($7,357,770 - $6,555,000), which will off -set the $2,000,000 in remaining off -site improvement costs of $1,197,230 and is applied in the first period of the cash flow model. On -Site Development Costs According to the Developer's cost budget, site development costs total $11,817,126, inclusive of on - site development costs and development impact fees, as summarized below: On -Site Development Costs Developer Impact Fees Developer Impact Fees (Retail) Total Site Development Costs $ 1,000,000 $ 10,744,172 $ 72,954 $ 11,817,126 These costs will be incurred as the units are being constructed and are allocated evenly over the first four periods. Permits and Fees Based on information provided by the Developer, permits and fees due at building permit total $790,000. These costs will be incurred as the units are being constructed and are allocated evenly over the first five periods. Direct and Indirect Construction Costs Construction costs are generally classified into direct and indirect costs. Direct costs reflect the cost of labor and materials to build the project. Direct costs generally are lower per square foot for larger floor plans, all else being equal, due to economies of scale. Indirect items are the carrying costs and Uptown Newport (Phase 1) Adjustment Factors 62 fees incurred in developing the project and during the construction cycle. Construction quality and market -segment are significant factors that affect direct construction costs. In addition, national/public builders, which are able to achieve lower costs due to the larger scale in which orders are placed, routinely achieve lower direct costs. According to information provided by the Developer, estimated direct construction costs for the subject are as follows: Residential Condominium Units Direct Construction Costs $ 116,431,938 Upgrade Costs $ 17,349,943 Subtotal $ 133,781,881 ($506.72 per SF) Commercial Condominium Direct Constriction Costs $ 1,302,354 Subtotal $ 1,302,354 ($434.12 per SF) Total Direct Construction Costs $135,084,235 Considering the presumed quality of the subject property, direct construction costs of $500 per square foot of residential unit and $435 per square foot of commercial unit are considered reasonable. Under current market conditions, we estimate a level appreciation factor for direct construction costs of 1.00% per year (0.50% semi-annually) for the subject's sell-off. Regarding indirect costs, the following list itemizes some of the typical components that generally comprise indirect costs: • Architectural and engineering fees for plans, plan checks, surveys and environmental studies • Appraisal, consulting, accounting and legal fees • The cost of carrying the investment in land and contract payments during construction. If the property is financed, the points, fees or service charges and interest on construction loans are considered • All-risk insurance • The cost of carrying the investment in the property after construction is complete, but before sell -out is achieved • Developer fee earned by the project coordinator • Interest reserve Conversations with developers indicate the indirect costs generally range anywhere from 10% to 15% of the direct costs (excluding marketing, sales, general and administrative expenses, taxes, which are accounted for separately). An estimate of 15% is considered reasonable for the subject. Uptown Newport (Phase 1) Adjustment Factors 63 Summary The following chars summarizes the revenue and expenses discussed on the preceding pages. Revenue And Expense Summary Revenue Residential Unit Sire {SF) 1.671 Sale Price (Total Consideration) $1.650.000 Number of Residential Units 158 Res Idential Revenue 5260.700,000 Commercial Unit Size (SF) 3,000 Sale Price (Total Consideration) 53.600.000 Number of Commercial Units 1 Commercial Revenue $3,600,000 Unit Revenue (Belpre Appreciation}: Unit Revenue (After Appreciation): Unit Revenue (Per Unit • from Cash Hpw): Residential Unit Premiums and Upgrades Model Recapture (r# 35% of cast) Lot Premium and Model Recapture Revenue: Expenses Non -Appreciated Expenses General and Administrative Marketing and Sales Ad Valorem Real Estate Taxes 0 i rect Rea! Estate Tax Charges CSCOACFD No. 2018-03 Presidential Units Commercial Unit HOA Model Costs OH -Site improvement Casts On -Site Development Casts Permits and fees Subtotal: $264,300,000 5280,951,135 $1.766,359 526.070.000 3157.500 $26,227,500 $165,000 (per rest detnial unit) 5165,997 {per residetnial unit) Total Revenue (Aker ApprediUon): 5307,078,635 51,931,312 {per unit) $771 /unit/year 55.35 /SF/year Appreciated Expenses Direct Constructor Casts (8eforr Appeciation) Direct Constructor Casts (After Appreciation) Indirect Constructon Costs (Total) Subtotal: ■ 3.0% 6.0% 53,407 $60 $867 Total Over Sell -Off Period of total revenue $9,212,359 el total revenue $18,424,716 /unit/year 51.901,030 (from cash flow) /unit/year 533,473 from cash flow) /unit/year 5470.832 {from cash flow) $325 /unit/month 3 models 15% of Direct CostS 52,117,700 (from cash flow) $450,000 $150,000 (per modell 51,197,230 $7,530 (per unit) $11,617.126 574,322 (per unit) $790 000 $4,969 (per unit) $46.414.474 Residential Units: 5132.009.000 $835,500 (per residential unit) 5500A0 per SF Commercial Unit 51305000 51,305,000 (per commerical unit) 5435.00 per IF 5133,314,000 5134.317.192 5844,762 (per unit) (from cash flow] $20.147,579 $126,714 (per unit) (from cash fiord) $154,464,771 Total Expenses: $200,879,244 Discount Rate The project yield rate is the rate of return on the total un-leveraged investment in a development, including both equity and debt. The leveraged yield rate is the rate of return to the "base" equity position when a portion of the development is financed. The "base" equity position represents the total equity contribution. The developer/builder may have funded all of the equity contribution, or a consortium of investors/builders as in a joint venture may fund it. Most surveys indicate that the threshold project yield requirement is about 20% to 30% for production home type projects. Instances in which project yields may be less than 20% often involve profit participation arrangements in master planned communities where the master developer limits the number of competing tracts. irr. Uptown Newport (Phase 1) Adjustment Factors 64 According to a leading publication within the appraisal industry, the PwC Real Estate Investor Survey', discount rates for land development projects ranged from 10.00% to 20.00%, with an average of 15.40% during the Second Quarter 2018, which is consistent with the Fourth Quarter 2017, the last time the survey was conducted. Without entitlements in place, certain investors will increase the discount rate between 100 and 800 basis points (the average increase is 394 basis points). These rates are free -and -clear of financing, are inclusive of developer's profit, and assume entitlements are in place. The surveyed investors have mixed opinions regarding value trends for the national development land market; their expectations range from negative 10.0% to positive 10.0% with an average expected value change of positive 1.2%. According to the data presented in the survey prepared by PwC, the majority of those respondents who use the discounted cash flow (DCF) method do so free and clear of financing. Additionally, the participants reflect a preference in including the developer's profit in the discount rate, versus a separate line item for this factor. As such, the range of rates presented above is inclusive of the developer's profit projection. The discount rates are based on a survey that includes residential, office, retail and industrial developments. Participants in the survey indicate the highest expected returns are on large-scale, unapproved developments. The low end of the range was extracted from projects where certain development risks had been lessened or eliminated. Several respondents indicate they expect slightly lower returns when approvals/entitlements are already in place. Excerpts from recent PwC surveys are copied below. Compared to investors' responses six months ago, a greater sense of caution is evident among our participants due to heightened uncertainty as it related to the current political environment, capital markets, and the industry's position in the real estate cycle... "the further path of interest rates and inflation, the longevity of the current cycle [are we near the peak?], and the high degree of uncertainty with regard to the overall stability of the decision makers in the federal government. (Second Quarter 2018) The largest increase over the past year occurs for the retail sector, where the rating rises from 2.42 to 2.55. The retail sector's development rating took a big hit between 2016 and 2017 and it appears that developers are now becoming more comfortable with this sector's evolution. Ironically, the only two sectors to see their development ratings decline this year, albeit slightly, are apartments and industrial, where concerns of oversupply issues have been expressed... Single- family development also gets a nod, as well as senior housing, where favorable demographics, compelling returns, greater liquidity, rising transparency, and mounting understanding of the benefits for residents appeal to investors... (Fourth Quarter 2017) This quarter, most surveyed investors note that the industrial sector presents the best opportunities for development land investing in the near term. Other top choices include restaurant and high -end luxury residential... Total spending on U.S. private construction was up 1 PwC Real Estate Investor Survey, PricewaterhouseCoopers, 2nd Quarter 2018, Volume 30, Number 4. irr. Uptown Newport (Phase 1) Adjustment Factors 65 7.0% on a year -over -year basis in March 2017, according to the U.S. Census Bureau. When looking more closely, private residential spending was up 7.5% while private nonresidential spending was up 6.4% — still positive, but below its year -over -year growth for March 2016 (9.3%). In the nonresidential sector, communication, office, and education reported the highest year -over -year gains in spending as of March 2017. In contrast, spending for health care, religious, and transportation construction declined year over year in March 2017... (Second Quarter 2017) Surveyed investors remain divided when asked which property sector presents the best opportunity for development land investing in the near term. While some believe that undeveloped residential land represents the best prospects for investing, a few others feel that land readied for retail development stands as the best opportunity for investors...While investors may be divided when it comes to which land type to pursue, they unanimously see positive opportunities over the near term and are eager to partake...Within the commercial real estate (CRE) industry, Reis reports that construction activity across all major property types continues to increase, fueled by the ongoing recovery in the economy and CRE fundamentals...Total spending on U.S. private construction was up 8.5% on a year -over -year basis in March 2016, according to the U.S. Census Bureau. When looking at private spending, private residential construction was up 7.8%, while private non-residential spending was up 9.3%...Over the next 12 months, all investor participants except one foresee development land values to increase... (Second Quarter 2016) First, investors and developers are increasingly looking for development opportunities throughout the commercial real estate (CRE) industry — in both established sectors, like apartments, as well as in niche sectors, like data centers housing. And second, rising construction and land costs will likely keep the development cycle "in check," helping sustain the industry's recovery. Even though development ranks as the second preferred investment category/ strategy... only three of the five main CRE property types reported development prospects ratings higher than last year's report... retail, office and industrial. The apartment sector's score slipped slightly this year, while the hotel sector's rating decreased the most. Outside the traditional CRE property sectors... respondents felt that development prospects in 2016 were best for 1) urban mixed -use properties, 2) data centers, 3) master -planned communities, 4) self -storage, and 5) infrastructure. (Fourth Quarter 2015) Of the four main property types covered in our Survey, three of them are expected to positively move along the real estate cycle, shifting mainly into either expansion or recovery, which will provide development opportunities. The one exception is the national multifamily sector, where many metros are expected to move into contraction by year-end 2015... Over the next 12 months, all investor participants expect one foresee development land values to increase. Appreciation ranges up to 15.0% and averages 5.2%. (Second Quarter 2015) Information for a developing in-house database of project yield rates is presented in the following table. It is noted the preceding survey related to production home developments at the land stage. Uptown Newport (Phase 1) Adjustment Factors 66 Project Yield Rate Survey Data Source Yield / IRR Expectations (inclusive of Profit) PwC Real Estate Investor Survey - Second Quarter 2018 (updated semi-annually) National Builder Range of 1p.0%to 20.0%, with an average of 15.4%, inclusive of profit and assuming entitlements in place, for land development (national average) 20% to 25% for entitled lots Regional Builder 18% to 25%. Longer term, higher risk projects on higher side of the range, shorter term, lower risk projects on the lower side of the range. Long term speculation properties (10 to 20 years out) often closer to 30%. National Builder 18% minimum, 20% target Developer Minimum IRR of 213-25%; for an 8 to 10 year cash flow, mid to upper 20% range Developer 25% IRR for land development is typical (no entitlements); slightly higher for properties with significant infrastructure costs Land Management Company Land Developer 20% to 30% IRR for land development deals on an unleveraged basis 35% for large land deals from raw unentitled to tentative map stage, unleveraged or leveraged. 25% to 30% from tentative map to pad sales to merchant builders, unleveraged Land Developer 18%to 22%for land with some entitlements, unleveraged. 30% for raw unentitled land Real Estate Consulting Firm Low 20% range yield rate required to attract capital to longer -tern land holdings Land Developer Merchant builder yield requirements in the 20% range for traditionally financed tract developments. Larger land holdings would require 25% to 3096. Environmentally challenged or politically risky development could well run in excess of 35%. Regional Builder 1096 discount rate excluding profit for single-family subdivisions National Builder 10%to40% for single-family residential subdivisions with 1-2year development timelines Regional Builder 15%to 20% IRR Regional Builder Land Developer No less than 20% IRR for land development, either entitled or unentitled 2096 to 3096 far an unentitled property; the lower end of the range would reflect those properties close to tentative maps Regional Builder No less than 30% when typical entitlement risk exists Based on this analysis, an internal rate of return towards the middle of the range is considered reasonable. Land Value Conclusion — Land Residential Analysis The land residual analysis is presented on the following page. irr. Uptown Newport (Phase 1) Adjustment Factors 67 Land Residual Analysis 6 Months: 0 1 2 3 4 5 6 7 8 9 10 11 Total REVENUE AND SALES Sales- Condominium Units 0 4 0 0 0 24 24 24 24 24 24 15 159 Unsold Inventory 159 159 159 159 159 135 111 87 63 39 15 0 Close of Escrow (COE) 0 0 0 0 0 24 24 24 24 24 24 15 159 Contracted Base Revenue (Before Appreciation) 50 $0 $0 $0 539,500,000 $39,600,000 $39,600,000 535,600,000 539,600,000 $39.600,000 $24,750,040 $262,350,000 Semi-annual Appreciation Factor 1.010 1.00000 1.01004 1.02010 1.03030 1.04060 1.05101 1.06152 1.07214 1.08286 1.09369 1.10462 Appreciated Contracted Home Revenue 50 $0 $0 50 $41.207,919 $41,619.998 542.036.198 $42,456,560 $42,881,126 $43,309.937 527,339.398 $280,851.135 Unit Premium and Model Recapture Revenue $Q 5Q a5.4 53 983 924 53 983.924 53.983 924 53 983,924 53 983.924 53 983.924 52.489 953 526 393,497 Total Revenue 50 50 5D $0 545,191,843 $45,603,922 $46,020,122 $46,440,484 $46,865,050 547,293,861 529,829,350 5307,244,631 EXPENSES AND CASH FLOWS Fixed Pr Percentage Expenses General and Administrative 3% (5837,940) ($837,940) ($837,9401 (5837,940) ($837,940) ($837,940) ($837,940j (5837,940) (5837,540) ($837,940) ($837,9401 (59,217,339) Marketing and Sales 6% SD SO 50 50 (52,711,511) (52.736,235) ($2,761.2071 (52,786,4291 (52,811,903) (52.837,5321 (51.789,7611 (518,434,578) Ad Valorem Real Estate Taxes per Unit $3,484 (5276,954) (5276,954) (5282,4531 (5282,493) (5244,649) (5201,156) ($160,816) ($116,453) (573,532) (528,281) 50 (51,943,781) Direct Real Estate Tax ChargeS per Unit $60 (54,770) (54,770) (54)865) (54,865) (S4,214) (53,465) (52,770) (52,006) ($1,2661 (54871 $0 1533.478) CSCDACFO No. 2018-03 per Unit $867 ($58,934) (568.934) ($58,934) ($58,9341 ($58.529) ($48.124) ($37.719) (527.313) ($16.908) ($6,503) $0 ($470,832) HOA per Month per Unit $325 $0 50 $D $0 ($263,250) ($216.450) ($169,6501 (5122,850) ($76,050) (529,250) $0 ($877,500) Model Casts 50 50 50 (5450,000) 50 50 50 50 50 50 50 (5450,0001 off -Site imp rovcment Costs ($1,197,230) $0 S0 50 50 $0 S0 50 50 $0 S0 (51,197,230) On -Site Development Costs (52,954,282) ($2,954,282) (52,954,2821 ($2,954,282) SO $0 $0 50 SO 50 $0 ($11,817,125) Building Permits i5158.0001 15158.0001 151560001 15258.000) 5158.0001 59. 5_4_ 54. 50. N. 54 15790.0001 Subtotal: (55,498,109) ($4,300,8791 (54,306,514) ($4,756,514) ($4,278,092) (54.043,3701 (53,970,1021 (53,892,991) (53,817,599) (53.740.093) (52,627,7011 (545.231,9641 Appreciated Expenses %Complete > 2.2S 2.5N 20:Or Q1 n Q7i Qn Qijr sal (f)0% Direct Construction Costs (533,328,500) (533,328,500) (533.328,500j (533,328,500) $O $0 $0 $0 $0 $0 $0 (5133.314.40D) Semi-annual Appreciation Factor 1.005 1,00000 1.00500 1.01003 1.01508 1.02015 1.02525 1.03038 1.03553 1.04071 1.04591 1.05114 Appreciated Direct Costs (S33.328,500) (533,495,1431 (533,662,6181 (533.830,931) 50 50 50 50 50 50 SO ($134,317,192) Indirect Construction Costs 15% (54,999.275) (55.024.2711 (55.049.3931 j55.074,640) a a gQ 59. a $g a 1520.147.5791 Subtotal; ($38,327,775) (538.519,414) ($38,712.0111 ($38,905.571) $0 $0 $0 50 $0 $0 50 (5154,464,7711 Total Expenses 1543 325 8841 .1542 820 2931 1543018.5241 1543 662 0851 154,278 D921 154 043 3701 153 970 1021 153 892 991) .1531317 5991 (53 7400531 ;52 627 7011 (5199 5957351 NET INCOME (BEFORE DISCOUNTING) (543,825,884) 1542,820,293) ($43,018,524) ($43.662,085} 540,913,751 541,550,552 $42,050,020 542,547,453 543,047,450 543,553.768 527.201,649 5107.547,897 Present Value Factors Internal Rate of Return (IRR) 16.00% 0.96154 0.92456 0.88900 0.85480 0.82193 0.79031 0,75992 0.73069 0.70259 0.67556 0.64958 Discounted Cash Flow ($42,140,273) 1539,589,768) ($38,243,3121 (537,322,533) $33.628,121 532,845,908 531,954,559 $31,089,036 530,244,567 $29,423,365 $17,669,673 549,559,344 Net Present Value 549,560,000 Net Present Value Per Unit: 5311,698 Uptown Newport (Phase 1) Sales Comparison Approach 68 Sales Comparison Approach This approach is based on the economic principle of substitution. According to The Appraisal of Real Estate, 14th Edition (Chicago: Appraisal Institute, 2013), "The principle of substitution holds that the value of property tends to be set by the cost of acquiring a substitute or alternative property of similar utility and desirability within a reasonable amount of time." The sales comparison approach is applicable when there are sufficient recent, reliable transactions to indicate value patterns or trends in the market. The proper application of this approach requires obtaining recent sales data for comparison with the appraised properties. In order to assemble the comparable sales, we searched public records and other data sources for leads, then confirmed the raw data obtained with parties directly related to the transactions (primarily brokers, buyers and sellers). On the following pages, we have arrayed comparable sales that have occurred in the subject's market area of similar redevelopment sites. The summary table is accompanied by a map and discussion of adjustments. For this analysis, we use price per unit as the appropriate unit of comparison because market participants typically compare sale prices and property values on this basis. The sales most relevant to analyzing the subject's land value are summarized in the following table: irr. Uptown Newport (Phase 1) Sales Comparison Approach 69 Summary of Comparable Land Sales Sale Units; Date; Effective Sale SF; Density No. Name/Address Status Price Acres (Units/Ac.) Zoning $/Unit 1 671 West 17th Street Jun-17 $17,100,000 94,090 42 General $407,143 671 W. 17th St. Closed 2.16 19.4 Industrial Costa Mesa Orange County Tax ID: Portion of 424-291-11 Grantor: W-WP Wests i de Gateway Owner VII Grantee: Westsi de Gateway Development LLC Comments: This property is located at the southeast corner of 17th Street and Pomona Avenue. It is irregular in shape with level topography. The surrounding land uses in the immediate area include a mix of industrial, retail, and multi family residential. According to the buyer's broker, Brandon Johnson with Tierra Development Advisors, the site was sold as vacant land and was fully entitled for 42 townhomes. The sale included approved tract maps, however, the infrastructure was not completed. 2 929 Baker Street Jan-17 $21,350,000 201,247 56 Multiple Family $381,250 929 Baker St. Closed 4.62 12.1 Residential Costa Mesa Orange County Tax ID: 141-242-03 Grantor: R & THolmes Family Limited Partnership and William L. Steel, Trustee Grantee: Socal Baker, LLC Comments: This property is located on south side of Baker Street and east of Milbro Street. It is rectangular in shape with level topography. The surrounding land uses in the immediate area are single and multi family residences, along with an education center adjacent to the site. According to the buyer, David Sanson with Civic Property Group, the site was improved with an old industrial building that added no value. The sale was based on land value and was fully entitled to develop 56 single-family residences. 3 E/S Von Karman Avenue; 5/0 Alton Parkway Dec-16 $17,500,000 148,104 71 IBC Multi -Use $246,479 Irvine Closed 3.40 20.9 Orange County Tax ID: Portion of 435-035-06 Grantor: Fairfield Von Karman LLC Grantee: Irvine Gateway Development LLC Comments: This property is located on the east side of Von Karman Avenue and south of Alton Parkway. It is rectangular in shape with level topography. The immediate surrounding land uses are multi family residential and industrial. According to the seller's broker, Mike Hunter with Land Advisors Organization, this property sold as vacant land with entitlements and infrastructure in place. The buyer plans to develop 71 townhomes on the site. 4 2626 Harbor Blvd. Sep-16 $12,500,000 160,214 33 Multifamily $378,788 Costa Mesa Closed 3.68 9.0 Residential, Orange County Medium Tax ID: 141-361-29 and 30; and 141-731-02 and 03 Density Grantor: Suburban Harbor, LLC, etc. Grantee: SoCaI Harbor, LLC, etc. Comments: The seller's broker, Brian Childs, confirmed the sale, and that it was an arm's-length transaction at a market price. There were two buildings which were demolished prior to the sale and the lot sold as vacant land. The sale included a tract map with 33 single family residential lots. No specific value was attributed to the entitlements. Subject 141,483 159 Uptown Uptown Newport (Phase 1) 3.25 49.0 Newport Newport Beach, CA Planned Community Development Uptown Newport (Phase 1) Sales Comparison Approach 70 Comparable Land Sales Map Forcer Ross moor Reserve CentEr 22 Seer? Seal Beach Beach Nawvr Weapons Shtror Sunset each LIP bin?g Garden Grove Westminster nster Midway City Fountain VaLI ey Huntington Beach Orange 122 North Tustin Santa Ana ▪ Tustin ti .. 5Urrwoao crNfRht u* Fi Irvine 0 rr Costa Me▪ sa i Newport Beach lm JiJ r?.F ROCK I,31 San Joaquin Hills Laguna each 261 Kathryn �133 El Toro Marble Cars Air Station Lake Forest Silver Foothill Ranch Mission Viejo Laguna Hills Aliso Viejo Laguna Niguel Ladera reusnnre 20EG hdicrasaft Corporal ion 18 HERE Uptown Newport (Phase 1) Sales Comparison Approach 71 Adjustment Factors The sales are compared to the subject and adjusted to account for material differences that affect value. Adjustments are considered for the following factors, in the sequence shown below. Adjustment Factors Effective Sale Price Real Property Rights Financing Terms Conditions of Sale Market Conditions Location Access/Exposure Size Shape and Topography Off -Site Improvements Zoning /Entitlements Accounts for atypical economics of a transaction, such as demolition cost, expenditures by the buyer at time of purchase, or other similar factors. Usually applied directly to sale price on a lump sum basis. Fee simple, leased fee, leasehold, partial interest, etc. Seller financing, or assumption of existing financing, at non -market terms. Extraordinary motivation of buyer or seller, assemblage, forced sale, related parties transaction. Changes in the economic environment over time that affect the appreciation and depreciation of real estate. Market or submarket area influences on sale price; surrounding land use influences. Convenience to transportation facilities; ease of site access; visibility from main thoroughfares; traffic counts. Inverse relationship that often exists between parcel size and unit value. Primary physical factors that affect the utility of a site for its highest and best use. Infrastructure improvements at the time of sale. Government regulations that affect the types and intensities of uses allowable on a site; the specific level of governmental approvals attained pertaining to development of a site. When considering market conditions, we note that the sales took place from September 2016 to June 2017, and that market conditions generally have been strengthening over this period through the effective date of value. Accordingly, we apply upward adjustments for improving market conditions to Comparables 2 through 4 to account for this trend. Overall, the majority of the comparables require upward adjustments for location as the subject is located within the city of Newport Beach, which is considered superior to Costa Mesa and Irvine. However, the subject's location is least proximate to the coast as most of the Newport Beach area is accustom to. irr. Uptown Newport (Phase 1) Sales Comparison Approach 72 Analysis and Adjustment of Sales Our analysis of the comparable sales is described in the following paragraphs. Land Sale 1 is a 2.16 acre, or 94,090 square foot, parcel located at 671 W. 17th St., Costa Mesa, Orange County, CA, with development potential for 42 units. The property sold in June 2017 for $17,100,000, or $407,143 per unit. Overall, this comparable is deemed superior to the subject and a market value less than this comparable sale is considered reasonable for the subject property. Land Sale 2 is a 4.62 acre, or 201,247 square foot, parcel located at 929 Baker St., Costa Mesa, Orange County, CA, with development potential for 56 units. The property sold in January 2017 for $21,350,000, or $381,250 per unit. This comparable is deemed slightly superior to the subject, as its smaller size and single-family entitlements outweighs its inferior location. Overall, a market value somewhat less than this comparable sale is considered reasonable for the subject property. Land Sale 3 is a 3.40 acre, or 148,104 square foot, parcel located at E/S Von Karman Avenue; S/O Alton Parkway, Irvine, Orange County, CA, with development potential for 71 units. The property sold in December 2016 for $17,500,000, or $246,479 per unit. Located the furthest inland of all the comparables analyzed, this comparable is considered inferior to the subject property and a market value conclusion higher than this transaction is deemed reasonable. Land Sale 4 is a 3.68 acre, or 160,214 square foot, parcel located at 2626 Harbor Blvd., Costa Mesa, Orange County, CA, with development potential for 33 units. The property sold in September 2016 for $12,500,000, or $378,788 per unit. Similar to Comparable 2, this property's size and entitlements provide for a higher indicator of market value as it, overall, is considered slightly superior to the subject property. Overall, a market value somewhat less than this comparable sale is considered reasonable for the subject property. The following table summarizes the adjustments we make to the comparable sales. irr. Uptown Newport (Phase 1) Sales Comparison Approach 73 Land Sales Adjustment Grid Subject Comparable 1 Comparable Comparable Comparable Name Address City County Sale Date Sale Status Sale Price Price Adjustment Description of Adjustment Effective Sale Price Square Feet Acres Number of Units Uptown Newport (Phase 1) 4311-4321 Jamboree Rd. Newport Beach Orange 141,483 3.248 159 671 West 17th Street 671 W. 17th St. Costa Mesa Orange Jun-17 Closed $17,100,000 — $17,100,000 94,090 2.160 42 929 Baker Street 929 Baker St. Costa Mesa Orange Jan-17 Closed $21,350,000 — $21,350,000 201,247 4.620 56 E/S Von Karman Avenue; S/O Alton Parkway E/S Von Karman Avenue; S/O Alton Parkway Irvine Orange Dec-16 Closed $17,500,000 — $17,500,000 148,104 3.400 71 2626 Harbor Blvd, 2626 Harbor Blvd. Costa Mesa Orange Sep-16 Closed $12,500,000 — $12,500,000 160,214 3.678 33 Price per Unit Property Rights Adjustment Financing Terms Adjustment Conditions of Sale Adjustment Market Conditions 12/22/2018 Adjustment Location Access/Exposure Size Shape and Topography Off -Site Improvements Zoning/Entitlements $407,143 Fee Simple = Cash to seller = Market = Jun-17 $381,250 Fee Simple _ Cash to seller = Market _ Jan-17 $246,479 Fee Simple = Cash to seller = Market = Dec-16 $378,788 Fee Simple = Cash to seller = Market = Sep-16 = + + ++ = = = = = + = - = = --- ++ = = = = + = = = Overall Adjustment --- --- + --- Indicated Value Uptown Newport (Phase 1) $300,000 Sales Comparison Approach 74 Land Value Conclusion — Sales Comparison Approach Prior to adjustments, the sales reflect a range of $246,479 - $407,143 per unit. After adjustment, the data indicated a market value less than Comparables 1, 2 and 4, but higher than Comparables 3 for the subject property. Based on the preceding analysis, we reach a land value conclusion as follows: Land Value Conclusion Indicated Value per Unit $300,000 Subject Units 159 Indicated Value $47,700,000 Rounded $47,700,000 irr. Uptown Newport (Phase 1) Reconciliation and Conclusion of Land Value The land value conclusions indicated by the land residual analysis and sales comparison approach to value are presented below. Reconciliation of Land Value Land Residual Analysis Sales Comparison Appraoch Conclusion $49,560,000 $47,700,000 $49,500,000 In our opinion, when considered together, both the sales comparison approach and land residual analysis provide reliable indicators of market value for the subject. Overall, slightly more reliance is placed on the land residual analysis. Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of value of the appraised property, in bulk, subject to the hypothetical condition all public capital facilities and improvements to be financed by the CFD Special Tax have been completed, as well as the Assessed Value of Lot 2 not appraised, is as follows: Value Conclusions Appraisal Premise Market Value of Lot 1, As If Public Capital Facilities and Improvements Have Been Completed Assessed Value of Lot 2 Total Aggregate Value of Appraised and Assessed Properties in the District Interest Appraised Date of Value Value Conclusion Fee Simple December 22, 2018 $49,500,000 S1,721,636 $51,221,636 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. None The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. We have been requested to provide the market value of the fee simple interest in the appraised property, subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. The opinions of value expressed in this report are based on estimates and forecasts that are prospective in nature and subject to considerable risk and uncertainty. Events may occur that could irr. Uptown Newport (Phase 1) cause the performance of the property to differ materially from our estimates, such as changes in the economy, interest rates, capitalization rates, financial strength of tenants, and behavior of investors, lenders, and consumers. Additionally, our opinions and forecasts are based partly on data obtained from interviews and third party sources, which are not always completely reliable. Although we are of the opinion that our findings are reasonable based on available evidence, we are not responsible for the effects of future occurrences that cannot be reasonably foreseen at this time. Exposure Time Exposure time is the length of time the subject property would have been exposed for sale in the market had it sold on the effective valuation date at the concluded market value. Exposure time is always presumed to precede the effective date of the appraisal. Based on our review of recent sales transactions for similar properties and our analysis of supply and demand in the local market, it is our opinion that the probable exposure time for the subject at the concluded market value stated previously is 12 months. Marketing Time Marketing time is an estimate of the amount of time it might take to sell a property at the concluded market value immediately following the effective date of value. As we foresee no significant changes in market conditions in the near term, it is our opinion that a reasonable marketing period for the subject is likely to be the same as the exposure time. Accordingly, we estimate the subject's marketing period at 12 months. irr. Uptown Newport (Phase 1) Certification 77 Certification We certify that, to the best of our 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 our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. We have not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. S. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 8. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice as well as applicable state appraisal regulations. 9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 11. Eric Segal, MAI, made a personal inspection of the property that is the subject of this report. Sara Gilbertson has not personally inspected the subject. 12. No one provided significant real property appraisal assistance to the person(s) signing this certification. 13. We have experience in appraising properties similar to the subject and are in compliance with the Competency Rule of USPAP. 14. As of the date of this report, Eric Segal, MAI, has completed the continuing education program for Designated Members of the Appraisal Institute. irr. Uptown Newport (Phase 1) Certification 78 15. As of the date of this report, Sara Gilbertson has completed the Standards and Ethics Education Requirements for Candidates/Practicing Affiliates of the Appraisal Institute. Eric Segal, MAI Certified General Real Estate Appraiser California Certificate # AG026558 Sara Gilbertson Certified General Real Estate Appraiser California Certificate # 3002204 Uptown Newport (Phase 1) irr. Assumptions and Limiting Conditions 79 Assumptions and Limiting Conditions This appraisal and any other work product related to this engagement are limited by the following standard assumptions, except as otherwise noted in the report: 1. The title is marketable and free and clear of all liens, encumbrances, encroachments, easements and restrictions. The property is under responsible ownership and competent management and is available for its highest and best use. 2. There are no existing judgments or pending or threatened litigation that could affect the value of the property. 3. There are no hidden or undisclosed conditions of the land or of the improvements that would render the property more or less valuable. Furthermore, there is no asbestos in the property. 4. The revenue stamps placed on any deed referenced herein to indicate the sale price are in correct relation to the actual dollar amount of the transaction. 5. The property is in compliance with all applicable building, environmental, zoning, and other federal, state and local laws, regulations and codes. 6. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy. This appraisal and any other work product related to this engagement are subject to the following limiting conditions, except as otherwise noted in the report: 1. An appraisal is inherently subjective and represents our opinion as to the value of the property appraised. 2. The conclusions stated in our appraisal apply only as of the effective date of the appraisal, and no representation is made as to the effect of subsequent events. 3. No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated. 4. No environmental impact studies were either requested or made in conjunction with this appraisal, and we reserve the right to revise or rescind any of the value opinions based upon any subsequent environmental impact studies. If any environmental impact statement is required by law, the appraisal assumes that such statement will be favorable and will be approved by the appropriate regulatory bodies. 5. Unless otherwise agreed to in writing, we are not required to give testimony, respond to any subpoena or attend any court, governmental or other hearing with reference to the property without compensation relative to such additional employment. 6. We have made no survey of the property and assume no responsibility in connection with such matters. Any sketch or survey of the property included in this report is for illustrative purposes only and should not be considered to be scaled accurately for size. The appraisal irr. Uptown Newport (Phase 1) Assumptions and Limiting Conditions 80 covers the property as described in this report, and the areas and dimensions set forth are assumed to be correct. 7. No opinion is expressed as to the value of subsurface oil, gas or mineral rights, if any, and we have assumed that the property is not subject to surface entry for the exploration or removal of such materials, unless otherwise noted in our appraisal. 8. We accept no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal descriptions and other legal matters such as legal title, geologic considerations such as soils and seismic stability; and civil, mechanical, electrical, structural and other engineering and environmental matters. Such considerations may also include determinations of compliance with zoning and other federal, state, and local laws, regulations and codes. 9. The distribution of the total valuation in the report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. The appraisal report shall be considered only in its entirety. No part of the appraisal report shall be utilized separately or out of context. 10. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraisers, or any reference to the Appraisal Institute) shall be disseminated through advertising media, public relations media, news media or any other means of communication (including without limitation prospectuses, private offering memoranda and other offering material provided to prospective investors) without the prior written consent of the persons signing the report. 11. Information, estimates and opinions contained in the report and obtained from third -party sources are assumed to be reliable and have not been independently verified. 12. Any income and expense estimates contained in the appraisal report are used only for the purpose of estimating value and do not constitute predictions of future operating results. 13. If the property is subject to one or more leases, any estimate of residual value contained in the appraisal may be particularly affected by significant changes in the condition of the economy, of the real estate industry, or of the appraised property at the time these leases expire or otherwise terminate. 14. Unless otherwise stated in the report, no consideration has been given to personal property located on the premises or to the cost of moving or relocating such personal property; only the real property has been considered. 15. The current purchasing power of the dollar is the basis for the values stated in the appraisal; we have assumed that no extreme fluctuations in economic cycles will occur. 16. The values found herein are subject to these and to any other assumptions or conditions set forth in the body of this report but which may have been omitted from this list of Assumptions and Limiting Conditions. 17. The analyses contained in the report necessarily incorporate numerous estimates and assumptions regarding property performance, general and local business and economic irr. Uptown Newport (Phase 1) Assumptions and Limiting Conditions 81 conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our analysis will vary from our estimates, and the variations may be material. 18. The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific survey or analysis of the property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. We claim no expertise in ADA issues, and render no opinion regarding compliance of the subject with ADA regulations. Inasmuch as compliance matches each owner's financial ability with the cost to cure the non- conforming physical characteristics of a property, a specific study of both the owner's financial ability and the cost to cure any deficiencies would be needed for the Department of Justice to determine compliance. 19. The appraisal report is prepared for the exclusive benefit of the Client, its subsidiaries and/or affiliates. It may not be used or relied upon by any other party. All parties who use or rely upon any information in the report without our written consent do so at their own risk. 20. No studies have been provided to us indicating the presence or absence of hazardous materials on the subject property or in the improvements, and our valuation is predicated upon the assumption that the subject property is free and clear of any environment hazards including, without limitation, hazardous wastes, toxic substances and mold. No representations or warranties are made regarding the environmental condition of the subject property. Integra Realty Resources — Sacramento, Integra Realty Resources, Inc., Integra Strategic Ventures, Inc. and/or any of their respective officers, owners, managers, directors, agents, subcontractors or employees (the "Integra Parties"), shall not be responsible for any such environmental conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because we are not experts in the field of environmental conditions, the appraisal report cannot be considered as an environmental assessment of the subject property. 21. The persons signing the report may have reviewed available flood maps and may have noted in the appraisal report whether the subject property is located in an identified Special Flood Hazard Area. We are not qualified to detect such areas and therefore do not guarantee such determinations. The presence of flood plain areas and/or wetlands may affect the value of the property, and the value conclusion is predicated on the assumption that wetlands are non- existent or minimal. 22. Integra Realty Resources — Sacramento is not a building or environmental inspector. Integra Sacramento does not guarantee that the subject property is free of defects or environmental problems. Mold may be present in the subject property and a professional inspection is recommended. 23. The appraisal report and value conclusions for an appraisal assume the satisfactory completion of construction, repairs or alterations in a workmanlike manner. 24. It is expressly acknowledged that in any action which may be brought against any of the Integra Parties, arising out of, relating to, or in any way pertaining to this engagement, the Uptown Newport (Phase 1) Assumptions and Limiting Conditions 82 appraisal reports, and/or any other related work product, the Integra Parties shall not be responsible or liable for any incidental or consequential damages or losses, unless the appraisal was fraudulent or prepared with intentional misconduct. 25. Integra Realty Resources — Sacramento, an independently owned and operated company, has prepared the appraisal for the specific intended use stated elsewhere in the report. The use of the appraisal report by anyone other than the Client is prohibited except as otherwise provided. Accordingly, the appraisal report is addressed to and shall be solely for the Client's use and benefit unless we provide our prior written consent. We expressly reserve the unrestricted right to withhold our consent to your disclosure of the appraisal report or any other work product related to the engagement (or any part thereof including, without limitation, conclusions of value and our identity), to any third parties. Stated again for clarification, unless our prior written consent is obtained, no third party may rely on the appraisal report (even if their reliance was foreseeable). 26. The conclusions of this report are estimates based on known current trends and reasonably foreseeable future occurrences. These estimates are based partly on property information, data obtained in public records, interviews, existing trends, buyer -seller decision criteria in the current market, and research conducted by third parties, and such data are not always completely reliable. The Integra Parties are not responsible for these and other future occurrences that could not have reasonably been foreseen on the effective date of this assignment. Furthermore, it is inevitable that some assumptions will not materialize and that unanticipated events may occur that will likely affect actual performance. While we are of the opinion that our findings are reasonable based on current market conditions, we do not represent that these estimates will actually be achieved, as they are subject to considerable risk and uncertainty. Moreover, we assume competent and effective management and marketing for the duration of the projected holding period of this property. 27. All prospective value opinions presented in this report are estimates and forecasts which are prospective in nature and are subject to considerable risk and uncertainty. In addition to the contingencies noted in the preceding paragraph, several events may occur that could substantially alter the outcome of our estimates such as, but not limited to changes in the economy, interest rates, and capitalization rates, behavior of consumers, investors and lenders, fire and other physical destruction, changes in title or conveyances of easements and deed restrictions, etc. It is assumed that conditions reasonably foreseeable at the present time are consistent or similar with the future. 28. The appraisal is also subject to the following: irr. Uptown Newport (Phase 1) Assumptions and Limiting Conditions 83 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. None The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. We have been requested to provide the market value of the fee simple interest in the appraised property, subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. irr. Uptown Newport (Phase 1) Addenda Addendum A Appraiser Qualifications Uptown Newport (Phase 1) i.71 Eric Segal, MAI Experience Mr. Segal is a Certified General real estate appraiser and holds the Appraisal Institute's MAI designation. In 1998, Mr. Segal began his career in real estate as a research analyst/appraiser trainee for Richard Seevers and Associates. By 1999, he began writing narrative appraisal reports covering a variety of commercial properties, with an emphasis on residential master planned communities and subdivisions. Today, Mr. Segal is a partner in the firm and is involved in appraisal assignments covering a wide variety of properties including office, retail, industrial, multifamily housing, master planned communities, and specializes in the appraisal of Mello -Roos Community Facilities Districts and Assessment Districts for land -secured municipal financings, as well as multifamily developments under the U.S. Department of Housing and Urban Development's Multifamily Accelerated Processing (MAP) Guide. He has developed the experience and background necessary to deal with complex assignments covering an array of property types, with a particular focus on urban redevelopment in the cities of San Francisco, Monterey, Alameda and San Mateo. He has developed the experience and background necessary to deal with complex assignments covering an array of property types. Eric is currently Managing Director of the Integra -San Francisco office and Senior Managing Director of the Integra -Sacramento office. Professional Activities & Affiliations Appraisal Institute, Member (MAI) Appraisal Institute, January 2016 Licenses California, Certified General, AG026558, Expires February 2021 Nevada, Certified General, A.0207666-CG, Expires January 2019 Education Academic: Bachelor of Science in Business Administration (Concentrations in Finance and Real Estate & Land Use Affairs), California State University, Sacramento Appraisal and Real Estate Courses: Uniform Standards of Professional Appraisal Practice Appraisal Principles Basic Income Capitalization Highest & Best Use and Market Analysis Advanced Income Capitalization Report Writing and Valuation Analysis Self -Storage Economics and Appraisal Seminar Appraisal Litigation Practice and Courtroom Management Hotel Valuations: New Techniques for today's Uncertain Times Computer Enhanced Cash Flow Modeling Advanced Sales Comparison & Cost Approaches Advanced Applications Supervisor -Trainee Course for California esegal@irr.com - 916-435-3883 x228 Integra Realty Resources Sacramento 3825 Atherton Rd # 500 Rocklin, CA 95765 T 916-435-3883 F 916-435-4774 irr.com irr. ‘ vri'.--..,_' , ..,, _A:id , r • ' ..„, igt • - .2 ' ---... , = ' ', .4.=,' = =itis. .,'..-,,, ''.. Ala e..', _ -i- . `'- , ' IP ,.' 1...,.? - , d . ,,,, .., 4 . , , s..• ,-------- ill. w /111N,-- ,- • - . ! I i, I •: El tke, . , 9 6 ,,, -, 'MeV. -,--_,/ ( ' in the and ) , 1 ( • " L 41 • t:; . '.4 „, , ..,. -, ., .--- , _.... • :„,, /4 . r i . , 4 ., . --- ' . . nf, _ ..,.. , 0, A Business, BUREAU ESTATE met the requirements and is, therefore, been issued in accordance IDENTIFICATION ---- Consumer Services OF REAL & Housing ESTATE APPRAISERS A. Segal as a residential and the title: Real Estate Appraiser" provisions of the AG 026558 Effective Date Expires: ._-x-- cnzz Agency LICENSE commercial real estate appraiser Real Estate Appraisers' Licensing Date: February 19, 2017 February 18, 2019 ett., %.,,000 REAL APPRAISER Eric for a license entitled to use 'Certified General with the NUMBER: .„-- ---„ ----,-, w, ----------._.-_,-;- , _, _.-_,—. =„ . __,_._- ____-_, --------- ,-,-,--- --_-_—_ -_-- - has successfully State of California This license has Certification Law. BREA APPRAISER , ,..,... — - te ** 4,12., „,e. t.• Jim Prtin, Bureau Chief, BREA . _ _,-- - -.._. - — _..____- — .„.._,--. --._-__ _ .---_-_ ------,- - r+++ ... """`r""...`"" ..,. ' ...;" ""...";.."` ". "' ".:•,;'•.,,,......-......1:-..+ e++ + + r: !+++,....7......•••••••••+++++++.. + ,7+7++e+++; 7+++ .t. , +,+++++++ .. .. MM.! tr...W. .. , , ...........".......*'.•••• .., ....T.. a 1:1 44, tlt , N....----,.. .,---....s., 'ST" tci: ' ...--- -,IfiCa;Ilialii,I'Aratt-lhitVallatitgifittuillkittaari/af ,,,,, , -,....,....,... F,-...-41W•0. , ac x s vwz,....M..4 5-.M..-Iilq, 1%11 ValE,,,,, .6.1.9.4iff.• rx N., vAr-2,-,,, ..-m-vire, r y . , s ,ava.,....-.--. w--1.,,car, r , ,,,vedr-,-,-n w.-=,,swear.. e . X VI.,18,....,-.7 6,-.5,,N”...,?, THIS DOCUMENT CONTAINS A TRUE WATERMARK - HOLD UP TO LIGHT TO SEE CHAIN LINK" '11,1.1atiili02,4\7AftU,SV,. • , , ,,, V Business, Consumer Services & Housing Agency BUREAU OF REAL ESTATE APPRAISERS MT'..ESTAflAPIRAISERL10ENSE as successfully met the requt ements for a license as a residential and co nmercial: real estate State of California and is, - therefore ;, entitled to use the titles w .. Effective Date: February 19,` 201 Date Expires , February 18, 202 TIPS FUME : TRUE WATEFiMA iK . I LD UP TO LIGHT TO ;EE kdAU I LTN$ Sara Gilbertson Experience Ms. Gilbertson is a licensed appraiser with Integra Realty Resources, a real estate appraisal firm that engages in a wide variety of real estate valuation and consultation assignments. She joined the firm in April 2011 after completing her bachelor's degree at California State University, Sacramento and has been writing narrative appraisal reports for a variety of commercial properties. She has experience in writing narrative appraisal reports covering a variety of commercial properties, as well as special -use properties including self -storage facilities, hotels and mobile home parks. She also specialized in the appraisal of residential master planned communities and subdivision, as well as Mello -Roos and Assessment Districts for land -secured municipal financings. Ms. Gilbertson has developed the experience and background necessary to deal with complex assignments covering an array of property types. Licenses California, Certified General Real Estate Appraiser, 3002204, Expires May 2020 Education Academic: Bachelor of Science in Business Administration (Concentration in Real Estate and Land Development), California State University, Sacramento Appraisal Institute Courses: Basic Appraisal Principles Basic Appraisal Procedures Uniform Standards of Professional Appraisal Practice Real Estate Finance and Statistics and Valuation Modeling Sales Comparison Approach Report Writing and Case Studies Market Analysis and Highest and Best Use Site Valuation and Cost Approach Basic Income Capitalization Expert Witness for Commercial Appraisers Commercial Appraisal Review sgilbertson@irr.com - 916-435-3883 x248 Integra Realty Resources Sacramento 3825 Atherton Rd # 500 Rocklin, CA 95765 T 916-435-3883 F 916-435-4774 irr.com irr. t mil' gJraF 4.4p„.1+'. ugt4A 1 r .�� %r 44. SEpL OF as 1��� Business, Consumer Services & Housing Agency lli r o �-a: BUREAU OF REAL ESTATE APPRAISERS Yr, s fr�l>, �� q o - REAL ESTATE APPRAISER LICENSE Sara A. Gilbertson has successfully met the requirements for a license as a residential and commercial real estate appraiser in the State of California and is, therefore, entitled to use the title: "Certified General Real Estate Appraiser" This license has been issued in accordance with the provisions of the Real Estate Appraisers' Licensing and Certification Law. BRE.A APPRAISER IDENTIFICATION NUMBER: 3002204 3039402 Effective Date: May 30, 2018 Date Expires: May 29, 2020 Ji artin, Bureau Chief, BREA THIS DOCUMENT CONTAINS A TRUE WATERMARK - HOLD UP TO LIGHT TO SEE "CHAIN LINK' • About IRR Integra Realty Resources, Inc. (IRR) provides world -class commercial real estate valuation, counseling, and advisory services. Routinely ranked among leading property valuation and consulting firms, we are now the largest independent firm in our industry in the United States, with local offices coast to coast and in the Caribbean. IRR offices are led by MAI-designated Senior Managing Directors, industry leaders who have over 25 years, on average, of commercial real estate experience in their local markets. This experience, coupled with our understanding of how national trends affect the local markets, empowers our clients with the unique knowledge, access, and historical perspective they need to make the most informed decisions. Many of the nation's top financial institutions, developers, corporations, law firms, and government agencies rely on our professional real estate opinions to best understand the value, use, and feasibility of real estate in their market. Local Expertise...Nationally! irr.com irr® Addenda Addendum B Definitions Uptown Newport (Phase 1) i.71 Definitions The source of the following definitions is the Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), unless otherwise noted. As Is Market Value The estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date. Disposition Value The most probable price that a specified interest in property should bring under the following conditions: 1. Consummation of a sale within a specified time, which is shorter than the typical exposure time for such a property in that market. 2. The property is subjected to market conditions prevailing as of the date of valuation. 3. Both the buyer and seller are acting prudently and knowledgeably. 4. The seller is under compulsion to sell. 5. The buyer is typically motivated. 6. Both parties are acting in what they consider to be their best interests. 7. An adequate marketing effort will be made during the exposure time. 8. Payment will be made in cash in U.S. dollars (or the local currency) or in terms of financial arrangements comparable thereto. 9. 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. This definition can also be modified to provide for valuation with specified financing terms. Effective Date 1. The date on which the appraisal or review opinion applies. 2. In a lease document, the date upon which the lease goes into effect. Entitlement In the context of ownership, use, or development of real estate, governmental approval for annexation, zoning, utility extensions, number of lots, total floor area, construction permits, and occupancy or use permits. Entrepreneurial Profit 1. A market -derived figure that represents the amount an entrepreneur receives for his or her contribution to a project and risk; the difference between the total cost of a property (cost of irr. Uptown Newport (Phase 1) development) and its market value (property value after completion), which represents the entrepreneur's compensation for the risk and expertise associated with development. An entrepreneur is motivated by the prospect of future value enhancement (i.e., the entrepreneurial incentive). An entrepreneur who successfully creates value through new development, expansion, renovation, or an innovative change of use is rewarded by entrepreneurial profit. Entrepreneurs may also fail and suffer losses. 2. In economics, the actual return on successful management practices, often identified with coordination, the fourth factor of production following land, labor, and capital; also called entrepreneurial return or entrepreneurial reward. Exposure Time 1. The time a property remains on the market. 2. The estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based on an analysis of past events assuming a competitive and open market. Fee Simple Estate 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. Floor Area Ratio (FAR) The relationship between the above -ground floor area of a building, as described by the zoning or building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area. Highest and Best Use 1. 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. 2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an asset's existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid. (ISV) 3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal Land Acquisitions) Uptown Newport (Phase 1) Investment Value 1. The value of a property to a particular investor or class of investors based on the investor's specific requirements. Investment value may be different from market value because it depends on a set of investment criteria that are not necessarily typical of the market. 2. The value of an asset to the owner or a prospective owner for individual investment or operational objectives. Lease A contract in which rights to use and occupy land, space, or structures are transferred by the owner to another for a specified period of time in return for a specified rent. Leased Fee Interest The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires. Leasehold Interest The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease. Liquidation Value The most probable price that a specified interest in real property should bring under the following conditions: 1. Consummation of a sale within a short time period. 2. The property is subjected to market conditions prevailing as of the date of valuation. 3. Both the buyer and seller are acting prudently and knowledgeably. 4. The seller is under extreme compulsion to sell. S. The buyer is typically motivated. 6. Both parties are acting in what they consider to be their best interests. 7. A normal marketing effort is not possible due to the brief exposure time. 8. Payment will be made in cash in U.S. dollars (or the local currency) or in terms of financial arrangements comparable thereto. 9. 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. This definition can also be modified to provide for valuation with specified financing terms. Marketing Time An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal. Uptown Newport (Phase 1) Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal. Market Value 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 and 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: • buyer and seller are typically motivated; • both parties are well informed or well advised, and acting in what they consider their own best interests; • a reasonable time is allowed for exposure in the open market; • payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and • 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. (Source: Code of Federal Regulations, Title 12, Chapter 1, Part 34.42[g]; also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472) Prospective Opinion of Value A value opinion effective as of a specified future date. The term does not define a type of value. Instead, it identifies a value opinion as being effective at some specific future date. An opinion of value as of a prospective date is frequently sought in connection with projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy. irr. Uptown Newport (Phase 1) Addenda Addendum C Preliminary Title Report Uptown Newport (Phase 1) i.71 CLTA Preliminary Report Form Order Number: NHSC-5064254 (mw) (Rev. 11/06) Page Number: 1 Updated First American Title First American Title Company 1250 Corona Pointe Court, Suite 200 Corona, CA 92879 Terri Hovdestad Shopoff Realty Investments, L.P. 2 Park Plaza, Suite 700 Irvine, CA 92614 Customer Reference: Uptown Newport Order Number: NHSC-5064254 (mw) Title Officer: Mark Wardle Phone: (951)256-5830 Fax No.: E-Mail: MWardle@firstam.com Buyer: Owner: Uptown Newport PRELIMINARY REPORT In response to the above referenced application for a policy of title insurance, this company hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a Policy or Policies of Title Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referred to as an Exception below or not excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations of said Policy forms. The printed Exceptions and Exclusions from the coverage and Limitations on Covered Risks of said policy or policies are set forth in Exhibit A attached. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on Covered Risks applicable to the CLTA and ALTA Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limit of Liability for certain coverages are also set forth in Exhibit A. Copies of the policy forms should be read. They are available from the office which issued this report. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit A of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered. It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land. This report (and any supplements or amendments hereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance, a Binder or Commitment should be requested. First American Title Order Number: NHSC-5064254 (mw) Page Number: 2 Dated as of May 11, 2017 at 7:30 A.M. The form of Policy of title insurance contemplated by this report is: To Be Determined A specific request should be made if another form or additional coverage is desired. Title to said estate or interest at the date hereof is vested in: TSG — PARCEL 1, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS TO LOT 1, A PORTION OF LETTERED LOTS B, M, N, 0, LETTERED LOTS C, D AND P; UPTOWN NEWPORT JAMBOREE, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS TO LOT 2, A PORTION OF LOT 4, A PORTION OF LETTERED LOTS B, L, M, N, AND 0, LETTERED LOTS E, F, J AND K; TPG/TSG VENTURE I ACQUISITION, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS TO A PORTION OF LETTERED LOTS L, M AND 0, LETTERED LOTS G, H AND I; UPTOWN NEWPORT BUILDING OWNER, LP, A DELAWARE LIMITED PARTNERSHIP, AS TO LOT 3, A PORTION OF LOT 4; THE CITY OF NEWPORT BEACH, AS TO LOT A The estate or interest in the land hereinafter described or referred to covered by this Report is: A fee. The Land referred to herein is described as follows: (See attached Legal Description) At the date hereof exceptions to coverage in addition to the printed Exceptions and Exclusions in said policy form would be as follows: 1. General and special taxes and assessments for the fiscal year 2017-2018, a lien not yet due or payable. 2. The lien of supplemental taxes, if any, assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code. 3. An easement for avigation purposes in and through the air above and incidental purposes, recorded March 17, 1964 as Book 6965, Page 721 of Official Records. In Favor of: The County of Orange Affects: A portion of said land First American Title Order Number: NHSC-5064254 (mw) Page Number: 3 The location of the easement cannot be determined from record information. 4. An easement for pole lines, conduits and incidental purposes, recorded February 18, 1974 as Book 11074, Page 182 of Official Records. In Favor of: Southern California Edison Company, a corporation Affects: Lettered Lots E, F, G, H and M 5. An easement for pole lines, conduits and incidental purposes, recorded February 19, 1974 as Book 11077, Page 1117 of Official Records. In Favor of: Southern California Edison Company, a corporation Affects: Lettered Lots H, I, J and L 6. A non-exclusive easement for purposes of ingress and egress as reserved in the deed recorded May 7, 1974 in Book 11137, Page 1008 of Official Records. Note 1: Said document recites the following: "Said reservation is subject to: Grantee's right to relocate said easement at Grantee's expense, at any time, and from time to time". Note 2: Said easements is 25 and 30 feet in width at different locations. Affects: Lot 2 and Lettered Lots M and 0 7. An easement for electrical supply systems and communication systems and incidental purposes, recorded March 7, 1990 as Instrument No. 90-120897 of Official Records. In Favor of: Southern California Edison Company, a corporation Affects: Lettered Lot H 8. An easement for communication facilities and incidental purposes, recorded July 3, 1991 as Instrument No. 91-346219 of Official Records. In Favor of: Pacific Bell Affects: Lots 3 and 4 and Lettered Lot H 9. An easement for maintenance and operation of an electrical substation and incidental purposes, recorded September 3, 1992 as Instrument No. 92-594041 of Official Records. In Favor of: Southern California Edison Company, a corporation Affects: Lot 2 and Lettered Lot E 10. The terms and provisions contained in the document entitled "Sound Mitigation Agreement" recorded June 30, 1997 as Instrument No. 19970303268 of Official Records. 11. An easement for telecommunications facilities and incidental purposes, recorded November 15, 2005 as Instrument No. 2005000916240 of Official Records. In Favor of: Affects: 12. Intentionally Deleted CoxCom Inc., d/b/a Cox Communications Orange County Lots 3 and 4 and Lettered Lot H First American Title Order Number: NHSC-5064254 (mw) Page Number: 4 13. The terms and provisions contained in the document entitled "Development Agreement" recorded March 26, 2013 as Instrument No. 2013000180939 of Official Records. The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Development Agreement" recorded February 14, 2014 as Instrument No. 2014000060352 of Official Records. Affects: Lot 2, A Portion of Lot 4, A Portion of Lettered Lots A, B, L, M, N, and 0, Lettered Lots E, F, J and K The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Development Agreement" recorded February 14, 2014 as Instrument No. 2014000060354 of Official Records. Affects: Lot 1, A Portion of Lettered Lots A, B, M, N, 0, Lettered Lots C, D and P The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Development Agreement" recorded February 14, 2014 as Instrument No. 2014000060356 of Official Records. Affects: Lot 3, A Portion of Lot 4, A Portion of Lettered Lots L, M and 0, Lettered Lots G, H and I Document(s) declaring modifications thereof recorded July 6, 2015 as Instrument No. 2015000349840 of Official Records. The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Development Agreement" recorded March 6, 2017 as 2017000091827 of Official Records. Affects: Lots 3 and 4 and other property The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Developement Agreement" recorded April 10, 2017 as 2017000143133 of Official Records. Affects: Lots 3 and 4 and other property 14. The terms and provisions contained in the document entitled "Memorandum of Agreement" recorded June 13, 2013 as Instrument No. 2013000359252 and rerecorded July 18, 2013 as Instrument No. 2013000429555, both of Official Records. 15. The terms and provisions contained in the document entitled "Amended and Restated Declaration of Reciprocal Easements" recorded February 13, 2014 as Instrument No. 2014000059221 of Official Records. 16. The terms and provisions contained in the document entitled "Inter -Phase Agreement" recorded February 14, 2014 as Instrument No. 2014000060494 of Official Records. First American Title Order Number: NHSC-5064254 (mw) Page Number: 5 17. The terms and provisions contained in the document entitled "Grant of Easements (Water, Fire, Gas, Sewer and Storm Drain)" recorded February 14, 2014 as Instrument No. 2014000060495 of Official Records. 18. The terms and provisions contained in the document entitled "Development Cooperation Agreement" recorded February 14, 2014 as Instrument No. 2014000060496 of Official Records. 19. The terms and provisions contained in the document entitled "Memorandum of Shared Infrastructure Agreement" recorded February 14, 2014 as Instrument No. 2014000060929 of Official Records. Affects: Lots 1 and 2, A Portion of Lot 4, A Portion of Lettered Lots A, B, L, M, N, 0, Lettered Lots C, D, E, F, J, K and P The terms and provisions contained in the document entitled "Memorandum of Second Amendment to Shared Infrastructure Construction Agreement" recorded March 6, 2017 as 2017000091828 of Official Records. Affects: Lots 1, 3, 4, A and B (portion) C, D, G, H, I, L (portion), M (portion), N, 0 (portion), P of Tract No. 17763 20. An option in favor of TPG/TSG Venture I Acquisition LLC, a Delaware limited liability company as contained in or disclosed by a document recorded February 14, 2014 as Instrument No. 2014000060972 of Official Records. Affects: Lot 2, A Portion of Lot 4, A Portion of Lettered Lots A, B, L, M, N, and 0, Lettered Lots E, F, J and K 21. The terms and provisions contained in the document entitled "License Agreement" recorded February 14, 2014 as Instrument No. 2014000061108 of Official Records. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F A document recorded June 5, 2015 as Instrument No. 2015000292781 of Official Records provides that the lien or charge of the deed of trust was subordinated to the lien or charge of the deed of trust recorded March 21, 2014 as Instrument No. 2014000107704 of Official Records. The terms and provisions contained in the document entitled "Amendment, Assignment and Assumption of License Agreement" recorded March 6, 2017 as 2017000091826 of Official Records. 22. Intentionally Deleted 23. A document entitled "Assignment of Contract Rights and Agreements" recorded February 14, 2014 as Instrument No. 2014000061175 of Official Records, as additional security for the payment of the indebtedness secured by the deed of trust recorded February 14, 2014 as Instrument No. 2014000061109 of Official Records. First American Title Order Number: NHSC-5064254 (mw) Page Number: 6 Affects: Lot 3, A Portion of Lot 4, A Portion of Lettered Lots L, M and 0, Lettered Lots G, H and I 24. A notice of nonresponsibility, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company, recorded August 12, 2014 as Instrument No. 2014000323937 of Official Records. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F 25. A notice of nonresponsibility, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company, recorded September 19, 2014 as Instrument No. 2014000382172 of Official Records. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F 26. A notice of nonresponsibility, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company, recorded January 14, 2015 as Instrument No. 2015000023703 of Official Records. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F 27. An easement dedicated to the City of Newport Beach on the Map of Tract 17763 as referred to in the legal description For: Emergency access, ingress, egress, public pedestrian walkway, paseo, open space, parking, public utility and public access and incidental purposes. 28. Easements reserved on the Map of Tract 17763 as referred to in the legal description: For: Public pedestrian, private street, walkway, paseo, open space, landscape, temporary access, parking, public utility and public access and incidental purposes. 29. A temporary easement reserved on the Map of Tract 17763 as referred to in the legal description For: project construction staging, stockpiling and installation of park improvements and incidental purposes. Affects: Lot A 30. A permanent easement reserved on the Map of Tract 17763 as referred to in the legal description For: operation, maintenance and repair of installed park improvements and incidental purposes. Affects: Lot A First American Title Order Number: NHSC-5064254 (mw) Page Number: 7 31. The following matters shown or disclosed by the Map of Tract 17763 referred to in the legal description: All lettered Lots are "Not a Separate Building Site" Lot "A" is for "Park" purposes and "Water Treatment" purposes. Lot "B" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "C" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "D" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "E" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "F" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "G" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "H" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "I" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "J" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "K" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "L" is for "Emergency Access", "Public Access", "Private Street" and "Utility" purposes. Lot "M" is for "Emergency Access", "Public Access", "Private Street" and "Utility" purposes. Lot "N" "Access", "Paseo", "Open Space", "Utility" and "Landscape" purposes. Lot "0" is for "Emergency Access", "Public Access", "Private Street" and "Utility" purposes. Lot "P" is for "Emergency Access", "Public Access", "Private Street" and "Utility" purposes. 32. Abutter's rights of ingress and egress to or from Jamboree Road have been dedicated or relinquished on the filed Map, except at the "access openings" shown on the map of Tract 17763. 33. A deed of trust to secure an original indebtedness of $18,000,000.00 recorded July 10, 2015 as Instrument No. 2015000361484 of Official Records. Dated: July 10, 2015 Trustor: TSG — Parcel 1, LLC, a Delaware limited liability company Trustee: First American Title Beneficiary: Terra Secured Income Fund 5, LLC, a Delaware limited liability company Affects: Lot 1 First American Title Order Number: NHSC-5064254 (mw) Page Number: 8 A document recorded March 31, 2016 as 2016000136850 of Official Records provides that the above document was subordinated to the document recorded March 31, 2016 as 20160000136850 of Official Records. A document recorded April 28, 2016 as 2017000187274 of Official Records provides that the above document was subordinated to the document recorded April 28, 2016 as 2016000187274 of Official Records. 34. A deed of trust to secure an original indebtedness of $25,750,000.00 recorded August 14, 2015 as Instrument No. 2015000424863 of Official Records. Dated: August 14, 2015 Trustor: Uptown Newport Jamboree, LLC, a Delaware limited liability company Trustee: First American Title Insurance Company Beneficiary: Fidelity & Guarantee Life Insurance Company, an Iowa corporation A document entitled "Assignment of Leases and Rents" recorded August 14, 2015 as Instrument No. 2015000424864 of Official Records, as additional security for the payment of the indebtedness secured by the deed of trust. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F and other property 35. An unrecorded lease dated March 12, 2002, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company as lessor and Newport FAB, LLC, a Delaware limited liability company doing business as Jazz Semiconductor as lessee, as disclosed by a "Subordination, Non - Disturbance and Attornment Agreement" recorded August 14, 2015 as Instrument No. 2015000424867 of Official Records. Defects, liens, encumbrances or other matters affecting the leasehold estate, whether or not shown by the public records. 36. An unrecorded lease dated November 23, 2011, as amended on June 11, 2015, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company as lessor and Skyworks Solutions, Inc., a Delaware corporation as lessee, as disclosed by a "Subordination, Non - Disturbance and Attornment Agreement" recorded August 14, 2015 as Instrument No. 2015000424868 of Official Records. Defects, liens, encumbrances or other matters affecting the leasehold estate, whether or not shown by the public records. 37. The terms and provisions contained in the document entitled "Affordable Housing Agreement" recorded September 09, 2015 as Instrument No. 2015000465265 of Official Records. The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Affordable Housing Agreement" recorded March 6, 2017 as 2017000091825 of Official Records. First American Title Order Number: NHSC-5064254 (mw) Page Number: 9 Affects: Lots 3 and 4 and other property The terms and provisions contained in the document entitled Partial Assignment and Assumption of Affordable Housing Agreement recorded April 10, 2017 as 2017000143134 of Official Records. Affects: Lots 3 and 4 and other property 38. An easement for storm drain and incidental purposes, recorded June 19, 2015 as Instrument No. 2015000320678 of Official Records. In Favor of: TSG — Parcel 1, LLC, a Delaware limited partnership Affects: Lettered Lot A 39. A document entitled Tract Map Certificate of Correction recorded February 2, 2016 as 2016000045179 of Official Records. 40. Covenants, conditions, restrictions, easements, assessments, liens, charges, terms and provisions in the document recorded March 31, 2016 as 2016000136850 of Official Records, which provide that a violation thereof shall not defeat or render invalid the lien of any first mortgage or deed of trust made in good faith and for value, but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, sexual orientation, familial status, disability, handicap, national origin, genetic information, gender, gender identity, gender expression, source of income (as defined in California Government Code § 12955 (p)) or ancestry, to the extent such covenants, conditions or restrictions violate 42 U.S.C. § 3604(c), or California Government Code § 12955. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status. Note: You may wish to contact the homeowners association referred to in the above document for information regarding assessments, transfer requirements or other matters. Affects: Lots 1, 3 and 4, and Lots B to P and Lot 2 (annexable territory) with other property 41. Covenants, conditions, restrictions, easements, assessments, liens, charges, terms and provisions in the document recorded April 28, 2016 as 2016000187274 of Official Records, which provide that a violation thereof shall not defeat or render invalid the lien of any first mortgage or deed of trust made in good faith and for value, but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, sexual orientation, familial status, disability, handicap, national origin, genetic information, gender, gender identity, gender expression, source of income (as defined in California Government Code § 12955 (p)) or ancestry, to the extent such covenants, conditions or restrictions violate 42 U.S.C. § 3604(c), or California Government Code § 12955. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status. Note: You may wish to contact the homeowners association referred to in the above document for information regarding assessments, transfer requirements or other matters. First American Title Order Number: NHSC-5064254 (mw) Page Number: 10 Affects: Lots 1, 3 and 4 and Lots B to P and Lot 2 (annexable territory) with other property 42. An easement for underground communication facilities and incidental purposes, recorded February 22, 2017 as 2017000075078 of Official Records. In Favor of: Pacific Bell Telephone Company, a California corporation dba AT&T California Affects: Lots 1 through 4, inclusive and Lettered Lots C, L, M, 0, P of Tract 17763 43. An easement for water pipeline and access purposes and incidental purposes, recorded February 27, 2017 as 2017000082310 of Official Records. In Favor of: Irvine Ranch Water District Affects: Lot A 44. An easement for water pipeline and access purposes and incidental purposes, recorded February 27, 2017 as 2017000082311 of Official Records. In Favor of: Irvine Ranch Water District Affects: Lots 3 and 4 and Lettered Lots L and M, and portions of Lots D, 0 and P 45. An easement for water pipeline and access purposes and incidental purposes, recorded February 27, 2017 as 2017000082312 of Official Records. In Favor of: Irvine Ranch Water District Affects: Lot 1 and Lettered Lots L and M and portions of Lots D, 0 and P 46. An easement for water pipeline and access purposes and incidental purposes, recorded February 27, 2017 as 2017000082313 of Official Records. In Favor of: Irvine Ranch Water District Affects: Lot 2 and Lettered Lots L and M and portions of Lots D, 0 and P 47. The terms and provisions contained in the document entitled Regulatory Agreement and Declaration of Restrictive Covenants recorded March 6, 2017 as 2017000091829 of Official Records. Affects: Lots 3 and 4 48. A deed of trust to secure an original indebtedness of $161,620,000.00 recorded March 6, 2017 as 2017000091830 of Official Records. Dated: March 1, 2017 Trustor: UPTOWN NEWPORT BUILDING OWNER, LP, a Delaware limited partnership Trustee: Fidelity National Title Insurance Company Beneficiary: Wilmington Trust, National Association, a national association Affects: Lots 3 and 4 First American Title 49. A deed of trust to secure 2017 as 2017000091831 Dated: Trustor: Trustee: Beneficiary: Affects: Order Number: NHSC-5064254 (mw) Page Number: 11 an original indebtedness of $163,692,302.00 recorded March 6, of Official Records. March 1, 2017 UPTOWN NEWPORT BUILDING OWNER, LP, a Delaware limited partnership Fidelity National Title Insurance Company Comerica Bank, in its capacity as Agent for Lenders Lots 3 and 4 50. A document entitled Intercreditor Agreement recorded March 6, 2017 as 2017000091833 of Official Records. Affects: Lots 3 and 4 51. An easement for pipelines and conduits, together with devices for metering, measuring, regulating, cathodic protection, communications and other appurtenances and incidental purposes, recorded May 2, 2017 as 2017000176218 of Official Records. In Favor of: Southern California Gas Company, a California corporation, its successors and assigns Affects: Lots L, M and 0 52. An easement for pipelines and conduits, together with devices for metering, measuring, regulating, cathodic protection, communications and other appurtenances and incidental purposes, recorded May 2, 2017 as 2017000176219 of Official Records. In Favor of: Southern California Gas Company, a California corporation, its successors and assigns Affects: Lot 1 53. An easement for pipelines and conduits, together with devices for metering, measuring, regulating, cathodic protection, communications and other appurtenances and incidental purposes, recorded May 2, 2017 as 2017000176220 of Official Records. In Favor of: Southern California Gas Company, a California corporation, its successors and assigns Affects: Lot 2, with other property 54. Rights of the public in and to that portion of the land lying within Road, Street, Alley or Highway. 55. Water rights, claims or title to water, whether or not shown by the public records. 56. Rights of parties in possession. Prior to the issuance of any policy of title insurance, the Company will require: First American Title Order Number: NHSC-5064254 (mw) Page Number: 12 57. With respect to TSG — Parcel 1, LLC, a Delaware limited liability company, Uptown Newport Jamboree, LLC, a Delaware limited liability company and TPG/TSG Venture I Acquisition, LLC, a Delaware limited liability company: a. A copy of its operating agreement and any amendments thereto; b. If it is a California limited liability company, that a certified copy of its articles of organization (LLC-1) and any certificate of correction (LLC-11), certificate of amendment (LLC-2), or restatement of articles of organization (LLC-10) be recorded in the public records; c. If it is a foreign limited liability company, that a certified copy of its application for registration (LLC-5) be recorded in the public records; d. With respect to any deed, deed of trust, lease, subordination agreement or other document or instrument executed by such limited liability company and presented for recordation by the Company or upon which the Company is asked to rely, that such document or instrument be executed in accordance with one of the following, as appropriate: (i) If the limited liability company properly operates through officers appointed or elected pursuant to the terms of a written operating agreement, such document must be executed by at least two duly elected or appointed officers, as follows: the chairman of the board, the president or any vice president, and any secretary, assistant secretary, the chief financial officer or any assistant treasurer; (ii) If the limited liability company properly operates through a manager or managers identified in the articles of organization and/or duly elected pursuant to the terms of a written operating agreement, such document must be executed by at least two such managers or by one manager if the limited liability company properly operates with the existence of only one manager. e. Other requirements which the Company may impose following its review of the material required herein and other information which the Company may require 58. With respect to UPTOWN NEWPORT BUILDING OWNER, LP, a Delaware limited partnership, a limited partnership: a. That a certified copy of the application for registration, foreign limited partnership (form LP-5) and any amendments thereto (form LP-6) be recorded in the public records; b. A full copy of the partnership agreement and any amendments; c. Satisfactory evidence of the consent of a majority in interest of the limited partners to the contemplated transaction; d. Other requirements which the Company may impose following its review of the material required herein and other information which the Company may require. First American Title Order Number: NHSC-5064254 (mw) Page Number: 13 INFORMATIONAL NOTES Note: The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than the certain dollar amount set forth in any applicable arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. If you desire to review the terms of the policy, including any arbitration clause that may be included, contact the office that issued this Commitment or Report to obtain a sample of the policy jacket for the policy that is to be issued in connection with your transaction. 1. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $no taxes due, Penalty: $0.00 Second Installment: $no taxes due, Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-01 through 445-134-07 and 445-134-10 through 445- 134-16 and 445-134-18 through 445-134-21 and 445-134-23 through 445-134-28 and 445-134-30 through 445-134-32 Affects: Lots A through P 2. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $no taxes due, Penalty: $0.00 Second Installment: $no taxes due, Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-22 Affects: Portion Lot 2 3. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $40,567.81, PAID Penalty: $0.00 Second Installment: $40,567.81, PAID Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-08 Affects: Lot 3 First American Title Order Number: NHSC-5064254 (mw) Page Number: 14 4. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $40,418.18, PAID Penalty: $0.00 Second Installment: $40,418.18, PAID Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-09 Affects: Lot 4 5. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $65,793.84, PAID Penalty: $0.00 Second Installment: $65,793.84, PAID Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-17 Affects: Lot 1 6. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $9,249.53, PAID Penalty: $0.00 Second Installment: $9,249.53, PAID Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-29 Affects: Portion Lot 2 7. According to the latest available equalized assessment roll in the office of the county tax assessor, there is located on the land a(n) Commercial Structure known as 4311 Jamboree Road, Newport Beach, California. Affects: Lot 1 The map attached, if any, may or may not be a survey of the land depicted hereon. First American expressly disclaims any liability for loss or damage which may result from reliance on this map except to the extent coverage for such loss or damage is expressly provided by the terms and provisions of the title insurance policy, if any, to which this map is attached. First American Title Order Number: NHSC-5064254 (mw) Page Number: 15 First American Title Company 1250 Corona Pointe Court, Suite 200 Corona, CA 92879 (951)256-5880 Fax - (909)476-2401 WIRE INSTRUCTIONS for First American Title Company, Demand/Draft Sub -Escrow Deposits Riverside County, California First American Trust, FSB 5 First American Way Santa Ana, CA 92707 Banking Services: (877) 600-9473 ABA 122241255 Credit to First American Title Company Account No. 3097840000 Reference Title Order Number 5064254 and Title Officer Mark Wardle Please wire the day before recording. First American Title Order Number: NHSC-5064254 (mw) Page Number: 16 LEGAL DESCRIPTION Real property in the City of Newport Beach, County of Orange, State of California, described as follows: LOTS 1 THROUGH 4, INCLUSIVE, AND LETTERED LOTS A THROUGH P, INCLUSIVE, OF TRACT NO. 17763 IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA AS SHOWN ON A MAP FILED IN BOOK 937, PAGES 17 THROUGH 23, INCLUSIVE, OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM ALL OIL, GAS, HYDROCARBONS AND OTHER MINERALS OF EVERY KIND AND NATURE BELOW A DEPTH OF FIVE HUNDRED (500) FEET BENEATH THE SURFACE OF THE ABOVE DESCRIBED PROPERTY, WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED IN THE DEED RECORDED MAY 7, 1974 IN BOOK 11137, PAGE 1008 OF OFFICIAL RECORDS. APN: 445-134-01 through 445-134-30 APN: Portions of 445-133-01, 445-133-02, 445-133-03 and 445-133-04 First American Title \6 4 Order Number: NHSC-5064254 (mw) Page Number: 17 44,M33N3 &VW 730 VN06107, 011,244 _eFEI 0 dP""O�RE� `,ads o 'H06 ti La MARCH 1973 First American Title Order Number: NHSC-5064254 (mw) Page Number: 18 NOTICE Section 12413.1 of the California Insurance Code, effective January 1, 1990, requires that any title insurance company, underwritten title company, or controlled escrow company handling funds in an escrow or sub -escrow capacity, wait a specified number of days after depositing funds, before recording any documents in connection with the transaction or disbursing funds. This statute allows for funds deposited by wire transfer to be disbursed the same day as deposit. In the case of cashier's checks or certified checks, funds may be disbursed the next day after deposit. In order to avoid unnecessary delays of three to seven days, or more, please use wire transfer, cashier's checks, or certified checks whenever possible. First American Title Order Number: NHSC-5064254 (mw) Page Number: 19 EXHIBIT A LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (BY POLICY TYPE) CLTA/ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE (02-03-10) EXCLUSIONS In addition to the Exceptions in Schedule B, You are not insured against loss, costs, attorneys' fees, and expenses resulting from: 1. Governmental police power, and the existence or violation of those portions of any law or government regulation concerning: (a) building; (b) zoning; (c) land use; (d) improvements on the Land; (e) land division; and (f) environmental protection. This Exclusion does not limit the coverage described in Covered Risk 8.a., 14, 15, 16, 18, 19, 20, 23 or 27. 2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not limit the coverage described in Covered Risk 14 or 15. 3. The right to take the Land by condemning it. This Exclusion does not limit the coverage described in Covered Risk 17. 4. Risks: (a) that are created, allowed, or agreed to by You, whether or not they are recorded in the Public Records; (b) that are Known to You at the Policy Date, but not to Us, unless they are recorded in the Public Records at the Policy Date; (c) that result in no loss to You; or (d) that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.e., 25, 26, 27 or 28. 5. Failure to pay value for Your Title. 6. Lack of a right: (a) to any land outside the area specifically described and referred to in paragraph 3 of Schedule A; and (b) in streets, alleys, or waterways that touch the Land. This Exclusion does not limit the coverage described in Covered Risk 11 or 21. 7. The transfer of the Title to You is invalid as a preferential transfer or as a fraudulent transfer or conveyance under federal bankruptcy, state insolvency, or similar creditors' rights laws. LIMITATIONS ON COVERED RISKS Your insurance for the following Covered Risks is limited on the Owner's Coverage Statement as follows: For Covered Risk 16, 18, 19, and 21 Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A. Covered Risk 16: Covered Risk 18: Covered Risk 19: Covered Risk 21: Your Deductible Amount 1% of Policy Amount or $2,500.00 (whichever is less) 1% of Policy Amount or $5,000.00 (whichever is less) 1% of Policy Amount or $5,000.00 (whichever is less) 1% of Policy Amount or $2,500.00 (whichever is less) Our Maximum Dollar Limit of Liability $10,000.00 $25,000.00 $25,000.00 $5,000.00 ALTA RESIDENTIAL TITLE INSURANCE POLICY (6-1-87) EXCLUSIONS In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees, and expenses resulting from: 1. Governmental police power, and the existence or violation of any law or government regulation. This includes building and zoning ordinances and also laws and regulations concerning: (a) and use (b) improvements on the land (c) and division (d) environmental protection This exclusion does not apply to violations or the enforcement of these matters which appear in the public records at Policy Date. First American Title Order Number: NHSC-5064254 (mw) Page Number: 20 This exclusion does not limit the zoning coverage described in Items 12 and 13 of Covered Title Risks. 2. The right to take the land by condemning it, unless: (a) a notice of exercising the right appears in the public records on the Policy Date (b) the taking happened prior to the Policy Date and is binding on you if you bought the land without knowing of the taking 3. Title Risks: (a) that are created, allowed, or agreed to by you (b) that are known to you, but not to us, on the Policy Date -- unless they appeared in the public records (c) that result in no loss to you (d) that first affect your title after the Policy Date -- this does not limit the labor and material lien coverage in Item 8 of Covered Title Risks 4. Failure to pay value for your title. 5. Lack of a right: (a) to any land outside the area specifically described and referred to in Item 3 of Schedule A OR (b) in streets, alleys, or waterways that touch your land This exclusion does not limit the access coverage in Item 5 of Covered Title Risks. 2006 ALTA LOAN POLICY (06-17-06) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 13, or 14); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing - business laws of the state where the Land is situated. 5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth -in -lending law. 6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 13(b) of this policy. 7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the Insured Mortgage in the Public Records. This Exclusion does not modify or limit the coverage provided under Covered Risk 11(b). The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) that arise by reason of: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such First American Title Order Number: NHSC-5064254 (mw) Page Number: 21 proceedings, whether or not shown by the records of such agency or by the Public Records. 2. 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 or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4. 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 by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 6. Any lien or right to a lien for services, labor or material not shown by the public records. 2006 ALTA OWNER'S POLICY (06-17-06) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 9 or 10); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title. 4. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction vesting the Title as shown in Schedule A, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 9 of this policy. 5. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A. The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) that arise by reason of: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records. 2. 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 or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4. 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 by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 6. Any lien or right to a lien for services, labor or material not shown by the public records. First American Title ALTA EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (07-26-10) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 16, 17, 18, 19, 20, 21, 22, 23, 24, 27 or 28); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing - business laws of the state where the Land is situated. 5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth -in -lending law. This Exclusion does not modify or limit the coverage provided in Covered Risk 26. 6. Any claim of invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to Advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11. 7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching subsequent to Date of Policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11(b) or 25. 8. The failure of the residential structure, or any portion of it, to have been constructed before, on or after Date of Policy in accordance with applicable building codes. This Exclusion does not modify or limit the coverage provided in Covered Risk 5 or 6. 9. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 27(b) of this policy. First American Title w '° First American Title Privacy Information We Are Committed to Safeguarding Customer Information In order to better serve your needs now and in the future, we may ask you to provide us with certain information. We understand that you may be concerned about what we will do with such information - particularly any personal or financial information. We agree that you have a right to know how we will utilize the personal information you provide to us. Therefore, together with our subsidiaries we have adopted this Privacy Policy to govern the use and handling of your personal information. Applicability This Privacy Policy governs our use of the information that you provide to us. It does not govern the manner in which we may use information we have obtained from any other source, such as information obtained from a public record or from another person or entity. First American has also adopted broader guidelines that govern our use of personal information regardless of its source. First American calls these guidelines its Fair Information Values. Types of Information Depending upon which of our services you are utilizing, the types of nonpublic personal information that we may collect include: • Information we receive from you on applications, forms and in other communications to us, whether in writing, in person, by telephone or any other means; • Information about your transactions with us, our affiliated companies, or others; and • Information we receive from a consumer reporting agency. Use of Information We request information from you for our own legitimate business purposes and not for the benefit of any nonaffiliated party. Therefore, we will not release your information to nonaffiliated parties except: (1) as necessary for us to provide the product or service you have requested of us; or (2) as permitted by law. We may, however, store such information indefinitely, including the period after which any customer relationship has ceased. Such information may be used for any internal purpose, such as quality control efforts or customer analysis. We may also provide all of the types of nonpublic personal information listed above to one or more of our affiliated companies. Such affiliated companies include financial service providers, such as title insurers, property and casualty insurers, and trust and investment advisory companies, or companies involved in real estate services, such as appraisal companies, home warranty companies and escrow companies. Furthermore, we may also provide all the information we collect, as described above, to companies that perform marketing services on our behalf, on behalf of our affiliated companies or to other financial institutions with whom we or our affiliated companies have joint marketing agreements. Former Customers Even if you are no longer our customer, our Privacy Policy will continue to apply to you. Confidentiality and Security We will use our best efforts to ensure that no unauthorized parties have access to any of your information. We restrict access to nonpublic personal information about you to those individuals and entities who need to know that information to provide products or services to you. We will use our best efforts to train and oversee our employees and agents to ensure that your information will be handled responsibly and in accordance with this Privacy Policy and First American's Fair Information Values. We currently maintain physical, electronic, and procedural safeguards that comply with federal regulations to guard your nonpublic personal information. Information Obtained Through Our Web Site First American Financial Corporation is sensitive to privacy issues on the Internet. We believe it is important you know how we treat the information about you we receive on the Internet. In general, you can visit First American or its affiliates' Web sites on the World Wide Web without telling us who you are or revealing any information about yourself. Our Web servers collect the domain names, not the e-mail addresses, of visitors. This information is aggregated to measure the number of visits, average time spent on the site, pages viewed and similar information. First American uses this information to measure the use of our site and to develop ideas to improve the content of our site. There are times, however, when we may need information from you, such as your name and email address. When information is needed, we will use our best efforts to let you know at the time of collection how we will use the personal information. Usually, the personal information we collect is used only by us to respond to your inquiry, process an order or allow you to access specific account/profile information. If you choose to share any personal information with us, we will only use it in accordance with the policies outlined above. Business Relationships First American Financial Corporation's site and its affiliates' sites may contain links to other Web sites. While we try to link only to sites that share our high standards and respect for privacy, we are not responsible for the content or the privacy practices employed by other sites. Cookies Some of First American's Web sites may make use of "cookie" technology to measure site activity and to customize information to your personal tastes. A cookie is an element of data that a Web site can send to your browser, which may then store the cookie on your hard drive. FirstAm.com uses stored cookies. The goal of this technology is to better serve you when visiting our site, save you time when you are here and to provide you with a more meaningful and productive Web site experience. Fair Information Values Fairness We consider consumer expectations about their privacy in all our businesses. We only offer products and services that assure a favorable balance between consumer benefits and consumer privacy. Public Record We believe that an open public record creates significant value for society, enhances consumer choice and creates consumer opportunity. We actively support an open public record and emphasize its importance and contribution to our economy. Use We believe we should behave responsibly when we use information about a consumer in our business. We will obey the laws governing the collection, use and dissemination of data. Accuracy We will take reasonable steps to help assure the accuracy of the data we collect, use and disseminate. Where possible, we will take reasonable steps to correct inaccurate information. When, as with the public record, we cannot correct inaccurate information, we will take all reasonable steps to assist consumers in identifying the source of the erroneous data so that the consumer can secure the required corrections. Education We endeavor to educate the users of our products and services, our employees and others in our industry about the importance of consumer privacy. We will instruct our employees on our fair information values and on the responsible collection and use of data. We will encourage others in our industry to collect and use information in a responsible manner. Security We will maintain appropriate facilities and systems to protect against unauthorized access to and corruption of the data we maintain. Form 50-PRIVACY (9/1/10) Page 1 of 1 Privacy Information (2001-2010 First American Financial Corporation) (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX C RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX (THIS PAGE INTENTIONALLY LEFT BLANK) RATE AND METHOD OF APPORTIONMENT CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA A Special Tax as hereinafter defined shall be levied on all Assessor's Parcels of CSCDA Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California ("CFD No. 2018-03") and collected each Fiscal Year commencing in Fiscal Year 2019-2020, in an amount determined by the CSCDA Program Manager, through the application of the Rate and Method of Apportionment as described below. All Taxable Property in CFD No. 2018-03, 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 The terms hereinafter set forth have the following meanings: "Acre" or "Acreage" means the land area of an Assessor's Parcel as shown on an Assessor's Parcel Map, or if the land area is not shown on an Assessor's Parcel Map, the land area shown on the applicable final subdivision map, parcel map, condominium plan, record of survey, or other recorded County parcel map. "Act" means the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2 of Title 5 of the Government Code of the State of California. "Administrative Expenses" means the actual or reasonably estimated costs directly related to the administration of CFD No. 2018-03 including, but not limited to, the following: the costs of computing the Special Taxes and preparing the annual Special Tax Levy collection schedules (whether by the CSCDA Program Manager or designee thereof or both); the costs of collecting the Special Tax Levies (whether by the County or otherwise); the costs of remitting the Special Tax Levies to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to CSCDA, CFD No. 2018-03, or any designee thereof of complying with arbitrage rebate requirements, or responding to questions from the Securities and Exchange Commission or Internal Revenue Service pertaining to any CFD No. 2018-03 Bonds or any audit of any CFD No. 2018-03 Bonds by the Securities and Exchange Commission or Internal Revenue Service; the costs to CSCDA, CFD No. 2018-03, the Trustee or any designee thereof of complying with CSCDA, CFD No. 2018-03, or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax Levy disclosure statements and responding to public inquiries regarding the Special Tax Levies; the costs to CSCDA, CFD No. 2018-03, or any designee thereof related to an appeal of the levy or application of the Special Tax; the costs associated with the release of funds from an escrow account; and CSCDA's annual administration fees and third California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 1 party expenses. Administrative Expenses shall also include amounts estimated or advanced by CSCDA or CFD No. 2018-03 for any other administrative purposes of CFD No. 2018-03, including, but not limited to, attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tax Levies. "Apartment Floor Area" means all of the square footage of living area within the perimeter of the Apartment Property, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Apartment Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the Building Division of the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Apartment Property. "Apartment Property" means an Assessor's Parcel of Developed Property on which all or any portion of a structure or structures with multiple Apartment Units are located, and such Apartment Units are offered for rent and are not available for sale to individual owners. If Apartment Property is subsequently reclassified as Residential Property, Special Taxes levied on such reclassified Assessor's Parcels shall be modified to match those of Residential Property. "Apartment Unit" means one (1) for -rent residential unit on Apartment Property. "Assessor's Parcel" means a lot or parcel shown on an Assessor's Parcel Map with an assigned Assessor's Parcel number. "Assessor's Parcel Map" means an official map of the County Assessor of the County designating parcels by Assessor's Parcel number. "Assigned Special Tax" means the Special Tax for each Land Use Class of Developed Property, as determined in accordance with Section C.a.(2), below. "Authorized Facilities" means the facilities authorized to be financed by CFD No. 2018-03. "Backup Special Tax" means the Backup Special Tax applicable to each Assessor's Parcel of Developed Property, as determined in accordance with Section C.a.(3), below. "Building Permit" means a permit issued by the City or other governmental agency for the construction of a residential or non-residential building on an Assessor's Parcel. "Buildout" means, for CFD No. 2018-03, that all expected Building Permits for Residential Property, Apartment Property, and Non -Residential Property to be constructed within CFD No. 2018-03 have been issued, as determined by the CSCDA Program Manager. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 2 "CFD No. 2018-03" means California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California. "CFD No. 2018-03 Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one (1) or more series, authorized by CFD No. 2018-03 under the Act and issued by CSCDA and secured by the Special Taxes. "City" means the City of Newport Beach. "Commission" means the governing board of CSCDA. "County" means the County of Orange. "CSCDA" means the California Statewide Communities Development Authority. "CSCDA Program Manager" means the program manager for CSCDA, or its designee. "Developed Property" means, for each Fiscal Year, all Taxable Property in Tax Zone 1 and Tax Zone 2, for which a Building Permit for new construction was issued after January 1, 2018 and on or before May 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied. For purposes of this Rate and Method of Apportionment, any Developed Property for which Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area is removed, shall be considered Developed Property under the previously assigned Land Use Class with the previously assigned Residential Floor Area, Apartment Floor Area, or Non -Residential Floor Area, until a new Building Permit is issued, and a new Land Use Class and Special Tax can be assigned. Notwithstanding the above, a reclassification shall not occur, unless the CSCDA Program Manager determines that the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after such reclassification, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds is each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. "Developer" means TSG-Parcel 1, LLC or Uptown Newport Jamboree, LLC and its successors and assigns. The term "successors" does not refer to the successors to all or any portion of the property within CFD No. 2018-03 unless the new property owner receives an assignment of the Developer's rights and obligations described in an assignment agreement or similar agreement. "Dwelling Unit" means one (1) for -sale residential unit of any configuration, including, but not limited to, a single family attached or detached dwelling, condominium, mobile home, or otherwise, but excluding Apai tiiient Units on Apartment Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 3 "Final Mapped Property" means, for each Fiscal Year, all Taxable Property, exclusive of Developed Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, and Taxable Public Property, located in a Final Subdivision as of January 1 of the Fiscal Year preceding the Fiscal Year for which the Special Taxes are being levied, but no earlier than January 1, 2018. "Final Subdivision" means a subdivision of property by recordation of a final map, parcel map, or lot line adjustment, approved by the County 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, in either case, creates individual lots for which Building Permits may be issued without further subdivision. "Fiscal Year" means the period starting July 1 and ending on the following June 30. "Indenture" means the indenture, fiscal agent agreement, resolution, or other instrument pursuant to which CFD No. 2018-03 Bonds are issued, as modified, amended, and/or supplemented from time to time, and any instrument replacing or supplementing the same. "Land Use Class" means any of the land use classes listed in Table 1 below. "Maximum Special Tax" means the maximum Special Tax, determined in accordance with Section C.a.1 below, that can be levied by CSCDA in any Fiscal Year on any Assessor's Parcel of Taxable Property. "Non -Residential Floor Area" means the total gross building square footage of non- residential property lying within an Assessor's Parcel for which one (1) or more non- residential Building Permits have been issued. Such square footage shall be measured from outside wall to outside wall, exclusive of overhangs, porches, patios, carports, or similar spaces attached to the building but generally open on at least two (2) sides, as determined by reference to the Building Permit(s) issued for that Assessor's Parcel, or if these are not available, as otherwise determined by the CSCDA Program Manager. "Non -Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit permitting the construction of one (1) or more non-residential units or facilities has been issued by the City or other governmental agency. "Outstanding Bonds" means all CFD No. 2018-03 Bonds which remain outstanding under the Indenture. "Property Owner Association Property" means, for each Fiscal Year (i) any property within the boundaries of CFD No. 2018-03 that was owned by a property owner association, including any master or sub -association, as of January 1 of the prior Fiscal Year, (ii) any property located in a Final Subdivision that was recorded as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied and which, as determined from such Final Subdivision, is or will be open space, a common area recreation facility, or a private street, or (iii) any property which, as of the May 1 California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 4 preceding the Fiscal Year for which the Special Tax is being levied, has been conveyed to a property owner's association, including any master or sub -association, provided evidence of such conveyance is submitted to the CSCDA Program Manager by May 1 preceding the Fiscal Year for which the Special Tax is being levied. The total number of acres to be classified as Property Owner Association Property or Public Property, shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Proportionately" means, for Developed Property, that the ratio of the actual Special Tax Levy within Tax Zone 1 and Tax Zone 2, to the Assigned Special Tax or the Maximum Special Tax of the respective Tax Zone, is equal for all Assessor's Parcels of Developed Property. For Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property categories, "Proportionately" means that the ratio of the actual Special Tax Levy per Acre within Tax Zone 1 and Tax Zone 2, to the Maximum Special Tax per Acre of their respective Land Use Class and Tax Zone, is equal. "Public Property" means, for each Fiscal Year, any property within the boundaries of CFD No. 2018-03 that, as of the May 1 preceding the Fiscal Year in which the Special Tax is being levied, was (i) owned by, irrevocably offered, or dedicated to the federal government, the State, the County, the City, or any local government or other public agency, provided that any property leased by a public agency to a private entity and subject to taxation under Section 53340.1 of the Act shall be taxed and classified according to its use; or (ii) encumbered by a public utility easement making impractical its use for any purpose other than that set forth in the easement. The total number of acres to be classified as Property Owner Association Property or Public Property shall not exceed 12.16 acres, as described in Section E of this Rate and Method of Apportionment. "Rate and Method of Apportionment" means this Rate and Method of Apportionment for CFD No. 2018-03. "Residential Floor Area" means all of the square footage of living area within the perimeter of a residential structure, not including any carport, walkway, garage, overhang, patio, enclosed patio, or similar area. The determination of Residential Floor Area for an Assessor's Parcel shall be as set forth in the Building Permit(s) issued for such Assessor's Parcel and/or as set forth in the appropriate records kept by the City, or other applicable City department, as determined by the CSCDA Program Manager. Such determination shall be final following the issuance of a certificate of occupancy for the Dwelling Unit. "Residential Property" means all Assessor's Parcels of Developed Property for which a Building Permit has been issued by the Building Division of the City for purposes of constructing one (1) or more Dwelling Units. Residential Property does not include Apartment Property for purposes of this Rate and Method of Apportionment. "Special Tax" or "Special Taxes" means the special tax to be levied in each Fiscal Year to fund the Special Tax Requirement for Facilities. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 5 "Special Tax Levy" or "Special Tax Levies" means the Special Tax to be levied in each Fiscal Year on Assessor's Parcel of Taxable Property to fund the Special Tax Requirement for Facilities, as applicable. "Special Tax Requirement" means that amount of Special Taxes required, if any, in any Fiscal Year for CFD No. 2018-03 to: (i) pay debt service on all Outstanding Bonds; (ii) pay periodic costs on the CFD No. 2018-03 Bonds, including but not limited to, credit enhancement and rebate payments on the CFD No. 2018-03 Bonds; (iii) pay all or a portion of the Administrative Expenses as determined by the CSCDA Program Manager; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of Authorized Facilities to the extent that the inclusion of such amount does not increase the Special Tax Levy on Undeveloped Property; and (vi) pay for reasonably anticipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year; less (vii) a credit for funds available to reduce the annual Special Tax Levy, as determined by the CSCDA Program Manager pursuant to the Indenture. "State" means the State of California. "Tax Zone" means one of the two (2) mutually exclusive geographic areas defined below and identified in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 1" means the geographic area specifically identified as Zone 1 in Attachment 1 of this Rate and Method of Apportionment. "Tax Zone 2" means the geographic area specifically identified as Zone 2 in Attachment 1 of this Rate and Method of Apportionment. "Taxable Property" means all of the Assessor's Parcels within the boundaries of CFD No. 2018-03 that are not exempt Property Owner Association Property or exempt Public Property or other property exempted pursuant to Section E herein. "Taxable Property Owner Association Property" means all Assessor's Parcels of Property Owner Association Property that are not exempt pursuant to Section E herein. "Taxable Public Property" means all Assessor's Parcels of Public Property that are not exempt pursuant to Section E herein. "Total Floor Area" means the sum of the Residential Floor Area, Apartment Floor Area, and the Non- Residential Floor Area located on an Assessor's Parcel. "Trustee" means the trustee or fiscal agent under the Indenture. "Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Final Mapped Property, Taxable Property Owner Association Property, or Taxable Public Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 6 B. ASSIGNMENT TO LAND USE CATEGORIES Each Fiscal Year, all Taxable Property within CFD No. 2018-03 shall be classified as Developed Property, Final Mapped Property, Undeveloped Property, Apartment Property, Non -Residential Property, Taxable Property Owner Association Property, or Taxable Public Property and shall be subject to Special Taxes in accordance with this Rate and Method of Apportionment determined pursuant to Sections C and D below. C. MAXIMUM SPECIAL TAX RATE a. Developed Property (1) Maximum Special Tax The Maximum Special Tax for each Assessor's Parcel classified as Developed Property shall be the greater of (i) the amount derived by application of the Assigned Special Tax and (ii) the amount derived by application of the Backup Special Tax. (2) Assigned Special Tax Residential Property shall be assigned to Land Use Classes 1 and 2 as listed in Table 1 below based on the description associated with each Dwelling Unit or Apartment Unit and its determined Tax Zone. Non -Residential Property shall be assigned to Land Use Class 3 as listed in Table 1 below based on the description associated with square feet of Non -Residential Floor Area and it's determined Tax Zone. The Assigned Special Tax that shall be levied in Fiscal Year 2019-2020 for each Assessor's Parcel classified as Developed Property is shown on the following page in Table 1. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 7 TABLE 1 Assigned Special Tax for Developed Property CFD No. 2018-03 Fiscal Year 2019-2020 LAND USE CLAS 1 ESCRIPTION ASSIGNED SPECIAL TAX • ` - ASSIGNED SPECIAL TAX h. 1 Residential Property $750 per Dwelling Unit $950 per Dwelling Unit 2 Apartment Property $0 per Apartment Unit $260 per Apartment Unit 3 Non -Residential Property $5.35 per Square Foot of Non -Residential Floor Area $5.35 per Square Foot of Non -Residential Floor Area (3) Backup Special Tax The Backup Special Tax for an Assessor's Parcel of Developed Property shall equal $50,028 per Acre of the Assessor's Parcel. If a Final Subdivision includes Assessor's Parcels of Taxable Property for which Building Permits have been issued, exclusive of Taxable Property Owner Association Property and Taxable Public Property, then the Backup Special Tax for each residential Dwelling Unit shall be calculated according to the following formula: Residential Dwelling Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Residential Floor Area/(Total Floor Area)) / Number of residential Dwelling Units) In this case, the Backup Special Tax for each Apartment Unit shall be calculated according to the following formula: Apartment Unit Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Apartment Floor Area/(Total Floor Area)) / Number of Apartment Units) Finally, the Backup Special Tax for each square foot of Non -Residential Floor Area shall be calculated according to the following formula: Non -Residential Square Foot Backup Special Tax = ((Backup Special Tax) X (Acreage of Assessor's Parcel) X (Non -Residential Floor Area/(Total Floor Area)) / Non -Residential Floor Area) California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 8 Furthermore, all Assessor's Parcels within CFD No. 2018-03 shall be relieved simultaneously and permanently from the obligation to pay and disclose the Backup Special Tax if the CSCDA Program Manager calculates that (i) the annual debt service required for the Outstanding Bonds, when compared to the Assigned Special Tax that shall be levied against all Assessor's Parcels of Developed Property in CFD No. 2018-03, results in 110% debt service coverage (i.e., the Assigned Special Tax that shall be levied against all Developed Property in CFD No. 2018-03 in each remaining Fiscal Year based on the then existing development is at least equal to the sum of (a) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (b) the Administrative Expenses as defined in Section A herein), or (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it shall not issue any additional CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Assigned Special Tax in CFD No. 2018-03. (4) Increase in the Assigned Special Tax and Backup Special Tax On each July 1, commencing on July 1, 2020, the Assigned Special Tax and the Backup Special Tax shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. (5) Multiple Land Use Classes In some instances, an Assessor's Parcel of Developed Property may contain more than one Land Use Class. The Special Tax levied on an Assessor's Parcel shall be the sum of the Special Tax for all Land Use Classes located on that Assessor's Parcel. Furthermore, if only a portion of Building Permits have been issued on an Assessor's Parcel, the remaining portion of the Assessor's Parcel shall be considered Final Mapped Property. The CSCDA Program Manager's allocation to each type of property shall be final. b. Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property (1) Maximum Special Tax The Fiscal Year 2019-2020 Maximum Special Tax for each Assessor's Parcel of Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property shall be $50,028 per Acre. (2) Increase in the Maximum Special Tax On each July 1, commencing on July 1, 2020, the Maximum Special Tax for Final Mapped Property, Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property within each respective Tax Zone, shall be increased by an amount equal to two percent (2.00%) of the amount in effect for the previous Fiscal Year. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 9 D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX Commencing with Fiscal Year 2019-2020 and for each following Fiscal Year, the CSCDA Program Manager shall determine the Special Tax Requirement and shall (i) levy 100% of the Assigned Special Taxes on Developed Property, and (ii) levy the remaining Special Taxes as prioritized below until the total Special Taxes levied equal the Special Tax Requirement. The Special Taxes shall be levied in each Fiscal Year as follows: 1. Annual Levy First: The Special Tax shall be levied on each Assessor's Parcel of Residential Property and Apaitiiient Property, within all Tax Zones, in an amount equal to 100% of the applicable Assigned Special Tax for Residential Property and Apartment Property respectively. Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied on each Assessor's Parcel of Non -Residential Property, within all Tax Zones, until (i) the total Special Tax levied under the first two steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Non -Residential Property equals 100% of the applicable Assigned Special Tax, whichever comes first. Third: If additional monies are needed to satisfy the Special Tax Requirement after the second step has been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Final Mapped Property, within all Tax Zones, until (i) the total Special Tax levied under the first three steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Final Mapped Property equals 100% of the applicable Maximum Special Tax, whichever comes first. Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Undeveloped Property, within all Tax Zones, until (i) the total Special Tax levied under the first four steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on Undeveloped Property equals 100% of the applicable Maximum Special Tax, whichever occurs first. Fifth: If additional monies are needed to satisfy the Special Tax Requirement after the first four steps have been completed, then the levy of the Special Tax on each Assessor's Parcel of Developed Property for which the Maximum Special Tax is determined through the application of the Backup Special Tax shall be increased in equal percentages from the Assigned Special Tax up to 100% of the Maximum Special Tax for each such Assessor's Parcel of Developed Property, within all Tax Zones, until (i) the total Special Tax levied under the first five steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Developed Property equals 100% of the Maximum Special Tax for Developed Property, whichever occurs first. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 10 Sixth: If additional monies are needed to satisfy the Special Tax Requirement after the first five steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Property Owner Association Property, within all Tax Zones, until (i) the total Special Tax levied under the first six steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Property Owner Association Property equals 100% of the Maximum Special Tax for Property Owner Association Property, whichever occurs first. Seventh: If additional monies are needed to satisfy the Special Tax Requirement after the first six steps have been completed, the Special Tax shall be levied Proportionately on each Assessor's Parcel of Taxable Public Property, within all Tax Zones, until (i) the total Special Tax levied under the first seven steps listed in this Section D equals the Special Tax Requirement, or (ii) the Special Tax levied on all Taxable Public Property equals 100% of the Maximum Special Tax for Taxable Public Property, whichever occurs first. Notwithstanding the above, the CSCDA Program Manager or its designee may, in any Fiscal Year, levy Proportionately less than 100% of the Assigned Special Tax in the first step (above), when (i) CSCDA is no longer required to levy the Special Tax beyond the first step (above) in order to meet the Special Tax Requirement; and (ii) all authorized CFD No. 2018-03 Bonds have already been issued or CSCDA has covenanted that it will not issue any additional CFD No. 2018-03 Bonds (except refunding bonds), to be supported by the Special Tax. E. EXEMPTIONS No Special Tax shall be levied on Public Property or Property Owner Association Property in CFD No. 2018-03 provided that no such exemption shall reduce the total Acreage of Taxable Property to less than 12.88 Acres. Tax-exempt status shall be assigned by the CSCDA Program Manager in the chronological order in which property in CFD No. 2018-03 becomes Public Property or Property Owner Association Property. However, should an Assessor's Parcel of Public Property or Property Owner Association Property no longer be classified as tax-exempt, it will, from that point forward, be subject to the Special Tax. Furthermore, any Assessor's Parcel designated as Public Property or Property Owner Association Property that cannot be exempt from the Special Tax because such exemption would reduce the Acreage of all Taxable Property within CFD No. 2018-03 to less than 12.88 Acres shall be designated as Taxable Public Property or Taxable Property Owner Association Property. Prior to sixty (60) days before the issuance of a first series of CFD No. 2018-03 Bonds, the CSCDA Program Manager may increase or decrease the final number of minimum taxable Acres in CFD No. 2018-03 to better reflect the actual tax-exempt acreage within CFD No. 2018-03. However, notwithstanding the above, the final number of taxable Acres in CFD No. 2018-03 shall not be decreased if it causes an increase in the Special Tax levied on any existing Assessor's Parcel of Developed Property. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 11 F. REVIEW/APPEAL PROCESS Any taxpayer may file a written appeal of the Special Tax on his/her property with CSCDA, provided that the appellant is current in his/her payments of Special Taxes. During the pendency of an appeal, all Special Taxes previously levied must be paid on or before the payment date established when the levy was made. The appeal must specify the reasons why the appellant claims the Special Tax is in error. The CSCDA Program Manager or its designee shall review the appeal, meet with the appellant if the CSCDA Program Manager deems necessary, and advise the appellant of its determination within sixty (60) days after receipt of the appeal. If the CSCDA Program Manager agrees with the appellant, the CSCDA Program Manager shall make a recommendation to CSCDA to eliminate or reduce the Special Tax on the appellant's property or to provide a refund to appellant. The approval of CSCDA or its designee must be obtained prior to any such elimination or reduction. If the CSCDA Program Manager disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has thirty (30) days in which to appeal to CSCDA by filing a written notice of appeal with the CSCDA Program Manager, provided that the appellant is current in his/her payments of the Special Taxes. The second appeal must specify the reasons for the appellant's disagreement with the CSCDA Program Manager's determination. The CSCDA Program Manager shall schedule the appeal to be heard before CSCDA within sixty (60) days after receipt of the second appeal. Interpretations may be made by CSCDA, without Resolution or Ordinance of the Commission, for purposes of clarifying any vagueness or ambiguity as it relates to the Special Taxes, the Rate and Method of Apportionment, Land Use Classes, or any other definition applicable to CFD No. 2018-03. Without Commission approval, the CSCDA Program Manager may make minor, non - substantive administrative and technical changes to the provisions of this document that do not materially affect the rate, method of apportionment, and manner of collection of the Special Tax for purposes of administrative efficiency or convenience or to comply with new applicable federal, state, or local law. G. MANNER OF COLLECTION The Special Tax Levy will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 2018-03 may directly bill the Special Tax Levy, may collect Special Tax Levies 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. H. PREPAYMENT OF SPECIAL TAX Under this Rate and Method of Apportionment, an Assessor's Parcel within CFD No. 2018-03 is permitted to prepay the Special Tax. The obligation of the owner of an Assessor's Parcel to pay the Special Tax may be fully or partially prepaid and permanently satisfied as described herein, California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 12 provided that a prepayment may be made only for Assessor's Parcels of Developed Property, or for an Assessor's Parcel of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2019, and only if there are no delinquent Special Taxes with respect to such Assessor's Parcel at the time of prepayment. An owner of an Assessor's Parcel intending to prepay the Special Tax obligation shall provide the CSCDA Program Manager with written notice of intent to prepay. Within thirty (30) days of receipt of such written notice, the CSCDA Program Manager shall notify such owner of the Special Tax Prepayment Amount (defined below) for such Assessor's Parcel. The CSCDA Program Manager may charge such owner a reasonable fee for providing this service. If there are Outstanding Bonds, prepayment must be made not less than thirty (30) days prior to a date that notice of redemption of CFD No. 2018-03 Bonds from the proceeds of such prepayment may be given by the Trustee pursuant to the Indenture. The following additional definitions apply to this Section H: "CFD Public Facilities Costs" means either $7,500,000 in 2018 dollars, which shall increase by the Construction Inflation Index on July 1, 2019, and on each July 1 thereafter, or such lower number as (i) shall be determined by the CSCDA Program Manager as sufficient to provide funding for the Authorized Facilities under the authorized bonding program for CFD No. 2018- 03, or (ii) shall be determined by CSCDA concurrently with a covenant that it shall not issue any more CFD No. 2018-03 Bonds (except refunding bonds) to be supported by the Special Tax levy under this Rate and Method of Apportionment. "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 month of December in 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 CSCDA Program Manager 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 Costs minus (i) costs of Authorized Facilities previously paid from the Improvement Fund, (ii) monies currently on deposit in the Improvement Fund available to pay costs of Authorized Facilities, (iii) monies currently on deposit in an escrow fund established pursuant to the Indenture and expected to be available to fund Authorized Facilities and (iv) the amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of these funds. "Improvement Fund" means a fund or account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct Authorized Facilities. "Previously Issued Bonds" means, for any Fiscal Year, all Outstanding Bonds that are outstanding under the Indenture after the first interest and/or principal payment date following the current Fiscal Year. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 13 1. Prepayment in Full The Special Tax Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as defined below): Bond Redemption Amount plus Redemption Premium plus Future Facilities Amount plus Defeasance Amount plus Administrative Fees and Expenses less Reserve Fund Credit less Capitalized Interest Credit Equals Special Tax Prepayment Amount As of the proposed date of prepayment, the Special Tax Prepayment Amount shall be calculated according to the following paragraphs: 1. Confirm that no Special Tax delinquencies apply to such Assessor's Parcel. 2. For Assessor's Parcels of Developed Property, compute the Assigned Special Tax and Backup Special Tax for the Assessor's Parcel to be prepaid. For Assessor's Parcels of Final Mapped Property or Undeveloped Property for which a Building Permit has been issued after January 1, 2018, compute the Assigned Special Tax and Backup Special Tax for that Assessor's Parcel as though it was already designated as Developed Property, based upon the Building Permit which has already been issued for such Assessor's Parcel. 3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Tax levy for CFD No. 2018-03 based on the Assigned Special Tax for Developed Property which could be levied on all expected development assuming Buildout of CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid, and (b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the total estimated Backup Special Taxes at Buildout for the entire CFD No. 2018-03, excluding any Assessor's Parcels which have been prepaid. 4. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the Previously Issued Bonds to compute the amount of Previously Issued Bonds to be redeemed (the "Bond Redemption Amount"). 5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if any, on the Previously Issued Bonds to be redeemed (the "Redemption Premium"). 6. Compute the current Future Facilities Costs. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 14 7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determined pursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount"). 8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bond interest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Previously Issued Bonds. 9. Determine the Special Tax levied on the Assessor's Parcel in the current Fiscal Year which has not yet been paid. 10. Compute the minimum amount the CSCDA Program Manager reasonably expects to derive from the reinvestment of the Special Tax Prepayment Amount, less any interest earnings attributed to the Administrative Fees and Expenses (defined below) from the date of prepayment until the redemption date for the Previously Issued Bonds to be redeemed with the prepayment. 11. Add the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuant to paragraph 10 (the "Defeasance Amount"). 12. The administrative fees and expenses of CFD No. 2018-03 are as calculated by the CSCDA Program Manager and include the costs of computation of the prepayment, the costs to invest the prepayment proceeds, the costs of redeeming CFD No. 2018-03 Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses"). 13. The reserve fund credit (the "Reserve Fund Credit") shall equal the lesser of: (a) the expected reduction in the reserve requirement (as defined in the Indenture), if any, associated with the redemption of Previously Issued Bonds as a result of the prepayment, or (b) the amount derived by subtracting the new reserve requirement (as defined in the Indenture) in effect after the redemption of Previously Issued Bonds as a result of the prepayment from the balance in the reserve fund on the prepayment date, but in no event shall such amount be less than zero. No Reserve Fund Credit shall be granted if the amount then on deposit in the reserve fund for the Previously Issued Bonds is below 100% of the reserve requirement (as defined in the Indenture). 14. If any capitalized interest for the Previously Issued 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 3(a) or 3(b) by the expected balance in the capitalized interest fund or account under the Indenture after such first interest and/or principal payment date (the "Capitalized Interest Credit"). 15. The Special Tax prepayment is equal to the sum of the amounts computed pursuant to paragraphs 4, 5, 7, 11, and 12, less the amounts computed pursuant to paragraphs 13 and 14 (the "Special Tax Prepayment Amount"). California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 15 2. Prepayment in Part The amount of the prepayment shall be calculated as in Section H.1; except that a partial prepayment shall be calculated according to the following formula: PP = (PE — A) x F + A. These terms have the following meaning: PP = the partial prepayment PE = the Special Tax Prepayment Amount calculated according to Section H.1 F = the percentage by which the owner of the Assessor's Parcel(s) is partially prepaying the Special Tax. A = the Administration Fees and Expenses from Section H.1. The owner of any Assessor's Parcel who desires such prepayment shall notify the CSCDA Program Manager of such owner's intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. With respect to any Assessor's Parcel that is partially prepaid, CSCDA shall (i) distribute the funds remitted to it according to Section H.3, and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's Parcel, equal to the outstanding percentage (1.00 - F) of the remaining Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D. 3. General Provisions Applicable to the Prepayment of Special Tax (a). Use of the Special Tax Prepayment Amount The Special Tax Prepayment Amount, less the Administrative Fees and Expenses calculated according to Sections H.1 and H.2 which shall be retained by CFD No. 2018- 03, and less the Future Facilities Amount calculated according to Section H.1 which shall be deposited into the Improvement Fund, shall be deposited into specific funds established under the Indenture, to fully or partially redeem as many Outstanding Bonds as possible, and, if amounts are less than $5,000, to make debt service payments on the Outstanding Bonds (collectively designated as the "Bond Retirement Funds"). (b). Full Prepayment of Special Tax Upon confirmation of the payment of the current Fiscal Year's entire Special Tax obligation, the CSCDA Program Manager may remove the current Fiscal Year's Special Tax levy for such Assessor's Parcel from the County tax rolls. With respect to any California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 16 Assessor's Parcel that is prepaid in accordance with Section H.1, the CSCDA Program Manager shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of the Special Tax and the release of the Special Tax lien on such Assessor's Parcel, and the obligation to pay the Special Tax for such Assessor's Parcel shall cease. (c). Partial Prepayment of Special Tax With respect to any Assessor's Parcel that is partially prepaid, the CSCDA Program Manager shall (i) distribute or cause to be distributed the funds remitted to it according to Section H.2. and (ii) indicate in the records of CFD No. 2018-03 that there has been a partial prepayment of the Special Tax and that a portion of the Special Tax with respect to such Assessor's parcel, equal to the outstanding percentage (1.00 — F) of the Maximum Special Tax, shall continue to be levied on such Assessor's Parcel pursuant to Section D herein. (d). Debt Service Coverage Notwithstanding the foregoing, no prepayment of the Special Tax shall be allowed unless the amount of Special Tax that may be levied on Taxable Property (assuming Buildout) within CFD No. 2018-03 in each future Fiscal Year (after excluding Taxable Public Property and Taxable Property Owner Association Property as set forth in Section E herein), after the proposed prepayment, is at least equal to the sum of (i) 1.10 times the debt service necessary to support the remaining Outstanding Bonds in each corresponding Fiscal Year, and (ii) the Administrative Expenses as defined in Section A herein. I. TERM OF SPECIAL TAX The Special Tax shall be levied until the final series of CFD No. 2018-03 Bonds have matured, provided that the Special Tax shall not be levied after Fiscal Year 2069-2070. The Special Taxes will cease to be levied in an earlier Fiscal Year if the CSCDA Program Manager has determined that all required interest and principal payments on the CFD No. 2018-03 Bonds have been paid and CSCDA has covenanted that it will not issue any more CFD No. 2018-03 Bonds (other than refunding Bonds) to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D. California Statewide Communities Development Authority December 7, 2018 CFD No. 2018-03 (Uptown Newport) Page 17 ATTACHMENT 1 PROPOSED BOUNDARIES & IDENTIFICATION OF TAX ZONES OF CFD NO. 2018-03 SHEET 1 OF 1 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA For particulars of lines and dimensions. reference is made to the parcels maps of the Orange County Assessor. California. and to Tract map No. 17763 recorded on June 19, 2015 as insvument No. 201500320061 at Pages 17 through 23 in Book 937 of maps in the office of the County Recorder of Orange County, California. LEGEND Proposed Boundaries of Califomia Statewide Communities Development • Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, California 11111111 Parcel Line Tax Zone 1 Tax Zone 2 445-13n-nn Assessor Parcel Number F .EPA0.ED BY WIYID TA U9510 ANO AiSOC IATE9% INC. (1) Filed in the office of the Secretary of California Statewide Communities Development Authority this day of , 2018. Secretary, California Statewide Communities Development Authority (2) I hereby certify that the within map showing proposed boundaries of California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport). City of Newport Beach. County of Orange, Stale of California, was approved by the Commission of the California Statewide Communities Development Authority at a regular meeting thereof. held on this day of , 2018, by its resolution No. Secretary, California Statewide Communities Development Authority (3) Filed this day of 2018, at the hour of o'clock _ m., in Book of Maps of Assessment. and Community Facilities Districts at page and as Instrument No. in the office of the County Recorder of Orange County. State of California_ Hugh Nguyen Clerk -Recorder, County of Orange By Deputy Fee (THIS PAGE INTENTIONALLY LEFT BLANK) APPENDIX D PROPOSED FORM OF OPINION OF BOND COUNSEL [Closing Date] California Statewide Communities Development Authority Sacramento, California California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (Final Opinion) Ladies and Gentlemen: We have acted as bond counsel to the California Statewide Communities Development Authority (the "Authority") in connection with the issuance by the Authority of $8,300,000 aggregate principal amount of its Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds") pursuant to the provisions of the Mello -Roos Community Facilities Act of 1982 of the State of California (being Sections 53311 et seq. of the Government Code of the State of California, as amended) and an Indenture by and between the Authority and Wilmington Trust, National Association, as trustee (the "Trustee"), dated as of March 1, 2019 (the "Indenture"). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture. In such connection, we have reviewed the Indenture, the Tax Certificate, opinions of counsel to the Authority, the Developers and the Trustee, certificates of the Authority, the Developers, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not be relied upon or otherwise used in connection with any such actions, events or matters. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Authority. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax purposes. We call attention to the fact that the rights and obligations under the Bonds, the Indenture and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against joint powers authorities in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non -exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any of the assets described in or as subject to the lien of the Indenture or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets. We express no opinion regarding the plans, specifications, maps, financial report or other engineering or financial details of the proceedings, or upon the Rate and Method or the validity of the Special Tax levied upon any individual parcel. Our services did not include financial or other non -legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion with respect thereto. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions: 1. The Bonds constitute the valid and binding special tax obligations of the Authority, payable solely from the proceeds of the Special Tax and certain funds held under the Indenture. 2. The Indenture has been duly executed and delivered by, and constitutes the valid and binding obligation of, the Authority. 3. Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds. Faithfully yours, ORRICK, HERRINGTON & SUTCLIFFE LLP per D-2 APPENDIX E SUMMARY OF THE INDENTURE The following is a brief summary of certain provisions of the Indenture. Additional provisions of the Indenture are summarized in the body of the Official Statement. This summary does not purport to be complete and is qualified in its entirety by reference to the Indenture. Definitions Unless the context otherwise requires, the terms defined below will for all purposes of the Indenture and of any Supplemental Indenture and of the Bonds and of any certificate, opinion, report, request or other document mentioned in the Indenture or in any Supplemental Indenture or in the Bonds have the meanings defined below. The following definitions will be equally applicable to both the singular and plural forms of any of the terms defined in the Indenture. "Acquisition Agreement" means that certain Acquisition Agreement, between the City of Newport Beach and TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC, as the same may be further amended from time to time in accordance with its terms. "Acquisition and Construction Fund" means the "CSCDA/Uptown Newport Community Facilities District Acquisition and Construction Fund" established pursuant to the Indenture and maintained by the Trustee. "Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of the Community Facilities District: the costs of computing the Special Tax and preparing the annual Special Tax collection schedules; the costs of remitting the Special Tax to the Trustee; the costs of the Trustee (including its legal counsel) in the discharge of the duties required of it under the Indenture; the costs to the Authority or any designee thereof of complying with arbitrage rebate requirements; the costs to the Authority or any designee thereof of complying with disclosure requirements associated with applicable federal and state securities laws and of the Law; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Tax, the costs of the Authority or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from an escrow account; and the Authority's annual administration fees and third party expenses. Administrative Expenses will also include amounts estimated or advanced by the Authority for any other administrative purposes of the Community Facilities District, including attorney's fees and other costs related to commencing and pursuing to completion any foreclosure of delinquent Special Tax. "Authority" means the California Statewide Communities Development Authority. "Authorized Signatory" means any member of the Commission of the Authority and any other person as may be designated and authorized to sign on behalf of the Authority pursuant to a resolution adopted thereby. "Average Annual Debt Service" means the average over all Bond Years of the annual debt service from the date of the Bonds to their maturity, including: (1) the principal amount of all such Outstanding Bonds payable in such Bond Year either at maturity or pursuant to a Sinking Fund Payment; and E- 1 (2) the interest payable on the aggregate principal amount of such Bonds Outstanding in such Bond Year assuming such Bonds are retired as scheduled. "Bond Year" means the period from September 2 through the following September 1. "Bonds" means the special tax bonds of the Authority at any time Outstanding under the Indenture or under any Supplemental Indenture that are executed, issued and delivered in accordance with the provisions of the Indenture or of any Supplemental Indenture and that were authorized at the special election held in the Community Facilities District on December 20, 2018. "Serial Bonds" means the Bonds for which no Mandatory Sinking Account Payments are established. "Term Bonds" means the Bonds which are redeemable or payable on or before their specified maturity date or dates from the Mandatory Sinking Account Payments established for the purpose of redeeming or paying such Bonds on or before their specified maturity date or dates. "Capitalized Interest Account" means the account of that name in the Redemption Fund established pursuant to the Indenture and maintained by the Trustee. "Certificate of the Authority" means an instrument in writing signed by an Authorized Signatory. "Certificate of the City" means an instrument in writing signed by an officer of the City or such officer's designee. "City" means the City of Newport Beach, California. "Closing Date" means, with respect to the Series 2019 Bonds, the date upon which the Series 2019 Bonds are delivered and, with respect to any Refunding Bonds, will have the meaning given to such term in the Supplemental Indenture providing for the issuance of such Refunding Bonds. "Code" means the Internal Revenue Code of 1986 and the regulations issued thereunder from time to time, and in this regard reference to any particular Section of the Code will include reference to any successor to such Section of the Code. "Commission" means the governing board of the Authority. "Community Facilities District" means the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), a community facilities district duly organized by the Authority and existing in the County of Orange under and by virtue of the Law. "Costs of Issuance" means all costs and expenses payable by or reimbursable to the Authority that are related to the formation of the Community Facilities District or the authorization, sale, execution, authentication, or initial delivery of Bonds, including costs of preparation and reproduction of documents, rating agency fees (if any), filing fees, fees, and charges of the Trustee (including fees and expenses of its counsel), legal fees and charges and fees and charges of other consultants and professionals, together with all costs for the preparation of Bonds, and any other cost or expense in connection with the formation of the Community Facilities District or the authorization, sale, execution, authentication, or initial delivery of Bonds. "Costs of Issuance Account" means the CSCDA/Uptown Newport Community Facilities District Costs of Issuance Account established pursuant to the Indenture and maintained by the Trustee. E-2 "Debt Service" means, for any period, the sum of (1) the interest payable during such period on all Outstanding Bonds, assuming that all Outstanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds are redeemed or paid as scheduled at the times of and in amounts equal to the sum of all Mandatory Sinking Account Payments (but excluding the amount of any such interest funded from the proceeds of the sale of Bonds or investment earnings thereon), plus (2) the principal amount of all Outstanding Serial Bonds maturing by their terms in such period, plus (3) the aggregate amount of all Mandatory Sinking Account Payments required to be deposited in all Sinking Accounts in such period. For purposes of any test for the issuance of Bonds to refund Outstanding Bonds, Debt Service will be deemed to include Debt Service on the proposed refunding Bonds but will not include Debt Service on any Bonds proposed to be defeased concurrently. "Developer" means, collectively, TSG-Parcel 1, LLC, a Delaware limited liability company and Uptown Newport Jamboree, LLC, a Delaware Limited Partnership. "Event of Default" means an event described as such in the Indenture. "Expense Fund" means the CSCDA/Uptown Newport Community Facilities District Expense Fund established pursuant to the Indenture and maintained by the Trustee. "Federal Securities" means (a) any securities now or hereafter authorized both the interest on and principal of which are guaranteed by the full faith and credit of the United States of America, and (b) any of the following obligations of federal agencies not guaranteed by the United States of America: (1) participation certificates or senior debt obligations of the Federal Home Loan Mortgage Corporation, (2) bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act and bonds of any federal home loan bank established under such act, and (3) stocks, bonds, debentures, participations and other obligations of or issued by the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National Mortgage Association or the Federal Home Loan Mortgage Corporation, as and to the extent that such securities or obligations are eligible for the legal investment of Authority funds, together with any repurchase agreements which are secured by any of such securities or obligations that (a) have a fair market value (determined at least daily) at least equal to one hundred two percent (102%) of the amount invested in the repurchase agreement, (b) are in the possession of the Trustee or a third party acting solely as agent for the Trustee who holds a perfected first lien therein, and (c) are free from all third party claims. "Fiscal Year" means the twelve-month period terminating on June 30 of each year, or any other annual accounting period hereafter selected and designated by the Authority as its Fiscal Year in accordance with applicable law. "Generally Accepted Accounting Principles" means the uniform accounting and reporting procedures set forth in publications of the American Institute of Certified Public Accountants or its successor, or by any other generally accepted authority on such procedures, and includes, as applicable, the standards set forth by the Governmental Accounting Standards Board or its successor. "Holder" means any person who is the registered owner of any Outstanding Bond, as shown on the registration books maintained by the Trustee pursuant to the Indenture. "Improvements" means the public capital improvements and utility undergrounding authorized to be financed by the Community Facilities District, and to which the Community Facilities District is authorized to contribute, as more particularly described in the Resolution of Formation. "Indenture" means the Indenture and all Supplemental Indentures. E-3 "Independent Certified Public Accountant" means any certified public accountant or firm of such accountants duly licensed and entitled to practice and of recognized national reputation as a verification agent, appointed and paid by the Authority, and who, or each of whom: (1) is in fact independent and not under the domination of the Authority; (2) does not have a substantial financial interest, direct or indirect, in the operations of the Authority; and (3) is not connected with the Authority as an officer or employee of the Authority, but who may be regularly retained to audit the accounting records of and make reports thereon to the Authority. "Interest Payment Date" means March 1 and September 1 of each year, commencing September 1, 2019, as well as any date on which the Bonds are redeemed prior to their maturity. "Law" means the Mello -Roos Community Facilities Act of 1982, as amended (being Sections 53311 et seq. of the Government Code of the State of California) and all laws amendatory thereof or supplemental thereto. "Legal Investments" means any securities in which funds of the Authority may be legally invested in accordance with the applicable law in effect at the time of such investment and in accordance with the then current investment policy of the Authority as determined by the Commission, including without limitation the California Asset Management Program pooled investment fund. "Lien Amount" means, with respect to any parcel subject to the lien of the Special Tax, the sum of (A) the aggregate principal amount of the Bonds attributable to such parcel plus (B) the aggregate principal amount of bonds, notes or other evidences of indebtedness other than the Bonds then outstanding and payable from assessments or reassessments to be levied on such parcel, plus (C) a portion of the aggregate principal amount of bonds, notes or other evidences of indebtedness issued under the Law and payable at least partially from special taxes to be levied on the parcel (except to the extent such special taxes are made expressly subordinate to the special taxes securing Bonds) (the "Other Mello -Roos Bonds") equal to the aggregate principal amount of the Other Mello -Roos Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other Mello -Roos Bonds on the parcel and the denominator of which is the total amount of special taxes levied for the Other Mello -Roos Bonds on all parcels of land securing the Other Mello -Roos Bonds (such fraction to be determined based upon the maximum special taxes which could be levied the year in which maximum annual debt service on the Other Mello -Roos Bonds occurs), based upon information from the most recent available fiscal year. "Mandatory Sinking Account Payments" means the payments required by the Indenture and by all Supplemental Indentures to be deposited in all Sinking Accounts established for the payment of all Term Bonds. "Maximum Annual Debt Service" means the maximum sum obtained for any Bond Year prior to the final maturity of Bonds by totaling the following for each Bond Year: (1) The amount of all such Outstanding Bonds payable in such Bond Year; (2) The principal amount of any such Bonds scheduled to be called and redeemed in such Bond Year; and E-4 (3) The interest payable on the aggregate principal amount of such Outstanding Bonds in such Bond Year if such Outstanding Bonds are retired as scheduled. "Moody's" means Moody's Investors Service, Inc., a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors or assigns, except that if such entity is dissolved or liquidated or no longer performs the functions of a securities rating agency, then the term "Moody's" will be deemed to refer to any other nationally recognized securities rating agency selected by the Authority. "Opinion of Counsel" means a written opinion of counsel retained or employed by the Authority. "Outstanding," when used as of any particular time with reference to Bonds, means (subject to the provisions of the Indenture) all Bonds except: (1) Bonds cancelled and destroyed by the Trustee or delivered to the Trustee for cancellation and destruction; (2) Bonds paid or deemed to have been paid within the meaning of the Indenture; and (3) Bonds in lieu of or in substitution for which other Bonds have been executed by the Authority and authenticated and delivered by the Trustee pursuant to the Indenture. "Park Improvement Subaccount" means the subaccount by that name in the Acquisition and Construction Fund and established pursuant to the Indenture. "Prepayment Fund" means the CSCDA/Uptown Newport Community Facilities District Prepayment Fund established pursuant to the Indenture and maintained by the Trustee. "Principal Corporate Trust Office" means the corporate trust office of the original Trustee in Los Angeles or San Francisco, California, at which at any particular time corporate trust business is administered, or such other office as it designates; and any such office designated by any successor Trustee, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term will mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business will be conducted. "Rate and Method" means the "Rate and Method of Apportionment California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport)" adopted by the Commission as part of the Resolution of Formation, as the same may be amended from time to time. "Rebate Fund" means the CSCDA/Uptown Newport Community Facilities District Rebate Fund established pursuant to the Indenture (to be maintained by the Treasurer of the Authority). "Redemption Fund" means the CSCDA/Uptown Newport Community Facilities District Redemption Fund established pursuant to the Indenture and maintained by the Trustee. "Refunding Bonds" means Bonds other than the Series 2019 Bonds that are issued pursuant to the Indenture. "Required Bond Reserve" means, as of any date of calculation, an amount equal to the lesser of (a) Maximum Annual Debt Service, (b) 10% of the proceeds (within the meaning of Section 148 of the E-5 Code) of such Bonds, or (c) 125% of Average Annual Debt Service; provided that upon the issuance of any Series of Refunding Bonds, the Required Bond Reserve will not be required to be funded or increased by an amount greater than 10% of the proceeds of that Series. "Reserve Fund" means the CSCDA/Uptown Newport Community Facilities District Reserve Fund established pursuant to the Indenture and maintained by the Trustee. "Resolution of Formation" means Resolution No. 18SCIP-117, adopted by the Commission on December 20, 2018. "Series" means all Bonds of like designation authenticated and delivered on original issuance at the same time pursuant to the Indenture or a Supplemental Indenture and any Bond or Bonds thereafter delivered in lieu of or as substitution for any of such Bonds pursuant to the Indenture. "Sinking Account" means the accounts referred to by that name in the Redemption Fund established pursuant to the Indenture. "Special Tax" means the special tax levied within the Community Facilities District to fund the Special Tax Requirement. "Special Tax Fund" means the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Fund established pursuant to the Indenture and maintained by the Trustee. "Special Tax Requirement" has the meaning given in the Rate and Method. "Special Tax Revenues" means the proceeds of the Special Tax received by or on behalf of the Community Facilities District, including any prepayments thereof, interest and penalties thereon, and proceeds of the redemption or sale of property sold as a result of the foreclosure of the lien of the Special Tax, which will be limited to the amount of said lien and interest and penalties thereon. "Standard & Poor's" means S&P Global Ratings, a business of Standard & Poor's Financial Services LLC, a corporation duly organized and existing under and by virtue of the laws of the State of New York, and its successors and assigns, or, if such entity will be dissolved or liquidated or will no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency selected by the Authority. "Supplemental Indenture" means any indenture then in full force and effect that has been made and entered into by the Authority and the Trustee, amendatory of or supplemental to the Indenture; but only to the extent that such Supplemental Indenture is specifically authorized under the Indenture. "Tax Certificate" means each certificate delivered upon the issuance of Bonds relating to Section 148 of the Code. "Taxable Property" has the meaning given in the Rate and Method. "Trustee" means Wilmington Trust, National Association, a national banking association duly organized and existing under and by virtue of the laws of the United States of America and authorized to accept and execute trusts of the character set forth in the Indenture, at its Principal Corporate Trust Office, or any other bank, national banking association or trust company having a corporate trust office in Los E-6 Angeles or San Francisco, California, which may at any time be substituted in its place as provided in the Indenture at its Principal Corporate Trust Office. "Undergrounding Subaccount" means the subaccount by that name in the Acquisition and Construction Fund and established pursuant to the Indenture. "Written Request of the Authority" means an instrument in writing signed by an Authorized Signatory. Equal Security In consideration of the acceptance of the Bonds by the Holders thereof, the Indenture will be deemed to be and will constitute a contract between the Authority and the Holders from time to time to secure the full and final payment of the interest on and principal of and redemption premiums, if any, on all Bonds which may from time to time be authorized, sold, executed, authenticated and delivered under the Indenture, subject to the agreements, conditions, covenants and terms contained in the Indenture; and all agreements, conditions, covenants and terms contained in the Indenture required to be observed or performed by or on behalf of the Authority will be for the equal and proportionate benefit, security and protection of all Holders without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number thereof or the time of execution, authentication or delivery thereof or otherwise for any cause whatsoever, except as expressly provided therein or in the Indenture. Various Provision Relating to the Bonds Authentication by the Trustee Only those Bonds that bear thereon a certificate of authentication manually executed by the Trustee will be entitled to any benefit, protection or security under the Indenture or be valid or obligatory for any purpose, and such certificate of the Trustee will be conclusive evidence that the Bonds so authenticated have been duly authorized, sold, executed, authenticated and delivered under the Indenture and are entitled to the benefits of the Indenture. Transfer and Exchange of Bonds The Trustee is required to keep at its Principal Corporate Trust Office sufficient books for the transfer and exchange of the Bonds, which books are required to at all times during normal business hours with reasonable prior notice be open to inspection by the Authority or by any Holder. Any Bond may, in accordance with its terms, be transferred or exchanged on such books by the person in whose name it is registered, in person or by his duly authorized attorney, upon payment by the Holder requesting such transfer or exchange of any tax or other governmental charge required to be paid with respect to such transfer or exchange and upon surrender of such Bond for cancellation accompanied by delivery of a duly executed written instrument of transfer or exchange in a form acceptable to the Trustee. Whenever any Bond or Bonds are surrendered for transfer or exchange, the Authority is required to execute and the Trustee to authenticate and deliver a new Bond or Bonds of the same maturity date and of authorized denominations for the same aggregate principal amount, except that neither the Authority nor the Trustee will be required (i) to transfer or exchange any Bonds during the fifteen -day period prior to the selection of any Bonds for redemption under the Indenture, or (ii) to transfer or exchange any Bond which has been selected for redemption in whole or in part, except the unredeemed portion of such Bond selected for redemption in part, from and after the day that such Bond has been selected for redemption in whole or in part under the Indenture. E-7 Mutilated, Destroyed, Stolen or Lost Bonds In case any Bond becomes mutilated in respect of the body of such Bond or is be believed by the Authority to have been destroyed, stolen or lost, upon proof of ownership satisfactory to the Authority and the Trustee and upon the surrender of such mutilated Bond at the Principal Corporate Trust Office of the Trustee, or upon the receipt of evidence satisfactory to the Authority and the Trustee of such destruction, theft or loss and upon receipt of indemnity satisfactory to the Authority and the Trustee, and also upon payment of all Administrative Expenses incurred by the Authority and the Trustee related to the replacement of any Bond so mutilated, destroyed, stolen or lost, the Authority is required to execute and the Trustee to authenticate and deliver at its Principal Corporate Trust Office a new Bond or Bonds of the same maturity date for the same aggregate principal amount in authorized denominations of like tenor and date and bearing such numbers and notations as the Trustee will determine in exchange and substitution for and upon cancellation of the mutilated Bond or in lieu of and in substitution for the Bond so destroyed, stolen or lost. If any such destroyed, stolen or lost Bond will have matured or been called for redemption, payment of the amount due thereon may be made by the Trustee upon receipt of like proof, indemnity and payment of Administrative Expenses. Any replacement Bonds issued will be entitled to equal and proportionate benefits with all other Bonds issued under the Indenture, and the Authority and the Trustee will not be required to treat both the original Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued under the Indenture or for the purpose of determining any percentage of Bonds Outstanding under the Indenture, but both the original and the replacement Bond will be treated as one and the same. Use of Depository for Bonds The Depository Trust Company, in New York, New York, has been appointed depository for the Bonds, and the Bonds will be initially registered in the name of "Cede & Co.," as nominee of The Depository Trust Company, and will be initially issued as one Bond for each of the maturities in the principal amounts set forth in the Indenture, and registered ownership of the Bonds, or any portion thereof, may not thereafter be transferred except: • To any successor of Cede & Co., as nominee of The Depository Trust Company, or its nominee, or to any substitute depository designated pursuant to the Indenture (a "substitute depository"); provided, that any successor of Cede & Co., as nominee of The Depository Trust Company, or any substitute depository, will be qualified under any applicable laws to provide the services proposed to be provided by it; • To any substitute depository not objected to by the Trustee, upon (1) the resignation of The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository, or (2) a determination by the Authority to substitute another depository for The Depository Trust Company or its successor because The Depository Trust Company or its successor (or any substitute depository or its successor) is no longer able to carry out its functions as depository; provided, that any such substitute depository will be qualified under any applicable laws to provide the services proposed to be provided by it; or • To any person as provided below, upon (1) the resignation of The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository, or (2) a E-8 determination by the Authority to remove The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository. In the case of any transfer pursuant to one of the first two of the bulleted paragraphs, immediately above, upon receipt of the Bonds by the Trustee, together with a Written Request of the Authority to the Trustee, a new Bond for each maturity date of the Bonds are required to be executed by the Authority and authenticated and delivered by the Trustee in the aggregate principal amount of the Bonds so received, in such denominations and registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such Written Request of the Authority. In the case of any transfer pursuant to the third of the bulleted paragraphs, immediately above, upon receipt of the Bonds by the Trustee, together with a Written Request of the Authority to the Trustee, a new Bond or Bonds for each maturity date of the Bonds are required to be executed by the Authority and authenticated and delivered by the Trustee in the aggregate principal amount of the Bonds so received, in such denominations and registered in the names of such persons as are requested in such Written Request of the Authority, subject to the $5,000 minimum denomination and the maximum amount to mature in any one year, and thereafter, the Bonds will be transferred pursuant to the Indenture; provided, that the Trustee will not be required to deliver such new Bonds on a date prior to sixty (60) days after receipt of such Written Request of the Authority. The Authority and the Trustee will be entitled to treat the person in whose name any Bond is registered as the owner thereof for all purposes of the Indenture and any applicable laws, notwithstanding any notice to the contrary received by the Authority or the Trustee; and the Authority and the Trustee will have no responsibility for transmitting payments to, communication with, notifying, or otherwise dealing with any beneficial owners of the Bonds, and neither the Authority nor the Trustee will have any responsibility or obligation, legal or otherwise, to the beneficial owners or to any other party, including The Depository Trust Company or its successor (or any substitute depository or its successor), except to The Depository Trust Company or its successor (or any substitute depository or its successor) as a Holder of the Bonds. So long as any Bonds are registered in the name of Cede & Co. or its registered assigns, the Authority and the Trustee are required to cooperate with Cede & Co., as sole Holder, or its registered assigns, in effecting payment of the interest on and principal of and redemption premiums, if any, on such Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made immediately available on the date they are due. Bond Proceeds Upon the receipt of payment of the proceeds of sale of the Series 2019 Bonds when the same have been duly sold by the Authority, the Trustee is required to establish and maintain the following funds and accounts: The Reserve Fund The "CSCDA/Uptown Newport Community Facilities District Reserve Fund," (the "Reserve Fund") into which is required to be deposited an amount equal to the Required Bond Reserve. Subject to the Indenture, moneys in the Reserve Fund are required to be used solely for the purpose of paying the principal of and interest on the Bonds in the event that the moneys in the Redemption Fund are insufficient therefor, and for that purpose the Trustee will withdraw from the Reserve Fund, for deposit in the Redemption Fund, moneys necessary for such purpose. Amounts in the Reserve Fund will only be withdrawn to pay principal and interest on the Bonds; provided, that if the amount on deposit in the Reserve Fund is less than the Required Bond Reserve, the Trustee is required to notify the Authority of E-9 the amount needed to replenish the Reserve Fund to the Required Bond Reserve and the Authority will collect the deficiency by including it in the next annual Special Tax levy, to the extent permitted by law and as necessary. The Costs of Issuance Account The "CSCDA/Uptown Newport Community Facilities District Costs of Issuance Account," (the "Costs of Issuance Account") into which account is required to be deposited the amount shown above. All money in the Costs of Issuance Account will be applied by the Trustee in the manner provided by law for payment of Costs of Issuance as directed by the Written Request of the Authority; provided, that any money remaining in the Costs of Issuance Account after the completion of the payment of the Costs of Issuance (but not later than as permitted in the Indenture in respect of the Series 2019 Bonds) will be withdrawn by the Trustee from the Costs of Issuance Account and deposited by the Trustee in the Special Tax Fund, and the Costs of Issuance Account will be closed. Any Supplemental Indenture may reopen or create a new Costs of Issuance Account with respect to Refunding Bonds. The Acquisition and Construction Fund The Trustee is required to establish and maintain a fund to be known as the "CSCDA/Uptown Newport Community Facilities District Acquisition and Construction Fund" (the "Acquisition and Construction Fund") and within the Acquisition and Construction Fund, the Park Improvement Subaccount and the Undergrounding Subaccount, into which fund and account will be deposited the amounts required to be deposited therein by the provisions of the Indenture. All money in the Acquisition and Construction Fund will be applied by the Trustee in accordance with the following paragraph for financing the acquisition and construction of the Improvements (or for making reimbursements to the Developer for such costs theretofore paid by it), including payment of costs incidental to or connected with financing such acquisition and construction, or for the payment of development fees, or for the repayment of funds advanced to or for the Community Facilities District, not to exceed the amount on deposit in the Acquisition and Construction Fund. Amounts in the Acquisition and Construction Fund will be applied by the Trustee as directed in a Disbursement Request. Moneys in the Acquisition and Construction Fund may be transferred between subaccounts in the Acquisition and Construction Fund at any time upon recipient by the Trustee of a request of the City in writing or delivered by electronic means to the Trustee. Any amount remaining in any subaccount of the Acquisition and Construction Fund after the completion of its purpose, which completion will be conclusively evidenced by a Certificate of the City, will be transferred by the Trustee to the Special Tax Fund, except that any amounts remaining in the Acquisition and Construction Fund after all Series 2019 Bonds and all Refunding Bonds have been paid and retired is required to be deposited in the Expense Fund. Special Tax Revenues Deposit of Special Tax Revenues in the Special Tax Fund The Trustee is required to establish and maintain a fund to be known as the "CSCDA/ Uptown Newport Community Facilities District Special Tax Fund" (the "Special Tax Fund"), which fund is required to be held and maintained in trust by the Trustee, and the Authority agrees and covenants that all Special Tax Revenues (including any prepayments thereof and including any amounts, net of any costs of collection and enforcement, received as a result of foreclosure of the lien securing the Special Tax or other actions by the Authority to collect delinquent Special Tax), when and as received, will be immediately transferred to the Trustee, and the Trustee agrees and covenants to deposit all such transfers E-10 in the Special Tax Fund, and all money in the Special Tax Fund will be disbursed, allocated and applied solely to the uses and purposes set forth in the Indenture. Except for money held in the Acquisition and Construction Fund, the Prepayment Fund, the Expense Fund and the Rebate Fund, all of the Special Tax Revenues, all funds and accounts established to hold Special Tax Revenues under the Indenture, and any investment earnings thereon, are pledged to, and constitute a trust fund for, the payment of the principal of and interest on the Bonds. So long as the principal of and interest on the Bonds remains unpaid, the Special Tax Revenues, the funds and accounts established to hold Special Tax Revenues, and any investment earnings thereon will not be used for any other purpose, except as otherwise permitted by the Indenture, and is required to be held in trust for the benefit of the owners of the Bonds and will be applied pursuant to the Indenture. The Prepayment Fund is pledged for the payment of principal and redemption premiums, if any, on the Bonds in accordance with the Indenture; but is pledged to pay interest on the Bonds only to the extent of accrued interest included in the calculations of the prepayment amounts under the Rate and Method and in accordance with the Indenture. Covenants of the Authority Punctual Payment and Performance The Authority will punctually pay the interest on and principal of and redemption premium, if any, to become due on every Bond issued under the Indenture in strict conformity with the terms of the Law and the Indenture and of the Bonds, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained in the Indenture and in the Bonds required to be observed and performed by it. Against Indebtedness and Encumbrances The Authority will not issue any evidences of indebtedness payable from the Special Tax Revenues except as provided in the Indenture, and will not create, nor permit the creation of, any pledge, lien, charge or other encumbrance upon any money in the Special Tax Fund other than as provided in the Indenture; provided, that the Authority may at any time, or from time to time, issue evidences of indebtedness for any lawful purpose of the Community Facilities District so long as any payments due thereunder will be subordinate in all respects to the use of the Special Tax Revenues as provided in the Indenture. Against Federal Income Taxation The Authority will not take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, and specifically the Authority will not directly or indirectly use or make any use of the proceeds of the Bonds or any other funds of the Authority or take or omit to take any action that would cause the Bonds to be "arbitrage bonds" subject to federal income taxation by reason of Section 148 of the Code or "private activity bonds" subject to federal income taxation by reason of Section 141(a) of the Code or obligations subject to federal income taxation because they are "federally guaranteed" as provided in Section 149(b) of the Code; and to that end the Authority, with respect to the proceeds of the Bonds and such other funds, will comply with all requirements of such sections of the Code; provided, that if the Authority will obtain an opinion of nationally recognized bond counsel to the effect that any action required under this covenant is no longer required, or to the effect that some further action is required, to maintain the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, the Authority may rely conclusively on such opinion in complying with the provisions E-11 of this covenant. In the event that at any time the Authority is of the opinion that for purposes of this covenant it is necessary to restrict or limit the yield on the investment of any money held by the Treasurer of the Authority or the Trustee under the Indenture or otherwise the Authority will so instruct the Treasurer of the Authority or the Trustee, as the case may be, in writing, and the Treasurer of the Authority or the Trustee, as the case may be, will take such action as may be necessary in accordance with such instructions. Without limiting the generality of the foregoing, the Authority will pay from time to time all amounts required to be rebated to the United States of America pursuant to Section 148(f) of the Code and all regulations of the United States Depaitriient of the Treasury issued thereunder to the extent that such regulations are, at the time, applicable and in effect, which obligation will survive payment in full or defeasance of the Bonds, and to that end, there is established in the treasury of the Authority a fund to be known as the "CSCDA/Uptown Newport Community Facilities District Rebate Fund" (the "Rebate Fund") to be held in trust and administered by the Treasurer of the Authority. The Authority will comply with the provisions of the Tax Certificate with respect to making deposits in the Rebate Fund, and all money held in the Rebate Fund is pledged to provide payments to the United States of America as provided in the Indenture and in the Tax Certificate and no other person will have claim to such money except as provided in the Tax Certificate. The Trustee may rely conclusively upon the Authority's determinations, calculations and certifications required by this covenant. The Trustee will have no responsibility to independently make any calculation or determination or to review the Authority's calculations required by this covenant. The provisions of this covenant will survive the defeasance of the Bonds. Payment of Claims The Authority will pay and discharge any and all lawful claims which, if unpaid, might become payable from the Special Tax Revenues or any part thereof or upon any funds in the hands of the Trustee allocated to the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, or which might impair the security of the Bonds. Expense Budgets The Authority will, on or before September 2 in each year, prepare and approve a budget setting forth the estimated Administrative Expenses for the period from such September 2 through the next succeeding September 1. Any budget approved in accordance with this covenant may be amended at any time. Accounting Records; Financial Statements and Other Reports The Authority will keep, and pursuant to the Indenture requires the Trustee to keep, appropriate accounting records in which complete and correct entries are required to be made of all transactions relating to the receipt, investment, disbursement, allocation and application of the Special Tax Revenues and of the proceeds of the Bonds, which accounting records are required at all times during business hours with reasonable prior notice be subject to the inspection of any Holder (or his representative authorized in writing) and (upon the prior written consent of the Authority) of any investment banker, security dealer or other person interested in the Bonds. The Authority will prepare annually, no later than January 1, a summary report showing in reasonable detail the proceeds of the Special Tax levied and collected and the Administrative Expenses for the preceding Fiscal Year and containing a general statement of the physical condition of the E-12 Improvements. The Authority will furnish a copy of such summary report without charge to any Holder (or his representative authorized in writing) and to any investment banker, security dealer or other person interested in the Bonds requesting a copy thereof. The Authority will prepare annually not later than October 30 of each year, commencing October 30, 2020, and file with the California Debt and Investment Advisory Commission by mail, postage prepaid, all necessary information required to be filed under the Law(see Section 53359.5), including: • The principal amount of the Outstanding Bonds; • The balance in the Reserve Fund; • The balance in the Capitalized Interest Account, if any; • The number of parcels securing the Bonds which are delinquent with respect to their Special Tax payments, the amount that each delinquent parcel is delinquent, the total amount of Special Tax due on the delinquent parcels, the length of time that each delinquent parcel has been delinquent, when foreclosure was commenced for each delinquent parcel, the total number of foreclosure parcels for each date specified, and the total amount of tax due on the foreclosure parcels for each date specified; • The balance in the Acquisition and Construction Fund; • The assessed value of all parcels subject to the levy of the Special Tax to repay the Bonds, as shown on the most recent equalized assessment roll, the date of assessed value reported, and that the information comes from the County Assessor's Office of the County of Orange; • The total amount of Special Tax due, the total amount of unpaid Special Tax, and whether the Special Tax is paid under the County's Teeter Plan; and • Contact information for the Authority official providing the information. Additionally, the Authority will notify the California Debt and Investment Advisory Commission by mail, postage prepaid, within ten (10) days if the Authority or the Trustee fails to pay any interest on or principal of any of the Bonds on any scheduled payment date. Protection of Security and Rights of Holders The Authority will preserve and protect the security of the Bonds and the rights of the Holders and will warrant and defend their rights against all claims and demands of all persons. Levy and Collection of the Special Tax The Authority, so long as any Bonds are Outstanding, will annually levy the Special Tax against all Taxable Property in the Community Facilities District and make provision for the collection of the Special Tax in amounts which will be sufficient, after making reasonable allowances for contingencies and errors in the estimates, to yield proceeds equal to the amounts required for compliance with the agreements, conditions, covenants and terms contained in the Indenture, and which in any event will be sufficient to pay the interest on and principal of and all Mandatory Sinking Account Payments for and redemption premiums, if any, on the Bonds as they become due and payable and to pay all current Administrative Expenses as they become due and payable in accordance with the provisions and terms of E-13 the Indenture. The Special Tax will be collected in the same manner as ordinary ad valorem property taxes are collected and, except as otherwise provided in the following covenant and in the Law, will be subject to the same penalties and the same collection procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes. Foreclosure of Special Tax Liens On or before October 1 of each year, the Authority will review the public records of the County of Orange relating to the collection of the Special Tax in the Community Facilities District in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and on the basis of such review the Authority will, not later than December 1 of such year, institute foreclosure proceedings as authorized by the Law (a) against any single parcel within the Community Facilities District with aggregate delinquent Special Taxes (including prior years) of $5,000 or more in any year in which such Special Tax payments were due, (b) against all parcels owned within the Community Facilities District by any single owner with delinquent Special Taxes in the aggregate amount (including prior years) of $5,000 or more, and (c) against all parcels with delinquent Special Tax payments regardless of their delinquent amount in any fiscal year in which it receives Special Tax payments in an amount which is less than 95% of the total Special Tax levy, and will diligently prosecute and pursue the foreclosure proceedings to judgment and sale; provided that any actions taken to enforce delinquent Special Tax liens will be taken only consistent with Sections 53356.1 through 53356.7, both inclusive, of the Law. Continuing Disclosure Certificate The Authority will comply with and carry out all of the provisions of the Continuing Disclosure Certificate executed by the Authority and dated the date of the execution, authentication and initial delivery of any Series of Bonds issued under the Indenture, as originally executed and as it may be amended from time to time in accordance with the terms thereof, and notwithstanding any other provision of the Indenture, failure of the Authority to comply with such Continuing Disclosure Certificate will not be considered a default under the Indenture; provided, that any Holder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Authority to comply with its obligations under the Indenture. Further Assurances The Authority will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Indenture and for the better assuring and confirming unto the Holders of the rights and benefits provided in the Indenture. The Trustee Wilmington Trust, National Association at its Principal Corporate Trust Office is Trustee for the purpose of receiving all money which the Authority is required to transfer to it under the Indenture and for applying and using such money as provided in the Indenture for the purpose of paying the interest on and principal of and redemption premiums, if any, on the Bonds. The Authority agrees that it will at all times maintain a Trustee having a corporate trust office in Los Angeles or San Francisco, California. The Authority may remove the Trustee initially appointed and any successor thereto and may appoint a successor or successors thereto by an instrument in writing; provided, that any such successor will be a bank, national banking association or trust company doing business and having a corporate trust office in Los Angeles or San Francisco, California, having a combined capital (exclusive of borrowed E- 14 capital) and surplus of at least fifty million dollars ($50,000,000) and subject to supervision or examination by a federal or state banking authority. If such bank, national banking association or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then the combined capital and surplus of such bank, national banking association or trust company will be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving written notice of such resignation to the Authority and by giving notice of such resignation by mail pursuant to the Indenture to the Holders, and upon receiving such notice of resignation, the Authority will promptly appoint a successor Trustee by an instrument in writing having the qualifications required. Any resignation or removal of a Trustee and appointment of a successor Trustee will become effective only upon the acceptance of appointment by the successor Trustee. If within thirty (30) days after notice of the removal or resignation of the Trustee no successor Trustee will have been appointed by the Authority and will have accepted such appointment, the removed or resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, which court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by law, appoint a successor Trustee having the qualifications required by the Indenture. Liability of the Trustee The recitals of facts, agreements and covenants contained in the Indenture and in the Bonds will be taken as statements, agreements and covenants of the Authority, and the Trustee does not assume any responsibility for the correctness of the same and does not make any representation as to the sufficiency or validity thereof or of the Bonds or of the Special Tax, or as to the financial or technical feasibility of the Improvements, and will not incur any responsibility in respect thereof other than in connection with the rights and obligations expressly assigned to or imposed upon it in the Indenture or in the Bonds, and will not be liable in connection with the performance of its duties under the Indenture except for its own negligence or willful misconduct. The Trustee will not be liable for any error of judgment made in good faith, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts, and no provision of the Indenture will require the Trustee to expend or risk its own funds or otherwise incur any liability for the performance of its duties under the Indenture, or in the exercise of any of its rights or powers under the Indenture. The Trustee will not be liable for any error of judgment made in good faith by a responsible officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts. The Trustee may execute any of the trusts or powers of the Indenture and perform the duties required of it under the Indenture by or through attorneys, agents, or receivers, and will be entitled to advice of counsel concerning all matters of trust and its duty under the Indenture, but the Trustee will not be answerable for the negligence or misconduct of any such attorney, agent, receiver or certified public accountant selected by it with due care. The Trustee is required to perform only those duties expressly set forth in the Indenture and no implied duties or obligations will be read into the Indenture against the Trustee. The Trustee will not have any responsibility with respect to any information, statement or recital contained in any official statement, offering memorandum or any other disclosure material prepared or distributed by the Authority with respect to any of the Bonds. The Trustee agrees to accept and act upon instructions or directions pursuant to the Indenture sent by unsecured e-mail, facsimile transmission or other similar unsecured electronic methods, provided, however, that, the Trustee will have received an incumbency certificate listing persons designated to give such instructions or directions and containing specimen signatures of such designated persons, which E-15 such incumbency certificate will be amended and replaced whenever a person is to be added or deleted from the listing. If the Authority or the City elects to give the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee's understanding of such instructions will be deemed controlling. The Trustee will not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee's reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. The Authority and the City agree to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, and the risk of interception and misuse by third parties. The Trustee will 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 will include but not be limited to acts of God, terrorism, war, riots, strikes, fire, floods, earthquakes, epidemics or other similar occurrences. 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 will be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such company will be eligible under the Indenture, will be the successor to such Trustee without the execution or filing of any paper or any further act, anything to the contrary notwithstanding. The permissive right of the Trustee to do things enumerated in the Indenture will not be construed as a duty and it will not be answerable for other than its negligence or willful misconduct. The Trustee will hold any financial statements of the Authority solely as an accommodation to the Bondholders and will have no duty or obligation to review such financial statements. The Trustee will not be responsible for or accountable to anyone for the subsequent use or application of any moneys which will be released or withdrawn in accordance with the provisions hereof. Notice to the Trustee The Trustee will be protected in acting upon any Bond, Certificate of the Authority, consent, notice, opinion, report, resolution, Written Request of the Authority or other document or paper believed by it to be genuine and to have been signed or presented by the proper party or parties. Each such Bond, Certificate of the Authority, consent, notice, opinion, report, resolution, Written Request of the Authority or other document or paper will be sufficient evidence to the Trustee of the facts stated therein and the Trustee will have no duty to confirm the accuracy of such facts. The Trustee may consult with counsel, including, without limitation, counsel to the Authority, with regard to legal questions, and the opinion of such counsel will be full and complete authorization and protection with respect to any action taken or suffered in good faith and in accordance therewith. Whenever in the administration of its rights and obligations the Trustee deems it necessary or desirable that a matter be established or proved prior to taking or suffering any action, such matter (unless other evidence in respect thereof be specifically prescribed in the Indenture) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively established or proved by a Certificate of the Authority, which will be full warrant to the Trustee for any action taken or suffered under the provisions of the Indenture upon the faith thereof, and on which the Trustee may conclusively rely, but in its E-16 discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable. Amendment or Supplement to the Indenture Amendment or Supplement by Consent of Holders The Indenture and the rights and obligations of the Authority and of the Holders may be amended or supplemented at any time by the execution and delivery of a Supplemental Indenture by the Authority and the Trustee, which Supplemental Indenture will become binding when the written consents of the Holders of sixty percent (60%) or more in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided below, are filed with the Trustee. No such amendment or supplement will (1) extend the maturity of or reduce the interest rate on or otherwise alter or impair the obligation of the Authority to pay the interest on or principal of or Mandatory Sinking Account Payment for or redemption premium, if any, on any Bond at the time and place and at the rate and in the currency and from the funds provided in the Indenture without the express written consent of the Holder of such Bond, or (2) permit the issuance by the Authority of any other obligations payable from the Special Tax Revenues except as provided in the Indenture, or jeopardize the ability of the Authority to levy and collect the Special Tax, or (3) reduce the percentage of Bonds required for the written consent to any such amendment or supplement, or (4) modify any rights or obligations of the Trustee without its prior written assent thereto. Amendment or Supplement Without Consent of Holders The Indenture and the rights and obligations of the Authority and of the Holders may also be amended or supplemented at any time by the execution and delivery of a Supplemental Indenture by the Authority and the Trustee, which Supplemental Indenture will become binding upon execution without the prior written consent of any Holders, but only to the extent permitted by law and after receiving an approving Opinion of Counsel and only for any one or more of the following purposes: • To add to the agreements and covenants required to be performed by the Authority other agreements and covenants thereafter to be performed by the Authority which will not (in the opinion of the Authority) adversely affect the interests of the Holders, or to surrender any right or power reserved to or conferred upon the Authority which will not (in the opinion of the Authority) adversely affect the interests of the Holders; • To make such provisions for the purpose of curing any ambiguity or of curing, correcting or supplementing any defective provision contained in the Indenture or in regard to questions arising under the Indenture which the Authority may deem desirable or necessary and not inconsistent with the Indenture and which will not (in the opinion of the Authority) adversely affect the interests of the Holders; • To authorize the issuance under and subject to the Law of any Refunding Bonds for any of the Bonds and to provide the conditions and terms under which such Refunding Bonds may be issued subject to the Indenture; • To make such additions, deletions or modifications as may be necessary or appropriate to insure exclusion from gross income for purposes of federal income taxation of the interest on the Bonds; • To make such additions, deletions or modifications as may be necessary or appropriate to maintain any then current rating on the Bonds; or E-17 • To make such additions, deletions or modifications as may be necessary or appropriate to effectuate amendments to the Rate and Method in the form attached to the Indenture. Disqualified Bonds Bonds owned or held for the account of the Authority will not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Bonds provided for in the Indenture, and will not be entitled to consent to or take any other action provided for in the Indenture. Upon request of the Trustee, the Authority will specify in a certificate to the Trustee those Bonds disqualified pursuant to the Indenture and the Trustee may conclusively rely on such certificate. Endorsement or Replacement of Bonds After Amendment or Supplement After the effective date of any action taken as above provided, the Authority may determine that the Bonds may bear a notation by endorsement in form approved by it as to such action, and in that case upon demand of the Holder of any Bond Outstanding on such effective date and presentation of his Bond for such purpose at the Principal Corporate Trust Office of the Trustee a suitable notation as to such action will be made on such Bond. If the Authority so determines, new Bonds so modified as, in the opinion of the Authority, will be necessary to conform to such action will be prepared and executed, and in that case upon demand of the Holder of any Bond Outstanding on such effective date such new Bonds will, upon surrender of such Outstanding Bonds, be exchanged at the Principal Corporate Trust Office of the Trustee, without cost to each Holder, for Bonds then Outstanding. Amendment or Supplement by Mutual Consent The provisions of the Indenture will not prevent any Holder from accepting any amendment or supplement as to any particular Bonds held by him; provided, that due notation thereof is made on such Bonds. Events of Default and Remedies of Holders Events of Default; Remedies of Holders If one or more of the following events (herein "Events of Default") should happen, that is to say - • if default is made by the Authority in the due and punctual payment of any interest on or principal of or Mandatory Sinking Account Payment for any of the Bonds when and as the same becomes due and payable; or • if default is made by the Authority in the observance or performance of any of the other agreements or covenants contained in the Indenture required to be observed or performed by it, and such default continues for a period of thirty (30) days after the Authority has been given notice in writing of such default by the Trustee; then in each and every such case during the continuance of such Event of Default any Holder will have the right for the equal benefit and protection of all Holders similarly situated: • by mandamus or other suit or proceeding at law or in equity to enforce his rights against the Authority, its Commission, or any of the officers or employees of the Authority, and to compel the Authority, its Commission, or any such officers or employees to perform and carry out their E-18 duties under the Law and the agreements and covenants with the Holders contained in the Indenture; • by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Holders; or • by suit in equity upon the nonpayment of the Bonds to require the Authority, its Commission or its officers and employees to account as the trustee of an express trust. Non -waiver Nothing in the Indenture or in the Bonds will affect or impair the obligation of the Authority, which is absolute and unconditional, to pay the interest on and principal of and redemption premiums, if any, on the Bonds to the respective Holders of the Bonds at the respective dates of maturity or upon redemption prior to maturity from the Special Tax Revenues and the other funds as provided in the Indenture, or will affect or impair the right of such Holders, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied in the Indenture and in the Bonds. A waiver of any default or breach of duty or contract by any Holder will not affect any subsequent default or breach of duty or contract and will not impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by any Holder to exercise any right or remedy accruing upon any default or breach of duty or contract will impair any such right or remedy or will be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right and remedy conferred upon the Holders by the Law or by the Indenture may be enforced and exercised from time to time and as often as will be deemed expedient by the Holders. If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to any Holder, the Authority and such Holder will be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken. Remedies Not Exclusive No remedy conferred upon or reserved to the Holders by the Indenture is intended to be exclusive of any other remedy, and every such remedy will be cumulative and will be in addition to every other remedy given under the Indenture 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 Law or any other law. Defeasance Discharge of the Bonds. If the Authority is required to pay or cause to be paid or there is otherwise required be paid to the Holders of all Outstanding Bonds the interest thereon and the principal thereof and the redemption premiums, if any, thereon at the times and in the manner stipulated therein and pursuant to the Indenture, then all agreements, covenants and other obligations of the Authority to the Holders of such Bonds under the Indenture will thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee is required to execute and deliver to the Authority all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee is required to deposit E-19 in accordance with a written direction of the Authority all money or securities held by it pursuant hereto which are not required for the payment of the interest on and principal of and redemption premiums, if any, on the Bonds. Any Outstanding Bonds will on the maturity date or redemption date thereof be deemed to have been paid within the meaning of and with the effect expressed in the preceding paragraph if there will be on deposit with the Trustee money which is sufficient to pay the interest due on such Bonds on such date and the principal and redemption premiums, if any, due on such Bonds on such date. Any Outstanding Bonds will prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed above if (1) in case any of the Bonds are to be redeemed on any date prior to their maturity date, the Authority will have irrevocably instructed the Trustee to mail pursuant to the Indenture a notice of redemption to the respective Holders of all such Outstanding Bonds, (2) there will have been deposited with an escrow agent or the Trustee either (i) money in an amount which will be sufficient or (ii) as evidenced by a report of an Independent Certified Public Accountant or nationally recognized, independent municipal finance consultant, on file with the Authority and the Trustee, Federal Securities which are not subject to redemption except by the holder thereof prior to maturity (including any Federal Securities issued or held in book -entry form on the books of the Department of the Treasury of the United States of America) or municipal obligations which have been defeased with Federal Securities and which are rated in the highest rating category by either Moody's or Standard & Poor's, the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with such escrow agent or the Trustee at the same time, will be sufficient to pay when due the interest to become due on such Bonds on and prior to the maturity dates or redemption dates thereof, as the case may be, and the principal of and redemption premiums, if any, on such Bonds on and prior to the maturity dates or the redemption dates thereof, as the case may be, and (3) in the event such Bonds are not by their terms subject to redemption within the next succeeding ninety (90) days, the Authority will have agreed to mail pursuant to the Indenture a notice to the Holders of such Bonds that the deposit required above has been made with such escrow agent or the Trustee and that such Bonds are deemed to have been paid in accordance with the Indenture and stating the maturity dates or redemption dates, as the case may be, upon which money is to be available for the payment of the principal of and redemption premiums, if any, on such Bonds. Unclaimed Money. Anything contained in the Indenture to the contrary notwithstanding, any money held by the Trustee in trust for the payment and discharge of any of the Bonds or any interest thereon which remains unclaimed for two (2) years after the date when such Bonds or interest thereon have become due and payable, either at their stated maturity dates or by call for redemption prior to maturity, if such money was held by the Trustee on such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when such Bonds or interest thereon became due and payable, will be repaid by the Trustee to the Authority as its absolute property free from trust for use in accordance with the Law, and the Trustee will thereupon be released and discharged with respect thereto and the Holders will look only to the Authority for the payment of such Bonds and interest thereon; provided, that before the Trustee will be required to make any such repayment the Authority will mail pursuant to the Indenture a notice to the Holders of all Outstanding Bonds and to such securities depositories and securities information services selected by it pursuant to the Indenture that such money remains unclaimed and that after a date named in such notice, which date will not be less than thirty (30) days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the Authority. E-20 Miscellaneous Liability of Authority Limited to Special Tax Revenues Notwithstanding anything contained in the Indenture, the Authority will not be required to advance any money derived from any source of income other than the Special Tax Revenues and the other funds as provided in the Indenture for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds. The Bonds are special tax obligations of the Authority and the interest on and principal of and redemption premiums, if any, on the Bonds are payable solely from the Special Tax Revenues and such other funds, and the Authority is not obligated to pay them except from the Special Tax Revenues and such other funds. The general funds and assets of the Authority are not liable and the full faith and credit of the Authority is not pledged for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, and no tax or assessment other than the Special Tax will ever be levied or collected to pay the interest on or principal of or redemption premiums, if any, on the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the Authority or any of its income or receipts except the Special Tax Revenues and such other funds as provided in the Indenture, and neither the payment of the interest on or principal of or redemption premiums, if any, on the Bonds is a general debt, liability or obligation of the Authority. The Bonds do not constitute an indebtedness of the Authority within the meaning of any constitutional or statutory debt limitation or restriction, and neither the Commission nor the Authority nor any officer or employee thereof will be liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds otherwise than from the Special Tax Revenues and the other funds as provided in the Indenture. Benefits of the Indenture Limited to Certain Parties Nothing contained in the Indenture, express or implied, is intended to give to any person other than the Authority, the Trustee and the Holders any right, remedy or claim under or by reason of the Indenture, and any agreement or covenant required under the Indenture to be performed by or on behalf of the Authority or any officer or employee thereof will be for the sole and exclusive benefit of the Trustee and the Holders. Execution of Documents by Holders Any declaration, request or other instrument which is permitted or required in the Indenture to be executed by Holders may be in one or more instruments of similar tenor, and may be executed by Holders in person or by their attorneys duly authorized in writing. The fact and date of the execution by any Holder or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness to such execution duly sworn to before such notary public or other officer. The ownership of Bonds and the amount, maturity, number and date of holding the same will be proved by the registration books required to be kept by the Trustee pursuant to the Indenture. Any declaration, request or other instrument or writing of the Holder of any Bond will bind all future Holders of such Bond with respect to anything done or suffered to be done by the Authority in good faith and in accordance therewith. E-2 1 Deposit and Investment of Moneys in Funds All money held by the Trustee in any fund established in the Indenture is required to be deposited by the Trustee in Legal Investments at the written direction of the Authority, and is required to be secured at all times by such obligations as are required by law to the fullest extent required by law. All money held by the Trustee in the Redemption Fund, Expense Fund and Acquisition and Construction Fund are required to be invested by the Trustee in Legal Investments upon the written direction of the Authority. In the absence of a written investment direction of the Authority, the Trustee is required to invest such moneys in a taxable money market portfolio composed of or fully secured by U.S. government securities; provided, however, that any such investment will be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee will have received a written direction of the Authority specifying a specific money market fund and, if no such written direction of the Authority is so received, the Trustee is required to hold such moneys uninvested. The Trustee may rely upon any investment direction from the Authority as a certification to the Trustee that such investment constitutes a Legal Investment. The Trustee (or any of its affiliates) may act as principal or agent or as sponsor, advisor or manager in connection with the making of any investment by the Trustee and may impose its customary charges therefor, and the Trustee will not be responsible for any loss suffered in connection with any investment made in accordance with these provisions. The Authority acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority the right to receive brokerage confirmations of security transactions as they occur, the Authority specifically waives receipt of such confirmations to the extent permitted by law; provided, that the Trustee will furnish the Authority periodic cash transaction statements which include details for all investment transactions made by the Trustee under the Indenture. All interest received on any such money so deposited or invested is required to (subject to the Authority's covenant to preserve the tax-exempt status of the Bonds) be retained within the fund from which the deposit or investment was made, and all losses on any such money so deposited or invested will be borne by the fund from which the deposit or investment was made. Waiver of Personal Liability No member of the Authority Commission or officer or employee of the Authority will be individually or personally liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, but nothing contained in the Indenture will relieve any member of the Authority Commission or officer or employee of the Authority from the performance of any official duty provided by the Indenture or by the Law or by any other applicable provisions of law. Governing Law The Indenture will be governed by and construed and interpreted in accordance with the laws of the State of California. E-22 APPENDIX F FORMS OF CONTINUING DISCLOSURE CERTIFICATES CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CONTINUING DISCLOSURE CERTIFICATE (Authority) This Continuing Disclosure Certificate (this "Disclosure Certificate") is executed and delivered by the California Statewide Communities Development Authority (the "Authority") in connection with the issuance by the Authority of its California Statewide Communities Development Authority Community Facilities District No. 2018- 03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of March 1, 2019 (the "Indenture"), by and between the Authority and Wilmington Trust, National Association, as Trustee (the "Trustee"). The Authority covenants and agrees as follows: SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Authority for the benefit of the Holders and Beneficial Owners (as defined below) of the Bonds, and in order to assist the Underwriter (as defined below) in complying with the Rule (as defined below), but shall not be deemed to create any monetary liability on the part of the Authority to any other persons, including Holders or Beneficial Owners of the Bonds based on the Rule. The sole remedy in the event of any failure of the Authority to comply with this Disclosure Certificate shall be an action to compel performance of any act required hereunder. 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 Authority pursuant to, and as described in, Sections 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 tax purposes. "Community Facilities District" shall mean the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange. "Dissemination Agent" shall mean any dissemination agent designated in writing by the Authority and which has filed with the Authority a written acceptance of such designation. The initial Dissemination Agent shall be David Taussig & Associates, Inc. "Financial Obligation" shall mean, for purposes of the Listed Events set out in Section 5(a)(x) and Section (5)(b)(viii), a (a) debt obligation, (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation, or (c) guarantee of (a) or (b). The term "Financial Obligation" shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule. "Holder" shall mean the person in whose name any Bond shall be registered. "Listed Event" shall mean any of the events listed in Section 5(a) or 5(b) of this Disclosure Certificate. F-1 "MSRB" shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org. "Official Statement" shall mean the official statement relating to the Bonds, dated February 27, 2019. "Report Date" shall mean January 15 in each year. "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. "Special Taxes" shall mean the annual special taxes for facilities of the Community Facilities District levied on taxable property within the Community Facilities District. "Underwriter" shall mean RBC Capital Markets, LLC, as original underwriter of the Bonds and any other 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 Authority shall, or shall cause the Dissemination Agent to, not later than January 15 in each year, commencing January 15, 2020, provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided, that the audited financial statements of the Authority may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. The Annual Report shall be submitted on a standard form in use by industry participants or other appropriate form and shall identify the Bonds by name and CUSIP number. (b) Not later than fifteen (15) business days prior to said date, the Authority shall provide the Annual Report to the Dissemination Agent (if other than the Authority). If the Authority is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the Authority shall send a notice in a timely manner to the MSRB in substantially the form attached as Exhibit A hereto. (c) The Dissemination Agent shall (if the Dissemination Agent is other than the Authority) file a report with the Authority certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to the MSRB. SECTION 4. Content of Annual Reports. The Authority's Annual Report shall contain or include by reference the following: (a) The Authority's comprehensive audited financial report for the prior fiscal year (subject to 3(a) above). (b) A maturity schedule for the outstanding Bonds, and a listing of Bonds redeemed prior to maturity during the prior fiscal year. (c) Balances in each of the following funds established pursuant to the Indenture as of the close of the prior fiscal year: (i) the Redemption Fund (with a statement of the debt service requirement to be discharged by said fund prior to the receipt of expected additional Special Tax Revenues); and (ii) the Reserve Fund. F-2 (d) A current debt service schedule for the Bonds. (e) A statement of the total Special Tax levied in the prior fiscal year, listing the Special Tax components and broken down by land use classification, as provided in the Rate and Method (as such term is defined in the Official Statement). (f) A statement of the maximum and actual annual Special Tax for the current fiscal year broken down by land use classification. (g) A statement of majority taxpayers within the Community Facilities District. (h) A statement of the assessed value of the Taxable Property (as defined in the Official Statement) within the Community Facilities District. (i) A statement of the actual Special Tax received for the Community Facilities District for the prior fiscal year. (j) The following information (to the extent that it is no longer reported in the Authority's annual filings with the California Debt and Investment Advisory Commission regarding the Bonds): (i) the Required Bond Reserve for the prior fiscal year; and (ii) a statement as to the status of any foreclosure actions with respect to delinquent payments of the Special Tax. Any or all of the items listed above may be set forth in one or a set of documents or may be included by specific reference to other documents, including official statements of debt issues of the Authority or related public entities, which have been made available to the public on the MSRB's website. The Authority 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 Authority shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not later than ten (10) business days after the occurrence of the event to the MSRB: (i) principal and interest payment delinquencies; (ii) unscheduled draws on debt service reserves reflecting financial difficulties; (iii) unscheduled draws on credit enhancements reflecting financial difficulties; (iv) substitution of credit or liquidity providers, or their failure to perform; (v) adverse tax opinions or issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB); (vi) tender offers; (vii) defeasances; (viii) rating changes; (ix) bankruptcy, insolvency, receivership or similar event of the obligated person; or F-3 (x) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the Community Facilities District, any of which reflect financial difficulties. Note: for the purposes of the event identified in subparagraph (ix), 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 court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b) The Authority shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material, in a timely manner not later than ten (10) business days after the occurrence of the event to the MSRB: (i) unless described in paragraph 5(a)(v), other material 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; (ii) modifications to rights of Bond holders; (iii) Bond calls; (iv) release, substitution, or sale of property securing repayment of the Bonds; (v) non-payment related defaults; (vi) 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; or (vii) appointment of a successor or additional trustee or the change of name of a trustee; or (viii) incurrence of a Financial Obligation of the Community Facilities District, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the Community Facilities District, any of which affect security holders. (c) Whenever the Authority obtains knowledge of the occurrence of a Listed Event described in Section 5(b), the Authority shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) Notwithstanding the foregoing, notice of the Listed Event described in subsections (a)(vii) or (b)(iii) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Indenture. (e) The Authority intends to comply with the Listed Events described in Section 5(a)(x) and Section 5(b)(viii), and the defmition of "Financial Obligation" in Section 2, with reference to the Rule, any other applicable federal securities laws and the guidance provided by the Securities and Exchange F-4 Commission in Release No. 34-83885 dated August 20, 2018 (the "2018 Release"), and any further amendments or written guidance provided by the Securities and Exchange Commission or its staff with respect the amendments to the Rule effected by the 2018 Release. SECTION 6. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB. SECTION 7. Termination of Reporting Obligation. The Authority's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination or substitution occurs prior to the final maturity of the Bonds, the Authority shall give notice of such termination or substitution to the MSRB. SECTION 8. Dissemination Agent. The Authority may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent (if other than the Authority) shall not be responsible in any manner for the content of any notice or report prepared by the Authority pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be David Taussig & Associates, Inc. SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Authority may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied (provided, however, that the Dissemination Agent shall not be obligated under any such amendment that modifies or increases its duties or obligations hereunder without its written consent thereto): (a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, 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, 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 Holders of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Authority 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 Authority. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given to the MSRB, and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Authority 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 Authority chooses to include any information in any Annual Report or notice of occurrence of a Listed Event, in addition to that F-5 which is specifically required by this Disclosure Certificate, the Authority 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 11. Authority Not Responsible for Continuing Disclosure by Other Parties. Nothing contained herein shall be construed to require the Authority to enforce the obligation of any other party, including any owner or property within the Community Facilities District, to provide information to the MSRB, or the Underwriter or otherwise to comply with such other party's continuing disclosure undertaking entered into in connection with the issuance of the Bonds. SECTION 12. Default. In the event of a failure of the Authority to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Authority to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the Authority to comply with this Disclosure Certificate shall be an action to compel performance. SECTION 13. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and if the Authority is not the Dissemination Agent, the Authority agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Authority under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 14. Notices. Any notices or communications to or among any of the parties to this Disclosure Certificate may be given as follows: To the Authority: To the Underwriter: California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, California 95814 Attention: Chair RBC Capital Markets, LLC Two Embarcadero Center, Suite 1200 San Francisco, CA 94111 Attn: Bob Williams, Managing Director Any person may, by written notice to the other persons listed above, designate a different address to which subsequent notices or communications should be sent. SECTION 15. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Authority, the Underwriter, Holders and Beneficial Owners of the Bonds from time to time, and shall create no rights in any other person or entity. SECTION 16. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. Date: March 12, 2019 F-6 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory F-7 EXHIBIT A FORM OF NOTICE TO THE MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: California Statewide Communities Development Authority Name of Bond Issue: California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 Date of Issuance: March 12, 2019 NOTICE IS HEREBY GIVEN that the California Statewide Communities Development Authority (the "Authority") has not provided an Annual Report with respect to the above named Bonds as required by the Continuing Disclosure Certificate, dated the date of issuance of such Bonds. The Authority anticipates that the Annual Report will be filed by , 20. Date: , 20 . CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory F-8 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CONTINUING DISCLOSURE CERTIFICATE — DEVELOPER This Continuing Disclosure Certificate — Developer (the "Disclosure Certificate") is executed on March 12, 2019, by TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC (collectively, the "Developers"), in connection with the issuance by the California Statewide Communities Development Authority (the "Authority") of its California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of March 1, 2019 (the "Indenture"), by and between the Authority and Wilmington Trust, National Association, as Trustee (the "Trustee"). The Developers covenant and agree as follows: SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Developers for the benefit of the Holders and Beneficial Owners, but shall not be deemed to create any monetary liability on the part of the Developers to any other persons, including Holders or Beneficial Owners of the Bonds. The sole remedy in the event of any failure of the Developers to comply with this Disclosure Certificate shall be an action to compel performance of any act required hereunder. SECTION 2. Definitions. In addition to the definitions set forth in the preamble above and 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 when used herein: "Annual Report" shall mean any Annual Report provided by the Developers pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Assumption Agreement" shall mean an undertaking of a Major Owner, for the benefit of the Holders and Beneficial Owners of the Bonds containing terms substantially similar to this Disclosure Certificate (as modified for such Major Owner's development and financing plans with respect to the Community Facilities District), whereby such Major Owner agrees to provide Annual Reports and notices of significant events, setting forth the information described in Sections 4 and 5 hereof, respectively, with respect to the portion of the property in the Community Facilities District owned by such Major Owner. "Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of the Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). "Business Day" shall mean any day other than (i) a Saturday or a Sunday or (ii) a day which is a federal or State of California holiday. "Community Facilities District" shall mean California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange. "Developer Improvements" is defined in Section 4(a)(4) herein. "Dissemination Agent" shall mean any dissemination agent designated in writing by the Developers and which has filed with the Developers a written acceptance of such designation. The initial Dissemination Agent shall be David Taussig & Associates. "EMMA" shall mean the Electronic Municipal Market Access system of the MSRB, currently located at http://emma.msrb.org. F-9 "Fiscal Year" shall mean the period beginning on July 1 of each year and ending on the next succeeding June 30. "Government Authority" shall mean any national, state or local government, any political subdivision thereof, any department, agency, authority or bureau of any of the foregoing, or any other Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Holder" shall mean the person in whose name any Bond shall be registered. "Listed Event" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "Major Owner" shall mean an owner of property in the Community Facilities District responsible, by itself or in conjunction with affiliates, in the aggregate for 15% or more of the Special Taxes in the Community Facilities District in the Fiscal Year following the transfer of such property. "MSRB" shall mean the Municipal Securities Rulemaking Board. "Official Statement" shall mean the Official Statement, dated February 27, 2019, relating to the Bonds. "Participating Underwriter" shall mean RBC Capital Markets, LLC, as original underwriter of the Bonds and any other underwriter of the Bonds. "Person" shall mean any natural person, corporation, partnership, firm, association, Government Authority or any other Person whether acting in an individual fiduciary, or other capacity. "Repository" shall mean the MSRB or any other entity designated or authorized by the MSRB or the Securities and Exchange Commission to receive reports. Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through EMMA. "Special Taxes" shall mean the annual special taxes for facilities of the Community Facilities District levied on taxable property within the Community Facilities District. "State" shall mean the State of California. "Undeveloped Property" has the meaning given to such term in the Rate and Method of Apportionment of Special Tax for the Community Facilities District. SECTION 3. Provision of Annual Reports. (a) The Developers shall, or shall cause the Dissemination Agent to, not later than December 15 of each year, commencing December 15, 2019, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. If, in any year, December 15 does not fall on a Business Day, then such deadline shall be extended to the following Business Day. 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. (b) Not later than fifteen (15) calendar days prior to the date specified in subsection (a) for providing the Annual Report to the Repository, the Developers shall provide the Annual Report to the Dissemination Agent or shall provide notification to the Dissemination Agent that the Developers are preparing, or causing to be prepared, the Annual Report and the date which the Annual Report is expected to be available. If by such date, the Dissemination Agent has not received a copy of the Annual Report or notification as described in the preceding sentence, the Dissemination Agent shall notify the Developers of such failure to receive the report. (c) If the Dissemination Agent is unable to provide an Annual Report to the Repository by the date required in subsection (a) or to verify that an Annual Report has been provided to the Repository by the date required F-10 in subsection (a), the Dissemination Agent shall send in a timely manner a notice (in the form of Exhibit A) to the Repository in a form that is accepted by the Repository. (d) The Developers shall, or shall cause the Dissemination Agent to: (i) determine each year prior to the date for providing the Annual Report the name and address of the Repository; and (ii) promptly file a report with the Developers and the Authority certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to the Repository. (e) Notwithstanding any other provision of this Disclosure Certificate, any of the required filings hereunder shall be made in accordance with the MSRB's EMMA system or in another manner approved under Rule 15c2-12. SECTION 4 Content of Annual Report. (a) The Developers' Annual Report shall contain or include by reference the information which is available not more than sixty (60) days prior to the Annual Report relating to the following: 1. A detailed update to the discussion of the sources of funds to finance development of property owned by the Developers within the Community Facilities District contained in the Official Statement under the heading "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — Project Plan of Finance," and whether any material defaults exist under any loan arrangement related to such financing. 2. A summary of development activity conducted by the Developers within the Community Facilities District, including the number of building permits that have been issued and a description of the uses for which such permits have been pulled (i.e. residential or commercial units), and as to property owned by the Developers, the number of parcels or units for which sales have closed to end users. 3. Any sale by the Developers of property in the Community Facilities District to another Person, other than to buyers of completed homes or condominium units, including a description of the property sold (acreage, number of units, etc.) and the identity of the Person that so purchased the property. 4. Status of completion of the development being undertaken by the Developers with respect to the Undeveloped Property, including the property identified as Phase 2 in the Official Statement until such time as that property is classified as "Developed Property" according to the Rate and Method of Apportionment for the Community Facilities District, and any major legislative, administrative and judicial challenges known to the Developers to or affecting the construction of the development or the time for construction of any public or private improvements to be made by the Developers within the Community Facilities District (the "Developer Improvements"). 5. Information regarding any failure by the Developers to pay, prior to delinquency, any real property taxes (including Special Taxes) levied on a parcel of property in the Community Facilities District which was, at the time of the levy, owned by the Developers. 6. Unless such information has previously been included or incorporated by reference in an Annual Report or otherwise provided pursuant to 1 through 5 above, describe any other significant changes in the information relating to the Developers and any property owned by the Developers in the Community Facilities District contained in the Official Statement under the heading "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS" that would materially and adversely interfere with the Developers' ability to develop the property as described in the Official Statement and an update of any significant changes to the information in Table 1 in the Official Statement. (b) Any and all of the items listed above may be included by specific reference to other documents, including official statements of debt issues which have been submitted to the Repository or the Securities and F-11 Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Developers shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Listed Events. (a) Pursuant to the provisions of this Section 5, the Developers shall give, or cause to be given, within ten Business Days of obtaining actual knowledge thereof, notice to the Repository of the occurrence of any of the following events with respect to the Bonds, if material: 1. Failure to pay any real property taxes, special taxes or assessments levied within the Community Facilities District on a parcel owned by the Developers. 2. Damage to or destruction of any of the improvements within the Community Facilities District which has a material adverse effect on the value of the parcels owned by the Developers within the Community Facilities District. 3. Material default by the Developers on any loan with respect to the construction or permanent financing of improvements within the Community Facilities District. 4. Material default by the Developers on any loan secured by property within the Community Facilities District owned by the Developers. 5. Material payment default by the Developers on any loan of the Developers (whether or not such loan is secured by property within the Community Facilities District) which is beyond any applicable cure period in such loan. 6. The filing of any proceedings with respect to the Developers, in which the Developers may be adjudicated as bankrupt or discharged from any or all of its respective debts or obligations or granted an extension of time to pay debts or a reorganization or readjustment of debts. 7. The filing of any lawsuit against the Developers (with service of process on the Developers having occurred) which, in the reasonable judgment of the Developers, will materially adversely affect the completion of the Developer Improvements or the development of parcels owned by the Developers within the Community Facilities District, or litigation which if decided against the Developers, in the reasonable judgment of the Developers, would materially adversely affect the financial condition of the Developers in a manner that would materially adversely affect the completion of the improvements within the Community Facilities or the development of parcels owned by the Developers within the Community Facilities District. 8. The termination of that certain lease, by and between Uptown Newport Jamboree, LLC and Newport Fab, LLC dba Jazz Semiconductor for the real property located at 432 Jamboree Road, Newport Beach, California 92660 prior to March 12, 2027. 9. A sale or transfer of all or substantially all of either Developers' assets or a sale of a majority of the partnership interests, membership interests or outstanding stock of either Developer (it being understood that if the Developer is a publicly traded company, such majority sale is not meant to include an aggregation of routine, unrelated market trades). (b) Whenever the Developers obtain knowledge of the occurrence of a Listed Event described in Section 5(a), the Developers shall as soon as possible determine if such event would be material under applicable federal securities laws. SECTION 6. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB. SECTION 7. Termination of Reporting Obligation. The Developers' obligations hereunder shall terminate upon the following events: F-12 (a) the legal defeasance, prior redemption or payment in full of all of the Bonds, (b) if on any date the property in the Community Facilities District owned by the Developers, in aggregate is no longer responsible for payment of 20% or more of the Special Taxes or all of the condominiums to be developed are completed and sold to homeowners, all apartments are completed and all commercial/retail space is completed and at least 50% leased to end -users; provided, however, that the Developers' obligations under this Disclosure Certificate shall remain in force with respect to any transferred property for which the purchaser is a Major Owner who has not executed an Assumption Agreement unless such Major Owner is a foreclosing creditor and/or lender, or (c) upon the delivery by the Developers to the Authority of an opinion of nationally recognized bond counsel to the effect that the information required by this Disclosure Certificate is no longer required. Such opinion shall be based on information publicly provided by the Securities and Exchange Commission or a private letter ruling obtained by the Developers or a private letter ruling obtained by a similar entity to the Developers. If such termination occurs prior to the final maturity of the Bonds, the Developers shall give notice of such termination in the same manner as for a Listed Event hereunder. SECTION 8. Dissemination Agent. The Developers 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 Developers) shall not be responsible in any manner for the content of any notice or report prepared by the Developers pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be David Taussig & Associates, Inc. SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Developers may agree to amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the Developers, or the type of business conducted; (b) The amendment or waiver either (i) is approved by the Holders in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Bondowners, or (ii) does not, in the opinion of nationally recognized bond counsel addressed to the Authority and the Trustee, materially impair the interests of the Holders or Beneficial Owners of the Bonds; and (c) The Developers, or the Dissemination Agent, shall have delivered copies of the amendment and any opinions delivered under (a) and (b) above to the Repository. SECTION 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Developers 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 Developers choose 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 Developers shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 11. Default. In the event of a failure of the Developers to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developers to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture (as such term is defined therein), and the sole remedy under this Disclosure Certificate in the event of any failure of the Developers to comply with this Disclosure Certificate shall be an action F-13 to compel performance. Neither the Developers nor the Dissemination Agent shall have any liability to the Holders of the Bonds or the Beneficial Owners of the Bonds or any other party for monetary damages or financial liability of any kind whatsoever arising from or relating to this Disclosure Certificate. SECTION 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate and in any agreement between the Developers and Dissemination Agent, and the Developers agree to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder during the time that the Developers collectively constitute a Major Owner obligated to comply with the Disclosure Certificate, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Developers under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 13. Reporting Obligation of Developers' Transferees. The Developers shall, in connection with any sale or transfer of ownership of land within the Community Facilities District to a transferee that is not an affiliate of the Developers which will result in the transferee (which term shall include any successors and assigns of such party) becoming a Major Owner, cause such transferee to enter into an Assumption Agreement provided that such transferee's obligations under such Assumption Agreement shall terminate upon the sold or transferred land being improved with structures, or the land owned by the transferee becoming responsible for the payment of less than twenty (20) percent of the annual Special Taxes. SECTION 14. Developers as Independent Contractor. In performing under this Disclosure Certificate, it is understood that the Developers are independent contractors and not an agent of the City of Newport Beach or the Authority. SECTION 15. Notices. Notices should be sent in writing to the following addresses. The following information may be conclusively relied upon until changed in writing. To the Developer: To the Underwriter: To the Authority: TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC 2 Park Plaza, Suite 700 Irvine, CA 92614 Attn: Shopoff Realty Investments, L.P. RBC Capital Markets, LLC Two Embarcadero Center, Suite 1200 San Francisco, CA 94111 Attn: Bob Williams, Managing Director California Statewide Communities Development Authority 1100 K Street, Suite 1001 Sacramento, CA 95814 Attn: Chair Email: info@cscda.org Phone: (925) 391-3590 SECTION 16. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Developers, the Dissemination Agent, the Trustee, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 17. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof. F-14 SECTION 18. Governing Law. The validity, interpretation and performance of this Disclosure Certificate shall be governed by the laws of the State of California applicable to contracts made and performed in California. IN WITNESS WHEREOF, the Developers hereto have each executed this Continuing Disclosure Certificate — Developer as of the date first above written. UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited liability company By: Name: Title: TSG-PARCEL 1, LLC, a Delaware limited liability company By: Name: Title: F-15 EXHIBIT A FORM OF NOTICE TO THE MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: California Statewide Communities Development Authority Name of Bond Issue: California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 Date of Issuance: March 12, 2019 NOTICE IS HEREBY GIVEN that TSG-PARCEL 1, LLC and UPTOWN NEWPORT JAMBOREE, LLC (the "Developers") have not provided an Annual Report with respect to the above named bonds as required by the Continuing Disclosure Certificate, dated the date of issuance of such Bonds. The Developers anticipate that the Annual Report will be filed by , 20. Date: , 20 . cc: The Developers Underwriter DISSEMINATION AGENT: By: Its: F-16 APPENDIX G BOOK -ENTRY SYSTEM The information in this APPENDIX G has been provided by DTC for use in securities offering documents, and the Authority takes no responsibility for the accuracy or completeness thereof. The Authority cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the beneficial owners either (a) payments of interest, principal or premium, if any, with respect to the Bonds or (b) certificates representing ownership interest in or other confirmation of ownership interest in the Bonds, or that they will so do on a timely basis or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in the Official Statement. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC. 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the bonds (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 certificate will be issued for each series and maturity of the Bonds, each in the principal amount of such series and maturity, and will be deposited with DTC. If, however, the aggregate principal amount of any series and maturity exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such series and maturity. 2. 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. 3. 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 Bonds, except in the event that use of the book -entry system for the Bonds is discontinued. 4. 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 G-1 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. 5. 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 the 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 defaults and proposed amendments to the Bond documents. For example, Beneficial Owners of the 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 Trustee and Paying Agent and request that copies of notices be provided directly to them. 6. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. 7. 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 Authority 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). 8. 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 Authority or Paying Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, Paying Agent, or Authority, 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 Authority or Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. 9. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to Authority or Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered. 10. The Authority may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered to DTC. G-2 OP, M FOR ADDITIONAL BOOKS: ELABRA.COM OR (888) 935-2272 MISCELLANEOUS The quotations from, and the summaries and explanations of the Indenture and other statutes and documents contained herein do not purport to be complete, and reference is made to such documents and statutes for the full and complete statements of their respective provisions. This Official Statement is submitted only in connection with the initial offering of the Bonds by the Authority, and is not to be used for any other purpose. This Official Statement does not constitute a contract with the purchasers of the Bonds. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The execution and delivery of this Official Statement has been duly authorized by the Authority. CALIFORNIA ST IDE COMMUNITIES DEVELOI'MEN ` ORITY By: 52 Authorized Signatory REPORT OF PROPOSED DEBT ISSUANCE California Debt and Investment Advisory Commission 915 Capitol Mall, Room 400, Sacramento, CA 95814 P.O. Box 942809, Sacramento, CA 94209-0001 Tel: (916) 653-3269 Fax: (916) 654-7440 Your completion and submittal of this on-line form assures your compliance with existing California State law and will assist in the maintenance of a complete database of public debt in California. Thank you for your cooperations Submitted: Thursday, February 21, 2019 5:46:31PM ISSUER NAME: California Statewide Communities Development Authority ISSUE NAME: California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Specia PROJECT NAME: Community Facilities District No. 2018-03 (Uptown Newport) PROPOSED SALE DATE: 2/26/2019 PRINCIPAL TO BE SOLD: $8,800,000.00 WILL A VALIDATION ACTION BE PURSUED: IS DEBT REPAYABLE IN NON -US CURRENCY: Issuance Authorization #1 Original Amount: $8,800,000.00 Authorization Date: 2/7/2019 Name: Resolution No. 19SCIP-5 Reduced: $0.00 Replenished $8,800,000.00 Net ❑X No ❑ Yes ❑ Unknown © No p Yes ❑ Unknown Issuance Authorization #2 $8,800,000.00 Statutory Code Under which this debt will be issued (1): Statutory Code Under which this debt will be issued (2): 2 IS ANY PORTION OF THE DEBT TO REFUND? ❑X No ❑ Yes --- Amount proposed for refunding $0.00 IS ANY PORTION OF THE DEBT TO REDEEM, PAYDOWN, OR REFINANCE OUTSTANDING DEBT? X❑ No ❑ Yes --- Amount proposed for redemption, paydown, or refinancing $0.00 Issuer Contact Original Amount: Authorization Date: Name: Reduced: $0.00 Replenished $0.00 $0.00 Name: Title: James Hamill Managing Director Address: 1700 North Broadway, Suite 405 City: Phone: Walnut Creek, CA 94596 925 4765644 Mello -Roos Community Facilities Act of 1982 E-Mail: jhamill@cscda.org ISSUER LOCATED IN Net: $0.00 Contra Costa COUNTY Filing Contact Name of Individual representing Bond Counsel who completed this form and maybe contacted for information: Name: Patricia Eichar, Esq. E-Mail: peichar@orrick.com Firm/ Agency: Orrick, Herrington & Sutcliffe LLP Address: 400 Capitol Mall 30th Floor City: Rgrgyarp7CA 95814-4497 Send on. to: Financing Participants BOND COUNSEL: Orrick, Herrington & Sutcliffe LLP BORROWER COUNSEL (LOAN) (Not Obligor Counsel): FINANCIAL ADVISOR: UNDERWRITER: RBC Capital Markets LLC DISCLOSURE COUNSEL: PURCHASER: LENDER: LESSOR: IS THE INTEREST ON THE DEBT TAXABLE? Under State Law: ❑ YES (taxable) Under Federal Law: ❑ YES (taxable) If the issue is federally tax-exempt, is interest a specific preference item for the purpose of alternative minimum Jaileez Campos Orrick, Herrington & Sutcliffe LLP NO (tax-exempt) NO (tax-exempt) E-Mail: jaileezcampos@orrick.com TYPE OF SALE ❑ Competitive 0 Negotiated ❑ YES, preference item IS THIS FINANCING A PRIVATE PLACEMENT? ❑ No ❑ Yes ISSUER CERTIFIES THAT IT HAS COMPLIED WITH GC SECTION 8855 (I) WITH RESPECT TO LOCAL DEBT POLICIES: 0 NO, not a preference item No Yes El N/A CDIAC Report of Proposed Debt Issuance Page 2 TYPE OF DEBT INSTRUMENT NOTE ❑ Bond anticipation (BAN) Grant anticipation (GAN) Loan from bank / other institution (LOAN) Other note (Please specify below.) (OTHN) Revenue anticipation (RAN) Tax allocation (TALN) Tax and revenue anticipation (TRAN) Tax anticipation (TAN) Marks -Roos Authority Loan (MKRL) Commercial paper (CP) Conduit Revenue Note (Private Obligor) (CRN) Certificates of Participation (COPL) Capital Lease (CL) State Agency Loan (STAL) Other (Please specify below.) (OTH) Please specify if "Other Note/ Other Bond/ Other" was checked. SOURCE(S) OF REPAYMENT Bond proceeds (BDPR) General fund of issuing jurisdiction (GNFD) Grants (GRNT) Intergovernmental transfers other than grants (ITGV) Local obligor (LOB) Private obligor payments (POP) Other (OTHS) Please specify if "Other" was checked. PURPOSE(S) OF FINANCING Percent Showing 1st 5: MCAP Please specify type/name of project if different from above. 100 Bond ❑ Conduit revenue (CRB) General obligation (GOB) Limited tax obligation (LTOB) Other bond (Please specify below.) (OTHB) Pension Obligation (POB) Public lease revenue (PLRB) Rate Reduction (GC 6588.7) (RRB) Revenue (RB) Revenue (Public enterprise) (PERB) Sales tax revenue (STRB) Special assessment (SAB) Tax allocation (TAB) Property tax revenues (PRTX) Public enterprise revenues (PER) Sales tax revenues (SATR) Special assessments (SA) Special tax revenues (SPTR) Tax -increment (TI) Utility Project Charges (UPC) 1 Section 88550) of the California Government Code requires the issuer of any proposed new public debt issue to give written notice of the proposed sale to CDIAC no later than 30 days prior to the sale. Under California Government Code Section 88550), the issuer of any debt issue shall, not later than 21 days after the sale of the debt, submit a report of final sale and the official statement (or alternate financing documents) to the Commission. The Commission may require information to be submitted in the report that it considers appropriate. 2 Section 53583(c)(2)(B) of the California Government Code requires that any local agency selling refunding bonds at private sale or on a negotiated basis shall send a written statement, within two weeks after the bonds are sold, to CDIAC explaining the reasons why the local agency determined to sell the bonds at private sale or on a negotiated basis instead of at public sale. 3 In accordance with 8855(i) of the California Government code. STATE OF CALIFORNIA Fiona Ma, CPA State Treasurer and Chair CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION 915 CAPITOL MALL ROOM 400 PO BOX 942809 SACRAMENTO, CA 94209-0001 TELEPHONE: (916) 653-3269 FAX: (916) 654-7440 February 22, 2019 TO: Jaileez Campos Orrick Herrington & Sutcliffe 405 Howard Street, 9th Floor San Francisco, CA 94105 FROM: Mark Campbell, Executive Director RE: RECEIPT OF NOTICE OF A PUBLIC DEBT ISSUE AFTER THE NOTICE PERIOD DATE California Government Code Section 8855(i) requires that written notice be given to the California Debt and Investment Advisory Commission (CDIAC) no later than 30 days prior to the proposed sale date. The following notice was received late. CDIAC Nbr: 2019-0398 Issuer: California Statewide Communities Development Authority CFD No 2018-03 Project: Community Facilities District No. 2018-03 (Uptown Newport) Proposed Amount: $8,800,000 Proposed Sale Date: February 26, 2019 Date Notice Received: February 21, 2019 Issuers may electronically file the Report of Final Sale (RFS) through CDIAC's website, using the following CDIAC number and password, which are unique to this filing and must be used for any sebsequent reporting under this CDIAC number. CDIAC Number: 2019-0398 Password: 25017595 In accordance with Government Code Section 8855(j), the RFS for this issue must be submitted not later than 21 days after the sale of the debt. The RFS may be submitted electroncially at http://www.treasurer.ca.gov/cdiac/reporting.asp. An official Statement or other financing documents must accompany the RFS. Any questions regarding reporting requirements may be directed to CDIAC's Data Unit by email at CDIAC_Issuance@treasurer.ca.gov or by telephone at (916) 653-3269. Cc: James F Hamill Managing Director $8,800,000* CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 15c2-12 CERTIFICATE CERTIFICATE OF AUTHORITY AS TO FINALITY OF PRELIMINARY OFFICIAL STATEMENT I hereby certify that I am a member of the commission of the California Statewide Communities Development Authority (the "Authority") or an authorized administrative delegatee thereof (an "Authorized Signatory"), and as such I am authorized to execute this certificate on behalf of the Authority. I understand that there has been delivered to RBC Capital Markets, LLC, as underwriter (the "Underwriter") of the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"), a Preliminary Official Statement relating to the Bonds, dated February 13, 2019 (including the cover page, the introduction and all appendices thereto, the "Preliminary Official Statement"), which the Authority deems to be final as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of 1934 ("Rule 15c2-12"), except for information permitted to be omitted therefrom by Rule 15c2-12. Dated: February 13, 2019. CALIFORNIA STATE IDE COMMUNITIES DEVELOPMENT A ORITY By: *Preliminary, subject to change. 4156-0803-2538.1 Axt orized Signatory CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CONTINUING DISCLOSURE CERTIFICATE (Authority) This Continuing Disclosure Certificate (this "Disclosure Certificate") is executed and delivered by the California Statewide Communities Development Authority (the "Authority") in connection with the issuance by the Authority of its California Statewide Communities Development Authority Community Facilities District No. 2018- 03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of March 1, 2019 (the "Indenture"), by and between the Authority and Wilmington Trust, National Association, as Trustee (the "Trustee"). The Authority covenants and agrees as follows: SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Authority for the benefit of the Holders and Beneficial Owners (as defined below) of the Bonds, and in order to assist the Underwriter (as defined below) in complying with the Rule (as defined below), but shall not be deemed to create any monetary liability on the part of the Authority to any other persons, including Holders or Beneficial Owners of the Bonds based on the Rule. The sole remedy in the event of any failure of the Authority to comply with this Disclosure Certificate shall be an action to compel performance of any act required hereunder. 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 Authority pursuant to, and as described in, Sections 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 tax purposes. "Community Facilities District" shall mean the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange. "Dissemination Agent" shall mean any dissemination agent designated in writing by the Authority and which has filed with the Authority a written acceptance of such designation. The initial Dissemination Agent shall be David Taussig & Associates, Inc. "Financial Obligation" shall mean, for purposes of the Listed Events set out in Section 5(a)(x) and Section (5)(b)(viii), a (a) debt obligation, (b) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation, or (c) guarantee of (a) or (b). The term "Financial Obligation" shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule. "Holder" shall mean the person in whose name any Bond shall be registered. "Listed Event" shall mean any of the events listed in Section 5(a) or 5(b) of this Disclosure Certificate. "MSRB" shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org. 1 4145-0841-7562.2 "Official Statement" shall mean the official statement relating to the Bonds, dated February 27, 2019. "Report Date" shall mean January 15 in each year. "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. "Special Taxes" shall mean the annual special taxes for facilities of the Community Facilities District levied on taxable property within the Community Facilities District. "Underwriter" shall mean RBC Capital Markets, LLC, as original underwriter of the Bonds and any other 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 Authority shall, or shall cause the Dissemination Agent to, not later than January 15 in each year, commencing January 15, 2020, provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB, and may cross-reference other information as provided in Section 4 of this Disclosure Certificate; provided, that the audited financial statements of the Authority may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. The Annual Report shall be submitted on a standard form in use by industry participants or other appropriate form and shall identify the Bonds by name and CUSIP number. (b) Not later than fifteen (15) business days prior to said date, the Authority shall provide the Annual Report to the Dissemination Agent (if other than the Authority). If the Authority is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the Authority shall send a notice in a timely manner to the MSRB in substantially the form attached as Exhibit A hereto. (c) The Dissemination Agent shall (if the Dissemination Agent is other than the Authority) file a report with the Authority certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to the MSRB. SECTION 4. Content of Annual Reports. The Authority's Annual Report shall contain or include by reference the following: (a) The Authority's comprehensive audited financial report for the prior fiscal year (subject to 3(a) above). (b) A maturity schedule for the outstanding Bonds, and a listing of Bonds redeemed prior to maturity during the prior fiscal year. (c) Balances in each of the following funds established pursuant to the Indenture as of the close of the prior fiscal year: (i) the Redemption Fund (with a statement of the debt service requirement to be discharged by said fund prior to the receipt of expected additional Special Tax Revenues); and (ii) the Reserve Fund. (d) A current debt service schedule for the Bonds. 2 4145-0841-7562.2 (e) A statement of the total Special Tax levied in the prior fiscal year, listing the Special Tax components and broken down by land use classification, as provided in the Rate and Method (as such term is defined in the Official Statement). (f) A statement of the maximum and actual annual Special Tax for the current fiscal year broken down by land use classification. (g) A statement of majority taxpayers within the Community Facilities District. (h) A statement of the assessed value of the Taxable Property (as defined in the Official Statement) within the Community Facilities District. (i) A statement of the actual Special Tax received for the Community Facilities District for the prior fiscal year. (j) The following information (to the extent that it is no longer reported in the Authority's annual filings with the California Debt and Investment Advisory Commission regarding the Bonds): (i) the Required Bond Reserve for the prior fiscal year; and (ii) a statement as to the status of any foreclosure actions with respect to delinquent payments of the Special Tax. Any or all of the items listed above may be set forth in one or a set of documents or may be included by specific reference to other documents, including official statements of debt issues of the Authority or related public entities, which have been made available to the public on the MSRB's website. The Authority 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 Authority shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds in a timely manner not later than ten (10) business days after the occurrence of the event to the MSRB: (i) principal and interest payment delinquencies; (ii) unscheduled draws on debt service reserves reflecting financial difficulties; (iii) unscheduled draws on credit enhancements reflecting financial difficulties; (iv) substitution of credit or liquidity providers, or their failure to perform; (v) adverse tax opinions or issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB); (vi) tender offers; (vii) defeasances; (viii) rating changes; (ix) bankruptcy, insolvency, receivership or similar event of the obligated person; or 3 4145-0841-7562.2 (x) default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the Community Facilities District, any of which reflect financial difficulties. Note: for the purposes of the event identified in subparagraph (ix), 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 court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person. (b) The Authority shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material, in a timely manner not later than ten (10) business days after the occurrence of the event to the MSRB: (i) unless described in paragraph 5(a)(v), other material 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; (ii) modifications to rights of Bond holders; (iii) Bond calls; (iv) release, substitution, or sale of property securing repayment of the Bonds; (v) non-payment related defaults; (vi) 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; or (vii) appointment of a successor or additional trustee or the change of name of a trustee; or (viii) incurrence of a Financial Obligation of the Community Facilities District, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the Community Facilities District, any of which affect security holders. (c) Whenever the Authority obtains knowledge of the occurrence of a Listed Event described in Section 5(b), the Authority shall as soon as possible determine if such event would be material under applicable federal securities laws. (d) Notwithstanding the foregoing, notice of the Listed Event described in subsections (a)(vii) or (b)(iii) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Indenture. (e) The Authority intends to comply with the Listed Events described in Section 5(a)(x) and Section 5(b)(viii), and the definition of "Financial Obligation" in Section 2, with reference to the Rule, any other applicable federal securities laws and the guidance provided by the Securities and Exchange 4 4145-0841-7562.2 Commission in Release No. 34-83885 dated August 20, 2018 (the "2018 Release"), and any further amendments or written guidance provided by the Securities and Exchange Commission or its staff with respect the amendments to the Rule effected by the 2018 Release. SECTION 6. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB. SECTION 7. Termination of Reporting Obligation. The Authority's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination or substitution occurs prior to the final maturity of the Bonds, the Authority shall give notice of such termination or substitution to the MSRB. SECTION 8. Dissemination Agent. The Authority may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent (if other than the Authority) shall not be responsible in any manner for the content of any notice or report prepared by the Authority pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be David Taussig & Associates, Inc. SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Authority may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied (provided, however, that the Dissemination Agent shall not be obligated under any such amendment that modifies or increases its duties or obligations hereunder without its written consent thereto): (a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, 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, 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 Holders of the Bonds in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Holders or Beneficial Owners of the Bonds. In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Authority 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 Authority. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given to the MSRB, and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. SECTION 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Authority 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 Authority chooses to include any information in any Annual Report or notice of occurrence of a Listed Event, in addition to that 5 4145-0841-7562.2 which is specifically required by this Disclosure Certificate, the Authority 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 11. Authority Not Responsible for Continuing Disclosure by Other Parties. Nothing contained herein shall be construed to require the Authority to enforce the obligation of any other party, including any owner or property within the Community Facilities District, to provide information to the MSRB, or the Underwriter or otherwise to comply with such other party's continuing disclosure undertaking entered into in connection with the issuance of the Bonds. SECTION 12. Default. In the event of a failure of the Authority to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Authority to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the Authority to comply with this Disclosure Certificate shall be an action to compel performance. SECTION 13. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and if the Authority is not the Dissemination Agent, the Authority agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Authority under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 14. Notices. Any notices or communications to or among any of the parties to this Disclosure Certificate may be given as follows: To the Authority: To the Underwriter: California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, California 95814 Attention: Chair RBC Capital Markets, LLC Two Embarcadero Center, Suite 1200 San Francisco, CA 94111 Attn: Bob Williams, Managing Director Any person may, by written notice to the other persons listed above, designate a different address to which subsequent notices or communications should be sent. SECTION 15. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Authority, the Underwriter, Holders and Beneficial Owners of the Bonds from time to time, and shall create no rights in any other person or entity. SECTION 16. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. Date: March 12, 2019 6 4145-0841-7562.2 CALIFORNIA STIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory [Signature Page - Continuing Disclosure Certificate} 4145 08=4t•7562 EXHIBIT A FORM OF NOTICE TO THE MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: California Statewide Communities Development Authority Name of Bond Issue: California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 Date of Issuance: March 12, 2019 NOTICE IS HEREBY GIVEN that the California Statewide Communities Development Authority (the "Authority") has not provided an Annual Report with respect to the above named Bonds as required by the Continuing Disclosure Certificate, dated the date of issuance of such Bonds. The Authority anticipates that the Annual Report will be filed by , 20. Date: , 20 . CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: Authorized Signatory 8 4145-0841-7562.2 $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 Dated: March 12, 2019 CERTIFICATE OF THE AUTHORITY The undersigned, an Authorized Signatory of the Commission of the California Statewide Communities Development Authority (the "Authority"), hereby certifies as follows: 1. The Authority is a joint exercise of powers agency duly organized and validly existing under and by virtue of the laws of the State of California. 2. The following are now and, at all times relevant to this certificate, have been the duly elected, qualified and acting members or alternate members of the Commission of the Authority (the "Commission"): Larry Combs, Chair Kevin O'Rourke, Vice Chair Brian Moura, Treasurer Tim Snellings, Secretary Jordan Kaufman, Member Dan Mierzwa, Member Marcia Raines, Member 3. The Chair of the Authority has been duly authorized by the Authority to execute, and the Secretary of the Authority has been duly authorized by the Authority to attest, on behalf of the Authority, $8,300,000 aggregate principal amount of its California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"). Pursuant to such authority, the facsimile signatures of such officers have been affixed to the Bonds, and the true names and facsimile signatures of such officers are as set forth below opposite their respective offices, as follows: Name Office Tim Snellings Secretary Brian Moura Treasurer Larry Combs Chair Facsimile Signature 6-2 ho------ 4151-7123-5098 4. The Authority has all necessary power and authority to execute, deliver and perform its obligations under each of the following: (a) the Bond Purchase Contract, dated February 27, 2019 (the "Purchase Contract"), by and between the Authority and RBC Capital Markets, LLC, as underwriter (the "Underwriter"); (b) the Indenture, dated as of March 1, 2019, by and between the Authority and Wilmington Trust, National Association, as trustee; (c) the Authority Continuing Disclosure Certificate, dated March 12, 2019; (c) the Official Statement, dated February 27, 2019; and (d) the Tax Certificate, dated March 12, 2019. 5. The Authority Documents (as defined in the Purchase Contract) are in full force and effect and have not been amended, modified, supplemented or rescinded, except as has been agreed to in writing by the Underwriter. 6. The Authority has all necessary power and authority to issue the Bonds and the Bonds, dated the date hereof, have been executed by the manual or facsimile signature of the within -named Chair of the Authority or an Authorized Signatory of the Authority and countersigned by the manual or facsimile signature of the within -named Secretary of the Authority or an Authorized Signatory of the Authority. 7. The undersigned further certifies that the representations contained in Section 4 of the Purchase Contract are true and correct in all material respects as of the date hereof. 8. Attached hereto as Exhibit A are full, true and correct copies of the amended and restated joint exercise of powers agreement, Resolutions No. 18SCIP-110 and 18CIP-111, each adopted at a regular meeting of the Authority held on November 15, 2018, Resolutions No. 18SCIP-117, 18SCIP-118, 18SCIP-119 and 18SCIP-120, each adopted at a regular meeting of the Authority held on December 20, 2018, Ordinance No. 18ORD-4, adopted at a regular meeting of the Authority held on January 10, 2019, Resolution No. 19R-1 adopted at a regular meeting of the Authority held on January 24, 2019 and Resolution No. 19SCIP-5 adopted at a regular meeting of the Authority held on February 7, 2019, at which meetings a quorum was present. The undersigned further certifies that said copies are full, true and correct copies of the original resolutions adopted at said meetings and entered in the respective proceedings thereof; and that said resolutions have not been amended, modified or superseded in any manner since the date of their adoption, and the same are now in full force and effect. Capitalized terms used but not defined herein shall have the meanings given in the Indenture. [Remainder of Page Intentionally Left Blank] 4151-7123-5098 IN WITNESS WHEREOF, the undersigned has executed this CERTIFICATE OF THE AUTHORITY as of the date first above written. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT HORITY By: 4151-7123.5O 8 uthorized Signatory Exhibit A 1. Amended and Restated Joint Exercise of Powers Agreement. (Attached) 2. Resolution No. 18SCIP-110 entitled, "A Resolution Approving a Joint Community Facilities Agreement and Declaring Intention to Establish California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California, and to Levy a Special Tax Therein to Finance the Acquisition and Construction of Certain Public Capital Improvements and Certain Utility Undergrounding," adopted by the Commission of the Authority on November 15, 2018. (See Tab 2) 3. Resolution No. 18CIP-111 entitled, "A Resolution to Incur Bonded Indebtedness to Finance the Acquisition and Construction of Certain Public Capital Improvements and Certain Utility Undergrounding for California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California and Calling for a Public Hearing" adopted by the Commission of the Authority on November 15, 2018. (See Tab 3) 4. Resolution No. 18SCIP-117 entitled, "A Resolution of Formation Establishing California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California, and Providing for the Levy of a Special Tax Therein to Finance the Construction and Acquisition of Certain Public Capital Improvements and Certain Utility Undergrounding," adopted by the Commission of the Authority on December 20, 2018. (See Tab 9) 5. Resolution No. 18SCIP-118, entitled "A Resolution Deeming it Necessary to Incur Bonded Indebtedness to Finance the Acquisition and Construction of Certain Public Capital Improvements and Certain Utility Undergrounding within California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California," adopted by the Commission of the Authority on December 20, 2018. (See Tab 10) 6. Resolution No. 18SCIP-119, entitled "Resolution Calling Special Mailed -Ballot Election within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California," adopted by the Commission of the Authority on December 20, 2018. (See Tab 11) 7. Resolution No. 18SCIP-120, entitled "Resolution Declaring Results of Special Mailed - Ballot Election within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California," adopted by the Commission of the Authority on December 20, 2018. (See Tab 15) A-1 4151-7123-5098 8. Ordinance No. 18ORD-4, entitled "Ordinance Levying A Special Tax for Fiscal Year 2019-2020 and Following Fiscal Years Solely Within and Relating to California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" adopted by the Commission of the Authority on January 10, 2019. (See Tab 17) 9. Resolution No. 19R-1 entitled, "A Resolution of the California Statewide Communities Development Authority Authorizing, Among Other Matters, Designees Thereof to Execute and Deliver on Behalf of the Commission or the Authority Documents Requiring Signature By a Member of the Commission and Authorized by Authority Resolution," adopted by the Commission of the Authority on January 24, 2019. (Attached) 10. Resolution No. 19SCIP-5 entitled, "Resolution Approving the Issuance of the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019; Authorizing the Execution and Delivery of an Indenture Providing for the Issuance of Such Bonds; Approving a Bond Purchase Contract Providing for the Sale of Such Bonds; Approving an Official Statement; Approving a Continuing Disclosure Certificate; Authorizing the Sale of Such Bonds; and Authorizing Related Actions and the Execution of Related Documents in Connection with the Issuance, Sale and Delivery of Such Bonds," adopted by the Commission of the Authority on February 7, 2019. (Tab 20) A-2 4151-7123-5098 RESOLUTION NO. 19R-1 A RESOLUTION OF THE CALIh'ORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY AUTHORIZING, AMONG OTHER MATTERS, DESIGNEES THEREOF TO EXECUTE AND DELIVER ON BEHALF OF THE COMMISSION OR THE AUTHORITY DOCUMENTS REQUIRING SIGNATURE BY A MEMBER OF THE COMMISSION AND AUTHORIZED BY AUTHORITY RESOLUTION WHEREAS, pursuant to the provisions of the Joint Exercise of Powers Act, comprising Articles 1, 2, 3 and 4 of Chapter 5 of Division 7 of Title 1 (commencing with Section 6500) of the Government Code of the State of California (the "Act"), a number of California cities, counties and special districts entered into a joint exercise of powers agreement (the "Agreement") pursuant to which the California Statewide Communities Development Authority (the "Authority") was organized; and WHEREAS, pursuant to the Agreement, the Authority is administered by a commission (the "Commission") consisting of seven members (the "Members") vested with the powers set forth therein, four of which are appointed by the California State Association of Counties ("CSAC"), successor to County Supervisors Association of California, and three of which are appointed by the League of California Cities (the "League"); and WHEREAS, pursuant to the Agreement, the Commission has the power, by resolution, to the extent permitted by the Act and any other applicable law, to delegate any of its functions to one or more of the Members, its officers or its agents and to cause such designees to take any actions and execute any documents or instruments for and in the name and on behalf of the Commission; and WHEREAS, given the increase in the number of issues of bonds per year by the Authority and the related documentation since the formation of the Authority, the Commission desires to delegate to certain agents the function of execution and delivery on behalf of the Authority of any documents, certificates or instruments requiring signature by any Member, including any Member acting as an officer of the Commission, that are authorized for execution and delivery by adoption of a resolution of the Authority (each an "Authority Resolution"); and NOW, THEREFORE, BE IT RESOLVED by the Commission of the Authority as follows: Section 1. The Authority hereby finds and determines that the foregoing recitals are true and correct. Section 2. The Authority hereby appoints Manuel Rivas and Valentina Dzebic, and such other persons as may from time to time be appointed pursuant to a resolution of the Authority, delegatees of the Members with certain administrative duties as further specified in Sections 4 and 5 below. 1 4150-0232-2713.1 Section 3. The Authority hereby confirms its appointment of Sendy Young, originally appointed pursuant to Resolution No. 18R-2, adopted by the Authority on April 19, 2018; James Hamill and Jon Penkower, originally appointed pursuant to Resolution No. 17R-4, adopted by the Authority on March 2, 2017; Alan Fernandes, originally appointed pursuant to Resolution No. 15R-53, adopted by the Authority on October 22, 2015; Graham Knaus, originally appointed pursuant to Resolution No. 15R-11, adopted by the Authority on April 9, 2015; Executive Director, Catherine Bando, originally appointed pursuant to Resolution No. 14R-4, adopted by the Authority on February 6, 2014; Laura Labanieh (formerly Laura Campbell), originally appointed pursuant to Resolution No. 13R-20, adopted by the Authority on September 5, 2013, with her name change from Laura Campbell to Laura Labanieh recognized by the Authority pursuant to Resolution No. 14R-58, adopted by the Authority on November 6, 2014; and Norman Coppinger, originally appointed pursuant to Resolution No. 13R-12, adopted by the Authority on May 30, 2013. Manuel Rivas, Valentina Dzebic, Sendy Young, James Hamill, Jon Penkower, Alan Fernandes, Graham Knaus, Catherine Bando, Laura Labanieh and Norman Coppinger, are each referred to herein as an "Authorized Signatory." The Authority hereby revokes its appointment of Dorothy Holzem as an Authorized Signatory, originally appointed pursuant to Resolution No. 15R-11, adopted by the Authority on April 9, 2015. Section 4. To the extent permitted by the Act or any other applicable law, the Commission hereby delegates to each Authorized Signatory, on behalf of a Member, the administrative authority to execute and deliver, any documents, certificates or instruments requiring signature by any Member, including any Member acting as an officer of the Commission, that are authorized for execution and delivery by Authority Resolution, including, but not limited to, the execution and delivery of any bonds, notes or other evidences of indebtedness issued and/or delivered by the Authority. Section 5. To the extent permitted by the Act or any other applicable law, the Commission hereby further delegates to each Authorized Signatory, on behalf of a Member, the administrative authority to execute and deliver any amendments, waivers, consents, approvals, notices, orders, requests and other actions of the Authority entered into or given in accordance with the documents approved by an Authority Resolution or as otherwise provided in Resolution No. OOR-5, adopted by the Authority on March 28, 2000, as provided to such Authorized Signatory by staff to the Authority upon the advice of counsel to the Authority. Section 6. The Commission hereby further delegates to each Authorized Signatory, the administrative authority to record and publish minutes of meetings of the Commission on behalf of the Authority and further authorizes each Authorized Signatory, to delegate such functions to staff of the League or CSAC, as he or she may deem necessary or appropriate. Section 7. All actions heretofore taken by any Member, Authorized Signatory and other appropriate officers and agents of the Authority with respect to the matters herein contained are hereby ratified, confirmed and approved. Section 8. This resolution shall take effect immediately upon its passage. 2 4150-0232-2713.1 PASSED AND ADOPTED by the California Statewide Communities Development Authority this January 24, 2019. I, the undersigned, an Authorized Signatory of the California Statewide Communities Development Authority, DO HEREBY CERTIFY that the foregoing resolution was duly adopted by the Commission of the Authority at a duly called meeting of the Commission of the Authority held in accordance with law on January 24, 2019. 3 Au ze• ' ignatory California Statewide Communities Development Authority 4150-0232-2713.1 $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 Dated: March 12, 2019 WRITTEN REQUEST OF AUTHORITY AS TO AUTHENTICATION, REGISTRATION AND DELIVERY OF BONDS TO: WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee The undersigned, a member of the Commission of the California Statewide Communities Development Authority (the "Authority") or duly authorized signatory thereof, hereby certify as follows: The Authority has caused its Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds") in the aggregate principal amount of $8,300,000 to be issued under the provisions of the Indenture, dated as of March 1, 2019, between the Authority and Wilmington Trust, National Association, as trustee, approved by its Resolution No. 19SCIP-5, adopted by the Commission of the Authority on February 7, 2019. The Bonds mature on the dates and in the years and amounts, and bear interest at the rates, as set forth in Schedule A attached hereto. On the date set forth below, you are hereby requested to authenticate the Bonds, in fully registered form, by executing the Certificate of Authentication and Registration appearing on each Bond, and to deliver said $8,300,000 principal amount of Bonds, pursuant to the Bond Purchase Contract, dated February 27, 2019 (the "Purchase Contract"), between the Authority and RBC Capital Markets, LLC, as underwriter (the "Underwriter"), to The Depository Trust Company, New York, New York, for the account of said Underwriter, against payment to you of the following purchase price of the Bonds: Principal Amount of Bonds: Plus Original Issue Premium: Less Underwriter's Discount: TOTAL PURCHASE PRICE: $8,300,000.00 $539,472.40 -124,500.00 $8,714,972.40 Capitalized terms used but not otherwise defined shall have the meanings ascribed to them in the Purchase Contract. [Remainder of Page Intentionally Left Blank] 4151-7123-5098 IN WITNESS WHEREOF, the undersigned has executed this WRITTEN REQUEST OF AUTHORITY as of the date first above written. CALIFORNIA STATEWIDE COMM DEVELOPMENT AUTHORITY thorized Signatory 4I51-7123-5095 TIES SCHEDULE A MATURITY SCHEDULE Maturity Principal Interest (September 1) Amount Rate 2039(T) $3,295,000 5.000% 2048(T) 5,005,000 5.000 (T) Term Bond. 4151-7123-5098 $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 Dated: March 12, 2019 WRITTEN ORDER OF THE AUTHORITY TO THE TRUSTEE TO: WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee The California Statewide Communities Development Authority (the "Authority") hereby certifies that all conditions precedent to the issuance, sale and delivery of its Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds") have been satisfied or waived, and that the Bonds have been duly executed by the Authority and delivered to Wilmington Trust, National Association, as trustee (the "Trustee") under that certain Indenture, dated as of March 1, 2019, between the Authority and the Trustee (the "Indenture"). In connection therewith: (a) You are hereby authorized and directed to authenticate and deliver the Bonds to or upon the order of RBC Capital Markets, LLC (the "Underwriter"), as soon as practicable, upon payment to you of the purchase price of the Bonds of $8,714,972.40 (being the par amount of the Bonds, plus an original issue premium of $539,472.40, less an underwriter's discount of $124,500.00), calculated in accordance with the Bond Purchase Contract, dated February 27, 2019, between the Authority and the Underwriter relating to the Bonds. (b) You are hereby authorized and directed to apply the purchase price in the manner set forth in Section 4.01 of the Indenture. Capitalized terms used but not defined herein shall have the meanings given in the Indenture. [Remainder of Page Intentionally Left Blank] 4151-7123-5098 IN WITNESS WHEREOF. the undersigned has executed this WRITTEN ORDER OF THE AUTHORITY TO THE TRUSTEE as of the date first above written. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY By: 415l-7123-5098 Authorized Signatory $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 COSTS OF ISSUANCE ACCOUNT REQUISITION NO. 1 TO: WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee and Custodian You are hereby directed to pay the costs of issuance, as listed in Exhibit A, from the bond proceeds deposited in the Costs of Issuance Account established under the Indenture, dated as of March 1, 2019, by and between the California Statewide Communities Development Authority (the "Authority") and Wilmington Trust, National Association, as Trustee. The undersigned hereby certifies that (i) each such payment is a proper charge against the Costs of Issuance Account, and (ii) each such payment has not been previously paid from the Costs of Issuance Account. Further, in accordance with Section 4 of that certain Deposit and Reimbursement Agreement, dated as of August 29, 2017, by and among the Authority, TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC, you are hereby directed to return the unexpended and unencumbered funds to TSG Parcel 1, LLC in the amount of $40,362.95 from amounts on deposit in the Application Fee Account relating to the Uptown Newport Project pursuant to Section 1(g) of the Custody Agreement dated May 1, 2015, by and between the Authority and Wilmington Trust, National Association, as Custodian. 4151-7123-5098 Dated: March 12, 2019 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENUTHORITY By: Authorized Signatory [Signature Page - Costs of Issuance Account Requisition No. 1] 4151-7123-5 9 S EXHIBIT A SCHEDULE OF COSTS OF ISSUANCE Payee Orrick Herrington & Sutcliffe LLP Integra Realty Resources Wilmington Trust, National Association Taboada Rochlin Govier, LLP Elabra David Taussig & Associates California Statewide Communities Development Authority City of Newport Beach TSG Parcel 1, LLC Purpose Bond Counsel, Disclosure Counsel Fees and Expenses Appraiser Fees Trustee Fee Trustee's Counsel Printing Fees Special Tax Consultant Authority Fees Administrative Fee Developer's Reimbursement Not to Exceed Amount* $90,122.00 $22,000.00 $6,000.00 $1,000.00 $2,450.00 $13,937.12 $83,000.00 $30,000.00 $26,304.55 * Payment to be made per actual invoice or closing memorandum received by the Trustee not to exceed the amount indicated above for each payee. 4151-7123-5098 CSCDA CFD No. 2018-03 (Uptown Newport) - COI Requisition No. 1 & Developer Deposit Reimbursement Costs of Issuance Payee Purpose Total Amounts Orrick, Herrington & Sutcliffe LLP Orrick, Herrington & Sutcliffe LLP Orrick, Herrington & Sutcliffe LLP CSCDA City of Newport Beach DTA Intega Realty Resources Elabra Printing Wilmington Trust, National Association Taboada Rochlin Govier LLP TSG Parcel 1, LLC Bond and Disclosure Counsel Fees and Expenses Expenses for Preparation, Publication & Distribution Formation Costs Issuer's Fee Administrative Costs Special Tax Consultant +Expenses Appraisal Service Fees Preliminary and Official Statement Printing Trustee's Fee Trustee's Counsel Developer's Reimbursement $70,000.00 $5,122.00 $15,000.00 $83,000.00 $30,000.00 $40,241.67 $22,000.00 $2,450.00 $6,000.00 $1,000.00 $274,813.67 Total Costs of Issuance for Requisition $274,813.67 Prefunded Expenses To Stay with CSCDA Trustee Contingency Administration / Expense Fund $52,000.00 $2.24 Total $326,815.91 Developer's Deposits Total Disbursements 09/18/2017 09/18/2017 02/14/2019 Total $25,000.00 $25,000.00 $16,667.50 $66,667.50 ($26,304.55) Balance to be Remitted to Developer at Closing $40,362.95 Developer Payments for Reimbursement Amount Paid from Deposit Amount Paid Total Invoiced Directly & Paid from COI ($26,304.55) $70,000.00 $5,122.00 $15,000.00 $83,000.00 $30,000.00 $13,937.12 $22,000.00 $2,450.00 $6,000.00 $1,000.00 ($26,304.55) $26,304.55 - $248,509.12 - $26,304.55 - $274,813.67 labra'\ Uufinr raila1ordkon dnd free f printing Invoice No: I-19-114 888.935.2272 miles 415,289-5400 £ / 415.289.5001 fax 3825 [high Sc.. Urdr 103 Chklsai CA 94619 Date: March 11, 2019 $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY Client: RBC Capital Markets, LLC COMMUNITY FACILITIES DISTRICT NO. 2018-03 2 Embarcadero Center, Suite 1200 (UPTOWN NEWPORT) San Francisco, Ca 94111 SPECIAL TAX BONDS, SERIES 2019 Attention: Luke Brewer bob.williams@rbccm.com luke.brewer@rbcon.com Printing services: Typeset cover PDF camera ready copy Scan and pdf files such as appendicies Unlimited Authors Alterations Rush services Premium Service for this job is based on the above, as needed, and INVOICE Preliminary Official Statements of 262 pages, shipped/published on February 13, 2019 8 Final Official Statements of 262 pages, shipped/published on March 11, 2019 Internet Posting & Electronic Distribution 0 CSCDA CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY 0.000% of books, delivered out of CA 0.000% of books, delivered in Oakland 100.000% of books, delivered in CA Inquiries: accounting@n,elabra.com Cost of Production for: Out of State (non-taxable) In Oakland (taxable) In California (taxable) Cost of production Sales Tax Oakland (9.250%) Sales Tax California Statewide (7.25%) Shipping $0.00 $0.00 $2,081.26 $2,081.26 $0.00 150.89 217.85 TOTAL: $2,450.00 When remitting payment to us, you may either send a check to the remittance address at the top of the page, or you may arrange to have the payment wired directly to our account. If wiring the funds, please call the bank with the following information. First Republic Bank Please reference our San Rafael Office Invoice Number: I-19-114 1099 Fourth Street Account name: Elabra, Inc. San Rafael Account number: 91400702163 800-700-0388 ABA/Routing number: 321081669 Integra Realty Resources Sacramento irr 3825 Atherton Suite 500 Rocklin CA 95765 T (916) 435-3883 F (916) 435-4774 www.irr.com Invoice Invoice Number: 193-2018-0555 Invoice Date: 2/13/2019 Page: 1 Bill To: California Statewide Communities Development Authority 1700 N. Broadway Suite 405 Walnut Creek, CA 94596 Attn: Mr. James Hamill Project No. 193-2018-0555 Project Name: CSCDA CFD No. 2018-03 (Uptown Newport) Uptown Newport 4311-4321 Jamboree Rd. Newport Beach, CA 92660 Appraisal Services $22,000.00 TOTAL DUE THIS INVOICE: $22,000.00 Please make check payable to: Integra Realty Resources *Note Invoice number on check. Terms: Net 30 Please note our remittance address has changed. Send all payments to: Integra Realty Resources - Sacramento 3825 Atherton Road, Suite 500 Rocklin, CA 95765 Federal EIN: 91-1756837 CITY OF NEWPORT BEACH 100 Civic Center Drive Newport Beach, California 92660 949 644-3127 1 949 644-3339 FAX ap@newportbeachca.gov March 12, 2019 California Statewide Communities Development Authority 1700 North Broadway, Suite 405 Walnut Creek, CA 94596 Attention: James Hamill, Managing Director For City administrative costs and expenses incurred in regards to the formation of Community Facilities District No. 2018-03 (Uptown Newport) of the City of Newport Beach and delivery of an Acquisition Agreement related thereto: Administrative Costs and Expenses Please wire transfer to: Bank: Address of Receiving Bank: ABA Routing Number: Account Name: Account Number: Bank Official to Contact: Bank Official Phone Number: Bank Official FAX Number: Email: $30,000.00 City National Bank 18111 Von Karman Ave #120 Irvine, CA 92612 1220 16066 City of Newport Beach — General 023-696835 Miguel Rivera 213-673-9381 213-673-9462 miguel.rivera@cnb.com Finance Department CSCDA CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY March 1, 2019 Robert Williams RBC Capital Markets Two Embarcadero Center, Suite 1200 San Francisco, CA 94111 RE: CSCDA Closing Invoice — Uptown Newport CFD Dear Bob: This letter serves as the Statement of Issuance Fees prepared in connection with the issuance and delivery of Special Tax Bonds (the "Bonds") by the California Statewide Communities Development Authority (the "Authority") for the Uptown Newport CFD Project, in the principal amount of $8,300,000. ISSUER FEES DUE AT CLOSING The Issuance Fee for the Bonds is $83,000.00 which is due and payable on the closing date of the Bonds and shall be paid by wire as follows: U.S. Bank ABA #: 091-000-022 Credit Account #: 104790895775 Reference: CSCDA Fees & Deposits FFC: 6745037201 (Uptown Newport CFD) ANNUAL ADMINISTRATION FEES The Authority's annual administration fee is $10,000. The annual fee shall be paid to the Authority due and payable in arrears each March 1 and September 1, commencing September 1, 2019 and shall be paid by wire as follows: U.S. Bank ABA #: 091-000-022 Credit Account #: 104790895775 Reference: New CSCDA Bond Admin. FFC: 6745041500 (Uptown Newport CFD) If you have any questions, please contact me at (925) 476-5887. Sincerely, Jon Penkower Managing Director 1700 North Broadway, Suite 405 • Walnut Creek, California 94596 Phone (800) 531-7476 • Fax (925) 391-3590 • www.cscda.org dta 5000 Birch Street, Suite 6000 Newport Beach, CA 92660 (800) 9694DTA James Hamill Calif. Statewide Community Development Authority 1700 North Broadway, Suite 405 Walnut Creek, CA 94596 Project Dear Mr. Hamill, This invoice is submitted for professional consulting services in invoice payment payable to David Taussig and Associates, Inc. PAYMENT IS DUE UPON RECEIPT. AN INTEREST CHARGE DAYS PAST DUE. Professional Services through March 31, 2019 Professional Fee Total Professional Fee Percent Complete Total Earned Previous Fee Billing Current Fee Billing 40,000.00 100.00 40,000.00 26,304.55 13,695.45 Total Professional Fee Reimbursable Expenses Reproduction Data Postage/Delivery/Courier Total Reimbursables March 7, 2019 Invoice No: D17-00101.000 CSCDA/Uptown Newport PN (CFD Formation) 1903003 association with the above referenced project. Please remit OF1.2% PER MONTH WILL BE APPLIED TO INVOICES30 13,695.45 6.90 12.81 221.96 19241.67 Total this Invoice $13,937.12 Newport Beach I San Jose I San Francisco I Riverside I Dallas I Houston I Raleigh dta 5000 Birch Street, Suite 6000 Newport Beach, CA 92660 (800) 9694DTA March 7, 2019 Subject: Wire Instruction Dear Sir/Madam: Below is the information to set up a wire transfer payment. Bank of America Branch #2439 18622 MacArthur Boulevard Irvine, CA 92626 To the account of David Taussig and Associates, Inc. Account No. 24397-02944 ABA Routing No. 026009593 Should you have any questions regarding the enclosed invoices, please do not hesitate to contact me at (949) 955-1500 ext. 214. Sincerely, Nicole Le Accountant Newport Beach I San Jose I San Francisco I Riverside I Dallas I Houston I Raleigh James Hamill California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, CA 95814 1 rt March 12, 2019 Client No. 40929 Invoice No. 1779167 Orrick Contact: Patricia L. Eichar FOR SERVICES RENDERED as Bond and Disclosure Counsel to the California Statewide Communities Development Authority in connection with the issuance by the Authority of $8,300,000 aggregate principal amount of its Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 $70,000.00 Formation of Community Facilities District No. 2018-03: $15,000.00 DISBURSEMENTS (expenses, including transcript preparation): $ 1,000.00 DISBURSEMENTS (publication costs): $ 4,122.00 TOTAL For inquiries, call: (304) 231-2701. Fax (304) 231-2501 REMITTANCE COPY - PLEASE RETURN WITH PAYMENT ELECTRONIC FUNDS TRANSFERS: ACHE Wire Transfers: ABA Number 121000248 SWIFT CODE: WFBIUS6S (for wires initiated outside the USA) Account Number: 4123701088 Wells Fargo 420 Montgomery Street San Francisco, CA 94104 Account of Orrick. Herrington & Sutcliffe LLP Reference: 40929,317: Invoice: 1779167 E, I. N. 94-2952627 OVERNIGHT DELIVERY: S90,122.00 ORRICK, HERRINGTON & SUTCLIFFE LLP cfo Wells Fargo Locktox Attn: Dept 34461 3440 Walnut Avenue Building A, Window H Fremont, CA 94538 (904) 634-6350 Reference: 40929.317 Invoice: 1779167 4162-5817-01381 SHOPOFF REALTY INVESTMENTS Transforming Opportunity into Value Name on Account: Bank Name: Bank Address: ABA No.: Account No.: WIRE INSTRUCTIONS TSG Parcel 1, LLC Wells Fargo Bank Austin Downtown Business Banking 111 Congress Ave. Austin, TX 78701 121000248 2918457421 2 Park Plaza, Suite 700, Irvine, California 92614 Main: 949-417-1396 Fax: 949-417-1399 shopoff.com THE $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 Dated: March 12, 2019 CLOSING CERTIFICATE OF THE CITY OF NEWPORT BEACH The undersigned, an authorized officer of the CITY OF NEWPORT BEACH (the "Local Agency"), hereby certifies as follows: 1. The meetings of the Local Agency relating to the proceedings taken in connection with the Local Agency's authorization of the Authority to form the Community Facilities District and issue the Bonds and the Local Agency's execution and delivery of the Acquisition Agreement, dated as of March 12, 2019 (the "Local Agency Acquisition Agreement") and Facilities Relocation Agreement, dated as of February 12, 2019 (the "Facilities Relocation Agreement" and, together with the Local Agency Acquisition Agreement, the "Local Agency Documents"), were duly called and held and the related resolutions (the "Local Agency Resolutions") were duly adopted or enacted and are in full force and effect and have not been amended, modified or supplemented in any way. 2. The Local Agency has full legal right, power and authority to execute, deliver and carry out the transactions contemplated by the Local Agency Documents and the Local Agency Documents have been duly authorized and executed by the Local Agency. 3. The adoption of the Local Agency Resolutions and the execution and delivery by the Local Agency of the Local Agency Documents and compliance with the provisions thereof by the Local Agency do not violate any applicable law, regulation or judgment, order or decree of any court or any public or governmental agency or authority of the State of California or the federal government of the United States of America and do not conflict with, or result in the breach of any of the provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Local Agency is a party or by which it or its properties is or may be bound. 4. No order, consent, permission, approval, authorization, order or license of, or filing or registration with, any governmental authority is necessary in connection with the execution and delivery of the Local Agency Documents or the Local Agency Resolutions except as have been obtained or made and as are in full force and effect. 5. The Local Agency is not in breach of or default under any applicable law or administrative regulation of the State of California or the United States or any applicable judgment or decree or any loan agreement, note, resolution, agreement or other instrument to which the Local Agency is a party or is otherwise subject, which breach or default would materially adversely affect the transactions contemplated by the Local Agency Resolutions and the Local Agency Documents, and compliance with the provisions thereof will not conflict with or constitute a breach of or default under any law, administrative regulation, judgment, decree, 4158-9756-9818.3 loan agreement, note, resolution, agreement or other instrument to which the Local Agency is a party or is otherwise subject. 6. There are no actions, suits, proceedings, inquiries or investigations, at law or in equity, before or by any court, governmental agency, public board or body which are pending and have been served against the Local Agency, or against the titles of its officers to their respective offices, or seeking to restrain or to enjoin the application of the proceeds of the Bonds in accordance with the Local Agency Resolutions, or in any way contesting or affecting the validity or enforceability of the Local Agency Documents, or the powers of the Local Agency or its authority with respect to the Local Agency Resolutions, the Local Agency Documents, or any action on the part of the Local Agency contemplated by any of said documents. 7. The Tax Certifications attached hereto as Exhibit A are true and correct. All capitalized terms not otherwise defined herein shall have the meaning given such terms in the Bond Purchase Contract, dated February 27, 2019, between the California Statewide Communities Development Authority and RBC Capital Markets, LLC, as underwriter. 2 4158-9756-9818.3 IN WITNESS WHEREOF, the undersigned has executed this CLOSING CERTIFICATE OF THE CITY OF NEWPORT BEACH as of the date first above written. CITY OF NEWPORT BEACH By: 4158-9756-9818 Exhibit A Tax Certifications of Local Agency The Local Agency hereby makes the following representations of facts and expectations and covenants to comply with the requirements of this Tax Certification in connection with its participation in the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019, in an aggregate amount not to exceed $8,800,000 (the "Participation"). The representations and covenants contained in this Tax Certification are designed to support the conclusion that the interest paid on the bonds issued to fund the Participation (the "Bonds") is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code"). 1.1 Use of Facilities. The proceeds of the Participation (the "Proceeds") will be used by the Local Agency to (i) finance the acquisition and construction of certain public improvements, specifically park improvements consisting of landscaping, utilities, irrigation and recreational amenities (the "Improvements"), and (ii) finance the undergrounding of certain existing electrical transmission lines (the "Undergrounding," and together with the Improvements, the "Facilities"). Except for certain components of the Undergrounding that will be owned by a private entity (the "Utility Assets"), the Local Agency or another state or local government agency will own, and for the entire useful life of the reasonably expects to own, all of the Facilities. To the extent any of the Facilities (other than the Utility Assets) are sold to an entity that is not a state or local government agency, the procedures outlined in the SLIP Manual available from the Authority will be followed. The Local Agency will not allow any of the Proceeds or any of the Facilities (other than the Utility Assets) to be used (for example, by lease or other contract) in the trade or business of any nongovernmental persons (other than in their roles as members of the general public) and will not loan any of the Proceeds to any person or entity. All of the Facilities will be used in the performance of essential governmental functions of the Local Agency or another state or local government agency. The average expected useful life of the Facilities is at least 20 years. 1.2 Timing of Expenditures. The Local Agency reasonably expects that all of the Proceeds will be spent for the governmental purpose of the Participation within three years. In addition, the Local Agency reasonably expects that at least 5% of the Proceeds will be spent, or that the Local Agency has or will incur a binding obligation to a third party involving an expenditure of such amount, within six months. The Local Agency reasonably expects that construction or acquisition of the Facilities will proceed with due diligence to completion and that the allocation of proceeds to expenditures for the Facilities will proceed with due diligence. None of the Proceeds will be used to pay principal of or interest on any obligations. 1.3 Expenditure of Proceeds. Proceeds and other deposits relating to the Bonds are not treated as spent on the Facilities until the Local Agency makes a transfer to a person unrelated to the Local Agency and such transfer represents a payment for the Facilities. A payment for the Facilities will occur if Proceeds or other deposits relating to the Bonds are transferred from the construction fund either (a) to the Local Agency and actually used to make a payment to a person unrelated to the Local Agency no later than three days after the transfer or 4158-9756-98183 (b) directly to a third party at the direction of the Local Agency to pay the cost of the Facilities, (c) to the Local Agency to reimburse the Local Agency of costs of the Facilities paid before the date of the transfer. To the extent Proceeds or other deposits relating to the Bonds are transferred to the Local Agency to reimburse the Local Agency for costs of Facilities paid before the date of the transfer, Proceeds will only be treated as spent if (i) such costs were originally paid no earlier than 60 days before September 20, 2018 (the date that the Authority declared its intent to reimburse), and (ii) the transfer of Proceeds to reimburse the Local Agency for such costs occurs within 18 months of the date the costs were paid or 18 months of the date the respective Facilities was placed in service (whichever is later), but in no case more than 3 years after the date the costs were paid by the Local Agency. 2 4158-9756-9818.3 DISBURSEMENT REQUEST FORM To: Wilmington Trust, National Association (the "Trustee") Attention: Jeanie Mar Fax: 714-384-4153 Phone: 714-384-4151 Email: jmar@wilmingtontrust.com Re: CSCDA Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 The undersigned, a duly authorized officer of the City of Newport Beach (the "City") hereby requests a withdrawal from the Undergrounding Subaccount of the CSCDA/Uptown Newport Community Facilities District Acquisition and Construction Fund (the "Acquisition and Construction Fund") held pursuant to the Indenture, dated as of March 1, 2019 (the "Indenture") between the California Statewide Communities Development Authority (the "Authority") and Wilmington Trust, National Association, as Trustee, as described in Exhibit A attached hereto. The undersigned hereby certifies as follows: The withdrawal is being made in accordance with a permitted use of the monies pursuant to the Indenture and the Acquisition Agreement among the Authority, the City, and TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC and the withdrawal is not being made for the purpose of reinvestment. None of the items for which payment is requested have been reimbursed previously from the Acquisition and Construction Fund. If the Withdrawal Amount is greater than the funds held in the Undergrounding Subaccount of the Acquisition and Construction Fund, the Trustee is authorized to pay the amount of such funds and to pay remaining amount(s) as funds are subsequently deposited in the Undergrounding Subaccount of the Acquisition and Construction Fund, should that occur. CITY OF NEWPORT BEACH Authorize . Officer 4149-2995-2026.2 Request Date: Name of Recipient: Withdrawal Amount: Description: Payment Instructions: EXHIBIT A Disbursement for Undergrounding Fees March 12, 2019 Southern California Edison Company $749,000 Payment to Southern California Edison for undergrounding work under the Facilities Relocation Agreement, dated as of February 13, 2019 Southern California Edison Company c/o Shopoff Realty Investments, L.P. 2 Park Plaza, Suite 700, Irvine, CA 92614 Attn: Brian Rupp Ref: SCE Project File Number 747 4149-2995-2026.2 DISBURSEMENT REQUEST FORM To: Wilmington Trust, National Association (the "Trustee") Attention: Jeanie Mar Fax: 714-384-4153 Phone: 714-384-4151 Email: jmar@wilmingtontrust.com Re: CSCDA Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 The undersigned, a duly authorized officer of the City of Newport Beach (the "City") hereby requests a withdrawal from the Undergrounding Subaccount of the CSCDA/Uptown Newport Community Facilities District Acquisition and Construction Fund (the "Acquisition and Construction Fund") held pursuant to the Indenture, dated as of March 1, 2019 (the "Indenture") between the California Statewide Communities Development Authority (the "Authority") and Wilmington Trust, National Association, as Trustee, as described in Exhibit A attached hereto. The undersigned hereby certifies as follows: The withdrawal is being made in accordance with a permitted use of the monies pursuant to the Indenture and the Acquisition Agreement among the Authority, the City, and TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC and the withdrawal is not being made for the purpose of reinvestment. None of the items for which payment is requested have been reimbursed previously from the Acquisition and Construction Fund. If the Withdrawal Amount is greater than the funds held in the Undergrounding Subaccount of the Acquisition and Construction Fund, the Trustee is authorized to pay the amount of such funds and to pay remaining amount(s) as funds are subsequently deposited in the Undergrounding Subaccount of the Acquisition and Construction Fund, should that occur. CITY OF NEWPORT BEACH Authorized Officer 4157-7393-2058.1 EXHIBIT A Disbursement for Construction Advances Request Date: March 12, 2019 Name of Developer: TSG Parcel 1, LLC Withdrawal Amount: $840,089.00 (total) Reflecting costs of: Description: Payment Instructions: 4157-7393-2058.1 $349,000.00 Reimbursements to Developer for deposits with Southern California Edison $491,089.00 Developer work Payment to Developer for reimbursements for construction advances for undergrounding under the Facilities Relocation Agreement, dated as of February 13, 2019 Bank Name: Wells Fargo Bank Bank Address: Austin Downtown Business Banking 111 Congress Ave. Austin, TX 78701 ABA No.: 121000248 Account No.: 2918457421 DISBURSEMENT REQUEST FORM To: Wilmington Trust, National Association (the "Trustee") Attention: Jeanie Mar Fax: 714-384-4153 Phone: 714-384-4151 Email: jmar@wilmingtontrust.com Re: CSCDA Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 The undersigned, a duly authorized officer of the City of Newport Beach (the "City") hereby requests a withdrawal from the Undergrounding Subaccount of the CSCDA/Uptown Newport Community Facilities District Acquisition and Construction Fund (the "Acquisition and Construction Fund") held pursuant to the Indenture, dated as of March 1, 2019 (the "Indenture") between the California Statewide Communities Development Authority (the "Authority") and Wilmington Trust, National Association, as Trustee, as described in Exhibit A attached hereto. The undersigned hereby certifies as follows: The withdrawal is being made in accordance with a permitted use of the monies pursuant to the Indenture and the Acquisition Agreement among the Authority, the City, and TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC and the withdrawal is not being made for the purpose of reinvestment. None of the items for which payment is requested have been reimbursed previously from the Acquisition and Construction Fund. If the Withdrawal Amount is greater than the funds held in the Undergrounding Subaccount of the Acquisition and Construction Fund, the Trustee is authorized to pay the amount of such funds and to pay remaining amount(s) as funds are subsequently deposited in the Undergrounding Subaccount of the Acquisition and Construction Fund, should that occur. CITY OF NEWPORT BEACH Authorized Officer 4157-7393-2058.1 EXHIBIT A Disbursement for Construction Advances Request Date: March 12, 2019 Name of Developer: TSG Parcel 1, LLC Withdrawal Amount: $840,089.00 (total) Reflecting costs of: Description: Payment Instructions: 4157-7393-2058.1 $349,000.00 Reimbursements to Developer for deposits with Southern California Edison $491,089.00 Developer work Payment to Developer for reimbursements for construction advances for undergrounding under the Facilities Relocation Agreement, dated as of February 13, 2019 Bank Name: Wells Fargo Bank Bank Address: Austin Downtown Business Banking 111 Congress Ave. Austin, TX 78701 ABA No.: 121000248 Account No.: 2918457421 $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 Dated: March 12, 2019 RECEIPT FOR PURCHASE PRICE AND CERTIFICATE OF DEPOSIT The undersigned, Wilmington Trust, National Association, as trustee (the "Trustee") under that certain Indenture, dated as of March 1, 2019 (the "Indenture"), between the Trustee and the California Statewide Communities Development Authority does hereby certify: (a) On the date set forth below the Trustee did receive from RBC Capital Markets, LLC, as the underwriter, the amount of $8,714,972.40, in full and final payment for the following securities (the "Bonds"): Title of Bonds: California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 Principal Amount: $8,300,000 Date of Bonds: March 12, 2019 (b) On the date hereof, the Trustee deposited the purchase price for the Bonds as set forth in Section 4.01 in the Indenture. Capitalized terms used but not defined herein shall have the meanings given in the Indenture. [Remainder of Page Intentionally Left Blank] 4151-7123-5098 IN WITNESS WHEREOF, the undersigned has executed this RECEIPT FOR PURCHASE PRICE AND CERTIFICATE OF DEPOSIT as of the date first above written. WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee By: '.iZas' a Authorized Officer 4151-7123-5098 $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 Dated: March 12, 2019 CERTIFICATE OF THE TRUSTEE 1. Wilmington Trust, National Association (the "Trustee") is a national banking association, duly organized and validly existing and in good standing under the laws of the United States, having full power and being qualified to enter, accept and administer the trust created under the Indenture, dated as of March 1, 2019, by and between the California Statewide Communities Development Authority (the "Authority") and the Trustee. All capitalized terms not otherwise defined herein shall have the meaning given such terms in the Bond Purchase Contract (the "Purchase Contract") dated February 27, 2019, by and between the Authority and RBC Capital Markets, LLC, as underwriter. 2. All approvals, consents and orders of any governmental authority or agency having jurisdiction in the matter that would constitute a condition precedent to the performance by the Trustee of its duties and obligations under the Indenture have been obtained and are in full force and effect. 3. The acceptance of the duties and obligations of the Trustee under the Indenture, and the consummation of the transactions on the part of the Trustee contemplated therein, and the compliance by the Trustee with the terms, conditions and provisions of the Indenture does not contravene any provisions of applicable law of regulation or any order or decree, writ or injunction of the Articles of Incorporation or Bylaws of the Trustee, and, to the best of knowledge of the undersigned, will not require the consent under, or result in a beach of or default under, any resolution, agreement or other instrument to which the Trustee is a party or by which it may be bound. [Remainder of Page Intentionally Left Blank] 4151-7123-5098 IN WITNESS WHEREOF, the undersigned has executed this CERTIFICATE OF THE TRUSTEE as of the date first above written. WILMINGTON TRUST, NATIONAL ASSOCIATION, as Trustee By: Authorized Officer 4151-7123-5098 WILMINGTON TRUST, NATIONAL ASSOCIATION The undersigned, a duly appointed Assistant Secretary of Wilmington Trust, National Association, a national banking association ("WTNA"), DOES HEREBY CERTIFY as follows: 1. Each of the persons named on Exhibit A hereto has been duly elected or appointed and is duly qualified as an officer of WTNA on the date hereof, holding the office or offices set forth opposite his or her name, and the signature set forth opposite his or her name is a specimen of his or her genuine signature. 2. Attached hereto as Exhibit B is a true and correct copy of the Articles of Association of WTNA as in effect on the date hereof. 3. Attached hereto as Exhibit C is a true and correct copy of the By -Laws of WTNA as in effect on the date hereof. 4. Attached hereto as Exhibit D is a true and correct copy of a resolution adopted by unanimous written consent of the Board of Directors of WTNA on July 1, 2011. Such resolution has not been amended, modified, rescinded or revoked and is in full force and effect on the date hereof. 5. WTNA is an association existing and in good standing under the laws of the United States. 6. There is no proceeding pending or, to the best of my knowledge, threatened, for the dissolution or liquidation of WTNA. IN WITNESS WHEREOF, the undersigned has caused this Certificate to be duly executed as of this 12th day of March, 2019. Assistant Secretary THE UNDERSIGNED, an Administrative Vice President of WTNA, does hereby certify that Brian A. Buchanan is a duly appointed, duly qualified Assistant Secretary of WTNA, and that the signature above is his/her genuine signature. IN WITNESS WHEREOF, I have hereunto set my hand as of the day and year written above. Administrative Vice President EXHIBIT A Name Office ggnature William J. Farrell Executive Vice President John M. Beeson, Jr. Senior Vice President k (----/ Cynthia L. Corliss Senior Vice President -,,, • ' - 21�J/ Jean-Christophe R. Schroeder Senior Vice President Jason L. Kyler Group Vice President --/ -__ Timothy P. Mowdy Group Vice President p oilv-- /`j"''„ i,:, Brian Oard Group Vice President (5 ,.....----J _ Patrick J. Tadie Group Vice President °J\A, qa/k42#2 Nicholas D. Tally Group Vice President XJ"-7 Matthew J. McAfee Group Vice President (1[1a� `" ---7- (�e----L--`--- Robert Barnett III Administrative Vice President .�y---1 Nadine L. Black Administrative Vice President (-_ ; ,t_., CY a_eJe_, Robert D. Brown Administrative Vice President &4-" .l Steven M. Cimalore Administrative Vice President John A. Hayes, III Administrative Vice President .7.--4.-.°4'-*....d.----.------- Tira L. Johnson Administrative Vice President Edward C. Jones, Jr. Administrative Vice President C /14 Benjamin F. Jordan Administrative Vice President i .�"- 7-a- - '(-- Roseline K. ManeyAdministrative Vice President C 1 - -' •� Jeanie Mar Administrative Vice President ----jakAridX,--- Jennifer E. Matz Administrative Vice President '-y_D s V Christopher J. Monigle Administrative Vice President /..,e- A'� Sandra R. Ortiz Administrative Vice President -i to G Timothy M. Powers Administrative Vice President /e.c.t,,h-j-/si P., _ Mary Kay Pupillo Administrative Vice President 4.,__.gp___., Jeffrey M. Seling Administrative Vice President David A. Vanaskey, Jr. Administrative Vice President \ l t. 1 , ! 2 Thomas Whitehair III Administrative Vice President Nicholas A. Adams Vice President (. r Dara Alderton Vice President • '"' ==�'�`"i'ea Hsiao (Ling) Amoroso Vice President qri Mary E. Anderson Vice President c.A. Beth Andrews Vice President M. Anthony Argenio Vice President M .0„,,,y(172,....to..- Mary Alice Avery Vice President David Bagley Vice President Steven M. Barone Vice President Robert W. Bilodeau Vice President Robert H. Bockrath, II Vice President A-7----..—,-7=---- s FeliciaM. Boyer Vice President „..) of w , 601,0 --I- it try .� . F. I1 �, PLC' 1 , ,i Mark H. Brzoska Vice President //14—.- 3 Brian Buchanan Vice President C34/Aftek-4t--%4,4-1 Jason Buechele Vice President ._ `,�A-�- William Cardozo Vice President U taA"k G44;42 Joseph Clark Vice President -="' '= ��---- Dorri Costello Vice President '------7>Z4-54,10 Dennis Cristofoletti Vice President Deborah M. Daniello Vice President , JJOAL4112-6—') to Drew H. Davis Vice President �i eJai/9 James C. Deitrick Vice President e",,--... e • ..4PL"-:*A9 John T. Deleray Vice President9,„j! /____-___ Patrick J. Donahue Vice President _____:, ,, ''; ' -- Robert J. Donaldson Vice President , -I,-�-��--- Duke Vice President. --� `._� _ 0.._ t.,-. ___,Cynthia Kevin M. Ebert Vice President ,--v.:444A,... I1 or Michael T. Edgington Vice President " , , [[ �s Will Estess Vice President Aidig Donald E. Evans, Jr. Vice President 44(--)Ive7G„g, Joseph B. Feil Vice President —,.- Peter F. Finkel Vice President dc . 7b� Nancy L. George Vice President d . Gregory Golden Vice President J.,___,,/(>) _, 7 Jared J. Grunig Vice President Donald C. Hargadon Vice President i-s----4----— William M. Hearn Vice President Thomas Herring, Jr. Vice President Charles Hicks Vice President �J' � " (-- ./. Garry Hills Vice President y%'� Lf� . G Robert P. Hines, Jr. Vice President/21,,,A �j ), , 5 Paul C. Hoek Vice President 20--S-c-U---(------ Joy E. Holloway Vice President91-Pig Rex F. Hood Vice President all "7741 Brandon Horak Vice President M /1,—. Michael W. Ingraham Vice President ~�2L i (-- Nancy James Vice President Wei-4.te,e, et4i.ter Jason L. Johnson Vice President L Jeffery A. Kemp Vice President '%� C� � 1 a A z9 Tamara L. Krawczyk Vice President /(4-A----- Eleanor D. Kress Vice President62Warnioi\,(D.C), Susan Laratonda Vice President OIVAL 441(1`-- Baron W. Legault Vice President ‘,< ill /e/lb Camilla J. Lindsey Vice President _� -- LarryR. LongVice President L4"—L----''-'----\1/4 6 Jennifer A. Luce Vice President ��,,,.i K. G` ,�`cz r Shawn T. Lucey Vice President Victoria L. Manrique Vice President ----/2 � ��-,7.________ Chad May Vice President. ___..) Meghan H. McCauley Vice President 1/..11/4(1,0,,,,,,..--- Nicole A. McClelland Vice President 4csk g 1)%e elk',404_ Frank W. McDonald Vice President ,ill °L------- Aaron G. McManus Vice President ,&.f :.:_____ Alphonse C. Miller Vice President --- e Charles P. More Vice PresidentOP----- W. Thomas Morris, II Vice President M John Mulvena Vice President9--..//-f "J John T. Needham Jr. Vice President : ` Paul J. Nelson Vice President ---)ify2/1 7 Caroline R. Oakes Vice President ( ,�� ,(0,,- Barbara O'Brien Vice President 417-4ere..-. ` Joseph P. O'Donnell Vice President .,14,,Q•D kc�`�--�� James Olek Vice President eaL_ 7114-4 Jeanne M. 011er Vice President ilifit't'-' Michael W. Orendorf Vice President L Erik Overcash Vice President /, /� Catherine A. Parranto Vice President ��-' . Kara Lee Partin Vice President /1 Onu Sophie B. Pendolino Vice President 1hc4)12tdo4%zb Robert J. Perkins Vice President �- V-' Kimberly A. Pickering Vice President rr. ��� Margaret Pulgini Vice President ±-,—, Fazal UR Rehman Vice President tyd_iyk,____' (. 8 Robert L. Reynolds Vice President itV Rita Marie Ritrovato Vice President Amy G. Roe Vice President j/vin )3 4)-C_ Jeffery Rose Vice President _ Amy Rubincam Vice PresidentAt8-604_____. Erik L. Saville Vice President --lj� , Jane Y. Schweiger Vice President (fr.., ,...--M6,-- Adam Scozzafava Vice President G --t Rachel L. Simpson Vice President c j011(2. ,.0)3 Christopher J. Sla bau h p Y g Vice President �.44:,-,— Dayna L. Smith Vice President L Jay Smith IV Vice President Jane Snyder Vice President /' 6----- Jacqueline E. Solone Vice President 1 _k AV _t 9 Erwin Soriano Vice President W. Chris Sponenberg Vice President 7 Lynn Mary Steiner Vice President ' ,4& Mary Alice Stopyra Vice President l%)?ati A 3tofriza_, Nedine P. Sutton VicePresident f .5t,/ Aimee Lynn Tabor Vice President Al tb1:7:NLIL-- Boris Treyger Vice President Adam R. Vogelsong Vice President ‘o, Brooks Von Arx, Jr. Vice President :: John D. Wallen Vice President Mindy Walser Vice President 61fir Michael H. Wass Vice President 72,:—__P =7-7 7, ---/ Steven J. Wattie Vice President31;&iert,),.114111e... F. Welsh Vice President-F0(Azth� thnFarrah 10 Julie M. Westrich Vice President C�') a AlZ �- ( -`I Z Cindy L. White Vice President I`je(Y 06' '521-3'1 Gerald C. Williston, Sr. Vice President Todd M. Winchel Vice President �, 4L-'-. 9 Michelle M. Wojciechowicz Vice President ✓U I) � A � ill Anita R. Woolery Vice President ,, _ _, ,,_ ._ ' -_r- Gr-' J- David B. Young Vice President -c,—___A Maureen A. Auld Assistant Vice President 01.-----N ,u—LilLuLA.___. 0j. ,I�j� Stevie Blackston Assistant Vice President /4". +a:7 Andrea K. Cabrera Assistant Vice President 6u20--ea. d��. Tashia Campbell Assistant Vice President jailtsu ary 11—/` Beverly D. Capers Assistant Vice President /3.,e,v-e,St /1.0:te Colin M. Casner Assistant Vice President , Elizabeth M. Cerro Assistant Vice Presidentr 1 A.dova 11 Cynthia Cerda Assistant Vice President CCeA-t)4\._ Catherine A. Chandler Assistant Vice President 62651hee4t i �fC�i/°%(--- Alisha M. Clendaniel Assistant Vice President Wtiiiil . utnelad Christine Cotton Assistant Vice President bi‘x•Ab--,-V;4/,31-_ etrk\O-N--_ Russell L. Crane Assistant Vice President _a_____ Karin W. Cranz Assistant Vice President /41)LaM/L_______----- Serena D'Amato Assistant Vice President - ,7 4.- 4 i - Hallie E. Field Assistant Vice President #0,6y. Gregory S. Foltz Assistant Vice President Shawn Goffinet Assistant Vice President 5__---',./:__ S. Bernadette Greaver Assistant Vice President i yh4. ex-ee_.Aig-e--tubt.„ Margaret L. Griffith Assistant Vice President ao,,,u42,_ Nancy E. Hagner Assistant Vice President Christopher Hickok Assistant Vice President �� , Cam_.__ 12 Patricia Hohensee Assistant Vice President ��L) a,c4-?4,0, Elisabeth Hudgens Assistant Vice President s Melissa Jalace-Vasold Assistant Vice President INC\it.t-LL._ June T. Jones Assistant Vice President --'.R. ` .(4,`°, Eric A. Kardash Assistant Vice President -`-.1 I Janet Krone Assistant Vice President(3 k ,...„.b, Gregory J. Lechowicz Assistant Vice President,84..,iti' Lisa M. Lewis Assistant Vice President A. ' Melissa A. Marion Assistant Vice President & , Douglas P. Marmion Assistant Vice President h AA.c,W,,, Dawn McCarthy Assistant Vice President OW- David McGuire Assistant Vice President 'AA.54_ ..._:_. Stephen McPherson Assistant Vice President- /if:/. -- Sally M. Molina Assistant Vice President 13 Kila J. Mullikin Assistant Vice President y je;14.44. 1R J. Christopher Murphy Assistant Vice President ".c'ii-o___ Dawn M. Nelson Assistant Vice President Susan T. O'Neal Assistant Vice President 7JLt ,lialn I Zdravka S. Panchev Assistant Vice President v_,,.._09__ ?er,,,c)}..t.ti Jose L. Paredes Assistant Vice President - :..- — -- __ -_ - - - Patricia F. Pikus Assistant Vice President ) Melinda L. Romay Assistant Vice President L-Ilita K__ Lora K. Russell Assistant Vice President /� e-/ C_ Ruth K. Shiffler Assistant Vice President Susan Beth Sobocinski Assistant Vice Presidentb _ ,_ . Joan H. Stapley Assistant Vice President — /" -. -i Sarah Stokes Assistant Vice President ,,,'?/Z A-Yr- Sung Assistant Vice President ).- (9jADan 14 RosemaryPresident7 A. Toobert Assistant Vice� C,� • `r'fD:�' Michelle Tornabene Assistant Vice President .p C stSjik—SAna.62A0 Paula Warrenfeltz Assistant Vice President pc„,a. • 0 Scott B. Wetzel Assistant Vice President ;,, \-i\ Katherine V. Whitestone Assistant Vice President . 1 �, _ Russell T. Whitley Assistant Vice President ,,Z2 -------- James G. Wisniewski Assistant Vice President .=— Nicole L. Woodford Assistant Vice President,16t-cikt—P;636;1------ Ann K. Wright Assistant Vice President (' ,di,' Clarice Wright Assistant Vice President Doris Yang Assistant Vice President Matthew Bosnjak Banking Officer 1411 1/S\-?) Patricia Bradenburg Banking Officer -Py� camiA4 Leslie Brooks Banking Officer 15 Mark Campise Banking Officer 4 Barbara Casper Banking Officer — 6-af\--a- 9,0-pi2A- Rachel Cebada Bankin Officer g �� c.lu-� La Cl c'`- Craig Cramer Banking Officer ,„ „ f Rosemarie A. DiBattista Banking Officer A Pt IIir, Marcus Farmer Banking Officer Kevin Andrew Fetters Banking Officer Audrey M. Gordon Banking Officer 01,Lott-1 Mary Ellen Gray Banking Officer ite:7_ 4`'d Darcy Green Banking Officer striaia-hr /62441..1 Daniel J. Greene Banking Officer Arlene M. Henn Banking Officer — .70t, �.1i /4. Sherri Hicks Banking Officer //te,tL 2014,141., Lynette J. Hilgar Banking Officer iiiii- 16 Lizbet G. Hinojosa Banking Officer -/v /yo: Shane Holland Banking Officer Jessica A. Jankiewicz Banking Officer y,,,Jr_..i.,L„ /2. Patrick A. Kanar Banking Officer / a. i--• Nicole Kroll Banking Officer [ Judith N. Kruck Banking Officer 9tAlc& INAA,CPA— Andrew P. Lennon Banking Officer aa2,4 g-,2—,,,,v--„____ Cynthia L. Major Banking Officer (,:cp R. Sandy Maulkham Banking Officer Marie McMullen Banking Officer °Q4A-0.Atitx,,, Joyce A. Nolan Banking Officer Trudy A. O'Grady Banking Officer —;--- ---- 1°6------ Julianne N. Powers Banking Officer ,--1(-4-- Grp Wilfredo Rodriguez, Jr. Banking Officer ....-1ua m.;�dt,', ' A, J 17 Jamie Danita Roseberg Banking Officer r / C / -��'-`�� V Angela Rossi Banking Officer ,_______,44ye,----- Susan E. Russell Banking Officer Voiail- (---- - igu-404-eze- David Sabbann Banking Officer V' Rachel Schlee Banking Officer Li2..4"'b,.. so, Sarah K. Vilhauer Banking Officer daiaklUiouw, Regina A. Velas uez g q BankingOfficer (k\J Jennifer L. Wieszcholek Banking Officer OW53 ii (te/i l 18 EXHIBIT B ARTICLES OF ASSOCIATION OF WILMINGTON TRUST, NATIONAL ASSOCIATION For the purpose of organizing an association to perform any lawful activities of national banks, the undersigned do enter into the following articles of association: FIRST. The title of this association shall be Wilmington Trust, National Association. SECOND. The main office of the association shall be in the City of Wilmington, County of New Castle, State of Delaware. The general business of the association shall be conducted at its main office and its branches. THIRD. The board of directors of this association shall consist of not less than five nor more than twenty-five persons, unless the OCC has exempted the bank from the 25-member limit. The exact number is to be fixed and determined from time to time by resolution of a majority of the full board of directors or by resolution of a majority of the shareholders at any annual or special meeting thereof. Each director shall own common or preferred stock of the association or of a holding company owning the association, with an aggregate par, fair market or equity value $1,000. Determination of these values may be based as of either (i) the date of purchase or (ii) the date the person became a director, whichever value is greater. Any combination of common or preferred stock of the association or holding company may be used. Any vacancy in the board of directors may be filled by action of a majority of the remaining directors between meetings of shareholders. The board of directors may not increase the number of directors between meetings of shareholders to a number which: (1) exceeds by more than two the number of directors last elected by shareholders where the number was 15 or less; or (2) exceeds by more than four the number of directors last elected by shareholders where the number was 16 or more, but in no event shall the number of directors exceed 25, unless the OCC has exempted the bank from the 25-member limit. Directors shall be elected for terms of one year and until their successors are elected and qualified. Terms of directors, including directors selected to fill vacancies, shall expire at the next regular meeting of shareholders at which directors are elected, unless the directors resign or are removed from office. Despite the expiration of a director's term, the director shall continue to serve until his or her successor is elected and qualifies or until there is a decrease in the number of directors and his or her position is eliminated. Honorary or advisory members of the board of directors, without voting power or power of final decision in matters concerning the business of the association, may be appointed by resolution of a majority of the full board of directors, or by resolution of shareholders at any W/1798252 annual or special meeting. Honorary or advisory directors shall not be counted to determine the number of directors of the association or the presence of a quorum in connection with any board action, and shall not be required to own qualifying shares. FOURTH. There shall be an annual meeting of the shareholders to elect directors and transact whatever other business may be brought before the meeting. It shall be held at the main office or any other convenient place the board of directors may designate, on the day of each year specified therefor in the bylaws, or, if that day falls on a legal holiday in the state in which the association is located, on the next following banking day. If no election is held on the day fixed, or in the event of a legal holiday on the following banking day, an election may be held on any subsequent day within 60 days of the day fixed, to be designated by the board of directors, or, if the directors fail to fix the day, by shareholders representing two-thirds of the shares issued and outstanding. In all cases at least 10 days advance notice of the time, place and purpose of a shareholders' meeting shall be given to the shareholders by first class mail, unless the OCC determines that an emergency circumstance exists. The sole shareholder of the bank is permitted to waive notice of the shareholders' meeting. In all elections of directors, the number of votes each common shareholder may cast will be determined by multiplying the number of shares such shareholder owns by the number of directors to be elected. Those votes may be cumulated and cast for a single candidate or may be distributed among two or more candidates in the manner selected by the shareholder. If, after the first ballot, subsequent ballots are necessary to elect directors, a shareholder may not vote shares that he or she has already fully cumulated and voted in favor of a successful candidate. On all other questions, each common shareholder shall be entitled to one vote for each share of stock held by him or her. Nominations for election to the board of directors may be made by the board of directors or by any stockholder of any outstanding class of capital stock of the association entitled to vote for election of directors. Nominations other than those made by or on behalf of the existing management shall be made in writing and be delivered or mailed to the president of the association not less than 14 days nor more than 50 days prior to any meeting of shareholders called for the election of directors; provided, however, that if less than 21 days notice of the meeting is given to shareholders, such nominations shall be mailed or delivered to the president of the association not later than the close of business on the seventh day following the day on which the notice of meeting was mailed. Such notification shall contain the following information to the extent known to the notifying shareholder: (1) The name and address of each proposed nominee. (2) The principal occupation of each proposed nominee. (3) The total number of shares of capital stock of the association that will be voted for each proposed nominee. -2— [WTNA Articles of Association] (4) The name and residence address of the notifying shareholder. (5) The number of shares of capital stock of the association owned by the notifying shareholder. Nominations not made in accordance herewith may, in his/her discretion, be disregarded by the chairperson of the meeting, and the vote tellers may disregard all votes cast for each such nominee. No bylaw may unreasonably restrict the nomination of directors by shareholders. A director may resign at any time by delivering written notice to the board of directors, its chairperson, or to the association, which resignation shall be effective when the notice is delivered unless the notice specifies a later effective date. A director may be removed by shareholders at a meeting called to remove the director, when notice of the meeting stating that the purpose or one of the purposes is to remove the director is provided, if there is a failure to fulfill one of the affirmative requirements for qualification, or for cause; provided, however, that a director may not be removed if the number of votes sufficient to elect the director under cumulative voting is voted against the director's removal. FIFTH. The authorized amount of capital stock of this association shall be three million (3,000,000) shares of common stock of the par value of one dollar ($1.00) each; but said capital stock may be increased or decreased from time to time, according to the provisions of the laws of the United States. No holder of shares of the capital stock of any class of the association shall have any preemptive or preferential right of subscription to any shares of any class of stock of the association, whether now or hereafter authorized, or to any obligations convertible into stock of the association, issued, or sold, nor any right of subscription to any thereof other than such, if any, as the board of directors, in its discretion, may from time to time determine and at such price as the board of directors may from time to time fix. Preemptive rights also must be approved by a vote of holders of two-thirds of the bank's outstanding voting shares. Unless otherwise specified in these articles of association or required by law, (1) all matters requiring shareholder action, including amendments to the articles of association, must be approved by shareholders owning a majority voting interest in the outstanding voting stock, and (2) each shareholder shall be entitled to one vote per share. Unless otherwise specified in these articles of association or required by law, all shares of voting stock shall be voted together as a class, on any matters requiring shareholder approval. If a proposed amendment would affect two or more classes or series in the same or a substantially similar way, all the classes or series so affected must vote together as a single voting group on the proposed amendment. -3— [WTNA Articles of Association] Shares of one class or series may be issued as a dividend for shares of the same class or series on a pro rata basis and without consideration. Shares of one class or series may be issued as share dividends for a different class or series of stock if approved by a majority of the votes entitled to be cast by the class or series to be issued, unless there are no outstanding shares of the class or series to be issued. Unless otherwise provided by the board of directors, the record date for determining shareholders entitled to a share dividend shall be the date authorized by the board of directors for the share dividend. Unless otherwise provided in the bylaws, the record date for determining shareholders entitled to notice of and to vote at any meeting is the close of business on the day before the first notice is mailed or otherwise sent to the shareholders, provided that in no event may a record date be more than 70 days before the meeting. If a shareholder is entitled to fractional shares pursuant to a stock dividend, consolidation or merger, reverse stock split or otherwise, the association may; (a) issue fractional shares; (b) in lieu of the issuance of fractional shares, issue script or warrants entitling the holder to receive a full share upon surrendering enough script or warrants to equal a full share; (c) if there is an established and active market in the association's stock, make reasonable arrangements to provide the shareholder with an opportunity to realize a fair price through sale of the fraction, or purchase of the additional fraction required for a full share; (d) remit the cash equivalent of the fraction to the shareholder; or (e) sell full shares representing all the fractions at public auction or to the highest bidder after having solicited and received sealed bids from at least three licensed stock brokers; and distribute the proceeds pro rata to shareholders who otherwise would be entitled to the fractional shares. The holder of a fractional share is entitled to exercise the rights for shareholder, including the right to vote, to receive dividends, and to participate in the assets of the association upon liquidation, in proportion to the fractional interest. The holder of script or warrants is not entitled to any of these rights unless the script or warrants explicitly provide for such rights. The script or warrants may be subject to such additional conditions as: (1) that the script or warrants will become void if not exchanged for full shares before a specified date; and (2) that the shares for which the script or warrants are exchangeable may be sold at the option of the association and the proceeds paid to scriptholders. The association, at any time and from time to time, may authorize and issue debt obligations, whether or not subordinated, without the approval of the shareholders. Obligations classified as debt, whether or not subordinated, which may be issued by the association without the approval of shareholders, do not carry voting rights on any issue, including an increase or decrease in the aggregate number of the securities, or the exchange or reclassification of all or part of securities into securities of another class or series. SIXTH. The board of directors shall appoint one of its members president of this association, and one of its members chairperson of the board and shall have the power to appoint one or more vice presidents, a secretary who shall keep minutes of the directors' and - 4 — [WTNA Articles of Association] shareholders' meetings and be responsible for authenticating the records of the association, and such other officers and employees as may be required to transact the business of this association. A duly appointed officer may appoint one or more officers or assistant officers if authorized by the board of directors in accordance with the bylaws. The board of directors shall have the power to: (1) Define the duties of the officers, employees, and agents of the association. (2) Delegate the performance of its duties, but not the responsibility for its duties, to the officers, employees, and agents of the association. (3) Fix the compensation and enter into employment contracts with its officers and employees upon reasonable terms and conditions consistent with applicable law. (4) Dismiss officers and employees. (5) Require bonds from officers and employees and to fix the penalty thereof. (6) Ratify written policies authorized by the association's management or committees of the board. (7) Regulate the manner in which any increase or decrease of the capital of the association shall be made, provided that nothing herein shall restrict the power of shareholders to increase or decrease the capital of the association in accordance with law, and nothing shall raise or lower from two-thirds the percentage required for shareholder approval to increase or reduce the capital. (8) Manage and administer the business and affairs of the association. (9) Adopt initial bylaws, not inconsistent with law or the articles of association, for managing the business and regulating the affairs of the association. (10) Amend or repeal bylaws, except to the extent that the articles of association reserve this power in whole or in part to shareholders. (11) Make contracts. (12) Generally perform all acts that are legal for a board of directors to perform. SEVENTH. The board of directors shall have the power to change the location of the main office to any other place within the limits of Wilmington, Delaware, without the approval of the shareholders, or with a vote of shareholders owning two-thirds of the stock of such -5-- jW7'NA Articles of Association] association for a relocation outside such limits and upon receipt of a certificate of approval from the Comptroller of the Currency, to any other location within or outside the limits of Wilmington Delaware, but not more than 30 miles beyond such limits. The board of directors shall have the power to establish or change the location of any branch or branches of the association to any other location permitted under applicable law, without approval of shareholders,subject to approval by the Comptroller of the Currency. EIGHTH. The corporate existence of this association shall continue until termination according to the laws of the United States. NINTH. The board of directors of this association, or any one or more shareholders owning, in the aggregate, not less than 50 percent of the stock of this association, may call a special meeting of shareholders at any time. Unless otherwise provided by the bylaws or the laws of the United States, a notice of the time, place, and purpose of every annual and special meeting of the shareholders shall be given at least 10 days prior to the meeting by first-class mail, unless the OCC determines that an emergency circumstance exists. If the association is a wholly -owned subsidiary, the sole shareholder may waive notice of the shareholders' meeting. Unless otherwise provided by the bylaws or these articles, any action requiring approval of shareholders must be effected at a duly called annual or special meeting. TENTH. For purposes of this Article Tenth, the term "institution -affiliated party" shall mean any institution -affiliated party of the association as such term is defined in 12 U.S.C. 1813(u). Any institution -affiliated party (or his or her heirs, executors or administrators) may be indemnified or reimbursed by the association for reasonable expenses actually incurred in connection with any threatened, pending or completed actions or proceedings and appeals therein, whether civil, criminal, governmental, administrative or investigative, in accordance with and to the fullest extent permitted by law, as such law now or hereafter exists; provided, however, that when an administrative proceeding or action instituted by a federal banking agency results in a final order or settlement pursuant to which such person: (i) is assessed a civil money penalty, (ii) is removed from office or prohibited from participating in the conduct of the affairs of the association, or (iii) is required to cease and desist from or to take any affirmative action described in 12 U.S.C. 1818(b) with respect to the association, then the association shall require the repayment of all legal fees and expenses advanced pursuant to the next succeeding paragraph and may not indemnify such institution -affiliated parties (or their heirs, executors or administrators) for expenses, including expenses for legal fees, penalties or other payments incurred. The association' shall provide indemnification in connection with an action or proceeding (or part thereof) initiated by an institution -affiliated party (or by his or her heirs, executors or administrators) only if such action or proceeding (or part thereof) was authorized by the board of directors. -6— [WTNA Articles of Association] Expenses incurred by an institution -affiliated party (or by his or her heirs, executors or administrators) in connection with any action or proceeding under 12 U.S.C. 164 or 1818 may be paid by the association in advance of the final disposition of such action or proceeding upon (a) a determination by the board of directors acting by a quorum consisting of directors who are not parties to such action or proceeding that the institution -affiliated party (or his or her heirs, executors or administrators) has a reasonable basis for prevailing on the merits, (b) a determination that the indemnified individual (or his or her heirs, executors or administrators) will have the financial capacity to reimburse the bank in the event he or she does not prevail, (c) a determination that the payment of expenses and fees by the association will not adversely affect the safety and soundness of the association, and (d) receipt of an undertaking by or on behalf of such institution -affiliated party (or by his or her heirs, executors or administrators) to repay such advancement in the event of a final order or settlement pursuant to which such person: (i) is assessed a civil money penalty, (ii) is removed from office or prohibited from participating in the conduct of the affairs of the association, or (iii) is required to cease and desist from or to take any affirmative action described in 12 U.S.C. 1818(b) with respect to the association. In all other instances, expenses incurred by an institution -affiliated party (or by his or her heirs, executors or administrators) in connection with any action or proceeding as to which indemnification may be given under these articles of association may be paid by the association in advance of the final disposition of such action or proceeding upon (a) receipt of an undertaking by or on behalf of such institution -affiliated party (or by or on behalf of his or her heirs, executors or administrators) to repay such advancement in the event that such institution - affiliated party (or his or her heirs, executors or administrators) is ultimately found not to be entitled to indemnification as authorized by these articles of association and (b) approval by the board of directors acting by a quorum consisting of directors who are not parties to such action or proceeding or, if such a quorum is not obtainable, then approval by stockholders. To the extent permitted by law, the board of directors or, if applicable, the stockholders, shall not be required to find that the institution -affiliated party has met the applicable standard of conduct provided by law for indemnification in connection with such action or proceeding. In the event that a majority of the members of the board of directors are named as respondents in an administrative proceeding or civil action and request indemnification, the remaining members of the board may authorize independent legal counsel to review the indemnification request and provide the remaining members of the board with a written opinion of counsel as to whether the conditions delineated in the first four paragraphs of this Article Tenth have been met. If independent legal counsel opines that said conditions have been met, the remaining members of the board of directors may rely on such opinion in authorizing the requested indemnification. In the event that all of the members of the board of directors are named as respondents in an administrative proceeding or civil action and request indemnification, the board shall authorize independent legal counsel to review the indemnification request and provide the board with a written opinion of counsel as to whether the conditions delineated in the first four paragraphs of this Article Tenth have been met. If legal counsel opines that said conditions have - 7 — [WTNA Articles of Association] been met, the board of directors may rely on such opinion in authorizing the requested indemnification. To the extent permitted under applicable law, the rights of indemnification and to the advancement of expenses provided in these articles of association (a) shall be available with respect to events occurring prior to the adoption of these articles of association, (b) shall continue to exist after any restrictive amendment of these articles of association with respect to events occurring prior to such amendment, (c) may be interpreted on the basis of applicable law in effect at the time of the occurrence of the event or events giving rise to the action or proceeding, or on the basis of applicable law in effect at the time such rights are claimed, and (d) are in the nature of contract rights which may be enforced in any court of competent jurisdiction as if the association and the institution -affiliated party (or his or her heirs, executors or administrators) for whom such rights are sought were parties to a separate written agreement. The rights of indemnification and to the advancement of expenses provided in these articles of association shall not, to the extent permitted under applicable law, be deemed exclusive of any other rights to which any such institution affiliated party (or his or her heirs, executors or administrators) may now or hereafter be otherwise entitled whether contained in these articles of association, the bylaws, a resolution of stockholders, a resolution of the board of directors, or an agreement providing such indemnification, the creation of such other rights being hereby expressly authorized. Without limiting the generality of the foregoing, the rights of indemnification and to the advancement of expenses provided in these articles of association shall not be deemed exclusive of any rights, pursuant to statute or otherwise, of any such institution -affiliated party (or of his or her heirs, executors or administrators) in any such action or proceeding to have assessed or allowed in his or her favor, against the association or otherwise, his or her costs and expenses incurred therein or in connection therewith or any part thereof. If this Article Tenth or any part hereof shall be held unenforceable in any respect by a court of competent jurisdiction, it shall be deemed modified to the minimum extent necessary to make it enforceable, and the remainder of this Article Tenth shall remain fully enforceable. The association may, upon affirmative vote of a majority of its board of directors, purchase insurance to indemnify its institution -affiliated parties to the extent that such indemnification is allowed in these articles of association; provided, however, that no such insurance shall include coverage to pay or reimburse any institution -affiliated party for the cost of any judgment or civil money penalty assessed against such person in an administrative proceeding or civil action commenced by any federal banking agency. Such insurance may, but need not, be for the benefit of all institution -affiliated parties, ELEVENTH. These articles of association may be amended at any regular or special meeting of the shareholders by the affirmative vote of the holders of a majority of the stock of this association, unless the vote of the holders of a greater amount of stock is required by law, -8— [WTNA Articles of Association] and in that case by the vote of the holders of such greater amount. The association's board of directors may propose. one or more amendments to the articles of association for submission to the shareholders. 4 _g_ [WTNA Articles of Association] EXHIBIT C WILMINGTON TRUST, NATIONAL ASSOCIATION AMENDED AND RESTATED BYLAWS (Effective as of April 17, 2018) AMENDED AND RESTATED BYLAWS OF WILMINGTON TRUST, NATIONAL ASSOCIATION ARTICLE I Meetings of Shareholders Section 1. Annual Meeting. The annual meeting of the shareholders to elect directors and transact whatever other business may properly come before the meeting shall be held at the main office of the association, Rodney Square North, 1100 Market Street, City of Wilmington, State of Delaware, at 1:00 o'clock p.m. on the first Tuesday in March of each year, or at such other place and time as the board of directors may designate, or if that date falls on a legal holiday in Delaware, on the next following banking day. Notice of the meeting shall be mailed by first class mail, postage prepaid, at least 10 days and no more than 60 days prior to the date thereof, addressed to each shareholder at his/her address appearing on the books of the association. If, for any cause, an election of directors is not made on that date, or in the event of a legal holiday, on the next following banking day, an election may be held on any subsequent day within 60 days of the date fixed, to be designated by the board of directors, or, if the directors fail to fix the date, by shareholders representing two-thirds of the shares. In these circumstances, at least 10 days' notice must be given by first class mail to shareholders. Section 2. Special Meetings. Except as otherwise specifically provided by statute, special meetings of the shareholders may be called for any purpose at any time by the board of directors or by any one or more shareholders owning, in the aggregate, not less than fifty percent of the stock of the association. Every such special meeting, unless otherwise provided by law, shall be called by mailing, postage prepaid, not less than 10 days nor more than 60 days prior to the date fixed for the meeting, to each shareholder at the address appearing on the books of the association a notice stating the purpose of the meeting. The board of directors may fix a record date for determining shareholders entitled to notice and to vote at any meeting, in reasonable proximity to the date of giving notice to the shareholders of such meeting. The record date for determining shareholders entitled to demand a special meeting is the date the first shareholder signs a demand for the meeting describing the purpose or purposes for which it is to be held. A special meeting may be called by shareholders or the board of directors to amend the articles of association or bylaws, whether or not such bylaws may be amended by the board of directors in the absence of shareholder approval. If an annual or special shareholders' meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time or place, if the new date, time or place is announced at the meeting before adjournment, unless any additional items of business are to be considered, or the association becomes aware of an intervening event materially affecting any matter to be voted on more than 10 days prior to the date to which the meeting is adjourned. If a new record date for the adjourned meeting is fixed, however, notice of the adjourned meeting —1— must be given to persons who are shareholders as of the new record date. If, however, the meeting to elect the directors is adjourned before the election takes place, at least ten days' notice of the new election must be given to the shareholders by first-class mail. Section 3. Nominations of Directors. Nominations for election to the board of directors may be made by the board of directors or by any stockholder of any outstanding class of capital stock of the association entitled to vote for the election of directors. Nominations, other than those made by or on behalf of the existing management of the association, shall be made in writing and shall be delivered or mailed to the president of the association and the Comptroller of the Currency, Washington, D.C., not less than 14 days nor more than 50 days prior to any meeting of shareholders called for the election of directors; provided, however, that if less than 21 days' notice of the meeting is given to shareholders, such nomination shall be mailed or delivered to the president of the association not later than the close of business on the seventh day following the day on which the notice of meeting was mailed. Such notification shall contain the following information to the extent known to the notifying shareholder: (1) The name and address of each proposed nominee; (2) The principal occupation of each proposed nominee; (3) The total number of shares of capital stock of the association that will be voted for each proposed nominee; (4) The name and residence of the notifying shareholder; and (5) The number of shares of capital stock of the association owned by the notifying shareholder. Nominations not made in accordance herewith may, in his/her discretion, be disregarded by the chairperson of the meeting, and upon his/her instructions, the vote tellers may disregard all votes cast for each such nominee. Section 4. Proxies. Shareholders may vote at any meeting of the shareholders by proxies duly authorized in writing, but no officer or employee of this association shall act as proxy. Proxies shall be valid only for one meeting, to be specified therein, and any adjournments of such meeting. Proxies shall be dated and filed with the records of the meeting. Proxies with facsimile signatures may be used and unexecuted proxies may be counted upon receipt of a written confirmation from the shareholder. Proxies meeting the above requirements submitted at any time during a meeting shall be accepted. Section 5. Quorum. A majority of the outstanding capital stock, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders, unless otherwise provided by law, or by the shareholders or directors pursuant to Article IX, Section 2, but less than a quorum may adjourn any meeting, from time to time, and the meeting may be held, as adjourned, without further notice. A majority of the votes cast shall decide every question or matter submitted to the shareholders at any meeting, unless otherwise provided by law or by the articles —2— of association, or by the shareholders or directors pursuant to Article IX, Section 2. If a meeting for the election of directors is not held on the fixed date, at least 10 days' notice must be given by first-class mail to the shareholders. ARTICLE II Directors Section 1. Board of Directors. The board of directors shall have the power to manage and administer the business and affairs of the association. Except as expressly limited by law, all corporate powers of the association shall be vested in and may be exercised by the board of directors. Section 2. Number. The board of directors shall consist of not less than five nor more than twenty-five members, unless the OCC has exempted the bank from the 25-member limit. The exact number within such minimum and maximum limits is to be fixed and determined from time to time by resolution of a majority of the full board of directors or by resolution of a majority of the shareholders at any meeting thereof. Section 3. Organization Meeting. The secretary or treasurer, upon receiving the certificate of the judges of the result of any election, shall notify the directors -elect of their election and of the time at which they are required to meet at the main office of the association, or at such other place in the cities of Wilmington, Delaware or Buffalo, New York, to organize the new board of directors and elect and appoint officers of the association for the succeeding year. Such meeting shall be held on the day of the election or as soon thereafter as practicable, and, in any event, within 30 days thereof. If, at the time fixed for such meeting, there shall not be a quorum, the directors present may adjourn the meeting, from time to time, until a quorum is obtained. Section 4. Regular Meetings. The Board of Directors may, at any time and from time to time, by resolution designate the place, date and hour for the holding of a regular meeting, but in the absence of any such designation, regular meetings of the board of directors shall be held, without notice, on the first Tuesday of each March, June and September, and on the second Tuesday of each December at the main office or other such place as the board of directors may designate. When any regular meeting of the board of directors falls upon a holiday, the meeting shall be held on the next banking business day unless the board of directors shall designate another day. Section 5. Special Meetings. Special meetings of the board of directors may be called by the Chairman of the Board of the association, or at the request of two or more directors. Each member of the board of directors shall be given notice by telegram, first class mail, or in person stating the time and place of each special meeting. Section 6. Quorum. A majority of the entire board then in office shall constitute a quorum at any meeting, except when otherwise provided by law or these bylaws, but a lesser number may adjourn any meeting, from time to time, and the meeting may be held, as adjourned, without further notice. If the number of directors present at the meeting is reduced below the —3— number that would constitute a quorum, no business may be transacted, except selecting directors to fill vacancies in conformance with Article II, Section 7. If a quorum is present, the board of directors may take action through the vote of a majority of the directors who are in attendance. Section 7. Meetings by Conference Telephone. Any one or more members of the board of directors or any committee thereof may participate in a meeting of such board or committees by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time. Participation in a meeting by such means shall constitute presence in person at such meeting. Section 8. Procedures. The order of business and all other matters of procedure at every meeting of the board of directors may be determined by the person presiding at the meeting. Section 9. Removal of Directors. Any director may be removed for cause, at any meeting of stockholders notice of which shall have referred to the proposed action, by vote of the stockholders. Any director may be removed without cause, at any meeting of stockholders notice of which shall have referred to the proposed action, by the vote of the holders of a majority of the shares of the Corporation entitled to vote. Any director may be removed for cause, at any meeting of the directors notice of which shall have referred to the proposed action, by vote of a majority of the entire Board of Directors. Section 10. Vacancies. When any vacancy occurs among the directors, a majority of the remaining members of the board of directors, according to the laws of the United States, may appoint a director to fill such vacancy at any regular meeting of the board of directors, or at a special meeting called for that purpose at which a quorum is present, or if the directors remaining in office constitute fewer than a quorum of the board of directors, by the affirmative vote of a majority of all the directors remaining in office, or by shareholders at a special meeting called for that purpose in conformance with Section 2 of Article I. At any such shareholder meeting, each shareholder entitled to vote shall have the right to multiply the number of votes he or she is entitled to cast by the number of vacancies being filled and cast the product for a single candidate or distribute the product among two or more candidates. A vacancy that will occur at a specific later date (by reason of a resignation effective at a later date) may be filled before the vacancy occurs but the new director may not take office until the vacancy occurs. ARTICLE III Committees of the Board The board of directors has power over and is solely responsible for the management, supervision, and administration of the association. The board of directors may delegate its power, but none of its responsibilities, to such persons or committees as the board may determine. The board of directors must formally ratify written policies authorized by committees of the board of directors before such policies become effective. Each committee must have one or —4— more member(s), and who may be an officer of the association or an officer or director of any affiliate of the association, who serve at the pleasure of the board of directors. Provisions of the articles of association and these bylaws governing place of meetings, notice of meeting, quorum and voting requirements of the board of directors, apply to committees and their members as well. The creation of a committee and appointment of members to it must be approved by the board of directors. Section 1. Loan Committee. There shall be a loan committee composed of not less than 2 directors, appointed by the board of directors annually or more often. The loan committee, on behalf of the bank, shall have power to discount and purchase bills, notes and other evidences of debt, to buy and sell bills of exchange, to examine and approve loans and discounts, to exercise authority regarding loans and discounts, and to exercise, when the board of directors is not in session, all other powers of the board of directors that may lawfully be delegated. The loan committee shall keep minutes of its meetings, and such minutes shall be submitted at the next regular meeting of the board of directors at which a quorum is present, and any action taken by the board of directors with respect thereto shall be entered in the minutes of the board of directors. Section 2. Investment Committee. There shall be an investment committee composed of not less than 2 directors, appointed by the board of directors annually or more often. The investment committee, on behalf of the bank, shall have the power to ensure adherence to the investment policy, to recommend amendments thereto, to purchase and sell securities, to exercise authority regarding investments and to exercise, when the board of directors is not in session, all other powers of the board of directors regarding investment securities that may be lawfully delegated. The investment committee shall keep minutes of its meetings, and such minutes shall be submitted at the next regular meeting of the board of directors at which a quorum is present, and any action taken by the board of directors with respect thereto shall be entered in the minutes of the board of directors. Section 3. Examining Committee. There shall be an examining committee composed of not less than 2 directors, exclusive of any active officers, appointed by the board of directors annually or more often. The duty of that committee shall be to examine at least once during each calendar year and within 15 months of the last examination the affairs of the association or cause suitable examinations to be made by auditors responsible only to the board of directors and to report the result of such examination in writing to the board of directors at the next regular meeting thereafter. Such report shall state whether the association is in a sound condition, and whether adequate internal controls and procedures are being maintained and shall recommend to the board of directors such changes in the manner of conducting the affairs of the association as shall be deemed advisable. Notwithstanding the provisions of the first paragraph of this section 3, the responsibility and authority of the Examining Committee may, if authorized by law, be given over to a duly constituted audit committee of the association's parent corporation by a resolution duly adopted by the board of directors. Section 4. Trust Audit Committee. There shall be a trust audit committee in conformance with Section 1 of Article V. Section 5. Other Committees. The board of directors may appoint, from time to time, from its own members, compensation, special litigation and other committees of one or more persons, for such purposes and with such powers as the board of directors may determine. However, a committee may not: (1) Authorize distributions of assets or dividends; (2) Approve action required to be approved by shareholders; (3) Fill vacancies on the board of directors or any of its committees; (5) Amend articles of association; (6) Adopt, amend or repeal bylaws; or (6) Authorize or approve issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences and limitations of a class or series of shares. Section 6. Committee Members' Fees. Committee members may receive a fee for their services as committee members and traveling and other out-of-pocket expenses incurred in attending any meeting of a committee of which they are a member. The fee may be a fixed sum to be paid for attending each meeting or a fixed sum to be paid quarterly, or semiannually, irrespective of the number of meetings attended or not attended. The amount of the fee and the basis on which it shall be paid shall be determined by the board of directors. ARTICLE IV Officers and Employees Section 1. Officers. The board of directors shall annually, at the Annual Reorganization Meeting of the board of directors following the annual meeting of the shareholders, appoint or elect a Chairperson of the Board, a Chief Executive Officer and a President, and one or more Vice Presidents however denominated, a Corporate Secretary, a Treasurer, a General Auditor, and such other officers as it may determine. At the Annual Reorganization Meeting, the board of directors shall also elect or reelect all of the officers of the association to hold office until the next Annual Reorganization Meeting. In the interim between Annual Reorganization Meetings, the officers of the association may be elected as follows and shall hold office until the next Annual Reorganization meeting unless otherwise determined by the board of directors or such authorized officer(s) as set forth below: (1) The board of directors may elect or appoint a Chief Executive Officer, a President or such additional officers to the rank of Vice President, including (without —6— limitation as to title or number) one or more Administrative Vice Presidents, Group Vice Presidents, Senior Vice Presidents and Executive Vice Presidents, and any other officer positions as they deem necessary and appropriate; (2) The Chief Executive Officer of M&T Bank, the head of the Human Resources Department of M&T Bank, and either the President of M&T Bank or an executive Vice Chairman of M&T Bank, acting jointly, may appoint one or more officers to the rank of Executive Vice President or Senior Vice President; (3) The head of the Human Resources Department of M&T Bank or his or her designee or designees, may appoint other officers up to and including the rank of Group Vice President, including (without limitation as to title or number) one or more Administrative Vice Presidents, Vice Presidents, Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers and Assistant Auditors, and any other officer positions as they deem necessary and appropriate. Section 2. Chairperson of the Board. The board of directors shall appoint one of its members to be the chairperson of the board to serve at its pleasure. Such person shall preside at all meetings of the board of directors. The chairperson of the board shall supervise the carrying out of the policies adopted or approved by the board of directors; shall have general executive powers, as well as the specific powers conferred by these bylaws; and shall also have and may exercise such further powers and duties as from time to time may be conferred upon or assigned by the board of directors. Section 3. President. The board of directors shall appoint one of its members to be the president of the association. In the absence of the chairperson, the president shall preside at any meeting of the board of directors. The president shall have general executive powers and shall have and may exercise any and all other powers and duties pertaining by law, regulation, or practice to the office of president, or imposed by these bylaws. The president shall also have and may exercise such further powers and duties as from time to time may be conferred or assigned by the board of directors. Section 4. Vice President. The board of directors may appoint one or more vice presidents. Each vice president shall have such powers and duties as may be assigned by the board of directors. One vice president shall be designated by the board of directors, in the absence of the president, to perform all the duties of the president. Section 5. Secretary. The board of directors shall appoint a secretary, treasurer, or other designated officer who shall be secretary of the board of directors and of the association and who shall keep accurate minutes of all meetings. The secretary shall attend to the giving of all notices required by these bylaws; shall be custodian of the corporate seal, records, documents and papers of the association; shall provide for the keeping of proper records of all transactions of the association; shall have and may exercise any and all other powers and duties pertaining by law, regulation or practice to the office of treasurer, or imposed by these bylaws; and shall also perform such other duties as may be assigned from time to time, by the board of directors. —7— Section 6. Other Officers. The board of directors may appoint one or more assistant vice presidents, one or more trust officers, one or more officers, one or more assistant secretaries, one or more assistant treasurers, one or more managers and assistant managers of branches and such other officers and attorneys in fact as from time to time may appear to the board of directors to be required or desirable to transact the business of the association. Such officers shall respectively exercise such powers and perform such duties as pertain to their several offices, or as may be conferred upon or assigned to them by the board of directors, the chairperson of the board, or the president. The board of directors may authorize an officer to appoint one or more officers or assistant officers. Section 7. Tenure of Office. The president and all other officers shall hold office for the current year for which the board of directors was elected, unless they shall resign, become disqualified, or be removed; and any vacancy occurring in the office of president shall be filled promptly by the board of directors. Section 8. Resignation. An officer may resign at any time by delivering notice to the association. A resignation is effective when the notice is given unless the notice specifies a later effective date. ARTICLE V Fiduciary Activities Section 1. Trust Audit Committee. There shall be a Trust Audit Committee composed of not less than 2 directors, appointed by the board of directors, which shall, at least once during each calendar year make suitable audits of the association's fiduciary activities or cause suitable audits to be made by auditors responsible only to the board, and at such time shall ascertain whether fiduciary powers have been administered according to law, Part 9 of the Regulations of the Comptroller of the Currency, and sound fiduciary principles. Such committee: (1) must not include any officers of the bank or an affiliate who participate significantly in the administration of the bank's fiduciary activities; and (2) must consist of a majority of members who are not also members of any committee to which the board of directors has delegated power to manage and control the fiduciary activities of the bank. Notwithstanding the provisions of the first paragraph of this section 1, the responsibility and authority of the Trust Audit Committee may, if authorized by law, be given over to a duly constituted audit committee of the association's parent corporation by a resolution duly adopted by the board of directors. Section 2. Fiduciary Files. There shall be maintained by the association all fiduciary records necessary to assure that its fiduciary responsibilities have been properly undertaken and discharged. Section 3. Trust Investments. Funds held in a fiduciary capacity shall be invested according to the instrument establishing the fiduciary relationship and applicable law. Where such instrument does not specify the character and class of investments to be made, but does vest —8— in the association investment discretion, funds held pursuant to such instrument shall be invested in investments in which corporate fiduciaries may invest under applicable law. ARTICLE VI Stock and Stock Certificates Section 1. Transfers. Shares of stock shall be transferable on the books of the association, and a transfer book shall be kept in which all transfers of stock shall be recorded. Every person becoming a shareholder by such transfer shall in proportion to such shareholder's shares, succeed to all rights of the prior holder of such shares. The board of directors may impose conditions upon the transfer of the stock reasonably calculated to simplify the work of the association with respect to stock transfers, voting at shareholder meetings and related matters and to protect it against fraudulent transfers. Section 2. Stock Certificates. Certificates of stock shall bear the signature of the president (which may be engraved, printed or impressed) and shall be signed manually or by facsimile process by the secretary, assistant secretary, treasurer, assistant treasurer, or any other officer appointed by the board of directors for that purpose, to be known as an authorized officer, and the seal of the association shall be engraved thereon. Each certificate shall recite on its face that the stock represented thereby is transferable only upon the books of the association properly endorsed. The board of directors may adopt or use procedures for replacing lost, stolen, or destroyed stock certificates as permitted by law. The association may establish a procedure through which the beneficial owner of shares that are registered in the name of a nominee may be recognized by the association as the shareholder. The procedure may set forth: (1) The types of nominees to which it applies; (2) The rights or privileges that the association recognizes in a beneficial owner; (3) How the nominee may request the association to recognize the beneficial owner as the shareholder; (4) The information that must be provided when the procedure is selected; (5) The period over which the association will continue to recognize the beneficial owner as the shareholder; (6) Other aspects of the rights and duties created. ARTICLE VII Corporate Seal Section 1. Seal. The seal of the association shall be in such form as may be determined from time to time by the board of directors. The president, the treasurer, the secretary or any assistant treasurer or assistant secretary, or other officer thereunto designated by the board of directors shall have authority to affix the corporate seal to any document requiring such seal and to attest the same. The seal on any corporate obligation for the payment of money may be facsimile. ARTICLE VIII Miscellaneous Provisions Section 1. Fiscal Year. The fiscal year of the association shall be the calendar year. Section 2. Execution of Instruments. All agreements, indentures, mortgages, deeds, conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and other instruments or documents may be signed, executed, acknowledged, verified, delivered or accepted on behalf of the association by any officer elected or appointed pursuant to Article IV of these bylaws. Any such instruments may also be executed, acknowledged, verified, delivered or accepted on behalf of the association in such other manner and by such other officers as the board of directors may from time to time direct. The provisions of this section 2 are supplementary to any other provision of these bylaws. Section 3. Records. The articles of association, the bylaws and the proceedings of all meetings of the shareholders, the board of directors, and standing committees of the board of directors shall be recorded in appropriate minute books provided for that purpose. The minutes of each meeting shall be signed by the secretary, treasurer or other officer appointed to act as secretary of the meeting. Section 4. Corporate Governance Procedures. To the extent not inconsistent with federal banking statutes and regulations, or safe and sound banking practices, the association may follow the Delaware General Corporation Law, Del. Code Ann. tit. 8 (1991, as amended 1994, and as amended thereafter) with respect to matters of corporate governance procedures. Section 5. Indemnification. For purposes of this Section 5 of Article VIII, the term "institution -affiliated party" shall mean any institution -affiliated party of the association as such term is defined in 12 U.S.C. 1813(u). Any institution -affiliated party (or his or her heirs, executors or administrators) may be indemnified or reimbursed by the association for reasonable expenses actually incurred in connection with any threatened, pending or completed actions or proceedings and appeals therein, whether civil, criminal, governmental, administrative or investigative, in accordance with and to the fullest extent permitted by law, as such law now or hereafter exists; provided, however, that when an administrative proceeding or action instituted by a federal banking agency — 10— results in a final order or settlement pursuant to which such person: (i) is assessed a civil money penalty, (ii) is removed from office or prohibited from participating in the conduct of the affairs of the association, or (iii) is required to cease and desist from or to take any affirmative action described in 12 U.S.C. 1818(b) with respect to the association, then the association shall require the repayment of all legal fees and expenses advanced pursuant to the next succeeding paragraph and may not indemnify such institution -affiliated parties (or their heirs, executors or administrators) for expenses, including expenses for legal fees, penalties or other payments incurred. The association shall provide indemnification in connection with an action or proceeding (or part thereof) initiated by an institution -affiliated party (or by his or her heirs, executors or administrators) only if such action or proceeding (or part thereof) was authorized by the board of directors. Expenses incurred by an institution -affiliated party (or by his or her heirs, executors or administrators) in connection with any action or proceeding under 12 U.S.C. 164 or 1818 may be paid by the association in advance of the final disposition of such action or proceeding upon (a) a determination by the board of directors acting by a quorum consisting of directors who are not parties to such action or proceeding that the institution -affiliated party (or his or her heirs, executors or administrators) has a reasonable basis for prevailing on the merits, (b) a determination that the indemnified individual (or his or her heirs, executors or administrators) will have the financial capacity to reimburse the bank in the event he or she does not prevail, (c) a determination that the payment of expenses and fees by the association will not adversely affect the safety and soundness of the association, and (d) receipt of an undertaking by or on behalf of such institution -affiliated party (or by his or her heirs, executors or administrators) to repay such advancement in the event of a final order or settlement pursuant to which such person: (i) is assessed a civil money penalty, (ii) is removed from office or prohibited from participating in the conduct of the affairs of the association, or (iii) is required to cease and desist from or to take any affirmative action described in 12 U.S.C. 1818(b) with respect to the association. In all other instances, expenses incurred by an institution -affiliated party (or by his or her heirs, executors or administrators) in connection with any action or proceeding as to which indemnification may be given under these articles of association may be paid by the association in advance of the final disposition of such action or proceeding upon (a) receipt of an undertaking by or on behalf of such institution -affiliated party (or by or on behalf of his or her heirs, executors or administrators) to repay such advancement in the event that such institution - affiliated party (or his or her heirs, executors or administrators) is ultimately found not to be entitled to indemnification as authorized by these bylaws and (b) approval by the board of directors acting by a quorum consisting of directors who are not parties to such action or proceeding or, if such a quorum is not obtainable, then approval by stockholders. To the extent permitted by law, the board of directors or, if applicable, the stockholders, shall not be required to find that the institution -affiliated party has met the applicable standard of conduct provided by law for indemnification in connection with such action or proceeding. In the event that a majority of the members of the board of directors are named as respondents in an administrative proceeding or civil action and request indemnification, the remaining members of the board may authorize independent legal counsel to review the indemnification request and provide the remaining members of the board with a written opinion of counsel as to whether the conditions delineated in the first four paragraphs of this Section 5 of — 11 — Article VIII have been met. If independent legal counsel opines that said conditions have been met, the remaining members of the board of directors may rely on such opinion in authorizing the requested indemnification. In the event that all of the members of the board of directors are named as respondents in an administrative proceeding or civil action and request indemnification, the board shall authorize independent legal counsel to review the indemnification request and provide the board with a written opinion of counsel as to whether the conditions delineated in the first four paragraphs of this Section 5 of Article VIII have been met. If legal counsel opines that said conditions have been met, the board of directors may rely on such opinion in authorizing the requested indemnification. To the extent permitted under applicable law, the rights of indemnification and to the advancement of expenses provided in these articles of association (a) shall be available with respect to events occurring prior to the adoption of these bylaws, (b) shall continue to exist after any restrictive amendment of these bylaws with respect to events occurring prior to such amendment, (c) may be interpreted on the basis of applicable law in effect at the time of the occurrence of the event or events giving rise to the action or proceeding, or on the basis of applicable law in effect at the time such rights are claimed, and (d) are in the nature of contract rights which may be enforced in any court of competent jurisdiction as if the association and the institution -affiliated party (or his or her heirs, executors or administrators) for whom such rights are sought were parties to a separate written agreement. The rights of indemnification and to the advancement of expenses provided in these bylaws shall not, to the extent permitted under applicable law, be deemed exclusive of any other rights to which any such institution -affiliated party (or his or her heirs, executors or administrators) may now or hereafter be otherwise entitled whether contained in the association's articles of association, these bylaws, a resolution of stockholders, a resolution of the board of directors, or an agreement providing such indemnification, the creation of such other rights being hereby expressly authorized. Without limiting the generality of the foregoing, the rights of indemnification and to the advancement of expenses provided in these bylaws shall not be deemed exclusive of any rights, pursuant to statute or otherwise, of any such institution -affiliated party (or of his or her heirs, executors or administrators) in any such action or proceeding to have assessed or allowed in his or her favor, against the association or otherwise, his or her costs and expenses incurred therein or in connection therewith or any part thereof. If this Section 5 of Article VIII or any part hereof shall be held unenforceable in any respect by a court of competent jurisdiction, it shall be deemed modified to the minimum extent necessary to make it enforceable, and the remainder of this Section 5 of Article VIII shall remain fully enforceable. The association may, upon affirmative vote of a majority of its board of directors, purchase insurance to indemnify its institution -affiliated parties to the extent that such indemnification is allowed in these bylaws; provided, however, that no such insurance shall include coverage for a final order assessing civil money penalties against such persons by a bank — 12 — regulatory agency. Such insurance may, but need not, be for the benefit of all institution - affiliated parties. ARTICLE IX Inspection and Amendments Section 1. Inspection. A copy of the bylaws of the association, with all amendments, shall at all times be kept in a convenient place at the main office of the association, and shall be open for inspection to all shareholders during banking hours. Section 2. Amendments. The bylaws of the association may be amended, altered or repealed, at any regular meeting of the board of directors, by a vote of a majority of the total number of the directors except as provided below, and provided that the following language accompany any such change. I, , certify that: (1) I am the duly constituted (secretary or treasurer) of and secretary of its board of directors, and as such officer am the official custodian of its records; (2) the foregoing bylaws are the bylaws of the association, and all of them are now lawfully in force and effect. I have hereunto affixed my official signature on this day of (Secretary or Treasurer) The association's shareholders may amend or repeal the bylaws even though the bylaws also may be amended or repealed by the board of directors. EXHIBIT D RESOLVED, that each officer of this Bank, however denominated, hereby is appointed as an Assistant Secretary of this Bank, authorized to attest and affix this Bank's corporate seal to any instrument. CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CONTINUING DISCLOSURE CERTIFICATE — DEVELOPER This Continuing Disclosure Certificate — Developer (the "Disclosure Certificate") is executed on March 12, 2019, by TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC (collectively, the "Developers"), in connection with the issuance by the California Statewide Communities Development Authority (the "Authority") of its California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of March 1, 2019 (the "Indenture"), by and between the Authority and Wilmington Trust, National Association, as Trustee (the "Trustee"). The Developers covenant and agree as follows: SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Developers for the benefit of the Holders and Beneficial Owners, but shall not be deemed to create any monetary liability on the part of the Developers to any other persons, including Holders or Beneficial Owners of the Bonds. The sole remedy in the event of any failure of the Developers to comply with this Disclosure Certificate shall be an action to compel performance of any act required hereunder. SECTION 2. Definitions. In addition to the definitions set forth in the preamble above and 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 when used herein: "Annual Report" shall mean any Annual Report provided by the Developers pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Assumption Agreement" shall mean an undertaking of a Major Owner, for the benefit of the Holders and Beneficial Owners of the Bonds containing terms substantially similar to this Disclosure Certificate (as modified for such Major Owner's development and financing plans with respect to the Community Facilities District), whereby such Major Owner agrees to provide Annual Reports and notices of significant events, setting forth the information described in Sections 4 and 5 hereof, respectively, with respect to the portion of the property in the Community Facilities District owned by such Major Owner. "Beneficial Owner" shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of the Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). "Business Day" shall mean any day other than (i) a Saturday or a Sunday or (ii) a day which is a federal or State of California holiday. "Community Facilities District" shall mean California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange. "Developer Improvements" is defined in Section 4(a)(4) herein. "Dissemination Agent" shall mean any dissemination agent designated in writing by the Developers and which has filed with the Developers a written acceptance of such designation. The initial Dissemination Agent shall be David Taussig & Associates. "EMMA" shall mean the Electronic Municipal Market Access system of the MSRB, currently located at http://emma.msrb.org. 1 4161-5258-4730.2 "Fiscal Year" shall mean the period beginning on July 1 of each year and ending on the next succeeding June 30. "Government Authority" shall mean any national, state or local government, any political subdivision thereof, any department, agency, authority or bureau of any of the foregoing, or any other Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Holder" shall mean the person in whose name any Bond shall be registered. "Listed Event" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "Major Owner" shall mean an owner of property in the Community Facilities District responsible, by itself or in conjunction with affiliates, in the aggregate for 15% or more of the Special Taxes in the Community Facilities District in the Fiscal Year following the transfer of such property. "MSRB" shall mean the Municipal Securities Rulemaking Board. "Official Statement" shall mean the Official Statement, dated February 27, 2019, relating to the Bonds. "Participating Underwriter" shall mean RBC Capital Markets, LLC, as original underwriter of the Bonds and any other underwriter of the Bonds. "Person" shall mean any natural person, corporation, partnership, firm, association, Government Authority or any other Person whether acting in an individual fiduciary, or other capacity. "Repository" shall mean the MSRB or any other entity designated or authorized by the MSRB or the Securities and Exchange Commission to receive reports. Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through EMMA. "Special Taxes" shall mean the annual special taxes for facilities of the Community Facilities District levied on taxable property within the Community Facilities District. "State" shall mean the State of California. "Undeveloped Property" has the meaning given to such term in the Rate and Method of Apportionment of Special Tax for the Community Facilities District. SECTION 3. Provision of Annual Reports. (a) The Developers shall, or shall cause the Dissemination Agent to, not later than December 15 of each year, commencing December 15, 2019, provide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. If, in any year, December 15 does not fall on a Business Day, then such deadline shall be extended to the following Business Day. 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. (b) Not later than fifteen (15) calendar days prior to the date specified in subsection (a) for providing the Annual Report to the Repository, the Developers shall provide the Annual Report to the Dissemination Agent or shall provide notification to the Dissemination Agent that the Developers are preparing, or causing to be prepared, the Annual Report and the date which the Annual Report is expected to be available. If by such date, the Dissemination Agent has not received a copy of the Annual Report or notification as described in the preceding sentence, the Dissemination Agent shall notify the Developers of such failure to receive the report. (c) If the Dissemination Agent is unable to provide an Annual Report to the Repository by the date required in subsection (a) or to verify that an Annual Report has been provided to the Repository by the date required 2 4161-5258-4730.2 in subsection (a), the Dissemination Agent shall send in a timely manner a notice (in the form of Exhibit A) to the Repository in a form that is accepted by the Repository. (d) The Developers shall, or shall cause the Dissemination Agent to: (i) determine each year prior to the date for providing the Annual Report the name and address of the Repository; and (ii) promptly file a report with the Developers and the Authority certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to the Repository. (e) Notwithstanding any other provision of this Disclosure Certificate, any of the required filings hereunder shall be made in accordance with the MSRB's EMMA system or in another manner approved under Rule 15c2-12. SECTION 4 Content of Annual Report. (a) The Developers' Annual Report shall contain or include by reference the information which is available not more than sixty (60) days prior to the Annual Report relating to the following: 1. A detailed update to the discussion of the sources of funds to finance development of property owned by the Developers within the Community Facilities District contained in the Official Statement under the heading "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS — Project Plan of Finance," and whether any material defaults exist under any loan arrangement related to such financing. 2. A summary of development activity conducted by the Developers within the Community Facilities District, including the number of building permits that have been issued and a description of the uses for which such permits have been pulled (i.e. residential or commercial units), and as to property owned by the Developers, the number of parcels or units for which sales have closed to end users. 3. Any sale by the Developers of property in the Community Facilities District to another Person, other than to buyers of completed homes or condominium units, including a description of the property sold (acreage, number of units, etc.) and the identity of the Person that so purchased the property. 4. Status of completion of the development being undertaken by the Developers with respect to the Undeveloped Property, including the property identified as Phase 2 in the Official Statement until such time as that property is classified as "Developed Property" according to the Rate and Method of Apportionment for the Community Facilities District, and any major legislative, administrative and judicial challenges known to the Developers to or affecting the construction of the development or the time for construction of any public or private improvements to be made by the Developers within the Community Facilities District (the "Developer Improvements"). 5. Information regarding any failure by the Developers to pay, prior to delinquency, any real property taxes (including Special Taxes) levied on a parcel of property in the Community Facilities District which was, at the time of the levy, owned by the Developers. 6. Unless such information has previously been included or incorporated by reference in an Annual Report or otherwise provided pursuant to 1 through 5 above, describe any other significant changes in the information relating to the Developers and any property owned by the Developers in the Community Facilities District contained in the Official Statement under the heading "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS" that would materially and adversely interfere with the Developers' ability to develop the property as described in the Official Statement and an update of any significant changes to the information in Table 1 in the Official Statement. (b) Any and all of the items listed above may be included by specific reference to other documents, including official statements of debt issues which have been submitted to the Repository or the Securities and 3 4161-5258-4730.2 Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB. The Developers shall clearly identify each such other document so included by reference. SECTION 5. Reporting of Listed Events. (a) Pursuant to the provisions of this Section 5, the Developers shall give, or cause to be given, within ten Business Days of obtaining actual knowledge thereof, notice to the Repository of the occurrence of any of the following events with respect to the Bonds, if material: 1. Failure to pay any real property taxes, special taxes or assessments levied within the Community Facilities District on a parcel owned by the Developers. 2. Damage to or destruction of any of the improvements within the Community Facilities District which has a material adverse effect on the value of the parcels owned by the Developers within the Community Facilities District. 3. Material default by the Developers on any loan with respect to the construction or permanent financing of improvements within the Community Facilities District. 4. Material default by the Developers on any loan secured by property within the Community Facilities District owned by the Developers. 5. Material payment default by the Developers on any loan of the Developers (whether or not such loan is secured by property within the Community Facilities District) which is beyond any applicable cure period in such loan. 6. The filing of any proceedings with respect to the Developers, in which the Developers may be adjudicated as bankrupt or discharged from any or all of its respective debts or obligations or granted an extension of time to pay debts or a reorganization or readjustment of debts. 7. The filing of any lawsuit against the Developers (with service of process on the Developers having occurred) which, in the reasonable judgment of the Developers, will materially adversely affect the completion of the Developer Improvements or the development of parcels owned by the Developers within the Community Facilities District, or litigation which if decided against the Developers, in the reasonable judgment of the Developers, would materially adversely affect the financial condition of the Developers in a manner that would materially adversely affect the completion of the improvements within the Community Facilities or the development of parcels owned by the Developers within the Community Facilities District. 8. The termination of that certain lease, by and between Uptown Newport Jamboree, LLC and Newport Fab, LLC dba Jazz Semiconductor for the real property located at 432 Jamboree Road, Newport Beach, California 92660 prior to March 12, 2027. 9. A sale or transfer of all or substantially all of either Developers' assets or a sale of a majority of the partnership interests, membership interests or outstanding stock of either Developer (it being understood that if the Developer is a publicly traded company, such majority sale is not meant to include an aggregation of routine, unrelated market trades). (b) Whenever the Developers obtain knowledge of the occurrence of a Listed Event described in Section 5(a), the Developers shall as soon as possible determine if such event would be material under applicable federal securities laws. SECTION 6. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Certificate must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB. SECTION 7. Termination of Reporting Obligation. The Developers' obligations hereunder shall terminate upon the following events: 4 4161-5258-4730.2 (a) the legal defeasance, prior redemption or payment in full of all of the Bonds, (b) if on any date the property in the Community Facilities District owned by the Developers, in aggregate is no longer responsible for payment of 20% or more of the Special Taxes or all of the condominiums to be developed are completed and sold to homeowners, all apartments are completed and all commercial/retail space is completed and at least 50% leased to end -users; provided, however, that the Developers' obligations under this Disclosure Certificate shall remain in force with respect to any transferred property for which the purchaser is a Major Owner who has not executed an Assumption Agreement unless such Major Owner is a foreclosing creditor and/or lender, or (c) upon the delivery by the Developers to the Authority of an opinion of nationally recognized bond counsel to the effect that the information required by this Disclosure Certificate is no longer required. Such opinion shall be based on information publicly provided by the Securities and Exchange Commission or a private letter ruling obtained by the Developers or a private letter ruling obtained by a similar entity to the Developers. If such termination occurs prior to the final maturity of the Bonds, the Developers shall give notice of such termination in the same manner as for a Listed Event hereunder. SECTION 8. Dissemination Agent. The Developers 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 Developers) shall not be responsible in any manner for the content of any notice or report prepared by the Developers pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be David Taussig & Associates, Inc. SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Developers may agree to amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the Developers, or the type of business conducted; (b) The amendment or waiver either (i) is approved by the Holders in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Bondowners, or (ii) does not, in the opinion of nationally recognized bond counsel addressed to the Authority and the Trustee, materially impair the interests of the Holders or Beneficial Owners of the Bonds; and (c) The Developers, or the Dissemination Agent, shall have delivered copies of the amendment and any opinions delivered under (a) and (b) above to the Repository. SECTION 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Developers 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 Developers choose 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 Developers shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 11. Default. In the event of a failure of the Developers to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developers to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture (as such term is defined therein), and the sole remedy under this Disclosure Certificate in the event of any failure of the Developers to comply with this Disclosure Certificate shall be an action 5 4161-5258-4730.2 to compel performance. Neither the Developers nor the Dissemination Agent shall have any liability to the Holders of the Bonds or the Beneficial Owners of the Bonds or any other party for monetary damages or financial liability of any kind whatsoever arising from or relating to this Disclosure Certificate. SECTION 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate and in any agreement between the Developers and Dissemination Agent, and the Developers agree to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder during the time that the Developers collectively constitute a Major Owner obligated to comply with the Disclosure Certificate, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the Developers under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. SECTION 13. Reporting Obligation of Developers' Transferees. The Developers shall, in connection with any sale or transfer of ownership of land within the Community Facilities District to a transferee that is not an affiliate of the Developers which will result in the transferee (which term shall include any successors and assigns of such party) becoming a Major Owner, cause such transferee to enter into an Assumption Agreement provided that such transferee's obligations under such Assumption Agreement shall terminate upon the sold or transferred land being improved with structures, or the land owned by the transferee becoming responsible for the payment of less than twenty (20) percent of the annual Special Taxes. SECTION 14. Developers as Independent Contractor. In performing under this Disclosure Certificate, it is understood that the Developers are independent contractors and not an agent of the City of Newport Beach or the Authority. SECTION 15. Notices. Notices should be sent in writing to the following addresses. The following information may be conclusively relied upon until changed in writing. To the Developer: To the Underwriter: To the Authority: TSG-Parcel 1, LLC and Uptown Newport Jamboree, LLC 2 Park Plaza, Suite 700 Irvine, CA 92614 Attn: Shopoff Realty Investments, L.P. RBC Capital Markets, LLC Two Embarcadero Center, Suite 1200 San Francisco, CA 94111 Attn: Bob Williams, Managing Director California Statewide Communities Development Authority 1100 K Street, Suite 1001 Sacramento, CA 95814 Attn: Chair Email: info@cscda.org Phone: (925) 391-3590 SECTION 16. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Developers, the Dissemination Agent, the Trustee, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 17. Severability. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision hereof. 6 4161-5258-4730.2 SECTION 18. Governing Law. The validity, interpretation and performance of this Disclosure Certificate shall be governed by the laws of the State of California applicable to contracts made and performed in California. IN WITNESS WHEREOF, the Developers hereto have each executed this Continuing Disclosure Certificate — Developer as of the date first above written. UPTOWN NEWPORT JAMBOREE, LLC, a Delaware limited liability company By: Name: Title: at.*A G, . oP1 TSG-PARCEL 1, LLC, a Delaware limited liability company By: Name: 'NV-1 6' , U P Title: 54 [Signature Page - Continuing Disclosure Certificate] EXHIBIT A FORM OF NOTICE TO THE MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: California Statewide Communities Development Authority Name of Bond Issue: California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 Date of Issuance: March 12, 2019 NOTICE IS HEREBY GIVEN that TSG-PARCEL 1, LLC and UPTOWN NEWPORT JAMBOREE, LLC (the "Developers") have not provided an Annual Report with respect to the above named bonds as required by the Continuing Disclosure Certificate, dated the date of issuance of such Bonds. The Developers anticipate that the Annual Report will be filed by , 20_. Date: , 20. cc: The Developers Underwriter 8 DISSEMINATION AGENT: By: Its: 4161-5258-4730.2 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CERTIFICATE OF TSG-PARCEL 1, LLC February13, 2019 RBC Capital Markets, LLC San Francisco, California California Statewide Communities Development Authority Sacramento, California Ladies and Gentlemen: This Developer Certificate is delivered to each of you by TSG Parcel 1, LLC, a Delaware limited liability company (the "Developer") pursuant to, and in satisfaction of Section 60)(13) of that certain Bond Purchase Contract (the "Bond Purchase Contract") to be executed by and between the California Statewide Communities Development Authority (the "Authority") and RBC Capital Markets, LLC (the "Underwriter") with respect to the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"). Capitalized terms not otherwise defined herein have the meaning ascribed to them in the Bond Purchase Contract. As used herein, the phrase "Actual Knowledge of the Developer" shall mean the knowledge that the undersigned has or has obtained through (i) interviews with such officers and responsible employees of the Developer and its Relevant Entities 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 Certificate, and/or (ii) inspection of documents in the possession of the Developer that were reasonably available to the undersigned and which the undersigned has determined are necessary for the undersigned to sign this Certificate. With your permission, the undersigned has not conducted any additional or extraordinary inspection or inquiry other than such inspections and inquiries as are prudent and customary in connection with the ordinary course of the Developer's business and operations. Individuals who are no longer employed by the Developer or its Relevant Entities have not been contacted. As used herein, "Relevant Entity" means, with respect to the Developer, any other person or entity (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 or entity is material to an evaluation of the Bonds (i.e. such person or entity's assets or funds would materially affect the Developer's ability to develop the property within the California Statewide 1 Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) (the "Community Facilities District") owned by the Developer as of the date hereof (the "Property") or to pay its Special Taxes on the Property prior to delinquency). The undersigned certifies that he or she is familiar with the facts herein certified and is authorized and qualified to certify the same on behalf of the Developer, and the undersigned, on behalf of the Developer, further certifies as follows: 1. The Developer is duly organized, validly existing and in good standing under the laws of the State of Delaware and has the authority to transact business in the State of California, and has all requisite right, corporate power, and authority (i) to enter into, execute as of the Closing Date, deliver and perform its obligations under the Developer Continuing Disclosure Certificate (the "Disclosure Certificate"), the form of which is attached as part of Appendix F to the Preliminary Official Statement relating to the Bonds (the "Preliminary Official Statement"), (ii) when negotiated and approved by all parties thereto, to enter into, execute, deliver and perform its obligations under the Acquisition Agreement (the "Acquisition Agreement" and together with the Disclosure Certificate, the "Developer Documents") to be entered into by and between the Developer, the Authority, Uptown Newport Jamboree, LLC and the City of Newport Beach (the "City"), and (iii) to own the Property and to conduct its business with respect to the Property as described in the Preliminary Official Statement. 2. The Developer (i) has or will have prior to the Closing Date, duly and validly authorized and approved the execution and delivery of the Developer Documents, and (ii) has or will have prior to the Closing Date, duly authorized and approved the performance by the Developer of its obligations contained in, and the taking of any and all action as may be necessary to carry out, give effect to and perform its obligations under, the Developer Documents and assuming due authorization, execution and delivery by all parties thereto, from and after the Closing Date, the Developer Documents will constitute the valid, legal and binding obligations of the Developer and, when executed will be enforceable against the Developer in accordance with their terms, subject to laws relating to bankruptcy, insolvency, other laws affecting the enforcement of creditors' rights generally, and the application of equitable principles if equitable remedies are sought. . 3. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, (a) the Developer is not in breach of or in default under any applicable law or administrative rule or regulation of the State of California or 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, line of credit, note, bond, indenture, fiscal agent agreement, development agreement (including mitigation agreements or joint community facilities agreements) (collectively, the "Material Agreements") to which the Developer is a party or is otherwise subject or bound, which breach or default could reasonably be expected to materially and adversely affect the ability of the Developer to perform its obligations under the Developer Documents or to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes prior to delinquency with respect to the Property (to the extent the responsibility of the Developer) and (b) no event has occurred and is continuing that with the passage of time or giving of notice, or both, would constitute such a breach of or default under any Material Agreement which could 2 reasonably be expected to materially and adversely affect the ability of the Developer to perform its obligations under the Developer Documents or to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes prior to delinquency with respect to the Property (to the extent the responsibility of the Developer). To the Actual Knowledge of the Developer, neither the execution and delivery of the Developer Documents by the Developer and compliance by the Developer on its part with the provisions thereof, nor the consummation of any material transactions contemplated in the Preliminary Official Statement with respect to the Property, will conflict with or constitute such a breach of or default under any applicable law or administrative rule or regulation of the State of California or 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 Material Agreement. 4. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, 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 Developer of its obligations under the Developer Documents have been obtained and are in full force and effect, except as such may be required by state securities or blue sky laws governing the sale and distribution of the Bonds by the Underwriter. 5. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, there are no material loans outstanding and unpaid and no material lines of credit of the Developer or its Relevant Entities that are secured by an interest in the Property. To the Actual Knowledge of the Developer, the Developer is not currently in default on any loans, lines of credit or other financial obligation, the result of which could reasonably be expected to materially and adversely affect the development of the Property as described in the Preliminary Official Statement. 6. To the Actual Knowledge of the Developer, the Developer is not currently delinquent in any material amount in the payment of ad valorem property taxes, special assessments or special taxes on the Property. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, the Developer has not been delinquent in the last five years in the payment of special assessments or special taxes on property in California owned by the Developer during the period of its ownership included within the boundaries of a community facilities district or assessment district within California that caused a draw on a reserve fund relating to such assessment district or community facilities district financing. 7. As of the date of the Preliminary Official Statement , the statements in the Preliminary Official Statement with respect to the Developer, the Property and the proposed development of the Property as described under the captions entitled "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS" and "CONTINUING DISCLOSURE — The Developers" (but, in all captions, excluding the information regarding the appraisal, market value ratios and annual special tax ratios, and information which is identified as having been provided by a source other than the Developer, and except that no belief is expressed as to any information about valuation, appraisals, market absorption, archaeological or environmental 3 matters), are true and correct in all material respects and do not contain any untrue statement of any material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 8. Except as disclosed 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 Developer, is overtly threatened in writing against the Developer, (i) in any way questioning the due formation and valid existence of the Developer, (ii) in any way seeking to challenge or affect the validity and enforceability of any governmental agreements or approvals necessary for the development of the Property, or seeking to restrain or enjoin continuation and/or completion of the development of the Property as described in the Preliminary Official Statement, (iii) in any way seeking to invalidate or set aside any agreement relating to the development of the Property, (iv) in any way seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture, or the collection or application of the Special Taxes pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, (v) in any way contesting or affecting the validity or enforceability of the Bonds, the Resolution, the Indenture, or the Developer Documents, or any action of the Developer contemplated by any of said Developer Documents, or (vi) in any way contesting the completeness or accuracy of the Preliminary Official Statement or the powers of the Developer or its authority with respect to the Developer Documents or any action of the Developer contemplated by any of said Developer Documents. 9. To the Actual Knowledge of the Developer, all written information submitted by the Developer's employees as authorized by the Developer to the Authority, the Special Tax Consultant, Disclosure Counsel or the Underwriter in connection with the preparation of the Preliminary Official Statement relating to the issuance of the Bonds, and to Integra Realty Resources (the "Appraiser") in connection with the preparation of the Appraisal of the property in the Community Facilities District attached as Appendix B to the Preliminary Official Statement, was, at the time of submission, and is as of the date hereof, except as modified by later written information submitted by, or on behalf of and authorized by, the employees of the Developer involved in the issuance of the Bonds (including information set forth in the Preliminary Official Statement), fair and accurate in all material respects. 10. To the Actual Knowledge of the Developer, 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 Developer, overtly 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. 11. The Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and its Relevant Entities 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 which seeks to challenge or overturn the formation or existence of the Community Facilities District, the authorization of the Special Taxes or the 4 validity of the Bonds or the pledge and assignment of the Special Taxes to secure payment of the Bonds or the proceedings taken for their issuance. The foregoing covenant shall not prevent the Developer from bringing any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, (a) contending that the Special Taxes have not been levied in accordance with the methodologies contained in the Rate and Method of Apportionment of Special Taxes for the Community Facilities District pursuant to which the Special Taxes are levied, (b) with respect to the application or use of the Special Taxes levied and collected, or (c) enforcing the obligations of the Community Facilities District, the Authority and the City under the formation resolutions or any agreement including without limitation, the Resolution of Formation, the Indenture, the Developer Documents, the Bond Purchase Contract, or any other agreements between the Developer and/or the Community Facilities District, Authority, or the City to which the Developer is a party or beneficiary. 12. To the Actual Knowledge of the Developer, there are no claims, disputes, suits, actions pending against the Developer (with proper service of process or notice to the Developer having been accomplished) or overtly threatened in writing against the Developer, nor, to the Actual Knowledge of the Developer, are there any contingent liabilities of, among, by or between the Developer or any Relevant Entity, in each such case which is reasonably expected to materially and adversely affect the ability of the Developer to develop the Property as described in the Preliminary Official Statement, or, when executed, to comply with its obligations under the Developer Documents. 13. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, the Developer is not aware of any State of California or federally classified hazardous substances located on the Property, and does not believe that such a current liability exists with respect to any portion of the Property owned by the Developer. 14. Except as disclosed in the Preliminary Official Statement, the Developer has not submitted an application for, nor received actual notice of, (a) the formation or authorization of any assessment district or community facilities district which would include any portion of the Property, or (b) the authorization or issuance of any debt secured by a special tax or assessment to be levied on any portion of the Property. 15. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, the Developer is not aware of any material failures by it to comply in all material respects with previous continuing disclosure undertakings in a written certificate or agreement executed by it to provide periodic continuing disclosure reports or notices of material events respecting securities offerings in California within the past five years. 16. The Developer agrees to deliver a Closing Certificate dated the date of the issuance of the Bonds at the time of issuance of the Bonds in substantially the form attached as Appendix A. 17. The Developer has received a copy of the Bond Purchase Contract and acknowledges and agrees that the representations and covenants on its part contained in this Certificate are given as a condition to the issuance of the Bonds by the Authority and the underwriting ofthe Bonds by the Underwriter, and that the Authority and the Underwriter would 5 not so issue and so underwrite the Bonds, respectively, without the representations and covenants contained herein. 6 The undersigned has executed this Certificate solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability, individually or collectively, arising from or relating to this Certificate. Any liability arising from or relating to this Certificate may only be asserted against the Developer. This Certificate has been executed as of the date first written above. TSG-PARCEL 1, LLC By: Jon M. Santry, Ex. Vice Preident — Acquisitions & Development 7 APPENDIX A CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CLOSING CERTIFICATE OF TSG-PARCEL 1, LLC [Closing Date] RBC Capital Markets, LLC San Francisco, California California Statewide Communities Development Authority Sacramento, California Ladies and Gentlemen: Reference is made to the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds") and to the Bond Purchase Contract (the "Bond Purchase Contract") to be executed by and between the California Statewide Communities Development Authority (the "Authority") and RBC Capital Markets, LLC (the "Underwriter"), entered into in connection therewith. This Closing Certificate is delivered by TSG-Parcel 1, LLC, a Delaware limited liability company (the "Developer") pursuant to the Bond Purchase Contract. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Certificate of TSG-Parcel 1, LLC, dated February 13, 2019 (the "Certificate"), delivered by the Developer, a copy of which is attached hereto as Exhibit A. The undersigned certifies that he or 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 final Official Statement relating to the Bonds, dated , 2019 (the "Official Statement"). Each statement, representation and warranty made in the Certificate 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 Official Statement. 2. To the Actual Knowledge of the Developer, no event has occurred since the date of the Preliminary Official Statement affecting the statements and information contained in the Sections of the Official Statement described in Paragraph 7 of the Certificate relating to the Developer, the Property and the proposed development of the Property, which should be disclosed in the Official Statement for the 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. 8 3. For the period through 25 days after the "End of the Underwriting Period" as referenced in Section 4(g) of the Bond Purchase Contract (provided the Developer may assume the End of the Underwriting Period is the Closing Date (as defined in the Bond Purchase Contract), unless it receives written notice from the Underwriter that the End of the Underwriting Period is later than the Closing Date), if any event relating to or affecting the Developer, its Relevant Entities, or the development of the Property shall occur as a result of which the information contained in the sections of the Official Statement referred to in Paragraph 7 of this Certificate contains an untrue statement of a material fact or omits 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 Authority, and the Underwriter, and if, in the opinion of counsel to the Authority or the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Developer shall reasonably cooperate with the Authority and the Underwriter in the preparation of an amendment or supplement to the Official Statement in form and substance satisfactory to counsel to the Authority and the Underwriter. 4. The Developer has duly executed and delivered the Disclosure Certificate, and the Disclosure Certificate 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. The undersigned has executed this Closing Certificate solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability, individually or collectively, arising from or relating to this Closing Certificate. Any Liability arising from or relating to this Closing Certificate may only be asserted against the Developer. This Closing Certificate has been executed as of the date first written above. TSG-PARCEL 1, LLC By: 9 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CLOSING CERTIFICATE OF TSG-PARCEL 1, LLC March 12, 2019 RBC Capital Markets, LLC San Francisco, California California Statewide Communities Development Authority Sacramento, California Ladies and Gentlemen: Reference is made to the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds") and to the Bond Purchase Contract (the "Bond Purchase Contract") to be executed by and between the California Statewide Communities Development Authority (the "Authority") and RBC Capital Markets, LLC (the "Underwriter"), entered into in connection therewith. This Closing Certificate is delivered by TSG-Parcel 1, LLC, a Delaware limited liability company (the "Developer") pursuant to the Bond Purchase Contract. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Certificate of TSG-Parcel 1, LLC, dated February 13, 2019 (the "Certificate"), delivered by the Developer, a copy of which is attached hereto as Exhibit A. The undersigned certifies that he or 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 final Official Statement relating to the Bonds, dated February 27, 2019 (the "Official Statement"). Each statement, representation and warranty made in the Certificate 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 Official Statement. 2. To the Actual Knowledge of the Developer, no event has occurred since the date of the Preliminary Official Statement affecting the statements and information contained in the Sections of the Official Statement described in Paragraph 7 of the Certificate relating to the Developer, the Property and the proposed development of the Property, which should be disclosed in the Official Statement for the 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. 1 3. For the period through 25 days after the "End ofthe Underwriting Period" as referenced in Section 4(g) of the Bond Purchase Contract (provided the Developer may assume the End of the Underwriting Period is the Closing Date (as defined in the Bond Purchase Contract), unless it receives written notice from the Underwriter that the End of the Underwriting Period is later than the Closing Date), if any event relating to or affecting the Developer, its Relevant Entities, or the development of the Property shall occur as a result of which the information contained in the sections of the Official Statement referred to in Paragraph 7 of the Certificate contains an untrue statement of a material fact or omits 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 Authority, and the Underwriter, and if, in the opinion of counsel to the Authority or the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Developer shall reasonably cooperate with the Authority and the Underwriter in the preparation of an amendment or supplement to the Official Statement in form and substance satisfactory to counsel to the Authority and the Underwriter. 4. The Developer has duly executed and delivered the Disclosure Certificate, and the Disclosure Certificate 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. The undersigned has executed this Closing Certificate solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability, individually or collectively, arising from or relating to this Closing Certificate. Any liability arising from or relating to this Closing Certificate may only be asserted against the Developer. This Closing Certificate has been executed as of the date first written above. TSG-PARCEL 1, LLC By: 7 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CERTIFICATE OF UPTOWN NEWPORT JAMBOREE, LLC February 13, 2019 RBC Capital Markets, LLC San Francisco, California California Statewide Communities Development Authority Sacramento, California Ladies and Gentlemen: This Developer Certificate is delivered to each of you by Uptown Newport Jamboree, LLC, a Delaware limited liability company (the "Developer") pursuant to, and in satisfaction of Section 6(f)(13) of that certain Bond Purchase Contract (the "Bond Purchase Contract") to be executed by and between the California Statewide Communities Development Authority (the "Authority") and RBC Capital Markets, LLC (the "Underwriter") with respect to the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"). Capitalized terms not otherwise defined herein have the meaning ascribed to them in the Bond Purchase Contract. As used herein, the phrase "Actual Knowledge of the Developer" shall mean the knowledge that the undersigned has or has obtained through (i) interviews with such officers and responsible employees of the Developer and its Relevant Entities 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 Certificate, and/or (ii) inspection of documents in the possession of the Developer that were reasonably available to the undersigned and which the undersigned has determined are necessary for the undersigned to sign this Certificate. With your permission, the undersigned has not conducted any additional or extraordinary inspection or inquiry other than such inspections and inquiries as are prudent and customary in connection with the ordinary course of the Developer's business and operations. Individuals who are no longer employed by the Developer or its Relevant Entities have not been contacted. As used herein, "Relevant Entity" means, with respect to the Developer, any other person or entity (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 or entity is material to an evaluation of the Bonds (i.e. such person or entity's assets or funds would materially affect the Developer's ability to develop the property within the California Statewide 1 Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) (the "Community Facilities District") owned by the Developer as of the date hereof (the "Property") or to pay its Special Taxes on the Property prior to delinquency). The undersigned certifies that he or she is familiar with the facts herein certified and is authorized and qualified to certify the same on behalf of the Developer, and the undersigned, on behalf of the Developer, further certifies as follows: 1. The Developer is duly organized, validly existing and in good standing under the laws of the State of Delaware and has the authority to transact business in the State of California, and has all requisite right, corporate power, and authority (i) to enter into, execute as of the Closing Date, deliver and perform its obligations under the Developer Continuing Disclosure Certificate (the "Disclosure Certificate"), the form of which is attached as part of Appendix F to the Preliminary Official Statement relating to the Bonds (the "Preliminary Official Statement"), (ii) when negotiated and approved by all parties thereto, to enter into, execute, deliver and perform its obligations under the Acquisition Agreement (the "Acquisition Agreement" and together with the Disclosure Certificate, the "Developer Documents") to be entered into by and between the Developer, the Authority, TSG Parcel 1, LLC and the City of Newport Beach (the "City"), and (iii) to own the Property and to conduct its business with respect to the Property as described in the Preliminary Official Statement. 2. The Developer (i) has or will have prior to the Closing Date, duly and validly authorized and approved the execution and delivery of the Developer Documents, and (ii) has or will have prior to the Closing Date, duly authorized and approved the performance by the Developer of its obligations contained in, and the taking of any and all action as may be necessary to carry out, give effect to and perform its obligations under, the Developer Documents and assuming due authorization, execution and delivery by all parties thereto, from and after the Closing Date, the Developer Documents will constitute the valid, legal and binding obligations of the Developer and, when executed will be enforceable against the Developer in accordance with their terms, subject to laws relating to bankruptcy, insolvency, other laws affecting the enforcement of creditors' rights generally, and the application of equitable principles if equitable remedies are sought. . 3. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, (a) the Developer is not in breach of or in default under any applicable law or administrative rule or regulation of the State of California or the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable courtor administrative decree or order, or under any loan agreement, line of credit, note, bond, indenture, fiscal agent agreement, development agreement (including mitigation agreements or joint community facilities agreements) (collectively, the "Material Agreements") to which the Developer is a party or is otherwise subject or bound, which breach or default could reasonably be expected to materially and adversely affect the ability of the Developer to perform its obligations under the Developer Documents or to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes prior to delinquency with respect to the Property (to the extent the responsibility of the Developer) and (b) no event has occurred and is continuing that with the passage of time or giving of notice, or both, would constitute such a breach of or default under any Material Agreement which could 2 reasonably be expected to materially and adversely affect the ability of the Developer to perform its obligations under the Developer Documents or to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes prior to delinquency with respect to the Property (to the extent the responsibility of the Developer). To the Actual Knowledge of the Developer, neither the execution and delivery of the Developer Documents by the Developer and compliance by the Developer on its part with the provisions thereof, nor the consummation of any material transactions contemplated in the Preliminary Official Statement with respect to the Property, will conflict with or constitute such a breach of or default under any applicable law or administrative rule or regulation of the State of California or 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 Material Agreement. 4. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, 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 Developer of its obligations under the Developer Documents have been obtained and are in full force and effect, except as such may be required by state securities or blue sky laws governing the sale and distribution of the Bonds by the Underwriter. 5. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, there are no material loans outstanding and unpaid and no material lines of credit of the Developer or its Relevant Entities that are secured by an interest in the Property. To the Actual Knowledge of the Developer, the Developer is not currently in default on any loans, lines of credit or other financial obligation, the result of which could reasonably be expected to materially and adversely affect the development of the Property as described in the Preliminary Official Statement. 6. To the Actual Knowledge of the Developer, the Developer is not currently delinquent in any material amount in the payment of ad valorem property taxes, special assessments or special taxes on the Property. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, the Developer has not been delinquent in the last five years in the payment of special assessments or special taxes on property in California owned by the Developer during the period of its ownership included within the boundaries of a community facilities district or assessment district within California that caused a draw on a reserve fund relating to such assessment district or community facilities district financing. 7. As of the date of the Preliminary Official Statement , the statements in the Preliminary Official Statement with respect to the Developer, the Property and the proposed development of the Property as described under the captions entitled "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS" and "CONTINUING DISCLOSURE — The Developers" (but, in all captions, excluding the information regarding the appraisal, market value ratios and annual special tax ratios, and information which is identified as having been provided by a source other than the Developer, and except that no belief is expressed as to any information about valuation, appraisals, market absorption, archaeological or environmental 3 matters), are true and correct in all material respects and do not contain any untrue statement of any material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. 8. Except as disclosed 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 Developer, is overtly threatened in writing against the Developer, (i) in any way questioning the due formation and valid existence of the Developer, (ii) in any way seeking to challenge or affect the validity and enforceability of any governmental agreements or approvals necessary for the development of the Property, or seeking to restrain or enjoin continuation and/or completion of the development of the Property as described in the Preliminary Official Statement, (iii) in any way seeking to invalidate or set aside any agreement relating to the development of the Property, (iv) in any way seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture, or the collection or application of the Special Taxes pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, (v) in any way contesting or affecting the validity or enforceability of the Bonds, the Resolution, the Indenture, or the Developer Documents, or any action of the Developer contemplated by any of said Developer Documents, or (vi) in any way contesting the completeness or accuracy of the Preliminary Official Statement or the powers of the Developer or its authority with respect to the Developer Documents or any action of the Developer contemplated by any of said Developer Documents. 9. To the Actual Knowledge of the Developer, all written information submitted by the Developer's employees as authorized by the Developer to the Authority, the Special Tax Consultant, Disclosure Counsel or the Underwriter in connection with the preparation of the Preliminary Official Statement relating to the issuance of the Bonds, and to Integra Realty Resources (the "Appraiser") in connection with the preparation of the Appraisal of the property in the Community Facilities District attached as Appendix B to the Preliminary Official Statement, was, at the time of submission, and is as of the date hereof, except as modified by later written information submitted by, or on behalf of and authorized by, the employees of the Developer involved in the issuance of the Bonds (including information set forth in the Preliminary Official Statement), fair and accurate in all material respects. 10. To the Actual Knowledge of the Developer, 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 Developer, overtly 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. 11. The Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and its Relevant Entities 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 which seeks to challenge or overturn the formation or existence of the Community Facilities District, the authorization of the Special Taxes or the 4 validity of the Bonds or the pledge and assignment of the Special Taxes to secure payment of the Bonds or the proceedings taken for their issuance. The foregoing covenant shall not prevent the Developer from bringing any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, (a) contending that the Special Taxes have not been levied in accordance with the methodologies contained in the Rate and Method of Apportionment of Special Taxes for the Community Facilities District pursuant to which the Special Taxes are levied, (b) with respect to the application or use of the Special Taxes levied and collected, or (c) enforcing the obligations of the Community Facilities District, the Authority and the City under the formation resolutions or any agreement including without limitation, the Resolution of Formation, the Indenture, the Developer Documents, the Bond Purchase Contract, or any other agreements between the Developer and/or the Community Facilities District, Authority, or the City to which the Developer is a party or beneficiary. 12. To the Actual Knowledge of the Developer, there are no claims, disputes, suits, actions pending against the Developer (with proper service of process or notice to the Developer having been accomplished) or overtly threatened in writing against the Developer, nor, to the Actual Knowledge of the Developer, are there any contingent liabilities of, among, by or between the Developer or any Relevant Entity, in each such case which is reasonably expected to materially and adversely affect the ability of the Developer to develop the Property as described in the Preliminary Official Statement, or, when executed, to comply with its obligations under the Developer Documents. 13. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, the Developer is not aware of any State of California or federally classified hazardous substances located on the Property, and does not believe that such a current liability exists with respect to any portion of the Property owned by the Developer. 14. Except as disclosed in the Preliminary Official Statement, the Developer has not submitted an application for, nor received actual notice of, (a) the formation or authorization of any assessment district or community facilities district which would include any portion of the Property, or (b) the authorization or issuance of any debt secured by a special tax or assessment to be levied on any portion of the Property. 15. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Developer, the Developer is not aware of any material failures by it to comply in all material respects with previous continuing disclosure undertakings in a written certificate or agreement executed by it to provide periodic continuing disclosure reports or notices of material events respecting securities offerings in California within the past five years. 16. The Developer agrees to deliver a Closing Certificate dated the date of the issuance of the Bonds at the time of issuance of the Bonds in substantially the form attached as Appendix A. 17. The Developer has received a copy of the Bond Purchase Contract and acknowledges and agrees that the representations and covenants on its part contained in this Certificate are given as a condition to the issuance of the Bonds by the Authority and the underwriting of the Bonds by the Underwriter, and that the Authority and the Underwriter would 5 not so issue and so underwrite the Bonds, respectively, without the representations and covenants contained herein, 6 The undersigned has executed this Certificate solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability, individually or collectively, arising from or relating to this Certificate. Any liability arising from or relating to this Certificate may only be asserted against the Developer. This Certificate has been executed as of the date first written above. UPTOWN NEWPORT JAMBOREE, LLC By: Pre id Join ICI. Santry, Ex. Vice ent — Acquisitions & Development 7 APPENDIX A CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CLOSING CERTIFICATE OF UPTOWN NEWPORT JAMBOREE, LLC [Closing Date] RBC Capital Markets, LLC San Francisco, California California Statewide Communities Development Authority Sacramento, California Ladies and Gentlemen: Reference is made to the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds") and to the Bond Purchase Contract (the "Bond Purchase Contract") to be executed by and between the California Statewide Communities Development Authority (the "Authority") and RBC Capital Markets, LLC (the "Underwriter"), entered into in connection therewith. This Closing Certificate is delivered by Uptown Newport Jamboree, LLC, a Delaware limited liability company (the "Developer") pursuant to the Bond Purchase Contract. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Certificate of Uptown Newport Jamboree, LLC, dated February 13, 2019 (the "Certificate"), delivered by the Developer, a copy of which is attached hereto as Exhibit A. The undersigned certifies that he or 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 final Official Statement relating to the Bonds, dated , 2019 (the "Official Statement"). Each statement, representation and warranty made in the Certificate 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 Official Statement. 2. To the Actual Knowledge of the Developer, no event has occurred since the date of the Preliminary Official Statement affecting the statements and information contained in the Sections of the Official Statement described in Paragraph 7 of the Certificate relating to the Developer, the Property and the proposed development of the Property, which should be disclosed in the Official Statement for the 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. 8 3. For the period through 25 days after the "End of the Underwriting Period" as referenced in Section 4(g) of the Bond Purchase Contract (provided the Developer may assume the End of the Underwriting Period is the Closing Date (as defined in the Bond Purchase Contract), unless it receives written notice from the Underwriter that the End of the Underwriting Period is later than the Closing Date), if any event relating to or affecting the Developer, its Relevant Entities, or the development of the Property shall occur as a result of which the information contained in the sections of the Official Statement referred to in Paragraph 7 of this Certificate contains an untrue statement of a material fact or omits 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 Authority, and the Underwriter, and if, in the opinion of counsel to the Authority or the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Developer shall reasonably cooperate with the Authority and the Underwriter in the preparation of an amendment or supplement to the Official Statement in form and substance satisfactory to counsel to the Authority and the Underwriter. 4. The Developer has duly executed and delivered the Disclosure Certificate, and the Disclosure Certificate 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. The undersigned has executed this Closing Certificate solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability, individually or collectively, arising from or relating to this Closing Certificate. Any liability arising from or relating to this Closing Certificate may only be asserted against the Developer. This Closing Certificate has been executed as of the date first written above. UPTOWN NEWPORT JAMBOREE, LLC By: 9 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 CLOSING CERTIFICATE OF UPTOWN NEWPORT JAMBOREE, LLC March 12, 2019 RBC Capital Markets, LLC San Francisco, California California Statewide Communities Development Authority Sacramento, California Ladies and Gentlemen: Reference is made to the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds") and to the Bond Purchase Contract (the "Bond Purchase Contract") to be executed by and between the California Statewide Communities Development Authority (the "Authority") and RBC Capital Markets, LLC (the "Underwriter"), entered into in connection therewith. This Closing Certificate is delivered by Uptown Newport Jamboree, LLC, a Delaware limited liability company (the "Developer") pursuant to the Bond Purchase Contract. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Certificate of Uptown Newport Jamboree, LLC, dated February 13, 2019 (the "Certificate"), delivered by the Developer, a copy of which is attached hereto as Exhibit A. The undersigned certifies that he or 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 final Official Statement relating to the Bonds, dated February 27, 2019 (the "Official Statement"). Each statement, representation and warranty made in the Certificate 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 Official Statement. 2. To the Actual Knowledge of the Developer, no event has occurred since the date of the Preliminary Official Statement affecting the statements and information contained in the Sections of the Official Statement described in Paragraph 7 of the Certificate relating to the Developer, the Property and the proposed development of the Property, which should be disclosed in the Official Statement for the 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. 1 3. For the period through 25 days after the "End of the Underwriting Period" as referenced in Section 4(g) of the Bond Purchase Contract (provided the Developer may assume the End of the Underwriting Period is the Closing Date (as defined in the Bond Purchase Contract), unless it receives written notice from the Underwriter that the End of the Underwriting Period is later than the Closing Date), if any event relating to or affecting the Developer, its Relevant Entities, or the development of the Property shall occur as a result of which the information contained in the sections of the Official Statement referred to in Paragraph 7 of the Certificate contains an untrue statement of a material fact or omits 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 Authority, and the Underwriter, and if, in the opinion of counsel to the Authority or the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Developer shall reasonably cooperate with the Authority and the Underwriter in the preparation of an amendment or supplement to the Official Statement in form and substance satisfactory to counsel to the Authority and the Underwriter. 4. The Developer has duly executed and delivered the Disclosure Certificate, and the Disclosure Certificate 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. The undersigned has executed this Closing Certificate solely in his or her capacity as an authorized officer or representative of the Developer and he or she will have no personal liability, individually or collectively, arising from or relating to this Closing Certificate. Any liability arising from or relating to this Closing Certificate may only be asserted against the Developer. This Closing Certificate has been executed as of the date first written above. UPTOWN NEWPORT JAMBOREE, LLC By: eTh Integra Realty Resources Sacramento Appraisal of Real Property Uptown Newport (Phase 1) CSCDA Community Facilities District No. 2018-03 Newport Beach, Orange County, California 92660 Prepared For: California Statewide Communities Development Authority Effective Date of the Appraisal: December 22, 2018 Report Format: Appraisal Report — Comprehensive Format IRR - Sacramento File Number: 193-2018-0555 irr I Uptown Newport (Phase 1) CSCDA Community Facilities District No. 2018-03 Newport Beach, California Integra Realty Resources Sacramento February 5, 2019 3825 Atherton Road Suite 500 Rocklin, CA 95765 Mr. James Hamill Mr. Jon Penkower Managing Directors California Statewide Communities Development Authority 1700 N. Broadway Walnut Creek, CA 94596 T 916.435.3883 F 916.435.4774 www.irr.com SUBJECT: Market Value Appraisal Uptown Newport (Phase 1) CSCDA Community Facilities District No. 2018-03 Newport Beach, Orange County, California 92660 IRR - Sacramento File No. 193-2018-0555 Dear Messrs. Hamill and Penkower: Integra Realty Resources — Sacramento is pleased to submit the accompanying appraisal of the referenced property. The purpose of the appraisal is to develop an opinion of the market value of lot 1, as if public capital facilities and improvements have been completed, subject to a hypothetical condition, of the fee simple interest in the property in bulk as of the effective date of the appraisal, December 22, 2018. The client for the assignment is California Statewide Communities Development Authority, and the intended use is for bond underwriting purposes. The appraised property comprises Lot 1 within Phase 1 of the Uptown Newport project. The appraised property herein encompasses 158 condominium units and 3,000 square feet of commercial space. The Uptown Newport project site is located on Jamboree Road and bounded by Birch Street and MacArthur Boulevard in downtown Newport Beach, Orange County, California, within the Newport Beach city limits. A more detailed legal and physical description of the subject property is contained within the attached report. The appraised property comprises the taxable portion of the proposed California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) No. 2018-03 for the Uptown Newport project. In addition to the appraised property, CSCDA CFD No. 2018-03 Mr. James Hamill Mr. Jon Penkower California Statewide Communities Development Authority February 5, 2019 Page 2 (Newport Uptown) also contains a 0.635-acre parcel (identified as Lot 2) and one public/quasi-public parcel, which are not a part of this appraisal. To report the assignment results, we use the Appraisal Report option of Standards Rule 2- 2(a) of USPAP. As USPAP gives appraisers the flexibility to vary the level of information in an Appraisal Report depending on the intended use and intended users of the appraisal, we adhere to the Integra Realty Resources internal standards for an Appraisal Report — Standard Format. This format summarizes the information analyzed, the appraisal methods employed, and the reasoning that supports the analyses, opinions, and conclusions. The appraisal report has been conducted in accordance with appraisal standards and guidelines found in the Uniform Standards of Professional Appraisal Practice (USPAP) and the Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (2004). This document is an Appraisal Report, which is intended to comply with the reporting requirements set forth under Standards Rule 2-2(a) of the 2018-2019 edition of USPAP. Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of value of the appraised property, in bulk, subject to the hypothetical condition all public capital facilities and improvements to be financed by the CFD Special Tax have been completed, as well as the Assessed Value of Lot 2 not appraised, is as follows: Value Conclusions Appraisal Premise Market Value of Lot 1, As If Public Capital Facilities and Improvements Have Been Completed Assessed Value of Lot 2 Total Aggregate Value of Appraised and Assessed Properties in the District Interest Appraised Date of Value Value Conclusion Fee Simple December 22, 2018 $49,500,000 S1,721.636 $51,221,636 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. None The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. We have been requested to provide the market value of the fee simple interest in the appraised property, subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. irr- Mr. James Hamill Mr. Jon Penkower California Statewide Communities Development Authority February 5, 2019 Page 3 Any properties within CFD No. 2018-03 Phase 1 not subject to the Lien of the Special Tax securing the Bonds (for -rent multi -family, public and quasi -public land use sites) are not a part of this appraisal. The opinions of value expressed in this report are based on estimates and forecasts that are prospective in nature and subject to considerable risk and uncertainty. Events may occur that could cause the performance of the property to differ materially from our estimates, such as changes in the economy, interest rates, capitalization rates, financial strength of tenants, and behavior of investors, lenders, and consumers. Additionally, our opinions and forecasts are based partly on data obtained from interviews and third party sources, which are not always completely reliable. Although we are of the opinion that our findings are reasonable based on available evidence, we are not responsible for the effects of future occurrences that cannot reasonably be foreseen at this time. If you have any questions or comments, please contact the undersigned. Thank you for the opportunity to be of service. Respectfully submitted, INTEGRA REALTY RESOURCES - SACRAMENTO Eric Segal, MAI Certified General Real Estate Appraiser California Certificate # AG026558 Telephone: 916-435-3883, ext. 228 Email: esegal@irr.com Sara Gilbertson Certified General Real Estate Appraiser California Certificate # 3002204 Telephone: 916-435-3883, ext. 248 Email: sgilbertson@irr.com irr- Table of Contents Summary of Salient Facts and Conclusions General Information Identification of Subject Sale History Purpose of the Appraisal Definition of Market Value Definition of Property Rights Appraised Intended Use and User Applicable Requirements Report Format Prior Services Scope of Work Economic Analysis Area Analysis — Orange County Area Map Surrounding Area Analysis Residential Market Analysis Retail Market Analysis Property Analysis Land Description and Analysis 9 9 14 14 18 33 37 37 1 Highest and Best Use 50 2 Valuation 52 4 Valuation Methodology 52 5 Land Residual Analysis 54 5 Adjustment Factors 56 5 Sales Comparison Approach 68 5 Adjustment Factors 71 6 Analysis and Adjustment of Sales 72 6 Land Value Conclusion — Sales Comparison 6 Approach 74 6 Reconciliation and Conclusion of Land Value 75 6 Exposure Time 76 Marketing Time 76 Certification 77 Assumptions and Limiting Conditions 79 Addenda A. Appraiser Qualifications B. Definitions C. Preliminary Title Report Uptown Newport (Phase 1) irr. Summary of Salient Facts and Conclusions 1 Summary of Salient Facts and Conclusions Property Name Uptown Newport (Phase 1) Address 4311-4321 Jamboree Rd. Newport Beach, Orange County, California 92660 Property Type Land - Multifamily Owner of Record TSG - Parcel 1, LLC, a Delaware limited liability company, and Uptown Newport Ja mboree, LLC, a Delaware limited liability company (collectively, the "Developer") Tax ID 445-134-17 (Lot 1), 445-134-29 (Lot 2) and 445-134-22 (Remainder) Land Area Zoning Designation Highest and Best Use Exposure Time; Marketing Period Date of the Report 3.248 acres; 141,483 SF PC-58, Planned Community (Uptown Newport), Uptown Newport Planned Community Development Mixed -use (residential with commercial) 12 months; 12 months February 5, 2019 Value Conclusions Appraisal Premise Interest Appraised Date of Value Value Conclusion Market Value of Lot 1, As If Public Capital Facilities and Improvements Have Been Completed Assessed Value of Lot 2 Total Aggregate Value of Appraised and Assessed Properties in the District Fee Simple December 22, 2018 $49,500,000 51,721,636 $51,221,636 The values reported above are subjecttothe definitions, assumptions, and limiting conditions set forth in the accompanying report of which this summary is a part. No party other than California Statewide Communities Development Authority and the associated finance team may use or rely on the information, opinions, and conclusions contained in the report. It is assumed that the users of the report have read the entire report, including all of the definitions, assumptions, and limiting conditions contained therein. Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. None The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. We have been requested to provide the market value of the fee simple interest in the appraised property, subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. irr. Uptown Newport (Phase 1) General Information 2 General Information Project History The Uptown Newport Planned Community Development Plan is located within the City of Newport Beach Airport Area, encompassing a 25-acre project site with access provided by Jamboree Road, Birch Street, Von Karman Avenue, and MacArthur Boulevard. The Uptown Newport project is located in close proximity to the 405, 73 and 55 Freeways via MacArthur Boulevard and Jamboree Road. Uptown Newport is located near regional open space areas, including Upper Newport Bay, Mason Regional Park in Irvine and the San Joaquin Freshwater Marsh. It is also located near the University of California - Irvine (UCI) with immediate adjacency to the UCI North Campus, which is located opposite the Uptown Newport project on Jamboree Road. The Uptown Newport project site was originally developed as part of the Koll Center Newport, and has been used for manufacturing telecommunications equipment and computer chips since the 1970's. The City's General Plan calls for infill development and redevelopment of the Airport Business Area. In September of 2010, the City approved the Integrated Conceptual Development Plan (ICDP) to provide a framework for residential development on both the Koll Center Newport and Uptown Newport properties. The ICDP allocated 1,244 residential units and up to 11,500 square feet of retail to be developed on the Uptown Newport property and up to 260 residential units to be developed on the Koll property. The Uptown Newport Planned Community Development Plan provides the regulatory framework for redevelopment of the Subject Property into a high -density mixed use residential project. Uptown Newport (Phase 1) General Information 3 - till. 4, 1111. � lb'# KOLL CENTER • j 1- '.3, l f ,ti0'I NEWPORT I W 't- LAI(E I r �1 �Peilop....‘ I 2 ¢ KOL1,. CENTER! . � +�� , i` 1 m NEWPQRT * ti _ #I ■ t "i EXISTINi ACCESS ' KOLL CENTER NEWPORT yS,Id ....4311 JAMBOREE RD -. 4321 JAMBOREE RI da— - * ::.JAMBOREE ROAD'.* ISTING SIAALIZED EXISTING ACCESS ACCESS 1 UNIVERSITY OF CALIFORNIA IRVINE"NORTH CAMPUS" SITE BOUNDARY SCALE:1"=400' 0 200' 400' (Source: Uptown Newport Planned Community Development Plan 2-14-13, Figure 1-3: Aerial photo of the Uptown Newport Project site) The Uptown Newport project will be developed in two primary phases. Phase 1, which encompasses a portion of the appraised property, will include demolition of the existing single -story office building at 4311 Jamboree Road and development of the westerly portion of the property, including the frontage along Jamboree Road. Phase 1 development includes 680 residential units (attached single- and multi- family) and 11,500 square feet of retail. The TowerJazz semiconductor facility is an existing semiconductor chip manufacturing facility that operates on the Uptown Newport property. The operation of TowerJazz may continue as an interim use. In accordance with the Uptown Newport Planned Community Development Plan, interim light irr Uptown Newport (Phase 1) General Information 4 industrial uses shall cease to be an allowed use after March 12, 2027. Phase 2 will include demolition of the TowerJazz building and development of approximately 564 residential units on the easterly portion of the property. JAUBORFF ROAD Figure 1-1: Phasing Diagram Phase 1 Phaso2 Total Number of Units: 68D 564 1,244 Developable Area Oa 8-74 9-72 18.46 ParkArea (ac): 1.03 1.02 2.05 Retail (sr): 1 1.303 0 11,500 Right of WayAr a {ack >329 1_3D 4,54 Total Area (ad: 13_01 12.04 25.05 (Source: Uptown Newport Planned Community Development Plan 2-14-13) ,5O ?OD Identification of Subject The appraised property comprises Lot 1 within Phase 1 of the Uptown Newport project. The appraised property herein encompasses 158 condominium units and 3,000 square feet of commercial space. The Uptown Newport project site is located on Jamboree Road and bounded by Birch Street and MacArthur Boulevard in downtown Newport Beach, Orange County, California, within the Newport Beach city limits. A more detailed legal and physical description of the subject property is contained within the attached report. The appraised property comprises the taxable portion of the proposed California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) No. 2018-03 for the Uptown Newport project. In addition to the appraised property, CSCDA CFD No. 2018-03 (Newport Uptown) also contains a 0.635-acre parcel (identified as Lot 2) and one public/quasi-public parcel, which are not a part of this appraisal. A legal description of the property is provided in the preliminary title report, a copy of which is provided in the Addenda. irr. Uptown Newport (Phase 1) General Information 5 Property Identification Property Name Tax ID Owner of Record Uptown Newport (Phase 1) Newport Beach, California 92660 445-134-17 (Lot 1), 445-134-29 (Lot 2) and 445-134-22 (Remainder) TSG - Parcel 1, LLC, a Delaware Iimited IiabiIity company, and Uptown Newport Jamboree, LLC, a Delaware limited liability company (collectively, the "Developer") Sale History To the best of our knowledge, no sale or transfer of ownership has taken place within a three-year period prior to the effective appraisal date. Purpose of the Appraisal The purpose of the appraisal is to develop an opinion of the market value of lot 1, as if public capital facilities and improvements have been completed, subject to a hypothetical condition, of the fee simple interest in the property in bulk as of the effective date of the appraisal, December 22, 2018. The date of the report is February 5, 2019. The appraisal is valid only as of the stated effective date or dates. Definition of Market Value Market value 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 and 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: • Buyer and seller are typically motivated; • Both parties are well informed or well advised, and acting in what they consider their own best interests; • A reasonable time is allowed for exposure in the open market; • Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and • 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." (Source: Code of Federal Regulations, Title 12, Chapter 1, Part 34.42(g]; also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472) Definition of Property Rights Appraised Fee simple estate is defined 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." irr. Uptown Newport (Phase 1) General Information 6 (Source: Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015)) Intended Use and User The intended use of the appraisal is for bond underwriting purposes. The client is California Statewide Communities Development Authority. The intended users are California Statewide Communities Development Authority and the associated finance team. The appraisal is not intended for any other use or user. No party or parties other than California Statewide Communities Development Authority and the associated finance team may use or rely on the information, opinions, and conclusions contained in this report. Applicable Requirements This appraisal is intended to conform to the requirements of the following: • Uniform Standards of Professional Appraisal Practice (USPAP); • Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute; • Applicable state appraisal regulations; • Appraisal Standards for Land Secured Financing published by the California Debt and Investment Advisory Commission (2004); • Interagency Appraisal and Evaluation Guidelines issued December 10, 2010. Report Format This report is prepared under the Appraisal Report option of Standards Rule 2-2(a) of USPAP. As USPAP gives appraisers the flexibility to vary the level of information in an Appraisal Report depending on the intended use and intended users of the appraisal, we adhere to the Integra Realty Resources internal standards for an Appraisal Report — Standard Format. This format summarizes the information analyzed, the appraisal methods employed, and the reasoning that supports the analyses, opinions, and conclusions. Prior Services USPAP requires appraisers to disclose to the client any other services they have provided in connection with the subject property in the prior three years, including valuation, consulting, property management, brokerage, or any other services. We have not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. Scope of Work To determine the appropriate scope of work for the assignment, we considered the intended use of the appraisal, the needs of the user, the complexity of the property, and other pertinent factors. Our concluded scope of work is described below. irr. Uptown Newport (Phase 1) General Information 7 Valuation Methodology This Appraisal Report has been prepared in accordance with the Uniform Standards of Professional Appraisal Practice (USPAP). This analysis is intended to be an "appraisal assignment," as defined by USPAP; the intention is the appraisal service be performed in such a manner that the result of the analysis, opinions, or conclusion be that of a disinterested third party. Several legal and physical aspects of the appraised properties were researched and documented. A physical inspection of the property was completed and serves as the basis for the site description contained in this report. Zoning and entitlement information was collected from the City of Newport Beach Planning Department. The subject's earthquake zones, flood zones and utilities were obtained from the respective agencies, and property tax information was obtained from the Orange County Assessor's Office on-line resources. Data relating to the subject's neighborhood and surrounding market area were analyzed and documented. This information was obtained through personal inspections of portions of the neighborhood and market area; newspaper articles; real estate conferences; and interviews with various market participants, including property owners, property managers, land brokers, developers and local government agencies. In this appraisal we determined the highest and best use of the subject property as vacant based on the four standard tests (legal permissibility, physical possibility, financial feasibility and maximum productivity). As will be shown in the Highest and Best Use Analysis section, the highest and best use of the subject property as vacant is for near term mixed -use development (in accordance with existing entitlements). We have been requested to provide estimates of market value of the appraised property in bulk, subject to the hypothetical condition various public capital facilities and improvements to be financed by the CFD Special Tax have been completed. Appraisers usually consider the use of three approaches to value when developing a market value opinion for real property. These are the cost approach, sales comparison approach, and income capitalization approach. Use of the approaches in this assignment is summarized as follows: Approaches to Value Approach Applicability to Subject Use in Assignment Cost Approach Applicable Utilized Sales Comparison Approach Applicable Utilized Income Capitalization Approach Applicable Utilized We have been requested to estimate the market value of the fee simple estate of the appraised property, in bulk, comprising the California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) No. 2018-03 (Uptown Newport), subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. In order to estimate the market value of the subject property, two approaches to value were utilized: the sales comparison approach and the land residual analysis, which is a form of discounted cash flow analysis. Uptown Newport (Phase 1) General Information 8 In the land residual analysis, the revenue component of the DCF will be based on the probable market value for the average, proposed residential condominium units and the concluded market value of the commercial condominium unit. A number of assumptions were made in the discounted cash flow analysis, not the least of which was the forecast of absorption, or disposition, of the condominium units comprising the subject property. Any properties within CFD No. 2018-03 Phase 1 not subject to the Lien of the Special Tax securing the Bonds (for -rent multi -family, public and quasi -public land use sites) are not a part of this appraisal. Research and Analysis The type and extent of our research and analysis is detailed in individual sections of the report. This includes the steps we took to verify comparable sales, which are disclosed in the comparable sale profile sheets in the addenda to the report. Although we make an effort to confirm the arms -length nature of each sale with a party to the transaction, it is sometimes necessary to rely on secondary verification from sources deemed reliable. Inspection Eric Segal, MAI, conducted an on -site inspection of the property on December 15, 2018. irr. Uptown Newport (Phase 1) Area Analysis — Orange County 9 Economic Analysis Area Analysis — Orange County Introduction Orange County is located in the southern part of California, bordered by Los Angeles County on the north, San Bernardino and Riverside Counties on the northeast and San Diego County on the southeast and the Pacific Ocean on the southwest. It is the smallest county in Southern California, with an area of 948 square miles, 157 square miles of which is water. The Santa Ana River roughly bisects the county into a northwestern and southeastern portion. The southeastern, inland part of the county has higher elevations in the foothills of the Santa Ana Mountains, the topography transitions to lower coastal land in the northwestern part of the county. Most of the population in the county is concentrated within two coastal valleys — the Santa Ana Valley and Saddleback Valley — that lie in the basin. The northern and central portions of the county are more urbanized with dense development, while the southern portion is suburban in nature, with lower density development. The Santa Ana Valley is home to most of the business districts in the county, with Anaheim, Buena Park, Costa Mesa, Fullerton, Irvine, Orange, Placentia, Santa Ana and Yorba Linda among the larger cities located there. Several cities within the county are located on the Pacific Coast: Huntington Beach, Newport Beach, Laguna Beach, Dana Point and San Clemente. In total, there are 34 incorporated towns and cities in the county. Population The county has a population of over 3.2 million and has grown at a moderate rate of 0.8% per year for the past five years. The following table illustrates recent population trends for areas within Orange County over the past several years. irr. Uptown Newport (Phase 1) Area Analysis - Orange County 10 Population Trends City 2013 2014 2015 2016 2017 2018 %/Yr Aliso Viejo 49,812 50,142 50,281 50,335 50,384 51,950 0.9% Anaheim 349,827 351,345 353,211 354,167 356,502 357,084 0.4% Brea 41,826 42,846 43,802 44,175 44,776 44,890 1.5% Buena Park 82,485 82,646 82,869 82,950 83,926 83,995 0.4% Costa Mesa 112,899 113,161 114,423 114,825 115,012 115,296 0.4% Cypress 48,893 49,104 49,347 49,546 49,704 49,978 0.4% Dana Point 33,581 33,595 33,656 33,768 33,897 34,071 0.3% Fountain Valley 56,350 56,683 56,773 56,815 56,916 56,920 0.2% Fullerton 139,364 140,808 141,438 142,406 143,499 144,214 0.7% Garden Grove 174,680 175,302 176,318 176,955 176,784 176,896 0.3% Huntington Beach 194,769 196,546 198,243 200,501 201,981 202,648 0.8% Irvine 232,910 243,906 251,181 256,926 267,097 276,176 3.7% Laguna Beach 23,016 23,040 23,097 23,137 23,248 23,309 0.3% Laguna Hills 30,818 30,872 30,915 30,935 31,829 31,818 0.6% Laguna Niguel 63,545 63,638 63,804 63,850 65,288 65,377 0.6% Laguna Woods 16,468 16,483 16,504 16,513 16,575 16,597 0.2% La Habra 61,597 61,968 62,184 62,270 62,451 62,850 0.4% Lake Forest 78,693 78,911 79,432 81,903 83,414 84,845 1.6% La Palma 15,851 15,874 15,896 15,907 15,933 15,948 0.1% Los Alamitos 11,711 11,782 11,811 11,846 11,860 11,863 0.3% Mission Viejo 94,202 94,433 94,985 95,510 95,985 95,987 0.4% Newport Beach 85,709 85,738 85,815 85,782 86,207 87,182 0.3% Orange 140,118 140,301 140,670 140,792 140,981 141,952 0.3% Placentia 52,179 52,278 52,483 52,709 52,772 52,755 0.2% Rancho Santa Margari 48,884 49,025 49,205 49,258 49,301 49,329 0.2% San Clemente 64,160 64,179 64,468 64,547 65,009 65,543 0.4% San Juan Capistrano 35,536 36,010 36,240 36,412 36,624 36,759 0.7% Santa Ana 333,558 335,441 337,180 337,373 337,843 338,247 0.3% Seal Beach 25,406 25,528 25,909 25,938 25,959 25,984 0.5% Stanton 38,997 39,079 39,233 39,378 39,500 39,470 0.2% Tustin 78,542 78,695 79,975 81,484 82,291 82,344 1.0% Villa Park 5,893 5,905 5,913 5,920 5,944 5,951 0.2% Westminster 92,297 92,653 93,431 93,991 94,353 94,476 0.5% Yorba Linda 66,416 67,126 67,528 67,858 68,781 69,121 0.8% Unincorporated 121,160 121,875 124,094 125,540 126,342 129,278 1.3% Total 3,102,152 3,126,918 3,152,314 3,172,222 3,198,968 3,221,103 0.8% Source: California Department of Finance Orange County is the third most populous county in California, following Los Angeles and San Diego Counties. The majority of residents live within incorporated areas, the largest of which is the city of Anaheim, with a population of just over 357,000. Santa Ana is the second most populous and is also the county seat. The seven largest cities, ranging in population from 141,952 to 357,084, make up over 50% of the total county population. Employment & Economy The California Employment Development Department has reported the following employment data for Orange County over the past few years. Uptown Newport (Phase 1) Area Analysis — Orange County 11 Employment Trends 2012 2013 2014 2015 2016 2017 Labor Force 1,562,100 1,565,300 1,572,700 1,588,800 1,602,500 1,618,800 Employment 1,439,300 1,462,300 1,486,400 1,517,800 1,537,700 1,562,200 Job Growth 32,900 23,000 24,100 31,400 19,900 24,500 Unemployment Rate 7.9% 6.6% 5.5% 4.5% 4.0% 3.5% Source: California Employment Development Department The unemployment rate in Orange County was 2.9% in October 2018, which is lower than California and the U.S., with 4.0% and 3.5% rates, respectively. Most areas within the state and nation, including Orange County, saw declining unemployment rates from 2004 through 2006, increases from 2007 to 2010, and declines from 2011-2017. The following chart indicates the percentage of total employment for each sector within the county as of October 2018. EMPLOYMENT BY SECTOR Professional/Business Services Trade/Transportation/Utilities Educational/Health Services Leisure/Hospitality Government Manufacturing Financial Activities Construction/Mining/Logging Other Services Information Agriculture 0.0% 2.0% 4.0% 6.0% 8.0% 10 0% 12.0% 14.0% 16 0% 18.0% 20.0% Source: California Employment Development Department Orange County has a diverse economy, with the majority of its employment distributed among several sectors of industry, as opposed to one or two key sectors. As illustrated in the chart above, the region's largest employment sectors are Professional and Business Services; Trade/Transportation/ Utilities; Educational and Health Services; and Leisure and Hospitality. The county is home to several Fortune 500 and Fortune 1000 companies, as well as start-up companies and notable technology companies, such as Gateway Inc., Linksys, Blizzard Entertainment irr. Uptown Newport (Phase 1) Area Analysis — Orange County 12 and Panasonic Avionics Corporation. Regional headquarters of several international companies, such as Mazda, Toshiba, Toyota, Samsung, Mitsubishi, Hyundai and others, are also located in the county, as are headquarters for several fashion brands (Oakley, Inc., Hurley International, St. John's) and restaurants (In-N-Out Burger, Marie Callendar's, Claim Jumper, Taco Bell, El Pollo Loco and Wienerschnitzel). The region's largest employers are listed in the following table. Largest Employers Employer Industry Employees 1 Walt Disney Co. Leisure / Hospitality 29,000 2 University of California, Irvine Education 23,605 3 County of Orange Government 18,264 4 St. Joseph Health System Healthcare 11,925 5 Allied Universal Security Services 8,229 6 Kaiser Permanente Healthcare 7,694 7 Boeing Co. Manufacturing 6,103 8 Walmart Retail 6,000 9 California State University Fullerton Education 5,781 10 Bank of America Corp. Financial 5,500 Source: County of Orange, Comprehensive Annual Financial Report, June 30, 2017 Household Income Median household income represents a broad statistical measure of well-being or standard of living in a community. The median income level divides households into two equal segments with one half of households earning less than the median and the other half earning more. The median income is considered to be a better indicator than the average household income as it is not dramatically affected by unusually high or low values. In the year 2016 (most recent data available from the U.S. Census Bureau), Orange County's median household income was $78,145, which was higher than the state of California's median income of $63,783. Transportation Access to and through Orange County is provided by several routes, including three major interstates and several state routes and connector highways. The Santa Ana Freeway (Interstate 5) is one the primary north -south transportation routes in Southern California, connecting all of California, Oregon and Washington to Los Angeles, and Los Angeles to suburbs southeast, terminating in San Diego. It connects to several state highways, including State Route 91, State Route 22, and State Route 55. It also connects with Interstate 405, known as the San Diego Freeway, another primary route through the region, providing access from San Fernando north of Los Angeles, continuing south through Inglewood west of Los Angeles, through Torrance, Fountain Valley and Irvine, where it terminates at the 1-5 junction. Several major east -west freeways provide access to neighboring counties in Southern California. State Route 91, known as the Riverside Freeway, runs from Gardena in Los Angeles County to Riverside county to the east. State Route 22 runs between Long Beach and Orange, through Garden Grove. irr. Uptown Newport (Phase 1) Area Analysis — Orange County 13 State Route 55, also known as the Costa Mesa Freeway, runs from the coast in Newport Beach to Anaheim, where it terminates at State Route 91. Several smaller highways connect to these primary routes to provide ground transportation throughout the county. Public transportation is provided primarily by the Orange County Transportation Authority (OCTA), which manages the county's bus network, maintains local streets and freeways, regulates taxicab services; and manages express toll lanes on State Route 91. The OCTA also collaborates with Southern California's Metrolink to provide commuter rail service via the Orange County Line, the 91 Line and the Inland Empire -Orange County Line. The county has one major airport — the John Wayne Airport, with 14 airlines servicing over 9 million passengers annually. The next closest airports are Los Angeles International Airport approximately 42 miles northwest; Ontario Airport approximately 43 miles northeast; and Hollywood Burbank Airport approximately 54 miles northwest. Recreation & Culture Orange County offers innumerable recreational and cultural opportunities, including world renowned Disneyland, Knotts Berry Farm, beaches, biking paths and hiking trails, golf courses, shopping and dining. Disneyland is ranked as the second most visited theme park in the world and Knotts Berry Farm receives roughly seven million visitors per year. The year-round, mild climate attracts millions of tourists annually, with 40 miles of coastline home to several beaches popular for surfing and sunbathing. Anaheim is home to the largest convention center on the West Coast with major conventions held throughout the year. Several significant shopping malls are located in Orange County, including South Coast Plaza, the largest mall in California and the third largest in the U.S.; Fashion Island, an open-air mall, in Newport Beach; and the Irvine Spectrum Center, an outdoor shopping and entertainment center. There are several historical points of interest in the county, including Mission San Juan Capistrano and the Richard Nixon Presidential Library and Museum, as well as other notable structures/venues, such as Crystal Cathedral and Angel Stadium. Over 28 school districts provide elementary, middle and high school education in the county. Orange County has many higher education institutions ranging from two-year community colleges to private and public universities, including Chapman University, Concordia University, Hope international University, Trinity Law School, Vanguard University, California State University Fullerton, and University of California Irvine. Conclusion Orange County, one of the largest counties in the state, is located in the southern portion of California, with extensive transportation routes; diverse employment opportunities; numerous colleges and universities; and recreational activities ranging from world famous amusement parks, popular beaches, an abundance of shopping centers and dining establishments, and outdoor hiking and biking trails. After a period of contraction in the economy and real estate markets around 2008- 2010, the region has seen improvement in employment and economic conditions over the past few years. The near -term outlook is for sustained growth. Uptown Newport (Phase 1) Area Map 14 Area Map Simi Vallet, Thousand C-:!ks Agoura His Ja Mourn Sgn illn Anhlog...trt Wilson Antonio . .0.064 fr ?,,,,,..... SQ17 Bernardino Pia[Tonal Glerlda[e Arcadld ia Genora /7 _ :•:. Highland West Haywood lea AI:Ian-13'a Baldwin P.arli. 2".10j—IAPIalici Enna Sart Bernardino LOs Angeles El Monte West,COvi 6-2-76ntliira -1 0.• Colton Redlands Santa Mar ica riorencMontebello .. Ponic...,n- a-- —Rubicipux Lorna Linda •yr.lcai.pa e . C,•la ",•=2 Ghino YThittier Riv :side ingiewooci Bell ... Hawthorne ..=■—i..- Norwalk Yorba Linda Cl-den :pillrtc?1CIZ..,:!"Fullertpre Torrance Larson ;ific Ocean bing Long Rancho Palos Verdes Beach 6e?Orit G:izat.c Newport Beach Laguna Niguel Garden Grine Santa Ana 1 Norco Cleveand !Van ol Forest s,,ntkig.,0 ak Huntins.Ron Beach Costa Mesa Mission Viejo I NI Dana Point daN5,46 [Iey Perri Sae 5 Lake EISite Murrieta Ns Tern4ula San Clemente Cone Fa Ilbrciok Penthetun Fob] Mar..neLJ prp5 OUSE rosof Corparal kap 20/8 HERE irr. Uptown Newport (Phase 1) Surrounding Area Analysis 15 Surrounding Area Analysis Location The subject is located in the northern portion of the city of Newport Beach, on the border of the city of Irvine. It is located south of John Wayne Airport and north of the University of California, Irvine campus. Specifically, the subject site is situated along the north side of Jamboree Road, between MacArthur Boulevard and Campus Drive, east of Bristol Street and State Route 73 and west of Interstate 405. Access and Linkages The subject site benefits from excellent access near freeways and major thoroughfares. Both Jamboree Road and MacArthur Boulevard are primary thoroughfares in the neighborhood. The two streets intersect southwest of the subject and both extend southwest towards the coast where they terminate at East Coast Highway/Pacific Coast Highway 1. Heading east from the subject site, Jamboree Road extends northeast through Irvine, past Interstate 5 and northbound until it terminates at East Santiago Canyon Road in the City of Tustin. MacArthur Boulevard extends northeast from the subject site along the southern portion of the John Wayne Airport, past Interstate 405 and then it loops westward intersecting State Route 55 and continuing west until the Santa Ana River. The neighborhood has excellent highway access with Interstate 405 and State Route 55 intersecting north of the subject next to the airport. State Route 55 also intersects State Route 73 northwest of the subject. Interstate 405 is a major north -south interstate in southern California which extends from the San Fernando Valley north of the Los Angeles area to Irvine. State Route 55 runs north -south thorough Orange County extending from Pacific Coast Highway in Newport Beach and ending at State Route 91 in Anaheim. State Route 73 begins at its junction with Interstate 405 and extends south through the San Joaquin Hills to its junction with Interstate 5 in San Juan Capistrano. The majority of this highway is a tollway. Public transportation in the neighborhood is provided by Orange County Transit Authority (OCTA). Bus Routes 178, 472, 213 and 59 are located in close proximity to the subject. Route 59 has a stop at Campus Drive and Jamboree Road, less than one mile east of the subject; the nearest stop on Route 213 is at Michelson Drive and Teller Avenue, approximately 1 mile east of the subject; Route 178 has a station approximately one-half mile northwest of the subject at Von Karman Ave and Birch Street. Route 472 is a Metrolink feeder route. The nearest Metrolink station is Tustin Station, located approximately five miles northeast. The nearest airport for commercial air travel is John Wayne Airport located a few streets north of the subject, within a two-mile driving distance. Demand Generators In the subject's immediate area, major employers include University of California, Irvine; John Wayne Airport; South Coast Plaza mall; UCI Health Gottschalk Medical Plaza; as well as Concordia University and Orange Coast College. The Irvine Business Complex, a predominantly office, industrial and commercial corridor, is located northeast of the subject, east of Interstate 405 with concentration of employment centers. irr. Uptown Newport (Phase 1) Surrounding Area Analysis 16 Demographics A demographic profile of the surrounding area, including population, households, and income data, is presented in the following table. Surrounding Area Demographics Los Angeles -Long Orange County, Beach -Anaheim, 2019 Estimates 5-Mile Radius 10-Mile Radius 15-Mile Radius CA CA Metro Population 2010 415,801 1,399,064 2,410,200 3,010,232 12,828,837 Population 2019 450,435 1,507,246 2,578,795 3,222,381 13,478,088 Population 2024 469,273 1,566,276 2,677,705 3,348,192 13,913,534 Compound %Change 2010-2019 0.9% 0.8% 0.8% 0.8% 0.6% Compound %Change 2019-2024 0.8% 0.8% 0.8% 0.8% 0.6% Households 2010 146,789 457,192 785,153 992,781 4,233,985 Households 2019 159,074 495,174 841,667 1,062,951 4,452,770 Households 2024 165,957 515,466 874,737 1,105,004 4,599,698 Compound %Cha nge 2010-2019 0.9% OS% 0.8% 0.8% 0.6% Compound %Cha nge 2019-2024 0.9% 0.8% 0.8% 0.8% 0.7% Median Household Income 2019 $97,413 $87,468 $88,697 $91,094 $72,264 Average Household Sire 2.8 3.0 3.0 3.0 3.0 College Graduate % 49% 40% 38% 39% 33% Median Age 37 38 38 38 37 ❑wner occupied % 48% 53% 57% 59% 50% Renter occupied % 52% 47% 43% 41% 50% Median owner occupied Housing Value $879,347 $741,206 $715,389 $733,175 5650,973 Median Year Structure Built 1978 1976 1976 1976 1968 Avg. Travel Time to Work in Min. 26 28 30 30 33 Source! Environics Analytics As shown above, the current population within a 10-mile radius of the subject is 1,507,246, and the average household size is 3.0. Population in the area has grown since the 2010 census, and this trend is projected to continue over the next five years. Compared to Orange County overall, the population within a 10-mile radius is projected to grow at a similar rate. Median household income is $87,468, which is lower than the household income for Orange County. Residents within a 10-mile radius have a similar level of educational attainment to those of Orange County, while median owner occupied home values are similar. Land Use The most significant uses in the subject's immediate area are the John Wayne Airport and University of California Irvine campus, with a mix of complementary office, retail/commercial and service uses nearby. Adjacent to the subject site is Von Karman Avenue and office uses to the north, as well as to the west and northwest; and Courthouse Plaza and retail/restaurant to the east. The office uses are part of the Koll Center Newport — a mixed -use office park extending from the northwest corner of MacArthur Boulevard and Jamboree Road to the southeast corner of Campus Drive and MacArthur Boulevard and back to Jamboree Road. To the south of the subject site is the University of California Irvine — North Campus, including the UC Irvine Arboretum. irr. Uptown Newport (Phase 1) Surrounding Area Analysis 17 Uses along the west line of MacArthur Boulevard and Birch Street, Bristol Avenue and Campus Avenue are predominantly retail and neighborhood service uses, including restaurants, banks and financial services, car dealerships, fitness studios and salons. Uses to the east of MacArthur Boulevard are predominantly office uses with several high-rise buildings. The Harbor Justice Center Newport Beach is located at the northeast corner of Birch Street and Jamboree Road, The Irvine Museum is located along the north side of Von Karman Ave, east of Campus Drive. To the east of Campus Drive are also several apartment projects: Carlyle Apartments and the Metropolitan near MacArthur Boulevard; and Toscana Apartments, Watermarke, Avenue One and Villa Sienna Apartment Homes at the southeast quadrant of Campus Avenue and Jamboree Road. The John Wayne Airport is located along the north line of MacArthur Boulevard with direct access from Interstate 405. The airport terminal houses 14 airline carriers and a number of car rental companies. Uses to the north of the airport and south of State Route 55 are varied commercial and office uses. To the east of Interstate 405 is Main Street and the Irvine business district. The San Diego Creek is located south of the subject, parallel to Jamboree Road. Along the north side of the Creek is the San Joaquin Marsh and Wildlife Sanctuary Reserve, which protects some of the last remaining wetlands that once covered Orange County. The reserve supports a variety of habitats, provides a stopping place for migratory birds and serves as a field study site for university students. It is an area bordered by Carlson Ave on the northwest, Michelson Drive on the north, Riparian View on the east and southeast and Campus Drive on the west. It features 11 ponds, an urban forest, the Michelson Wastewater Treatment Plant and various walking trails. To the south of the San Diego Creek is the University of California Irvine campus. The campus encompasses 1,527 acres. The core of the campus resembles a circle with Aldrich Park at the center and a main road encircling the park. Most schools and libraries are located along this road and it is the primary pedestrian road for students and faculty. Northeast of the UC Irvine campus are the Rancho San Joaquin and University Park neighborhoods, which include single family homes, apartments and the Rancho San Joaquin Golf Course. There are several parks in the subject's neighborhood, including the William R. Mason Regional Park, the Crawford Field and Athletics Complex, Aldrich Park within the UC Irvine campus and Stanford Park. The Newport Beach Golf Course is located west of State Route 73 along Irvine Avenue and the Santa Ana Country Club is situated at the southeast corner of Newport Boulevard and Bristol Street. The nearest hospitals are UCI Health Gottschalk Medical Plaza within the University of California Irvine campus and College Hospital Costa Mesa, approximately six miles east of the subject along State Route 55. Outlook and Conclusions The area is in a redevelopment stage of its life cycle. We anticipate that property values will remain stable in the near future. irr. Uptown Newport (Phase 1) Residential Market Analysis 18 Surrounding Area Map FoCic twin Valley lams A4C ltlanta Ave L bing VJELAGL 7J77r5TOL WARNER MEFRO C'L,45SJC Aosdiopt � r m ti�J Anil ms A5+2 p = Costa Mesa `,�� • sn^I 1:;A,QU1N MARSH � s'ty far Victoria St S 1 TA .N i Ht'1frrs Ge� Sy Placentia F\Yr • Dyer Surma Ano SS - Marine x @, C Stratio rr Station raH• Cliff Raven Newport Beach Lido is it E Coo_ r77buoy �sdarld Irvine 2a WOO RSRrOSE :iRTLf ROCK Li ru.4TLF RIDGE S,o San Joaquin Hills Corona del Mar Laguna CGQsf Wr7derness Park NOR F7f WOOD F07NY Kathryn (Taj FAS r IRVJNE Rfi€AR• 4 020n Mir rasaft Carrorafon 2658 HERE Uptown Newport (Phase 1) Residential Market Analysis 19 Residential Market Analysis The subject property is located in the city of Newport Beach, just west of the city of Irvine, approximately five miles northeast of the Newport Beach Yacht Club. There are two projects currently available in Newport Beach (one attached and one detached). Due to the limited number of active projects in the Newport Beach area, as well as the subject's location adjacent to the City of Irvine, we have also included Irvine in our survey. Currently, there are 63 active projects in Irvine, of which 12 are attached projects and 51 detached. Home price points at active attached projects will be described from available projects in an effort to characterize the current status of the residential sector in general. We will begin with a County -wide perspective on incentives and pricing at new home projects; then we will shift to a localized perspective of the subject property and surrounding area. It is important to note price points are highest for those areas located closest to the coast. This also holds true for Orange County as a whole as well; price points are significantly higher the more proximate to coastal areas in comparison to those inland. Thus, while this market overview begins with the analysis of Orange County as a whole (macro overview), the market overview for the subject's location included the inland area of Newport Beach, proximate to Irvine. Single -Family Building Permits Single-family building permits for the cities of Newport Beach and Irvine, as well as Orange County are shown in the following table. Building Permits: Single -Family Year City of Newport Beach City of Irvine Orange County 2008 90 125 1,330 2009 62 188 1,341 2010 58 641 1,624 2011 64 857 1,822 2012 75 943 2271 2013 83 1,608 3,670 2014 84 1,564 3,714 2015 99 1,333 3,809 2016 108 1,461 4,357 2017 119 1,715 4,904 2018* 113 1,687 3,611 • Preliminary data for 2018 through October Future Development According to the City of Newport Beach Planning Division, a summary of the residential development activity with the city is provided on the following pages. irr. Uptown Newport (Phase 1) Residential Market Analysis 20 Newport Crossing Mixed -Use Newport Crossing Mixed -Use is a proposed project consisting of 50 residential dwelling units, 2,000 square feet of 'casual -dining' restaurant space, 5,500 square feet of commercial space, and a 0.5-acre public park will replace the existing MacArthur Square shopping center. A six -story parking structure (one level subterranean and five levels above ground) is proposed in the center of the site and will be surrounded and screened from public views by the residential and commercial buildings on all sides. The project would provide a total of 740 parking stalls for its residential and retail uses. This project is located in the airport area, like the subject, about a half mile from John Wayne Airport. The site is generally bounded by Corinthian Way to the northeast, Martingale Way to the east, Scott Drive to the northwest, and Dove Street to the southwest. Koll Center Residences The Koll Center Residences is located in Koll Center Newport, at 4400 Von Karman Avenue. The site is approximately 13.16 acres and is currently developed with surface parking lots and common landscape areas for Koll Center Newport. The irregularly -shaped site is generally bordered by Birch Street to the northeast, Von Karman Avenue to the west, and existing office uses and associated surface parking lots and garages to the east and south. The proposed project is a mixed -use infill development that includes 260 residential condominiums; 3,000 square feet of ground -floor retail uses, a 1.17-acre public park; a freestanding parking structure; lighting, landscaping, and pedestrian improvements; utility improvements; and the reconfiguration of existing surface parking. The 260 condominium dwelling units would be in three, 13-story buildings with a maximum building height of 160 feet. The buildings would have two levels of above - grade and two to three levels of below -grade structured parking. The public park would be located adjacent to Birch Street. Implementation of the project would require the demolition of existing surface parking and landscaping within the project site. Residential parking would be provided on site in the residential building parking structures. Parking for the public park and retail uses would be provided on site within reconfigured surface parking areas Office parking removed during construction of the project would be provided in a new free-standing parking structure, within one of the proposed residential buildings, and in reconfigured surface parking areas. There are three office buildings located within the boundaries of the project site; however, two of the office buildings are not a part of the project: 4490 Von Karman Avenue and 4910 Birch Street. The 4440 Von Karman Avenue office building is a part of the project site as the applicant proposes new landscaping, irrigation, sidewalk improvements and the reconfiguration of disabled parking. No change to the existing building is proposed as a part of the project. Uptown Newport (Phase 1) Residential Market Analysis 21 Uptown Newport The proposed Uptown Newport project (a portion of which is appraised herein) is a mixed -use development with up to 1,244 residential units, 11,500 square feet of neighborhood -serving retail space, and two acres of park space to be located at 4311-4321 Jamboree Road. The project will be developed in two phases. It encompasses 20.05 acres and is generally located on the east side of Jamboree Road, with Birch Street to the north, and Von Karman Avenue and MacArthur Boulevard to the west. Uptown Newport Back Bay Landing L Balboa Peninsula Legend NeLfvport ',,„Beach BACK BAY LANDING MIXED -USE PROJECT AREA Newport Bay — Project Area (Parcel 3) Back Bay Landing Mixed -Use Project Area — Existing PC-9 Boundary — Proposed PC-9 Boundary Expansion Upper Newport Bay Qa Back Bay Landing The Back Bay Landing project is a proposed integrated, mixed -use waterfront village on an approximately 7-acre portion of a 31.5 acre parcel located adjacent to the Upper Newport Bay in the City of Newport Beach. The majority of the project site (6.415 acres) is located immediately north of East Coast Highway between Bayside Drive and the Bayside Marina adjacent to the Upper Newport Bay. The balance of the project site (0.642-acres) is located under and immediately south of the East Coast Highway bridge. The proposed project involves land use amendments to provide the legislative framework for future development of the site. Amendments to the General Plan and Coastal Land Use Plan are required to change the land use designations to a Mixed -Use Water -Related designation and a Planned Community Development Plan (PCDP) is proposed to establish appropriate zoning regulations and development standards for the site. The requested approvals will provide for a mix of uses, including recreational and marine commercial retail, marine office, marine services, enclosed dry stack boat storage, and limited mixed- use structures with residential uses above the ground floor, as regulated by the proposed Back Bay Landing PCDP. No development is proposed for the De Anza Bayside Marsh Peninsula nor are any changes proposed to the existing Bayside Village Marina. In addition to the land use amendments, other requested approvals are a Lot Line Adjustment and Traffic Study pursuant to the City's Traffic Phasing Ordinance. irr. Uptown Newport (Phase 1) Residential Market Analysis 22 Newport Village Mixed -Use Project A mixed -use development encompassing approximately 11.05 acres on the north and south sides of West Coast Highway in the Mariner's Mile corridor. The project includes 175 residential units, 240,650 square feet of office, retail, and restaurant uses, and a new 75-boat marina. A new signalized intersection would provide primary access to the project. The design includes a new publicly accessible waterfront promenade and 1,343 parking spaces within two underground parking structures. Buildings above grade are 35 feet in height. All existing structures will demolished and existing uses will be discontinued with project implementation. The project includes approximately 1,000 linear feet of new bulkhead along the bay. V.OVERALL SfIE IiLUSTRAT1VE PLAN (aROUNO, PEIOIUM, AND E ROOROP LEVELS OH MORSN 0.1i0 SOUTH PARCELS) be City of Irvine Notable single-family residential development projects in the city of Irvine are summarized below, followed by a project map (see the identification number with each project summarized for location on the map): 2152-2182 Alton (3) — 357 attached residential units on 10.23 acres proposed by Wong Properties Irvine Gateway (8) — 434 apartments and condominiums on 8 acres developed by FF Realty II, LLC 17811 Gillette (9) — 44 residential units on 2.4 acres proposed by Sand Dollar Gillette, LLC 17822 Gillette (13) — 137 condominiums on 6 acres developed by Gillette Development, LLLC Central Park West (21) - 1,275 condominium unit project developed by Lennar 17821 Gillette (23) — 39 condominiums proposed by MLC Holdings, Inc. 2602 McGaw (25) — 120 condominium units developed by Natura City, LLC Uptown Newport (Phase 1) Residential Market Analysis 23 a i ro.u-o i ruo. n Squa . 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Residential Market Analysis 24 New Home Pricing and Sales According to the Gregory Group, a firm that publishes new homes prices and absorption statistics for areas in California and Nevada, there are presently 13 active new home projects (attached only) in Newport Beach and Irvine, with a total of 37 attached active projects throughout Orange County (including Anaheim, Brea, Buena Park, Costa Mesa, Cypress, Dana Point, Irvine, La Habra, Lake Forest, Newport Beach, Orange, Rancho Mission Viejo, San Juan Capistrano and Santa Ana). As previously mentioned, price points are highest for those areas located closest to the coast. Therefore, we will analyze the communities of Newport Beach and Irvine, which presently contain 13 active attached projects. Below we present a table depicting average sale prices for active single-family residential projects in the market area for the past three years. The data includes only attached projects. New Home Sales History (Attached Only) Average %Change Average Home Average %Change Quarter Number of Sold Per Proj. Time Period Price Average Price Size (SF} Price/Avg SF Price/SF Said Projects Per Month 20 2015 $898,354 - 1,741 $516.00 - 116 8 4.83 30 2015 $861,174 -4.1% 1.751 $491.82 -4.7% 141 11 4.27 4Q 2015 $881,542 2.4% 1,775 $496.64 1.096 164 11 4.97 1Q 2016 $658,661 -25.3% 1.636 $402.60 -18.9% 78 8 3.25 2Q 2016 $646,905 -1.8% 1,602 $403.81 0.3% 274 11 8.30 3Q 2016 5651,447 0.796 1,623 $401.38 -0.696 176 11 5.33 40 2016 5668,125 2.6% 1.658 $402.97 0.4% 266 15 5.91 1Q 2017 $686,736 2.8% 1,719 $399.50 -0.9% 198 16 4.13 2Q 2017 5732.967 6.796 1.786 $410.40 2.796 349 20 5.82 30 2017 $749,624 2.3% 1,814 $413.24 0.7% 188 16 3.92 4Q 2017 $756,432 0.996 1,796 5421.18 1.996 141 14 3.36 1Q 2018 $862,081 14.0% 1,809 $476.55 13.1% 164 14 3.90 2Q 2018 $969,001 12.4% 1,847 $524.64 10.196 103 12 2.86 3Q 2018 $885.580 -8.6% 1.818 $487.12 -7.296 76 13 1.95 As previously discussed, there are presently 13 active new home projects (attached only) in Newport Beach and Irvine, of which only one is located in Newport Beach and is located on the Balboa Peninsula, closest to the coast. This project is discussed in more detail in the next section. However, the survey period above predominantly consists of active attached projects in Irvine, as opposed to Newport Beach. Thus, providing a deflated average sales price for active projects when comparing to the subject's market area (i.e., inland Newport Beach location). In terms of the number of home sales, there have been ups and downs from quarter to quarter. There were 1.95 sales per project per month in the Third Quarter of 2018, which was down from 2.86 in the previous quarter and from a year earlier (3.92 sales per project per month). Absorption rates (homes sold per project per month) have fluctuated, but have generally stayed within the range of 3.0 to 6.0 sales per project per month. Over the last 12 months (through the Third Quarter of 2018), the average was 3.02 sales per project per month. Over the last three years, the number of home sales has averaged 4.49 per project per month. Active New Home Projects Pricing and Absorption As previously mentioned, there are 13 active attached projects in Newport Beach and Irvine. These projects are summarized in the following table, based on data from the Third Quarter of 2018. irr. Uptown Newport (Phase 1) Residential Market Analysis 25 Active Attached Projects Avg. Home Avgerage Units Units Units Units Project Master Plan Comnwnity Developer Average Price Size (SF) Price/SF Planned Offered Sold Unsold Aldea Trevate Irvine Lennar Homes $716,990 1,588 $451.51 105 24 9 15 Brise Portola Springs Irvine California Pacific Homes $708.903 1,448 5489.57 124 44 29 15 C2E — Irvine Intracorp Companies $802,440 1.648 5485.92 71 30 30 0 Celadon Parasol Park Irvine William Lyon Homes 5757.490 2,193 5345.41 79 79 79 0 Chorus Cadence Park Irvine Lennar Homes $826,490 2,260 $365.70 56 20 14 6 Delano Eastwood ViI[age Irvine Brookfield Residential 5913.333 1,721 5530.70 129 120 111 9 Indigo Portola springs Irvine California Pacific Homes 5735,875 1,577 5466.63 171 171 170 1 Rockefeller Central Park West Irvine Lennar Homes $1,500,990 2,545 5589.78 22 18 18 0 Sterling Parasol Park Irvine TriPointe Homes S697,400 1,763 5395.58 96 96 95 1 Tri beta Central Park West Irvine Lennar Homes $853,323 1,718 $496.70 120 66 61 5 Tristania Cypress Village Irvine California Pacific Homes 5859.709 1,770 5485.71 150 94 80 14 Windchime Parasol Park Irvine Lennar Homes $828,740 1.918 $432.09 118 118 114 4 Vue — Newport Beach Third Pain, Capital $2,300,000 2.149 $1,070.27 27 27 12 15 Minimum 5697,400 1,448 $345.41 Maximum $2,302,000 2,545 $1,070.27 Average 5951,668 1,869 5508.20 6o4 :4 rxpsaewo uyd.M c.M1 wu.eec n=4 ,ti 9 eDunw coa.r .,/ COSICO nw.Fa.Q j •t • ` / ° °I F T A D" ,,.,fir .eG ... saw,Gr.rrinFaQ o f CI el IV 'c •'-'.. la F `\• vawry 6{ 99 Q 3 Jon^ Wet, wr sy Irvine +.wc" i' '^n,� Vue nr. , .n. ••? Q waooteicer • Q i c¢ z` r r me ar•n.e.Q F "r" Pd�0 Tribeca re s ,? ./ ./ ._ j/ s �% 9 Rockefeller OC Fr M1Frei. Center l`7 , t• ,� e��. oe,4 =r 1 QC2E uvr�r Q P+EN.i P m.. 9 Aldea w. gri„e I �, �.1�Eel,,, s,� ryp ��.,_�. I"v„I 9 mg.: Fi�ITIi CWI CIWR t uM wrM1*sioe� cosT.f,,. znro.uv°.n ei'"coi'rrwM.. ✓r ""'fe t — _" 9 Tristania " c goan,e.eua Coats mesa % Jf PF..'" eve. ,i��.,. �,�� i C.d.^e uem,e. j ti Il.. j " 5 Celadon •'•• • , I �. '�+Tp, uaMD^ucvl Tun T li tli �liina.ira - $ O n� n.. 4 » ca, Tw, 9 Sterling wo .r e 9 Windchime Hr., i, ch - 9 4 9 Chorus ,u,e„ 9 Indigo Weals ▪ 9 Brisa • r Q Delano ..•••�Lar„:w�nc The projects most similar to the subject property, albeit limited, are detailed further on the following pages. irr. Uptown Newport (Phase 1) Residential Market Analysis 26 PROJECT INFORMATION 'village 750-8868 - Tues 1- 6, Wed 12-6 : 33.712051 9y: 117.749963 Average Price 5913,333 Average Sq Ft 1,721 Total Inventory 18 Standing Inventory 0 AT A GLANCE 35r Sold 12 Qtr WSR 0.92 Tot WSR 132 Avg Incentives $1,000 Project Name Delano Region Orange County Orange Community Irvine Master Plan East000d Age Restricted No Project Phone (888) Sales Office Hours Thurs GPS Coordinates N Cross Street Finished Lots N/A Open Date 02/15/17 Developer Name Brookleld Residential Developer Phone (714) 427-6868 Product Type Attached Type Description Townhome Lot Size Lot Dimension Blue Top Lots N/A Survey Date 10/1118 Special Tax per Month 3258.00 FDA per Month $30,6.00 Broker Coop $12,000 Special Incentives $0 Project Density Model/Trailer Model PLAN DETAILS Plan Horne Sze Base Pnce Pnce Sq Ft Incentives Net Pnce Net Prrce75q Ft Bed Bath Levels Garage Of r om 1,533 1.714 1:916 9788,000 $514.02 0953,000 $556.01 09990011 $521.40 01,000 51,900 01,000 5787,000 3952,000 5998,000 $513.37 $555.43 $520.88 3 3 4 2 2 2 2.5 2 2 3 2 2 None None None SURVEY INFORMATION Survey Per Units Planned Units Offered Units Sold Oh Sold Tot Inv Unothd Inv Unsold Inv Wkly Traffic Tot WSR Car WSR Avg Price % Charge Qtr 3118 129 0W7118 129 Qtr 1118 129 064117 129 Qtr 3+17 129 Qtr 2117 129 alr 1117 129 129 111 105 99 93 82 72 68 51 51 42 42 12 17 14 17 9 25 18 30 47 61 78 67 9 24 36 57 78 67 9 fi 11 4 0 0 85 80 80 125 150 290 1.32 0.92 $913,333 1.39 131 $920,333 1.41 1.08 5912,000 1-51 1.31 5868,333 1.59 0.69 $846,467 2.21 1.92 5798,000 - 0.76 091 5.03 2.58 6.07 5-32 0.00 18 17 17 112 111 1 200 2.83 1.31 5757,667 COMMENTS This project is located the furthest inland of the three highlighted active projects. Further, as shown in the previous table, Irvine generally achieves a substantially lower average price for new attached homes. Thus, the subject would be expected to achieve higher price points in terms of location (both proximity to the coast and Newport Beach). PROJECT INFORMATION AT A GLANCE 7 Project Name Region County Community Master Plan Age Restricted Project Phone Sales Office Hours GPS Coordinates Cross Street Finished Lots Rockefeller Orange ()range Irvine Central Park West No (949) 296-4775 DaOy 10 - 6 N : 33.675697 N/A w : 117.849243 Average Price Average Sq Ft Total Inventory Standing Inventory 51,53.0 990 2,545 4 0 qtr Sold ON WSR Tot WSR Avg Incentives 0 0.00 0.24 $5,000 Open Date Developer Name Developer Phone Product Type Type Description Lot Size Lot Dimension Blue Top Lots 04/29/17 Lennar Homes (949) 349-8100 Attached Townhome N/A Survey Date 1011118 Special Tax per Month $319.09 HGA per Month 3320.00 Broker Coop 2.0% Special Incentives $0 Project Density Model/Trailer Model PLAN DETAILS P an Home Size Base Price Price Sq Ft Inten4ves Net Pnce Net Pncel3q Ft Bed Bath Levels Garage Other Room 2,496 2,594 51,475,9911 $1.525,990 $591.34 $533.23 55,000 55,000 51,470,990 51,520.990 $589.34 $586.35 2 3 2.55 3 3.5 3 2 2 Loft None SURVEY INFORMATION Survey Per Un Is Planned Units Offered Units Sold Otr Sold Tol Inv Unsold In Unsold Inv Wkly Traffic Tot WSR Otr WSR Avg Price 13 Change 1263+18 22 18 18 0 4 4 0 50 0.24 0.00 51,500.990 0.00 Oh-2/18 22 1291/18 22 Otr4/17 22 Qtr 3/17 22 18 18 18 14 18 18 18 14 0 0 4 0 4 4 4 4 4 4 8 8 0 0 0 0 65 100 100 75 0.3U 0.00 0.38 0.00 0.51 0.31 0.64 0.00 31,500,990 51,500.990 31,500,990 51,500.990 0.00 0.00 0.00 6.27 1202117 22 14 14 14 8 8 0 70 1.56 1.08 31,412,490 0-00 COMMENTS 7 r Rockefeller is located the closest in proximity to the subject, about one mile northeast. Even with its close proximity, this project has an Irvine address as opposed to the subject's Newport Beach address which achieves a premium. While this is deemed the best project to estimate market value of the subject's proposed units, a higher price per square foot for the subject is considered reasonable given the smaller average size (1,671 square feet) and location within the city of Newport Beach. Uptown Newport (Phase 1) Residential Market Analysis 27 PROJECT INFORMATION AT A GLANCE Project Name Vue Average Price S2,3130.000 Qtr Sold 0 Region Orange Average Sq Ft 2,149 Qtr WSR 0.00 County Orange Total Inventory 15 Tot WSR 0.32 Community Newport Beach Standing Inventory 15 Avg Incentives $0 Master Plan No Open Date 01i15i18 Survey Date 10.+1118 Age Restricted No Developer Name Third Palm Capital Special Tax per Month $0.00 Project Phone i949; 485-5506 Developer Phone i214; 615-8590 HDA per Month $1,170.00 Sales Office Hours Tires - Sun 10 - 4 Product Type Attached Broker Coop 2.5% Type Description Condominium Special Incentives $0 GPS Coordinates N : 33.610941 w : 117.9281372 Lot Size Project Density Cross Street Lot Dimension Model,Trailer Model Finished Lots NiA Blue Top Lots NA PLAN DETAILS Plan Home Size Base Pnce Pnce 5q Ft Incentives Net Pnce Net Pnce;Sq Ft Bed Bath Levels Garage Other Room 1,711 52:100,000 51,227.35 $0 52,100.000 $1.227.35 2 2.5 1 None 2,723 52:500,000 $918.11 $0 52,500.000 $918.11 3 3 3 2 None SURVEY INFORMATION Survey Per Units Planned Units Offered Units Sold Qtr Sold Tol Inv Unoffrd Inv Unsold Inv Wily Traffic Tot WSR Qtr WSR Avg Price %Change Qtr 3/18 27 27 12 0 15 0 15 15 0.32 0.00 52,300.000 - 6.60 Qtr 2/18 27 27 12 2 15 0 15 25 0.52 0.15 32,462,500 1.20 Qtr 1118 27 27 10 10 17 0 17 25 1.00 0.77 52,433.333 0.00 COMMENTS and Townhomes This represents the only active attached project in Newport Beach consists of 27 units and is located on the Balboa Peninsula, closest to the coast. Thus, this project is achieving the highest average price for an attached project. Given the subject's inland location in comparison, a lower price point for the subject's proposed units is considered reasonable. According the information provided by the Developer, the appraised property will contain a weighted average residential condominium size of 1,671 square feet, with a weighted average anticipated base price per unit of $1,689,381, or $1,011 per square foot. Considering the subject's location in Newport Beach address, a price point towards the upper end of the range, albeit below the Vue's average price, is considered reasonable. Considering these active project's, as well as resale prices discussed next, a sale price (total consideration) of $1,650,000, or approximately $987 per square foot, is supported and utilized in the valuation herein. Absorption Praicc! Master Plan Builder Alden Irvine Lennar Homes arise Irvine California Pacific Homes C26 Irvine Intracerp Companies Celadon Irvine William Lyon Homes Chorus Irvine Lehner Homes Delano Irvine Brookfleld Residential Indigo Irvine California Pacific Homes Rockefeller Irvine Lennar Homes Sterling Irvine TriPointe Homes Tribeca Irvine Lennar Homes Tristania Irvine California Pacific HorneS Windchime Irvine Lennar Homes Vue Newport Beach Third Palm Capital Avg. Home Avg. Horne Average Average Price Size 12-Month Per Per (3418On1yj {3(318Only} 342018 242018 1122018 442017 Total Quarter Month $716,990 1,588 9 -- -- 9 9.0 3.0 5708,903 1,448 4 9 14 - 27 9.0 3.0 $802,440 1,648 15 15 - - 30 15.0 5.0 $757,490 2,393 1 -1 5 35 40 10.0 3.3 5826.490 2.260 14 - -- -- 14 14.0 4.7 S913,333 1.721 12 17 14 17 60 15.0 5.0 5735,875 1,577 3 5 16 15 39 9.8 3.3 S1,500,990 2,545 0 0 0 4 4 1.0 0.3 3697,400 1,763 1 4 13 27 45 11.3 3.8 S853,323 1,718 5 18 18 0 41 10.3 3A 5859,709 1,770 3 2 13 6 24 6.0 2.0 S828.740 1,918 9 18 49 7 83 20.8 6.9 $2,300,000 2.149 0 2 10 - 12 4.0 1.3 Total 76 89 152 111 No. of Active Projects 13 11 10 8 Quarterly Pro-Rata 5.8 8.1 15-2 13.9 Monthly Pro -Bata 1.9 2.7 5.1 44 3.6 Average Monthly Pro•Rata Based on this information, over the last four quarters the monthly absorption rate per attached project has ranged from 1.9 to 5.1 sales per project per month, with an average rate of 3.6 sales per irr. Uptown Newport (Phase 1) Residential Market Analysis 28 project per month. Generally, the absorption rates have decreased as the number of attached active projects have increased. Focusing on the three highlighted active projects (Delano, Rockefeller and Vue), over the last four quarters the monthly absorption rate per attached project has ranged from 1.3 to 3.5 sales per project per month, with an average rate of 2.4 sales per project per month, also on a decreasing trend, as shown below. Absorption Project Master Plan Delano Irvine Rockefeller Irvine Vue Newport Beach Builder Brookfield Residential Lennar Homes Third Palm Capital Avg. Home Avg. Home Average Average Price Size 12-Month Per Per (3Q 18 Only) (3Q 18 Only) 3Q 2018 2Q 2018 1Q 2018 4Q 2017 Total Quarter Month $913,333 1,721 12 17 14 17 60 15.0 5.0 $1,500,990 2,545 0 0 0 4 4 1.0 0.3 $2,300,000 2,149 0 2 10 -- 12 4.0 1.3 Total 12 19 24 21 No. of Active Projects 3 3 3 2 Quarterly Pro-Rata 4.0 6.3 8.0 10.5 Monthly Pro-Rata 1.3 2.1 2.7 3.5 2.4 Average Monthly Pro-Rata Two additional condominium projects in the immediate area, The Plaza Irvine and Marquee at Park West, albeit 2006/2007 construction, are considered in the absorption analysis. Based on historic data from the Gregory Group, The Plaza Irvine sold out within 15 quarters with an average absorption rate of approximately 3.88 sales per quarter, or 1.29 sales per month. While the Marquee at Park West was not tracked by the Gregory Group, the local multiple listing service (MLS) provided the following annual absorption data: 1.42 sales per month in 2006, 1.33 sales per month in 2007, 0.67 sales per month in 2008 and 1.08 sales per month in 2009, with an overall average of approximately 1.13 sales per month. Given market conditions and the subject's location and physical features, as well as its affordable price point for its Newport Beach location, we estimate the subject could achieve an average absorption rate of about 4.0 sales per month. Resale Market In addition to the preceding analysis, we have analyzed recent trends in the resale market for generally new condominium units. Based on data from the local multiple listing service, the tables on the following page show resale prices in Newport Beach and Irvine for attached homes. irr. Uptown Newport (Phase 1) Residential Market Analysis 29 Condominium Resales: Newport Beach (Closed 9/1/2018-11/20/2018;1,000 - 2,500 SF, Year 2000-2017) Contract Living Last List Sale Price Days on Address Date Area (SF) Sale Price Price /SF Sale/List Year Built Market 20402 Santa Ava Ave #9 8/9/2018 1,457 $650,000 $659,888 $446 98.50% 2007 94 20402 Santa Ava Ave #17 9/28/2018 1,457 $658,000 $668,888 $452 98.379E 2007 36 4 Bluefin Ct 8/8/2018 1,768 $739,900 $765,000 $418 96.72% 2005 243 Total Sales 3 1,561 $682,633 $697,925 $439 97.869E 2006 124 (avg.) (avg.) tavg•1 (avg.) (an-) (avg.) (avg.1 Condominium Resales: Irvine (Closed 10/1/2018- 11/20/2018; 1,500- 2,000 SF, Year 2010-2017) Contract Living Last List Sale Price Days on Address Date Area (SF) Sale Price Price /SF Sale/List Year Built Market 145 Neptune 9/20/2018 1,798 $650,000 $659,000 $362 98.63% 2016 29 156 Borrego 9/9/2018 1,631 $735,000 $738,000 $451 99.59% 2014 16 121 Mighty Oak 9/20/2018 1,500 $730,000 $739,000 $487 98.78% 2016 10 181 Pathway 9/14/2018 1,790 $691,500 $739,000 $386 93.57% 2011 87 48 Peony 10/3/2018 1,665 $740,000 $739,000 $444 100.14% 2010 41 157 Fixie 9/21/2018 1,664 $720,000 $740,000 $433 97.30% 2017 112 274 Rodeo 9/6/2018 1,501 $745,000 $745,000 $496 100.00% 2015 7 79 Kestrel 9/19/2018 1,800 $750,000 $749,999 $417 100.00% 2015 12 118 Walking Stick 10/21/2018 1,542 $735,000 $769,999 $477 95.45% 2016 36 76 Granite 10/24/2018 1,611 $775,000 $788,800 $481 98.25% 2016 50 152 Firefly 10/8/2018 1,746 $780,000 $788,888 $447 98.87% 2015 13 235 Carmine 9/7/2018 1,656 $790,000 $799,800 $477 98.77% 2017 121 229 Kempton 10/21/2018 1,614 $798,000 $814,900 $494 97.93% 2014 24 91 Strawberry Grove 9/17/2018 1,626 $825,000 $829,000 $507 99.52% 2014 66 137 Rose Arch 10/17/2018 1,619 $810,000 $838,000 $500 96.66% 2013 15 239 Carmine 9/11/2018 1,619 $819,000 $849,000 $506 96.47% 2017 12 37 Flowerstalk 9/13/2018 1,823 $850,000 $849,888 $466 100.01% 2011 7 179 Overbrook 10/14/2018 1,777 $847,700 $850,000 $477 99.73% 2013 16 128 Quite Grove 9/23/2018 1,646 $857,500 $869,000 $521 98.68% 2017 10 83 Wildvine 8/29/2018 1,745 $865,000 $886,000 $496 97.63% 2015 12 58 Waterleaf 9/26/2018 1,888 $888,500 $898,500 $471 98.89% 2015 26 94 Desert Pine 10/5/2018 1,873 $880,000 $898,888 $470 97.90% 2016 17 509 Rush Lily 10/14/2018 1,862 $870,000 $899,800 $467 96.69% 2014 10 705 Beacon 8/30/2018 1,897 $880,000 $900,000 $464 97.78% 2017 20 30 Pendant 9/28/2018 1,861 $900,000 $919,880 $484 97.84% 2012 46 126 Barrington 9/6/2018 1,982 $918,000 $935,000 $463 98.18% 2016 44 65 Coleridge 9/6/2018 1,739 $920,000 $939,000 $529 97.98% 2012 13 42 Somerton 10/11/2018 1,859 $978,800 $975,800 $527 100.31% 2012 3 51 Rembrandt 10/25/2018 1,861 $940,000 $987,000 $505 95.24% 2013 34 71 Brandisi 9/27/2018 1,713 $980,000 $998,000 $572 98.20% 2013 84 106 Working Ranch 9/13/2018 1,772 $978,000 $999,500 $552 97.85% 2014 99 302 Rockefeller 11/3/2018 1,832 $995,000 $1,025,000 $543 97.07% 2014 12 206 Holbrook 9/19/2018 1,918 $1,005,000 $1,025,000 $524 98.05% 2014 44 207 Traymore 9/18/2018 1,918 $1,017,000 $1,025,000 $530 99.22% 2013 5 118 Island Coral 10/1/2018 1,879 $988,888 $1,048,000 $526 94.36% 2016 95 62 Bianco 9/22/2018 1,775 $1,035,000 $1,089,888 $583 94.96% 2012 112 80 Lupari 8/24/2018 1,878 $1,088,886 $1,134,900 $580 95.95% 2013 95 Total Sales 37 1,754 $858,832 $877,876 $490 97.90% 2014 39 (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) (avg.) Uptown Newport (Phase 1) ,71 Residential Market Analysis 30 As shown by the data, MLS reports that there have been three resales in Newport Beach with close dates in the last 2.5 months. The data shows the limited amount of condominium units available within this market area. Further, all of these resales were constructed in 2005 and 2007, with no newer resale construction (2010+). Most homes closed at or near the asking price, and the time on the market has averaged about four months. As for the Irvine resale market for condominium units, there is ample supply, with 37 resales closing since October 1, 2018. Additionally, these homes are of newer construction (2010 to 2017) with sale prices between $659,000 and $1,088,886, which averaged 97.9% of the list price. These statistics indicate a generally healthy resale market. Considering the limited amount of data for similar condominium projects in the market area, we also surveyed the greater Orange County market for resales of newer homes with sale prices over $800 per square foot. It is noted, these consist of both attached and detached units. The results of this survey is provided in the table on the following page. irr. Uptown Newport (Phase 1) Residential Market Analysis 31 Resales: Orange County (Closed 1/1/2018 -11/20/2018; Year 2017+) No. Address 1 415.5 Marguerite 2 309 34th #B 3 503 1/2 Poinsettia AVE 4 6081/2 Heliotrope Ave. 5 608.5 Heliotrope AVE 6 603.5 Marguerite AVE 7 617 .5 Poppy AVE 8 607 .5 Carnation AVE 9 129 34th ST #A 10 712 1/2 Heliotrope AVE 11 518 1/2 Narcissus AVE 12 617 .5 Narcissus AVE 13 424 Larkspur AVE#B 14 415 .5 38th 15 2950 Third Ave 16 615 1/2 Begonia AVE 17 216 .5 33rd 18 129 34th ST #B 19 308 1/2 Fernleaf 20 4405 Channel PL 21 4401 Channel PL 22 2210 Newport BLVD #9 23 415 38th ST 24 400 1/2 Jasmine 25 701 .5 Poppy AVE 26 2210 Newport BLVD #8 27 503 Poinsettia AVE 28 617 Poppy AVE 29 603 Marguerite AVE 30 216 33rd ST 31 708 Heliotrope AVE #A 32 705 Acacia AVE 33 711 Marigold Avenue 34 607 Carnation AVE 35 2270 Newport BLVD #26 36 712 Heliotrope AVE 37 2270 Newport BLVD #20 38 617 Narcissus AVE 39 424 Larkspur AVE 40 2260 Newport BLVD #22 41 615 Begonia 42 308 Fernleaf AVE 43 701 Poppy AVE 44 433 Goldenrod AVE 45 2250 Newport BLVD #21 46 217 Marguerite AVE #1/2 47 2240 Newport BLVD #18 48 2230 Newport BLVD #15 49 2240 Newport BLVD #19 Total Sales Living Last List Sale Price Area (SF) Sale Price Price /SF $1,160,000 $1,198,000 $935 $1,200,000 $1,199,000 $915 $1,275,000 $1,395,000 $1,159 $1,300,000 $1,488,000 $1,086 $1,300,000 $1,490,000 $1,086 $1,500,000 $1,495,000 $1,270 $1,525,000 $1,498,000 $1,218 $1,565,000 $1,575,000 $1,304 $1,580,000 $1,599,000 $1,081 $1,600,000 $1,600,000 $1,348 $1,650,000 $1,650,000 $1,341 $1,515,125 $1,650,000 $1,218 1,240 1,312 1,100 1,197 1,197 1,181 1,252 1,200 1,462 1,187 1,230 1,244 1,370 1,500 1,235 1,213 1,821 1,378 1,220 1,734 1,654 1,916 1,500 1,703 1,300 1,888 1,450 2,332 1,768 2,449 1,705 2,019 1,739 1,940 2,308 1,778 2,160 1,715 1,941 2,262 1,908 1,933 1,700 1,893 2,012 1,982 2,104 2,105 2,105 $1,550,000 $1,575,000 $1,650,000 $1,700,000 $1,725,000 $1,749,000 $1,700,000 $1,775,000 $1,850,000 $1,999,000 $1,862,500 $2,150,000 $2,144,000 $2,250,000 $2,035,000 $2,225,000 $2,367,000 $2,225,000 $2,500,000 $2,490,000 $2,485,000 $2,604,000 $2,548,000 $2,550,000 $2,600,000 $2,550,000 $2,550,000 $2,700,000 $2,667,500 $2,699,000 $2,800,000 $2,725,000 $2,900,000 $2,995,000 $3,075,000 $3,225,000 $3,464,000 $1,695,000 $1,699,000 $1,699,900 $1,740,000 $1,749,000 $1,749,000 $1,795,000 $1,795,000 $1,919,000 $1,999,000 $1,999,999 $2,150,000 $2,150,000 $2,250,000 $2,295,000 $2,348,000 $2,367,000 $2,395,000 $2,495,000 $2,540,000 $2,575,000 $2,580,000 $2,600,000 $2,600,000 $2,600,000 $2,650,000 $2,695,000 $2,700,000 $2,730,000 $2,799,000 $2,850,000 $2,900,000 $2,900,000 $2,995,000 $3,075,000 $3,499,000 $3,649,000 $1,131 $1,050 $1,336 $1,401 $947 $1,269 $1,393 $1,024 $1,119 $1,043 $1,242 $1,262 $1,649 $1,192 $1,403 $954 $1,339 $909 $1,466 $1,233 $1,429 $1,342 $1,104 $1,434 $1,204 $1,487 $1,314 $1,194 $1,398 $1,396 $1,647 $1,440 $1,441 $1,511 $1,462 $1,532 $1,646 1,664 $2,118,962 $2,184,978 $1,272 (avg.) (avg.) (avg.) (avg.) Sale/List 96.83% 100.08% 91.40% 87.37% 87.25% 100.33% 101.80% 99.37% 98.81% 100.00% 100.00% 91.83% 91.45% 92.70% 97.06% 97.70% 98.63% 100.00% 94.71% 98.89% 96.40% 100.00% 93.13% 100.00% 99.72% 100.00% 88.67% 94.76% 100.00% 92.90% 100.20% 98.03% 96.50% 100.93% 98.00% 98.08% 100.00% 96.23% 94.62% 100.00% 97.71% 96.43% 98.25% 93.97% 100.00% 100.00% 100.00% 92.17% 94.93% Year Built 2017 2017 2018 2018 2018 2017 2017 2017 2017 2017 2017 2018 2017 2018 2017 2018 2018 2017 2018 2017 2017 2017 2018 2018 2017 2017 2018 2017 2017 2018 2018 2017 2017 2017 2017 2017 2017 2018 2017 2017 2018 2018 2017 2018 2018 2018 2018 2018 2017 Days on Market 72 27 43 65 50 7 9 175 18 4 300 273 92 183 95 319 147 7 9 91 79 0 43 248 0 0 117 198 24 150 126 26 338 0 0 35 0 54 92 0 326 53 145 46 0 0 0 33 346 96.89% 2017 91 (avg.) (avg.) (avg.) Uptown Newport (Phase 1) Residential Market Analysis 32 Tax Cuts and Jobs Act The U.S. Congress enacted a new law on December 22, 2017, known as the "Tax Cuts and Jobs Act". The Tax Act makes significant changes to many aspects of the Tax 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 California and could adversely affect the sale of homes in the State. However, at this time there is neither a consensus nor a central prediction regarding the effect that the Tax Act may have on the cost of home ownership or the price of homes in the State. Based on input from regional and national homebuilders, they are not adjusting either pricing or sales pace projections due to the Tax Act. This analysis was completed without projections of either an enhancement or a diminution to the price of homes in the State. Conclusions We have summarized some of the key points from this section as follows: • Building permit activity for single-family residences in the market area generally trended upward, with more moderate upward tends in recent years compared to 2009 through 2013. • New home pricing in Newport Beach and Irvine has been in a general increasing pattern since the First Quarter 2016, albeit a "pull -back" in prices as of late. The most recent period indicates the new home pricing generally consistent with those observed in 2015. • New home pricing per square foot of living area in Newport Beach and Irvine has fluctuated, but has generally been on an upward trend since 2016, from a low of $401.38 in the Third Quarter 2016 to a high of $524.64 in the Second Quarter 2018. • There are currently 13 active new attached projects in Newport Beach and Irvine. • Absorption rates at attached projects most similar to the subject in Newport Beach and Irvine have ranged from 1.3 to 3.5 sales per project per month over the past year, with an average of approximately 2.4 sales per month. • Resale homes in Newport Beach and Irvine are transferring at or near the asking price, and the exposure period has averaged from one to four months, both indicators of a healthy market. Overall, demand for new homes in the subject's market area remains stable. The housing market is considered to be in a stage of stability. Uptown Newport (Phase 1) Retail Market Analysis 33 10-91 90 Retail Market Analysis Strong economic conditions and high consumer confidence nationwide has had a positive impact on the retail industry overall, despite several recent bankruptcy announcements and national store closures. Orange County has experienced steady job growth, with levels remaining well below state and national levels in August 2018 at 3.1%. This market is often considered the hypocenter of Southern California's tourism and cutting -edge food and fashion trends; thus, Orange County has perpetually led the pack in terms of the retail market. The information and data obtained for this analysis was provided by the CBRE Orange County Retail Market Report (Q3 2018). k<1/ North County lt0 60� ` [l '1� 110 I I }l 57 39 -�Central:Coun, ty \lli . 91 15 Submarket Avg. Asking SF Overall Current Net YTD Net Under Construction Lease Rates GLA Vacancy (%) Absorption Absorption Construction Deliveries ($PSF/MO/NNN) Central County 29,335,947 3.7 (7,245) 13,121 0 0 2.23 Central Coast 13,227,851 1.3 98,559 170,869 0 0 3.36 North County 14,943,363 3.9 28,045 18,109 115,450 0 2.21 South County 17,942,185 4.0 (17,576) (68,235) 0 0 2.48 West County 10,053,081 2.1 29,018 62,407 0 0 2.92 Orange County 85,502,427 3.3 130,801 196,271 115,450 0 2.40 5ourre: CBRE Resemrh, 03 2018. In the wake of legacy store closures that shook the Southern California region in the first half of the year, the Orange County retail market made an impressive showing over the summer season. In Q3 2018, 130,801 square feet of vacant retail space was absorbed with much of the leasing activity taking Uptown Newport (Phase 1) Retail Market Analysis 34 place in high demand coastal cities. Lease rates dipped slightly quarter over quarter to $2.40 per square feet due to an influx of newly vacated space in South and Central County submarkets. Construction completions remained scarce with only one major project tracked by CBRE that is currently in development and will likely not open until early 2019. As the year draws to a close, the Orange County retail market shows just how resilient a market it can be. Absorption & Vacancy Overall vacancy in Orange County dropped by 20 bps to 3.3% in Q3 2018. Compared with the same period the year prior, vacancy decreased 30 bps. Thanks to strong leasing activity, the vacancy rate in the Central Coast submarket dropped a full percentage point from 2.3% in Q2 2018 to 1.3% in Q3 2018, the lowest level in Central Coast since CBRE began tracking the market. The highest vacancy came from South County at 4.0% an increase of 10 bps since the previous quarter due to the aforementioned vacancies. CBRE EA forecasts that the vacancy rate will stabilize through the end of the year. Figure 6: Overall Vacancy Rate (°I°) 5 4 3 2 0 c c u1 u1 6.n [an. -o -o -O -a r-- r-- r-- 00 Da DO 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 CV CV CV CV CV CV CV CV CV CV CV CV CV CV 0,4 0,1 CV Cri — N cr, — c.. Cr, — — C- c. tV Cr] C3 0 0 C3 0 0 0 0 0 0 0 co co 0 0 0 0 Source: CBRE Research, 03 2018. Figure 1: Vacancy Rote by Center Type (%) - Community Neighborhood S pecialty �SIrip 10 8 6 4 2 0 rowel sr sr u1 u1 .n oo cD ao 4 4 4 4 C. O 4 4 4 0 C. 4 4 4 4 4 4 CV CV CV Cti H N CV CV CV Cti Cti N CV CV CV H N c 0 C] 0 COY d 0 d 000000000 Source: CBRE Research, 03 2018. The end of Q2 2018 was marred by the closing of several legacy big box retailers, namely the prolific Toys/Babies "R" Us brand. The result left a litany of empty big box spaces ranging from 20,000 —50,000 square feet in the Orange County market —but not for very long. As expected, demand for space netted Orange County with 130,801 square feet of absorption for Q3 2018. Approximately 97% of the positive absorption activity took place in the Central Coast submarket where a handful of mid to large deals propelled overall net absorption to 98,559 square feet A pair of transactions in Irvine, Restoration Hardware (40,000 square feet) at Spectrum Crossroads, and an as -of -yet -named tenant at Park Place (38,000 square feet) propelled much of the Central Coast's stellar net absorption. In Santa Ana, shoe store WSS opened a brand-new location in a former Smart & Final supermarket space for 17,676 square feet. Figure 8: Net Absorption (SF) (000's) 800 600 400 200 Net Absorption Rolling 4-Quarter Average 0 U (200) ▪ -. ..n N 41 41 •C •C +O +O 1— ti 1— — CO CO CO O C CC. C. CV CA C. 0 0 0 • 0 • 0 0 0 0 0 ▪ C. 0 0 ▪ CCY alasaaaaaa a`4"cao82 Source: CBRE Reseorch, 03 2018. Uptown Newport (Phase 1) irr Retail Market Analysis 35 South County was hit with a string of small -to mid -sized vacancies, resulting in negative 17,576 square feet of net absorption for Q3 2018. In spite of this, a few transactions of note took place in the submarket during Q3 2018—namely the opening of smaller format Target store (29,851 square feet) and a brand-new lease signed by arts and crafts supply store Michael's (42,000 square feet) both in the city of Mission Viejo. Year to date, net absorption is positive 196,271 square feet Rental Rates The Orange County average asking lease rate Figure 4; Average Asking Lease Rate ($PSFIM0/NNN) decreased slightly by $0.02 to $2.40 per square feet in Q3 2018. Compared with the same period 2.50 last year, asking lease rates were 3.4% higher. 2.40 2.30 The dip can be traced back to two submarkets, 220 Central and South County, both of which had an 2.10 array of newly vacated retail space reenter the 2.00 market at lower than average asking lease rates. 1.90 Asking lease rates in Central County dropped by 1.80 o • o 0 o C. C. o 0 0 0 C.C. 0 n 0 $0.04 per square feet while South County fell as N :� CO ▪ CO ▪ Q CO 4 Q ▪ 0 0 0 O O O O 4 ▪ 4 0 0 low as $0.20 per square feet compared with Q2 2018. Despite this, demand for premiere retail Source:CBRE Reseorch,032018. space pushed asking lease rates higher in Q3 2018, notably in the coastal cities. Asking lease rates in the Central Coast submarket in particular rose by $0.14 per square feet from Q2 2018 to $3.36 per square feet —the highest average asking rates in the county. Meanwhile, West County cities had the largest quarter -to -quarter increase of $0.37 to $2.92 per square feet in Q3 2018. New Construction Though there were no major construction starts or completions during Q3 2018, a handful of projects are still in the planning phase, including the 176,500-sq.-ft. Anaheim Westgate Center and the 91,300- sq.-ft. Cypress City Center. The only center currently under construction is the Yorba Linda Town Center in North Orange County. The 115,450-sq.-ft. neighborhood center has already signed Regal Cinemas (49,500 square feet) and Bristol Farms (26,425 square feet) and is expected to finish construction by Q1 2019. Looking Ahead CBRE Economic Advisors forecasts that the vacancy rate and lease rate for the region will stay relatively stable for the next 12 months. irr Uptown Newport (Phase 1) Retail Market Analysis 36 12-Month Forecast Vacancy (%) 5 4 3 2 Vacancy Rate Asking lease Rate (SPSF/MO/P5C) 2.50 LI7 Ian Lr, Len .o .o -c .O rt r — r — rti ca co CC) CC) Cr, Cr. Cr-, CZD c c = c*D r1 crs cv c+'7 •d▪ - c� ▪ c+7 N cr7 •d- N L-,7 C3 =c3 c3 = {3 r�s === c3 == .:=,C3 = • =!,Ot=5 e3 Source: CBE Econometric Advisors, Q3 24/$_ 2.40 2.30 2.20 2.10 2.00 1.90 1.80 Uptown Newport (Phase 1) Land Description and Analysis 37 Property Analysis Land Description and Analysis Location The property is located on Jamboree Road and bounded by Birch Street and MacArthur Boulevard in downtown Newport Beach, Orange County, California, within the Newport Beach city limits. Land Area The following table summarizes the subject's land area. Land Area Summary Tax ID SF Acres 445-134-17 (Lot 1) 112,515 2.583 445-134-29 (Lot 2) 27,661 0.635 445-134-22 (Remainder) 1,307 0.030 Total 141,483 3.248 Source: Public Records The final large lot tract map (Tract No. 17763) was recorded on March 25, 2015. Final condominium maps for the appraised property (Lot 1) is anticipated in the near term, at which point individual Assessor's parcel numbers will be assigned to each unit. Shape and Dimensions The site of the appraised property (Lot 1) is flag -shaped, with dimensions of approximately 518 feet in width and between 109 and 207 feet in depth. Site utility based on shape and dimensions is average and do not inhibit development. Topography The site is generally level and at street grade. The topography does not result in any particular development limitations. Drainage No particular drainage problems were observed or disclosed at the time of field inspection. This appraisal assumes that there are not any unusual drainage issues that would affect the development of the subject. Flood Hazard Status The following table provides flood hazard information. irr. Uptown Newport (Phase 1) Land Description and Analysis 38 Flood Hazard Status Community Panel Number 06059CO286J Date December 3, 2009 Zone X Description Outside of 500-year fl oodpl a i n Insurance Required? No Environmental Hazards An environmental assessment report was not provided for review, and during our inspection, we did not observe any obvious signs of contamination on or near the subject. However, environmental issues are beyond our scope of expertise. It is assumed that the property is not adversely affected by environmental hazards. Seismic Hazards According to the Seismic Safety Commission, the subject site is located within Zone 4, which is considered to be the highest risk zone in California. There are only two zones in California: Zone 4, which is assigned to areas near major faults; and Zone 3, which is assigned to all other areas of more moderate seismic activity. In addition, the subject is located in a Fault -Rupture Hazard Zone (formerly referred to as an Alquist-Priolo Special Study Zone), as defined by Special Publication 42 (revised January 1994) of the California Department of Conservation, Division of Mines and Geology. In general, a number of faults are located in the Southern California and throughout California; thus, the area is subject to severe ground shaking during earthquakes. Competitive sites face similar seismic risk. Ground Stability A soils report was not provided for our review. Based on our inspection of the subject and observation of development on nearby sites, there are no apparent ground stability problems. However, we are not experts in soils analysis. We assume that the subject's soil bearing capacity is sufficient to support a variety of uses, including those permitted by zoning. Streets, Access and Frontage Details pertaining to street access and frontage are provided in the following table. irr Uptown Newport (Phase 1) Land Description and Analysis 39 Streets, Access and Frontage Street Jamboree Rd. Paving Yes Curbs Yes Sidewalks Yes Lanes 2 way, 3 lanes each way Direction of Traffic Northeast -Southwest Condition Average Traffic Levels Moderate Signals/Traffic Control Turn lane Access/Curb Cuts Average Visibility Average Utilities The availability of utilities to the subject is summarized in the following table. Utilities Service Provider Water Irvine Ranch Water District (IRWD) Sewer City of Newport Beach Electricity Southern California Edison Natural Gas Southern California Gas Company Local Phone Various providers Zoning The following table summarizes our understanding and interpretation of the zoning requirements that affect the subject, with a master site plane and detailed discussion to follow. Zoning Summary Zoning Jurisdiction City of Newport Beach Zoning Designation PC-58, Planned Community (Uptown Newport) Description Uptown Newport Planned Community Development Legally Conforming? Appears to be legally conforming Zoning Change Likely? No Permitted Uses Residential with portion of mixed -use irr. Uptown Newport (Phase 1) Land Description and Analysis 40 1 w' w w- n jal RESIDENTIAL Y, TT i, di' ! Lir- E : ! * 9 0 4 A R D ITESILIPMAL RESIDEMIAL (Source: Uptown Newport Planned Community Development Plan 2-14-13, Figure 1-6: Master Site Plan) The following is information provided in the Uptown Newport Planned Community (PC) Development Plan: Land Uses, Development Standards & Procedures, dated February 14, 2013: Purpose The Uptown Newport coordinates and regulates development of the residential, commercial, open space, circulation and other land uses that may be developed within the Uptown Newport site. It also serves as the implementing zoning document for the property and implements the Newport Beach 2006 General Plan and the approved Integrated Conceptual Development Plan (ICDP). The ICDP encourages the development of coordinated, cohesive and environmentally friendly residential and mixed use projects in the Airport Area, designed to create new urban villages with a distinctive sense of place. The Uptown Newport PC provides a framework for converting the existing industrial uses at the project site into a new village within the Airport Area, with a mix of uses, densities and amenities. The proposed land use intensity is compatible with existing and anticipated development planned in the Airport Area. It also permits the existing industrial development as an allowed interim use until the existing TowerJazz lease expires, or until March 2027, whichever occurs first, and ensures an orderly transition to new residential mixed -use village land uses. The Uptown Newport PC allows for the demolition and replacement of 438,127 square feet of existing industrial and office uses allocated to the Uptown Newport site with a residential and mixed -use development. A new street system will be developed to provide appropriate circulation throughout Uptown Newport (Phase 1) Land Description and Analysis 41 the project site for both pedestrians and vehicles, breaking up the project site into multiple development areas. Land Use The Uptown Newport PC is intended to be a multi -family residential community with neighborhood - serving retail uses. Prior to adoption of the Uptown Newport PC, development on the Uptown Newport property has been controlled by the Koll Center PC-15. The Uptown Newport PC replaces the Koll Center PC with respect to the development of the Uptown Newport site. It is recognized, however, that development and absorption of these elements within the Uptown Newport PC may require a span of several years to commence and complete, and that in the interim, industrial and commercial uses of the site will continue. Existing light industrial and office uses will be phased out as development is implemented. Prior to March 12, 2027 existing uses will continue to be allowed pursuant to the Uptown Newport PC and the Newport Beach Municipal Code (NBMC) relating to non -conforming uses and structures. Permitted uses are detailed in the table on the following page, provided by the Uptown Newport Planned Community Development Plan 2-14-13, Table 2-2: Permitted Land Use Regulation Table. irr. Uptown Newport (Phase 1) Land Description and Analysis 42 RESIDENTIAL i41 Mali-Uf.t Dwellings P Maria Occupations P Live -§errs units P Senor Citieen Housrig P CARE USE# A drR Day Care: Sims [B re fewer. in hornet P Child Day Cane: Small {9 or fewer, is hours) P Day Care, General'commercial) CUP {31 Cargregele Care Home CUP Convalescent Fadlitiy CUP 11:6fAA USES 1111 fJwhol Safes {off -sale) Alcohol Sates I off -sale I Amessary Only AnlIquee LlUP UUP Mum small 9akuln P P Ellodes P Eaaks P Eloutigr.F Shops P Clothing and acaessuifs Can ecn atnel ehologr+pYo Urlaglies Cenveraenee murksrslstores.iaod and be.erages P P P Handcrafted deals P Jewelry P Luggage and leather goads P Musical ins[nmenrs, pads and accessories P Office suppin P Pharmacies P Real estate information center P Shoe sloras P Sporting goads and egaprrnent rotiacao P P rays and Armes P SERVICE U3E5 • BUM SS, FINANCIAL- NIECHICAL AND PROFESSIONAL (II ATM' Pinar ilil Instllutiahs end kelaaed Sery+ors P Meal • Madeal And Mnlil Uptown Newport (Phase 1) SERVICE USE II -GENERAL {1I Animal Graarr ngNeternaay Seruiass fad Marring) Artists Studios P Eating and DrirdUrrg EsLai haler c Aczessory hood sundae {ripen fo pubic F Fast Food (no We hatissl Fast Food {with late -Mum) Food Service Igo late hours) Foal Service myth lace hcers) iake-01AService, Lotted P12} SUP F2) P kIUP 17j P Health Feness Facilities Sall - LDOD sq. ix. OF less Large - Over 2.000 sq. A. P Medical Rata&U $pnsoes EQdr scanning (Dental enhancement treatments Eye exam ereglassicwrtect lens sales SkIn Irealnknts Priori Services Clotlreq Rand Shops pry Cleaners - Agent Only Kew Salons,. &arbre $hops 1-Lorne electrontes and small accoan a repair Leck.n Itr.s Massage Esiablishrrents Manage Essabhhreenb. Acwasary Nai Salons,' Stoney Shops Scars tailors and seamstresses Tahnleg seder,' Travel agenciesrsenrioes PQsral Seryrces P P P F P P F P P MUP MUP P P P P pdnung and Dtlpllcamg Seiceices TRANSPORTATK» . COMMUNICATIONS APIt1INFRA STRUCTURE USES —'IIIIIes k.11nar P Wireless "eleronviwnicatkm Facilities OTIERUSES Accessory Simkins and Uses Iierinnil PrapMy Silas temporary Uen P Ltp LEND P= Permitted Icy -Right CUP. Cared done l Use Permit MUP= Minor Use Perrot LTP= Limited Term Pernik — Not Al lowed (1] US n permit'ed on the hut Floor only. (2) Late hours- FacIlitleswlth Late hours shall mean facilities that cafe r service and are open to the public after 11730 pm. any day of the meek. A Minor Use Perrnit shall be requhied for am/ use that rn Intains late hours. b} Chllld day care that principally serves our site residential uses shall not becounted agalnst the 1 i,500 squaw feet of allowable camrrterclak space. (4] Includes affordable housing In accordance with the Uptown Newport affordable housing Implementation plan. Noter Lard uses that are not listed In tine table above, or are not shown are not allowed, emcept as nthervbse provided by NEVC {hires of Interpretation]. LF such uses are Aoxssory Uses to a Resldantlal Devetaprner[t, such uses shakl rot be counted against the 11,51:1C sf, of allowable commercial Land Description and Analysis 43 Parking Requirements Parking within the Uptown Newport PC shall be provided along internal streets and within structured parking that is integrated with residential and retail buildings. On -street parallel and diagonal parking for visitors, public parks and short-term resident parking shall be provided along internal streets. Structured parking shall be provided for residential and retail uses, and may consist of subterranean or above -grade parking structures. Above -grade parking structures shall be encapsulated or lined with residential units or retail space. Parking requirements are summarized below. LAND USE PARKING REQUIREMENT Residential Studio: 1.1 spaces per dwelling unit (Rental) 1 Bedroom: 1.5 spaces per dwelling unit 2 Bedroom: 1.8 spaces per dwelling unit 3 Bedroom: 2.0 spaces per dwelling unit Visitor Parking: 0.3 spaces per dwelling unit Residential Studio: 1.4 spaces per dwelling unit (Ownership) 1 Bedroom: 1.8 spaces per dwelling unit 2 Bedroom: 1.8 spaces per dwelling unit 3 Bedroom: 2.0 spaces per dwelling unit Visitor Parking: 0.3 spaces per dwelling unit Senior Housing 1 per unit Affordable Housing 0-1 Bedroom: 1.0 spaces per dwelling unit 2+ Bedroom: 2.0 spaces per dwelling unit (Inclusive of handicap and guest parking) Refer to Newport Beach Municipal Code for all uses not listed above. (Source: Uptown Newport Planned Community Development Plan 2-14-13, Table 3-1: Uptown Newport Parking Requirements) According to the local planning department, there are no pending or prospective zoning changes. It appears that the property conforms with zoning requirements. We are not experts in the interpretation of zoning ordinances. An appropriately qualified land use attorney should be engaged if a determination of compliance is required. Entitlements The property appraised herein is entitled for 158 condominium units and 3,000 square feet of commercial space. Other Land Use Regulations We are not aware of any other land use regulations that would affect the property. Easements, Encroachments and Restrictions We were not provided a current title report to review. We are not aware of any easements, encroachments, or restrictions that would adversely affect value. Our valuation assumes no adverse impacts from easements, encroachments, or restrictions, and further assumes that the subject has clear and marketable title. irr. Uptown Newport (Phase 1) Land Description and Analysis 44 Off -Site Improvements Based on the appraiser's inspection and existing construction underway (not a part of the subject), as well as development costs provided by the Developer, a significant amount of the required infrastructure improvements servicing the appraised property has been complete. The valuation herein assumes all public capital facilities and improvements to be financed by the CFD Special Tax have been completed (i.e., undergrounding of overhead utilities and a City park). Based on information provided, the undergrounding of the utilities costs approximately $3,250,000 and the park $3,305,000. Additionally, the Developer's cost budget indicates $2,000,000 remain in off -site improvements. Based on anticipated Bond proceeds of $7,357,770, and $6,555,000 in proceeds amount to $802,770 ($7,357,770 - $6,555,000), which will off -set the $2,000,000 in remaining off -site improvement costs of $1,197,230 and is applied in the first period of the cash flow model. On -Site Development Costs According to the Developer's cost budget, site development costs total $11,817,126, inclusive of on - site development costs and development impact fees, as summarized below: On -Site Development Costs Developer Impact Fees Developer Impact Fees (Retail) Total Site Development Costs $ 1,000,000 $ 10,744,172 $ 72,954 $ 11,817,126 Permits and Fees Based on information provided by the Developer, permits and fees due at building permit total $790,000 for the residential component, or approximately $5,000 per residential unit. Timeline According to information provided, vertical construction is anticipated to begin December 2019 with the first condominium sales closing in December 2021. Vertical construction and sale of the commercial condominium unit is anticipated for the same time frame (construction in December 2019, sale in December 2021). Conclusion of Site Analysis Overall, the subject property is functional in terms of its size, topography, shape and overall location within the market area. There appear to be no unusual or restrictive physical limitations of the properties. The subject property is considered physically suitable for development. With an appropriate marketing campaign, the Uptown Newport project should be competitive with other planned communities in the city of Newport Beach and throughout the Orange County region. irr. Uptown Newport (Phase 1) Land Description and Analysis 45 frinag. a tternc • irr Uptown Newport (Phase 1) Land Description and Analysis 46 Uptown Newport (Phase 1) Land Description and Analysis 47 Parcel Map M LOr B .pC13 27 0.011 AC. LOT C 29 0. 03, AC. LOT D THIS MAP wes PaEPARED FOR ORANGE COUN IY d5SE650F 0£P T. UARANTE ONLY. SfOR MAFEf NO GUARANTEE As i0 O!CLEF!LY NOP l66Is !NY LrdSILITY FOR OTHER USES. NOi 0 B£ REPPOOUCEO. LL Za RESEPVfO. 0 COPYRIGHT DRANC£ COUNTY ASSESSOR 1016 24 n LOT Al 28 r305 AC. 0.01z � Ac. TRACT LOT r 583 aL. 0.030 AC. 0p030 C.e PARK STORM DRAIN 133 LOT P 20 .� Op195 e 41 L. 2 0. 0.706 2t AC. x NEWPORT0 ,0T 0 0.Bv (qAC. TORN DRAIN POP PlRR PUPP06E5. 'H OUCH k ARE S. LANOSCAP£ NI FOP UTIL PURPOSES. LANDSCAPE NANCE PURPOSES. 1.400 AO. LOT O 0.030 LOI 4 1.431 AC. LOTH 14 O.539 AC. LOT 0.09E AC. 1" = 100' NO. 17763 2 6.7 A o. o1e ac. 13 S r.0 445-1 34 PAGE 3 OF 3 13 JANUARY 2016 C. O00. O000B C. JAMBOREE 0.00 0.032 ROAD TRACT NO. 17763 M.M. 937-17 to 23 inol. 07 NOTE - ASSESSOR'S BLOCK 8 PARCEL NUMBERS SHOWN IN CIRCLES ASSESSOR'S MAP BOOK 445 PAGE 134 COUNTY OF ORANGE PRIVATE JrREET Uptown Newport (Phase 1) Land Description and Analysis 48 Real Estate Taxes [The property tax system in California was amended in 1978 by Article XIII to the State Constitution commonly referred to as Proposition 13. It provides for a limitation on property taxes and for a procedure to establish the current taxable value of real property by reference to a base year value, which is then modified annually to reflect inflation (if any). Annual increases cannot exceed 2% per year. The base year was set at 1975-76 or any year thereafter in which the property is substantially improved or changes ownership. When either of these two conditions occurs, the property is to be reappraised at market value, which becomes the new base year assessed value. Proposition 13 also limits the maximum tax rate to 1% of the value of the property, exclusive of bonds and direct charges. Bonded indebtedness approved prior to 1978, and any bonds subsequently approved by a two-thirds vote of the district in which the property is located, can be added to the 1% tax rate. Real estate taxes and assessments for the current tax year are shown in the following table. Taxes and Assessments - 2018-2019 Assessed Value Taxes and Assessments Ad Valorem Tax ID Land Improvements Total Tax Rate Taxes Direct Assessments Total 445-134-17 (Lot 1) $12,255,909 $0 $12,255,909 1.117650% $136,978 $147 $137,125 445-134-29 (Lot 2) $1,721,636 $0 $1,721,636 1.117650% $19,242 $20 $19,262 445-134-22 (Remainder) $0 $0 $0 1.117650% $0 $0 $0 $13,977,545 $0 $13,977,545 $156,220 $167 $156,387 According to the Orange County Treasurer —Tax Collector, the appraised properties are located in Tax Rate Area 07-088, which is subject to a tax rate of 1.11765%. Additional, upon completion of construction, annual direct charges of approximately $60 per unit is also considered in the analysis herein, based on similar projects in the market area. The existing ad valorem taxes are of nominal consequence in this appraisal, primarily due to the fact these taxes will be adjusted substantially as the remaining infrastructure and property improvements are completed and in consideration of the definition of market value employed in this appraisal, which assumes a sale of the appraised property. As referenced, the appraised properties are located within the boundaries of California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) Number 2018-03 (Uptown Newport). According to the Special Tax Bonding Analysis — Projected Debt Service Schedule and Debt Service Coverage provided, the annual special taxes applicable to the subject's facilities are as presented in the table on the next page. irr. Uptown Newport (Phase 1) Land Description and Analysis 49 Assigned special Taxes (2019-20) Land Use & Special Tax Class Class 1- Phase I Condominiums Class 2 - Phase II Condominiums No. of Units 158 314 Assigned Tax $771 $979 Class 3 - Phase II Apartments 314 1284 Total Tax Levy $121,818 $307,406 $89,176 Total Residential 786 Class 4 - Phase I - Non -Res_ Class 5 - Phase II - Non -Res. Total Non -Residential 9,750 sq_ ft. 1,75D sq_ ft. $060 $518,4.00 $5.35/sq. ft_ $5.35 / sq. ft. 5-35 J sq_ fit $52,153 $9,363 $61,525 Total $579,925 (Source: RBC Capital Markets, Special Tax Bonding Analysis — Projected Debt Service Schedule and Debt Service Coverage) The bond indebtedness and direct levies will be considered in the valuation of the subject property. SHEET 1 OF 1 PROPOSED BOUNDARIES OF CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 / (UPTOWN NEWPORT) CITY OF NEWPORT BEACH COUNTY OF ORANGE STATE OF CALIFORNIA For prkaars d lens and Ilr rsica, milavner 4 mai b re prcah naps of it cage Cam Arians.' Catena and WREN rat No. 17763 mooned or June I. 2015 a Irarulsu No. 201.50332C061 at Pages 17 elrcl*2! nSalk SW Of MOPm arc, efs Cat/itl RateAu CO Oile41 CO, tt Colannia LEGEND NrrrOr ri 11111111 Proposed Bwdanes of Calder. Samoa Camrmles Devebprnsa re61dp6' Canrrlrpiy F#tlpes Oatrct NP 2015.e) Itlp4rnn Neepero l Cif el Nearpel 6arNn Co -my Of [Mg& tasaerr Parer Lana Tea Zwre 1 T. Zara 1431A.4461 r NM* WO., 11I Filed an the &N a die Serseeuy on Caledonia StatewiUe CommWbea Developnners ✓attuney lira day of 201 B Stu -Nary Cm rfomw Sutee de Com munrees Development Adtrar-. y (2) 1 11ereb/ oerbk OM the w,ren map shnwn4 proposed madame d Calk. e Shrenede ammonites Development Rudnonty Community Facile:N DGahbi Ho. 2018413 Rlxkown Newponl. City erf Neeped Beach County al Orange, Sole of COW.. rrs BPINOVetl sY 1 e Cemmasnn Of me Canaan. 5mtewde Comsnmees Developmes Ratio -My al a regutar meeting thereof. held mthe day ad 2018. try do resduaon No. Secretary, C.Yfoma StOreee Corm unntes Development Aurhonty 131 FMB leB dy01 2016. Nuke hodrd &dock m.,nBook dMops dP.. . r1ridCCM,* F wires Oaakrla d page mld w lend Mo. n rte once Of tea Cards Rernee of Orange County. State el Cdtkxnle. %Pr. Gar► Recorder. CdtontYd piing. By Deputy fee irr Uptown Newport (Phase 1) Highest and Best Use 50 Highest and Best Use Process Before a property can be valued, an opinion of highest and best use must be developed for the subject site, both as vacant, and as improved. By definition, the highest and best use must be: • Legally permissible under the zoning regulations and other restrictions that apply to the site. • Physically possible. • Financially feasible. • Maximally productive, i.e., capable of producing the highest value from among the permissible, possible, and financially feasible uses. Highest and Best Use As Vacant Legally Permissible The site is zoned PC-58, Planned Community (Uptown Newport), Uptown Newport Planned Community Development. Permitted uses include residential with portion of mixed -use. To our knowledge, there are no legal restrictions such as easements or deed restrictions that would effectively limit the use of the property. Additionally, the subject is entitled for 158 condominium units and 3,000 square feet of commercial space. The subject property, as proposed, represents a planned community that has undergone extensive planning and review. Based on the difficulties in obtaining the subject's existing approvals, it is doubtful any significant project changes would be allowed and only mixed -use (residential with commercial) is given further consideration in determining the highest and best use of the site as vacant. Physically Possible The physical and locational characteristics of the properties have been previously described in this report. In summary, the physical characteristics of the site, terrain and soils are suitable for the proposed uses. Location considerations include the compatibility of the subject's proposed use(s) and location with respect to surrounding uses. As indicated previously, the subject represents a planned community, which has undergone extensive planning and review. The proposed development has been carefully designed to include an appropriate mix of land uses that are compatible with adjacent uses and uses throughout the planned community. The physical characteristics of the site do not appear to impose any unusual restrictions on development. Overall, the physical characteristics of the site and the availability of utilities result in functional utility suitable for a variety of uses. Financially Feasible The feasibility of the allowable uses is dependent on the supply and demand conditions, which could influence the competitive position of each proposed type of property use comprising the subject, including residential and commercial development. The subject property is located in an area that has Uptown Newport (Phase 1) Highest and Best Use 51 experienced modest population growth in recent years, with the little population growth a direct result of the limited supply of developable land. As noted in the Residential Market Analysis and Retail Market Analysis sections, the subject's Newport Beach location coupled with the limited supply of land and the upper income level associated with the potential buyer pool, sales of residential and commercial units in the area remain relatively strong. As shown later in this report by the land residual analysis, where the subject's condominium units and remaining site development costs are deducted from current prices, the subject's land value is significantly positive (reflecting its as vacant condition), which demonstrates that mixed -use development as proposed (residential and commercial) is financially feasible. Further, buyers are actively buying homes and builders are actively buying land, reflecting ample demand. Based on the preceding discussion, it appears development consistent with the entitlements approved for Phase 1 of the Uptown Newport Project is financially feasible. It is expected the subject property will be competitive with the other regional redevelopments similar to the subject that have been well received by the market, including currently active Rockefeller project by Lennar, as well as the older, but adjacent projects The Plaza and Marquee Park Place. The subject property's location proximate to transportation routes should bode well for the subject property's various land use components. Maximally Productive Legal, physical and market conditions have been analyzed to evaluate the highest and best use of the subject property. The analysis is presented to evaluate the type of use(s) that will generate the greatest level of future benefits possible to the property. Based on the zoning and entitlements approved for the subject property, a mix of residential and commercial development, are the only land uses that would generate the highest residual land value. Accordingly, it is our opinion that mixed -use (residential with commercial), developed as proposed, is the maximally productive use of the property. Conclusion Development of the site for mixed -use (residential with commercial) is the only use that meets the four tests of highest and best use. Therefore, it is concluded to be the highest and best use of the property as vacant. As Improved As is demonstrated in the valuation section presented later in this report, there is sufficient profit associated with the proposed improvements, suggesting the highest and best use as proposed is the development of the mixed -use project commensurate with the development agreement for the Uptown Newport Project. Most Probable Buyer The definition of market value is based on the components of the subject selling in a single, bulk transaction. The most probable buyer of the subject is a land developer familiar with the regional market area. irr. Uptown Newport (Phase 1) Valuation Methodology 52 Valuation Valuation Methodology Appraisers usually consider three approaches to estimating the market value of real property. These are the cost approach, sales comparison approach and the income capitalization approach. The cost approach assumes that the informed purchaser would pay no more than the cost of producing a substitute property with the same utility. This approach is particularly applicable when the improvements being appraised are relatively new and represent the highest and best use of the land or when the property has unique or specialized improvements for which there is little or no sales data from comparable properties. The sales comparison approach assumes that an informed purchaser would pay no more for a property than the cost of acquiring another existing property with the same utility. This approach is especially appropriate when an active market provides sufficient reliable data. The sales comparison approach is less reliable in an inactive market or when estimating the value of properties for which no directly comparable sales data is available. The sales comparison approach is often relied upon for owner -user properties. The income capitalization approach reflects the market's perception of a relationship between a property's potential income and its market value. This approach converts the anticipated net income from ownership of a property into a value indication through capitalization. The primary methods are direct capitalization and discounted cash flow analysis, with one or both methods applied, as appropriate. This approach is widely used in appraising income -producing properties. Additional analyses often undertaken in the valuation of subdivisions include extraction, land residual analysis, and the subdivision development method. Reconciliation of the various indications into a conclusion of value is based on an evaluation of the quantity and quality of available data in each approach and the applicability of each approach to the property type. The methodology employed in this assignment is summarized as follows: Approaches to Value Approach Applicabiliy to Subject Use in Assignment Cost Approach Applicable Utilized Sales Comparison Approach Applicable Utilized Income Capitalization Approach Applicable Utilized We have been requested to estimate the market value of the fee simple estate of the appraised property, in bulk, comprising the California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) No. 2018-03 (Uptown Newport), subject to the hypothetical irr. Uptown Newport (Phase 1) Valuation Methodology 53 condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. In order to estimate the market value of the subject property, two approaches to value were utilized: the sales comparison approach and the land residual analysis, which is a form of discounted cash flow analysis. In the land residual analysis, the revenue component of the DCF will be based on the probable market value for the average, proposed residential condominium units and the concluded market value of the commercial condominium unit. A number of assumptions were made in the discounted cash flow analysis, not the least of which was the forecast of absorption, or disposition, of the condominium units comprising the subject property. Any properties within CFD No. 2018-03 Phase 1 not subject to the Lien of the Special Tax securing the Bonds (for -rent multi -family, public and quasi -public land use sites) are not a part of this appraisal. Uptown Newport (Phase 1) Land Residual Analysis 54 Land Residual Analysis The land residual analysis is used in estimating land value when subdivision and development are the highest and best use of the land being appraised. All direct and indirect costs are deducted from an estimate of the anticipated gross sales price of the improved product; the resultant net sales proceeds are then discounted to present value at an anticipated rate over the development and absorption period to indicate the value of the land. The land residual analysis is conducted on a semi-annual (six month) basis. As a discounted cash flow analysis, the land residual analysis consists of four primary components summarized as follows: Revenue — the total gross income derived from the disposition of the subject's land components. Absorption Analysis — the time frame required to sell-off the components. Of primary importance in this analysis is the allocation of the revenue over the absorption period — including the estimation of an appreciation factor (if any). Expenses — the expenses associated with the sell-off of the components are calculated in this section — including administration, marketing, expenses, remaining development costs, commission costs and property taxes. Discount Rate — the appropriate discount rate is derived by employing a variety of data. Discussions of these four concepts begin below, with the discounted cash flow analysis offered at the end of this section. Revenue The individual component valuations of the subject property comprise the revenue of the discounted cash flow analysis. Specifically, the subject property represents the taxable portion of the proposed California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) for the Uptown Newport project, which consists of 158 condominium units and a 3,000 square foot retail condominium unit. For purposes of comparison, an average residential unit size of 1,671 square feet will form the basis of the residential land use component. Analysis from the Residential Market Analysis section determined a sale price (total consideration) of $1,650,000, or approximately $987 per square foot, is supported and consistent with current market conditions. In addition, a residential unit premium and upgrade factor of 10% of the sale price is considered reasonable and utilized in this analysis, as well as a 35% model recapture rate which will be discussed in greater detail in the expense section of this approach to value. The sales comparison approach is utilized to estimate the market value of a subject's commercial component. The subject consists of one commercial condominium unit containing 3,000 square feet. On the following pages, we will present and analyze several comparable properties. We will begin by presenting a summary tabulation and location map, followed by a discussion of necessary adjustments, and our conclusion of market value via this approach. These sales are the most recent irr. Uptown Newport (Phase 1) Land Residual Analysis 55 transactions considered reasonably similar to the subject property. This analysis is conducted on a per square foot of rentable area. Improved Commercial sales Summary Grantor Sale Sale Rentable Year Price No. Location Grantee Date Price Area {5f} Built per SI 1 133 The Prominade N. Unit 106 Emerita Garravillas Aug-18 5775,000 2,271 2006 5341.26 Long Beach, Los Angeles County California Holiday Investments. LLC APN: 7280-027-021 Comments: This mmpomble represent the sale of o single tenant, ground floor retail condominium unit looted in the downtown care of tong Beech. Prohibited uses within the space include: medico!/dental office, veterinarian/kennel/animal care facility, tattoo or body piercing service, fortuneteller, banquet facility, adult business, recycling renter, trade or private school religious institution, cafeteria, gymnasium or hearth club, any liquor store of business serving alcohol, end any use or operation which is obnoxious to °rout of harmony with the development or operation of a residentiol/retort project 2 2240 Newport Boulevard. Unit 104 NPBeach Marina LLC Jun-18 51.427,00D 1,057 2017 $1,350.05 Newport Beach, Orange County Berk Properties LLC APN:047.120.33 Comments: This is the sole of on office condominium unit within the VUE Newport mixed -use development offering high -end residential, specialty, retail and eateries. This project is located an the Newport Harbor waterfront 3 727 N. Douglas Street, Unit 7276 Pettus Q tlenekos Dec-17 52,132,000 2,870 2015 5798.50 El Segundo. Los Angeles County Stephanie Lee APN: 4138.031-050 Comments: This condominium unit is improved as a restaurant space located in a Class A creative office campus, Elevon. On the overage day Erevan is projected to hove 600 employees, and abuts another project with 500 employees. The immediate area has limited retail services to support the growing office population. The immediate area is also served by multiple newly developed hotels. 4 139 Hermosa Avenue, Unit 1C Jeffrey 5 & Mercedes C Smith Jun-16 51,310,000 1,2012 2008 $1,091.67 Hermosa Beach, Los Angeles County 139 Hermosa Ave LLC APN: 4183.003-041 Comments: This office condominium unit offers two bathrooms, five parking spaces, expo stroage, an integrates sound and secuirty system, kitchenette and dual zoning heatng and air conditioning system. it is located within less and a block to the beach. Pat Killen designed this two-story office/loft spore, which has been featured in architectural mogazines. 5 2230 Newport Boulevard, Unit 101 NPBeach Marina LLC Listing S1,358,455 1,049 2017 $1,295.00 Newport Beach, Orange County N/Av APN- N/Av Comments: This is a first floor waterfront condominium unit available for sale within the VUE Newport mixed -use development offering high -end residential specialty, retail and eateries. It has been actively marketed for about seven months. In total the VLIE offers II retail/office condominium units within seven buildings. Uptown Newport (Phase 1) 10. Adjustment Factors 56 Comparable Land Sales Map Marina Ladeia Heights I]el Rey Los Angeles International Airport Inglewood O v,ELP huntingtan Park South Gate ▪ Lynwood E!segundo Hawthorne Willowbrook Manhanan Beach _1 Redondo Beach Torrance Car▪ s▪ on Wear Cursor Gardena Ro91np Lomita Hmaealataa r,l ,n Rolling HIIIa Rancho Gales Verdes Subject Property 9 Comparable 1 9 Comparables 2 d 5 9 Comparable 3 9 Comparable Buena Park Lakewood Cerrhtos FET Signal Hill L nggeach Cypress Los Alairdros Stanton O D Seal Beach Go gleMyMaps Garden Grove Westminster Midway City Fountain C Huntington Beach Valley Fullerton Anaheim F.S.11e SCout Reservation Placentia Chino HIIIS 5/ropy Hallow Chino Hills State Park Yorba Linda Q "or Ewe stair" C)r.enr Villa Park P°kD res rr-, r, Orange El Modena lac North Tonga Santiogo Canyon Santa Ana Tustin Costa Mesa Ne n Be h ZIt e Irvine Crystal Co. State Park rQ' Slluereda Limestone Canyon Repronal Perk Whiling Ranch Wilderness Park Lake Forest Rancho Murg� 0 woods Q Laguna Beach Mission Viejo Aksa V. 10 Laguna Nlgual Oliarrandli L adera Ranch Cots Rancho Mission Vlep Wir O San Juan Capistrano irr. Uptown Newport (Phase 1) Adjustment Factors 57 Adjustment Factors The sales are compared to the subject and adjusted to account for material differences that affect value. Adjustments are considered for the following factors, in the sequence shown below. Adjustment Factors Present Value of Bonds Property Rights Conveyed Financing Terms Sale Conditions Market Conditions Location Access/Exposure Size Building Quality Age/Condition Bond debt has a direct impact on the amount for which the end product will sell. In an effort to account for the impact of bond indebtedness on the sales price, we establish a present value amount for the bond encumbrance based on the annual assessment to reflect the total consideration with each transaction. Leased fee, fee simple, leasehold, partial interest, etc. Seller financing, or assumption of existing financing, at non -market terms. Extraordinary motivation of buyer or seller, such as 1031 exchange transaction, assemblage, or forced sale, as well as applicable adjustments for non -stabilized occupancy, above/below market rents, and other economic factors. Excludes differences in rent levels that are already considered in previous adjustments, such as for location or quality. Changes in the economic environment over time that affect the appreciation and depreciation of real estate. Market or submarket area influences on sale price; surrounding land use influences. Convenience to transportation facilities; ease of site access; visibility from main thoroughfares; traffic counts. Inverse relationship that often exists between building size and unit value. Construction quality, amenities, market appeal, functional utility. Effective age; physical condition. irr. Uptown Newport (Phase 1) Adjustment Factors 58 Sales Adjustment Grid - Commercial Condominium Site Characteristics: Subject Comparable Comparable 2 Comparable 3 Comparable 4 Comparable 5 Sale Price per SF $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Bond Encumbrance (Present Value) per SF $0.00 $0.00 $0.00 $0.00 $0.00 Adjusted Price per SF $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Elements of Comparison Property Rights Conveyed Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Fee Simple Adjustment Adjusted Price $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Financing Terms Cash Equiv. Similar Similar Similar Similar Similar Adjustment Adjusted Price $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Sale Conditions Market Market Market Market Market Listing Adjustment Adjusted Price $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Market Conditions Dec-18 Aug-18 Jun-18 Dec-17 Jun-16 Dec-18 Adjustment (Appraisal) Adjusted Price $341.26 $1,350.05 $798.50 $1,091.67 $1,295.00 Physical Characteristics Location Newport Beach Long Beach Newport Beach El Segundo Hermosa Beach Newport Beach Adjustment Access/Exposure Average Similar Similar Similar Similar Similar Adjustment Rentable Area (SF) 3,000 2,271 1,057 2,670 1,200 1,049 Adjustment Building Quality Good Similar Similar Superor Similar Similar Adjustment .I, .I, Age/Condtion New/Excel. Inferior Similar SI. Inferior Inferior Similar Adjustment TT T TT Net Adjustment Adjusted Price per SF Sig. Upward Downward Upward SI. Upward 51. Downward > $341.26 < $1,350.05 > $798.50 > $1,091.67 < $1,295.00 Given the analysis in the table above and on the preceding pages, a ranking analysis of the subject's commercial condominium unit and the comparable sales is presented below: Improved Commercial Ranking Summary Property Sale Date Price per SF Net Adjustment Comparable2 Jun-18 $1,350.05 Downward Comparable 5 Dec-18 $1,295.00 SI. Downward Subject -- $1,200.00 Comparable4 Jun-16 $1,091.67 SI. Upward Comparable 3 Dec-17 $798.50 Upward Comparable 1 Aug-18 $341.26 Sig. Upward Considering current market conditions and specifics of the subject, an improved market value of $1,200 per square foot is considered reasonable. Applying this unit indicator to the subject's commercial condominium unit results in the following estimate of value via the sales comparison approach: 3,000 square feet x $1,200 per square foot = $3,600,000 irr. Uptown Newport (Phase 1) Adjustment Factors 59 Closing Projections According to the construction schedule provided, and the typical time required for the construction of attached units , it is estimated to take approximately 24 months from start to compete construction and begin sales. It is assumed that closings will occur in the same period as the sales. Changes in Market Conditions (Price Increases or Decreases) Based on market surveys, responses are mixed whether market participants trend revenues and expenses. Generally market participants prefer not to price trend, but sometimes they will trend when trying to justify a sale price when there is strong competition for land. Or, participants have indicated they may trend if the sell-off period is anticipated to be protracted. However, under current market conditions, there is likelihood of some home price appreciation during the sell-off period. We estimate a level appreciation factor of 2.00% per year (1.00% semi-annually) for the subject's sell-off. Absorption Considering our discussion in the Residential Market Analysis section, and for purposes of this analysis, it is estimated the subject can achieve an absorption rate of 4.0 sales per month (24.0 sales semi- annually, or every six months). This estimate is consistent with the average monthly absorption rates observed by similar active residential projects in the immediate market area. With sales beginning in Period 5, the subject's units sell out in seven periods. Expenses Projections As part of an ongoing effort to assemble market information, the table on the next page reflects survey responses and developer budget information for numerous attached single-family residential projects throughout the California region. Attached Residential Budgets Developer Classification RegionaI RegtonaI LOCaI RegionaI Regional National Mrnl7Mlm Maximum Average Budget Date 2018 2018 2018 2018 2017 2015 No. of Unit 63 60 34 29 28 72 Quality Good Good Excellent Good Average/Good Excellent 28 Average/Good 72 Excellent 47.667 Good Avg. Unit Size ]SF] 2,096 2,026 1,133 1,364 2,000 1,079 1.079 2,096 1,616 G&A%of Revenue 1.1% 1.1% N/Av 2.1% 1.2% N/Av I.I% 2.I`% 1.4% Mkt & Sales % of Revenue 1.68% 1.68% NIAv 1.0% 2.6% NIAv 2.696 1.7% Cost per Model 5365,333 5365,333 N/Av 5204,500 581,074 NIAv $81.074 $365.333 5254.060 Site CostsfUnit 580.658 580, 058 552,675 590,074 560,000 NIAv 552,675 590,074 572,573 Permits & Fees/Unit 542,602 541,624 526.034 549,244 543,714 NIAv Direct Costs/SF 5157.69 5157.79 5381.77 S111.92 $89.27 Sass.00 $26,034 $89.27 S381.77 540,044 5179.69 $49, 244 Indirect % of Direct Costs 996 9% 11% 9% 17% WAN 9% 1796 11% Profit % of Revenue IRR 12.5% 20.18% 12.5% 20.18% NIAv N/Av 23.0% NIAv 21.6% NIAv NIAv NIAv 12.5% 20.18% 23.0% 20.18% 17.4% 20.1896 General and Administrative These expenses consist of management fees, liability and fire insurance, inspection fees, appraisal fees, legal and accounting fees and copying or publication costs. This expense category typically ranges from 2.0% to 4.0%, depending on length of project and if all of the categories are included in a builder's budget. We have used 3.0% for general and administrative expenses. This expense category is spread evenly over the entire sellout period. irr. Uptown Newport (Phase 1) Adjustment Factors 60 Marketing and Sales These expenses typically consist of advertising and promotion, closing costs, sales operations, and sales commissions. The expenses are expressed as a percentage of the gross sales revenue. The range of marketing and sales expenses typically found in projects within the subject's market area is 5.0% to 6.5%. A figure of 6.0%, or 3.0% for marketing and 3.0% for sales, is estimated in the marketing and sales expense category. Property Taxes (Ad Valorem and Special Taxes) The subject is located within an area with an effective tax rate of 1.11765%. This amount is applied to the estimated market values and divided by the total number of units to yield an estimate of ad valorem taxes/unit/year. The tax amounts are applied to unclosed inventory over the sell-off period. Property taxes are increased by 2% per year. Direct levies are estimated at $60 per unit per year and are also considered in this analysis. Additionally, as referenced, the appraised properties are located within the boundaries of California Statewide Communities Development Authority (CSCDA) Community Facilities District (CFD) Number 2018-03 (Uptown Newport). According to the Special Tax Bonding Analysis — Projected Debt Service Schedule and Debt Service Coverage provided, the annual special taxes applicable to the subject's facilities are as presented in the table below. Assigned Special Taxes .r2O19-20? Land Use & Special Tax Class No. of Units Class 1- Phase I Condominiums Class 2 - Phase 11 Condominiums Class 3 - Phase II Apartments 158 314 314 Assigned Tax $771 $979 $284 Total Tax Levy $121.818 $307.40.6 89.176 Total Residential Class 4 - Phase I - Non -Res. Class 5 - Phase II - Nan -Res. Total Non -Residential 786 9,750 sq_ ft. 1,750 sq_ ft. $660 $5.35 / sd. ft. $5.35 / sq. ft. $5.35 / sq. ft. 518,400 $5 2.163 $9,363 $61,525 Total $579,925 (Source: RBC Capital Markets, Special Tax Bonding Analysis — Projected Debt Service Schedule and Debt Service Coverage) The total tax expense is gradually reduced over the absorption period, as the land components are sold off. Homeowner's Association Fee Allocations for HOA fees of approximately $325 per unit per month is applicable to this valuation. The total HOA expense is assumed to be incurred once construction is complete, and is reduced over the absorption period, as units are transferred to homebuyers. irr. Uptown Newport (Phase 1) Adjustment Factors 61 Model Costs Model upgrade expenses can vary widely depending upon construction quality, targeted market and anticipated length of time on the market. These upgrades, exterior and interior, including furniture, can range from $20,000 per model to over $250,000 per model for executive homes. Based on the quality of the subject's proposed improvements and the targeted buyer segment, a model upgrade cost of $150,000 is considered reasonable for the subject's units. Of this amount approximately 35% will be recaptured with the sale of the models reflecting a model recapture of $157,500. Model costs will be applied in the fourth period, at the end of the vertical construction period. Off -Site Improvement Costs Based on the appraiser's inspection and existing construction underway (not a part of the subject), as well as development costs provided by the Developer, a significant amount of the required infrastructure improvements servicing the appraised property has been complete. The valuation herein assumes all public capital facilities and improvements to be financed by the CFD Special Tax have been completed (i.e., undergrounding of overhead utilities and a City park). Based on information provided, the undergrounding of the utilities costs approximately $3,250,000 and the park $3,305,000. Additionally, the Developer's cost budget indicates $2,000,000 remain in off -site improvements. Based on anticipated Bond proceeds of $7,357,770, and $6,555,000 in proceeds amount to $802,770 ($7,357,770 - $6,555,000), which will off -set the $2,000,000 in remaining off -site improvement costs of $1,197,230 and is applied in the first period of the cash flow model. On -Site Development Costs According to the Developer's cost budget, site development costs total $11,817,126, inclusive of on - site development costs and development impact fees, as summarized below: On -Site Development Costs Developer Impact Fees Developer Impact Fees (Retail) Total Site Development Costs $ 1,000,000 $ 10,744,172 $ 72,954 $ 11,817,126 These costs will be incurred as the units are being constructed and are allocated evenly over the first four periods. Permits and Fees Based on information provided by the Developer, permits and fees due at building permit total $790,000. These costs will be incurred as the units are being constructed and are allocated evenly over the first five periods. Direct and Indirect Construction Costs Construction costs are generally classified into direct and indirect costs. Direct costs reflect the cost of labor and materials to build the project. Direct costs generally are lower per square foot for larger floor plans, all else being equal, due to economies of scale. Indirect items are the carrying costs and Uptown Newport (Phase 1) Adjustment Factors 62 fees incurred in developing the project and during the construction cycle. Construction quality and market -segment are significant factors that affect direct construction costs. In addition, national/public builders, which are able to achieve lower costs due to the larger scale in which orders are placed, routinely achieve lower direct costs. According to information provided by the Developer, estimated direct construction costs for the subject are as follows: Residential Condominium Units Direct Construction Costs $ 116,431,938 Upgrade Costs $ 17,349,943 Subtotal $ 133,781,881 ($506.72 per SF) Commercial Condominium Direct Constriction Costs $ 1,302,354 Subtotal $ 1,302,354 ($434.12 per SF) Total Direct Construction Costs $135,084,235 Considering the presumed quality of the subject property, direct construction costs of $500 per square foot of residential unit and $435 per square foot of commercial unit are considered reasonable. Under current market conditions, we estimate a level appreciation factor for direct construction costs of 1.00% per year (0.50% semi-annually) for the subject's sell-off. Regarding indirect costs, the following list itemizes some of the typical components that generally comprise indirect costs: • Architectural and engineering fees for plans, plan checks, surveys and environmental studies • Appraisal, consulting, accounting and legal fees • The cost of carrying the investment in land and contract payments during construction. If the property is financed, the points, fees or service charges and interest on construction loans are considered • All-risk insurance • The cost of carrying the investment in the property after construction is complete, but before sell -out is achieved • Developer fee earned by the project coordinator • Interest reserve Conversations with developers indicate the indirect costs generally range anywhere from 10% to 15% of the direct costs (excluding marketing, sales, general and administrative expenses, taxes, which are accounted for separately). An estimate of 15% is considered reasonable for the subject. Uptown Newport (Phase 1) Adjustment Factors 63 Summary The following chars summarizes the revenue and expenses discussed on the preceding pages. Revenue And Expense Summary Revenue Residential Unit Sire {SF) 1.671 Sale Price (Total Consideration) $1.650.000 Number of Residential Units 158 Res Idential Revenue 5260.700,000 Commercial Unit Size (SF) 3,000 Sale Price (Total Consideration) 53.600.000 Number of Commercial Units 1 Commercial Revenue $3,600,000 Unit Revenue (Belpre Appreciation}: Unit Revenue (After Appreciation): Unit Revenue (Per Unit • from Cash Hpw): Residential Unit Premiums and Upgrades Model Recapture (r# 35% of cast) Lot Premium and Model Recapture Revenue: Expenses Non -Appreciated Expenses General and Administrative Marketing and Sales Ad Valorem Real Estate Taxes 0 i rect Rea! Estate Tax Charges CSCOACFD No. 2018-03 Presidential Units Commercial Unit HOA Model Costs OH -Site improvement Casts On -Site Development Casts Permits and fees Subtotal: $264,300,000 5280,951,135 $1.766,359 526.070.000 3157.500 $26,227,500 $165,000 (per rest detnial unit) 5165,997 {per residetnial unit) Total Revenue (Aker ApprediUon): 5307,078,635 51,931,312 {per unit) $771 /unit/year 55.35 /SF/year Appreciated Expenses Direct Constructor Casts (8eforr Appeciation) Direct Constructor Casts (After Appreciation) Indirect Constructon Costs (Total) Subtotal: ■ 3.0% 6.0% 53,407 $60 $867 Total Over Sell -Off Period of total revenue $9,212,359 el total revenue $18,424,716 /unit/year 51.901,030 (from cash flow) /unit/year 533,473 from cash flow) /unit/year 5470.832 {from cash flow) $325 /unit/month 3 models 15% of Direct CostS 52,117,700 (from cash flow) $450,000 $150,000 (per modell 51,197,230 $7,530 (per unit) $11,617.126 574,322 (per unit) $790 000 $4,969 (per unit) $46.414.474 Residential Units: 5132.009.000 $835,500 (per residential unit) 5500A0 per SF Commercial Unit 51305000 51,305,000 (per commerical unit) 5435.00 per IF 5133,314,000 5134.317.192 5844,762 (per unit) (from cash flow] $20.147,579 $126,714 (per unit) (from cash fiord) $154,464,771 Total Expenses: $200,879,244 Discount Rate The project yield rate is the rate of return on the total un-leveraged investment in a development, including both equity and debt. The leveraged yield rate is the rate of return to the "base" equity position when a portion of the development is financed. The "base" equity position represents the total equity contribution. The developer/builder may have funded all of the equity contribution, or a consortium of investors/builders as in a joint venture may fund it. Most surveys indicate that the threshold project yield requirement is about 20% to 30% for production home type projects. Instances in which project yields may be less than 20% often involve profit participation arrangements in master planned communities where the master developer limits the number of competing tracts. irr. Uptown Newport (Phase 1) Adjustment Factors 64 According to a leading publication within the appraisal industry, the PwC Real Estate Investor Survey', discount rates for land development projects ranged from 10.00% to 20.00%, with an average of 15.40% during the Second Quarter 2018, which is consistent with the Fourth Quarter 2017, the last time the survey was conducted. Without entitlements in place, certain investors will increase the discount rate between 100 and 800 basis points (the average increase is 394 basis points). These rates are free -and -clear of financing, are inclusive of developer's profit, and assume entitlements are in place. The surveyed investors have mixed opinions regarding value trends for the national development land market; their expectations range from negative 10.0% to positive 10.0% with an average expected value change of positive 1.2%. According to the data presented in the survey prepared by PwC, the majority of those respondents who use the discounted cash flow (DCF) method do so free and clear of financing. Additionally, the participants reflect a preference in including the developer's profit in the discount rate, versus a separate line item for this factor. As such, the range of rates presented above is inclusive of the developer's profit projection. The discount rates are based on a survey that includes residential, office, retail and industrial developments. Participants in the survey indicate the highest expected returns are on large-scale, unapproved developments. The low end of the range was extracted from projects where certain development risks had been lessened or eliminated. Several respondents indicate they expect slightly lower returns when approvals/entitlements are already in place. Excerpts from recent PwC surveys are copied below. Compared to investors' responses six months ago, a greater sense of caution is evident among our participants due to heightened uncertainty as it related to the current political environment, capital markets, and the industry's position in the real estate cycle... "the further path of interest rates and inflation, the longevity of the current cycle [are we near the peak?], and the high degree of uncertainty with regard to the overall stability of the decision makers in the federal government. (Second Quarter 2018) The largest increase over the past year occurs for the retail sector, where the rating rises from 2.42 to 2.55. The retail sector's development rating took a big hit between 2016 and 2017 and it appears that developers are now becoming more comfortable with this sector's evolution. Ironically, the only two sectors to see their development ratings decline this year, albeit slightly, are apartments and industrial, where concerns of oversupply issues have been expressed... Single- family development also gets a nod, as well as senior housing, where favorable demographics, compelling returns, greater liquidity, rising transparency, and mounting understanding of the benefits for residents appeal to investors... (Fourth Quarter 2017) This quarter, most surveyed investors note that the industrial sector presents the best opportunities for development land investing in the near term. Other top choices include restaurant and high -end luxury residential... Total spending on U.S. private construction was up 1 PwC Real Estate Investor Survey, PricewaterhouseCoopers, 2nd Quarter 2018, Volume 30, Number 4. irr. Uptown Newport (Phase 1) Adjustment Factors 65 7.0% on a year -over -year basis in March 2017, according to the U.S. Census Bureau. When looking more closely, private residential spending was up 7.5% while private nonresidential spending was up 6.4% — still positive, but below its year -over -year growth for March 2016 (9.3%). In the nonresidential sector, communication, office, and education reported the highest year -over -year gains in spending as of March 2017. In contrast, spending for health care, religious, and transportation construction declined year over year in March 2017... (Second Quarter 2017) Surveyed investors remain divided when asked which property sector presents the best opportunity for development land investing in the near term. While some believe that undeveloped residential land represents the best prospects for investing, a few others feel that land readied for retail development stands as the best opportunity for investors...While investors may be divided when it comes to which land type to pursue, they unanimously see positive opportunities over the near term and are eager to partake...Within the commercial real estate (CRE) industry, Reis reports that construction activity across all major property types continues to increase, fueled by the ongoing recovery in the economy and CRE fundamentals...Total spending on U.S. private construction was up 8.5% on a year -over -year basis in March 2016, according to the U.S. Census Bureau. When looking at private spending, private residential construction was up 7.8%, while private non-residential spending was up 9.3%...Over the next 12 months, all investor participants except one foresee development land values to increase... (Second Quarter 2016) First, investors and developers are increasingly looking for development opportunities throughout the commercial real estate (CRE) industry — in both established sectors, like apartments, as well as in niche sectors, like data centers housing. And second, rising construction and land costs will likely keep the development cycle "in check," helping sustain the industry's recovery. Even though development ranks as the second preferred investment category/ strategy... only three of the five main CRE property types reported development prospects ratings higher than last year's report... retail, office and industrial. The apartment sector's score slipped slightly this year, while the hotel sector's rating decreased the most. Outside the traditional CRE property sectors... respondents felt that development prospects in 2016 were best for 1) urban mixed -use properties, 2) data centers, 3) master -planned communities, 4) self -storage, and 5) infrastructure. (Fourth Quarter 2015) Of the four main property types covered in our Survey, three of them are expected to positively move along the real estate cycle, shifting mainly into either expansion or recovery, which will provide development opportunities. The one exception is the national multifamily sector, where many metros are expected to move into contraction by year-end 2015... Over the next 12 months, all investor participants expect one foresee development land values to increase. Appreciation ranges up to 15.0% and averages 5.2%. (Second Quarter 2015) Information for a developing in-house database of project yield rates is presented in the following table. It is noted the preceding survey related to production home developments at the land stage. Uptown Newport (Phase 1) Adjustment Factors 66 Project Yield Rate Survey Data Source Yield / IRR Expectations (inclusive of Profit) PwC Real Estate Investor Survey - Second Quarter 2018 (updated semi-annually) National Builder Range of 1p.0%to 20.0%, with an average of 15.4%, inclusive of profit and assuming entitlements in place, for land development (national average) 20% to 25% for entitled lots Regional Builder 18% to 25%. Longer term, higher risk projects on higher side of the range, shorter term, lower risk projects on the lower side of the range. Long term speculation properties (10 to 20 years out) often closer to 30%. National Builder 18% minimum, 20% target Developer Minimum IRR of 213-25%; for an 8 to 10 year cash flow, mid to upper 20% range Developer 25% IRR for land development is typical (no entitlements); slightly higher for properties with significant infrastructure costs Land Management Company Land Developer 20% to 30% IRR for land development deals on an unleveraged basis 35% for large land deals from raw unentitled to tentative map stage, unleveraged or leveraged. 25% to 30% from tentative map to pad sales to merchant builders, unleveraged Land Developer 18%to 22%for land with some entitlements, unleveraged. 30% for raw unentitled land Real Estate Consulting Firm Low 20% range yield rate required to attract capital to longer -tern land holdings Land Developer Merchant builder yield requirements in the 20% range for traditionally financed tract developments. Larger land holdings would require 25% to 3096. Environmentally challenged or politically risky development could well run in excess of 35%. Regional Builder 1096 discount rate excluding profit for single-family subdivisions National Builder 10%to40% for single-family residential subdivisions with 1-2year development timelines Regional Builder 15%to 20% IRR Regional Builder Land Developer No less than 20% IRR for land development, either entitled or unentitled 2096 to 3096 far an unentitled property; the lower end of the range would reflect those properties close to tentative maps Regional Builder No less than 30% when typical entitlement risk exists Based on this analysis, an internal rate of return towards the middle of the range is considered reasonable. Land Value Conclusion — Land Residential Analysis The land residual analysis is presented on the following page. irr. Uptown Newport (Phase 1) Adjustment Factors 67 Land Residual Analysis 6 Months: 0 1 2 3 4 5 6 7 8 9 10 11 Total REVENUE AND SALES Sales- Condominium Units 0 4 0 0 0 24 24 24 24 24 24 15 159 Unsold Inventory 159 159 159 159 159 135 111 87 63 39 15 0 Close of Escrow (COE) 0 0 0 0 0 24 24 24 24 24 24 15 159 Contracted Base Revenue (Before Appreciation) 50 $0 $0 $0 539,500,000 $39,600,000 $39,600,000 535,600,000 539,600,000 $39.600,000 $24,750,040 $262,350,000 Semi-annual Appreciation Factor 1.010 1.00000 1.01004 1.02010 1.03030 1.04060 1.05101 1.06152 1.07214 1.08286 1.09369 1.10462 Appreciated Contracted Home Revenue 50 $0 $0 50 $41.207,919 $41,619.998 542.036.198 $42,456,560 $42,881,126 $43,309.937 527,339.398 $280,851.135 Unit Premium and Model Recapture Revenue $Q 5Q a5.4 53 983 924 53 983.924 53.983 924 53 983,924 53 983.924 53 983.924 52.489 953 526 393,497 Total Revenue 50 50 5D $0 545,191,843 $45,603,922 $46,020,122 $46,440,484 $46,865,050 547,293,861 529,829,350 5307,244,631 EXPENSES AND CASH FLOWS Fixed Pr Percentage Expenses General and Administrative 3% (5837,940) ($837,940) ($837,9401 (5837,940) ($837,940) ($837,940) ($837,940j (5837,940) (5837,540) ($837,940) ($837,9401 (59,217,339) Marketing and Sales 6% SD SO 50 50 (52,711,511) (52.736,235) ($2,761.2071 (52,786,4291 (52,811,903) (52.837,5321 (51.789,7611 (518,434,578) Ad Valorem Real Estate Taxes per Unit $3,484 (5276,954) (5276,954) (5282,4531 (5282,493) (5244,649) (5201,156) ($160,816) ($116,453) (573,532) (528,281) 50 (51,943,781) Direct Real Estate Tax ChargeS per Unit $60 (54,770) (54,770) (54)865) (54,865) (S4,214) (53,465) (52,770) (52,006) ($1,2661 (54871 $0 1533.478) CSCDACFO No. 2018-03 per Unit $867 ($58,934) (568.934) ($58,934) ($58,9341 ($58.529) ($48.124) ($37.719) (527.313) ($16.908) ($6,503) $0 ($470,832) HOA per Month per Unit $325 $0 50 $D $0 ($263,250) ($216.450) ($169,6501 (5122,850) ($76,050) (529,250) $0 ($877,500) Model Casts 50 50 50 (5450,000) 50 50 50 50 50 50 50 (5450,0001 off -Site imp rovcment Costs ($1,197,230) $0 S0 50 50 $0 S0 50 50 $0 S0 (51,197,230) On -Site Development Costs (52,954,282) ($2,954,282) (52,954,2821 ($2,954,282) SO $0 $0 50 SO 50 $0 ($11,817,125) Building Permits i5158.0001 15158.0001 151560001 15258.000) 5158.0001 59. 5_4_ 54. 50. N. 54 15790.0001 Subtotal: (55,498,109) ($4,300,8791 (54,306,514) ($4,756,514) ($4,278,092) (54.043,3701 (53,970,1021 (53,892,991) (53,817,599) (53.740.093) (52,627,7011 (545.231,9641 Appreciated Expenses %Complete > 2.2S 2.5N 20:Or Q1 n Q7i Qn Qijr sal (f)0% Direct Construction Costs (533,328,500) (533,328,500) (533.328,500j (533,328,500) $O $0 $0 $0 $0 $0 $0 (5133.314.40D) Semi-annual Appreciation Factor 1.005 1,00000 1.00500 1.01003 1.01508 1.02015 1.02525 1.03038 1.03553 1.04071 1.04591 1.05114 Appreciated Direct Costs (S33.328,500) (533,495,1431 (533,662,6181 (533.830,931) 50 50 50 50 50 50 SO ($134,317,192) Indirect Construction Costs 15% (54,999.275) (55.024.2711 (55.049.3931 j55.074,640) a a gQ 59. a $g a 1520.147.5791 Subtotal; ($38,327,775) (538.519,414) ($38,712.0111 ($38,905.571) $0 $0 $0 50 $0 $0 50 (5154,464,7711 Total Expenses 1543 325 8841 .1542 820 2931 1543018.5241 1543 662 0851 154,278 D921 154 043 3701 153 970 1021 153 892 991) .1531317 5991 (53 7400531 ;52 627 7011 (5199 5957351 NET INCOME (BEFORE DISCOUNTING) (543,825,884) 1542,820,293) ($43,018,524) ($43.662,085} 540,913,751 541,550,552 $42,050,020 542,547,453 543,047,450 543,553.768 527.201,649 5107.547,897 Present Value Factors Internal Rate of Return (IRR) 16.00% 0.96154 0.92456 0.88900 0.85480 0.82193 0.79031 0,75992 0.73069 0.70259 0.67556 0.64958 Discounted Cash Flow ($42,140,273) 1539,589,768) ($38,243,3121 (537,322,533) $33.628,121 532,845,908 531,954,559 $31,089,036 530,244,567 $29,423,365 $17,669,673 549,559,344 Net Present Value 549,560,000 Net Present Value Per Unit: 5311,698 Uptown Newport (Phase 1) Sales Comparison Approach 68 Sales Comparison Approach This approach is based on the economic principle of substitution. According to The Appraisal of Real Estate, 14th Edition (Chicago: Appraisal Institute, 2013), "The principle of substitution holds that the value of property tends to be set by the cost of acquiring a substitute or alternative property of similar utility and desirability within a reasonable amount of time." The sales comparison approach is applicable when there are sufficient recent, reliable transactions to indicate value patterns or trends in the market. The proper application of this approach requires obtaining recent sales data for comparison with the appraised properties. In order to assemble the comparable sales, we searched public records and other data sources for leads, then confirmed the raw data obtained with parties directly related to the transactions (primarily brokers, buyers and sellers). On the following pages, we have arrayed comparable sales that have occurred in the subject's market area of similar redevelopment sites. The summary table is accompanied by a map and discussion of adjustments. For this analysis, we use price per unit as the appropriate unit of comparison because market participants typically compare sale prices and property values on this basis. The sales most relevant to analyzing the subject's land value are summarized in the following table: irr. Uptown Newport (Phase 1) Sales Comparison Approach 69 Summary of Comparable Land Sales Sale Units; Date; Effective Sale SF; Density No. Name/Address Status Price Acres (Units/Ac.) Zoning $/Unit 1 671 West 17th Street Jun-17 $17,100,000 94,090 42 General $407,143 671 W. 17th St. Closed 2.16 19.4 Industrial Costa Mesa Orange County Tax ID: Portion of 424-291-11 Grantor: W-WP Wests i de Gateway Owner VII Grantee: Westsi de Gateway Development LLC Comments: This property is located at the southeast corner of 17th Street and Pomona Avenue. It is irregular in shape with level topography. The surrounding land uses in the immediate area include a mix of industrial, retail, and multi family residential. According to the buyer's broker, Brandon Johnson with Tierra Development Advisors, the site was sold as vacant land and was fully entitled for 42 townhomes. The sale included approved tract maps, however, the infrastructure was not completed. 2 929 Baker Street Jan-17 $21,350,000 201,247 56 Multiple Family $381,250 929 Baker St. Closed 4.62 12.1 Residential Costa Mesa Orange County Tax ID: 141-242-03 Grantor: R & THolmes Family Limited Partnership and William L. Steel, Trustee Grantee: Socal Baker, LLC Comments: This property is located on south side of Baker Street and east of Milbro Street. It is rectangular in shape with level topography. The surrounding land uses in the immediate area are single and multi family residences, along with an education center adjacent to the site. According to the buyer, David Sanson with Civic Property Group, the site was improved with an old industrial building that added no value. The sale was based on land value and was fully entitled to develop 56 single-family residences. 3 E/S Von Karman Avenue; 5/0 Alton Parkway Dec-16 $17,500,000 148,104 71 IBC Multi -Use $246,479 Irvine Closed 3.40 20.9 Orange County Tax ID: Portion of 435-035-06 Grantor: Fairfield Von Karman LLC Grantee: Irvine Gateway Development LLC Comments: This property is located on the east side of Von Karman Avenue and south of Alton Parkway. It is rectangular in shape with level topography. The immediate surrounding land uses are multi family residential and industrial. According to the seller's broker, Mike Hunter with Land Advisors Organization, this property sold as vacant land with entitlements and infrastructure in place. The buyer plans to develop 71 townhomes on the site. 4 2626 Harbor Blvd. Sep-16 $12,500,000 160,214 33 Multifamily $378,788 Costa Mesa Closed 3.68 9.0 Residential, Orange County Medium Tax ID: 141-361-29 and 30; and 141-731-02 and 03 Density Grantor: Suburban Harbor, LLC, etc. Grantee: SoCaI Harbor, LLC, etc. Comments: The seller's broker, Brian Childs, confirmed the sale, and that it was an arm's-length transaction at a market price. There were two buildings which were demolished prior to the sale and the lot sold as vacant land. The sale included a tract map with 33 single family residential lots. No specific value was attributed to the entitlements. Subject 141,483 159 Uptown Uptown Newport (Phase 1) 3.25 49.0 Newport Newport Beach, CA Planned Community Development Uptown Newport (Phase 1) Sales Comparison Approach 70 Comparable Land Sales Map Forcer Ross moor Reserve CentEr 22 Seer? Seal Beach Beach Nawvr Weapons Shtror Sunset each LIP bin?g Garden Grove Westminster nster Midway City Fountain VaLI ey Huntington Beach Orange 122 North Tustin Santa Ana ▪ Tustin ti .. 5Urrwoao crNfRht u* Fi Irvine 0 rr Costa Me▪ sa i Newport Beach lm JiJ r?.F ROCK I,31 San Joaquin Hills Laguna each 261 Kathryn �133 El Toro Marble Cars Air Station Lake Forest Silver Foothill Ranch Mission Viejo Laguna Hills Aliso Viejo Laguna Niguel Ladera reusnnre 20EG hdicrasaft Corporal ion 18 HERE Uptown Newport (Phase 1) Sales Comparison Approach 71 Adjustment Factors The sales are compared to the subject and adjusted to account for material differences that affect value. Adjustments are considered for the following factors, in the sequence shown below. Adjustment Factors Effective Sale Price Real Property Rights Financing Terms Conditions of Sale Market Conditions Location Access/Exposure Size Shape and Topography Off -Site Improvements Zoning /Entitlements Accounts for atypical economics of a transaction, such as demolition cost, expenditures by the buyer at time of purchase, or other similar factors. Usually applied directly to sale price on a lump sum basis. Fee simple, leased fee, leasehold, partial interest, etc. Seller financing, or assumption of existing financing, at non -market terms. Extraordinary motivation of buyer or seller, assemblage, forced sale, related parties transaction. Changes in the economic environment over time that affect the appreciation and depreciation of real estate. Market or submarket area influences on sale price; surrounding land use influences. Convenience to transportation facilities; ease of site access; visibility from main thoroughfares; traffic counts. Inverse relationship that often exists between parcel size and unit value. Primary physical factors that affect the utility of a site for its highest and best use. Infrastructure improvements at the time of sale. Government regulations that affect the types and intensities of uses allowable on a site; the specific level of governmental approvals attained pertaining to development of a site. When considering market conditions, we note that the sales took place from September 2016 to June 2017, and that market conditions generally have been strengthening over this period through the effective date of value. Accordingly, we apply upward adjustments for improving market conditions to Comparables 2 through 4 to account for this trend. Overall, the majority of the comparables require upward adjustments for location as the subject is located within the city of Newport Beach, which is considered superior to Costa Mesa and Irvine. However, the subject's location is least proximate to the coast as most of the Newport Beach area is accustom to. irr. Uptown Newport (Phase 1) Sales Comparison Approach 72 Analysis and Adjustment of Sales Our analysis of the comparable sales is described in the following paragraphs. Land Sale 1 is a 2.16 acre, or 94,090 square foot, parcel located at 671 W. 17th St., Costa Mesa, Orange County, CA, with development potential for 42 units. The property sold in June 2017 for $17,100,000, or $407,143 per unit. Overall, this comparable is deemed superior to the subject and a market value less than this comparable sale is considered reasonable for the subject property. Land Sale 2 is a 4.62 acre, or 201,247 square foot, parcel located at 929 Baker St., Costa Mesa, Orange County, CA, with development potential for 56 units. The property sold in January 2017 for $21,350,000, or $381,250 per unit. This comparable is deemed slightly superior to the subject, as its smaller size and single-family entitlements outweighs its inferior location. Overall, a market value somewhat less than this comparable sale is considered reasonable for the subject property. Land Sale 3 is a 3.40 acre, or 148,104 square foot, parcel located at E/S Von Karman Avenue; S/O Alton Parkway, Irvine, Orange County, CA, with development potential for 71 units. The property sold in December 2016 for $17,500,000, or $246,479 per unit. Located the furthest inland of all the comparables analyzed, this comparable is considered inferior to the subject property and a market value conclusion higher than this transaction is deemed reasonable. Land Sale 4 is a 3.68 acre, or 160,214 square foot, parcel located at 2626 Harbor Blvd., Costa Mesa, Orange County, CA, with development potential for 33 units. The property sold in September 2016 for $12,500,000, or $378,788 per unit. Similar to Comparable 2, this property's size and entitlements provide for a higher indicator of market value as it, overall, is considered slightly superior to the subject property. Overall, a market value somewhat less than this comparable sale is considered reasonable for the subject property. The following table summarizes the adjustments we make to the comparable sales. irr. Uptown Newport (Phase 1) Sales Comparison Approach 73 Land Sales Adjustment Grid Subject Comparable 1 Comparable Comparable Comparable Name Address City County Sale Date Sale Status Sale Price Price Adjustment Description of Adjustment Effective Sale Price Square Feet Acres Number of Units Uptown Newport (Phase 1) 4311-4321 Jamboree Rd. Newport Beach Orange 141,483 3.248 159 671 West 17th Street 671 W. 17th St. Costa Mesa Orange Jun-17 Closed $17,100,000 — $17,100,000 94,090 2.160 42 929 Baker Street 929 Baker St. Costa Mesa Orange Jan-17 Closed $21,350,000 — $21,350,000 201,247 4.620 56 E/S Von Karman Avenue; S/O Alton Parkway E/S Von Karman Avenue; S/O Alton Parkway Irvine Orange Dec-16 Closed $17,500,000 — $17,500,000 148,104 3.400 71 2626 Harbor Blvd, 2626 Harbor Blvd. Costa Mesa Orange Sep-16 Closed $12,500,000 — $12,500,000 160,214 3.678 33 Price per Unit Property Rights Adjustment Financing Terms Adjustment Conditions of Sale Adjustment Market Conditions 12/22/2018 Adjustment Location Access/Exposure Size Shape and Topography Off -Site Improvements Zoning/Entitlements $407,143 Fee Simple = Cash to seller = Market = Jun-17 $381,250 Fee Simple _ Cash to seller = Market _ Jan-17 $246,479 Fee Simple = Cash to seller = Market = Dec-16 $378,788 Fee Simple = Cash to seller = Market = Sep-16 = + + ++ = = = = = + = - = = --- ++ = = = = + = = = Overall Adjustment --- --- + --- Indicated Value Uptown Newport (Phase 1) $300,000 Sales Comparison Approach 74 Land Value Conclusion — Sales Comparison Approach Prior to adjustments, the sales reflect a range of $246,479 - $407,143 per unit. After adjustment, the data indicated a market value less than Comparables 1, 2 and 4, but higher than Comparables 3 for the subject property. Based on the preceding analysis, we reach a land value conclusion as follows: Land Value Conclusion Indicated Value per Unit $300,000 Subject Units 159 Indicated Value $47,700,000 Rounded $47,700,000 irr. Uptown Newport (Phase 1) Reconciliation and Conclusion of Land Value The land value conclusions indicated by the land residual analysis and sales comparison approach to value are presented below. Reconciliation of Land Value Land Residual Analysis Sales Comparison Appraoch Conclusion $49,560,000 $47,700,000 $49,500,000 In our opinion, when considered together, both the sales comparison approach and land residual analysis provide reliable indicators of market value for the subject. Overall, slightly more reliance is placed on the land residual analysis. Based on the valuation analysis in the accompanying report, and subject to the definitions, assumptions, and limiting conditions expressed in the report, our opinion of value of the appraised property, in bulk, subject to the hypothetical condition all public capital facilities and improvements to be financed by the CFD Special Tax have been completed, as well as the Assessed Value of Lot 2 not appraised, is as follows: Value Conclusions Appraisal Premise Market Value of Lot 1, As If Public Capital Facilities and Improvements Have Been Completed Assessed Value of Lot 2 Total Aggregate Value of Appraised and Assessed Properties in the District Interest Appraised Date of Value Value Conclusion Fee Simple December 22, 2018 $49,500,000 S1,721,636 $51,221,636 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. None The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. We have been requested to provide the market value of the fee simple interest in the appraised property, subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. The opinions of value expressed in this report are based on estimates and forecasts that are prospective in nature and subject to considerable risk and uncertainty. Events may occur that could irr. Uptown Newport (Phase 1) cause the performance of the property to differ materially from our estimates, such as changes in the economy, interest rates, capitalization rates, financial strength of tenants, and behavior of investors, lenders, and consumers. Additionally, our opinions and forecasts are based partly on data obtained from interviews and third party sources, which are not always completely reliable. Although we are of the opinion that our findings are reasonable based on available evidence, we are not responsible for the effects of future occurrences that cannot be reasonably foreseen at this time. Exposure Time Exposure time is the length of time the subject property would have been exposed for sale in the market had it sold on the effective valuation date at the concluded market value. Exposure time is always presumed to precede the effective date of the appraisal. Based on our review of recent sales transactions for similar properties and our analysis of supply and demand in the local market, it is our opinion that the probable exposure time for the subject at the concluded market value stated previously is 12 months. Marketing Time Marketing time is an estimate of the amount of time it might take to sell a property at the concluded market value immediately following the effective date of value. As we foresee no significant changes in market conditions in the near term, it is our opinion that a reasonable marketing period for the subject is likely to be the same as the exposure time. Accordingly, we estimate the subject's marketing period at 12 months. irr. Uptown Newport (Phase 1) Certification 77 Certification We certify that, to the best of our 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 our personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in the property that is the subject of this report and no personal interest with respect to the parties involved. 4. We have not performed any services, as an appraiser or in any other capacity, regarding the property that is the subject of this report within the three-year period immediately preceding acceptance of this assignment. S. We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 6. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 7. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 8. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice as well as applicable state appraisal regulations. 9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 11. Eric Segal, MAI, made a personal inspection of the property that is the subject of this report. Sara Gilbertson has not personally inspected the subject. 12. No one provided significant real property appraisal assistance to the person(s) signing this certification. 13. We have experience in appraising properties similar to the subject and are in compliance with the Competency Rule of USPAP. 14. As of the date of this report, Eric Segal, MAI, has completed the continuing education program for Designated Members of the Appraisal Institute. irr. Uptown Newport (Phase 1) Certification 78 15. As of the date of this report, Sara Gilbertson has completed the Standards and Ethics Education Requirements for Candidates/Practicing Affiliates of the Appraisal Institute. Eric Segal, MAI Certified General Real Estate Appraiser California Certificate # AG026558 Sara Gilbertson Certified General Real Estate Appraiser California Certificate # 3002204 Uptown Newport (Phase 1) irr. Assumptions and Limiting Conditions 79 Assumptions and Limiting Conditions This appraisal and any other work product related to this engagement are limited by the following standard assumptions, except as otherwise noted in the report: 1. The title is marketable and free and clear of all liens, encumbrances, encroachments, easements and restrictions. The property is under responsible ownership and competent management and is available for its highest and best use. 2. There are no existing judgments or pending or threatened litigation that could affect the value of the property. 3. There are no hidden or undisclosed conditions of the land or of the improvements that would render the property more or less valuable. Furthermore, there is no asbestos in the property. 4. The revenue stamps placed on any deed referenced herein to indicate the sale price are in correct relation to the actual dollar amount of the transaction. 5. The property is in compliance with all applicable building, environmental, zoning, and other federal, state and local laws, regulations and codes. 6. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy. This appraisal and any other work product related to this engagement are subject to the following limiting conditions, except as otherwise noted in the report: 1. An appraisal is inherently subjective and represents our opinion as to the value of the property appraised. 2. The conclusions stated in our appraisal apply only as of the effective date of the appraisal, and no representation is made as to the effect of subsequent events. 3. No changes in any federal, state or local laws, regulations or codes (including, without limitation, the Internal Revenue Code) are anticipated. 4. No environmental impact studies were either requested or made in conjunction with this appraisal, and we reserve the right to revise or rescind any of the value opinions based upon any subsequent environmental impact studies. If any environmental impact statement is required by law, the appraisal assumes that such statement will be favorable and will be approved by the appropriate regulatory bodies. 5. Unless otherwise agreed to in writing, we are not required to give testimony, respond to any subpoena or attend any court, governmental or other hearing with reference to the property without compensation relative to such additional employment. 6. We have made no survey of the property and assume no responsibility in connection with such matters. Any sketch or survey of the property included in this report is for illustrative purposes only and should not be considered to be scaled accurately for size. The appraisal irr. Uptown Newport (Phase 1) Assumptions and Limiting Conditions 80 covers the property as described in this report, and the areas and dimensions set forth are assumed to be correct. 7. No opinion is expressed as to the value of subsurface oil, gas or mineral rights, if any, and we have assumed that the property is not subject to surface entry for the exploration or removal of such materials, unless otherwise noted in our appraisal. 8. We accept no responsibility for considerations requiring expertise in other fields. Such considerations include, but are not limited to, legal descriptions and other legal matters such as legal title, geologic considerations such as soils and seismic stability; and civil, mechanical, electrical, structural and other engineering and environmental matters. Such considerations may also include determinations of compliance with zoning and other federal, state, and local laws, regulations and codes. 9. The distribution of the total valuation in the report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. The appraisal report shall be considered only in its entirety. No part of the appraisal report shall be utilized separately or out of context. 10. Neither all nor any part of the contents of this report (especially any conclusions as to value, the identity of the appraisers, or any reference to the Appraisal Institute) shall be disseminated through advertising media, public relations media, news media or any other means of communication (including without limitation prospectuses, private offering memoranda and other offering material provided to prospective investors) without the prior written consent of the persons signing the report. 11. Information, estimates and opinions contained in the report and obtained from third -party sources are assumed to be reliable and have not been independently verified. 12. Any income and expense estimates contained in the appraisal report are used only for the purpose of estimating value and do not constitute predictions of future operating results. 13. If the property is subject to one or more leases, any estimate of residual value contained in the appraisal may be particularly affected by significant changes in the condition of the economy, of the real estate industry, or of the appraised property at the time these leases expire or otherwise terminate. 14. Unless otherwise stated in the report, no consideration has been given to personal property located on the premises or to the cost of moving or relocating such personal property; only the real property has been considered. 15. The current purchasing power of the dollar is the basis for the values stated in the appraisal; we have assumed that no extreme fluctuations in economic cycles will occur. 16. The values found herein are subject to these and to any other assumptions or conditions set forth in the body of this report but which may have been omitted from this list of Assumptions and Limiting Conditions. 17. The analyses contained in the report necessarily incorporate numerous estimates and assumptions regarding property performance, general and local business and economic irr. Uptown Newport (Phase 1) Assumptions and Limiting Conditions 81 conditions, the absence of material changes in the competitive environment and other matters. Some estimates or assumptions, however, inevitably will not materialize, and unanticipated events and circumstances may occur; therefore, actual results achieved during the period covered by our analysis will vary from our estimates, and the variations may be material. 18. The Americans with Disabilities Act (ADA) became effective January 26, 1992. We have not made a specific survey or analysis of the property to determine whether the physical aspects of the improvements meet the ADA accessibility guidelines. We claim no expertise in ADA issues, and render no opinion regarding compliance of the subject with ADA regulations. Inasmuch as compliance matches each owner's financial ability with the cost to cure the non- conforming physical characteristics of a property, a specific study of both the owner's financial ability and the cost to cure any deficiencies would be needed for the Department of Justice to determine compliance. 19. The appraisal report is prepared for the exclusive benefit of the Client, its subsidiaries and/or affiliates. It may not be used or relied upon by any other party. All parties who use or rely upon any information in the report without our written consent do so at their own risk. 20. No studies have been provided to us indicating the presence or absence of hazardous materials on the subject property or in the improvements, and our valuation is predicated upon the assumption that the subject property is free and clear of any environment hazards including, without limitation, hazardous wastes, toxic substances and mold. No representations or warranties are made regarding the environmental condition of the subject property. Integra Realty Resources — Sacramento, Integra Realty Resources, Inc., Integra Strategic Ventures, Inc. and/or any of their respective officers, owners, managers, directors, agents, subcontractors or employees (the "Integra Parties"), shall not be responsible for any such environmental conditions that do exist or for any engineering or testing that might be required to discover whether such conditions exist. Because we are not experts in the field of environmental conditions, the appraisal report cannot be considered as an environmental assessment of the subject property. 21. The persons signing the report may have reviewed available flood maps and may have noted in the appraisal report whether the subject property is located in an identified Special Flood Hazard Area. We are not qualified to detect such areas and therefore do not guarantee such determinations. The presence of flood plain areas and/or wetlands may affect the value of the property, and the value conclusion is predicated on the assumption that wetlands are non- existent or minimal. 22. Integra Realty Resources — Sacramento is not a building or environmental inspector. Integra Sacramento does not guarantee that the subject property is free of defects or environmental problems. Mold may be present in the subject property and a professional inspection is recommended. 23. The appraisal report and value conclusions for an appraisal assume the satisfactory completion of construction, repairs or alterations in a workmanlike manner. 24. It is expressly acknowledged that in any action which may be brought against any of the Integra Parties, arising out of, relating to, or in any way pertaining to this engagement, the Uptown Newport (Phase 1) Assumptions and Limiting Conditions 82 appraisal reports, and/or any other related work product, the Integra Parties shall not be responsible or liable for any incidental or consequential damages or losses, unless the appraisal was fraudulent or prepared with intentional misconduct. 25. Integra Realty Resources — Sacramento, an independently owned and operated company, has prepared the appraisal for the specific intended use stated elsewhere in the report. The use of the appraisal report by anyone other than the Client is prohibited except as otherwise provided. Accordingly, the appraisal report is addressed to and shall be solely for the Client's use and benefit unless we provide our prior written consent. We expressly reserve the unrestricted right to withhold our consent to your disclosure of the appraisal report or any other work product related to the engagement (or any part thereof including, without limitation, conclusions of value and our identity), to any third parties. Stated again for clarification, unless our prior written consent is obtained, no third party may rely on the appraisal report (even if their reliance was foreseeable). 26. The conclusions of this report are estimates based on known current trends and reasonably foreseeable future occurrences. These estimates are based partly on property information, data obtained in public records, interviews, existing trends, buyer -seller decision criteria in the current market, and research conducted by third parties, and such data are not always completely reliable. The Integra Parties are not responsible for these and other future occurrences that could not have reasonably been foreseen on the effective date of this assignment. Furthermore, it is inevitable that some assumptions will not materialize and that unanticipated events may occur that will likely affect actual performance. While we are of the opinion that our findings are reasonable based on current market conditions, we do not represent that these estimates will actually be achieved, as they are subject to considerable risk and uncertainty. Moreover, we assume competent and effective management and marketing for the duration of the projected holding period of this property. 27. All prospective value opinions presented in this report are estimates and forecasts which are prospective in nature and are subject to considerable risk and uncertainty. In addition to the contingencies noted in the preceding paragraph, several events may occur that could substantially alter the outcome of our estimates such as, but not limited to changes in the economy, interest rates, and capitalization rates, behavior of consumers, investors and lenders, fire and other physical destruction, changes in title or conveyances of easements and deed restrictions, etc. It is assumed that conditions reasonably foreseeable at the present time are consistent or similar with the future. 28. The appraisal is also subject to the following: irr. Uptown Newport (Phase 1) Assumptions and Limiting Conditions 83 Extraordinary Assumptions and Hypothetical Conditions The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, we reserve the right to modify our value conclusions. 1. None The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on the effective date of the appraisal but is supposed for the purpose of analysis. 1. We have been requested to provide the market value of the fee simple interest in the appraised property, subject to the hypothetical condition all public capital facilities and improvements (undergrounding of overhead utilities and a City park) to be financed by the CFD Special Tax, are complete as of the date of inspection. irr. Uptown Newport (Phase 1) Addenda Addendum A Appraiser Qualifications Uptown Newport (Phase 1) i.71 Eric Segal, MAI Experience Mr. Segal is a Certified General real estate appraiser and holds the Appraisal Institute's MAI designation. In 1998, Mr. Segal began his career in real estate as a research analyst/appraiser trainee for Richard Seevers and Associates. By 1999, he began writing narrative appraisal reports covering a variety of commercial properties, with an emphasis on residential master planned communities and subdivisions. Today, Mr. Segal is a partner in the firm and is involved in appraisal assignments covering a wide variety of properties including office, retail, industrial, multifamily housing, master planned communities, and specializes in the appraisal of Mello -Roos Community Facilities Districts and Assessment Districts for land -secured municipal financings, as well as multifamily developments under the U.S. Department of Housing and Urban Development's Multifamily Accelerated Processing (MAP) Guide. He has developed the experience and background necessary to deal with complex assignments covering an array of property types, with a particular focus on urban redevelopment in the cities of San Francisco, Monterey, Alameda and San Mateo. He has developed the experience and background necessary to deal with complex assignments covering an array of property types. Eric is currently Managing Director of the Integra -San Francisco office and Senior Managing Director of the Integra -Sacramento office. Professional Activities & Affiliations Appraisal Institute, Member (MAI) Appraisal Institute, January 2016 Licenses California, Certified General, AG026558, Expires February 2021 Nevada, Certified General, A.0207666-CG, Expires January 2019 Education Academic: Bachelor of Science in Business Administration (Concentrations in Finance and Real Estate & Land Use Affairs), California State University, Sacramento Appraisal and Real Estate Courses: Uniform Standards of Professional Appraisal Practice Appraisal Principles Basic Income Capitalization Highest & Best Use and Market Analysis Advanced Income Capitalization Report Writing and Valuation Analysis Self -Storage Economics and Appraisal Seminar Appraisal Litigation Practice and Courtroom Management Hotel Valuations: New Techniques for today's Uncertain Times Computer Enhanced Cash Flow Modeling Advanced Sales Comparison & Cost Approaches Advanced Applications Supervisor -Trainee Course for California esegal@irr.com - 916-435-3883 x228 Integra Realty Resources Sacramento 3825 Atherton Rd # 500 Rocklin, CA 95765 T 916-435-3883 F 916-435-4774 irr.com irr. ''`;-vorfir p�� VJ' Ir �llsl+ II .I l II�I�IIII VIIIIII •,Ty ^ I'`VlI1 II � �Fwl ill1pp11; I'�I�IIIII�Ii�l�lll�il�lll«4 ���5. C%] co ;1 OF il�l�llul�l II'lII IIIIII p -� J yS�(I � # III��I IlYigl�i i�l o�u'IUIII IIVII�'IJ u1,P: � _� � • I �� y,� B Z JW II'li�illil°iil`iV iiilillJ. #1.^r'$" a��� 'I�III�,�I ��IIIIIIIVI�II��llill�ipll� '�'0. " �j S o. IIIIIII IIIIII11VIOl' W „Cti y� V.l II` ,�1i1111 'I I`I�IIIIIII16 i� Y ,�€ _ I \rb� +i. / III'IIII III j11 `�1111' & IIIIIII I � I I SC II IIII�j II � by / IIIII,'illilll `lili�l'''d'ill,l,l�{ �' ��@� � II IIIIIIIL I�lllll�l I A �' uFr-: Sara Gilbertson Experience Ms. Gilbertson is a licensed appraiser with Integra Realty Resources, a real estate appraisal firm that engages in a wide variety of real estate valuation and consultation assignments. She joined the firm in April 2011 after completing her bachelor's degree at California State University, Sacramento and has been writing narrative appraisal reports for a variety of commercial properties. She has experience in writing narrative appraisal reports covering a variety of commercial properties, as well as special -use properties including self -storage facilities, hotels and mobile home parks. She also specialized in the appraisal of residential master planned communities and subdivision, as well as Mello -Roos and Assessment Districts for land -secured municipal financings. Ms. Gilbertson has developed the experience and background necessary to deal with complex assignments covering an array of property types. Licenses California, Certified General Real Estate Appraiser, 3002204, Expires May 2020 Education Academic: Bachelor of Science in Business Administration (Concentration in Real Estate and Land Development), California State University, Sacramento Appraisal Institute Courses: Basic Appraisal Principles Basic Appraisal Procedures Uniform Standards of Professional Appraisal Practice Real Estate Finance and Statistics and Valuation Modeling Sales Comparison Approach Report Writing and Case Studies Market Analysis and Highest and Best Use Site Valuation and Cost Approach Basic Income Capitalization Expert Witness for Commercial Appraisers Commercial Appraisal Review sgilbertson@irr.com - 916-435-3883 x248 Integra Realty Resources Sacramento 3825 Atherton Rd # 500 Rocklin, CA 95765 T 916-435-3883 F 916-435-4774 irr.com irr. 'J. 3 fisk to �rfi *rU' H0 H1 • I SER LICENSE Sara A. Gilbertson 1 BRE.A APPRAISER IDENTIFICATION NUMBER: r.. ct 0 'Th G i About IRR Integra Realty Resources, Inc. (IRR) provides world -class commercial real estate valuation, counseling, and advisory services. Routinely ranked among leading property valuation and consulting firms, we are now the largest independent firm in our industry in the United States, with local offices coast to coast and in the Caribbean. IRR offices are led by MAI-designated Senior Managing Directors, industry leaders who have over 25 years, on average, of commercial real estate experience in their local markets. This experience, coupled with our understanding of how national trends affect the local markets, empowers our clients with the unique knowledge, access, and historical perspective they need to make the most informed decisions. Many of the nation's top financial institutions, developers, corporations, law firms, and government agencies rely on our professional real estate opinions to best understand the value, use, and feasibility of real estate in their market. Local Expertise...Nationally! irr.com irr® Addenda Addendum B Definitions Uptown Newport (Phase 1) i.71 Definitions The source of the following definitions is the Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th ed. (Chicago: Appraisal Institute, 2015), unless otherwise noted. As Is Market Value The estimate of the market value of real property in its current physical condition, use, and zoning as of the appraisal date. Disposition Value The most probable price that a specified interest in property should bring under the following conditions: 1. Consummation of a sale within a specified time, which is shorter than the typical exposure time for such a property in that market. 2. The property is subjected to market conditions prevailing as of the date of valuation. 3. Both the buyer and seller are acting prudently and knowledgeably. 4. The seller is under compulsion to sell. 5. The buyer is typically motivated. 6. Both parties are acting in what they consider to be their best interests. 7. An adequate marketing effort will be made during the exposure time. 8. Payment will be made in cash in U.S. dollars (or the local currency) or in terms of financial arrangements comparable thereto. 9. 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. This definition can also be modified to provide for valuation with specified financing terms. Effective Date 1. The date on which the appraisal or review opinion applies. 2. In a lease document, the date upon which the lease goes into effect. Entitlement In the context of ownership, use, or development of real estate, governmental approval for annexation, zoning, utility extensions, number of lots, total floor area, construction permits, and occupancy or use permits. Entrepreneurial Profit 1. A market -derived figure that represents the amount an entrepreneur receives for his or her contribution to a project and risk; the difference between the total cost of a property (cost of irr. Uptown Newport (Phase 1) development) and its market value (property value after completion), which represents the entrepreneur's compensation for the risk and expertise associated with development. An entrepreneur is motivated by the prospect of future value enhancement (i.e., the entrepreneurial incentive). An entrepreneur who successfully creates value through new development, expansion, renovation, or an innovative change of use is rewarded by entrepreneurial profit. Entrepreneurs may also fail and suffer losses. 2. In economics, the actual return on successful management practices, often identified with coordination, the fourth factor of production following land, labor, and capital; also called entrepreneurial return or entrepreneurial reward. Exposure Time 1. The time a property remains on the market. 2. The estimated length of time that the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based on an analysis of past events assuming a competitive and open market. Fee Simple Estate 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. Floor Area Ratio (FAR) The relationship between the above -ground floor area of a building, as described by the zoning or building code, and the area of the plot on which it stands; in planning and zoning, often expressed as a decimal, e.g., a ratio of 2.0 indicates that the permissible floor area of a building is twice the total land area. Highest and Best Use 1. 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. 2. The use of an asset that maximizes its potential and that is possible, legally permissible, and financially feasible. The highest and best use may be for continuation of an asset's existing use or for some alternative use. This is determined by the use that a market participant would have in mind for the asset when formulating the price that it would be willing to bid. (ISV) 3. [The] highest and most profitable use for which the property is adaptable and needed or likely to be needed in the reasonably near future. (Uniform Appraisal Standards for Federal Land Acquisitions) Uptown Newport (Phase 1) Investment Value 1. The value of a property to a particular investor or class of investors based on the investor's specific requirements. Investment value may be different from market value because it depends on a set of investment criteria that are not necessarily typical of the market. 2. The value of an asset to the owner or a prospective owner for individual investment or operational objectives. Lease A contract in which rights to use and occupy land, space, or structures are transferred by the owner to another for a specified period of time in return for a specified rent. Leased Fee Interest The ownership interest held by the lessor, which includes the right to receive the contract rent specified in the lease plus the reversionary right when the lease expires. Leasehold Interest The right held by the lessee to use and occupy real estate for a stated term and under the conditions specified in the lease. Liquidation Value The most probable price that a specified interest in real property should bring under the following conditions: 1. Consummation of a sale within a short time period. 2. The property is subjected to market conditions prevailing as of the date of valuation. 3. Both the buyer and seller are acting prudently and knowledgeably. 4. The seller is under extreme compulsion to sell. S. The buyer is typically motivated. 6. Both parties are acting in what they consider to be their best interests. 7. A normal marketing effort is not possible due to the brief exposure time. 8. Payment will be made in cash in U.S. dollars (or the local currency) or in terms of financial arrangements comparable thereto. 9. 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. This definition can also be modified to provide for valuation with specified financing terms. Marketing Time An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market value level during the period immediately after the effective date of an appraisal. Uptown Newport (Phase 1) Marketing time differs from exposure time, which is always presumed to precede the effective date of an appraisal. Market Value 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 and 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: • buyer and seller are typically motivated; • both parties are well informed or well advised, and acting in what they consider their own best interests; • a reasonable time is allowed for exposure in the open market; • payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and • 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. (Source: Code of Federal Regulations, Title 12, Chapter 1, Part 34.42[g]; also Interagency Appraisal and Evaluation Guidelines, Federal Register, 75 FR 77449, December 10, 2010, page 77472) Prospective Opinion of Value A value opinion effective as of a specified future date. The term does not define a type of value. Instead, it identifies a value opinion as being effective at some specific future date. An opinion of value as of a prospective date is frequently sought in connection with projects that are proposed, under construction, or under conversion to a new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy. irr. Uptown Newport (Phase 1) Addenda Addendum C Preliminary Title Report Uptown Newport (Phase 1) i.71 CLTA Preliminary Report Form Order Number: NHSC-5064254 (mw) (Rev. 11/06) Page Number: 1 Updated First American Title First American Title Company 1250 Corona Pointe Court, Suite 200 Corona, CA 92879 Terri Hovdestad Shopoff Realty Investments, L.P. 2 Park Plaza, Suite 700 Irvine, CA 92614 Customer Reference: Uptown Newport Order Number: NHSC-5064254 (mw) Title Officer: Mark Wardle Phone: (951)256-5830 Fax No.: E-Mail: MWardle@firstam.com Buyer: Owner: Uptown Newport PRELIMINARY REPORT In response to the above referenced application for a policy of title insurance, this company hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a Policy or Policies of Title Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referred to as an Exception below or not excluded from coverage pursuant to the printed Schedules, Conditions and Stipulations of said Policy forms. The printed Exceptions and Exclusions from the coverage and Limitations on Covered Risks of said policy or policies are set forth in Exhibit A attached. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on Covered Risks applicable to the CLTA and ALTA Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limit of Liability for certain coverages are also set forth in Exhibit A. Copies of the policy forms should be read. They are available from the office which issued this report. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit A of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters which are not covered under the terms of the title insurance policy and should be carefully considered. It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land. This report (and any supplements or amendments hereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance, a Binder or Commitment should be requested. First American Title Order Number: NHSC-5064254 (mw) Page Number: 2 Dated as of May 11, 2017 at 7:30 A.M. The form of Policy of title insurance contemplated by this report is: To Be Determined A specific request should be made if another form or additional coverage is desired. Title to said estate or interest at the date hereof is vested in: TSG — PARCEL 1, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS TO LOT 1, A PORTION OF LETTERED LOTS B, M, N, 0, LETTERED LOTS C, D AND P; UPTOWN NEWPORT JAMBOREE, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS TO LOT 2, A PORTION OF LOT 4, A PORTION OF LETTERED LOTS B, L, M, N, AND 0, LETTERED LOTS E, F, J AND K; TPG/TSG VENTURE I ACQUISITION, LLC, A DELAWARE LIMITED LIABILITY COMPANY, AS TO A PORTION OF LETTERED LOTS L, M AND 0, LETTERED LOTS G, H AND I; UPTOWN NEWPORT BUILDING OWNER, LP, A DELAWARE LIMITED PARTNERSHIP, AS TO LOT 3, A PORTION OF LOT 4; THE CITY OF NEWPORT BEACH, AS TO LOT A The estate or interest in the land hereinafter described or referred to covered by this Report is: A fee. The Land referred to herein is described as follows: (See attached Legal Description) At the date hereof exceptions to coverage in addition to the printed Exceptions and Exclusions in said policy form would be as follows: 1. General and special taxes and assessments for the fiscal year 2017-2018, a lien not yet due or payable. 2. The lien of supplemental taxes, if any, assessed pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code. 3. An easement for avigation purposes in and through the air above and incidental purposes, recorded March 17, 1964 as Book 6965, Page 721 of Official Records. In Favor of: The County of Orange Affects: A portion of said land First American Title Order Number: NHSC-5064254 (mw) Page Number: 3 The location of the easement cannot be determined from record information. 4. An easement for pole lines, conduits and incidental purposes, recorded February 18, 1974 as Book 11074, Page 182 of Official Records. In Favor of: Southern California Edison Company, a corporation Affects: Lettered Lots E, F, G, H and M 5. An easement for pole lines, conduits and incidental purposes, recorded February 19, 1974 as Book 11077, Page 1117 of Official Records. In Favor of: Southern California Edison Company, a corporation Affects: Lettered Lots H, I, J and L 6. A non-exclusive easement for purposes of ingress and egress as reserved in the deed recorded May 7, 1974 in Book 11137, Page 1008 of Official Records. Note 1: Said document recites the following: "Said reservation is subject to: Grantee's right to relocate said easement at Grantee's expense, at any time, and from time to time". Note 2: Said easements is 25 and 30 feet in width at different locations. Affects: Lot 2 and Lettered Lots M and 0 7. An easement for electrical supply systems and communication systems and incidental purposes, recorded March 7, 1990 as Instrument No. 90-120897 of Official Records. In Favor of: Southern California Edison Company, a corporation Affects: Lettered Lot H 8. An easement for communication facilities and incidental purposes, recorded July 3, 1991 as Instrument No. 91-346219 of Official Records. In Favor of: Pacific Bell Affects: Lots 3 and 4 and Lettered Lot H 9. An easement for maintenance and operation of an electrical substation and incidental purposes, recorded September 3, 1992 as Instrument No. 92-594041 of Official Records. In Favor of: Southern California Edison Company, a corporation Affects: Lot 2 and Lettered Lot E 10. The terms and provisions contained in the document entitled "Sound Mitigation Agreement" recorded June 30, 1997 as Instrument No. 19970303268 of Official Records. 11. An easement for telecommunications facilities and incidental purposes, recorded November 15, 2005 as Instrument No. 2005000916240 of Official Records. In Favor of: Affects: 12. Intentionally Deleted CoxCom Inc., d/b/a Cox Communications Orange County Lots 3 and 4 and Lettered Lot H First American Title Order Number: NHSC-5064254 (mw) Page Number: 4 13. The terms and provisions contained in the document entitled "Development Agreement" recorded March 26, 2013 as Instrument No. 2013000180939 of Official Records. The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Development Agreement" recorded February 14, 2014 as Instrument No. 2014000060352 of Official Records. Affects: Lot 2, A Portion of Lot 4, A Portion of Lettered Lots A, B, L, M, N, and 0, Lettered Lots E, F, J and K The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Development Agreement" recorded February 14, 2014 as Instrument No. 2014000060354 of Official Records. Affects: Lot 1, A Portion of Lettered Lots A, B, M, N, 0, Lettered Lots C, D and P The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Development Agreement" recorded February 14, 2014 as Instrument No. 2014000060356 of Official Records. Affects: Lot 3, A Portion of Lot 4, A Portion of Lettered Lots L, M and 0, Lettered Lots G, H and I Document(s) declaring modifications thereof recorded July 6, 2015 as Instrument No. 2015000349840 of Official Records. The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Development Agreement" recorded March 6, 2017 as 2017000091827 of Official Records. Affects: Lots 3 and 4 and other property The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Developement Agreement" recorded April 10, 2017 as 2017000143133 of Official Records. Affects: Lots 3 and 4 and other property 14. The terms and provisions contained in the document entitled "Memorandum of Agreement" recorded June 13, 2013 as Instrument No. 2013000359252 and rerecorded July 18, 2013 as Instrument No. 2013000429555, both of Official Records. 15. The terms and provisions contained in the document entitled "Amended and Restated Declaration of Reciprocal Easements" recorded February 13, 2014 as Instrument No. 2014000059221 of Official Records. 16. The terms and provisions contained in the document entitled "Inter -Phase Agreement" recorded February 14, 2014 as Instrument No. 2014000060494 of Official Records. First American Title Order Number: NHSC-5064254 (mw) Page Number: 5 17. The terms and provisions contained in the document entitled "Grant of Easements (Water, Fire, Gas, Sewer and Storm Drain)" recorded February 14, 2014 as Instrument No. 2014000060495 of Official Records. 18. The terms and provisions contained in the document entitled "Development Cooperation Agreement" recorded February 14, 2014 as Instrument No. 2014000060496 of Official Records. 19. The terms and provisions contained in the document entitled "Memorandum of Shared Infrastructure Agreement" recorded February 14, 2014 as Instrument No. 2014000060929 of Official Records. Affects: Lots 1 and 2, A Portion of Lot 4, A Portion of Lettered Lots A, B, L, M, N, 0, Lettered Lots C, D, E, F, J, K and P The terms and provisions contained in the document entitled "Memorandum of Second Amendment to Shared Infrastructure Construction Agreement" recorded March 6, 2017 as 2017000091828 of Official Records. Affects: Lots 1, 3, 4, A and B (portion) C, D, G, H, I, L (portion), M (portion), N, 0 (portion), P of Tract No. 17763 20. An option in favor of TPG/TSG Venture I Acquisition LLC, a Delaware limited liability company as contained in or disclosed by a document recorded February 14, 2014 as Instrument No. 2014000060972 of Official Records. Affects: Lot 2, A Portion of Lot 4, A Portion of Lettered Lots A, B, L, M, N, and 0, Lettered Lots E, F, J and K 21. The terms and provisions contained in the document entitled "License Agreement" recorded February 14, 2014 as Instrument No. 2014000061108 of Official Records. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F A document recorded June 5, 2015 as Instrument No. 2015000292781 of Official Records provides that the lien or charge of the deed of trust was subordinated to the lien or charge of the deed of trust recorded March 21, 2014 as Instrument No. 2014000107704 of Official Records. The terms and provisions contained in the document entitled "Amendment, Assignment and Assumption of License Agreement" recorded March 6, 2017 as 2017000091826 of Official Records. 22. Intentionally Deleted 23. A document entitled "Assignment of Contract Rights and Agreements" recorded February 14, 2014 as Instrument No. 2014000061175 of Official Records, as additional security for the payment of the indebtedness secured by the deed of trust recorded February 14, 2014 as Instrument No. 2014000061109 of Official Records. First American Title Order Number: NHSC-5064254 (mw) Page Number: 6 Affects: Lot 3, A Portion of Lot 4, A Portion of Lettered Lots L, M and 0, Lettered Lots G, H and I 24. A notice of nonresponsibility, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company, recorded August 12, 2014 as Instrument No. 2014000323937 of Official Records. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F 25. A notice of nonresponsibility, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company, recorded September 19, 2014 as Instrument No. 2014000382172 of Official Records. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F 26. A notice of nonresponsibility, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company, recorded January 14, 2015 as Instrument No. 2015000023703 of Official Records. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F 27. An easement dedicated to the City of Newport Beach on the Map of Tract 17763 as referred to in the legal description For: Emergency access, ingress, egress, public pedestrian walkway, paseo, open space, parking, public utility and public access and incidental purposes. 28. Easements reserved on the Map of Tract 17763 as referred to in the legal description: For: Public pedestrian, private street, walkway, paseo, open space, landscape, temporary access, parking, public utility and public access and incidental purposes. 29. A temporary easement reserved on the Map of Tract 17763 as referred to in the legal description For: project construction staging, stockpiling and installation of park improvements and incidental purposes. Affects: Lot A 30. A permanent easement reserved on the Map of Tract 17763 as referred to in the legal description For: operation, maintenance and repair of installed park improvements and incidental purposes. Affects: Lot A First American Title Order Number: NHSC-5064254 (mw) Page Number: 7 31. The following matters shown or disclosed by the Map of Tract 17763 referred to in the legal description: All lettered Lots are "Not a Separate Building Site" Lot "A" is for "Park" purposes and "Water Treatment" purposes. Lot "B" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "C" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "D" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "E" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "F" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "G" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "H" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "I" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "J" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "K" is for "Access", "Paseo", "Open Space" and "Landscape" purposes. Lot "L" is for "Emergency Access", "Public Access", "Private Street" and "Utility" purposes. Lot "M" is for "Emergency Access", "Public Access", "Private Street" and "Utility" purposes. Lot "N" "Access", "Paseo", "Open Space", "Utility" and "Landscape" purposes. Lot "0" is for "Emergency Access", "Public Access", "Private Street" and "Utility" purposes. Lot "P" is for "Emergency Access", "Public Access", "Private Street" and "Utility" purposes. 32. Abutter's rights of ingress and egress to or from Jamboree Road have been dedicated or relinquished on the filed Map, except at the "access openings" shown on the map of Tract 17763. 33. A deed of trust to secure an original indebtedness of $18,000,000.00 recorded July 10, 2015 as Instrument No. 2015000361484 of Official Records. Dated: July 10, 2015 Trustor: TSG — Parcel 1, LLC, a Delaware limited liability company Trustee: First American Title Beneficiary: Terra Secured Income Fund 5, LLC, a Delaware limited liability company Affects: Lot 1 First American Title Order Number: NHSC-5064254 (mw) Page Number: 8 A document recorded March 31, 2016 as 2016000136850 of Official Records provides that the above document was subordinated to the document recorded March 31, 2016 as 20160000136850 of Official Records. A document recorded April 28, 2016 as 2017000187274 of Official Records provides that the above document was subordinated to the document recorded April 28, 2016 as 2016000187274 of Official Records. 34. A deed of trust to secure an original indebtedness of $25,750,000.00 recorded August 14, 2015 as Instrument No. 2015000424863 of Official Records. Dated: August 14, 2015 Trustor: Uptown Newport Jamboree, LLC, a Delaware limited liability company Trustee: First American Title Insurance Company Beneficiary: Fidelity & Guarantee Life Insurance Company, an Iowa corporation A document entitled "Assignment of Leases and Rents" recorded August 14, 2015 as Instrument No. 2015000424864 of Official Records, as additional security for the payment of the indebtedness secured by the deed of trust. Affects: Lot 2, Portions of Lettered Lots A, M and 0, Lettered Lots E and F and other property 35. An unrecorded lease dated March 12, 2002, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company as lessor and Newport FAB, LLC, a Delaware limited liability company doing business as Jazz Semiconductor as lessee, as disclosed by a "Subordination, Non - Disturbance and Attornment Agreement" recorded August 14, 2015 as Instrument No. 2015000424867 of Official Records. Defects, liens, encumbrances or other matters affecting the leasehold estate, whether or not shown by the public records. 36. An unrecorded lease dated November 23, 2011, as amended on June 11, 2015, executed by Uptown Newport Jamboree, LLC, a Delaware limited liability company as lessor and Skyworks Solutions, Inc., a Delaware corporation as lessee, as disclosed by a "Subordination, Non - Disturbance and Attornment Agreement" recorded August 14, 2015 as Instrument No. 2015000424868 of Official Records. Defects, liens, encumbrances or other matters affecting the leasehold estate, whether or not shown by the public records. 37. The terms and provisions contained in the document entitled "Affordable Housing Agreement" recorded September 09, 2015 as Instrument No. 2015000465265 of Official Records. The terms and provisions contained in the document entitled "Partial Assignment and Assumption of Affordable Housing Agreement" recorded March 6, 2017 as 2017000091825 of Official Records. First American Title Order Number: NHSC-5064254 (mw) Page Number: 9 Affects: Lots 3 and 4 and other property The terms and provisions contained in the document entitled Partial Assignment and Assumption of Affordable Housing Agreement recorded April 10, 2017 as 2017000143134 of Official Records. Affects: Lots 3 and 4 and other property 38. An easement for storm drain and incidental purposes, recorded June 19, 2015 as Instrument No. 2015000320678 of Official Records. In Favor of: TSG — Parcel 1, LLC, a Delaware limited partnership Affects: Lettered Lot A 39. A document entitled Tract Map Certificate of Correction recorded February 2, 2016 as 2016000045179 of Official Records. 40. Covenants, conditions, restrictions, easements, assessments, liens, charges, terms and provisions in the document recorded March 31, 2016 as 2016000136850 of Official Records, which provide that a violation thereof shall not defeat or render invalid the lien of any first mortgage or deed of trust made in good faith and for value, but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, sexual orientation, familial status, disability, handicap, national origin, genetic information, gender, gender identity, gender expression, source of income (as defined in California Government Code § 12955 (p)) or ancestry, to the extent such covenants, conditions or restrictions violate 42 U.S.C. § 3604(c), or California Government Code § 12955. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status. Note: You may wish to contact the homeowners association referred to in the above document for information regarding assessments, transfer requirements or other matters. Affects: Lots 1, 3 and 4, and Lots B to P and Lot 2 (annexable territory) with other property 41. Covenants, conditions, restrictions, easements, assessments, liens, charges, terms and provisions in the document recorded April 28, 2016 as 2016000187274 of Official Records, which provide that a violation thereof shall not defeat or render invalid the lien of any first mortgage or deed of trust made in good faith and for value, but deleting any covenant, condition or restriction indicating a preference, limitation or discrimination based on race, color, religion, sex, sexual orientation, familial status, disability, handicap, national origin, genetic information, gender, gender identity, gender expression, source of income (as defined in California Government Code § 12955 (p)) or ancestry, to the extent such covenants, conditions or restrictions violate 42 U.S.C. § 3604(c), or California Government Code § 12955. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status. Note: You may wish to contact the homeowners association referred to in the above document for information regarding assessments, transfer requirements or other matters. First American Title Order Number: NHSC-5064254 (mw) Page Number: 10 Affects: Lots 1, 3 and 4 and Lots B to P and Lot 2 (annexable territory) with other property 42. An easement for underground communication facilities and incidental purposes, recorded February 22, 2017 as 2017000075078 of Official Records. In Favor of: Pacific Bell Telephone Company, a California corporation dba AT&T California Affects: Lots 1 through 4, inclusive and Lettered Lots C, L, M, 0, P of Tract 17763 43. An easement for water pipeline and access purposes and incidental purposes, recorded February 27, 2017 as 2017000082310 of Official Records. In Favor of: Irvine Ranch Water District Affects: Lot A 44. An easement for water pipeline and access purposes and incidental purposes, recorded February 27, 2017 as 2017000082311 of Official Records. In Favor of: Irvine Ranch Water District Affects: Lots 3 and 4 and Lettered Lots L and M, and portions of Lots D, 0 and P 45. An easement for water pipeline and access purposes and incidental purposes, recorded February 27, 2017 as 2017000082312 of Official Records. In Favor of: Irvine Ranch Water District Affects: Lot 1 and Lettered Lots L and M and portions of Lots D, 0 and P 46. An easement for water pipeline and access purposes and incidental purposes, recorded February 27, 2017 as 2017000082313 of Official Records. In Favor of: Irvine Ranch Water District Affects: Lot 2 and Lettered Lots L and M and portions of Lots D, 0 and P 47. The terms and provisions contained in the document entitled Regulatory Agreement and Declaration of Restrictive Covenants recorded March 6, 2017 as 2017000091829 of Official Records. Affects: Lots 3 and 4 48. A deed of trust to secure an original indebtedness of $161,620,000.00 recorded March 6, 2017 as 2017000091830 of Official Records. Dated: March 1, 2017 Trustor: UPTOWN NEWPORT BUILDING OWNER, LP, a Delaware limited partnership Trustee: Fidelity National Title Insurance Company Beneficiary: Wilmington Trust, National Association, a national association Affects: Lots 3 and 4 First American Title 49. A deed of trust to secure 2017 as 2017000091831 Dated: Trustor: Trustee: Beneficiary: Affects: Order Number: NHSC-5064254 (mw) Page Number: 11 an original indebtedness of $163,692,302.00 recorded March 6, of Official Records. March 1, 2017 UPTOWN NEWPORT BUILDING OWNER, LP, a Delaware limited partnership Fidelity National Title Insurance Company Comerica Bank, in its capacity as Agent for Lenders Lots 3 and 4 50. A document entitled Intercreditor Agreement recorded March 6, 2017 as 2017000091833 of Official Records. Affects: Lots 3 and 4 51. An easement for pipelines and conduits, together with devices for metering, measuring, regulating, cathodic protection, communications and other appurtenances and incidental purposes, recorded May 2, 2017 as 2017000176218 of Official Records. In Favor of: Southern California Gas Company, a California corporation, its successors and assigns Affects: Lots L, M and 0 52. An easement for pipelines and conduits, together with devices for metering, measuring, regulating, cathodic protection, communications and other appurtenances and incidental purposes, recorded May 2, 2017 as 2017000176219 of Official Records. In Favor of: Southern California Gas Company, a California corporation, its successors and assigns Affects: Lot 1 53. An easement for pipelines and conduits, together with devices for metering, measuring, regulating, cathodic protection, communications and other appurtenances and incidental purposes, recorded May 2, 2017 as 2017000176220 of Official Records. In Favor of: Southern California Gas Company, a California corporation, its successors and assigns Affects: Lot 2, with other property 54. Rights of the public in and to that portion of the land lying within Road, Street, Alley or Highway. 55. Water rights, claims or title to water, whether or not shown by the public records. 56. Rights of parties in possession. Prior to the issuance of any policy of title insurance, the Company will require: First American Title Order Number: NHSC-5064254 (mw) Page Number: 12 57. With respect to TSG — Parcel 1, LLC, a Delaware limited liability company, Uptown Newport Jamboree, LLC, a Delaware limited liability company and TPG/TSG Venture I Acquisition, LLC, a Delaware limited liability company: a. A copy of its operating agreement and any amendments thereto; b. If it is a California limited liability company, that a certified copy of its articles of organization (LLC-1) and any certificate of correction (LLC-11), certificate of amendment (LLC-2), or restatement of articles of organization (LLC-10) be recorded in the public records; c. If it is a foreign limited liability company, that a certified copy of its application for registration (LLC-5) be recorded in the public records; d. With respect to any deed, deed of trust, lease, subordination agreement or other document or instrument executed by such limited liability company and presented for recordation by the Company or upon which the Company is asked to rely, that such document or instrument be executed in accordance with one of the following, as appropriate: (i) If the limited liability company properly operates through officers appointed or elected pursuant to the terms of a written operating agreement, such document must be executed by at least two duly elected or appointed officers, as follows: the chairman of the board, the president or any vice president, and any secretary, assistant secretary, the chief financial officer or any assistant treasurer; (ii) If the limited liability company properly operates through a manager or managers identified in the articles of organization and/or duly elected pursuant to the terms of a written operating agreement, such document must be executed by at least two such managers or by one manager if the limited liability company properly operates with the existence of only one manager. e. Other requirements which the Company may impose following its review of the material required herein and other information which the Company may require 58. With respect to UPTOWN NEWPORT BUILDING OWNER, LP, a Delaware limited partnership, a limited partnership: a. That a certified copy of the application for registration, foreign limited partnership (form LP-5) and any amendments thereto (form LP-6) be recorded in the public records; b. A full copy of the partnership agreement and any amendments; c. Satisfactory evidence of the consent of a majority in interest of the limited partners to the contemplated transaction; d. Other requirements which the Company may impose following its review of the material required herein and other information which the Company may require. First American Title Order Number: NHSC-5064254 (mw) Page Number: 13 INFORMATIONAL NOTES Note: The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than the certain dollar amount set forth in any applicable arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. If you desire to review the terms of the policy, including any arbitration clause that may be included, contact the office that issued this Commitment or Report to obtain a sample of the policy jacket for the policy that is to be issued in connection with your transaction. 1. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $no taxes due, Penalty: $0.00 Second Installment: $no taxes due, Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-01 through 445-134-07 and 445-134-10 through 445- 134-16 and 445-134-18 through 445-134-21 and 445-134-23 through 445-134-28 and 445-134-30 through 445-134-32 Affects: Lots A through P 2. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $no taxes due, Penalty: $0.00 Second Installment: $no taxes due, Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-22 Affects: Portion Lot 2 3. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $40,567.81, PAID Penalty: $0.00 Second Installment: $40,567.81, PAID Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-08 Affects: Lot 3 First American Title Order Number: NHSC-5064254 (mw) Page Number: 14 4. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $40,418.18, PAID Penalty: $0.00 Second Installment: $40,418.18, PAID Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-09 Affects: Lot 4 5. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $65,793.84, PAID Penalty: $0.00 Second Installment: $65,793.84, PAID Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-17 Affects: Lot 1 6. General and special taxes and assessments for the fiscal year 2016-2017. First Installment: $9,249.53, PAID Penalty: $0.00 Second Installment: $9,249.53, PAID Penalty: $0.00 Tax Rate Area: 07-088 A. P. No.: 445-134-29 Affects: Portion Lot 2 7. According to the latest available equalized assessment roll in the office of the county tax assessor, there is located on the land a(n) Commercial Structure known as 4311 Jamboree Road, Newport Beach, California. Affects: Lot 1 The map attached, if any, may or may not be a survey of the land depicted hereon. First American expressly disclaims any liability for loss or damage which may result from reliance on this map except to the extent coverage for such loss or damage is expressly provided by the terms and provisions of the title insurance policy, if any, to which this map is attached. First American Title Order Number: NHSC-5064254 (mw) Page Number: 15 First American Title Company 1250 Corona Pointe Court, Suite 200 Corona, CA 92879 (951)256-5880 Fax - (909)476-2401 WIRE INSTRUCTIONS for First American Title Company, Demand/Draft Sub -Escrow Deposits Riverside County, California First American Trust, FSB 5 First American Way Santa Ana, CA 92707 Banking Services: (877) 600-9473 ABA 122241255 Credit to First American Title Company Account No. 3097840000 Reference Title Order Number 5064254 and Title Officer Mark Wardle Please wire the day before recording. First American Title Order Number: NHSC-5064254 (mw) Page Number: 16 LEGAL DESCRIPTION Real property in the City of Newport Beach, County of Orange, State of California, described as follows: LOTS 1 THROUGH 4, INCLUSIVE, AND LETTERED LOTS A THROUGH P, INCLUSIVE, OF TRACT NO. 17763 IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA AS SHOWN ON A MAP FILED IN BOOK 937, PAGES 17 THROUGH 23, INCLUSIVE, OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. EXCEPTING THEREFROM ALL OIL, GAS, HYDROCARBONS AND OTHER MINERALS OF EVERY KIND AND NATURE BELOW A DEPTH OF FIVE HUNDRED (500) FEET BENEATH THE SURFACE OF THE ABOVE DESCRIBED PROPERTY, WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED IN THE DEED RECORDED MAY 7, 1974 IN BOOK 11137, PAGE 1008 OF OFFICIAL RECORDS. APN: 445-134-01 through 445-134-30 APN: Portions of 445-133-01, 445-133-02, 445-133-03 and 445-133-04 First American Title \6 4 Order Number: NHSC-5064254 (mw) Page Number: 17 44,M33N3 &VW 730 VN06107, 011,244 _eFEI 0 dP""O�RE� `,ads o 'H06 ti La MARCH 1973 First American Title Order Number: NHSC-5064254 (mw) Page Number: 18 NOTICE Section 12413.1 of the California Insurance Code, effective January 1, 1990, requires that any title insurance company, underwritten title company, or controlled escrow company handling funds in an escrow or sub -escrow capacity, wait a specified number of days after depositing funds, before recording any documents in connection with the transaction or disbursing funds. This statute allows for funds deposited by wire transfer to be disbursed the same day as deposit. In the case of cashier's checks or certified checks, funds may be disbursed the next day after deposit. In order to avoid unnecessary delays of three to seven days, or more, please use wire transfer, cashier's checks, or certified checks whenever possible. First American Title Order Number: NHSC-5064254 (mw) Page Number: 19 EXHIBIT A LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (BY POLICY TYPE) CLTA/ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE (02-03-10) EXCLUSIONS In addition to the Exceptions in Schedule B, You are not insured against loss, costs, attorneys' fees, and expenses resulting from: 1. Governmental police power, and the existence or violation of those portions of any law or government regulation concerning: (a) building; (b) zoning; (c) land use; (d) improvements on the Land; (e) land division; and (f) environmental protection. This Exclusion does not limit the coverage described in Covered Risk 8.a., 14, 15, 16, 18, 19, 20, 23 or 27. 2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not limit the coverage described in Covered Risk 14 or 15. 3. The right to take the Land by condemning it. This Exclusion does not limit the coverage described in Covered Risk 17. 4. Risks: (a) that are created, allowed, or agreed to by You, whether or not they are recorded in the Public Records; (b) that are Known to You at the Policy Date, but not to Us, unless they are recorded in the Public Records at the Policy Date; (c) that result in no loss to You; or (d) that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, 8.e., 25, 26, 27 or 28. 5. Failure to pay value for Your Title. 6. Lack of a right: (a) to any land outside the area specifically described and referred to in paragraph 3 of Schedule A; and (b) in streets, alleys, or waterways that touch the Land. This Exclusion does not limit the coverage described in Covered Risk 11 or 21. 7. The transfer of the Title to You is invalid as a preferential transfer or as a fraudulent transfer or conveyance under federal bankruptcy, state insolvency, or similar creditors' rights laws. LIMITATIONS ON COVERED RISKS Your insurance for the following Covered Risks is limited on the Owner's Coverage Statement as follows: For Covered Risk 16, 18, 19, and 21 Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A. Covered Risk 16: Covered Risk 18: Covered Risk 19: Covered Risk 21: Your Deductible Amount 1% of Policy Amount or $2,500.00 (whichever is less) 1% of Policy Amount or $5,000.00 (whichever is less) 1% of Policy Amount or $5,000.00 (whichever is less) 1% of Policy Amount or $2,500.00 (whichever is less) Our Maximum Dollar Limit of Liability $10,000.00 $25,000.00 $25,000.00 $5,000.00 ALTA RESIDENTIAL TITLE INSURANCE POLICY (6-1-87) EXCLUSIONS In addition to the Exceptions in Schedule B, you are not insured against loss, costs, attorneys' fees, and expenses resulting from: 1. Governmental police power, and the existence or violation of any law or government regulation. This includes building and zoning ordinances and also laws and regulations concerning: (a) and use (b) improvements on the land (c) and division (d) environmental protection This exclusion does not apply to violations or the enforcement of these matters which appear in the public records at Policy Date. First American Title Order Number: NHSC-5064254 (mw) Page Number: 20 This exclusion does not limit the zoning coverage described in Items 12 and 13 of Covered Title Risks. 2. The right to take the land by condemning it, unless: (a) a notice of exercising the right appears in the public records on the Policy Date (b) the taking happened prior to the Policy Date and is binding on you if you bought the land without knowing of the taking 3. Title Risks: (a) that are created, allowed, or agreed to by you (b) that are known to you, but not to us, on the Policy Date -- unless they appeared in the public records (c) that result in no loss to you (d) that first affect your title after the Policy Date -- this does not limit the labor and material lien coverage in Item 8 of Covered Title Risks 4. Failure to pay value for your title. 5. Lack of a right: (a) to any land outside the area specifically described and referred to in Item 3 of Schedule A OR (b) in streets, alleys, or waterways that touch your land This exclusion does not limit the access coverage in Item 5 of Covered Title Risks. 2006 ALTA LOAN POLICY (06-17-06) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 13, or 14); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing - business laws of the state where the Land is situated. 5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth -in -lending law. 6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 13(b) of this policy. 7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the Insured Mortgage in the Public Records. This Exclusion does not modify or limit the coverage provided under Covered Risk 11(b). The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) that arise by reason of: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such First American Title Order Number: NHSC-5064254 (mw) Page Number: 21 proceedings, whether or not shown by the records of such agency or by the Public Records. 2. 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 or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4. 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 by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 6. Any lien or right to a lien for services, labor or material not shown by the public records. 2006 ALTA OWNER'S POLICY (06-17-06) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 9 or 10); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title. 4. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction vesting the Title as shown in Schedule A, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 9 of this policy. 5. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A. The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) that arise by reason of: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records. 2. 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 or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4. 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 by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 6. Any lien or right to a lien for services, labor or material not shown by the public records. First American Title ALTA EXPANDED COVERAGE RESIDENTIAL LOAN POLICY (07-26-10) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 5, 6, 13(c), 13(d), 14 or 16. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 11, 16, 17, 18, 19, 20, 21, 22, 23, 24, 27 or 28); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure of an Insured to comply with applicable doing - business laws of the state where the Land is situated. 5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth -in -lending law. This Exclusion does not modify or limit the coverage provided in Covered Risk 26. 6. Any claim of invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as to Advances or modifications made after the Insured has Knowledge that the vestee shown in Schedule A is no longer the owner of the estate or interest covered by this policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11. 7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching subsequent to Date of Policy. This Exclusion does not modify or limit the coverage provided in Covered Risk 11(b) or 25. 8. The failure of the residential structure, or any portion of it, to have been constructed before, on or after Date of Policy in accordance with applicable building codes. This Exclusion does not modify or limit the coverage provided in Covered Risk 5 or 6. 9. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 27(b) of this policy. First American Title w '° First American Title Privacy Information We Are Committed to Safeguarding Customer Information In order to better serve your needs now and in the future, we may ask you to provide us with certain information. We understand that you may be concerned about what we will do with such information - particularly any personal or financial information. We agree that you have a right to know how we will utilize the personal information you provide to us. Therefore, together with our subsidiaries we have adopted this Privacy Policy to govern the use and handling of your personal information. Applicability This Privacy Policy governs our use of the information that you provide to us. It does not govern the manner in which we may use information we have obtained from any other source, such as information obtained from a public record or from another person or entity. First American has also adopted broader guidelines that govern our use of personal information regardless of its source. First American calls these guidelines its Fair Information Values. Types of Information Depending upon which of our services you are utilizing, the types of nonpublic personal information that we may collect include: • Information we receive from you on applications, forms and in other communications to us, whether in writing, in person, by telephone or any other means; • Information about your transactions with us, our affiliated companies, or others; and • Information we receive from a consumer reporting agency. Use of Information We request information from you for our own legitimate business purposes and not for the benefit of any nonaffiliated party. Therefore, we will not release your information to nonaffiliated parties except: (1) as necessary for us to provide the product or service you have requested of us; or (2) as permitted by law. We may, however, store such information indefinitely, including the period after which any customer relationship has ceased. Such information may be used for any internal purpose, such as quality control efforts or customer analysis. We may also provide all of the types of nonpublic personal information listed above to one or more of our affiliated companies. Such affiliated companies include financial service providers, such as title insurers, property and casualty insurers, and trust and investment advisory companies, or companies involved in real estate services, such as appraisal companies, home warranty companies and escrow companies. Furthermore, we may also provide all the information we collect, as described above, to companies that perform marketing services on our behalf, on behalf of our affiliated companies or to other financial institutions with whom we or our affiliated companies have joint marketing agreements. Former Customers Even if you are no longer our customer, our Privacy Policy will continue to apply to you. Confidentiality and Security We will use our best efforts to ensure that no unauthorized parties have access to any of your information. We restrict access to nonpublic personal information about you to those individuals and entities who need to know that information to provide products or services to you. We will use our best efforts to train and oversee our employees and agents to ensure that your information will be handled responsibly and in accordance with this Privacy Policy and First American's Fair Information Values. We currently maintain physical, electronic, and procedural safeguards that comply with federal regulations to guard your nonpublic personal information. Information Obtained Through Our Web Site First American Financial Corporation is sensitive to privacy issues on the Internet. We believe it is important you know how we treat the information about you we receive on the Internet. In general, you can visit First American or its affiliates' Web sites on the World Wide Web without telling us who you are or revealing any information about yourself. Our Web servers collect the domain names, not the e-mail addresses, of visitors. This information is aggregated to measure the number of visits, average time spent on the site, pages viewed and similar information. First American uses this information to measure the use of our site and to develop ideas to improve the content of our site. There are times, however, when we may need information from you, such as your name and email address. When information is needed, we will use our best efforts to let you know at the time of collection how we will use the personal information. Usually, the personal information we collect is used only by us to respond to your inquiry, process an order or allow you to access specific account/profile information. If you choose to share any personal information with us, we will only use it in accordance with the policies outlined above. Business Relationships First American Financial Corporation's site and its affiliates' sites may contain links to other Web sites. While we try to link only to sites that share our high standards and respect for privacy, we are not responsible for the content or the privacy practices employed by other sites. Cookies Some of First American's Web sites may make use of "cookie" technology to measure site activity and to customize information to your personal tastes. A cookie is an element of data that a Web site can send to your browser, which may then store the cookie on your hard drive. FirstAm.com uses stored cookies. The goal of this technology is to better serve you when visiting our site, save you time when you are here and to provide you with a more meaningful and productive Web site experience. Fair Information Values Fairness We consider consumer expectations about their privacy in all our businesses. We only offer products and services that assure a favorable balance between consumer benefits and consumer privacy. Public Record We believe that an open public record creates significant value for society, enhances consumer choice and creates consumer opportunity. We actively support an open public record and emphasize its importance and contribution to our economy. Use We believe we should behave responsibly when we use information about a consumer in our business. We will obey the laws governing the collection, use and dissemination of data. Accuracy We will take reasonable steps to help assure the accuracy of the data we collect, use and disseminate. Where possible, we will take reasonable steps to correct inaccurate information. When, as with the public record, we cannot correct inaccurate information, we will take all reasonable steps to assist consumers in identifying the source of the erroneous data so that the consumer can secure the required corrections. Education We endeavor to educate the users of our products and services, our employees and others in our industry about the importance of consumer privacy. We will instruct our employees on our fair information values and on the responsible collection and use of data. We will encourage others in our industry to collect and use information in a responsible manner. Security We will maintain appropriate facilities and systems to protect against unauthorized access to and corruption of the data we maintain. Form 50-PRIVACY (9/1/10) Page 1 of 1 Privacy Information (2001-2010 First American Financial Corporation) $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 March 12, 2019 CERTIFICATE OF CONSENT OF INCLUSION OF APPRAISAL REPORT IN THE OFFICIAL STATEMENT To: California Statewide Communities Development Authority Re: $8,300,000 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 We agree to the inclusion in the Preliminary Official Statement, dated February 13, 2019, and the Official Statement, dated February 27, 2019, relating to the above referenced bonds, of the Appraisal Report for CSCDA CFD No. 2018-03 (Uptown Newport), dated December 22, 2018. 4151-7123-5098 INTEGRA REALTY RESOURCES By: Eric A. Segal, Appraiser [Signature Page - Certificate of Consent of Inclusion of Appraisal Report in the Official Statement] 4151-7123-5098 The Depository Trust Company A subsidiary of the Depository Trust & Clearing Corporation BLANKET ISSUER LETTER OF REPRESENTATIONS (To be completed by Issuer and Co-Issuer(s), if applicable) CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY (Name of Issuer and Co-lssuer(s), if applicable) January 1, 2019 The Depository Trust Company 18301 Bermuda Green Drive Tampa, FL 33647 Attention: Underwriting Department Ladies and Gentlemen: This letter sets forth our understanding with respect to all issues (the "Securities") that Issuer shall request to be made eligible for deposit by The Depository Trust Company ("DTC"). Issuer is: (Note: Issuer shall represent one and cross out the other] cerporater } [formed under the laws of] the State of California To induce DTC to accept the Securities as eligible for deposit at D TC, and to act in accordance with DTC's Rules with respect to the Securities, Issuer represents to DTC that issuer will comply with the requirements stated in DTC's Operational Arrangements, as they may be amended from time to time. Note: Schedule A contains statements that DTC believes accurately describe DTC, the method of effecting book -entry transfers of securities distributed through DTC, and certain related matters. DTCC Very truly yours, California Statewide Communities Development Authority By: Tim Snellings, ecretary (Print Name) 1100 K Street, Suite 101 (Street Address) Sacramento, CA USA 95814 (sty) (State) (try) CET Cada) (800) 531-7476 (Phone Number) info©cscda.org (E-mail BLOR 06-2013 SCHEDULE A (To Blanket Issuer Letter of Representations) SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BQOK-ENTRY-ONLY ISSUANCE (Prepared by DTC—bracketed nwicrial may be applicable only to certain issues) 1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository for the securities (the "Securities"). The Securities 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 Security certificate will be issued for [each issue of] the Securities, [each] in the aggregate principal amount of such issue, and will be deposited with DTC. [If, however, the aggregate principal amount of [any] issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.] 2. DTC, the world's largest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a "ban king organization" within the meaning of t he 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. 3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC 's records. The ownership interest of each actual purchaser of each Security ("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 Securities 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 Securities, except in the event that use of the book -entry system for the Securities is discontinued. 4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC arc 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 Securities with DTC and their registration in the name of Ccdc & 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 Securities; DTC's records reflect only the identity of the Direct Participants to whose accounts such Securities 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. BLOR 06-2013 SCHEDULE A (To Blanket Issuer Letter of Representations) 5. 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 Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities m ay wish to ascertain that the nominee holding the Securities 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.] [6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.] 7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer 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 Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy). 8. Redemption proceeds, distributions, and dividend payments on the Securities 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 Issuer or Agent, on payable date in accordance with their respective holdings shown on DT C'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, Agent, or Issuer, 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 & C o. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. [9. A Beneficial Owner shall give notice to elect to have its Securities purchased or tendered, through its Participant, to [Ten der/Remarketing] Agent, and shall effect delivery of such Securities by causing the Direct Participant to transfer the Participant's interest in the Securities, on DTC's records, to [Tender/Remarketing] Agent. The requirement for physical delivery of Securities in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC'a records and followed by a book -entry credit of tendered Securities to [Tender/Remarketing] Agent's DTC account.] 10. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates arc required to be printed and delivered. 11. Issuer may decide to discontinue use of the system of book -entry -only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC. 12. The information in this section concerning DTC and DTC's book -entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof'. BLOR 08-2013 $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 Dated: March 12, 2019 RECEIPT FOR BONDS The undersigned hereby certifies that he is duly authorized to make this certification on behalf of RBC Capital Markets, LLC, as underwriter (the "Underwriter") of the above -referenced bonds (the "Bonds"), and further certifies that: (a) Pursuant to a Bond Purchase Contract, dated February 27, 2019, between the California Statewide Communities Development Authority and the Underwriter (the "Purchase Contract"), the Underwriter has received the following bonds against payment of a purchase price in the amount of $8,714,972.40 (representing the par amount of the Bonds, plus an original issue premium of $539,472.40, less an underwriting discount of $124,500.00): Title of Bonds: California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds") Par Value: $8,300,000 Date of Bonds: March 12, 2019 (b) The Underwriter has checked the Bonds and they are in compliance with the terms of the Purchase Contract. (c) All other conditions to the Underwriter's obligation to purchase the Bonds under the Purchase Contract have been duly satisfied or waived. Capitalized terms used but not defined in this Receipt for Bonds shall have the meanings given in the Purchase Contract. [Remainder of Page Intentionally Left Blank] 4151-7123-5098 IN WITNESS WHEREOF, the undersigned has executed this RECEIPT FOR BONDS as of the date first above written. RBC CAPITAL MARKS ST LC By: 4151-7123-5098 Managing Dire,Crtor $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 March 12, 2019 CERTIFICATE OF SPECIAL TAX CONSULTANT The undersigned, an authorized representative of David Taussig & Associates, hereby certify pursuant to the Bond Purchase Contract, dated February 27, 2019 (the "Purchase Contract"), between RBC Capital Markets, LLC (the "Underwriter") and the California Statewide Communities Development Authority (the "Authority") as follows: 1. I am authorized to execute and deliver this certificate on behalf of David Taussig & Associates. 2. The Authority, the Underwriter and Orrick, Herrington & Sutcliffe LLP, as Bond counsel to the Authority, may rely upon the statements made in this Certificate as if this Certificate were specifically addressed to them. 3. The statements and information in the Official Statement as set forth under the caption "SECURITY FOR THE BONDS — Rate and Method of Apportionment of Special Tax" and in Appendix C — "RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX" fairly and accurately describe the application of the Rate and Method (as defined in the Official Statement). Capitalized terms not otherwise defined in this Certificate have the meanings assigned in the Purchase Contract. [Remainder of Page Intentionally Left Blank] 4151-7123-5098 IN WITNESS WHEREOF, the undersigned has executed this CERTIFICATE OF SPECIAL TAX CONSULTANT as of the date first above written. DAVID TAUSSIG & ASSOCIATES Authoriz d R - : esen 4151-7123-5098 SCIP STATEWIDE COMMUNITY INFRASTRUCTURE PROGRAM FROM CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY CSCDA CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY UPTOWN NEWPORT CFD INTERESTED PARTIES LIST (AS OF OCTOBER 17, 2018) ISSUER California Statewide Communities Development Authority Fax: (925) 397-3590 1700 North Broadway, Suite 405 Walnut Creek, CA 94596 James Hamill, Managing Director (925) 476-5644 jhamill@cscda.org Jon Penkower, Managing Director (925) 476-5887 ipenkower(acscda. org BOND/DISCLOSURE COUNSEL Orrick, Herrington & Sutcliffe LLP 1120 NW Couch Street, Suite 200 Fax: (503) 943-4801 Portland, OR 97209 Patricia L. Eichar (503) 943-4860 peichar@orrick.com 405 Howard Street San Francisco, CA 94105-2669 Jaileez Campos, Practice Assistant (415) 773-5788 iaileezcampos@orrick.com 400 Capitol Mall, Suite 3000 Sacramento, CA 95814-4497 Sue S. Chang, Associate (916) 329-7939 suechang@orrick.com 777 S. Figueroa Street, Suite 3200 Los Angeles, CA 90017 Besorah Won, Associate (213) 612-2493 bwon@orrick.com California Statewide Communities Development Authority Interested Parties List City of Newport Beach — Uptown Newport CFD Page 2 of 4 UNDERWRITER RBC Capital Markets Fax: (415) 445-8679 Two Embarcadero Center, Suite 1200 San Francisco, CA 94111 Bob Williams, Managing Director (415) 445-8674 bob.williams@rbccm.com Luke Brewer, Associate (415) 445-8512 luke.brewer@rbccm.com Michelle Nimo, Administrative Assistant (415) 445-8676 michelle.nimo@rbccm.com APPRAISER Integra Realty Resources — Sacramento/San Francisco Fax: (916) 435-4774 3825 Atherton Road, Suite 500 Rocklin, CA 95765 Eric Segal (916) 435-3883 x 228 esegal@irr.com SPECIAL TAX CONSULTANT David Taussig & Associates Fax: (949) 955-1590 100 West San Fernando Street, Suite 430 San Jose, CA 95113 Nathan D. Perez, Managing Director (949) 955-1500 nperez@taussig.com Aksel Dregelid (949) 955-1500 adregelid@taussig.com Chris Hnatiuk (949) 955-1500 chnatiuk@taussig.com Kelly Wright (949) 955-1500 kwright@taussig.com TRUSTEE Wilmington Trust 650 Town Center Drive, Suite 600 Costa Mesa, CA 92626 John Deleray, Vice President. (714) 313-3858 jdeleray@wilmingtontrust.com Jeanie Mar, Vice President (714) 384-4153 jmar@wilmingtontrust.com California Statewide Communities Development Authority Interested Parties List City of Newport Beach — Uptown Newport CFD Page 3 of 4 LOCAL AGENCY City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Dan Matusiewicz, Finance Director/Treasurer (949) 644-3126 DMatusiewicz@newportbeachca.gov LOCAL AGENCY COUNSEL Stradling Yocca Carlson & Rauth, P.C. 660 Newport Center Drive, Suite 1600 Newport Beach, CA 92660 Brian Forbath (949) 725-4193 bforbath@sycr.com DEVELOPER Shopoff Realty Investments, L.P. 2 Park Plaza, Suite 700 Irvine, CA 92614 Tom Bitney, Sr. Development Manager (949) 417-4462 TBitney@shopoff.com Brian Rupp, Sr. Vice President of Development (949) 231-5068 BRupp@shopoff.com John Santry, Executive Vice President of Acquisitions and Development (949) 417-1867 JSantry@shopoff.com DEVELOPER'S CONSULTANT Latham & Watkins LLP 355 South Grand Avenue, Suite 100 Los Angeles, CA 90071 Anna Rienhardt (213) 891-7839 anna.rienhardt@lw.com UNDERWRITER'S COUNSEL Kutak Rock, LLP 5 Park Plaza, Suite 1500 Irvine, CA 92614 Albert Reyes (949) 221-3951 albert.reyes@kutakrock.com California Statewide Communities Development Authority Interested Parties List City of Newport Beach — Uptown Newport CFD Page 4 of 4 Email Distribution List: jhamill@cscda.org; jpenkower@cscda.org; peichar@orrick.com; jaileezcampos@orrick.com; suechang@orrick.com; bwon@orrick.com; bob.williams@rbccm.com; luke.brewer@rbccm.com; michelle.nimo@rbccm.com; esegal@irr.com; nperez@taussig.com; adregelid@taussig.com; chnatiuk@taussig.com; kwright@taussig.com; jdeleray@wilmingtontrust.com; jmar@wilmingtontrust.com; DMatusiewicz@newportbeachca.gov; bforbath@sycr.com; TBitney@shopoff.com; BRupp@shopoff.com; JSantry@shopoff.com; anna.rienhardt@lw.com; albert.reyes@kutakrock.com CFD No. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 FINAL CLOSING MEMORANDUM MARCH 12, 2019 s CSCDA S Statewide Community Infrastructure Program RBC Capital Markets ‘31 RBC RBC Capital Markets TO: Distribution List FROM: Bob Williams, RBC Capital Markets Luke Brewer, RBC Capital Markets DATE: March 12, 2019 CLOSING MEMORANDUM (415) 445-8674 (415) 445-8512 RE: Closing Procedures for: $8,300,000 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 CLOSING INFORMATION: Pre -Closing Date & Time: Closing Date & Time: Bond Delivery Instructions: March 11, 2019 March 12, 2019 9:00 a.m. Pacific (via telephone) Book -Entry -Only Depository Trust Company 55 Water Street New York, NY 10041 Acct #: 0235 RBC Capital Markets Via Orrick Deal Room Dial -In: (877) 310-7479 ID #: 732893419# # PROCEEDS CALCULATION Par Amount Plus: Original Issue Premium Gross Bond Proceeds Less: Underwriter's Discount Purchase Price Series 2019 $8,300,000.00 539,472.40 $8,839,472.40 124,500.00 $8,714,972.40 SUMMARY SOURCES AND USES SOURCES: Par Amount Plus: Original Issue Premium TOTAL SOURCES Series 2019 $8,300,000.00 539,472.40 $8,839,472.40 USES: Acquisition and Construction Fund Deposit to Undergrounding Subaccount Deposit to Park Improvement Subaccount Subtotal Acquisition and Construction Fund Debt Service Reserve Fund Capitalized Interest Fund Cost of Issuance Fund Administration Expense Fund Underwriter's Discount $1,994,808.07 4,845, 714.60 $6,840,522.67 $730,314.47 817,319.44 274,815.82 52,000.00 124,500.00 TOTAL USES $8,839,472.40 Page 1 of 3 RBC Capital Markets RBC WIRE INSTRUCTIONS I. Closing Wire Instructions - Wire Transfer from RBC Capital Markets to Wilmington Trust 0n the morning of closing, March 12, 2019, RBC Capital Markets will wire the Purchase Price amount of the Bonds to the Trustee to fund the balance of the Acquisition and Construction Fund, the Debt Service Reserve Fund, the Capitalized Interest Fund, the Expense Fund, and the Cost of Issuance Fund. Wire Transfer Instructions: Manufacturers Traders Trust Co. 1100 North Market St. Rodney Square North, Wilmington, DE 19890 ABA #: 031100092 A/C#: 1001 Account Name: Wilmington Trust Clearing FFC: CSCDA Uptown Newport CFD Attn: Jeanie Mar Amount wired by RBC Capital Markets II. Cost of Issuance Fund Instructions $8,714,972.40 After closing of the Bonds on March 12, 2019, the Trustee will wire the amounts as specified in Requisition No. 1 for Costs of Issuance. Page 2 of 3 "+,% RBC RBC Capital Markets CLOSING CONTACTS California Statewide Communities Development Authority James Hamill Jon Penkower Orrick, Herrington & Sutcliffe LLP Patricia Eichar Besorah Won Jaileez Campos RBC Capital Markets (Banking, Trading, and Closing Team) Bob Williams Luke Brewer John Stumpf Michelle Nimo Wai Chun, Closing Coordinator City of Newport Beach Dan Matusiewicz Stradling Yocca Carlson & Rauth, P.C. (City Counsel) Brian Forbath Shopoff Realty Investments, L.P. Tom Bitney Brian Rupp John Santry Latham & Watkins LLP Anna Rienhardt DTA Kutak Rock Nate Perez Kelly Wright Albert Reyes Wilmington Trust John Deleray Jeanie Mar DTC Phone (925) 476-5644 (925) 476-5887 (503) 943-4860 (213) 612-2493 (415) 773-5788 (415) 445-8674 (415) 445-8512 (415) 445-6321 (415) 445-8676 (212) 858-7069 (949) 644-3126 (949) 725-4193 (949) 417-4462 (949) 231-5068 (949) 417-1867 (213) 891-7893 (949) 955-1500 (949) 955-1500 (949) 221-3951 (714) 313-3858 (714) 384-4153 (212) 855-3752 Email jhamill@cscda.org jpenkower@cscda.org peichar@orrick.com bwon@orrick.com jaileezcampos@orrick.com bob.williams@rbccm.com luke.brewer@rbccm.com john.a.stumpf@rbccm.com michelle.nimo@rbccm.com wai.chun@rbccm.com MuniUWS@rbccm.com DMatusiewicz@newportbeachca.gov bforbath@sycr.com TBitney@shopoff.com BRupp@shopoff.com JSantry@shopoff.com anna.rienhardt@lw.com nperez@taussig.com kwright@taussig.com Albert.Reyes@KutakRock.com jdeleray@wilmingtontrust.com jmar@wilmingtontrust.com Page 3 of 3 APPENDIX A. 2018 YEAR IN REVIEW APPENDIX A FINAL NUMBERS s CSCDA S Statewide Community Infrastructure Program RBC Capital Markets TABLE OF CONTENTS California Statewide Communities Development Authority (Uptown Newport CFD) Special Tax Bonds, Series 2019 REVISED FINAL NUMBERS FOR CLOSING Report Page Sources and Uses of Funds Bond Summary Statistics Bond Pricing Bond Debt Service Net Debt Service Bond Solution Form 8038 Statistics Proof of Arbitrage Yield 1 2 3 4 6 8 9 10 Mar 6, 2019 5:00 pm Prepared by RBC Capital Markets SOURCES AND USES OF FUNDS California Statewide Communities Development Authority (Uptown Newport CFD) Special Tax Bonds, Series 2019 REVISED FINAL NUMBERS FOR CLOSING Dated Date 03/12/2019 Delivery Date 03/12/2019 Sources: Bond Proceeds: Par Amount 8,300,000.00 Premium 539,472.40 8,839,472.40 Uses: Project Fund Deposits: 66KV Undergrounding - SCE 20B 66KV Undergrounding - SCE 20B - Pre -Funded Deposit Soft Costs Park Improvements Other Fund Deposits: Debt Service Reserve Fund Capitalized Interest Fund 1,399,164.07 349,000.00 577,269.00 4, 515, 089.60 6,840,522.67 730,314.47 817,319.44 1,547,633.91 Cost of Issuance: Bond & Disclosure Counsel - Orrick 70,000.00 Formation Legal Costs - Orrick 15,000.00 Issuer - CSCDA 83,000.00 Appraisal - IRR 22,000.00 Special Tax Consultant - DTA 40,000.00 City Admin 30,000.00 Prefunded Expense Fund 52,000.00 Trustee 6,000.00 Trustee's Counsel 1,000.00 Printing & Miscellaneous 6,000.00 Delivery Date Expenses: Underwriter's Discount Other Uses of Funds: Contingency 325,000.00 124,500.00 1,815.82 8,839,472.40 Mar 6, 2019 5:00 pm Prepared by RBC Capital Markets Page 1 BOND SUMMARY STATISTICS Bond Component California Statewide Communities Development Authority (Uptown Newport CFD) Special Tax Bonds, Series 2019 REVISED FINAL NUMBERS FOR CLOSING Dated Date 03/12/2019 Delivery Date 03/12/2019 First Coupon 09/01/2019 Last Maturity 09/01/2048 Arbitrage Yield 4.148428% True Interest Cost (TIC) 4.619441% Net Interest Cost (NIC) 4.767329% All -In TIC 4.915284% Average Coupon 5.000000% Average Life (years) 21.488 Weighted Average Maturity (years) 21.453 Duration of Issue (years) 13.255 Par Amount 8,300,000.00 Bond Proceeds 8,839,472.40 Total Interest 8,917,569.44 Net Interest 8,502,597.04 Total Debt Service 17,217,569.44 Maximum Annual Debt Service 766,500.00 Average Annual Debt Service 584,251.58 Par Average Average PV of 1 bp Value Price Coupon Life change 2039 Term Bond 2048 Term Bond 3,295,000.00 5,005,000.00 107.327 5.000% 14.699 2,668.95 105.955 5.000% 25.958 4,004.00 8,300,000.00 21.488 6,672.95 Par Value + Accrued Interest + Premium (Discount) - Underwriter's Discount - Cost of Issuance Expense - Other Amounts TIC 8,300,000.00 539,472.40 -124,500.00 All -In Arbitrage TIC Yield 8,300,000.00 8,300,000.00 539,472.40 -124,500.00 -325,000.00 539,472.40 Target Value 8,714,972.40 8,389,972.40 8,839,472.40 Target Date 03/12/2019 03/12/2019 03/12/2019 Yield 4.619441% 4.915284% 4.148428% Mar 6, 2019 5:00 pm Prepared by RBC Capital Markets Page 2 BOND PRICING Bond Component California Statewide Communities Development Authority (Uptown Newport CFD) Special Tax Bonds, Series 2019 REVISED FINAL NUMBERS FOR CLOSING Maturity Yield to Call Call Premium Date Amount Rate Yield Price Maturity Date Price (-Discount) Principal Cost Takedown 2039 Term Bond: 2048 Term Bond: 09/01/2021 30,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 2,198.10 32,198.10 7.500 09/01/2022 40,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 2,930.80 42,930.80 7.500 09/01/2023 55,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 4,029.85 59,029.85 7.500 09/01/2024 65,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 4,762.55 69,762.55 7.500 09/01/2025 80,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 5,861.60 85,861.60 7.500 09/01/2026 95,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 6,960.65 101,960.65 7.500 09/01/2027 105,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 7,693.35 112,693.35 7.500 09/01/2028 125,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 9,158.75 134,158.75 7.500 09/01/2029 140,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 10,257.80 150,257.80 7.500 09/01/2030 155,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 11,356.85 166,356.85 7.500 09/01/2031 175,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 12,822.25 187,822.25 7.500 09/01/2032 195,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 14,287.65 209,287.65 7.500 09/01/2033 215,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 15,753.05 230,753.05 7.500 09/01/2034 240,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 17,584.80 257,584.80 7.500 09/01/2035 265,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 19,416.55 284,416.55 7.500 09/01/2036 290,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 21,248.30 311,248.30 7.500 09/01/2037 315,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 23,080.05 338,080.05 7.500 09/01/2038 340,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 24,911.80 364,911.80 7.500 09/01/2039 370,000 5.000% 4.060% 107.327 C 4.451% 09/01/2028 100.000 27,109.90 397,109.90 7.500 3,295,000 241,424.65 3,536,424.65 09/01/2040 405,000 5.000% 4.230% 105.955 C 4.628% 09/01/2028 100.000 24,117.75 429,117.75 7.500 09/01/2041 435,000 5.000% 4.230% 105.955 C 4.628% 09/01/2028 100.000 25,904.25 460,904.25 7.500 09/01/2042 470,000 5.000% 4.230% 105.955 C 4.628% 09/01/2028 100.000 27,988.50 497,988.50 7.500 09/01/2043 510,000 5.000% 4.230% 105.955 C 4.628% 09/01/2028 100.000 30,370.50 540,370.50 7.500 09/01/2044 550,000 5.000% 4.230% 105.955 C 4.628% 09/01/2028 100.000 32,752.50 582,752.50 7.500 09/01/2045 590,000 5.000% 4.230% 105.955 C 4.628% 09/01/2028 100.000 35,134.50 625,134.50 7.500 09/01/2046 635,000 5.000% 4.230% 105.955 C 4.628% 09/01/2028 100.000 37,814.25 672,814.25 7.500 09/01/2047 680,000 5.000% 4.230% 105.955 C 4.628% 09/01/2028 100.000 40,494.00 720,494.00 7.500 09/01/2048 730,000 5.000% 4.230% 105.955 C 4.628% 09/01/2028 100.000 43,471.50 773,471.50 7.500 5,005,000 298,047.75 5,303,047.75 8,300,000 539,472.40 8,839,472.40 Dated Date 03/12/2019 Delivery Date 03/12/2019 First Coupon 09/01/2019 Par Amount 8,300,000.00 Premium 539,472.40 Production Underwriter's Discount Purchase Price Accrued Interest 8,839,472.40 106.499667% -124,500.00 -1.500000% 8,714,972.40 104.999667% Net Proceeds 8,714,972.40 Mar 6, 2019 5:00 pm Prepared by RBC Capital Markets Page 3 BOND DEBT SERVICE California Statewide Communities Development Authority (Uptown Newport CFD) Special Tax Bonds, Series 2019 REVISED FINAL NUMBERS FOR CLOSING Dated Date 03/12/2019 Delivery Date 03/12/2019 Period Ending Principal Coupon Interest Debt Service 09/01/2019 194,819.44 194,819.44 09/01/2020 415,000.00 415,000.00 09/01/2021 30,000 5.000% 415,000.00 445,000.00 09/01/2022 40,000 5.000% 413,500.00 453,500.00 09/01/2023 55,000 5.000% 411,500.00 466,500.00 09/01/2024 65,000 5.000% 408,750.00 473,750.00 09/01/2025 80,000 5.000% 405,500.00 485,500.00 09/01/2026 95,000 5.000% 401,500.00 496,500.00 09/01/2027 105,000 5.000% 396,750.00 501,750.00 09/01/2028 125,000 5.000% 391,500.00 516,500.00 09/01/2029 140,000 5.000% 385,250.00 525,250.00 09/01/2030 155,000 5.000% 378,250.00 533,250.00 09/01/2031 175,000 5.000% 370,500.00 545,500.00 09/01/2032 195,000 5.000% 361,750.00 556,750.00 09/01/2033 215,000 5.000% 352,000.00 567,000.00 09/01/2034 240,000 5.000% 341,250.00 581,250.00 09/01/2035 265,000 5.000% 329,250.00 594,250.00 09/01/2036 290,000 5.000% 316,000.00 606,000.00 09/01/2037 315,000 5.000% 301,500.00 616,500.00 09/01/2038 340,000 5.000% 285,750.00 625,750.00 09/01/2039 370,000 5.000% 268,750.00 638,750.00 09/01/2040 405,000 5.000% 250,250.00 655,250.00 09/01/2041 435,000 5.000% 230,000.00 665,000.00 09/01/2042 470,000 5.000% 208,250.00 678,250.00 09/01/2043 510,000 5.000% 184,750.00 694,750.00 09/01/2044 550,000 5.000% 159,250.00 709,250.00 09/01/2045 590,000 5.000% 131,750.00 721,750.00 09/01/2046 635,000 5.000% 102,250.00 737,250.00 09/01/2047 680,000 5.000% 70,500.00 750,500.00 09/01/2048 730,000 5.000% 36,500.00 766,500.00 8,300,000 8,917,569.44 17,217,569.44 Mar 6, 2019 5:00 pm Prepared by RBC Capital Markets Page 4 BOND DEBT SERVICE California Statewide Communities Development Authority (Uptown Newport CFD) Special Tax Bonds, Series 2019 REVISED FINAL NUMBERS FOR CLOSING Dated Date 03/12/2019 Delivery Date 03/12/2019 Period Annual Ending Principal Coupon Interest Debt Service Debt Service 09/01/2019 194,819.44 194,819.44 194,819.44 03/01/2020 207,500.00 207,500.00 09/01/2020 207,500.00 207,500.00 415,000.00 03/01/2021 207,500.00 207,500.00 09/01/2021 30,000 5.000% 207,500.00 237,500.00 445,000.00 03/01/2022 206,750.00 206,750.00 09/01/2022 40,000 5.000% 206,750.00 246,750.00 453,500.00 03/01/2023 205,750.00 205,750.00 09/01/2023 55,000 5.000% 205,750.00 260,750.00 466,500.00 03/01/2024 204,375.00 204,375.00 09/01/2024 65,000 5.000% 204,375.00 269,375.00 473,750.00 03/01/2025 202,750.00 202,750.00 09/01/2025 80,000 5.000% 202,750.00 282,750.00 485,500.00 03/01/2026 200,750.00 200,750.00 09/01/2026 95,000 5.000% 200,750.00 295,750.00 496,500.00 03/01/2027 198,375.00 198,375.00 09/01/2027 105,000 5.000% 198,375.00 303,375.00 501,750.00 03/01/2028 195,750.00 195,750.00 09/01/2028 125,000 5.000% 195,750.00 320,750.00 516,500.00 03/01/2029 192,625.00 192,625.00 09/01/2029 140,000 5.000% 192,625.00 332,625.00 525,250.00 03/01/2030 189,125.00 189,125.00 09/01/2030 155,000 5.000% 189,125.00 344,125.00 533,250.00 03/01/2031 185,250.00 185,250.00 09/01/2031 175,000 5.000% 185,250.00 360,250.00 545,500.00 03/01/2032 180,875.00 180,875.00 09/01/2032 195,000 5.000% 180,875.00 375,875.00 556,750.00 03/01/2033 176,000.00 176,000.00 09/01/2033 215,000 5.000% 176,000.00 391,000.00 567,000.00 03/01/2034 170,625.00 170,625.00 09/01/2034 240,000 5.000% 170,625.00 410,625.00 581,250.00 03/01/2035 164,625.00 164,625.00 09/01/2035 265,000 5.000% 164,625.00 429,625.00 594,250.00 03/01/2036 158,000.00 158,000.00 09/01/2036 290,000 5.000% 158,000.00 448,000.00 606,000.00 03/01/2037 150,750.00 150,750.00 09/01/2037 315,000 5.000% 150,750.00 465,750.00 616,500.00 03/01/2038 142,875.00 142,875.00 09/01/2038 340,000 5.000% 142,875.00 482,875.00 625,750.00 03/01/2039 134,375.00 134,375.00 09/01/2039 370,000 5.000% 134,375.00 504,375.00 638,750.00 03/01/2040 125,125.00 125,125.00 09/01/2040 405,000 5.000% 125,125.00 530,125.00 655,250.00 03/01/2041 115,000.00 115,000.00 09/01/2041 435,000 5.000% 115,000.00 550,000.00 665,000.00 03/01/2042 104,125.00 104,125.00 09/01/2042 470,000 5.000% 104,125.00 574,125.00 678,250.00 03/01/2043 92,375.00 92,375.00 09/01/2043 510,000 5.000% 92,375.00 602,375.00 694,750.00 03/01/2044 79,625.00 79,625.00 09/01/2044 550,000 5.000% 79,625.00 629,625.00 709,250.00 03/01/2045 65,875.00 65,875.00 09/01/2045 590,000 5.000% 65,875.00 655,875.00 721,750.00 03/01/2046 51,125.00 51,125.00 09/01/2046 635,000 5.000% 51,125.00 686,125.00 737,250.00 03/01/2047 35,250.00 35,250.00 09/01/2047 680,000 5.000% 35,250.00 715,250.00 750,500.00 03/01/2048 18,250.00 18,250.00 09/01/2048 730,000 5.000% 18,250.00 748,250.00 766,500.00 8,300,000 8,917,569.44 17,217,569.44 17,217,569.44 Mar 6, 2019 5:00 pm Prepared by RBC Capital Markets Page 5 NET DEBT SERVICE California Statewide Communities Development Authority (Uptown Newport CFD) Special Tax Bonds, Series 2019 REVISED FINAL NUMBERS FOR CLOSING Period Total Debt Service Capitalized Net Ending Principal Interest Debt Service Reserve Fund Interest Fund Debt Service 09/01/2019 194,819.44 194,819.44 194,819.44 09/01/2020 415,000.00 415,000.00 415,000.00 09/01/2021 30,000 415,000.00 445,000.00 207,500.00 237,500.00 09/01/2022 40,000 413,500.00 453,500.00 453,500.00 09/01/2023 55,000 411,500.00 466,500.00 466,500.00 09/01/2024 65,000 408,750.00 473,750.00 473,750.00 09/01/2025 80,000 405,500.00 485,500.00 485,500.00 09/01/2026 95,000 401,500.00 496,500.00 496,500.00 09/01/2027 105,000 396,750.00 501,750.00 501,750.00 09/01/2028 125,000 391,500.00 516,500.00 516,500.00 09/01/2029 140,000 385,250.00 525,250.00 525,250.00 09/01/2030 155,000 378,250.00 533,250.00 533,250.00 09/01/2031 175,000 370,500.00 545,500.00 545,500.00 09/01/2032 195,000 361,750.00 556,750.00 556,750.00 09/01/2033 215,000 352,000.00 567,000.00 567,000.00 09/01/2034 240,000 341,250.00 581,250.00 581,250.00 09/01/2035 265,000 329,250.00 594,250.00 594,250.00 09/01/2036 290,000 316,000.00 606,000.00 606,000.00 09/01/2037 315,000 301,500.00 616,500.00 616,500.00 09/01/2038 340,000 285,750.00 625,750.00 625,750.00 09/01/2039 370,000 268,750.00 638,750.00 638,750.00 09/01/2040 405,000 250,250.00 655,250.00 655,250.00 09/01/2041 435,000 230,000.00 665,000.00 665,000.00 09/01/2042 470,000 208,250.00 678,250.00 678,250.00 09/01/2043 510,000 184,750.00 694,750.00 694,750.00 09/01/2044 550,000 159,250.00 709,250.00 709,250.00 09/01/2045 590,000 131,750.00 721,750.00 721,750.00 09/01/2046 635,000 102,250.00 737,250.00 737,250.00 09/01/2047 680,000 70,500.00 750,500.00 750,500.00 09/01/2048 730,000 36,500.00 766,500.00 730,314.47 36,185.53 8,300,000 8,917,569.44 17,217,569.44 730,314.47 817,319.44 15,669,935.53 Mar 6, 2019 5:00 pm Prepared by RBC Capital Markets Page 6 NET DEBT SERVICE California Statewide Communities Development Authority (Uptown Newport CFD) Special Tax Bonds, Series 2019 REVISED FINAL NUMBERS FOR CLOSING Period Total Debt Service Capitalized Net Ending Principal Interest Debt Service Reserve Fund Interest Fund Debt Service 09/01/2019 194,819.44 194,819.44 194,819.44 03/01/2020 207,500.00 207,500.00 207,500.00 09/01/2020 207,500.00 207,500.00 207,500.00 03/01/2021 207,500.00 207,500.00 207,500.00 09/01/2021 30,000 207,500.00 237,500.00 237,500.00 03/01/2022 206,750.00 206,750.00 206,750.00 09/01/2022 40,000 206,750.00 246,750.00 246,750.00 03/01/2023 205,750.00 205,750.00 205,750.00 09/01/2023 55,000 205,750.00 260,750.00 260,750.00 03/01/2024 204,375.00 204,375.00 204,375.00 09/01/2024 65,000 204,375.00 269,375.00 269,375.00 03/01/2025 202,750.00 202,750.00 202,750.00 09/01/2025 80,000 202,750.00 282,750.00 282,750.00 03/01/2026 200,750.00 200,750.00 200,750.00 09/01/2026 95,000 200,750.00 295,750.00 295,750.00 03/01/2027 198,375.00 198,375.00 198,375.00 09/01/2027 105,000 198,375.00 303,375.00 303,375.00 03/01/2028 195,750.00 195,750.00 195,750.00 09/01/2028 125,000 195,750.00 320,750.00 320,750.00 03/01/2029 192,625.00 192,625.00 192,625.00 09/01/2029 140,000 192,625.00 332,625.00 332,625.00 03/01/2030 189,125.00 189,125.00 189,125.00 09/01/2030 155,000 189,125.00 344,125.00 344,125.00 03/01/2031 185,250.00 185,250.00 185,250.00 09/01/2031 175,000 185,250.00 360,250.00 360,250.00 03/01/2032 180,875.00 180,875.00 180,875.00 09/01/2032 195,000 180,875.00 375,875.00 375,875.00 03/01/2033 176,000.00 176,000.00 176,000.00 09/01/2033 215,000 176,000.00 391,000.00 391,000.00 03/01/2034 170,625.00 170,625.00 170,625.00 09/01/2034 240,000 170,625.00 410,625.00 410,625.00 03/01/2035 164,625.00 164,625.00 164,625.00 09/01/2035 265,000 164,625.00 429,625.00 429,625.00 03/01/2036 158,000.00 158,000.00 158,000.00 09/01/2036 290,000 158,000.00 448,000.00 448,000.00 03/01/2037 150,750.00 150,750.00 150,750.00 09/01/2037 315,000 150,750.00 465,750.00 465,750.00 03/01/2038 142,875.00 142,875.00 142,875.00 09/01/2038 340,000 142,875.00 482,875.00 482,875.00 03/01/2039 134,375.00 134,375.00 134,375.00 09/01/2039 370,000 134,375.00 504,375.00 504,375.00 03/01/2040 125,125.00 125,125.00 125,125.00 09/01/2040 405,000 125,125.00 530,125.00 530,125.00 03/01/2041 115,000.00 115,000.00 115,000.00 09/01/2041 435,000 115,000.00 550,000.00 550,000.00 03/01/2042 104,125.00 104,125.00 104,125.00 09/01/2042 470,000 104,125.00 574,125.00 574,125.00 03/01/2043 92,375.00 92,375.00 92,375.00 09/01/2043 510,000 92,375.00 602,375.00 602,375.00 03/01/2044 79,625.00 79,625.00 79,625.00 09/01/2044 550,000 79,625.00 629,625.00 629,625.00 03/01/2045 65,875.00 65,875.00 65,875.00 09/01/2045 590,000 65,875.00 655,875.00 655,875.00 03/01/2046 51,125.00 51,125.00 51,125.00 09/01/2046 635,000 51,125.00 686,125.00 686,125.00 03/01/2047 35,250.00 35,250.00 35,250.00 09/01/2047 680,000 35,250.00 715,250.00 715,250.00 03/01/2048 18,250.00 18,250.00 18,250.00 09/01/2048 730,000 18,250.00 748,250.00 730,314.47 17,935.53 8,300,000 8,917,569.44 17,217,569.44 730,314.47 817,319.44 15,669,935.53 Mar 6, 2019 5:00 pm Prepared by RBC Capital Markets Page 7 BOND SOLUTION California Statewide Communities Development Authority (Uptown Newport CFD) Special Tax Bonds, Series 2019 REVISED FINAL NUMBERS FOR CLOSING Period Proposed Proposed Debt Service Total Adj Revenue Unused Debt Sery Ending Principal Debt Service Adjustments Debt Service Constraints Revenues Coverage 09/01/2019 194,819 -194,819 09/01/2020 415,000 -415,000 09/01/2021 30,000 445,000 -207,500 237,500 541,164 303,664 227.85865% 09/01/2022 40,000 453,500 453,500 552,188 98,688 121.76132% 09/01/2023 55,000 466,500 466,500 563,431 96,931 120.77842% 09/01/2024 65,000 473,750 473,750 574,900 101,150 121.35092% 09/01/2025 80,000 485,500 485,500 586,598 101,098 120.82347% 09/01/2026 95,000 496,500 496,500 598,530 102,030 120.54983% 09/01/2027 105,000 501,750 501,750 610,701 108,951 121.71410% 09/01/2028 125,000 516,500 516,500 623,115 106,615 120.64173% 09/01/2029 140,000 525,250 525,250 635,777 110,527 121.04271% 09/01/2030 155,000 533,250 533,250 648,692 115,442 121.64883% 09/01/2031 175,000 545,500 545,500 661,866 116,366 121.33203% 09/01/2032 195,000 556,750 556,750 675,304 118,554 121.29385% 09/01/2033 215,000 567,000 567,000 689,010 122,010 121.51845% 09/01/2034 240,000 581,250 581,250 702,990 121,740 120.94448% 09/01/2035 265,000 594,250 594,250 717,250 123,000 120.69829% 09/01/2036 290,000 606,000 606,000 731,795 125,795 120.75818% 09/01/2037 315,000 616,500 616,500 746,630 130,130 121.10794% 09/01/2038 340,000 625,750 625,750 761,763 136,013 121.73601% 09/01/2039 370,000 638,750 638,750 777,198 138,448 121.67489% 09/01/2040 405,000 655,250 655,250 792,942 137,692 121.01371% 09/01/2041 435,000 665,000 665,000 809,001 144,001 121.65431% 09/01/2042 470,000 678,250 678,250 825,381 147,131 121.69277% 09/01/2043 510,000 694,750 694,750 842,089 147,339 121.20746% 09/01/2044 550,000 709,250 709,250 859,131 149,881 121.13226% 09/01/2045 590,000 721,750 721,750 876,513 154,763 121.44277% 09/01/2046 635,000 737,250 737,250 894,243 156,993 121.29447% 09/01/2047 680,000 750,500 750,500 912,328 161,828 121.56273% 09/01/2048 730,000 766,500 766,500 930,775 164,275 121.43182% 8,300,000 17,217,569 -817,319 16,400,250 20,141,304 3,741,054 Mar 6, 2019 5:00 pm Prepared by RBC Capital Markets Page 8 FORM 8038 STATISTICS California Statewide Communities Development Authority (Uptown Newport CFD) Special Tax Bonds, Series 2019 REVISED FINAL NUMBERS FOR CLOSING Dated Date 03/12/2019 Delivery Date 03/12/2019 Redemption Bond Component Date Principal Coupon Price Issue Price at Maturity 2039 Term Bond: 2048 Term Bond: 09/01/2021 30,000.00 5.000% 107.327 32,198.10 30,000.00 09/01/2022 40,000.00 5.000% 107.327 42,930.80 40,000.00 09/01/2023 55,000.00 5.000% 107.327 59,029.85 55,000.00 09/01/2024 65,000.00 5.000% 107.327 69,762.55 65,000.00 09/01/2025 80,000.00 5.000% 107.327 85,861.60 80,000.00 09/01/2026 95,000.00 5.000% 107.327 101,960.65 95,000.00 09/01/2027 105,000.00 5.000% 107.327 112,693.35 105,000.00 09/01/2028 125,000.00 5.000% 107.327 134,158.75 125,000.00 09/01/2029 140,000.00 5.000% 107.327 150,257.80 140,000.00 09/01/2030 155,000.00 5.000% 107.327 166,356.85 155,000.00 09/01/2031 175,000.00 5.000% 107.327 187,822.25 175,000.00 09/01/2032 195,000.00 5.000% 107.327 209,287.65 195,000.00 09/01/2033 215,000.00 5.000% 107.327 230,753.05 215,000.00 09/01/2034 240,000.00 5.000% 107.327 257,584.80 240,000.00 09/01/2035 265,000.00 5.000% 107.327 284,416.55 265,000.00 09/01/2036 290,000.00 5.000% 107.327 311,248.30 290,000.00 09/01/2037 315,000.00 5.000% 107.327 338,080.05 315,000.00 09/01/2038 340,000.00 5.000% 107.327 364,911.80 340,000.00 09/01/2039 370,000.00 5.000% 107.327 397,109.90 370,000.00 09/01/2040 405,000.00 5.000% 105.955 429,117.75 405,000.00 09/01/2041 435,000.00 5.000% 105.955 460,904.25 435,000.00 09/01/2042 470,000.00 5.000% 105.955 497,988.50 470,000.00 09/01/2043 510,000.00 5.000% 105.955 540,370.50 510,000.00 09/01/2044 550,000.00 5.000% 105.955 582,752.50 550,000.00 09/01/2045 590,000.00 5.000% 105.955 625,134.50 590,000.00 09/01/2046 635,000.00 5.000% 105.955 672,814.25 635,000.00 09/01/2047 680,000.00 5.000% 105.955 720,494.00 680,000.00 09/01/2048 730,000.00 5.000% 105.955 773,471.50 730,000.00 8,300,000.00 8,839,472.40 8,300,000.00 Stated Weighted Maturity Interest Issue Redemption Average Date Rate Price at Maturity Maturity Yield Final Maturity 09/01/2048 5.000% 773,471.50 730,000.00 Entire Issue 8,839,472.40 8,300,000.00 21.4534 4.1484% Proceeds used for accrued interest Proceeds used for bond issuance costs (including underwriters' discount) Proceeds used for credit enhancement Proceeds allocated to reasonably required reserve or replacement fund 0.00 449,500.00 0.00 730,314.47 Mar 6, 2019 5:00 pm Prepared by RBC Capital Markets Page 9 PROOF OF ARBITRAGE YIELD California Statewide Communities Development Authority (Uptown Newport CFD) Special Tax Bonds, Series 2019 REVISED FINAL NUMBERS FOR CLOSING Present Value to 03/12/2019 Date Debt Service @ 4.1484280531% 09/01/2019 194,819.44 191,100.19 03/01/2020 207,500.00 199,402.63 09/01/2020 207,500.00 195,350.64 03/01/2021 207,500.00 191,380.99 09/01/2021 237,500.00 214,599.28 03/01/2022 206,750.00 183,018.13 09/01/2022 246,750.00 213,988.15 03/01/2023 205,750.00 174,806.01 09/01/2023 260,750.00 217,032.51 03/01/2024 204,375.00 166,652.64 09/01/2024 269,375.00 215,191.77 03/01/2025 202,750.00 158,676.71 09/01/2025 282,750.00 216,789.83 03/01/2026 200,750.00 150,791.13 09/01/2026 295,750.00 217,635.11 03/01/2027 198,375.00 143,012.86 09/01/2027 303,375.00 214,265.33 03/01/2028 195,750.00 135,443.40 09/01/2028 8,025,750.00 5,440,335.10 12,153,819.44 8,839,472.40 Proceeds Summary Delivery date 03/12/2019 Par Value 8,300,000.00 Premium (Discount) 539,472.40 Target for yield calculation 8,839,472.40 Mar 6, 2019 5:00 pm Prepared by RBC Capital Markets Page 10 PROOF OF ARBITRAGE YIELD California Statewide Communities Development Authority (Uptown Newport CFD) Special Tax Bonds, Series 2019 REVISED FINAL NUMBERS FOR CLOSING Assumed Call/Computation Dates for Premium Bonds Bond Maturity Call Call Yield To Component Date Rate Yield Date Price Call/Maturity TERM39 09/01/2029 5.000% 4.060% 09/01/2028 100.000 4.0604336% TERM39 09/01/2030 5.000% 4.060% 09/01/2028 100.000 4.0604336% TERM39 09/01/2031 5.000% 4.060% 09/01/2028 100.000 4.0604336% TERM39 09/01/2032 5.000% 4.060% 09/01/2028 100.000 4.0604336% TERM39 09/01/2033 5.000% 4.060% 09/01/2028 100.000 4.0604336% TERM39 09/01/2034 5.000% 4.060% 09/01/2028 100.000 4.0604336% TERM39 09/01/2035 5.000% 4.060% 09/01/2028 100.000 4.0604336% TERM39 09/01/2036 5.000% 4.060% 09/01/2028 100.000 4.0604336% TERM39 09/01/2037 5.000% 4.060% 09/01/2028 100.000 4.0604336% TERM39 09/01/2038 5.000% 4.060% 09/01/2028 100.000 4.0604336% TERM39 09/01/2039 5.000% 4.060% 09/01/2028 100.000 4.0604336% TERM48 09/01/2040 5.000% 4.230% 09/01/2028 100.000 4.2304365% TERM48 09/01/2041 5.000% 4.230% 09/01/2028 100.000 4.2304365% TERM48 09/01/2042 5.000% 4.230% 09/01/2028 100.000 4.2304365% TERM48 09/01/2043 5.000% 4.230% 09/01/2028 100.000 4.2304365% TERM48 09/01/2044 5.000% 4.230% 09/01/2028 100.000 4.2304365% TERM48 09/01/2045 5.000% 4.230% 09/01/2028 100.000 4.2304365% TERM48 09/01/2046 5.000% 4.230% 09/01/2028 100.000 4.2304365% TERM48 09/01/2047 5.000% 4.230% 09/01/2028 100.000 4.2304365% TERM48 09/01/2048 5.000% 4.230% 09/01/2028 100.000 4.2304365% Rejected CaII/Computation Dates for Premium Bonds Bond Maturity Call Call Yield To Increase Component Date Rate Yield Date Price Call/Maturity to Yield TERM39 09/01/2029 5.000% 4.060% 4.1310172% 0.0705836% TERM39 09/01/2030 5.000% 4.060% 4.1890832% 0.1286496% TERM39 09/01/2031 5.000% 4.060% 4.2376401% 0.1772066% TERM39 09/01/2032 5.000% 4.060% 4.2788046% 0.2183710% TERM39 09/01/2033 5.000% 4.060% 4.3141085% 0.2536750% TERM39 09/01/2034 5.000% 4.060% 4.3446885% 0.2842549% TERM39 09/01/2035 5.000% 4.060% 4.3714051% 0.3109716% TERM39 09/01/2036 5.000% 4.060% 4.3949225% 0.3344890% TERM39 09/01/2037 5.000% 4.060% 4.4157609% 0.3553274% TERM39 09/01/2038 5.000% 4.060% 4.4343339% 0.3739003% TERM39 09/01/2039 5.000% 4.060% 4.4509743% 0.3905407% TERM48 09/01/2040 5.000% 4.230% 4.5621652% 0.3317287% TERM48 09/01/2041 5.000% 4.230% 4.5732303% 0.3427937% TERM48 09/01/2042 5.000% 4.230% 4.5832691% 0.3528325% TERM48 09/01/2043 5.000% 4.230% 4.5924082% 0.3619716% TERM48 09/01/2044 5.000% 4.230% 4.6007544% 0.3703179% TERM48 09/01/2045 5.000% 4.230% 4.6083985% 0.3779619% TERM48 09/01/2046 5.000% 4.230% 4.6154178% 0.3849812% TERM48 09/01/2047 5.000% 4.230% 4.6218790% 0.3914424% TERM48 09/01/2048 5.000% 4.230% 4.6278397% 0.3974031% Mar 6, 2019 5:00 pm Prepared by RBC Capital Markets Page 11 APPENDIX A. 2018 YEAR IN REVIEW APPENDIX B SUMMARY OF THE ACQUISITION & CONSTRUCTION FUND s CSCDA S Statewide Community Infrastructure Program RBC Capital Markets California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 Revised Summary of the Acquisition and Construction Fund 66KV Undergrounding 66KV Undergrounding - SCE 20B 66KV Undergrounding - Contractor Work 66KV Undergrounding - Contingency $749,000.00 $508,000.00 $142,164.07 Total 66KV Undergrounding $1,399,164.07 66KV Undergrounding - SCE 20B - Pre -Funded Deposit $349,000.00 Park Improvements Park Improvements Park Improvements - Contingency $4,236,752.00 $278,337.60 Total Park Improvements $4,515,089.60 Soft Costs Park Improvements - Soft Costs 66KV Undergrounding - Soft Costs $330,625.00 $246,644.00 Total Soft Costs $577,269.00 Total Acquisition and Construction Fund $6,840,522.67 Deposits to the Acquisition and Construction Fund Deposit to Undergrounding Subaccount Deposit to Park Improvement Subaccount $1,994,808.07 $4,845,714.60 Total Acquisition and Construction Fund $6,840,522.67 CLOSING MEMORANDUM $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 Pre -Closing: Time and Place of Pre -Closing and Closing Date: Thursday, March 7, 2019 Place: Orrick, Herrington & Sutcliffe LLP via electronic deal room and teleconference At or prior to Pre -Closing, documents will be uploaded by Bond Counsel to be reviewed by interested parties through Bond Counsel's electronic deal room. Closing: Date: Tuesday, March 12, 2019 Time: Approx. 9:00 a.m., Pacific Time By telephone conference among Underwriter, Trustee, Bond Counsel and DTC. Bond Counsel will represent the Authority at the Closing. Parties California Statewide Communities Development Authority (the "Authority") Wilmington Trust, National Association (the "Trustee") Taboada Rochlin Govier, LLP (the "Trustee's Counsel") RBC Capital Markets, LLC (the "Underwriter") Kutak Rock LLP (the "Underwriter's Counsel") TSG-Parcel 1, LLC ("TSG Parcel 1") Uptown Newport Jamboree, LLC ("Uptown Newport Jamboree" and, together with TSG Parcel 1, the "Developer") Latham & Watkins LLP (the "Developer's Counsel") Gromet & Associates (the "Developer's Special Counsel") City of Newport Beach (the "Local Agency Participant") Stradling Yocca Carlson & Rauth, P.C. (the "Local Agency Participant's Counsel") Orrick, Herrington & Sutcliffe LLP ("Bond Counsel" and "Disclosure Counsel") 4151-7123-5098 David Taussig & Associates (the "Special Tax Consultant") Integra Realty Resources (the "Appraiser") 2 4151-7123-5098 PART I PROCEDURES TO BE UNDERTAKEN AT CLOSING The following procedures will be followed in completing the issuance and delivery of the Bonds: 1. On or before 2:00 p.m. on March 7, 2019, the documents listed in Part II of this Closing Memorandum will be delivered to Bond Counsel at its offices in San Francisco, California, in final form and fully executed. The party responsible for preparing each such document, obtaining the necessary signatures and delivering such document to Bond Counsel is listed in italics in Part II hereof. Bond Counsel will hold such documents in escrow on behalf of the interested parties until the Closing, at which time such documents will be deemed to be delivered. 2. On or before 8:00 a.m. on March 12, 2019, the Underwriter will wire transfer the purchase price of the Bonds in the amount of $8,714,972.40 to the Trustee. 3. The Trustee will authenticate and deliver the Bonds in the aggregate principal amount of $8,300,000 to the Underwriter through The Depository Trust Company, New York, New York, by F.A.S.T. settlement. 4. The Trustee will apply the proceeds of the Bonds in accordance with the Indenture. Bond Counsel will deliver one copy of the documents listed in Part II hereof to each interested party. 3 4151-7123-5098 PART II EXECUTED DOCUMENTS TO BE DEPOSITED WITH BOND COUNSEL PRIOR TO CLOSING The documents listed below will be executed in advance of the closing by the respective parties thereto and, except as otherwise indicated, two (2) signed copies or executed counterparts of each of the documents listed below shall be deposited in escrow with Bond Counsel at the aforementioned place of closing not later than 2:00 p.m., California time, on March 7, 2019. At that time and place, a pre -closing conference will be held to confirm that all documents are on hand, in proper form and properly executed. Unless otherwise specified, all documents will be dated the date of Closing. Responsibility for preparing the documents, arranging for the necessary signatures, and delivering such documents to Bond Counsel is indicated in italics below. Note: It is the responsibility of each party or its counsel to assure that the interests of such party are addressed to its satisfaction and that any condition to closing important to such party has been satisfied. It is not the role or responsibility of Bond Counsel to assure that any condition to closing (whether in this closing memorandum, the bond purchase contract, or other document, statute, regulation or practice) has been satisfied or otherwise addressed, except for conditions necessary in Bond Counsel's judgment to render the legal opinions delivered by Bond Counsel. None of Bond Counsel's role in this Bond closing, nor any action taken by Bond Counsel not in strict accord with the foregoing limitation, nor Bond Counsel's provision of this closing memorandum or of closing transcripts shall imply the completeness or adequacy of any items delivered or addressed at the closing or included in the closing transcript. The purpose of this note is to dispel any possible confusion about the responsibility of the parties with respect to closings. The absence of a similar note in any other closing memorandum or equivalent shall not imply any different role or responsibility on the part of Bond Counsel. PROCEEDINGS FOR FORMATION Community Facilities District Proceedings 1. Resolution No. 2018-44 entitled, "A Resolution of the City Council of the City of Newport Beach, California (1) Authorizing the California Statewide Communities Development Authority (the "Authority") to Form a Community Facilities District within the Territorial Limits of the City Of Newport Beach to Finance Certain Public Improvements; (2) Embodying a Joint Community Facilities Agreement Setting Forth the Terms and Conditions of the Community Facilities District Financing; (3) Approving an Acquisition Agreement Among the Authority, the City and the Developer; and (4) Authorizing Staff to Cooperate with the Authority and its Consultants in Connection Therewith," adopted by the Local Agency Participant on June 26, 2018. (Bond Counsel) 2. Resolution No. 18SCIP-110 entitled, "A Resolution Approving a Joint Community Facilities Agreement and Declaring Intention to Establish California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California, and to Levy a Special Tax Therein to Finance the Acquisition and Construction of Certain Public Capital 4 4151-7123-5098 Improvements and Certain Utility Undergrounding," adopted by the Commission of the Authority on November 15, 2018. (Bond Counsel) 3. Resolution No. 18CIP-111 entitled, "A Resolution to Incur Bonded Indebtedness to Finance the Acquisition and Construction of Certain Public Capital Improvements and Certain Utility Undergrounding for California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California and Calling for a Public Hearing" adopted by the Commission of the Authority on November 15, 2018. (Bond Counsel) 4. Boundary Map (Book 106; page 28; instrument number 2018-442520), recorded in the County of Orange on November 29, 2018. (Bond Counsel) 5. Proof of Publication of Notice of Public Hearing, published in The Orange County Register, on December 5, 2018. (Bond Counsel) 6. Certificate of Mailing and Publication of Notice of Public Hearing, dated December 20, 2018. (Bond Counsel) 7. Community Facilities District Report, dated December 13, 2018. (Special Tax Consultant/Bond Counsel) 8. Certificate Regarding Preparation and Distribution of Ballot, dated December 3, 2018. (Bond Counsel) Resolutions of Formation and To Incur Bonded Indebtedness 9. Resolution No. 18SCIP-117 entitled, "A Resolution of Formation Establishing California Statewide Communities Development Authority Community Facilities District No. 2018- 03 (Uptown Newport) City of Newport Beach, County of Orange, State of California, and Providing for the Levy of a Special Tax Therein to Finance the Construction and Acquisition of Certain Public Capital Improvements and Certain Utility Undergrounding," adopted by the Commission of the Authority on December 20, 2018. (Bond Counsel) 10. Resolution No. 18SCIP-118, entitled "A Resolution Deeming it Necessary to Incur Bonded Indebtedness to Finance the Acquisition and Construction of Certain Public Capital Improvements and Certain Utility Undergrounding within California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California," adopted by the Commission of the Authority on December 20, 2018. (Bond Counsel) Resolution Calling Election 11. Resolution No. 18SCIP-119, entitled "Resolution Calling Special Mailed -Ballot Election within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California," adopted by the Commission of the Authority on December 20, 2018. (Bond Counsel) 5 4151-7123-5098 Documents Relating to the Election 12. Certificate re Receipt of Property Owner Waiver and Consent Forms with Waivers Attached, dated December 20, 2018. (Bond Counsel) a. Certificate re Registered Voters and Landowners, dated November 29, 2018. (Bond Counsel) b. Waivers and Consents. (Bond Counsel) 13. Certificate re Receipt of Executed Ballots and Declaring Election Results, dated December 20, 2018. (Bond Counsel) 14. Official Ballots. (Bond Counsel) Resolution Declaring Election Results 15. Resolution No. 18SCIP-120, entitled "Resolution Declaring Results of Special Mailed - Ballot Election within the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) City of Newport Beach, County of Orange, State of California," adopted by the Commission of the Authority on December 20, 2018. (Bond Counsel) Notice of Special Tax 16. Notice of Special Tax Lien, California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) dated December 20, 2018, recorded in the County of Orange on January 3, 2019, as document number 2019000002327. (Bond Counsel) Ordinance Levying Special Taxes 17. Ordinance No. 18ORD-4, entitled "Ordinance Levying A Special Tax for Fiscal Year 2019-2020 and Following Fiscal Years Solely Within and Relating to California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport), City of Newport Beach, County of Orange, State of California" adopted by the Commission of the Authority on January 10, 2019. (Bond Counsel) 18. Proof of Publication of Ordinance No. 18ORD-4, published in The Orange County Register on January 18, 2019. (Bond Counsel) 19. Notice to City of Newport Beach dated January 11, 2019. (Bond Counsel) BASIC LEGAL DOCUMENTS 20. Resolution No. 19SCIP-5 entitled, "Resolution Approving the Issuance of the California Statewide Communities Development Authority Community Facilities District No. 2018- 03 (Uptown Newport) Special Tax Bonds, Series 2019; Authorizing the Execution and 6 4151-7123-5098 Delivery of an Indenture Providing for the Issuance of Such Bonds; Approving a Bond Purchase Contract Providing for the Sale of Such Bonds; Approving an Official Statement; Approving a Continuing Disclosure Certificate; Authorizing the Sale of Such Bonds; and Authorizing Related Actions and the Execution of Related Documents in Connection with the Issuance, Sale and Delivery of Such Bonds," adopted by the Commission of the Authority on February 7, 2019. (Bond Counsel) 21. Indenture, dated as of March 1, 2019 (executed by the Authority and the Trustee). (Bond Counsel) 22. Tax Certificate (executed by the Authority), dated March 12, 2019. (Bond Counsel) a. Certificate of the Underwriter (executed by the Underwriter). b. Certificate of the Authority concerning Rebate (executed by the Authority). 23. Acquisition Agreement, dated as of March 12, 2019 (executed by the Local Agency Participant, the Authority and the Developer). (Bond Counsel) 24. Facilities Relocation Agreement, dated as of February 12, 2019 (executed by the City and Southern California Edison). (Developer's Counsel) 25. Specimen Bonds (executed by facsimile). (Bond Counsel) SALE DOCUMENTS 26. Preliminary Official Statement, dated February 13, 2019. (Bond Counsel) 27. Bond Purchase Contract, dated February 27, 2019 (executed by the Authority and the Underwriter). (Bond Counsel) 28. Official Statement, dated February 27, 2019 (executed by the Authority). (Bond Counsel) 29. Report of Proposed Debt Issuance to California Debt Advisory Commission ("CDIAC") together with evidence of the receipt thereof, and Report of Final Sale to CDIAC. (Bond Counsel) AUTHORITY CLOSING DOCUMENTS 30. Certificate of the Authority as to Finality of Preliminary Official Statement, dated February 13, 2019 (executed by the Authority). (Bond Counsel) 31. Authority Continuing Disclosure Certificate, dated March 12, 2019 (executed by the Authority). (Bond Counsel) 32. Certificate of the Authority, together with Amended and Restated Joint Exercise of Powers Agreement (with signature page of City of Newport Beach, as local agency participant), Resolutions No. 18SCIP-110 and 18CIP-111, each adopted on November 15, 2018, Resolutions No. 18SCIP-117, 18SCIP-118, 18SCIP-119 and 18SCIP-120, each adopted on 7 4151-7123-5098 December 20, 2018, Ordinance No. 18ORD-4, adopted on January 10, 2019, Resolution No. 19R-1 adopted on January 24, 2019 and Resolution No. 19SCIP-5 adopted on February 7, 2019. (Bond Counsel) 33. Written Request of Authority as to Authentication, Registration and Delivery of Bonds (executed by the Authority). (Bond Counsel) 34. Written Order of the Authority to the Trustee, together with Costs of Issuance Account Requisition No. 1 (executed by the Authority). (Bond Counsel) 35. IRS Form 8038-G (executed by the Authority). (Bond Counsel) LOCAL AGENCY CLOSING DOCUMENTS 36. Closing Certificate of the City of Newport Beach (executed by the Local Agency Participant) with attachments. (Bond Counsel) a. Exhibit A: Tax Certification of Local Agency Participant. 37. Disbursement Request Form (re Undergrounding — Southern California Edison). (Bond Counsel) 38. Disbursement Request Form (re Undergrounding —Developers). (Bond Counsel) TRUSTEE DOCUMENTS 39. Receipt for Purchase Price and Certificate of Deposit of the Trustee (executed by the Trustee). (Bond Counsel) 40. Certificate of Trustee (executed by the Trustee). (Bond Counsel) 41. Incumbency Certificate of Trustee (executed by the Trustee), together with extracts of the Articles of Association and Amended and Restated Bylaws of the Trustee. (Trustee) DEVELOPER DOCUMENTS 42. Developer Continuing Disclosure Certificate, dated March 12, 2019 (executed by TSG Parcel 1 and Uptown Newport Jamboree). (Bond Counsel) 43. Certificate of TSG Parcel 1 regarding Preliminary Official Statement (executed by TSG Parcel 1). (Underwriter's Counsel) 44. Closing Certificate of TSG Parcel 1 (executed by TSG Parcel 1). (Underwriter's Counsel) 45. Certificate of Uptown Newport Jamboree regarding Preliminary Official Statement (executed by Uptown Newport Jamboree). (Underwriter's Counsel) 46. Closing Certificate of Uptown Newport Jamboree (executed by Uptown Newport Jamboree). (Underwriter's Counsel) 8 4151-7123-5098 MISCELLANEOUS DOCUMENTS 47. Appraisal Report, dated December 22, 2018 (executed by the Appraiser). (Appraiser) 48. Certificate of Consent of Inclusion of Appraisal Report in the Preliminary Official Statement and Official Statement, dated March 12, 2019. (Bond Counsel) 49. Blanket Authority Letter of Representations. (Bond Counsel) 50. Receipt for Bonds (executed by the Underwriter). (Bond Counsel) 51. Certificate of Special Tax Consultant (executed by the Special Tax Consultant). (Bond Counsel) 52. Interested Parties List. 53. Closing Memorandum. OPINIONS 54. Opinion of Trustee's Counsel. (Trustee's Counsel) 55. Opinions of Developer's Special Counsel. (Developer's Special Counsel) 56. Opinion of Underwriter's Counsel. (Underwriter's Counsel) 57. Opinion of Authority Counsel. (Bond Counsel) 58. Final Opinion of Bond Counsel. (Bond Counsel) 59. Supplemental Opinion of Bond Counsel. (Bond Counsel) 60. Reliance Letter to Trustee. (Bond Counsel) 9 4151-7123-5098 iTaboada Rocklin Govier ■ CALIFORNIA • NEW YORK • CONNECTICUT March 12, 2019 California Statewide Communities Development Authority RBC Capital Markets, LLC Trustee Counsel Opinion: Ladies and Gentlemen: $8,300,000 California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 We have acted as special legal counsel to Wilmington Trust, National Association, a national banking association, as Trustee (the "Trustee"), in connection with the Trustee's entry into that certain Indenture, dated as of March 1, 2019 (the "Indenture"), between the California Statewide Communities Development Authority (the "Authority") and the Trustee. The Indenture relates to the issuance of the Authority's Community Facilities District No. 2018- 03 (Uptown Newport) Special Tax Bonds, Series 2019, in aggregate principal amount of $8,300,000 (the "Bonds"). We reviewed the following documents and instruments: (i) the Indenture; (ii) a copy of a resolution of the Trustee with respect to signing authority; and (iii) the Certificate of Trustee delivered as of the date hereof (upon which, with your express permission, we have relied) and other information obtained from officers of the Trustee and upon certificates of public officials and officers of the Trustee as we have deemed necessary for purpose of rendering the opinions set forth below. We have also, with your express permission, assumed without independent investigation or verification (i) the genuineness of all signatures (other than the signatures of the Trustee) to all documents and papers; (ii) the authenticity of all documents submitted to us as originals; (iii) the conformity to original documents of documents submitted to us as copies; (iv) other than the Trustee, each entity has the power to enter into and perform all its obligations under each transaction document to which it is a party, the due authorization by each such other entity, and that each document is enforceable against each such other entity in accordance with its terms; (v) there are no oral or written terms or conditions agreed to by the Trustee or the other party to the Indenture which would materially alter the respective rights and obligations of the parties to such documents that would affect our opinions rendered herein; and (vi) the legal capacity of all natural persons. P. 805.915.9672 I F. 805.578.4657 I E. wgovier@taboadarochlin.com 4212 E. Los Angeles Avenue I Suite 3158 I Simi Valley, CA 93063 California Statewide Communities Development Authority RBC Capital Markets, LLC March 12, 2019 We call to your attention the fact that our legal opinions are an expression of professional judgment and not a guarantee of result. In rendering the opinions expressed herein we do not purport to be experts in, or generally familiar with, or qualified to express legal opinions based upon the laws of any jurisdiction other than the federal laws of the United States of America which are in effect on the date hereof and the substantive laws of the State of California (without reference to its conflicts of laws rules); provided, however, that we express no legal opinion in respect of the Securities Act of 1933, as amended, the Trust Indenture Act of 1939, as amended, and any state securities or "Blue Sky" law, or any related federal, state or local law. This opinion letter is limited to matters expressly set forth herein and no opinion may be inferred beyond the matters set forth herein and we specifically express no opinion as to the status of the Bonds or the interest thereon. We do not undertake to advise you of matters, which may come to our attention subsequent to the date hereof, which may affect our legal opinions expressed herein. Acceptance of this opinion letter by you shall conclusively operate as your acknowledgement that this opinion letter addresses all of the specific legal issues that are to be dealt with in our opinions set forth herein. Based on and subject to and limited by the qualifications and assumptions set forth herein and reliance thereon, we are of the opinion that: 1. The Trustee is duly organized and validly existing under the laws of the United States of America, having full power and being qualified to enter into, accept and agree to the provisions of the Indenture 2. The Indenture has been duly authorized, executed and delivered by the Trustee and, and, assuming due authorization, execution and delivery by the other party thereto, constitutes the valid and binding obligations of the Trustee enforceable against the Trustee in accordance with the terms thereof, subject to applicable bankruptcy, insolvency, moratorium, reorganization, arrangement and other similar laws affecting the rights of creditors (including creditors of national associations and/or state banks) generally or by the application of general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and the effect of judicial decisions which have held that certain provisions are unenforceable where their enforcement would violate the implied covenant of good faith and fair dealing, or would be commercially unreasonable and the effect of judicial decisions permitting the introduction of extrinsic evidence to modify the terms or the interpretations of the Indenture. This opinion letter is delivered as of its date and without any undertaking to advise you of any changes of law or fact that occur after the date of this 2 California Statewide Communities Development Authority RBC Capital Markets, LLC March 12, 2019 opinion letter even though the changes may affect the legal analysis or conclusion in this opinion letter. We advise you that we are not general counsel to the Trustee and do not represent the Trustee on a continuing basis in such capacity. Rather, we represent the Trustee on specific matters from time to time. This opinion letter is solely for the benefit of the addressees in connection with this transaction and may not be relied upon by any other person including owners of the Bonds, or for any other purpose, nor may it be quoted from or referred to, or copies delivered to any other person, without our prior written consent in each instance (other than its inclusion in the closing binder for this transaction which is hereby expressly permitted). This opinion letter will also confirm that no attorney -client relationship exists between the undersigned and the addressees and that the attorney -client relationship with respect to the Trustee for this matter will terminate upon the delivery of this opinion letter. Our engagement with respect to this matter has terminated upon the delivery of this opinion letter, and we disclaim any obligation to advise you of any events occurring or coming to our attention or any developments in areas covered by this opinion letter that occur after the date of this opinion letter. Inclusion of this opinion letter in a closing binder or its equivalent does not constitute delivery of this opinion letter to persons receiving such binder or equivalent (other than the addressees) and such persons are not authorized to rely upon, quote from, refer to or deliver copies to any other person (other than delivery to the addressees' legal counsel and advisors or as otherwise required by law) without our prior written consent in each instance. Respectfully submitted, i 3 GROMET& ASSOCIATES ATTORNEYS AT LAW SENDER'S E-MAIL cienkms®grometlaw com OUR FILE NUMBER 274 1401 March 12, 2019 City of Newport Beach 100 Civic Center Drive Newport Beach, CA 92660 Attention: City Manager California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, CA 95814 Attention: Chair RBC Capital Markets, LLC Two Embarcadero Center, Suite 1200 San Francisco, California 94111 Re: Community Facilities District No. 2018-03 (Uptown Newport) (the "Community Facilities District") Ladies and Gentlemen: We have acted as special counsel to (i) TSG Parcel 1, LLC. a Delaware limited liability company ("TSG"), and (ii) Uptown Newport Jamboree, LLC, a Delaware limited liability company ("UNJ", and collectively with TSG, "Developer"), in connection with certain agreements and instruments relating to the levy of special taxes and issuance of -bonds for the Community Facilities District to finance the cost of certain public capital improvements, as more particularly described in the "Community Facilities Documents" (as defined in Exhibit "A" attached hereto). We have examined drafts of the Community Facilities Documents, and such other documents and matters as we have deemed necessary and advisable for the purpose of rendering this opinion letter. Unless otherwise defined herein, the capitalized terms contained in this letter shall have the meanings assigned to them in Exhibit "A" or in the Acquisition Agreement. In rendering our opinions we have also examined such certificates of public officials, partnership and corporate documents and records, and other certificates and instruments as we have deemed necessary for the purposes of the opinions herein expressed. As to various questions of fact material to our opinions, we have relied upon certificates and written statements of TSG and UNJ. Please note that we are admitted to practice law in the State of California and we express no opinion with respect to the effect of any law other than the laws of the State of California, and to the extent related to formation, authorization and execution of the Community Facilities Documents, Federal law and the laws of the State of Delaware. Accordingly, the opinions set forth in this letter apply only insofar as the 114 Pacifica • Suite 250 • Irvine • California • 92618-3321 Phone: (949) 261-1110 • Facsimile: (949) 261-1818 City of Newport Beach et al. March 12, 2019 Page 2 laws, rules and regulations of the State of California may be concerned, and to the extent related to formation, authorization and execution of the Community Facilities Documents, Federal laws, rules and regulations, and the laws, rules and regulations of the State of Delaware, and we express no opinion with respect to the laws of any other jurisdiction. The foregoing opinions are rendered to the California Statewide Communities Development Authority (the "Authority") and the City of Newport Beach (the "City") and are solely for the benefit of the Authority and the City. In basing the opinions set forth in this letter on "our knowledge," the words "our knowledge" signify that, in the course of our representation of TSG and UNJ, no facts have come to our attention that would give us actual knowledge or actual notice that any such opinions contained in this letter or other matters contained in this letter are not accurate or that any of the documents referenced herein are not accurate and complete. Except as otherwise stated in this letter, we have undertaken no investigation or verification of such matters. Further, the words "our knowledge" and any similar language as used in this letter are intended to be limited to the actual knowledge of the attorneys within our firm who have been directly involved in representing TSG and UNJ in connection with the Community Facilities Documents. A. Assumptions. Without independent investigation or inquiry, we have, with your consent, relied upon the following assumptions and facts, the accuracy of which we will not be held accountable for, in rendering the opinions set forth below: 1. We have relied upon, and assumed the genuineness of, the signatures on all documents and instruments, other than the signatures of TSG and UNJ, the authenticity, validity and completeness of all written materials delivered to us as copies or reproductions of originals, the authenticity of all documents submitted to us as originals, the accuracy and completeness of all public records reviewed, and the accuracy as of the date of this letter of all certificates, instruments and other documentation dated earlier than the date of this letter. 2. We have relied exclusively upon the truth, accuracy and completeness of the factual representations and warranties (as opposed to legal conclusions) of TSG and UNJ set forth in the Certificates for Reliance of Counsel executed by TSG and UNJ issued to Gromet & Associates, copies of which are attached hereto and incorporated herein as Exhibits "B", and "C" (collectively, "Certificates for Reliance"), and, except as otherwise expressly set forth herein, have made no independent investigation of any of the matters contained therein. We have not examined the books and records of TSG and UNJ. 3. Should the City and/or the Authority seek to enforce the rights of the City and/or the Authority under the Community Facilities Documents, the City and/or the Authority will do so only in good faith and only in circumstances and in the manner in which it is commercially reasonable to do so. 4. The City the Authority are each duly organized, validly existing and in good standing under the laws of the state of its formation, as applicable, and are duly qualified and authorized to conduct its business wherever necessary, including, without limitation, in the State of California, are duly qualified to engage in the transactions covered by the following opinions, have fully authorized the transactions covered by the following opinions and the execution and delivery of the Community Facilities Documents to be executed by the City and/or the Authority, as applicable, and upon execution and delivery by the City and/or the Authority, as applicable, each of the Community Facilities Documents to be executed City of Newport Beach et al. March 12, 2019 Page 3 by the City and/or the Authority will be the legal, valid and binding obligation of the City and/or the Authority, as applicable, enforceable in accordance with its respective terms. 5. The execution and delivery of the Community Facilities Documents are or will be free from fraud, criminal activity, mistake, concealment, undue influence or misrepresentation. However, please be advised that, without investigation, we have no current actual knowledge, or reason to believe in the existence, of any of the foregoing. 6. Other than the Community Facilities Documents, there are no documents, understandings or agreements between Developer and the City and/or the Authority, or the City and/or the Authority and others that would expand, modify or otherwise affect the terms of the Community Facilities Documents or the respective rights and obligations of Developer, the City or the Authority as set forth in the Community Facilities Documents or would have any effect on the opinions rendered herein. There has been no conduct, or course of conduct, by the City or the Authority or their authorized agents or representatives, whether by action or omission, that would impair the validity of the Community Facilities Documents or render them unenforceable. 7. The representations and warranties of TSG and/or UNJ contained in each and all of the Community Facilities are true and accurate. However, please be advised that we have no current actual knowledge, or reason to believe, without investigation, that necessary consents of third parties have not been, or will not be, obtained. 8. The Community Facilities Documents, and all other documents relating thereto are valid and binding upon, and enforceable against, all parties thereto, other than TSG and UNJ. 9. Each natural person executing the documents referenced and reviewed herein is legally competent to do so. However, please be advised that we have no current actual knowledge, or reason to believe, without investigation, that any natural person executing any of the Community Facilities Documents on behalf of TSG or UNJ is not legally competent to do so. Without investigation, we have no actual knowledge that any of the foregoing assumptions are not in fact true. If any of the actual facts differ from any of the foregoing assumptions, such difference could lead to different conclusions and opinions. B. Opinions. Based on the foregoing documents and instruments that we have reviewed, and subject to the foregoing assumptions and facts (which you have agreed we may accept as true) and understanding that no opinion is expressed as to the validity or enforceability of the Community Facilities Documents as they may be affected or limited by the qualifications, exceptions and limitations contained in this letter, we express the following opinions in connection with this matter: TSG: 1. TSG is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to execute and deliver the Community Facilities Documents and perform its obligations thereunder. TSG is duly registered City of Newport Beach et al. March 12, 2019 Page 4 with the California Secretary of State as a foreign limited liability company and is in good standing under the laws of the State of California and is thus authorized to conduct business within the State of California. 2. Each of the Community Facilities Documents have been duly authorized, executed and delivered by TSG. 3. TSG's execution and delivery of the Community Facilities Documents and performance of the respective terms and conditions of the Community Facilities do not and will not: (a) conflict with or violate any provision of the limited liability company agreement or other organizational documents of TSG; or (b) to our knowledge: (i) conflict with or violate or result in a breach of any of the provisions of, or constitute a default under any agreement or instrument to which TSG is a party or by which any of its properties is bound; or (ii) result in the creation or imposition of a lien, charge or encumbrance upon TSG or any of its properties or assets (other than in connection with the Community Facilities District); or (iii) conflict with or violate any judgment, order, writ, injunction or decree binding on TSG; or (iv) conflict with or violate any law, rule, regulation or ordinance applicable to TSG; however, we express no opinion as to whether any law, rule, regulation or ordinance would prohibit the enforcement of any such terms or conditions. 4. To our knowledge, there is no action, litigation, proceeding or governmental investigation pending, threatened against or affecting TSG before any court, quasi-judicial body or administrative agency. 5. No approval, consent, order or authorization of, or designation, registration, declaration or filing with any Governmental Authority or any other Person is required in connection with the valid execution, delivery and performance of the Community Facilities Documents by TSG which has not been obtained. UNJ: 6. UNJ is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to execute and deliver the Community Facilities Documents and perform its obligations thereunder. UNJ is duly registered with the California Secretary of State as a foreign limited liability company and is in good standing under the laws of the State of California and is thus authorized to conduct business within the State of California. 7. Each of the Community Facilities Documents have been duly authorized, executed and delivered by UNJ. 8. UNJ's execution and delivery of the Community Facilities Documents and performance of the respective terms and conditions of the Community Facilities do not and will not: (a) conflict with or violate any provision of the limited liability company agreement or other organizational documents of UNJ; or (b) to our knowledge: (i) conflict with or violate or result in a breach of any of the provisions of, or constitute a default under any agreement or instrument to which UNJ is a party or by which any of its properties is bound; or (ii) result in the creation or imposition of a lien, charge or encumbrance upon UNJ or any of its properties or assets (other than in connection with the Community Facilities District); or (iii) conflict with or violate any judgment, order, writ, injunction or decree binding on UNJ; or (iv) conflict with or violate any law, rule, regulation or ordinance applicable to UNJ; however, we express City of Newport Beach et al. March 12, 2019 Page 5 no opinion as to whether any law, rule, regulation or ordinance would prohibit the enforcement of any such terms or conditions. 9. To our knowledge, there is no action, litigation, proceeding or governmental investigation pending, threatened against or affecting UNJ before any court, quasi-judicial body or administrative agency. 10. No approval, consent, order or authorization of, or designation, registration, declaration or filing with any Governmental Authority or any other Person is required in connection with the valid execution, delivery and performance of the Community Facilities Documents by UNJ which has not been obtained. All Entities: 11. Except as otherwise qualified or limited herein, each of the Community Facilities Documents constitutes the valid, legal and binding obligation of the TSG and UNJ, as the case may be, enforceable in accordance with the respective terms thereof, subject only to any applicable bankruptcy, moratorium or other laws affecting the enforcement of creditors' rights generally, and to principles of equity and the exercise of judicial discretion. C. Qualifications and Exceptions to Opinions. The following are qualifications and exceptions to the opinions set forth above: 1. The effect of bankruptcy, insolvency, reorganization, moratorium and other similar laws and court decisions of general application or legal or equitable principles relating to, limiting or affecting the enforcement of creditors' rights generally, including, without limitation, the effect of statutory or other laws regarding fraudulent conveyances or preferential transfers. 2. Under certain circumstances, the unenforceability of contractual provisions respecting various self-help or summary remedies without notice or opportunity for hearing or correction, especially if their operation would work a substantial forfeiture or impose a substantial penalty or burden upon a party. 3. The unenforceability under certain circumstances of provisions expressly or by implication waiving broadly or vaguely stated rights, unknown future rights, defenses to obligations or rights granted by law, where such waivers are against public policy or prohibited by law. 4. The effect of Section 1670.5 of the California Civil Code which provides that a court may refuse to enforce or may limit the application of a contract clause which the court finds as a matter of law to have been unconscionable at the time it was made. 5. The validity or enforceability of any indemnity and hold harmless provisions contained in any of the Community Facilities Documents to the extent that the enforcement thereof may be against public policy, may result in unjust enrichment, may be barred by the doctrine of unclean hands of the indemnified party, or may otherwise be unfair as determined by a court of competent jurisdiction. City of Newport Beach et al. March 12, 2019 Page 6 6. The validity or enforceability of any provision of the Community Facilities Documents that purports to grant rights or remedies to the City or the Authority (i) on account of any immaterial defaults under any of the Community Facilities Documents, or (ii) where the remedy bears no reasonable relationship to the damages resulting from the default. 7. The effect of Section 1668 of the California Civil Code which provides that a contract that has as its objective directly or indirectly to exempt any person or entity from responsibility for his own fraud or willful misconduct, or any violation of law, is against public policy. D. Limitations on Scope of Opinions. Please note that we express no opinion with respect to the following: 1. The availability of specific performance, injunctive relief or equitable remedies. 2. Contractual provisions authorizing or validating conclusive or discretionary determinations. 3. The effect of the City's or the Authority's compliance or noncompliance with any state or federal laws or regulations applicable to the transactions described herein. 4. The compliance with or absence of any violation of any state or federal banking or other laws which might be applicable to any aspect of this transaction. The foregoing opinions and information are rendered to the City and the Authority and are solely for the City's and the Authority's benefit. The opinions should not be relied upon in connection with any later modification of the Community Facilities Documents. We disclaim any obligation to advise the City or the Authority of changes of any law or fact which hereafter may be brought to our attention. Very truly yours, Gromet & Associates EXHIBIT A COMMUNITY FACILITIES DOCUMENTS A. Acquisition Agreement (the "Acquisition Agreement") by and between TSG, UNJ, the California Statewide Communities Development Authority (the "Authority") and the City of Newport Beach (the "City"); and B. Continuing Disclosure Certificate - Developer (the "Certificate", and together with the Acquisition Agreement, the "Community Facilities Documents") by TSG and UNJ. Exhibit A — Page I EXHIBIT B CERTIFICATE FOR RELIANCE OF COUNSEL The undersigned does hereby certify the following facts to Gromet & Associates for its (and no other's) reliance in issuing a legal opinion letter ("Opinion Letter") to be furnished to the California Statewide Communities Development Authority (the "Authority") and the City of Newport Beach (the "City"), in connection with the execution and delivery of certain Community Facilities Documents (as defined in the Opinion Letter) by TSG — Parcel 1, LLC, a Delaware limited liability company ("TSG"), and Uptown Newport Jamboree, LLC, a Delaware limited liability company ("UNJ", and collectively with TSG, "Developer"). Unless otherwise defined herein, the capitalized terms contained in this Certificate for Reliance of Counsel (this "Certificate") shall have the meanings ascribed to them in the Opinion Letter. 1. Prior to executing this Certificate, the undersigned has received and reviewed a final draft of the Opinion Letter to which this Certificate is attached, addressed to the City and the Authority. To the knowledge of the undersigned, the Opinion Letter does not contain any false or misleading factual statements. 2. None of the documents forming TSG have been amended, modified or altered, except as disclosed in writing to Gromet & Associates. 3. Neither TSG nor any of its members is in dissolution or liquidation, has filed for bankruptcy, has had a debtor's trustee appointed on its behalf, or has commenced any proceedings to partition or terminate, and TSG and its members are still presently existing. 4. The execution and delivery of the Community Facilities Documents by TSG are free from fraud, criminal activity, mistake, concealment, undue influence or misrepresentation. 5. All written materials which TSG has delivered, or caused to be delivered, to Gromet & Associates or to the City or the Authority as copies or reproductions of originals are authentic and complete, and the signatures by or on behalf of TSG and its affiliates on all such documents are genuine. 6. All of the representations and warranties of TSG contained in each and all of the Community Facilities Documents are true and accurate. 7. To our knowledge, as a factual matter, no consent, approval, giving of notice to, registration, filing with, or taking of any action in respect of or by any federal, state or local governmental authority or agency or any other person is required for the execution, delivery and performance of TSG's obligations and commitments under any of the Community Facilities Documents or, if such consent, approval, notice, registration, filing or action is required, TSG has obtained such consent or taken such action. 8. The execution and delivery by TSG of and the performance by TSG of all of its obligations under the Community Facilities Documents do not, and will not: (a) Violate any provision of any law, order, writ, judgment, injunction, decree, determination, award, indenture, agreement, lease, instrument or obligation presently in effect having applicability to TSG; or Exhibit B — Page 1 (b) Result in breach or constitute a default under, cause or permit the acceleration of any obligation owed under, or require the consent under, any indenture or loan or credit agreement or any other agreement, lease or instrument to which TSG is a party or by which TSG, or any property of TSG, is bound or affected. 9. Except as otherwise disclosed in writing to the City and the Authority, there are no judgments, claims, actions, suits or proceedings filed, pending or threatened against or affecting TSG or any properties of TSG at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, the effect of which would be materially adverse to the interests of the City or the Authority or that would have a material adverse effect on the financial condition of TSG. 10. Each natural person executing the documents referenced and reviewed herein is legally competent to do so. The undersigned hereby agree and acknowledge that the Opinion Letter is being given in reliance on the truth and accuracy of the statements contained in this Certificate. IN WITNESS WHEREOF, the undersigned have executed this Certificate as of February _, 2019. TSG: TSG — Parcel 1, LLC, a Delaware limited liability company By: Name: Its: Exhibit B — Page 2 EXHIBIT C CERTIFICATE FOR RELIANCE OF COUNSEL The undersigned does hereby certify the following facts to Gromet & Associates for its (and no other's) reliance in issuing a legal opinion letter ("Opinion Letter") to be furnished to the California Statewide Communities Development Authority (the "Authority") and the City of Newport Beach (the "City"), in connection with the execution and delivery of certain Community Facilities Documents (as defined in the Opinion Letter) by TSG — Parcel 1, LLC, a Delaware limited liability company ("TSG"), and Uptown Newport Jamboree, LLC, a Delaware limited liability company ("UNJ", and collectively with TSG, "Developer"). Unless otherwise defined herein, the capitalized terms contained in this Certificate for Reliance of Counsel (this "Certificate") shall have the meanings ascribed to them in the Opinion Letter. 1. Prior to executing this Certificate, the undersigned has received and reviewed a final draft of the Opinion Letter to which this Certificate is attached, addressed to the City and the Authority. To the knowledge of the undersigned, the Opinion Letter does not contain any false or misleading factual statements. 2. None of the documents forming UNJ have been amended, modified or altered, except as disclosed in writing to Gromet & Associates. 3. Neither UNJ nor any of its members is in dissolution or liquidation, has filed for bankruptcy, has had a debtor's trustee appointed on its behalf, or has commenced any proceedings to partition or terminate, and UNJ and its members are still presently existing. 4. The execution and delivery of the Community Facilities Documents by UNJ are free from fraud, criminal activity, mistake, concealment, undue influence or misrepresentation. 5. All written materials which UNJ has delivered, or caused to be delivered, to Gromet & Associates or to the City or the Authority as copies or reproductions of originals are authentic and complete, and the signatures by or on behalf of UNJ and its affiliates on all such documents are genuine. 6. All of the representations and warranties of UNJ contained in each and all of the Community Facilities Documents are true and accurate. 7. To our knowledge, as a factual matter, no consent, approval, giving of notice to, registration, filing with, or taking of any action in respect of or by any federal, state or local governmental authority or agency or any other person is required for the execution, delivery and performance of UNJ's obligations and commitments under any of the Community Facilities Documents or, if such consent, approval, notice, registration, filing or action is required, UNJ has obtained such consent or taken such action. 8. The execution and delivery by UNJ of and the performance by UNJ of all of its obligations under the Community Facilities Documents do not, and will not: (a) Violate any provision of any law, order, writ, judgment, injunction, decree, determination, award, indenture, agreement, lease, instrument or obligation presently in effect having applicability to UNJ; or Exhibit C— Page I (b) Result in breach or constitute a default under, cause or permit the acceleration of any obligation owed under, or require the consent under, any indenture or loan or credit agreement or any other agreement, lease or instrument to which UNJ is a party or by which UNJ, or any property of UNJ, is bound or affected. 9. Except as otherwise disclosed in writing to the City and the Authority, there are no judgments, claims, actions, suits or proceedings filed, pending or threatened against or affecting UNJ or any properties of UNJ at law or in equity, or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, the effect of which would be materially adverse to the interests of the City or the Authority or that would have a material adverse effect on the financial condition of UNJ. 10. Each natural person executing the documents referenced and reviewed herein is legally competent to do so. The undersigned hereby agree and acknowledge that the Opinion Letter is being given in reliance on the truth and accuracy of the statements contained in this Certificate. IN WITNESS WI IEREOF, the undersigned have executed this Certificate as of February _, 2019. UNJ: Uptown Newport Jamboree, LLC, a Delaware limited liability company By: Name: Its: Exhibit C - Page 2 GROMET& ASSOCIATES ATTORNEYS AT LAW OUR FILE NUMBER 274 1401 March 12, 2019 RBC Capital Markets, LLC Two Embarcadero Center, Suite 1200 San Francisco, California 94111 California Statewide Communities Development Authority 1100 K Street, Suite 101 Sacramento, California 95814 Attention: Chair Re: California Statewide Communities Development Authority Community Facilities District No. 2018- 03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "District") Ladies and Gentlemen: We have acted as special counsel to TSG-Parcel 1, LLC, a Delaware limited liability company ("TSG Parcel 1") and Uptown Newport Jamboree, LLC, a Delaware limited liability company ("Uptown Newport" and together with TSG Parcel 1, the "Developers") in connection with the sale to RBC Capital Markets, LLC (the "Underwriter") by the California Statewide Communities Development Authority (the "Issuer") of its $8,300,000 aggregate principal amount of Special Tax Bonds, Series 2019 (the "Bonds"). The Bonds are being issued pursuant to (i) an Indenture, dated as of March 1, 2019, by and between the Issuer and Wilmington Trust, National Association, as trustee; (ii) the Mello -Roos Community Facilities Act of 1982, as amended (constituting Sections 53311 et seq. of the California Government Code) (the "Act"), and (iii) a resolution adopted on February 7, 2019 by the Governing Board of the Issuer, acting as the legislative body of the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport). The Underwriter will purchase the Bonds pursuant to a Bond Purchase Contract dated February 27, 2019 by and between the Issuer and the Underwriter (the "BPC"). This letter is being delivered to you pursuant to Section 6(0(12) of the BPC. The primary purpose of our professional engagement was not to establish or confirm factual matters or financial or quantitative information. Therefore, we are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in, or incorporated by reference in, the Preliminary Official Statement dated February 13, 2019 with respect to the Bonds (the "Preliminary Official Statement") and the Official Statement dated 27, 2019 with respect to the Bonds (the "Official Statement" and together with the Preliminary Official Statement, the "Offering Documents"), and have not made an independent check or verification thereof. However, in the course of acting as counsel to the Developers in connection with the preparation of the Offering Documents, we reviewed the sections entitled "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS" in each of the Preliminary Official Statement and the Official Statement, and participated in conferences and telephone conversations RBC Capital Markets, LLC et al. March 12, 2019 Page 2 with officers and other representatives ofthe Developers and internal and outside counsel to the Developers, the Underwriter and its counsel, bond counsel, the Issuer and its counsel and the special tax consultants for the Bonds, during which conferences and conversations the contents of the Offering Documents and related matters were discussed. We also reviewed and relied upon certain corporate records and documents and oral and written statements of officers and other representatives of the Developers, including certificates provided by the Developers in conjunction with the issuance of the Bonds, and others as to the existence and consequence of certain factual and other matters. Based on our participation, review and reliance as described above, we advise you that no facts came to our attention that caused us to believe that: • the information contained in the sections entitled "THE PROJECT, THE DEVELOPERS AND THE IMPROVEMENTS" of the Preliminary Official Statement (solely to the extent such information is related to the Developers, their affiliates, and their development and financing plans for their property in the District) as of its date contained an untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading; • the information contained in the sections entitled "THE PROJECT. THE DEVELOPERS AND THE IMPROVEMENTS" of the Official Statement (solely to the extent such information is related to the Developers, their affiliates, and their development and financing plans for their property in the District), as of its date or as of the date hereof, contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were or are made, not misleading, it being understood that we express no belief with respect to (i) any other information contained in any other section of any ofthe Offering Documents or any attachments, exhibits, appendices or other documents attached thereto or referenced therein, (ii) any information sourced to any party or person other than the Developers or about any other party or person other than the Developers (including any of such parry's development or financing plans); and (iii) any financial statements, schedules, or other financial data, or information or estimates derived therefrom, included or incorporated by reference in, or omitted from, any of the Offering Documents. This letter is furnished only to you in your capacity as underwriter and issuer and is solely for your benefit in connection with the transactions referenced in the first paragraph. This letter may not be relied upon by you for any other purpose, or furnished to, assigned to, quoted to, or relied upon by any other person, firm or other entity for any purpose (including any person, firm or other entity that acquires Bonds or any interest therein from you) without our prior written consent, which may be granted or withheld in our sole discretion. Very truly yours, Gromet & Associates KUTAKROCK March 12, 2019 RBC Capital Markets, LLC Two Embarcadero Center, Suite 1200 San Francisco, California 94111 Kutak Rock LLP 5 Park Plaza, Suite 1500, Irvine, CA 92614-8595 office 949.417.0999 $8,300,000 CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 2018-03 (UPTOWN NEWPORT) SPECIAL TAX BONDS, SERIES 2019 Ladies and Gentlemen: We have acted as counsel to you, as underwriter (the "Underwriter"), in connection with the purchase by you of the $8,300,000 aggregate principal amount of the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds") pursuant to a Bond Purchase Agreement, dated February 27, 2019 (the "Purchase Agreement"), between the California Statewide Communities Development Authority (the "Authority") and the Underwriter. The Bonds are being issued pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, being California Government Code Section 53311, et seq. and an Indenture, dated as of March 1, 2019 (the "Indenture") between the Authority and Wilmington Trust, National Association, as trustee. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture or, if not defined in the Indenture, in the Purchase Agreement. In our capacity as counsel to the Underwriter, we have limited our participation in the preparation of the Preliminary Official Statement and Official Statement, solely to a review of certain material contained therein. In the course of such participation, we have generally reviewed information furnished to us by, and have participated in conferences and telephone conversations with, representatives of the Authority; Orrick, Herrington & Sutcliffe LLP, as Bond Counsel and Disclosure Counsel; David Taussig & Associates, Inc., as Special Tax Consultant; Integra Realty Resources, as Appraiser; Uptown Newport Jamboree, LLC; TSG-Parcel 1, LLC and your representatives. We have relied upon, and assumed the correctness of, the certificates of the officials of the Authority, and upon certain documents, opinions and letters delivered to the Underwriter. However, we have not independently investigated or verified the accuracy, completeness or fairness of any of the statements contained in the Preliminary Official Statement or the Official Statement. 4850-6981-2361.2 r\V_I A\yf1�V� if\ March 12, 2019 Page 2 In arriving at the opinions and conclusions hereinafter expressed, we have not, except as specifically identified above, made any independent review or investigation of factual or other matters, including the organization, existence, good standing, assets, business or affairs of the Authority, the City of Newport Beach or the California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) (the "Community Facilities District"). In reviewing the aforementioned certificates, records, proceedings, documents and opinions, we have assumed the due execution of, and genuineness of all signatures on, original and certified documents and the conformity of all documents submitted to us as conformed copies or photocopies to the respective original or certified documents. By offering the opinions and conclusions hereinafter expressed, we are not expressing any opinion or view on, and are assuming and relying on, the validity, accuracy and sufficiency of the records, documents, certificates and opinions referred to above (including the accuracy of all factual matters represented and legal conclusions contained therein). The opinions and conclusions expressed herein are based as to matters of law solely on the federal securities laws, and we express no opinion as to any other laws, statutes, ordinances, rules or regulations (including without limitation any federal or state tax or state securities laws or regulations). Based upon, subject to and limited by the foregoing, and in reliance thereon, as of the date hereof, we are of the following conclusions and opinions: (a) We advise you that although we have made no independent investigation or verification of the accuracy, correctness, fairness or completeness of, and do not pass upon or assume any responsibility for, the statements included in the Preliminary Official Statement and the Official Statement, during the course of the activities described above no information came to the attention of the attorneys in our firm rendering legal services in connection with the issuance and delivery of the Bonds which causes us to believe that the Preliminary Official Statement, as of its date, and the Official Statement, as of its date and as of the date hereof, contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, we do not assume responsibility for the accuracy, completeness or fairness of, nor do we express any belief with respect to, the information contained in the appendices thereto, any information about the Rate and Method of Apportionment of the Community Facilities District, the book -entry system or DTC included therein, and any CUSIP numbers, financial, accounting, statistical or economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, any information about verification, feasibility, valuation, appraisals, absorption, real estate or environmental matters included therein, which we expressly exclude from the scope of this paragraph. 4850-6981-2361.2 r\VT/r\1MCV^ ir\ March 12, 2019 Page 3 (b) The Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended. (c) The Continuing Disclosure Certificate complies with paragraph (b)(5) of Rule 15c2-12 of the Securities Exchange Act of 1934, as amended, in effect as of the date hereof. This letter is issued to and for the sole benefit of the above addressee and is issued for the sole purpose of the transaction specifically referred to herein. No person other than the above addressee may rely upon this letter without our express prior written consent. This letter may not be utilized by the addressee for any other purpose whatsoever and may not be quoted by the addressees without our express prior written consent; provided, however, that a copy of this letter may be included in the transcript of proceedings for the Bonds. We assume no obligation to review or supplement this letter subsequent to its date, whether by reason of a change in the current laws, by legislative or regulatory action, by judicial decision or for any other reason. Our engagement with respect to the transaction referred to herein terminates upon the date of this letter. Very truly yours, ,1<e zzP 4850-6981-2361.2 March 12, 2019 RBC Capital Markets, LLC San Francisco, California Orrick Orrick, Herrington & Sutclife LLP The Orrick Building 405 Howard Street San Francisco, CA 94105-2669 +1 415 773 5700 otrick.com California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 Ladies and Gentlemen: We have acted as special counsel to the California Statewide Communities Development Authority (the "Authority") in connection with its issuance of $8,300,000 aggregate principal amount of its Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the `Bonds"). In such connection, we have reviewed the resolution adopted by the Authority on January 24, 2019 (the "Resolution"), approving the Indenture, dated as of March 1, 2019 (the "Indenture"), between the Authority and Wilmington Trust, National Association, as trustee (the "Trustee"), certificates of the Authority and others as to certain factual matters, and such documents and matters to the extent we deemed necessary to render the opinions set forth herein. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings, and court decisions. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Accordingly, this opinion is not intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or matters. With the delivery of this letter, our engagement with respect to the Bonds has concluded, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, all parties thereto. We have assumed, without undertaking to verify independently, the accuracy of the factual matters represented, warranted or certified in the documents referred to in the first paragraph hereof. Our engagement with respect to the Bonds as special counsel to the Authority was limited to the matters expressly covered by the numbered opinions set out below. We express no opinion as to the validity or enforceability of the Bonds or any of the documents or actions authorized by the Resolution or as to the tax status of interest on the Bonds. We also undertake no responsibility of any kind for the Official Statement or other offering material relating to the Bonds. 4132-2035-5121 RBC Capital Markets, LLC March 12, 2019 Page 2 Orrick Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions: 1. The Authority is a California joint exercise of powers agency, duly organized and validly existing under the laws of the State of California. 2. The Resolution was duly adopted at a meeting of the governing board of the Authority. The Resolution is in full force and effect and has not been amended, modified or superseded. This letter is furnished by us as special counsel to the Authority. No attorney - client relationship has existed or exists between our firrn and the addressee hereof in connection with the Bonds or by virtue of this letter. This letter is solely for the benefit of the addressee in connection with the original issuance of the Bonds on the date hereof, and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any person other than the addressee of this letter. This letter is not intended to, and may not, be relied upon by owners of any Bonds or by any other party to whom it is not specifically addressed. Very truly yours, F .tC Hcf2 i ctToc d Su 'C( ORRICK, HERRINGTON & SUTCLIFFE LLP 4132-2038-8 l2 1 March 12, 2019 California Statewide Communities Development Authority Sacramento, California Orrick Orrick, Herrington & Sutcliffe LIP The Orrick Buiidlnc 405 Howard Street San Francisco, CA 94105-2669 +1 415 773 5700 orrick.corn California. Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (Final Opinion) Ladies and Gentlemen: We have acted as bond counsel to the California Statewide Communities Development Authority (the "Authority") in connection with the issuance by the Authority of $8,300,000 aggregate principal amount of its Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds") pursuant to the provisions of the Mello -Roos Community Facilities Act of 1982 of the State of California (being Sections 53311 et seq. of the Government Code of the State of California, as amended) and an Indenture by and between the Authority and Wilmington Trust, National Association, as trustee (the "Trustee"), dated as of March 1, 2019 (the "Indenture"). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture. In such connection, we have reviewed the Indenture, the Tax Certificate, opinions of counsel to the Authority, the Developer and the Trustee, certificates of the Authority, the Developer, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not be relied upon or otherwise used in connection with any such actions, events or matters. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution 4132-7071-9769 California Statewide Communities Development Authority March 12, 2019 Page 2 Orrick and delivery thereof by, and validity against, any parties other than the Authority. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Indenture and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax purposes. We call attention to the fact that the rights and obligations under the Bonds, the Indenture and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against joint powers authorities in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non -exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any of the assets described in or as subject to the lien of the Indenture or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets. We express no opinion regarding the plans, specifications, maps, financial report or other engineering or financial details of the proceedings, or upon the Rate and Method or the validity of the Special Tax levied upon any individual parcel. Our services did not include financial or other non -legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion with respect thereto. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions: 1. The Bonds constitute the valid and binding special tax obligations of the Authority, payable solely from the proceeds of the Special Tax and certain funds held under the Indenture. 2. The Indenture has been duly executed and delivered by, and constitutes the valid and binding obligation of, the Authority. 3. Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. We express no opinion regarding other tax 4132-7071-9769 California Statewide Communities Development Authority March 12, 2019 Page 3 Orrick consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds. Faithfully yours, ORRICK, HERRINGTON & SUTCLIFFE LLP per 4132-7071-9769 March 12, 2019 RBC Capital Markets, LLC San Francisco, California California Community Ladies and Gentlemen: Orrick Orrick, Herrington & Sutcliffe LIP The Orrick f3uifding 405 Howard Street San Francisco, CA 9411105.2669 +1 415 773 S700 orri kk,crn Statewide Communities Development Authority Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (Supplemental Opinion) This letter is addressed to you, as Underwriter, pursuant to Section 6(f)(2) of the Bond Purchase Contract, dated February 27, 2019 (the "Purchase Contract"), between you and the California Statewide Communities Development Authority (the "Authority"), providing for the purchase of $8,300,000 principal amount of its Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (the "Bonds"). The Bonds are being issued pursuant to an Indenture, dated as of March 1, 2019 (the "Indenture"), by and between the Authority and Wilmington Trust, National Association, as trustee (the "Trustee"). Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture or, if not defined in the Indenture, in the Purchase Contract. We have delivered our final legal opinion (the "Bond Opinion") as bond counsel to the Authority concerning the validity of the Bonds and certain other matters, dated the date hereof and addressed to the Authority. You may rely on such opinion as though the same were addressed to you. In connection with our role as bond counsel and disclosure counsel to the Authority, we have reviewed the Purchase Contract, the Indenture, the Tax Certificate, certain portions of the official statement of the Authority dated February 27, 2019, with respect to the Bonds (the "Official Statement"), opinions of counsel to the Authority, the Developer and the Trustee, certificates of the Authority, the Developer, the Trustee and others, and such other documents, opinions and matters to the extent we deemed necessary to provide the opinions or conclusions set forth herein. The opinions and conclusions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions or conclusions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any 4133-3782-8633.A RBC Capital Markets, LLC March 12, 2019 Page 2 Orrick person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the date hereof. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Authority. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the third paragraph hereof. We have further assumed compliance with all covenants and agreements contained in such documents. In addition, we call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Tax Certificate and the Purchase Contract and their enforceability may be subject to bankruptcy, insolvency, reorganization, receivership, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against joint powers authorities in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non -exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any assets described in or as subject to the lien of the Indenture or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets. We express no opinion with respect to the plans, specifications, maps, financial report or other engineering or financial details of the proceedings, or upon the Rate and Method or the validity of the Special Tax levied upon any individual parcel. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions or conclusions: 1. The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended. 2. The Purchase Contract has been duly executed and delivered by, and is a valid and binding agreement of, the Authority. 3. The statements contained in the Official Statement under the captions "THE BONDS," "TAX MATTERS," `APPENDIX D - PROPOSED FORM OF OPINION OF BOND COUNSEL" and "APPENDIX E ® SUMMARY OF THE INDENTURE," excluding any material that may be treated as included under such captions by cross reference or reference to other documents or sources, insofar as such statements expressly summarize certain provisions of the Indenture and the form and content of our Bond Opinion, are accurate in all material respects. 4133-3782-8633.4 RBC Capital Markets, LLC March 12, 2019 Page 3 c Orrick 4. We are not passing upon and do not assume any responsibility for the accuracy (except as explicitly stated in paragraph 3 above), completeness or fairness of any of the statements contained in the Official Statement, and make no representation that we have independently verified the accuracy, completeness or fairness of any such statements. We do not assume any responsibility for any electronic version of the Official Statement, and assume that any such version is identical in all respects to the printed version. In our capacity as bond counsel and disclosure counsel to the Authority in connection with issuance of the Bonds, we participated in conferences with your representatives, your counsel, representatives of the Authority, the Developer, special tax consultants and others, during which conferences the contents of the Official Statement and related matters were discussed. Based on our participation in the above - referenced conferences (which did not extend beyond the date of the Official Statement), and in reliance thereon, on oral and written statements and representations of the Authority and others and on the records, documents, certificates, opinions and matters herein mentioned, subject to the limitations on our role as bond counsel, we advise you as a matter of fact and not opinion that no facts came to the attention of the attorneys in our firm rendering legal services with respect to the Official Statement which caused us to believe that the Official Statement as of its date or as of the date hereof (except for any CUSIP numbers, financial, accounting, statistical or economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, any information about feasibility, valuation, appraisals, absorption, real estate or environmental matters, litigation, any statements about compliance with prior continuing disclosure undertakings, relationships among the parties, any information about book -entry, DTC, ratings, rating agencies, the underwriter, underwriting, and the information contained in Appendices A, B, C, F and G, included or referred to therein or omitted therefrom, which we expressly exclude from the scope of this paragraph and as to which we express no opinion or view) contained or contains any untrue statement of a material fact or omitted or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. No responsibility is undertaken or view expressed with respect to any other disclosure document, materials or activity, or as to any information from another document or source referred to by or incorporated by reference in the Official Statement. 4133-3782-8633 4 RBC Capital Markets, LLC March 12, 2019 Page 4 Orrick This letter is furnished by us as bond counsel and disclosure counsel to the Authority. No attorney -client relationship has existed or exists between our firm and you in connection with the Bonds or by virtue of this letter. We disclaim any obligation to update this Ietter. This letter is delivered to you as Underwriter of the Bonds, is solely for your benefit as such Underwriter in connection with the original issuance of the Bonds on the date hereof and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other purpose or by any other person. This letter is not intended to, and may not, be relied upon by owners of Bonds or by any other party to whom it is not specifically addressed. Very truly yours, LL? ORRICK, FIERRINGTON & SUTCLIFFE UP 4 4 I33-3782-8633,4 March 12, 2019 Wilmington Trust, National Association Costa Mesa, California Orrick Orrick, Herrington & Sutcliffe LLP The Orrick Bui d ng 405 Howard Street San Francisco, CA 94105-2669 +1 415 773 5700 arriisk,ccrn California Statewide Communities Development Authority Community Facilities District No. 2018-03 (Uptown Newport) Special Tax Bonds, Series 2019 (Reliance Letter) Ladies and Gentlemen: In connection with the delivery of the above -referenced bonds (the "Bonds") we have delivered our final legal opinion concerning the validity of the Bonds and certain other matters, dated the date hereof and addressed to the issuer of the Bonds. You may rely on said opinion as though the same were addressed to you, as trustee, but solely for the benefit of, and as if you were one of, the holders of the Bonds. No attorney -client relationship has existed or exists between the addressee of this letter and our firm in connection with the Bonds or by virtue of this letter. Very truly yours, Q'R cK, J/Ekliu trcN (Y StircGJFFA- 6f.c ORRICK, HERRINGTON & SUTCLIFFE LLP 4132-8749-6985,4 Mike On Feb 12, 2019, at 1:09 PM, Dan Bane <DBane@sheppardmullin.com> wrote: Mike, Thank you again for your time yesterday. After speaking further with my client's representatives, they would like to formally request that this item be continued for two weeks to the next City Council meeting so that further discussions can be had with Shopoff and SCE. Until those additional discussions are had, Towerjazz is not supportive of any approvals related to the undergrounding project. I realize this may result in some inconvenience and we apologize for that, but it averts the need for Towerjazz to appear at the City Council meeting tonight to lodge a formal objection; there was a lot of new information thrown at us during the meeting yesterday. I have a meeting from 1:30 to 3:30 p.m., but am available after that time if you want to discuss further. Also, I believe you were preparing a supplemental memorandum for the Council following our meeting yesterday. If you could forward me a copy, that would be appreciated. Thank you and regards, Dan Bane +1 714-424-8246 I direct DBane@sheppardmullin.com I Bio SheppardMullin 650 Town Center Drive, 4th Floor Costa Mesa, CA 92626-1993 +1 714-513-5100 I main www.sheppardmullin.com I Linkedln I Twitter Attention: This message is sent by a law firm and may contain information that is privileged or confidential. 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