NEW ISSUE—BOOK-ENTRY-ONLY NO RATINGIn the opinion of Best Best & KriegerLLP, Riverside, California, Bond Counsel, subject to certain qualifications described in

the Official Statement under existing statutes, regulations, rules and court decisions, and assuming certain representations and compliance with certain covenants and requirements described in the Official Statement the interest on the 2018 Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAXMATTERS" herein.

$15,945,000COMMUNITY FACILITIES DISTRICT NO. 32

OF THE RIVERSIDE UNIFIED SCHOOL DISTRICT SERIES 2018 SPECIAL TAX BONDS

Dated: Delivery Date Due: September 1, as shown belowThis cover page and the inside cover page contain certain information for general reference only. Such information is not a

summary of this issue. Investors must read the entire Official Statement including the section entitled “SPECIAL RISK FACTORS, ” to obtain information essential to making an informed investment decision with respect to the 2018 Bonds.

This Official Statement describes bonds that are being issued by the Riverside Unified School District (the “School District”) on behalf of Community Facilities District No. 32 of the Riverside Unified School District (the “District”). The Community Facilities District No. 32 of the Riverside Unified School District Series 2018 Special Tax Bonds (the “2018 Bonds”) are being issued: (i) to finance certain school and other public facilities, (ii) to pay interest on the 2018 Bonds through September 1, 2018, (iii) to fund a Reserve Fund, and (iv) to pay costs of issuance of the 2018 Bonds.

The 2018 Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Act”), and pursuant to Resolution No. 2017/18-28 adopted by the Board of Education of the School District on behalf of the District on April 17, 2018, and a Fiscal Agent Agreement by and between the School District and U.S. Bank National Association, as Fiscal Agent for the 2018 Bonds (the “Fiscal Agent”), dated as of May 1, 2018 (the “Fiscal Agent Agreement”).

The 2018 Bonds are payable from Net Special Tax Revenues derived from an annual Special Tax to be levied on taxable property within the District and from certain other funds pledged under the Fiscal Agent Agreement, all as further described herein. The Special Taxes are to be levied according to the rates and method of apportionment for the District approved by the Board of Education of the School District and the qualified electors within the District. See “SOURCES OF PAYMENT FOR THE 2018 BONDS” and APPENDIX A — “RATES AND METHOD OF APPORTIONMENT OF SPECIAL TAX” herein.

The 2018 Bonds are secured under the Fiscal Agent Agreement on a parity with any additional Parity Bonds issued in the future under the Fiscal Agent Agreement. See “SOURCES OF PAYMENT FOR THE 2018 BONDS — Issuance of Parity Bonds.”

The 2018 Bonds will be dated the date of their original issuance and delivery, will be available in denominations of $5,000 or integral multiples thereof (the “Authorized Denominations”), and will mature in the years and amounts as set forth in the table on the inside cover. Interest on the 2018 Bonds is payable semi-annually on March 1 and September 1 of each year, commencing September 1, 2018. The principal of and any redemption premiums with respect to each 2018 Bond will be paid upon surrender of such bond at the principal corporate office of the Fiscal Agent upon maturity or the earlier redemption thereof.

The 2018 Bonds are subject to redemption prior to maturity as set forth herein. See “THE 2018 BONDS — Redemption”herein.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE SCHOOL DISTRICT, THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE 2018 BONDS. EXCEPT FOR THE NET SPECIAL TAX REVENUES OF THE DISTRICT, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE 2018 BONDS. THE 2018 BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE SCHOOL DISTRICT OR GENERAL OBLIGATIONS OF THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM NET SPECIAL TAX REVENUES TO BE LEVIED IN THE DISTRICT AND OTHER AMOUNTS HELD UNDER THE FISCAL AGENT AGREEMENT AS MORE FULLY DESCRIBED HEREIN.

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

MATURITY SCHEDULE (See Inside Cover Page)

The 2018 Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Best Best& Krieger LLP, Riverside, California, Bond Counsel, and subject to certain other conditions. Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, is serving as Disclosure Counsel to the District with respect to the 2018 Bonds. Certain legal matters will be passed on for the District and the School District by Best Best & Krieger LLP, Riverside, California, for the Underwriter by its counsel, James F. Anderson Law Firm, A Professional Corporation, Laguna Hills, California, and for Lennar Homes of California, Inc. by its counsel, Holland & Knight LLP, San Francisco, California. It is anticipated that the 2018 Bonds in book-entry form will be available for delivery to DTC or its agent on or about May 17, 2018.

Dated: May 3, 2018

MATURITY SCHEDULE

COMMUNITY FACILITIES DISTRICT NO.32 OF RIVERSIDE UNI FI ED SCHOOL DISTRICT

SERIES 2018SPECIAL TAX BONDS

$8,560,OOOSerial Bonds

Maturity Date (September 1)

Pri ncipal Amount 1 nterest Rate Yield Price CUSIP No.

2019 $ 65,000 3.000% 1.790% 101.533 769069E352020 340,000 3.000 2.010 102.202 769069E432021 350,000 2.000 2.270 99.147 769069E 502022 355,000 4.000 2.510 106.019 769069E682023 370,000 2.375 2.700 98.406 769069E762024 380,000 2.500 2.890 97.769 769069E842025 390,000 2.750 3.000 98.371 769069E922026 400,000 2.750 3.100 97.456 769069F262027 410,000 3.000 3.170 98.638 769069F342028 420,000 3.000 3.230 97.997 769069F422029 435,000 3.125 3.350 97.896 769069F 592030 450,000 3.250 3.500 97.516 769069F672031 465,000 3.375 3.610 97.533 769069F752032 480,000 3.500 3.700 97.791 769069F832033 495,000 3.500 3.750 97.106 769069F912034 515,000 3.625 3.810 97.765 769069C252035 530,000 3.625 3.840 97.297 769069C 332036 550,000 3.625 3.880 96.678 769069C412037 570,000 3.750 3.900 97.975 769069C 582038 590,000 3.750 3.930 97.494 769069G66

$7,385,000Term Bonds

$3,330,000 4.00C% Term Bonds due September 1,2043, Yield: 4.000% Price: 100.000 CUS IP No.+ 769069C74

$4,055,000 4.000% Term Bonds due September 1,2048, Yield: 4.040% Price: 99.299CUSIP No.+769069C82

+ CUSIP® Copyright 2018, American Bankers Association. CUSIP® data in this Official Statement is provided by CUSIP Global Services, managed byS&P Capital IQ on behalf of the American Bankers’ Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service. None of the School District, the District or the Underwriter or its counsel takes any responsibility for the accuracy of CUSIP data in this Official Statement The CUSIP® number for a specific maturity is subject to being changed after the issuance of the 2018 Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the 2018 Bonds.

RIVERSIDE UNIFIEDSCHOOL DISTRICT COUNTY OF RIVERSIDE STATE OF CALIFORNIA

RIVERSIDE UNIFIEDSCHOOL DISTRICT

BOARDOF EDUCATION

Patricia Lock-Dawson, President Dr. Angela/ Farooq, Vice President

Kathy Allavie, Clerk Tom Hunt, Member Brent Lee, Member

DISTRICT STAFFDavid Hansen, Ph.D., Superintendent

Mays Kakish, Chief Business Officer and Go/ernmental Relations SergioSan Martin, Assistant Superintendent, Operations

Sandra L. Meekins, Director of Business Services

PROFESSIONAL SERVICES BONDCOUNSEL

BestBest& KriegerLLP Riverside, California

DISCLOSURE COUNSELStradlingYocca Carlson & Rauth, a Professional Corporation

San Francisco, California

MUNICIPAL ADVISORFieldman, Rdapp& Associates, Inc.

Irvine, California

SPECIAL TAX CONSULTANT AND DISSEMINATION AGENTDavid Taussig & Associates, Inc.

Newport Beach, California

FISCAL AGENTU.S. Bank National Association

L os A ngel es, C al i f orni a

APPRAISERStephenG. White, MAI

Fullerton, California

Except where otherwise indicated, all information contained in this Official Statement has been provided by the School District and the District No dealer, broker, salesperson or other person has been authorized by the School District, the District, the Fiscal Agent or the Underwriter to give any information or to make any representations in connection with the offer or sale of the 2018 Bonds other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the School District, the District, the Fiscal Agent or the U nderwriter. 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 2018 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers or owners of the 2018 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described in this Official Statement, are intended solely as such and are not to be construed as representations of fact This Official Statement, including any supplement or amendment to this Official Statement, is intended to be deposited with the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be found at www.emma.msrb.org.

The information set forth in this Official Statement which has been obtained from third party sources is believed to be reliable but is not guaranteed as to accuracy or completeness by the School District or the District The information and expressions of opinion in this Official Statement are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the School District or the District or any other parties described in this Official Statement since the date of this Official Statement All summaries of the Fiscal Agent Agreement or other documents are made subject to the previsions of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is made by this Official Statement to such documents on file with the School District for further information. While the School District maintains an internet website for various purposes, none of the information on that website is incorporated by reference herein or intended to assist investors in making any investment decision or to provide any continuing information with respect to the 2018 Bonds or any other bonds or obligations of the School District Any such information that is inconsistent with the information set forth in thisOfficial Statement should be disregarded.

The Underwriter has provided the following sentence for inclusion in this Official Statement:The Underwriter has reviewed the information in this Official Statement in accordance with, and as

a part of, its responsibilities to investors under the federal securities laws as applied to the facts andcircumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness ofsuch information.Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking

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

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE SCHOOL DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.

IN CONNECTION WITH THE OFFERING OF THE 2018 BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF SUCH 2018 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 2018 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE 2018 BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

TABLE OF CONTENTSPage

INTRODUCTION........................................................................................................................................................ 1TheSchool District............................................................................................................................................... 2The District............................................................................................................................................................ 2Forward Looking Statements................................................................................................................................3Sources of Payment for the 2018 B onds..............................................................................................................3Appraisal Report....................................................................................................................................................5Description of the 2018 Bonds..............................................................................................................................5Redemption............................................................................................................................................................ 5Tax Exemption.......................................................................................................................................................6Professionals Involved in the Offering................................................................................................................6Continuing Disclosure........................................................................................................................................... 7Bond Owners’ Risks............................................................................................................................................. 7Other Information..................................................................................................................................................7

ESTIMATEDSOURCES AND USES OF FUNDS................................................................................................. 8

THE 2018BONDS.......................................................................................................................................................8General Provisions.................................................................................................................................................8Debt S ervi ce S chedul e.......................................................................................................................................... 9Redemption.......................................................................................................................................................... 10Regi strati on, T ransf er and E xchange................................................................................................................. 13

SOURCES OF PAYMENT FOR THE 2018 BONDS............................................................................................ 13Limited Obligations.............................................................................................................................................13Special Taxes....................................................................................................................................................... 13NoTeeterPlan.....................................................................................................................................................20Reserve Fund.......................................................................................................................................................20Issuance of Parity Bonds.....................................................................................................................................21

THE DISTRICT..........................................................................................................................................................22General Description of the District....................................................................................................................22Di rect and Overlappi ng I ndebtedness................................................................................................................23Appraisal Report................................................................................................................................................. 27Estimated Valueto-Lien Ratios......................................................................................................................... 27Special Tax Rates.................................................................................................................................................31Largest Taxpayers................................................................................................................................................32Del i nquency H i story........................................................................................................................................... 32

PROPERTY OWNERSHIPANDTHE DEVELOPMENT................................................................................... 32The Developer......................................................................................................................................................32The Development Plan........................................................................................................................................ 33Financing Plan.....................................................................................................................................................36History of Property Tax Payments; Loan Defaults; Litigation........................................................................37

THE RIVERSIDE UNIFIEDSCHOOL DISTRICT...............................................................................................39

SPECIAL RISK FACTORS...................................................................................................................................... 39Risks of Real Estate Secured Investments Generally....................................................................................... 39F unds I nvested i n the C ounty I nvestment Pool.................................................................................................40Concentration of Ownership.............................................................................................................................. 40Li mited Obligations............................................................................................................................................ 41Insufficiency of Special Taxes........................................................................................................................... 41Failure to Develop Properties............................................................................................................................ 42Natural Disasters................................................................................................................................................. 43

i

TABLE OF CONTENTS (continued)

Page

E ndangered S peci es............................................................................................................................................ 44Hazardous Substances.........................................................................................................................................44Payment of the Special Tax is not a Personal Obligation of the Property Owners........................................45Property Values................................................................................................................................................... 45Parity Taxes, Special Assessments and Land Da/elopment Costs................................................................. 46Disclosures to Future Purchasers.......................................................................................................................46Special Tax Delinquencies..................................................................................................................................46Tax Cuts andj obs Act........................................................................................................................................47FDIC/Federal Government Interests in Properties........................................................................................... 47Bankruptcy and Foreclosure.............................................................................................................................. 48No Acceleration Prevision.................................................................................................................................. 50Loss of Tax Exemption....................................................................................................................................... 50Li mi ted Secondary Market.................................................................................................................................. 50Proposition 218....................................................................................................................................................51Ballot I nitiatives and Legislative Measures...................................................................................................... 52IRS Audit of Tax-Exempt Bond Issues..............................................................................................................53L i mitati ons on Remedi es.................................................................................................................................... 53

CONTINUING DISCLOSURE.................................................................................................................................53Di stri ct C onti nui ng D i scl osure............................................................................................................................53Da/el oper C onti nui ng Di scl osure...................................................................................................................... 53

TAX MATTERS......................................................................................................................................................... 54

LEGAL MATTERS....................................................................................................................................................55

ABSENCE OF LITIGATION................................................................................................................................... 55

NO RATING.............................................................................................................................................................. 55

UNDERWRITING.....................................................................................................................................................55

FINANCIAL INTERESTS........................................................................................................................................ 56

PENDING LEGISLATION....................................................................................................................................... 56

ADDITIONAL INFORMATION..............................................................................................................................57

APPENDIX A RATES AND METHOD OF APPORTIONMENT OF SPECIAL TAX............................................A-l

APPENDIX B FORM OF OPINION OF BOND COUNSEL ...................................................................................B-l

APPENDIX C GENERAL INFORMATION CONCERNING THE REGION..........................................................C-l

APPENDIX D SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT................... D-l

APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT OF THE SCHOOL DISTRICT..............E-l

APPENDIX F FORM OF CONTINUING DISCLOSURE AGREEMENT OF THE DEVELOPER..........................F-l

APPENDIX G BOOK-ENTRY ONLY SYSTEM....................................................................................................G-l

APPENDIX H APPRAISAL REPORT....................................................................................................................H-l

II

Citrus Heights Community

SHHRajj•\ f’rMj

#%>•

MallMmmssm.i------- ,r—

s •••• r:p‘ ' v'V

•i H 4<-

.x-

pspi

"£

•!:,

■ <■**.

[THIS PAGE INTENTIONALLY LEFT BLANK]

$15,945,000COMMUNITY FACILITIES DISTRICT NO. 32

OF THE RIVERSIDE UNI FI ED SCHOOL DISTRICT SERIES 2018SPECIAL TAX BONDS

INTRODUCTION

This Official Statement, which includes the cover page, the table of contents and the appendices (collectively, the “Official Statement”), provides certain information concerning the issuance by the Riverside Unified School District (the “School District”), on behalf of Community Facilities District No. 32 of the Riverside Unified School District (the “District’), of the Community Facilities District No. 32 of the Riverside Unified School District Series 2018 Special Tax Bonds (the “2018 Bonds"). The proceeds of the 2018 Bonds will be used (i) to finance certain school facilities (the “School Facilities”) of the School District, certain public facilities (the “City Facilities”) of the City of Riverside (the “City”), certain public facilities (the “County Facilities”) of the County of Riverside (the “County”) and certain public facilities (the “Water District Facilities,” and with the School Facilities, the City Facilities and the County Facilities, the “Facilities”) of the Western Municipal Water District of Riverside County (the “Water District’), (ii) to pay interest on the 2018 Bonds through September 1, 2018, (iii) to fund a Reserve Fund for the 2018 Bonds, and (iv) to pay costs of issuance on the 2018 Bonds. See“ESTIMATEDSOURCES AND USES OF FUNDS."

The 2018 Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Gcvernment Code of the State of California) (the “Act’), and pursuant to Resolution No. 2017/18-28 adopted by the Board of Education of the School District on behalf of the District on April 17, 2018 (the “Resolution of Issuance”), and a Fiscal Agent Agreement by and between the School District and U.S. Bank National Association, as Fiscal Agent for the 2018 Bonds (the “Fiscal Agent’), dated as of May 1, 2018 (the “Fiscal Agent Agreement’).

The 2018 Bonds are secured under the Fiscal Agent Agreement by a pledge of and lien upon Net Special Tax Revenues (as defined herein) levied on parcels within the District, and all moneys in the Special Tax Fund, all moneys in the Principal Account and Interest Account of the Bond Fund and all moneys deposited in the Reserve Fund, as described the Fiscal Agent Agreement. See “SOURCES OF PAYMENT FOR THE 2018 BONDS."

The 2018 Bonds are secured under the Fiscal Agent Agreement on a parity with any additional Parity Bonds (as defined in the Fiscal Agent Agreement) that may be issued in the future under the Fiscal Agent Agreement.

The 2018 Bonds are being issued and delivered pursuant to the provisions of the Act and the Fiscal Agent Agreement. The 2018 Bonds are being sold pursuant to a Bond Purchase Agreement between Piper Jaffray & Co. (the “Underwriter”) and the School District. For more complete information, see “THE 2018 BONDS — General Previsions” herein.

This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement. The sale and delivery of 2018 Bonds to potential investors is made only by means of the entire Official Statement. All capitalized terms used in this Official Statement and not defined shall have the meaning set forth in APPENDIX D — “SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT.”

1

The School District

The School District is a unified school district, governed by a five member, elected, Board of Education. The School District encompasses an area of about 92 square miles located in the northwestern portion of Riverside County approximately 47 miles east of the Los Angeles civic center. The School District encompasses major portions of the City of Riverside. The School District was established in 1963 through the unification of the Riverside City School District and the Riverside City High School District. The School District serves approximately 42,000 students. The School District operates thirty-one elementary schools, seven middle schools, five high schools, two alternative high schools, one virtual school, one adult school, one independent study school, one special education preschool and one STEM Academy. See “THE RIVERSIDE UNIFIED SCHOOL DISTRICT."

The District

The District was formed on July 18, 2016 by the Board pursuant to the Act. The Act was enacted by the California legislature to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. Any local agency (as defined in the Act) may establish a community facilities district to provide for and finance the cost of eligible public facilities and services. Generally, the legislative body of the local agency which forms a community facilities district acts on behalf of such district as its legislative body. Subject to apprcval by twcnthirds of the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a community facilities district or improvement area therein and may levy and collect a special tax within such district or imprcvement area to repay such indebtedness.

Pursuant to the Act, in forming the District, the B card adopted resolutions on May 31, 2016 stating its intention to establish the District, to authorize the levy of special taxes on property within the District (“Special Taxes)” pursuant to a rates and method of apportionment (the “Rates and Method”), and to authorize the District to incur bonded indebtedness. A copy of the Rates and Method is set forth in Appendix A hereto. Following a public hearing conducted pursuant to the Act, on July 18, 2016, the Board adopted resolutions establishing the District and calling consolidated special elections to submit the la/y of special taxes and the incurring of bonded indebtedness to the qualified voters of the District. At a special election held on July 18, 2016, the cwners of the property within the District authorized the District to incur a bonded indebtedness for the purpose of financing public facilities for the District in the amount of not to exceed $30,000,000. On August 2,2016 a Notice of Special Tax Lien was recorded in the official records of the County.

The District contains approximately 333.7 acres located in the northwestern portion of the County and south of the City. The property within the District constitutes the development kncwn as "Citrus Heights," which is divided into three neighborhoods: Orchard, Floral Ridge and Hill Crest. The community of Citrus Heights is planned to comprise a total of 343 singleTamily homes within three different product types of homes. In addition, the community will include eight community parks and a master trail system, plus much additional open space comprising water quality/detention basins, hillside and terraced areas, and natural drainage courses. Of the area within the District, 106acresarewithinthe343single4:amily lots, 7.3 acres are within the eight park sites, 5.7 acres are within the four water quality/detention basins, and nearly 170 acres are within the other open space areas. The property in the District is being developed by Lennar Homes of California, Inc. ("Lennar Homes" or the "Developer"). As of February 1, 2018, there were 94completed production homes which had been conveyed to individual homecwners, 6 completed model homes cwned by Lennar Homes, 6completed production homes, 26additional production homes under construction, 2 model homes under construction and 209 lots in partially to near finished condition. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT." As of April 1, 2018, an additional 15 production homes had been closed and transferred to individual homecwners, the 2 model homes under construction were completed, there were 36 lots with homes under construction, and 22 homes were under contract to be sold.

2

Forward Looking Statements

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

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.

Sources of Payment for the 2018 Bonds

As used in this Official Statement, the term “Special Tax” is that tax which has been authorized to be levied against taxable property within the District pursuant to the Act and in accordance with the Rates and Method to satisfy the Special Tax Requirement (as defined in the Rates and Method). “Special Tax Revenues” are defined to mean the proceeds of the Special Taxes received by the School District, including ary scheduled payments, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes in the amount of said lien and interest and penalties thereon. “Net Special Tax Revenues” are defined to mean Special Tax Revenues less the Administrative Expense Requirement. “Administrative Expense Requirement” is defined to mean an annual amount of up to $25,000 to be deposited in the Administrative Expense Fund for Administrative Expenses. See “SOURCES OF PAYMENT FOR THE 2018 BONDS — Special Taxes" and APPENDIX A — “RATES AND METHOD OF APPORTIONMENT OF SPECIAL TAX." Under the Fiscal Agent Agreement, the School District has pledged to repay the 2018 Bonds from the Net Special Tax Revenues and amounts on deposit in the Special Tax Fund, the Reserve Fund and the Principal Account and Interest Account of the Bond Fund on a parity with any future Parity Bonds.

The Reserve Fund. Pursuant to the Fiscal Agent Agreement, the initial Reserve Requirement for the 2018 Bonds is an amount equal to$912,200.00whichisequal to the least of (i) 10% of the proceeds of the sale of the 2018 Bonds, (ii) Maximum Annual Debt Service on the 2018 Bonds or (iii) 125% of average Annual Debt Service on the 2018 Bonds, as determined by the School District (the “Reserve Requirement”). The Reserve Requirement will initially be satisfied by a deposit of cash in the amount of the Reserve Requirement into the Reserve Fund. See “SOURCES OF PAYMENT FOR THE 2018BONDS — Reserve Fund." Subject to the maximum annual amounts of Special Taxes contained in the Rates and Method, if the amount in the Reserve Fund is less than the Reserve Requirement, the School District has ccvenanted to restore the amount in the Reserve Fund to the Reserve Requirement by the inclusion of a sufficient amount in the next annual Special Tax la/y within the District. The ability of the Board to increase the annual Special Taxes levied in the District to replenish the Reserve Fund is subject to the maximum annual amounts of Special Taxes authorized to be levied within the District and to ary limitations set forth by law. The moneys in the Reserve Fund will be used only for payment of the pri nci pal of, and i nterest and ary redempti on premi urn on, the 2018 B onds and at the direction of the School District, for deposit in the Rebate Fund. See “SOURCES OF PAYMENT FOR THE 2018 BONDS — Reserve Fund.”

3

The Net Special Tax Revenues are the primary security for the repayment of the 2018 B onds. In the a/entthat the Special Taxes are not paid when due, the only sources of funds available to pay the debt service on the 2018 B onds are amounts hel d by the F i seal A gent i n the P ri nci pal A ccount and I nterest A ccount of the Bond Fund and the Reserve Fund to the limited extent described in the Fiscal Agent Agreement. See “SOURCES OF PAYMENT FOR THE 2018 BONDS — Reserve Fund"

Pursuant to Section 53321(d) of the Gcvemment Code, under no circumstances will the Special Tax levied in any Fiscal Y ear against any Assessor's Parcel for which an occupancy permit for private residential use has been issued be increased as a consequence of delinquency or default by the owner or owners of ary other Assessor Parcel(s) within the District by more than 10% abeve the amount that would have been laried in that Fiscal Year had there never been any such delinquencies or defaults. As a result, it is possible that the School District may not be able to increase the tax levy to the maxi mum amount in all years. Hcwever, subject to the limitations on the District’s ability to levy the necessary amount of Special Taxes as imposed by Section 53321(d) of the Gcvernment Code, the District can levy Special Taxes on Undeveloped Property to make-up all or a portion of any shortfall intheSpecial Tax levy.

Foreclosure Proceeds. TheSchool District has covenanted with and for the benefit of the Owners of the 2018 Bonds as follcws: (i) it will order, and cause to be commenced, judicial foreclosure proceedings against properties with three or more delinquent installment payments of Special Taxes by October 1 follcwing the close of the Fiscal Year in which the third delinquent installment payment of Special Taxes was due, and (ii) it will commence judicial foreclosure proceedings against all properties with delinquent Special Taxes by the October 1 follcwing the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Taxes levied, and diligently pursue to completion such foreclosure proceedings. Notwithstanding the ccvenant in clause (ii) abeve, if on October 1 follcwing the close of ary Fiscal Year, the School District determines that the amount that is then available in the Special Reserve (as defined in the Fiscal Agent Agreement) is not less than $60,000, the School District shall not be required to order, and cause to be commenced, judicial foreclosure proceedings against any parcels of property in the District unless such parcels have three or more delinquent installment payments of Special Taxes due. See “SOURCES OF PAYMENT FOR THE 2018 BONDS — Special Taxes — Proceeds of Foreclosure Sales." There is no assurance that the property within the District can be sold for the appraised values described in this Official Statement, or for a price sufficient to pay the principal of and interest on the 2018 Bonds in the event of a default in payment of Special Taxes by the current or future landcwners within the District. See “SPECIAL RISK FACTORS — Property Values" and “APPENDIX H—APPRAISAL REPORT."

The District does not participate in the County’s Alternative Method of Distribution of Tax Lories and Collections and of Tax Sale Proceeds (the “Teeter Plan”); accordingly, the collection of Special Taxes is subject to delinquency. See“SOURCES OF PAYMENT FOR THE 2018 BONDS—NoTeeter Plan."

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE SCHOOL DISTRICT, THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE 2018 BONDS. EXCEPT FOR THE SPECIAL TAXES OF THE DISTRICT, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE 2018 BONDS. THE 2018 BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE SCHOOL DISTRICT OR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE SPECIAL OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM SPECIAL TAXES OF THE DISTRICT AND AMOUNTS HELD UNDER THE FISCAL AGENT AGREEMENT AS MORE FULLY DESCRI BED HEREI N.

Parity Bonds and Liens. Under the terms of the Fiscal Agent Agreement, the School District, on behalf of the District, may issue additional bonds secured by Net Special Tax Revenues on a parity with the 2018 Bonds (“Parity Bonds") if certain conditions are met. See “SOURCES OF PAYMENT FOR THE 2018 BONDS — Issuance of Parity Bonds.” Upon issuance of the 2018 Bonds, the School District, on behalf of the District, will have issued $15,945,000 in aggregate principal amount of bonds for the benefit of the District of

4

the $30,000,000 authorized to be issued, leaving $14,055,000 of the aggregate principal amount of bonds authorized to be issued for the District for the purpose of financing the construction and acquisition of additional Facilities. SeeAPPENDIX D — “SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT.” Other taxes and/or special assessments with liens equal in priority to the continuing lien of the Special Taxes have been levied and may also be levied in the future on the property within the District which could adversely affect the willingness of the landcwners to pay the Special Taxes when due. See “SPECIAL RISK FACTORS — Parity Taxes, Special Assessments and Land Development Costs” herein.

Appraisal Report

An MAI appraisal of the land and existing improvements within the District (the “Appraisal Report”) was prepared by Stephen G. White, MAI, Fullerton, California (the “Appraiser”). See APPENDIX H — “APPRAISAL REPORT." TheAppraisal Report is dated February 16, 2018 and prcvides an estimate of the aggregate market value of the as is condition of the taxable property within the District as of the date of value, February 1,2018.

As of February 1, 2018, of the 343 lots within the District, 94 completed single family detached homes had been completed and conveyed to individual homeowners, 12 single family detached homes (including six model homes) had been completed and cwned by Lennar Homes, 28 lots were in various stages of construction by Lennar Homes, and 209vacant lots owned by Lennar Homes were in partially to near finished lot condition. As of February 1, 2018, the Appraiser estimated the market value of the fee simple interest of the property within the District to be $110,220,000, consisting of (i) $58,620,000 for the 94 completed homes owned by individual homecwners within the District as of such date, and(ii) $51,600,000 for the 12 completed homes, lots in various stages of construction and partially to near finished lots cwned by Lennar Homes as of such date. The Appraisal Report is based upon a variety of assumptions and limiting conditions thataredescribedinAPPENDIX G. TheSchool District and the District make no representation as to the accuracy of the Appraisal Report. See “THE DISTRICT — Appraisal Report” and Estimated Valueto-Lien Ratios.” There is no assurance that the property within the District can be sold for the prices set forth in the Appraisal Report or that ary parcel can be sold for a price sufficient to pay the Special Tax for that parcel in the event of a default in payment of Special Taxes by the landowner. See “THE DISTRICT,” “SPECIAL RISK FACTORS —Property Values" and APPENDIX H —“APPRAISAL REPORT" herein.

Description of the 2018 Bonds

The 2018 Bonds will be issued and delivered as fully registered 2018 Bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to actual purchasers of the 2018 Bonds (the “Beneficial Owners”) inthe denominations of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the 2018 Bonds. I n the event that the book-entry-only system described herein is no longer used with respect to the 2018 B onds, the 2018 B onds wi 11 be regi stered and transferred i n accordance withthe Fiscal Agent Agreement. SeeAPPENDIX C — “BOOK-ENTRY ONLY SYSTEM."

Principal of, premium, if any, and interest on the 2018 Bonds is payable by the Fiscal Agent to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. See APPENDIX G — “BOOK-ENTRY ONLY SYSTEM."

Redemption

The 2018 Bonds are subject to redemption as described herein. See “THE 2018 BONDS — Redemption.” For a more complete description of the 2018 Bonds and the basic documentation pursuant to

5

which they are being sold and delivered, see “THE 2018 BONDS” and APPENDIX D — “SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT."

Tax Exemption

In the opinion of Bond Counsel, under existing statutes, regulations, rulings and court decisions, the interest on the 2018 Bonds is exempt from personal income taxes of the State of California and, assuming compliance with certain ccvenants described in the Official Statement, is excluded from gross income for federal income tax purposes, and is not a specific preference item for purposes of the federal alternative minimum tax for individuals. Setforth inAPPENDIX B is the form of opinion of Bond Counsel expected to be delivered in connection with the issuance of the 2018 Bonds. For a more complete discussion of such opinion and certain other tax consequences incident to the ownership of the 2018 Bonds, including certain exceptions to the tax treatment of i nterest, see “TAX MATTE RS.”

Professionals I nvdved in the Offering

U.S. Bank National Association will act as Fiscal Agent under the Fiscal Agent Agreement. Piper J affray & Co. is the Underwriter of the 2018 Bonds. Certain proceedings in connection with the issuance and delivery of the 2018 Bonds are subject to the approval of Best Best& Krieger LLP, Riverside, California, Bond Counsel. Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, is serving as Disclosure Counsel to the District. Fieldman Rdapp& Associates Inc. is acting as Municipal Advisor to the School Districtinconnectionwiththe2018Bonds. Certain legal matters will be passed on for theSchod District and the District by Best Best & Krieger LLP, Riverside, California, for the Underwriter by James F. Anderson Law Firm, A Professional Corporation, Laguna Hills, California, as Underwriter’s Counsel, and for Lennar Homes of California, Inc. by its counsel, Hdland & Knight LLP, San Francisco, California. David Taussig & Associates, Inc., Newport Beach, California, is serving as Special Tax Consultant and initial dissemination agent under the District Continuing Disclosure Agreement (as defined herein) and the Developer Continuing Disclosure Agreement (as defined herein), and Stephen G. White, MAI, Fullerton, California, is serving as Appraiser.

For information concerning the respects in which certain of the above-mentioned professionals, advisors, counsel and agents may have a financial or other interest in the offering of the 2018 Bonds, see “FINANCIAL INTERESTS.”

6

Continuing Disclosure

The District has agreed to prcvide, or cause to be prcvided, to the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board (the “MSRB”), which can be found at www.emma.msrb.org (“EMMA”), certain financial information and operating data on an annual basis. The District has further agreed to provide notice to EMMA of certain enumerated events. These ccvenants have been made in order to assist the Underwriter in complying with Rule 15c2—12(b)(5) (the “Rule”) adopted by the Securities and Exchange Commission (the “SEC"). See “CONTINUING DISCLOSURE — District Continuing Disclosure" and APPENDIX E — “FORM OF CONTINUING DISCLOSURE AGREEMENT OF THE DISTRICT” herein for the form of the District’s Continuing Disclosure Agreement. Other than as described in this Official Statement under the heading “CONTINUING DISCLOSURE — District Continuing Disclosure,” the School District has not failed to comply in all material respects with ary previous undertakings with regard to the Rule to prcvide annual reports or notices of enumerated events in the last five years.

The Underwriter does not consider the Developer to be an “obligated person” with respect to the 2018 Bonds for purposes of the Rule. Flcwever, to assist in the marketing of the 2018 Bonds, the Developer has agreed to prcvide, or cause to be prcvided on EMMA, updated information with respect to the development within the District, on a semiannual basis and notices of certain events until such undertaking is terminated in accordance with the Developer Continuing Disclosure Agreement. See “CONTINUING DISCLOSURE — Developer Continuing Disclosure" and APPENDIX F — “FORM OF CONTINUING DISCLOSURE AGREEMENT OF THE DEVELOPER."

Bond Owners’ Risks

Certain events could affect the ability of the District to pay the principal of and interest on the 2018 Bonds when due. See the section of this Official Statement entitled “SPECIAL RISK FACTORS" for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the 2018 Bonds. The 2018 Bonds are not rated and may not be appropriate investments for certain investors. See “SPECIAL RISK FACTORS" and “NO RATING" herein.

Other I nformation

This Official Statement speaks only as of its date, and the information contained herein is subject tochange.

Brief descriptions of the 2018 Bonds and the Fiscal Agent Agreement are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herei n to the F i seal A gent A greement, the 2018 B onds and the consti tuti on and I aws of the S tate as wel I as the proceedings of the Board, acting as the legislative body of the District, are qualified in their entirety by references to such documents, laws and proceedings, and with respect to the 2018 Bonds, by reference to the Fiscal Agent Agreement. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Fiscal Agent Agreement.

Copies of the Fiscal Agent Agreement, Appraisal Report and other documents and information are available for inspection and (upon request and payment to the School District of a charge for copying, mailing and handling) for delivery from the office of the Superintendent of Riverside Unified School District, 3380 14thStreet, Riverside, California 92501.

7

ESTIMATEDSOURCES AND USES OF FUNDS

The fol I cwi ng tabl e sets forth the expected sources and uses of 2018 B ond proceeds.

Sources of Funds:P ri nci pal A mount of 2018 B onds Less Underwriter’s Discount Less Net Original Issue Discount

Total Sources Uses of Funds:

2018 B onds I improvement F und(1)2018 B onds Reserve F und(2)Interest Account^2018 B onds C osts of I ssuance F und(4)

Total Uses

$15,945,000.00(239,175.00)(173,627.35)

$15.532.197.65

$14,244,458.90912,200.00165,538.75210,000.00

$15.532.197.65

(1) Includes $4,684,793.00for School District Facilities, $2,437,43695 for City Facilities, $2,437,436 95 for County Facilities and $4,684,792.00 forWater District Facilities.

(2) Equal to the Reserve Requirement(3) To pay intereston the 2018 Bonds through September 1, 2018.(4) Includes Bond Counsel fees, Disclosure Counsel fees, Special Tax Consultant fees, Municipal Advisor fees, Fiscal Agent

fees, Dissemination Agent fees, Appraiser fees, printing costs and other issuance costs.Source: The Underwriter.

THE 2018BONDS

General Previsions

The 2018 B onds wi 11 be dated as of thei r date of del ivery and wi 11 bear i nterest at the rates per annum set forth on the inside cover page hereof, payable semiannually on each September 1 and March 1, commencing on September 1,2018 (each, an “Interest Payment Date”), and will mature in the amounts and on the dates set forth on the inside ccver page of this Official Statement. The 2018 Bonds will be issued in fully registered form in denominations of $5,000 or any integral multi pie thereof.

I nterest will be calculated on the basis of a 360 day year comprised of twelve 30 day months. Interest on ary 2018 Bond will be payable from the Interest Payment Date next preceding the date of authentication of that 2018 Bond, unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such I nterest Payment Date, or (i i) it is authenticated prior to an I nterest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from the Closing Date; provided, howa/er, that if at the time of authentication of a 2018 Bond, interest is in default, interest on that 2018 Bond will be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or from September 1, 2018, if no interest has previously been paid or made available for payment thereon.

Interest on any 2018 Bond will be paid to the person whose name appears as its owner in the registration books held by the Fiscal Agent on the close of business on the Record Date. I nterest will be paid by check of the Fiscal Agent mailed by first class mail, postage prepaid, to the 2018 Bond Owner at its address on the registration books. Pursuant to a written request prior to the Record Date of a 2018 Bond Owner of at least $1,000,000 in aggregate principal amount of Outstanding 2018 Bonds, payment will be made by wire transfer in immediately available funds to an account in the United States of America designated by the 2018 B ond Owner i n the U nited States.

8

Principal of the 2018 Bonds and any premium due upon redemption is payable upon presentation and surrender of the 2018 Bonds at the principal corporate trust office of the Fiscal Agent in Minneapolis, Minnesota.

The 2018 Bonds will be issued as fully registered bonds and will be registered in the name of Cede & Co., as nominee DTC. DTC will act as securities depository of the 2018 Bonds. Ownership interests in the 2018 Bonds may be purchased in book-entry form only in denominations of $5,000 and any integral multiple thereof. So long as DTC is the securities depository all payments of principal and interest on the 2018 Bonds will be made to DTC and will be paid to the Beneficial Owners in accordance with DTC’s procedures and the procedures of DTC’s Participants. SeeAPPENDIX C — “BOOK-ENTRY-ONLY SYSTEM."

Debt S ervi ce S chedul e

The foil owing table presents the annual debt service on the 2018 Bonds (including mandatory sinking fund redemption), assuming there are no optional or extraordinary redemptions. See “SOURCES OF PAYMENT OF THE 2018 BONDS” and “THE 2018 BONDS — Redemption.”

Date 2018Bonds(September 1) Principal

2018 $2019 65,000.002020 340,000.002021 350,000.002022 355,000.002023 370,000.002024 380,000.002025 390,000.002026 400,000.002027 410,000.002028 420,000.002029 435,000.002030 450,000.002031 465,000.002032 480,000.002033 495,000.002034 51 5,000.002035 530,000.002036 550,000.002037 570,000.002038 590,000.002039 61 5,000.002040 640,000.002041 665,000.002042 690,000.002043 720,000.002044 750,000.002045 780,000.002046 810,000.002047 840,000.002048 875.000.00Total $ 15,945,000.00

2018 Bonds 2018 Bonds Total I nterest Debt Service

$ 165,538.75 $ 165,538.75573,018.76 638,018.76571,068.76 911,068.76560,868.76 910,868.76553,868.76 908,868.76539,668.76 909,668.76530,881.26 910,881.26521,381.26 911,381.26510,656.26 910,656.26499,656.26 909,656.26487,356.26 907,356.26474,756.26 909,756.26461,162.50 911,162.50446,537.50 911,537.50430,843.76 910,843.76414,043.76 909,043.763%,718.76 911,718.76378,050.00 908,050.00358,837.50 908,837.50338,900.00 908,900.00317,525.00 907,525.00295,400.00 910,400.00270,800.00 910,800.00245,200.00 910,200.00218,600.00 908,600.00191,000.00 911,000.00162,200.00 912,200.00132,200.00 912,200.00101,000.00 911,000.0068,600.00 908,600.0035.000.00 910.000.00

$ 11,251,338.89 $ 27,196,338.89

Source: The Underwriter.

Notwithstanding that the maximum Special Taxes that may be levied in the District exceeds debt service due on the 2018 Bonds, the Special Taxes collected could be inadequate to make timely payment of debt service either because of nonpayment or because property becomes exempt from taxation as permitted in the Rates and Method. See “SPECIAL RISK FACTORS — Insufficiency of Special Taxes.”

9

Pursuant to Section 53321(d) of the Government Code, under no circumstances will the Special Tax levied in any Fiscal Y ear against any Assessor's Parcel for which an occupancy permit for private residential use has been issued be increased as a consequence of delinquency or default by the owner or owners of any other Assessor Parcel(s) within the District ty more than 10% abcve the amount that would have been la/ied in that Fiscal Y ear had there never been any such delinquencies or defaults. Thus, the School District may not be able to increase Special Tax levies in future Fiscal Years by enough to make up for delinquencies in prior Fiscal Years. This would result in draws on the Reserve Fund and if delinquencies continue and in the aggregate exceed the Reserve Fund balance, defaults would occur in the payment of principal and interest on the 2018 Bonds. See “SPECIAL RISK FACTORS — Insufficiency of Special Taxes." Hcwever, subject to the limitations on the District’s ability to levy the necessary amount of Special Taxes as imposed by Section 53321(d) of the Gcvernment Code, the District can levy Special Taxes on Undeveloped Property to make-up all or a portion of any shortfall intheSpecial Tax levy.

Redemption

Optional Redemption. The 2018 Bonds maturing on and after September 1, 2026 are subject to redemption prior to their stated maturity dates on September 1, 2025 and on any date thereafter, as selected among maturities by the School District (and ty lot within a maturity), in integral multiples of $5,000, at the option of the School District from moneys derived by the School District from any source, at redemption prices (expressed as percentages of the principal amounts of the 2018 Bonds to be redeemed), together with accrued interest to the date of redemption, as follows:

Redempti on Dates Redempti on P ri ce

S eptember 1, 202 5 through and i ncl udi ng A ugust 31,2026 103%September 1, 2026 through and including August 31, 2027 102September 1, 2027 through and including August 31, 2028 101S eptember 1, 2028 and ary date thereafter 100

Extraordinary Redemption from Special Tax Prepayments. The 2018 Bonds are subject to mandatory redemption prior to their stated maturity dates on any Interest Payment Date, as selected among maturities ty the School District (and by lot within ary one maturity), in integral multiples of $5,000, from moneys derived by the School District from Special Tax Prepayments, at redemption prices (expressed as percentages of the principal amounts of the 2018 Bonds to be redeemed), together with accrued interest to the date of redemption, as fd lows:

Redempti on Dates Redempti on P ri ce

Any I nterest Payment Date through March 1,2026 103%September 1, 2026 and March 1,2027 102September 1, 2027 and March 1,2028 101September 1, 2028 and ary I nterest Payment Date thereafter 100

Mandatory Sinking F und Redemption. The outstanding 2018 Bonds maturing on September 1, 2043 are subject to mandatory sinking fund redemption, in part, on September 1, 2039, and on each September 1 thereafter to maturity, ty lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, and from sinking payments as follcws:

10

2018BondsMaturingSeptember 1,2043

Sinking F und Redemption Date (September 1) Sinking F und Payments

20392040204120422043 (Maturity)

$615,000640.000665.000690.000720.000

The outstanding 2018 Bonds maturing on September 1, 2048 are subject to mandatory sinking fund redemption, in part, on September 1, 2044, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, and from sinking payments as follows:

2018BondsMaturingSeptember 1,2048

Sinking F und Redemption Date (September 1) Sinking F und Payments

20442045204620472048 (Maturity)

$750,000780.000810.000840.000875.000

The amounts in the foregoing schedules shall be reduced by the School District pro rata among redemption dates, in order to maintain substantially level Debt Service, as a result of any prior or partial optional or extraordinary redemption of the 2018Bonds.

Purchase of 2018 Bonds. In lieu of payment at maturity or redemption under the Fiscal Agent Agreement, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding 2018 Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may prcvide, but in no event may 2018 Bonds be purchased at a price in excess of the pri nci pal amount thereof, pi us i nterest accrued to the date of purchase.

Notice to Fiscal Agent. An Authorized Officer shall give the Fiscal Agent written notice of the School District’s intention to redeem 2018 Bonds not less than 45 days pri or to the applicable redemption date. Such written notice shall specify whether 2018 Bonds are to be redeemed by optional redemption or mandatory redemption from Special Tax Prepayments. The foregoing prevision shall not apply to mandatory si nki ng fund redempti on of the 2018 B onds.

Redemption Procedure by F iscal Agent. The Fiscal Agent shall cause notice of ary redemption to be mailed by first class mail, postage prepaid, at least 30 days but not more than 60 days prior to the date fixed for redemption, to the Securities Depositories and to one or more I nformation Services selected by an Authorized Officer, and to the respective registered Owners of ary 2018 Bonds designated for redemption, at their addresses appearing on the 2018 Bond registration books maintained by the Fiscal Agent at its Principal Office; but such mailing shall not be a condition precedent to such redempti on and failure to mail or to receive ary such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such 2018 Bonds. The Fiscal Agent shall also cause notice of any redemption to be mailed, in such manner and withi n such ti me, to the U nderwriter.

11

Such notice shall state the date of such notice, the date of issue of the 2018 Bonds, the place or places of redemption, the redemption date, the redemption price and, if less than all of the then Outstanding 2018 Bonds are to be called for redemption, shall designate the CUSIP numbers and 2018 Bond numbers of the 2018 Bonds to be redeemed, ty giving the individual CUSIP number and 2018 Bond number of each 2018 Bond to be redeemed, or shall state that all 2018 Bonds between two stated 2018 Bond numbers, both inclusive, are to be redeemed or that all of the 2018 Bonds of one or more maturities have been called for redemption, shall state as to any 2018 Bond called for redemption in part the portion of the principal of the 2018 Bond to be redeemed, shall require that such 2018 Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such 2018 Bonds will not accrue from and after the redemption date. Such notice of redemption for any optional redemption may state that the redemption of the 2018 Bonds is contingent upon the Fiscal Agent’s receipt of funds sufficient to cause such redemption. Any such notice given may be conditional and/or rescinded ty written notice given to the Fiscal Agent ty an Authorized Officer and the Fiscal Agent shall provide notice of such rescission as soon thereafter as practicable in the same manner, and to the same recipients, as notice of such redemption was given pursuant to the Fiscal Agent Agreement. The cost of the mailing of any such redemption notice shall be paid by the District.

Upon the payment of the redemption price of 2018 Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying, ty issue and maturity, the 2018 Bonds being redeemed with the proceeds of such check or other transfer.

In the event of an optional redemption or mandatory redemption from Special Tax Prepayments pursuant to the Fiscal Agent Agreement, the School District shall transfer or cause to be transferred to the Fiscal Agent for deposit in the Bond Fund moneys in an amount equal to the redemption price of the 2018 B onds bei ng redeemed on or before the date upon whi ch such 2018 B onds are to be redeemed.

If less than all the 2018 Bonds Outstanding are to be redeemed, the portion of ary 2018 Bond of a denomination of more than $5,000 to be redeemed shall be in integral multiples of $5,000, and, in selecting portions of such 2018 Bonds for redemption, the Fiscal Agent shall treat each such 2018 Bond as representing the number of 2018 Bonds of $5,000 denominations which is obtained by dividing the principal amount of such 2018 Bond to be redeemed in part by $5,000.

Whenever prevision is made in the Fiscal Agent Agreement for the redemption of less than all of the 2018 Bonds of a maturity or any given portion thereof, the Fiscal Agent shall select the 2018 Bonds of such maturity to be redeemed, from all 2018 Bonds of such maturity or such given portion thereof not previously cal led for redemption, by lot within a maturity in ary manner which the Fiscal Agent in its sole discretion shall deem appropriate.

Upon surrender of 2018 Bonds redeemed in part only, the School District shall execute and the Fiscal Agent shall authenticate and deliver to the Owner, at the expense of the District, a new 2018 Bond or 2018 Bonds, of the same maturity, of authorized denominations in an aggregate principal amount equal to the unredeemed portion of the 2018 Bond or 2018 Bonds.

Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the redemption prices of the 2018 Bonds called for redemption shall have been deposited in the Bond Fund, such 2018 Bonds shall cease to be entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment of the redemption price, and interest shall cease to accrue on the 2018 Bonds to be redeemed on the redemption date specified in the notice of redemption.

All 2018 B onds redeemed and purchased ty the Fiscal Agent pursuant to the Fiscal Agent Agreement shall be cancelled by the Fiscal Agent.

12

Registration, Transfer and Exchange

Registration. The Fiscal Agent will keep sufficient books for the registration and transfer of the 2018 Bonds. The ownership of the 2018 Bonds will be established by the 2018 Bond registration books held by the Fiscal Agent.

Transfer or Exchange. Whenever any 2018 Bond is surrendered for registration of transfer or exchange, the Fiscal Agent will authenticate and deliver a new 2018 Bond or 2018 Bonds of the same maturity, for a like aggregate principal amount of authorized denominations; prcvided that the Fiscal Agent will not be required to register transfers or make exchanges of (i) 2018 Bonds for a period of 15 days next preceding the date established by the Fiscal Agent for selection of 2018 Bonds for redemption, or (ii) with respect to 2018 B onds selected for redemption.

SOURCES OF PAYMENT FOR THE 2018BONDS

Limited Obligations

The 2018 Bonds are special, limited obligations of the District payable on a parity with any future Parity Bonds only from amounts pledged under the Fiscal Agent Agreement, and from no other sources.

The Special Taxes are the primary security for the repayment of the 2018 Bonds. Under the Fiscal Agent Agreement, the School District has pledged to repay the 2018 Bonds from the Net Special Tax Revenues (which are the proceeds of the Special Taxes received by the School District, including any scheduled payments, i nterest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes, less the Administrative Expense Requirement) and all moneys deposited in the Interest Account and the Principal Account of the Bond Fund and the Reserve Fund. The 2018 Bonds are secured on a parity with any future Parity Bonds of the District. See Issuance of Parity Bonds.”

In the event that the Net Special Tax Revenues are not received when due, the only sources of funds available to pay the debt service on the 2018 Bonds are amounts held by the Fiscal Agent in the Interest Account and Principal Account of the Bond Fund for the exclusive benefit of the Owners of the 2018 Bonds and amounts held by the Fiscal Agent in the Reserve Fund and the Special Tax Fund.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE SCHOOL DISTRICT, THE CITY OF RIVERSIDE, THE COUNTY OF RIVERSIDE, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE 2018 BONDS. EXCEPT FOR THE NET SPECIAL TAX REVENUES COLLECTED WITHIN THE DISTRICT, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE 2018 BONDS. THE 2018 BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE SCHOOL DISTRICT OR GENERAL OBLIGATIONS OF THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM SPECIAL TAXES TO BE LEVIED IN THE DISTRICT AND OTHER AMOUNTS HELD UNDER THE FISCAL AGENT AGREEMENT AS MORE FULLY DESCRIBED HEREIN.

Special Taxes

Authorizition and Pledge. In accordance with the previsions of the Act, the School District established the District on J uly 18, 2016, for the purpose of financing the various public imprevements required in connection with the proposed development within the District. On J uly 18, 2016, elections were held within the District at which the landowners eligible to vote approved the issuance of bonds for the District in an amount not to exceed $30,000,000, secured by special taxes levied on property within the District to finance the Facilities. The landcwners within the District also voted to approve the Rates and Method which

13

authorize a special tax to be levied to repay indebtedness issued for the benefit of the District, including the 2018 Bonds. On August 2, 2016, a Notice of Special Tax Lien was recorded in the official records of the County.

The District began levying Special Taxes in Fiscal Year 2017-18. Until all Parity Bonds have been issued for the purpose of financing the construction of the Facilities, the District expects to levy Special Taxes at 100% of the Assigned Special Tax rate. Thereafter, the Special Taxes are only expected to be levied in an amount needed to pay the debt service due on the 2018 Bonds and the Parity Bonds, plus the Administrative Expense Requi rement.

The Special Taxes levied in ary fiscal year may not exceed the maximum rates authorized pursuant to the Rates and Method. See APPENDIX A — “RATES AND METHOD OF APPORTIONMENT OF SPECIAL TAX” hereto. In addition, pursuant to Section 53321(d) of the Government Code, under no circumstances will the Special Tax levied in any Fiscal Year against ary Assessor's Parcel for which an occupancy permit for private residential use has been issued be increased as a consequence of delinquency or default by the cwner or cwners of ary other Assessor Parcel(s) within the District by more than 10% above the amount that would have been levied in that Fiscal Year had there never been ary such delinquencies or defaults. As a result, it is possible that the School District may not be able to increase the tax levy to the Assigned Special Tax in all years. There is no assurance that the Special Tax proceeds will, in all circumstances, be adequate to pay the principal of and interest on the 2018 Bonds when due. See “SPECIAL RISK FACTORS — Insufficiency of Special Taxes” herein.

Rates and Method of Apportionment of Special Tax. The District is legally authorized and has ccvenanted to cause the levy of the Special Taxes in an amount determined according to a methodology, i.e., the Rates and Method which the Board and the electors within the District have approved. The Rates and Method apportion the total amount of Special Taxes to be collected among the taxable parcels in the District as more particularly described belcw.

The following is a synopsis of the previsions of the Rates and Method for the District, which should be read in conjunction with the complete text of the Rates and Method which is attached as APPENDIX A — “RATES AND METHOD OF APPORTIONMENT OF SPECIAL TAX." Unless otherwise defined herein, the meaning of the defined terms used in this section are as set forth in APPENDIX A. This section prevides only a summary of the Rates and Method, and is qualified by more complete and detailed information contai ned i n the enti re Rates and M ethod attached asAPPENDIXA.

The Special Tax was first levied in Fiscal Year 2017-18. Until all Parity Bonds have been issued for the purpose of financing the construction of the Facilities, the District expects to levySpecial Taxes at 100% of the Assigned Special Tax rate. Thereafter, the Special Taxes are only expected to be levied in an amount needed to pay the debt service due on the 2018 Bonds and the Parity Bonds, plus the Administrative Expense Requirement. No assurances can be made that Special Taxes will be collected in an amount required to make the debt service payments on the 2018 Bonds. See “SPECIAL RISK FACTORS — Special Tax Delinquencies” and“— Insufficiency of Special Taxes.”

The following is a summary of the salient provisions of the Rates and Method, as applicable to theDistrict.

Classification of Parcels. For each Fiscal Year all Assessor’s Parcels within the District shall be classified by Tax Zone and as Developed Property, Taxable Public Property, Taxable Property Owner Association Property or Undeveloped Property and shall be subject to the levy of Special Taxes in accordance with the Rates and Method.

Parcels of Developed Property in the District shall be assigned to the appropriate Land Use categories, as listed inthetables belcw.

14

Maxi mum Special Tax Rates.

Developed Property. The Maximum Special Tax for each Assessor's Parcel of Developed Property within a particular Tax Zone shall be the greater of (i) the amount derived by application of the Assigned Special Tax, or (ii) the amount derived by application of the Backup Special Tax. The Assigned Special Tax for each Land Use Class within each Tax Zone is shewn i n the fol I ewing tables.

Assigned Special Tax Rates for Developed Property TaxZone 1 (Orchard Neighborhood)

Land Use Category Description Residential F loor Space Assigned Special Tax Rate

1-1 Residential Property >4,000 sq.ft $5,104 per DwellingUnit1-2 Residential Property 3,801 to4,000 sq.ft 4,935 per Dwelling Unit1-3 Residential Property 3,401 to 3,800 sq.ft 4,787 per Dwelling Unit1-4 Residential Property 3,001 to 3,400 sq.ft 4,643 per Dwelling Unit1-5 Residential Property 2,601 to 3,000 sq.ft 4,317per Dwelling Unit1-6 Residential Property <2,601 sq.ft 4,024 per Dwelling Unit1-7 Non-Residential Property N/A 19,326 per Acre

Assigned Special Tax Rates for Developed Property Tax Zone 2 (Floral Ridge Neighborhood)

Land Use Category Description Residential F loor Space Assigned Special Tax Rate

2-1 Residential Property >4,200 sq.ft $5,803 per DwellingUnit2-2 Residential Property 3,801 to4,200 sq.ft 5,634 per Dwelling Unit2-3 Residential Property 3,401 to 3,800 sq.ft 5,470 per Dwelling Unit2-4 Residential Property 3,201 to 3,400 sq.ft 5,014 per Dwelling Unit2-5 Residential Property 3,001 to 3,200 sq.ft 4,618 per Dwelling Unit2-6 Residential Property <3,001 sq.ft 4,480 per Dwelling Unit2-7 Non-Residential Property N/A 16,118 per Acre

Assigned Special Tax Rates for Developed Property TaxZone3 (Hill Crest Neighborhood)

Land Use Category Description Residential F loor Space Assigned Special Tax Rate

3-1 Residential Property >4,500 sq.ft $5,977 per Dwelling Unit3-2 Residential Property 4,201 to4,500 sq.ft 5,798 per Dwelling Unit3-3 Residential Property 4,001 to4,200 sq.ft 5,624 per Dwelling Unit3-4 Residential Property 3,801 to4,000 sq.ft 5,455 per Dwelling Unit3-5 Residential Property 3,401 to 3,800 sq.ft 5,302 per Dwelling Unit3-6 Residential Property < 3,401 sq. ft 4,955 per Dwelling Unit3-7 Non-Residential Property N/A 16,366 per Acre

15

Backup Special Tax

The Backup Special Tax shall be calculated independently for each Tax Zone. The aggregate Backup Special Tax attributable to property within a Final MapwithinaTaxZone shall be determined by multiplying the Acreage of all Taxable Property located within such Tax Zone, excluding current or expected Non- Residential Property, Taxable Public Property and Taxable Property Owner Association Property, if ary, in such Final Map, by the amount shewn in the fdlcwing table for such Tax Zone and dividing the product by the total number of dvelling units expected to be constructed within such Tax Zone.

BackupSpecial Tax All TaxZones

TaxZone BackupSpecial Tax

1 $19,326 per A ere2 16,118 per Acre3 16,366 per Acre

Notwithstanding the foregoing, if all or ary portion of a Final Map is subsequently changed or modified, then the Backup Special Tax for each Assessor’s Parcel of Residential Property in such Final Map, or the portion thereof that is changed or modified, shall be a rate per Acre calculated as follows:

1. Determine the total Backup Special Taxes anticipated to apply to the changed or modified portion of the Final Map prior to the change or modification.

2. Divide the amount determined pursuant to Step 1 abeve by the total Acreage of Residential Property excluding Taxable Public Property and Taxable Property Owner Association Property which is ultimately expected to exist in such changed or modified Final Map area, as reasonably determined by theCFD Administrator.

3. The result is the Backup Special Tax per Acre which shall be applicable to all Assessor's Parcels of Residential Property in such changki or modified Final Map.

Ta>able Property Owner Association Property, Tarable Public Property and Undeveloped Property. The Maximum Special Tax for each Assessor's Parcel of Taxable Property Owner Association Property, Taxable Public Property or Undeveloped Property in a particular Tax Zone shall be equal to the amount shewn in the Backup Special Tax table abeve.

Method of Apportionment and Levy of the Special Tax. For each Fiscal Year, the District shall determine the Special Tax Requirement and shall levy the Special Taxasfollcws:

First: Prior to the issuance of the final series of Parity Bonds (other than refunding Parity Bonds), the Special Tax shall be levied on each Parcel of Da/eloped Property at 100 percent of the applicable Assigned Special Tax. Follcwing the issuance of the final series of Parity Bonds (other than refunding Parity Bonds), theSpecial Tax shall be la/ied Proportionately on each Parcel of Developed Property at up to 100 percent of theapplicableAssignedSpecial Tax Rate to satisfy theSpecial Tax Requirement.

Second: If additional monies are needed to satisfy the Special Tax Requirement after the first step has been completed, theSpecial Tax shall be levied Proportionately on each Parcel of Undeveloped Property at up to 100 percent of the Maximum Special Tax for Undeveloped Property.

Third: If additional monies are needed to satisfy theSpecial Tax Requirement afterthefirsttwo steps have been completed, the Special Tax to be levied on each Assessor’s Parcel of Developed Property whose

16

Maximum Special Tax is determined by application of the Backup Special Tax, shall be increased in equal percentages from the applicable Assigned Special Tax Rate up to 100 percent of the Maximum Special Tax for each such Assessor's Parcel.

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 Taxable Property Owner Association Property and Taxable Public Property at up to lOOpercent of the Maximum Special Tax for Taxable Property Owner Association Property and Taxable Public Property.

Notwithstanding the abcve, pursuant to Section 53321(d) of the Gcvernment Code, under no circumstances will the Special Tax levied in any Fiscal Year against any Assessor's Parcel for which an occupancy permit for private residential use has been issued be increased as a consequence of delinquency or default by the cwner or cwners of any other Assessor Parcel(s) within the District by more than 10% abcve the amount that would have been levied in that Fiscal Year had there never been any such delinquencies or defaults.

Exemptions. The District shall not la/y Special Taxes on: (i) Property Owner Association Property or Public Property in Tax Zones 1 through 3 provided that an Assessor’s Parcel shall not be exempt and shall be classified as Taxable Property Owner Association Property and Taxable Public Property if exempting such property would reduce the sum of all Taxable Property to less than the minimum taxable Acreage amounts shown in the table below and (ii) any Parcels for which the obligation to pay the Special Tax has been prepaid i n ful I pursuant to the Rates and M ethod.

Tax Zone M i ni mum Taxable Acreage

1 28.03 Acres2 41.21 Acres3 36.93 Acres

Term of Special Tax. The Special Tax shall be levied for the period necessary to fully satisfy the Special Tax Requirement, but in no event shall it be levied after Fiscal Year 2059-60.

Maximum Special Tax Capacity. Until all Parity Bonds have been issued for the purpose of financing the construction of the Facilities, the District must levy Special Taxes at 100% of the Assigned Special Tax rate. Thereafter, the Special Taxes are only expected to be levied in an amount needed to pay the debt service due on the 2018 Bonds and Parity Bonds, plus the Administrative Expense Requirement. Though the District has the ability to increase the Special Tax levy to account for delinquencies, pursuant to Section 53321(d) of the Gcvernment Code, under no circumstances will the Special Tax levied in any FiscalY ear against any Assessor's Parcel for which an occupancy permit for private residential use has been issued be increased as a consequence of delinquency or default by the owner or owners of any other Assessor Parcel(s) within the District by more than 1C% abcve the amount that would have been levied in that FiscalY ear had there never been any such delinquencies or defaults. As a result, it is possible that the School District may not be able to increase the tax levy to the Assigned Special Tax in all years. Hcwever, subject to the limitations on the District’s ability to levy the necessary amount of Special Taxes as imposed by Section 53321(d) of the Gcvernment Code, the District can levy Special Taxes on Undeveloped Property to make-up all or a portion of any shortfall intheSpecial Tax levy.

Prepayment of Annual Special Taxes. The Special Tax obligation for an Assessor's Parcel may be prepaid, either in full or in part, in accordance with formulas set forth in the Rates and Method. See APPENDIX A —“RATES AND METHOD OF APPORTIONMENT OF SPECIAL TAX — Section H."

Estimated Debt Service Coverage. The follcwing table sets forth the estimated debt service ccverage on the 2018 Bonds based on the Assigned Special Tax levy assuming 207 units are considered Developed

17

Property as of March 1, 2019 and assuming annual Administrative Expenses equal to the Administrative Expense Requi rement.

RIVERSIDE UNIFIEDSCHOOL DISTRICT COMMUNITY FACILITIES DISTRICT NO.32

ESTIMATED BOND DEBT SERVICE COVERAGE

Net Special NetSpecial Debt DebtTax Tax Series Service Service

Revenues Revenues 2018 Coverage CoverageBond Year Developed Undeveloped Annual from from All Bonds from from All

Ending Special Tax Special Tax Administrative Developed Taxable Debt Developed TaxableSeptember 1 Revenues0' Revenues(2) Expense^3' P roperty Property Service P roperty*4' Property*5

2018 $ 427,080 $1,352,681 S3Q000 $ 397,080 $1,749,761 $ cf® NA NA2019 732,208 1,027,480 30,000 702,208 1,729,688 638,019 no.oe% 271.1C%2020 1,033,527 719,680 30,000 1,003,527 1,723,207 911,069 110.15 189.142021 1,033,527 719,680 30,000 1,003,527 1,723,207 910,869 110.17 189.182022 1,033,527 719,680 30,000 1,003,527 1,723,207 908,869 110.41 189.602023 1,033,527 719,680 30,000 1,003,527 1,723,207 909,669 110.32 189.432024 1,033,527 719,680 30,000 1,003,527 1,723,207 910,881 110.17 189.182025 1,033,527 719,680 30,000 1,003,527 1,723,207 911,381 110.11 189.082026 1,033,527 719,680 30,000 1,003,527 1,723,207 910,656 110.20 189.232027 1,033,527 719,680 30,000 1,003,527 1,723,207 909,656 110.32 189.432028 1,033,527 719,680 30,000 1,003,527 1,723,207 907,356 110.60 189.922029 1,033,527 719,680 30,000 1,003,527 1,723,207 909,756 110.31 189.412030 1,033,527 719,680 30,000 1,003,527 1,723,207 911,163 110.14 189.122031 1,033,527 719,680 30,000 1,003,527 1,723,207 911,538 110.09 189.042032 1,033,527 719,680 30,000 1,003,527 1,723,207 910,844 110.18 189.192033 1,033,527 719,680 30,000 1,003,527 1,723,207 909,044 110.39 189.562034 1,033,527 719,680 30,000 1,003,527 1,723,207 911,719 110.07 189.012035 1,033,527 719,680 30,000 1,003,527 1,723,207 908,050 110.51 189.772036 1,033,527 719,680 30,000 1,003,527 1,723,207 908,838 110.42 189.612037 1,033,527 719,680 30,000 1,003,527 1,723,207 908,900 110.41 189.592038 1,033,527 719,680 30,000 1,003,527 1,723,207 907,525 110.58 189.882039 1,033,527 719,680 30,000 1,003,527 1,723,207 910,400 110.23 189.282010 1,033,527 719,680 30,000 1,003,527 1,723,207 910,800 110.18 189.202011 1,033,527 719,680 30,000 1,003,527 1,723,207 910,200 110.25 189.322012 1,033,527 719,680 30,000 1,003,527 1,723,207 908,600 110.45 189.662013 1,033,527 719,680 30,000 1,003,527 1,723,207 911,000 110.16 189.162014 1,033,527 719,680 30,000 1,003,527 1,723,207 912,200 110.01 18a912015 1,033,527 719,680 30,000 1,003,527 1,723,207 912,200 110.01 18a912016 1,033,527 719,680 30,000 1,003,527 1,723,207 911,000 110.16 189.162017 1,033,527 719,680 30,000 1,003,527 1,723,207 908,600 110.45 189.662018 1,033,527 719,680 30,000 1,003,527 1,723,207 910,000 110.28 189.36

(1) Special Tax Revenues for Fiscal Year 2017-18 equal to 10Q0CP6 of the Assigned Special Tax rates for 86 units considered Developed Property as of March 1, 2017. Special Tax Revenues for Fiscal Year 2018—19 equal to 100.00% of the Assigned Special Tax rates for 147 units considered Developed Property as of March 1, 2018. Special Tax Revenues for Fiscal Year 2019-20 and each year thereafter equal to 100.0C% of the Assigned Special Tax rates for 147 units considered Developed Property plus 60additional unitsexpected to be considered Developed Property asof March 1, 2019.

(2) Special Tax Revenues for Fiscal Year 2017-18 and each year thereafter equal to 100.0C% of the Maximum Special Tax rate for property considered Undeveloped Property asof March 1 of the previous Fiscal Year.

(3) Equal to the Administrative Expense Requirement(4) Calculated by dividing the Net Special Tax Revenues from Developed Property column by the Series 2018 Bonds Debt

Service column.(5) Calculated by dividing the Net Special Tax Revenues from All Taxable Property column by the Series 2018 Bonds Debt

Service column.*6' Interest due on the 2018 Bonds on September 1, 2018 is expected to be paid from 2018 Bond proceedsSource: David Taussig & Associates, Inc., except for debt service on the 2018 Bonds, which was provided by the Underwriter.

18

Limitation on Special Tax Levy and Potential Impact on Ccverage. Pursuant to Section 53321(d) of the Government Code, under no circumstances will the Special Tax levied in ary Fiscal Year against ary Assessor's Parcel for which an occupancy permit for private residential use has been issued be increased as a consequence of delinquency or default by the owner or cwners of any other Assessor Parcel(s) within the District by more than 10% abcve the amount that would have been levied in that Fiscal Y ear had there never been any such delinquencies or defaults. As a result, it is possible that the District may not be able to increase the tax levy to the Assigned Special Tax in all years. Hcwever, subject to the limitations on the District’s ability to levy the necessary amount of Special Taxes as imposed by Section 53321(d) of the Government Code, the District can levy S pedal Taxes on U ndeveloped Property to make-up al I or a portion of any shortfal I intheSpecial Tax levy.

Collection of Special Taxes. The Special Taxes are collected by the Treasurer-Tax Collector of the County in the same manner and at the same time as ad valorem property taxes. The District may, however, collect the Special Taxes at a different time or in a different manner if necessary to meet its financial obligations.

The County assesses and collects secured and unsecured property taxes for the cities, school districts, and special districts within the County, including the Special Taxes. The delinquency dates for property tax pay merits are December 10 for the f i rst i nstal I ment and April 10 for the second i nstal I ment. Once the property taxes are collected, the County conducts its internal reconciliation for accounting purposes and distributes the District’s share of such taxes (including the Special Taxes) to the School District, periodically and typically pursuant to a published schedule. Prior to distribution, the moneys are deposited in an account established on behalf of the School District for the District in the Riverside County Investment Pool (the “Pool”) which is invested by the County Treasurer. If the County or the Pool were at any time to become subject to bankruptcy proceedings, it is possible that School District property taxes held in the Pool (including the Special Taxes), if ary, could be temporarily unavailable to the County. The District does not participate in the County’s Teeter Plan, which is an alternate method for allocating property taxes by counties. Accordingly, the collection of Special Taxes is subject to delinquencies.

The District has made certain covenants in the Fiscal Agent Agreement for the purpose of ensuring that the current maximum Special Tax rate and method of collection of the Special Taxes are not altered in a manner that would impair the District’s ability to collect sufficient Special Taxes to pay debt service on the 2018 Bonds and Administrative Expenses when due. First, the School District has ccvenanted that, to the extent it is legally permitted to do so, it will not reduce the maxi mum Special Tax rates in the District and will oppose the reduction of maximum Special Tax rates by initiative. See “SPECIAL RISK FACTORS — Proposition 218.” Second, the School District has covenanted not to permit the tender of Bonds in payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the District having insufficient Net Special Tax revenues to pay the principal of and interest on the 2018 Bonds remainingOutstanding follcwing such tender.

Although the Special Taxes constitute liens on taxed parcels within the District, they do not constitute a personal indebtedness of the cwners of property within the District. Morecver, other liens for taxes and assessments already exist on the property located within the District and others could come into existence in the future in certain situations without the consent or knowledge of the School District or the landcwners in the District. See “SPECIAL RISK FACTORS — Parity Taxes, Special Assessments and Land Development Costs” herein. There is no assurance that property owners will be financially able to pay the annual Special Taxes or that the/ will pay such taxes even if financially able to do so, all as more fully described in the section of this Official Statement entitled “SPECIAL RISK FACTORS."

Proceeds of Foreclosure Sales. The net proceeds received follcwing a judicial foreclosure sale of land within the District resulting from a landcwneris failure to pay the Special Taxes when due are included within the Net Special Tax Revenues pledged to the payment of principal of and interest on the 2018 Bonds under the F i seal A gent A greement.

19

Pursuant to Section 53356.1 of theAct, in the event of ary delinquency in the payment of any Special Tax or receipt by the District of Special Taxes in an amount which is less than the Special Tax levied, the Board, as the legislative body of the District, may order that Special Taxes be collected by a superior court action to foreclose the lien within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Under the Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory. Hcwever, the School District has ccvenanted with and for the benefit of the Owners of the 2018 Bonds to initiate foreclosure proceedings in certain situations. See “INTRODUCTION — SOURCES OF PAYMENT FOR THE 2018 BONDS — Foreclosure Proceeds” herein.

If foreclosure is necessary and other funds (including amounts in the Reserve Fund) have been exhausted, debt service payments on the 2018 Bonds could be delayed until the foreclosure proceedings have ended with the receipt of any foreclosure sale proceeds. J udicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions, i rvdvement by agencies of the federal gcvernment and other factors beyond the control of the School District and the District. See “SPECIAL RISK FACTORS — Bankruptcy and Foreclosure” herein. Morecver, no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay ary delinquent Special Tax installment. See “SPECIAL RISK FACTORS — Property Values” herein. Although the Act authorizes the School District to cause such an action to be commenced and diligently pursued to completion, the Act does not impose on the District or the School District any obligation to purchase or acquire ary lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. TheAct provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem taxes.

NoTeeter Plan

The District does not participate in the County’s Teeter Plan. Accordingly, the collection of Special Taxes is subject to delinquencies.

Reserve Fund

In order to secure further the payment of principal of and interest on the 2018 Bonds, the School District is required, upon delivery of the 2018 Bonds, to deposit in the Reserve Fund and thereafter to maintain therein, an amount equal to the Reserve Requirement for the 2018 Bonds, initially $912,200.00. The Fiscal Agent Agreement prcvides that the amount in the Reserve Fund shall, as of ary date of calculation, equal the least of (i) 10% of the proceeds of the sale of the 2018 Bonds; (ii) the Maximum Annual Debt Service on the 2018Bonds; or (Hi) 125% of average Annual Debt Service on the 2018 Bonds. The Reserve Requirement will be initially satisfied by the deposit of cash i n the Reserve Fund.

Subject to the limits on the maxi mum annual Special Tax which may be levied within the District, as described in APPENDIX A, the School District has covenanted to levy Special Taxes in an amount that is anticipated to be sufficient, in light of the other intended uses of the Special Tax proceeds, to maintain the balance in the Reserve Fund at the Reserve Requirement. Amounts in the Reserve Fund are to be applied to (i) pay debt service on the 2018 Bonds, to the extent other monies are not available therefor; (ii) pay the principal of and interest on the 2018 Bonds to the extent the amount on deposit in the Reserve Fund exceeds the Reserve Requirement, (iii) redeem the 2018 Bonds in whole or in part; and (iv) pay the principal and interest due in the final year of maturity of the 2018 Bonds. See APPENDIX D — “SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT."

The moneys in the Reserve Fund will be used only for payment of the principal of, and interest and any redemption premium on, the 2018 Bonds and at the direction of the School District, for deposit in the Rebate Fund.

20

Issuanceof Parity Bonds

The School District may sell one or more additional series of bonds for the District (the “Parity Bonds”) secured on a parity with the 2018 Bonds if certain conditions precedent are met. Debt service on the Parity Bonds will be secured by a pledge of and lien upon Net Special Tax Revenues that will be on a parity with the pledge of and lien upon the Net Special Tax Revenues that secure the payment of debt service on the 2018Bonds. Thetimingof the sale of these additional bondswill depend on the progress of development and residential construction within the District. See“PROPERTY OWNERSHIP AND THE DEVELOPMENT" in this Official Statement for information concerning the current development and future planned development within the District. Capitalized terms not defined in this section, or elsewhere in this Official Statement, have the meanings set forth in the Fiscal Agent Agreement. See Appendix D — “SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT."

Upon issuance of the 2018 Bonds, $14,055,000 of the aggregate principal amount of bonds authorized to be issued for the District for the purpose of financing the construction and acquisition of additional Facilities will be unissued. Parity Bonds forthe purpose of finding additional Facilities may only beissued pursuant toa separate agreement entered into by the District and the Fiscal Agent and subject to the follcwing specific conditions precedent:

(1) The agreement providing for the issuance of such Parity Bonds must provide for the establishment of separate funds and accounts, including either: (i) a deposit to a reserve account for the Parity B onds i n an amount defi ned i n such agreement, and such agreement must expressly declare that the Owners of such Parity Bondswill have no interest in or claim to the Reserve Fund and that the Owners of the 2018 Bonds covered by the Reserve Fund will have no interest in or claim to such other reserve account; or(ii) no deposit to another reserve account, as long as such agreement expressly declares that the cwners of such Parity Bonds wi 11 have no i nterest i n or clai m to the Reserve Fund.

(2) The value of the property subject to the Special Tax (to be determined by reference to either or some combination of an appraisal prepared by an MAI appraiser selected by the District, with a date of value no earlier than 90 days before the date the proposed Parity Bonds would beissued, or the assessed val ues shown on the last equalized County assessor’s property tax rolls) shall be at least five times the sum of: (i) the aggregate principal amount of all 2018 Bonds then outstanding, plus (ii) the aggregate principal amount of the series of Parity Bonds proposed to be issued, plus (iii) the aggregate principal amount of any overlapping special tax or fixed assessments liens on the parcels in the District subject to the levy of Special Taxes.

(3) The amount of the maximum Special Taxes that may be levied in each Fiscal Year under the Ordinance must at least equal 110% of the total Annual Debt Service on the then-outstanding 2018 Bonds, the proposed Parity Bonds and theAdministrative Expense Requirement in the then-current Fiscal Year.

Notwithstanding the foregoing, the District may issue Refunding Bonds without the need to satisfy the value and coverage tests described in (2) and (3) abcve. “Refunding Bonds” means bonds issued by the District, the net proceeds of which are used to refund all or a portion of the then-outstanding 2018 Bonds; provided that the principal and interest on the Refunding Bonds to their final maturity date is less than the principal and interest on the 2018 Bonds being refunded to their final maturity date, and the final maturity of the Refunding Bonds is not later than the final maturity of the 2018 Bonds being refunded.

Nothing in the Fiscal Agent Agreement prohibits the District from issuing ary other bonds or otherwise incurring debt secured by a pledge of the Net Special Tax Revenues subordinate to the pledge thereof under the Fiscal Agent Agreement.

21

THE DISTRICT

General Description of the District

The District was formed on July 18, 2016 by the Board pursuant to the Act. The Act was enacted by the California legislature to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. Any local agency (as defined in the Act) may establish a community facilities district to provide for and finance the cost of eligible public facilities and services. Generally, the legislative body of the local agency which forms a community facilities district acts on behalf of such district as its legislative body. Subject to apprcval by twcnthirds of the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a community facilities district or improvement area therein and may levy and collect a special tax within such district or imprcvement area to repay such indebtedness.

Pursuant to the Act, in forming the District, the B card adopted resolutions on May 31, 2016 stating its intention to establish the District, to authorize the levy of the Special Taxes, and to authorize the District to incur bonded indebtedness. A copy of the Rates and Method is set forth in Appendix A hereto Following a public hearing conducted pursuant to the Act, onj uly 18, 2016, the B card adopted resolutions establishing the District and calling consolidated special elections to submit the levy of special taxes and the incurring of bonded indebtedness to the qualified voters of the District. At a special election held on J uly 18, 2016, the owners of the property within the District authorized the District to incur a bonded indebtedness for the purpose of financing public facilities for the District in the amount of not to exceed $30,000,000. On August 2,2016 a Notice of Special Tax Lien was recorded in the official records of the County.

The District contains approximately 333.7 acres located in the northwestern portion of the County and south of the City. The property within the District constitutes the development kncwn as "Citrus Heights," which is divided into three neighborhoods: Orchard, Floral Ridge and Hill Crest. For purposes of the Special Tax, Tax Zone 1 applies to the property in the Orchard neighborhood, Tax Zone 2 applies to property in the Floral Ridge neighborhood and Tax Zone 3 applies to property in the Hill Crest neighborhood. The community of Citrus Heights is planned to comprise a total of 343 singleTamily homes within three different product types of homes. In addition, the community will include eight community parks and a master trail system, plus much additional open space comprising water quality/detention basins, hillside and terraced areas, and natural drainage courses. Of the area within the District, 106 acres are within the 343 singleTamily lots, 7.3 acres are within the eight park sites, 5.7 acres are within the four water quality /detention basins, and nearly 170 acres are within the other open space areas. The property in the District is being developed by Lennar Homes of California, Inc. ("Lennar Homes" or the "Developer"). As of February 1, 2018, there were 94 completed production homes which had been conveyed to individual homecwners, 6 completed model homes cwned by Lennar Homes, 6 completed production homes, 26additional production homes under construction, 2 model units under construction and 209 lots in partial to near finished condition. See “PROPERTY OWNERSHIPANDTHE DEVELOPMENT." As of April 1,2018, an additional 15production homes had been closed and transferred to individual homecwners, the 2 model homes under construction were completed, there are 36 lots with homes under construction, and 22 homes were under contract to be sold.

Water and sewer service to the property within the District is supplied by Western Municipal Water District. Electricity is supplied by Southern California Edison, and gas is supplied by Southern California Gas Company.

Although, likeall of Southern California, the landwithinthe District is subject to seismic activity, itis not located in a designated Earthquake Study Zone as determined by the California State Geologist. Hcwever, as with all of Southern California, the property within the District will be subject to ground shaking in the a/ent of earthquakes. See“SPECIAL RISK FACTORS — Natural Disasters.”

22

The Federal Emergency Management Agency has determined that the District is not located in a flood area and flood insurance will not be required. See“SPECIAL RISK FACTORS — Natural Disasters.”

Direct and Overlapping I ndebtedness

The ability of an cwner of land within the District to pay the Special Taxes could be affected by the existence of other taxes and assessments imposed upon the property. These other taxes and assessments consist of the direct and overlapping debt in the District as set forth in Table 1 below (the “Debt Report”). The Debt Report sets forth those entities which have issued debt and does not include entities which have not issued debt and only la/y or assess fees, charges, ad valorem taxes or special taxes. See Tables 2A, 2B and2C for information regarding other entities levying taxes, assessments or other charges on property in the District. The Debt Report includes the principal amount of the 2018 Bonds. The Debt Report has been derived from data assembled and reported to the District by David Taussig & Associates, Inc. as of September 2, 2017, updated to include the principal amount of the 2018 Bonds. Neither the School District nor the Underwriter has independently verified the information in the Debt Report and such entities do not guarantee its completeness or accuracy. The allocation of total debt outstanding will change as additional development occurs.

TABLE 1RIVERSIDE UNIFIED SCHOOL DISTRICT

COMMUNITY FACILITIES DISTRICT NO.32 DIRECTANDOVERLAPPING DEBT

Amount of Percent ofActual F iscal Levy on Levy on DistrictShareYear 2017-18 Parcels in Parcels in Total Debt of Total Debt

Overlapping District Total Levy District*1' District Outstanding*2' Outstanding

Riverside Unified School DistrictC.O.Bonds $ 22,112,155 $ 32,968 01491% $226,320,000 $ 337,436

Metropolitan Water DistrictC.O. Bonds Riverside City Community College

121,647,024 1,217 0.0010 74,905,000 749

C.O. Bonds 15,181,528 5,619 Q0370 256,365,339 94,892Estimated Share of Overlapping DebtAllocabletothe District $ 433,077

Plus the 2018 Bonds 15.945.000Estimated Share of Direct and Overlapping DebtAllocabletothe District $16378.077

^ The amount of levy shown herein is based on the Fiscal Year 2017-18 ad valorem rates. Calculated by applying the corresponding ad valorem rate to the Fiscal Year 2017-18 assessed value.

(2) Asof September 2, 2017.Source: David Taussig & Associates, Inc.

Tables 2A, 2B and2C belcw set forth the estimated total effective tax rates for a generic single family home within two land use classes in Tax Zone 1 (Orchard neighborfiood) and one land use class in Tax Zone 3 (Hill Crest neighborhood) within the District, based upon Fiscal Year 2017-18 tax rates and the Developer’s proposed sales prices. These three land use classes were selected because the majority of the parcels therein have been transferred to individual homeowners. Tables 2A, 2B and 2C set forth those entities with fees, charges, ad valorem taxes and special taxes regardless of whether those entities have issued debt and assume the i ssuance of the 2018 B onds.

23

TABLE 2ARIVERSIDE UNIFIED SCHOOL DISTRICT

COMMUNITY FACILITIES DISTRICT NO.32 FISCAL YEAR 2017-18SAMPLE TAX BILL

TAX ZONE 1 (ORCHARD NEIGHBORHOOD),TAX CLASS 5

Valuation and Property Taxes

SALES PRICE0'NETVALUE11'Average Unit Size for Developed Property*2'Average Lot Size for Residential Property*3'

$582,990 575,990

2,821 Square Feet 12,371 Square Feet

Percent of NetValue

ExpectedAmount

MaximumAmount

AD VALOREM PROPERTY TAXES*4'Basic LevyMetropolitan Water DistrictC.O. BondsRiverside Unified School DistrictC.O. Bonds Riverside Citv Communitv Colleae C.O. Bonds

1.0000CB60.003500.094810.01616

$ 5,759.90 20.16

546.10 93.08

Total General Property Taxes and Overrides 1.11447% $ 6,419.24

ASSESSMENTS, SPECIAL TAXES AND PARCEL CHARGESFlood Control Storrrwater/Cleanwater*5'County Service Area 152 -Riverside Storrrwater*6'Metropolitan Water District West Standby Charge*73County of Riverside CFD No. 2016-1M Tr 36390 (Citrus Heights)*8'Riverside Unified School DistrictCFD No. 32*9'

$ 3.7968.82 9.22

407.52 4,317.00

$ 3.7968.82 9.22

$ 407.524,317.00

Total Assessments and Parcel Charges $ 4,806.35 $ 4,806.35

PROJECTED TOTAL PROPERTY TAXES $ 11.225.59 $ 11.225.59

Projected Total Effective Tax Rate (as % of SalesPrice) 1.92552% 1.92552%

(1) Based on proposed sales price for Residence Two homes in the Orchard neighborhood (which constitute the majority of the homes in this tax class) as shown on the Developer’s website. Net Value includes $7,000 homecwner's exemption. Sales Price used to determine the Total Effective Tax Rate.

(2) Based on the average unit size for 15 homes in Tax Class 5 levied in Fiscal Year 2017-18 in the Orchard neighborhood.(3) Based on the average lot size for 15 homes in Tax Class 5 levied in Fiscal Year 2017-18 in the Orchard neighborhood.(4) Based on actual Fiscal Year 2017-18 ad valorem rates.(5) Based on the Fiscal Year 2017-18 rate of $3.75 per benefit assessment unit (BAU). For small parcels (less than 1/6 acre), a

BAU is equal to the total lot size in SF/7,200. For large parcels (1/6 acre to 2.5 acres), a BAU is equal to 1+(Q l*(total lot size in SF-7,200)A3,560).

*® Based on the Fiscal Year 2017-18 rate of $68.82 per benefit unit(7) Based on the Fiscal Year 2017-18 rate of $9.22 per parcel or per acre, whichever is greater.(8) Based on the Fiscal Year 2017-18 rate of $407.52 per single family dwelling unit The Maximum Special Tax rate escalates

each year by CPI, with a minimum increase of two percent (2.0C%) and a maximum increase of six percent (6.0C%).(9) Based on the actual Riverside Unified School District CFD No. 32 Fiscal Year 2017-18 Special Tax rate of $4,317.00 per

unit for Zone 1 Tax Class 5 property, which is 100.0C% of the Assigned Special Tax rate.Source: David Taussig & Associates, Inc.

24

TABLE 2BRIVERSIDE UNIFIED SCHOOL DISTRICT

COMMUNITY FACILITIES DISTRICT NO.32 FISCAL YEAR 2017-18SAMPLE TAX BILL

TAX ZONE 1 (ORCHARD NEIGHBORHOOD),TAX CLASS 2

Valuation and Property Taxes

SALES PRICE0'NETVALUE11'Average Unit Size for Developed Property*2'Average Lot Size for Residential Property*3'

$602,310 595,310

3,823Square Feet 9,874 Square Feet

Percent of NetValue

ExpectedAmount

MaximumAmount

AD VALOREM PROPERTY TAXES*4'Basic LevyMetropolitan Water DistrictC.O. BondsRiverside Unified School DistrictC.O. Bonds Riverside Citv Communitv Colleae C.O. Bonds

1.0000CB60.003500.094810.01616

$ 5,953.10 20.84

564.41 96.20

Total General Property Taxes and Overrides 1.11447% $ 6,634.55

ASSESSMENTS, SPECIAL TAXES AND PARCEL CHARGESFlood Control Storrrwater/Cleanwater*5'County Service Area 152 -Riverside Storrrwater*6'Metropolitan Water District West Standby Charge*73County of Riverside CFD No. 2016-1M Tr 36390 (Citrus Heights)*8'Riverside Unified School DistrictCFD No. 32*9'

$ 3.7768.82 9.22

407.52 4,935.00

$ 3.7768.82 9.22

$ 407.524,935.00

Total Assessments and Parcel Charges $ 5,424.33 $ 5,424.33

PROJECTED TOTAL PROPERTY TAXES $ 12.058.88 $ 12.058.88

Projected Total Effective Tax Rate (as % of SalesPrice) 2.00211% 2.00211%

(1) Based on proposed sales price for Residence Three homes in the Orchard neighborhood (which constitute the majority of the homes in this tax class) as shown on the Developer’s website. Net Value includes $7,000 homecwner's exemption. Sales Price used to determine the Total Effective Tax Rate.

(2) Based on the average unit size for 15 homes in Tax Class 2 levied in Fiscal Year 2017-18 in the Orchard neighborhood.(3) Based on the average lot size for 15 homes in Tax Class 2 levied in Fiscal Year 2017-18 in the Orchard neighborhood.(4) Based on actual Fiscal Year 2017-18 ad valorem rates.(5) Based on the Fiscal Year 2017-18 rate of $3.75 per benefit assessment unit (BAU). For small parcels (less than 1/6 acre), a

BAU is equal to the total lot size in SF/7,200. For large parcels (1/6 acre to 2.5 acres), a BAU is equal to 1+(Q l*(total lot size in SF-7,200)A3,560).

*® Based on the Fiscal Year 2017-18 rate of $68.82 per benefit unit(7) Based on the Fiscal Year 2017-18 rate of $9.22 per parcel or per acre, whichever is greater.(8) Based on the Fiscal Year 2017-18 rate of $407.52 per single family dwelling unit The Maximum Special Tax rate escalates

each year by CPI, with a minimum increase of two percent (2.0C%) and a maximum increase of six percent (6.0C%).(9) Based on the actual Riverside Unified School District CFD No. 32 Fiscal Year 2017-18 Special Tax rate of $4,935.00 per

unit for Zone 1 Tax Class 2 property, which is 100.0C% of the Assigned Special Tax rate.Source: David Taussig & Associates, Inc.

25

TABLE 2CRIVERSIDE UNIFIED SCHOOL DISTRICT

COMMUNITY FACILITIES DISTRICT NO.32 FISCAL YEAR 2017-18SAMPLE TAX BILL

TAX ZONE 3(HILL CREST NEIGHBORHOOD),TAX CLASS 1

Valuation and Property TaxesPercent of NetValue

ExpectedAmount

MaximumAmount

SALES PRICE11'NETVALUE111Average Unit Size for Developed Property®Average Lot Size for Residential Property®

$754,390 747,390

4,644 Square Feet 14,244 Square Feet

AD VALOREM PROPERTY TAXES®Basic LevyMetropolitan Water DistrictC.O. BondsRiverside Unified School DistrictC.O. Bonds Riverside Citv Community Colleae C.O. BondsTotal General Property Taxes and Overrides

1.00000%0.003500.094810.016161.11447%

$ 7,473.90 26.16

708.60 120.78

$ 8,329.44

ASSESSMENTS, SPECIAL TAXES AND PARCEL CHARGESFlood Control Storrrwater/Cleanwater*51 $ 3.81 $ 3.81County Service Area 152 -Riverside Storrrwater® 68.82 68.82Metropolitan Water District West Standby Charge171 9.22 9.22County of Riverside CFD No. 2016-1M Tr 36390 (Citrus Heights)181 407.52 407.52Riverside Unified School DistrictCFD No. 32(91 5.977.00 5.977.00Total Assessments and Parcel Charges $ 6,466.37 $ 6,466.37

PROJECTED TOTAL PROPERTY TAXES $ 14.795.81 $ 14.795.81

Projected Total Effective Tax Rate (as % of SalesPrice) 1.96129% 1.96129%

(1) Based on proposed sales price for 4644 Next Cen homes in the Hillcrest neighborhood (which constitute the majority of the homes in this tax class) as shown on the Developer’s website. Net Value includes $7,000 homecwner's exemption. Sales Price used to determine the Total Effective Tax Rate.

(2) Based on the average unit size for 10 homes in Tax Class 1 levied in Fiscal Year 2017-18 in the Hill Crest neighborhood.(3) Based on the average lot size for 10 homes in Tax Class 1 levied in Fiscal Year 2017-18 in the Hill Crest neighborhood.(4) Based on actual Fiscal Year 2017-18 ad valorem rates.(5) Based on the Fiscal Year 2017-18 rate of $3.75 per benefit assessment unit (BAU). For small parcels (less than 1/6 acre), a

BAU is equal to the total lot size in SF/7,200. For large parcels (1/6 acre to 2.5 acres), a BAU is equal to 1+(Q l*(total lot size in SF-7,200)A3,560).

(® Based on the Fiscal Year 2017-18 rate of $68.82 per benefit unit(7) Based on the Fiscal Year 2017-18 rate of $9.22 per parcel or per acre, whichever is greater.(8) Based on the Fiscal Year 2017-18 rate of $407.52 per single family dwelling unit The Maximum Special Tax rate escalates

each year by CPI, with a minimum increase of two percent (2.0C%) and a maximum increase of six percent (6.0C%).(9) Based on the actual Riverside Unified School District CFD No. 32 Fiscal Year 2017-18 Special Tax rate of $5,977.00 per

unit for Zone 3 Tax Class 1 property, which is 100.00% of the Assigned Special Tax rate.Source: David Taussig & Associates, Inc.

26

Appraisal Report

The assessed value of the property within the District, as shown on the County’s assessment roll for Fiscal Year 2017-18, is $34,774,066. However, as a result of the requirements of Article X111A of the California Constitution, a property’s assessed value is not necessarily indicative of its market value. I n order toprcvide information with respect to the value of the property within the District, the School District engaged Stephen G. White, MAI, the Appraiser, to prepare the Appraisal Report.

The purpose of the Appraisal Report was to estimate the aggregate market value of the “as is” condition, subject to special tax and special assessment liens, of the taxable property within the District. Subject to the contingencies, assumptions and limiting conditions set forth in the Appraisal Report, the Appraiser concluded that, as of February 1, 2018, the market value of the property within the District was $110,220,000, consisting of (i) $58,620,000 for the 94 completed homes owned by individual homecwners within the District as of such date, and (ii) $51,600,000 for the 12 completed homes, lots in various stages of construction and partial to near finished lotscwnedby Lennar Homes as of such date.

Reference is made to APPENDIX H for a complete list of the assumptions and limiting conditions and a f ul I di scussi on of the apprai sal methodd ogy and the basi s for the A pprai ser’s opi ni ons. I n the event that ary of the contingencies, assumptions and limiting conditions are not actually realized, the value of the property within the District may be less than the amount reported in the A pprai sal Report. I nary case, there can be no assurance that ary portion of the property within the District would actually sell for the amount indicated by the A pprai sal Report.

The A pprai sal Report merely i ndi cates the A pprai ser5 s opi ni on as to the market val ue of the property referred to therein as of the date and under the conditions specified therein. The Appraiser’s opinion reflects conditions prevailing in the applicable market as of the date of value. The Appraiser’s opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not change adversely in the future.

The Appraiser has an “MAI” designation from the Appraisal Institute and has prepared numerous apprai sals for the sale of land-secured municipal bonds. TheAppraiserwas selected by the School Districtand has no material relationships with the School District, the District or the cwners of the land within the District other than the relationship represented by the engagement to prepare the Appraisal Report and other similar engagements for the School District. The School District instructed the Appraiser to prepare its analysis and report in conformity with District-apprcved guidelines and the Appraisal Standards for Land Secured Financings published in 1994 and revised in 2004 by the California Debt and Investment Advisory Commission. A cop/ of the A pprai sal Report is included as APPENDIX H to this Official Statement.

11 i s a condi ti on precedent to the i ssuance of the 2018 B onds that the A pprai ser del i ver to the Di stri ct a certification to the effect that, while the Appraiser has not updated the Appraisal Report since the date of the Appraisal Report and has not undertaken ary obligation to do so, nothing has come to the attention of the Appraiser subsequent to the date of the Appraisal Report that would cause the Appraiser to believe that the value of the property in the District is less than the value reported in the Appraisal Report. However, the Appraiser notes that acts and events may have occurred since the date of the Appraisal Report which could result in both positive and negative effects on market value within the District.

Estimated Value4:o-Lien Ratios

Table 3 below incorporates the values assigned to parcels in the Appraisal Report, the estimated principal amount of direct and overlapping debt allocable to each category of parcels and the estimated appraised val ueto-lien rati os for various categories of parcels based upon land values and property cwnership in the District as of February 1, 2018. Table 3 sets forth information based on land classification as of March 1, 2018, and includes a projected Fiscal Year 2018-19 Special Tax levy. Table3 calculates the appraised

27

valueto-lien ratios based upon the principal amount of the 2018 Bonds and other overlapping general obligation debt described in Table 1. The estimated appraised valueto-lien ratio including all Developed Property and Undeveloped Property as of February 1, 2018, based on land use classification as of March 1, 2018, and including the 2018 Bonds and other overlapping general obligation debt in such calculation, is 6.73TO-1. In the Annual Reports provided pursuant to the District Continuing Disclosure Agreement, Table 3 will not be updated based on appraised value, but similar information will be provided based on current assessed value.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

28

TABLE 3RIVERSIDE UNIFIED SCHOOL DISTRICT

COMMUNITY FACILITIES DISTRICT NO.32 ESTI MATED APPRAISED VALUE-TO-LIEN RATIOS FOR FISCAL YEAR 2018-19

P roperty Classification/Neighborhood Owner,C on struct] on Statu s(1)(2)

Number of Lots/

Units

ProjectedF iscal Year

2018-19 Special Tax

LaV3)

Percent of Total

Special TaxLaV3)

CFD No. 32 Outstanding

Bond Amount®

RiversideUnifiedSchool

DistrictC.O.Outstanding

BondAmount®

Metropolitan Water District

C.O.Outstanding

Bond Amount®

RCCDC.O.Outstanding

BondAmount®

Total Direct and

OverlappingDebt™® AppraisedValue®

Value-to-Lien

Ratios®

Da/eloped PropertyOrchard

Individual Owners(Completed-Sold) 57 $ 267,285 36.50% $ 5,820,558 $ 139,191 $ 309 $ 39,143 $ 5,999,201 $ 34,200,000 5.70 to 1Lennar Homes (Completed-U nsold) 6 29,330 4.01 638,708 11,683 26 3,286 653,703 3,210,000 4.91 to 1Lennar Homes (Under Construction) 19 90,778 12.40 1,976,836 4,271 9 1,201 1,982,318 5,870,000 2.96 to 1Lennar Homes (Vacant Lots) 5 23,484 3.21 511,402 1,124 2 316 512,844 980,000 1.91 to 1

Hillcrest?9Individual Owners (Completed-Sold) 37 200,263 27.35 4,361,047 113,839 253 32,013 4,507,153 24,420,000 5.42 to 1Lennar Homes (Completed-U nsold) 6 30,442 4.16 662,923 16,729 37 4,705 684,394 3,450,000 5.04 to 1Lennar Homes (Under Construction) 7 38,098 5.20 829,645 1,574 3 442 831,664 2,450,000 2.95 to 1Lennar Homes (Vacant Lots) 8 43,400 5.93 945,104 1,798 4 506 947,412 1,410,000 1.49 to 1

Floral Ridge®Lennar Homes(UnderConstruction) 2 9,128 1.25 198,777 450 1 126 199,354 820,000 4.11 to 1

Subtotal - Da/eloped Property 147 $ 732,208 100.00% $ 15,945,000 $ 290,660 $ 646 $ 81,738 $ 16,318,043 $ 76,810,000 4.71 to 1

Unda/eloped PropertyOrchard

Lennar Homes (Vacant Lots) 20 $ 0 0.00% $ 0 $ 7,213 $ 16 $ 2,028 $ 9,257 $ 3,920,000 423.45 to 1Hillcrest

Lennar Homes (Vacant Lots) 51 0 0.00% 0 11,464 25 3,224 14,714 8,990,000 610.99 to 1Floral Ridge

Lennar Homes (Vacant Lots) 125 0 0.00% 0 28,099 62 7,902 36,063 20,500,000 568.45 to 1Subtotal - Unda/eloped Property 196 $ 0 0.00% $ 0 $ 46.776 $ 104 $ 13.154 $ 60.034 $ 33.410.000 556.52 to 1

Total 343 S 732.208 100.00% S 15.945.000 S 337.436 $ 749 S 94.89? S 16.378.077 $ 110.770.000 6.73 to 1

^ Reflects building permits issued as of March 1, 2018. Per the Rates and Method, Developed Property is property for which a building permit was issued as of March 1, 2018. Undeveloped Property is property for which a building permit was not issued as of March 1,2018.

(2) Ownership and construction status based on Appraisal Report with adate of value of February 1, 2018.(3) Fiscal Year 2018-19 projected levy equal to 100.00% of the Assigned Special Tax rates for Developed Property.(4) Represents the principal amount of the 2018 Bonds. Allocated based on Fiscal Year 2018-19 projected la/y.(5) As of September 2, 2017. Allocated based on Fiscal Year 2017-18 levy.(6) Value based on Appraisal Reportwithadateofvalueof February 1, 2018.(7> Calculated by dividing Appraised Value column by the Total Direct and Overlapping Debt column.(8) The Official Statement generally describes the Hillcrest neighborhood asTaxZone3, but three Hi Merest model units are actually located inTaxZone 1 (Orchard).(9) The Official Statement generally describes the Floral Ridge neighborhood asTax Zone 2, but two Floral Ridge model units are actually located inTaxZone 1 (Orchard).Source: DavidTaussig & Associates, Inc.

29

Table 4 belcw sorts the Developed Property within the District by estimated assessed valueto-lien based on land use classification as of March 1,2018.

TABLE 4RIVERSIDE UNIFIED SCHOOL DISTRICT

COMMUNITY FACILITIES DISTRICT NO.32 PROJ ECTED FISCAL YEAR 2018-19

ESTI MATED APPRAISED VALUE-TO-LIEN RATIOS (DEVELOPED PROPERTIES ONLY)(1)

F iscal Year Total Direct2018-19 CF D No. 32 Total and

Number of Appraised Outstanding Overlapping OverlappingValue to Lien Ratio Units Value(2) Bond Amountf3) Debt Debt

Less Than 3:1(4) 27 $ 6,210,000 $ 3,016,930 $ 7,790 $ 3,024,720Between 3:1 and 3.99:1 11 4,070,000 1,175,566 3,174 1,178,740Between 4:1 and 4.99:1 19 1Q870,000 2,192,991 88,068 2,281,058Between 5:1 and 5.99:1 66 41,080,000 7,306,267 231,618 7,537,885Between 6:1 and 6.99:1 24 14,580,000 2,253,246 42,394 2,295,641Greater than 7:1 0 0 0 0 0Total 147 X 76.810.000 X 15.945.000 $ 373.043 X 16.318.043

(1) Reflects building permits issued as of March 1, 2018. Per the Rates and Method, Developed Property is property for which a building permit was issued as of March 1, 2018.

(2) Value based on Appraisal Reportwithadateofvalueof February 1, 2018.(3) Represents the principal amount of the 2018 Bonds. Allocated based on Fiscal Year 2018-19 projected levy.(4) Includes eleven lots currently under construction and five vacant lots in the Orchard neighborhood. Of the eleven lots, seven are in the early

stages of construction and four are at approximately 30.00% completion. In addition, includes three lots currently under construction and eight vacant lots in the Hill crest neighborhood. The three lots are at approximately 50.00% completion. Construction status based on Appraisal Reportwithadateofvalueof February 1, 2018.

Source: DavidTaussig & Associates, Inc.

30

Special Tax Rates

Special Taxes are levied annually in accordance with the Rates and Method. See APPENDIX A— “RATES AND METHOD OF APPORTIONMENT OF SPECIAL TAX." Table 5 below sets forth the projected Assigned Special Taxes that will be levied within the District for Fiscal Year 2018-19 based on land use classification as of March 1,2018. The projected Fiscal Year 2018-19 Special Tax levy is equal to 100% of the Assigned Special Tax rate plus the Administrative Expense Requirement. Assigned Special Taxes do not escalate in future Fiscal Y ears.

TABLE 5RIVERSIDE UNIFIED SCHOOL DISTRICT

COMMUNITY FACILITIES DISTRICT NO.32 PROJ ECTEDSPECIAL TAXES FOR FISCAL YEAR 2018-19

BY LAND USE CATEGORY

ProjectedF iscal Year

F iscal Year 2018-19 Total Fiscal

Projected Fiscal Year

TotalProjected

2018-19 Assigned Year 2018-19 2018-19 F iscal Year

Property Type/Tax Class(1)Number of Special Tax Assigned Special Tax 2018-19

Units per Unit Special Tax per Unit Special Tax

Tax Zone 1Developed Property

Tax Class 1 (SFD >4,000SF) 29 Units $5,104 $ 148,016 $5,104 $ 148,016Tax Class 2 (SFD 3,801 - 4.000SF) 27Units 4,935 133,245 4,935 133,245Tax Class 3 (SFD 3,401 -3,800SF) 1 Units 4,787 4,787 4,787 4,787Tax Class 4 (SFD 3,001 -3.400SF) OUnits 4,643 0 4,643 0Tax Class 5 (SFD 2,601 -3,000SF) 25 Units 4,317 107,925 4,317 107,925Tax Class 6 (SFD <2,601 SF) lOUnits 4.024 40.240 4.024 4Q240

Subtotal 92 Units N/A $ 434,213 N/A $ 434,213

Tax Zone 2Developed Property

Tax Class 1 (SFD >4,200SF) OUnits $5,803 $ 0 $5,803 $ 0Tax Class 2 (SFD 3,801 - 4.200SF) OUnits 5,634 0 5,634 0Tax Class 3 (SFD 3,401 - 3,800SF) OUnits 5,470 0 5,470 0Tax Class 4 (SFD 3,201 - 3.400SF) OUnits 5,044 0 5,044 0Tax Class 5 (SFD 3,001 - 3.200SF) OUnits 4,618 0 4,618 0Tax Class 6 (SFD <3,001 SF) OUnits 4.480 0 4.480 0

Subtotal OUnits N/A $ 0 N/A $ 0

Tax Zone 3Developed Property

Tax Class 1 (SFD >4,500SF) 19 Units $5,977 $ 113,563 $5,977 $ 113,563Tax Class 2 (SFD 4,201 - 4.500SF) OUnits 5,798 0 5,798 0Tax Class 3 (SFD 4,001 - 4.200SF) OUnits 5,624 0 5,624 0TaxClass4 (SFD 3,801 - 4.000SF) 1 Units 5,455 5,455 5,455 5,455Tax Class 5 (SFD 3,401 - 3,800SF) 16 U nits 5,302 84,832 5,302 84,832Tax Class 6 (SFD <3,401 SF) 19 Units 4,955 94,145 4,955 94,145

Subtotal 55 Units N/A $ 297,995 N/A $ 297,995

Total 147Units N/A $ 732,208 N/A $ 732,208

Reflects building permits issued as of March 1, 2018. Per the Rates and Method, Developed Properly is properly for whicha building permit was issued as of March 1, 2018

Source: David Taussig & Associates, Inc.

31

Largest Taxpayers

Based on da/elopment status as of March 1, 2018, and assuming no further lot transfers occur after such date, Lennar Homes is expected to be responsible for approximately 36.15% of the Fiscal Year 2018-19 Special Tax levy, with individual homecwners projected to be responsible for the remaining 63.85%. Actual property ownership, development status, share of Fiscal Year 2018-19 Special Taxes in Fiscal Year 2018-19 and percent of total Special Taxes, will change to the extent that development, home construction and home sales occur. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT" and “SPECIAL RISK FACTORS — Concentration of Ownership.”

Delinquency History

Special Taxes within the District were first levied in Fiscal Year 2017-18 in the amount of $427,080. As of May 3, 2018, such Special Taxes were delinquent in the amount of $12,606, which represented a delinquency rate of approximately 2.95%. Future delinquencies could increase as a result of various factors such as changes in the local or national economy1, increases in the mortgage rates and/or increases in the unemployment rate in the area. See“SPECIAL RISK FACTORS — Special Tax Delinquencies.”

PROPERTY OWNERSHIP ANDTHE DEVELOPMENT

The information prcvided in this section has been included because it may be considered relevant to an informed evaluation and analysis of the 2018 Bonds and the District. No assurance can be given, however, that the proposed development of the property within the District will occur in a timely manner or in the configuration or to the density described herein, or that the Developer, any owners or affiliates thereof, or any other property cwner described herein will or will not retain ownership of its respective property within the District. Neither the 2018 Bonds nor any of the Special Taxes are personal obligations of any property owner within the District. The 2018 Bonds are secured solely by the Special Taxes levied on property within the District and amounts on deposit in certain of the funds and accounts maintained by the Fiscal Agent under the Fiscal Agent Agreement. See “SPECIAL RISK FACTORS” for a discussion of certain of the risk factors that should be considered in evaluating the investment quality of the 2018 Bonds.

The Developer

As previously described in this Official Statement, the property in the District is being developed by Lennar Homes of California, Inc., a California corporation, which is based in Aliso Viejo, California, and has been in the business of developing residential real estate communities in California si nee 1995.

Lennar Homes is wholly-owned by U.S. Home Corporation, a Delaware corporation (“U.S. Home”). U.S. Home is wholly-cwned by Lennar Corporation.

Lennar Corporation, founded in 1954 and publicly traded under the symbol “LEN” since 1971, is one of the nation’s largest home builders, operating under a number of brand names, including Lennar Homes and U.S. Home. Lennar Homes primarily develops residential communities both within the Lennar family of builders and through consolidated and unconsolidated partnerships in which Lennar Homes maintains an interest.

Lennar Corporation is subject to the informational requirements of the Exchange Act and in accordance therewith files reports, proxy statements and other information with the SEC. Such filings, particularly the Annual Report on Form 10-K and its most recent Quarterly Report on Form 10-Q, may be inspected and copied at the public reference facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Such files can also be accessed ever the internet at the SEC’s website at www.sec.gcv. 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

32

Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on the internet site.

Copies of Lennar Corporation’s Annual Report and related financial statements, prepared in accordance with generally accepted accounting standards, are available from Lennar Corporation’s website at www.lennar.com. This internet address is included for reference only and the information on the I nternet site is not a part of this Official Statement and is not incorporated ty 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.

On October 30, 2017 Lennar Corporation announced that it would acquire CalAtlantic Group Inc. (“CalAtlantic”) for $5.7 billion in a combination of cash and stock, creating the largest home builder in the United States by revenue. The transaction closed in February 2018. Both Lennar Corporation’s (stock symbol “LEN”) and CalAtlantic’s (stock symbol “CAA”) public filings with theSecurities and Exchange Commission are accessible ever the internet at the SEC’s website. These internet addresses are included for reference only and the information on the internet sites are not a part of this Official Statement and are not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on the internet sites. The acquisition of CalAtlantic by Lennar Corporation will not affect Lennar Homes’ developments in the District as described herein.

The Development Plan

General Description of the District. As of February 1, 2018 cwnership of the property was as follcws: (i) of the 107 lots in the “OrcharcT community, 57 lots (with completed homes) were cwned ty individual homeewners and 50 lots were owned by Lennar Homes, including three completed model homes, three completed production homes (one of which was inescrcw), 19 lots with homes under construction (10 of which were in escrcw), and 25 finished lots; (ii) inthe“Floral Ridge” community, all 127 lots were cwned by Lennar Homes, including 2 model homes under construction with the remaining 125 lots in finished or near finished condition (none of which were in escrow); and (iii) of the 109 lots in the “Hill Crest’ community, 37 lots (with completed homes) were owned ty individual homeewners and 72 lots were owned ty Lennar Homes, including 3 completed model homes, 3 completed production homes (one of which was in escrcw), 7 homes under construction (all of which were in escrcw), and 59 finished or near finished lots (four of which were in escrcw). As of April 1, 2018, a total of 109 production homes had been closed and transferred to individual homeewners, the 2 model homes under construction were completed, there were 36 lots with homes under construction, and 22 homes were under contract to be sold, all of which are described further in the tables that fdlcw.

33

Summary of Lennar Home’s Development Plans. The table belcw details the proposed and completed development by Lennar Homes of its property within the District as of April 1,2018.

Riverside Unified School District Community Facilities District No. 32

Development Status Lennar Homes

(as of April 1,2018)

LandownerNeighborhood/ Product Type

E sti mated Number of Units

Lennar Homes Orchard 107Lennar Homes Floral Ridge 127LennarHomes Hill Crest 109Total 343

Number Completedof Units

Building (Not Units UnderPermits Closed) Construction

87 4<3> 1811 2(3) 958 5(3) 9

156 11 36

Finished/ UnitsUnitsWith

ClosedNear Under Escrows to

F inished Contract to 1 ndividualLots(,) be Sold(2) Homeowners

20 12 65116 2 0

51 8 44187 22 109

(1) Includes finished and near finished lots for which no building permits have been issued.(2) Sales contracts are subject to cancellation and, therefore, homes currently in escrcxv may not result in closed escrows with

the prospective homebuyers.(3) Includes completed model homes all located in the Orchard neighborhood (three for Orchard, two for Floral Ridge, and

three for Hill Crest).Source: Lennar Homes.

34

The table belcw details the plans and base sales prices of the remaining development to be completed by Lennar Homes within the District.

Riverside Unified School District Community Facilities District No. 32

Development Plans by Neighborhood and Plan Lennar Homes

(as of April 1,2018)

Orchard

Neighborhood Plan Square Feet

Orchard(,) 1 2,413

2 2,820

3 3,823

4 4,125

Total

TBD TED

No. of Lots

Closed to1 ndividual

HomeownersBase Sales

Price(2)

11 8 $522,990

28 18 568,990

33 19 614,990

34 20 663,9901(3) 0 TBD

107 65

^ The first home closings in the Orchard neighborhood occurred in September 2016 with final home closings anticipated to occur i n the fi rst quarter of 2019.

■2) Estimated average base sales prices are subject to change and are exclusive of any premiums, options, upgrades, incentives, and any selling concessions or price reductions currently being offered. Base sales price information is as of April 1, 2018.Lot 7 serves as a parking lot for the model home complex; the future plan to be constructed on this lot has not yet been determined.

Floral Ridge

Neighborhood Plan Square Feet

Floral Ridge(,) 1 2,391

2 2,832

3 3,615

4 4,644

5 4,830

Total

No. of Lots

C losed to1 ndividual

HomeownersBase Sales

P rice(2)

30 0 $516,990

19 0 575,990

17 0 615,990

28 0 711,990

33 0 740,990

127 0

The first home closings in the Floral Ridge neighborhood are anticipated to occur August 2018 with final home closings anticipated to occur in the first quarter of 2021.

■2) Estimated average base sales prices are subject to change and are exclusive of any premiums, options, upgrades, incentives, and any selling concessions or price reductions currently being offered. Base sales price information is as of April 1, 2018.

35

Hill Crest

C losed to I ndividual

Neighborhood Plan Square Feet No. of Lots Homeowners Base Sales Price(2)

Hill Crest(,) 1 2,832 15 13 $569,990

2 3,615 18 14 601,990

3 4,644 20 15 704,590

4 2,820 5 2 565,990

P hase 1 58 44

Phase 2(3) TED TED 51 0 TED

Total 109 44

^ The first home closings for the 58 lots in Phase 1 of the Hill Crest neighborhood occurred in October 2016 with final home closings for the homes in Phase 1 anticipated to occur in the second quarter of 2018.Estimated average base sales prices are subject to change and are exclusive of any premiums, options, upgrades, incentives, and any selling concessions or price reductions currently being offered. Base sales price information is as of April 1, 2018.The 51 lots in Phase 2 above are currently contemplated to be part of the Hill Crest neighborhood but have not yet been plotted. Depending on market conditions, Lennar Homes may choose to build different products on these 51 homesites. Home construction is anticipated to commence on these lots in the fourth quarter of 2G2Q

Source: Lennar Homes.

Required I infrastructure. All backbone infrastructure has been completed and, with the exception of 85 lots in Floral Ridge and 42 lots in Hill Crest, all intract grading, sewer, water, storm drain, and street infrastructure improyements have been completed. In addition, Lennar Homes has constructed two of the eight community parks to be located in the project, and is constructing part of the Riverside County Regional Park trail that winds through the community. The remaining grading, sewer, water, and storm drain imprcvements for the 85 lots in Floral Ridge and 42 lots in Hill Crest are anticipated to be completed in April 2018 and the street improyements are anticipated to be completed inj uly 2018.

Entitlement Status. Other than building and other permits required in the normal course of home construction, all discretionary entitlements required to complete the envelopment and sales of homes in the District have been received.

Conditions of Approyal. All conditions of approyal required for the issuance of building permits within the project have been satisfied. None of the remaining infrastructure imprcvements are required to be completed as a condition of receiving building or occupancy permits.

Financing Plan

To date, Lennar Homes has financed its land acquisition and various sitedeyelopment costs related to its property in the District through internally generated funds and home sales reyenues. Lennar Homes acquired the property in December 2013 for approximately $33.8 million and estimates that as of February 1, 2018 it has expended approximately $105.5 million on land deyelopment and homebuilding costs. Lennar Homes expects to incur approxi mately $12.8 million on remaining land deyelopment costs (as detailed belcw) and approximately $65.8 million on remaining homebuilding, marketing, and sales costs for the Orchard, Floral Ridge, and Hill Crest neighborhoods.

As of February 1, 2018, the remaining costs required to complete the grading, sewer, water, storm drain and street improyements total approximately $3.1 million. The remaining park and landscaping costs

36

total approximately $2.4 million. The remaining development impact fees for the project total approximately $7.3 mil lion and are paid at time of building permit and certificate of occupancy.

Lennar Homes expects to use home sales revenues and internal funding to complete its development in the District. Lennar Homes believes that it will have sufficient funds available to complete its planned development in the District in accordance with the da/el opment schedule described in this Official Statement.

Although Lennar Homes expects to have sufficient funds available to complete its development in the District in accordance with the development schedule described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining development costs will be available from Lennar Homes or any other source when needed. Neither Lennar Homes, nor any of its related entities are under any legal obligation of ary ki nd to expend funds for the development of and construction of homes on its property in the District. Ary contributions by Lennar Homes to fund the costs of such development are entirely voluntary.

If and to the extent that internal funding, including but not limited to lot sales revenues, is inadequate to pay the costs to complete the planned development by Lennar Homes within the District and other financing by Lennar Homes is not put into place, there could be a shortfall in the funds required to complete the planned development by Lennar Homes in the District.

History of Property Tax Payments; Loan Defaults; Litigation

Lennar Homes has represented to the District in a Letter of Representations (the “Developer Certificate”) signed by an officer of Lennar Homes (the “Signatory”) as follows:

1. Except as described in the Official Statement, there are no loans outstanding and unpaid and no lines of credit that are secured by the Property. Neither Lennar Homes nor, to the Actual Kncwledge of Lennar Homes, ary of its Relevant Entities is currently in material default on ary loans, lines of credit, agreements, or other contractual or financial obligations, or in breach of ary applicable law, regulation, judgment or decree, and no event has occurred and is continuing that would constitute such a default or breach, the result of which could materially adversely affect Lennar Homes’ ability to cwn, develop, and sell the Property as descri bed i n the Offi cial Statement, to pay the special taxes due with respect to the Property (to the extent the responsibility of Lennar Homes) prior to delinquency, to carry on its business as described in the Official Statement, or to perform its obligations under the DeveloperContinuing Disclosure Agreement.

2. Except as set forth in the Official Statement, to the Actual Kncwledge of Lennar Homes, there is no litigation, inquiry, investigation or administrative proceeding of ary nature pending against Lennar Homes (with proper service of process to Lennar Homes having been accomplished) or, to the Actual Kncwledge of Lennar Homes, is overtly threatened in writing against Lennar Homes, or to the Actual Kncwledge of Lennar Homes, pending (with service of process to Lennar Homes having been accomplished), or cvertly threatened in writing against ary Relevant Entity of Lennar Homes, in each case which if successful could (a) materially adversely affect Lennar Homes’ ability to own, develop, and sell the Property as described in the Official Statement, (b) materially adversely affect the ability of Lennar Homes to pay Special Taxes on the Property (to the extent the responsibility of Lennar Homes) prior to delinquency, (c) materially adversely affect the ability of Lennar Homes to carry on its business as described in the Official Statement, (d) materially adversely affect the ability of Lennar Homes to perform its obligations under the DeveloperContinuing Disclosure Agreement, (e) challenge, question the validity or enforceability of, or restrain or enjoin the performance of, the Special Taxes, the Bonds, the Resolution of Issuance, the Fiscal Agent Agreement, the Developer Continuing Disclosure Agreement, or the purchase contract for the 2018 Bonds, or (f) to restrain or enjoin the collection of special taxes or other sums pledged or to be pledged to pay the pri nci pal of and i nterest on the 2018 B onds.

37

3. Lennar Homes has been developing or has been irvdved in the development of numerous projects ever an extended period of time. It is likely that Lennar Homes and its Relevant Entities have been delinquent at onetime or another in the payment of ad valorem property taxes, special assessments or special taxes. Hcwever, to the Actual Kncwledge of Lennar Homes, neither Lennar Homes nor any of its Relevant Entities is currently in default in, or in the last five years, has, during the period of its ownership, a/er defaulted to any material extent in the payment of any special taxes or assessments in connection with the District or ary other community facilities districts or an assessment districts in California that was not cured prior to the institution of ary enforcement action with a court of law.

4. To the Actual Knowledge of Lennar Homes, there are no proceedings pending (with service of process to Lennar Homes having been accomplished) or cvertly threatened in writing in which Lennar Homes or ary of its Relevant Entities may be adjudicated as bankrupt, become the debtor in a bankruptcy proceeding, be discharged from any and all of its respective debts or obligations, be granted an extension of time to pay its respective debts or obligations, or be granted a reorganization or readjustment of its respective debts or obligations.

As used intheabeve representations of Lennar Homes, the following defined terms and phrases have the fol I ewi ng meani ngs:

“Actual Kncwledge of Lennar Homes” means the knowledge that the Signatory of the Developer Certificate currently has as of the date thereof or has obtained through (i) interviews with such current officers and responsible employees of Lennar Homes and its Relevant Entities as the Signatory has reasonably determined are likely, in the ordinary course of their respective duties, to have knowledge of the matters set forth in the Developer Certificate, and (ii) reviews of documents reasonably available to the Signatory and which the Signatory reasonably deemed necessary for the Signatory to execute the Developer Certificate. The Signatory did not conduct ary extraordinary inspection or inquiry other than such inspections or inquiries as were prudent and customary in connection with the ordinary course of Lennar Homes’ current business and operations. The Signatory did not contact ary individuals who are no longer empleyed by, or associated with, Lennar Homes. Lennar Homes further notes that Lennar Corporation completed a merger with CalAtlantic Group, Inc., a Delaware corporation ("CalAtlantic") in February, 2018, pursuant to which CalAtlantic merged with and into Lennar Corporation, with Lennar Corporation being the surviving entity. Separate and apart from Lennar Corporation’s due diligence efforts for purposes of completing the acquisition of CalAtlantic, for purposes of the Developer Certificate, individuals who were emplcyees and officers of CalAtlantic and its subsidiaries prior to the merger have not been consulted or contacted and documents entered into by CalAtlantic and its subsidiaries or related to their properties and projects have not been reviewed.

“Relevant Entity” of the Lennar Homes means ary person presently directly or indirectly through one or more intermediaries controlling, controlled by or under common control with Lennar Homes, and about whom information could be material to potential investors in their investment decision regarding the 2018 Bonds (including without limitation information relevant to the proposed development of the property in the District, or to Lennar Homes’ ability to pay the special taxes la/ied by the District prior to delinquency). Due to the recent merger, and for purposes hereof, the term “Relevant Entity” shall exclude CalAtlantic and its direct and indirect subsidiaries.

“Property” means, with respect to a Developer Certificate, that portion of the taxable property within the District covered by that Developer Certificate that is cwned by Lennar Homes as of the date of the Devel oper C ertifi cate.

38

THE RIVERSIDE UNI FI E D SCHOOL DISTRICT

The fol I ovi ng i nformati on rel ati ng to the School Di stri ct i s i ncl uded only for the purpose of supplyi ng general information regarding the School District. Neither the faith and credit nor taxing power of the School Di strict have been pledged to the payment of the 2018 Bonds and the 2018 Bonds will not be payabl e from ary of School District’s revenues or assets.

The School District is a unified school district, gcverned by a five member, elected, Board of Education. The School District encompasses an area of about 92 square miles located in the northwestern portion of Riverside County approximately 47 miles east of the Los Angeles civic center. The School District encompasses major portions of the City of Riverside. TheSchool Districtwas established in 1963 through the unification of the Riverside City School District and the Riverside City High School District. The School District serves approximately 42,000 students. The School District operates thirty-one elementary schools, seven middle schools, five high schools, two alternative high schools, one virtual school, one adult school, one independent study school, one special education preschool and one STEM Academy.

The management and policies of the School District are administered by a Superintendent of Schools and a staff which prcvides business, pupil, personnel, administrative personnel, and instruction support services.

SPECIAL RISK FACTORS

The purchase of the 2018 Bonds involves significant risks that are not appropriate investments for certain investors. The following is a discussion of certain risk factors which should be considered, in addition toother matters set forth herein, in evaluating the investment quality of the 2018 Bonds. This discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the 2018 Bonds. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the District to make full and punctual payments of debt service on the 2018 Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District. See“— Property Values” and“— Li mi ted Secondary Market” belcw.

Risks of Real Estate Secured I investments Generally

The 2018 Bond owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of residential property or buildings and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes, fires, floods, drought and windstorms), which may result in uninsured losses.

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

39

Funds Invested intheCounty Investment Pool

On January 24, 1996, the United States Bankruptcy Court for the Central District of California held that a State statute prcviding for a priority of distribution of property held in trust conflicted with, and was preempted by, federal bankruptcy law. In that case, the court addressed the priority of the disposition of moneys held in a county investment pool upon bankruptcy of the county. Fdlcwing payment of the Special Taxes to the District, such funds may be invested in the name of the School District or the District for a period of time in the County investment pool. I n the event of a petition of or the adjustment of County debts under C hapter 9 of the F ederal B ankruptcy C ode, a court mi ght hd d that the 2018 B ond owners do not have a val i d and/or prior lien on the Special Taxes or debt service payments where such amounts are deposited in the County investment pod and may not provide the 2018 Bond cwners with a priority interest in such amounts. In that circumstance, unless the 2018 Bond cwners could “trace” the funds that have been deposited in the County investment pod, the 2018 Bond cwners would be unsecured (rather than secured) creditors of the County. There can be no assurance that the 2018 Bond cwners could successfully so trace the Special Taxes or debt service payments.

Concentration of Ownership

As of February 1, 2018, the date of value for the Appraisal Report, there were 94 completed single family detached homes which had been conveyed to individual homeowners. Additionally, as of such date, within the District Lennar Homes cwned six completed model homes, six production homes ever 95% completed, 28 additional production homes under construction and 209 lots in a partial to near finished lot condition. Based on the cwnership status of the property within the District as of February 1,2018, as set forth in the Appraisal Report, assuming no additional transfers therein, and building permits issued as of March 1, 2018, approximately 36.15% of the Special Taxes projected to be levied in Fiscal Year 2018-19 would be payable by Lennar Homes.

The levy of Special Taxes on additional lots for which building permits are issued would subject the lots for which building permits were issued to the levy of Special Taxes at a time when these lots were owned by Lennar Homes or future home builders who may have purchased such lots from Lennar Homes. The inability of Lennar Homes or ary such builder to build and sell homes on the lots that it owns could lessen its incentive to pay Special Taxes that are levied on those lots. Lennar Homes has represented to the District that it is not delinquent in the payment of any installment of ad valorem property taxes that were levied on the land that it cwns in the District.

Until the construction and sale of the remaining homes within the District to individual homeewners, the receipt of the Special Taxes is dependent in part on the willingness and the ability of Lennar Homes to pay the Special Taxes when due. Failure of Lennar Homes, or ary successors), to pay the annual Special Taxes when due could result in a draw on the Reserve Fund, and ultimately a default in payments of the principal of, and interest on, the 2018 Bonds, when due. No assurance can be given that Lennar Homes, or its successors, will complete the remaining intended construction and development in the District. See Failure to Develop Properties.”

While the District does not expect to la/y Special Taxes on property within the District classified as Undeveloped Property, in the a/ent that (a) there are significant individual homeewner delinquencies in the District, or (b) Lennar Homes fails to complete the remaining intended construction and development in the District and Lennar Homes does not pay Special Taxes on property owned by Lennar Homes as of February 1, 2018, Special Taxes may be levied on Undeveloped Property. No assurance can be given that individual homeewners, Lennar Homes, or its successors, will pay Special Taxes in the future or that Special Taxes will be paid on a timely basis. See“— Bankruptcy and Foreclosure” for a discussion of certain limitations on the School District’s ability to pursue judicial proceedings with respect to delinquent parcels. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT" and “SOURCES OF PAYMENT FOR THE 2018 BONDS — Special Taxes.”

40

Until all Parity Bonds have been issued for the purpose of financing the construction of the Facilities, the District expects to levy Special Taxes at 100% of the Assigned Special Tax rate. Thereafter, the Special Taxes are only expected to be levied in an amount needed to pay the debt service due on the 2018 Bonds and the Parity Bonds, plus the Administrative Expense Requirement. Parity Bonds may be issued in the future under certain circumstances, but the School District has covenanted to issue Parity Bonds only for refunding purposes. See “SOURCES OF PAYMENT FOR THE 2018 BONDS — Special Taxes - Rates and Method of Apportionment of Special Tax” and“— Issuance of Parity Bonds.”

Limited Obligations

The 2018 Bonds and interest thereon are not payable from the general funds of the School District. Except with respect to the Special Taxes, neither the faith and credit nor the taxing power of the District or the School District is pi edged for the payment of the 2018 Bonds or the interest thereon, and, except as provided in the Fiscal Agent Agreement, no Owner of the 2018 Bonds may compel the exercise of any taxing power by the District or the School District or force the forfeiture of any School District or District property. The principal of, premium, if any, and interest on the 2018 Bonds are not a debt of the School District ora legal or equitable pledge, charge, lien or encumbrance upon any of the School District’s or the District’s property or upon any of the School District’s or the District’s income, receipts or revenues, except the Net Special Tax Revenues and other amounts pledged under the Fiscal Agent Agreement. See “SOURCES OF PAYMENT FOR THE 2018 BONDS — Special Taxes."

I nsufficiency of Special Taxes

The Rates and Method governing the levy of the Special Taxes expressly exempt up to a certain number of acres within the District in the chronological order in which such property becomes property that lies within dedications for public streets, publicly cwned surface drainage channels or other public property or Property Owner Association Property. See APPENDIX A — “RATES AND METHOD OF APPORTIONMENT OF SPECIAL TAX" and “SOURCES OF PAYMENT FOR THE 2018 BONDS — Special Taxes — Rates and Method of Apportionment of Special Tax”

Under the Rates and Method, the annual amount of Special Tax to be levied on each taxable parcel in the will generally be based on the land use class and Tax Zone to which a parcel of Developed Property is assigned. See APPENDIX A — “RATES AND METHOD OF APPORTIONMENT OF SPECIAL TAX" and “SOURCES OF PAYMENT FOR THE 2018 BONDS — Special Taxes — Rates and Method of Apportionment of Special Tax”

In order to pay debt service on the 2018 Bonds, it is necessary that the Special Taxes be paid in a timely manner. Should the Special Taxes not be paid on time, the District has established a Reserve Fund in an amount equal to the Reserve Requirement for the 2018 Bonds to pay debt service on the 2018 Bonds to the extent other funds are not available. See “SOURCES OF PAYMENT FOR THE 2018BONDS — Reserve Fund.” The District has ccvenanted to maintain in the Reserve Fund an amount equal to the Reserve Requirement for the 2018 Bonds subject, however, to the limitation that the District may not levy the Special Tax in the in ary fiscal year at a rate in excess of the maximum amounts permitted under the Rates and Method. As a result, if a significant number of delinquencies occur, the District could be unable to replenish the Reserve Fund to the Reserve Requirement for the 2018 Bonds due to the limitations on the maximum Special Tax. If such defaults were to continue in successive years, the Reserve Fund could be depleted and a defaul t on the 2018 B onds coul d occur.

The School District has ccvenanted that, under certain conditions, it will institute foreclosure proceedings to sell any property with delinquent Special Taxes in order to obtain funds to pay debt service on the 2018 Bonds. If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder could, but would not be required to, advance the amount of the delinquent Special Tax to protect its security interest. See “INTRODUCTION — Sources Of Payment For The 2018 Bonds — Foreclosure Proceeds” for previsions

41

which apply in the event of such foreclosure and which the School District is required to foilcw in the event of del i nquenci es i n the payment of the S pedal Tax.

In the event that sales or foreclosures of property are necessary, there could be a delay in payments to owners of the 2018 Bonds (if the Reserve Fund has been depleted) pending such sales or the prosecution of such foreclosure proceedings and receipt by the School District on behalf of the District of the proceeds of sale. The District may adjust the future Special Tax levied on taxable parcels in the District, subject to the limitation on the maximum Special Tax, to prcvide an amount required to pay interest on, principal of, and redemption premiums, if any, on the 2018 Bonds, and the amount, if ary, necessary to replenish the Reserve Fund to an amount equal to the Reserve Requirement for the 2018 Bonds and to pay all current expenses. There is, hcwever, no assurance that the total amount of the Special Tax that could be levied and collected against taxable parcels in the District will be at all times sufficient to pay the amounts required to be paid by the Fiscal Agent Agreement, even if the Special Tax is levied at the maximum Special Tax rates. See Bankruptcy and Foreclosure” for a discussion of potential delays in foreclosure actions.

The Rates and Method gcverning the levy of the Special Tax expressly exempts up to a certain property cwned by public agencies and other exempt entities in the. See Section E of APPENDIX A — “RATES AND METHOD OF APPORTIONMENT OF SPECIAL TAX." If for any reason property within the District becomes exempt from taxation by reason of ownership by a ncrntaxable entity such as the federal gcvernment or another public agency, subject to the limitations of the maximum authorized rates, the Special Tax will be reallocated to the remaining taxable properties within the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon the ability and willingness of the owners of such property to pay the Special Tax when due.

The Rates and Method gcverning the levy of the Special Tax provides that, once a parcel is classified as taxable property, it will remain subject to a Special Tax levy even if subsequently it is acquired by a public agency. The Act prcvides that, if any property within the District not otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that acquired the property. I n addition, the Act prcvides that, if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment and be paid from the eminent domain award. The constitutionality and operation of these previsions of the Act have not been tested in the courts. Due to problems of collecting taxes from public agencies, if a substantial portion of land within the District was to become cwned by public agencies, collection of the Special Tax might become more difficult and could result in collections of the Special Tax which might not be sufficient to pay principal of and interest on the 2018 Bonds when due and a default could occur with respect to the payment of such pri nci pal and i nterest.

Failure to Develop Properties

Development of property within the District may be subject to unexpected delays, disruptions and changes which may affect the willingness and ability of Lennar Homes or any property cwner to pay the Special Taxes when due. Land development is subject to comprehensive federal, State and local regulations. Apprcval is required from various agencies in connection with the layout and design of developments, the nature and extent of i mprevements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. There is always the possibility that such approvals will not be obtained or, if obtained, will not be obtained on a timely basis. Failure to obtain any such agency apprcval or satisfy such governmental requirements would adversely affect planned land development. Development of land in the District is also subject to the availability of water. Finally, development of land is subject to economic considerations.

As of February 1, 2018, within the District, there were 94 completed single family detached homes which had been conveyed to individual homeowners. Additionally, as of February 1, 2018, within the District,

42

Lennar Homes cwned six completed model homes, six production homes ever 95% completed, 28 additional production homes under construction and 209 lots in a partial to near finished lot condition. Hcwever, significant infrastructure imprevements remain to be completed in order to complete construction of all 343 of the single family detached homes currently planned within the District. No assurance can be given that the remaining proposed residential development will be partially or fully completed; and for purposes of a/aluating the investment quality of the 2018 Bonds, prospective purchasers should consider the possibility that such parcel swill remai n vacant and uni mpreved.

Undeveloped or partially da/eloped land is inherently less valuable than developed land and provides less security to the 2018 Bond owners should it be necessary for the School District to foreclose on the property due to the nonpayment of Special Taxes. The failure to complete development of the required infrastructure for development in the District as planned, or substantial delays in the completion of the development or the required infrastructure for the development due to litigation or other causes may reduce the value of the property within the District and increase the length of time during which Special Taxes would be payable from undeveloped property, and may affect the willingness and ability of the owners of property within the District to pay the Special Taxes when due.

There can be no assurance that land development operations within the District will not be adversely affected by future deterioration of the real estate market and economic conditions or future local, State and federal governmental policies relating to real estate development, an increase in mortgage interest rates, the income tax treatment of real property cwnership, or the national economy. A slcwdcwn of the development process and the absorption rate could adversely affect land values and reduce the ability or desire of the property owners to pay the annual Special Taxes. I n that event, there could be a default in the payment of pri nci pal of, and i nterest on, the 2018 B onds when due.

2018 Bond owners should assume that any event that significantly impacts the ability to develop the remaining homes within the District as planned would cause the property values within the District to decrease substantially from those estimated in the Appraisal Report and could affect the willingness and ability of Lennar Homes, or any successor thereto, to pay the Special Taxes when due.

While the District does not expect to levy Special Tax on Undeveloped Property, if delinquencies are high it may be necessary in the future to levy on Undeveloped Property within the District. Unda/eloped Property is less valuable per unit of area than Developed Property, especially if there are no plans to develop such land or if there are severe restrictions on the development of such land. The Undeveloped Property also prevides less security to the Owners of the 2018 B onds should it be necessary for the District to foreclose on Undeveloped Property due to the nonpayment of the Special Taxes. Furthermore, an inability to develop the land within the District as currently proposed will make the Owners of the 2018 Bonds dependent upon timely payment of the Special Taxes levied on Undeveloped Property. A slowdown or stoppage in the continued development of the District could reduce the willingness and ability of Lennar Homes to make Special Tax payments on Undeveloped Property and could greatly reduce the value of such property in the event it has to be foreclosed upon. See Land Values.”

Natural Disasters

The District is located in a seismically active region in Southern California There is significant potential for destructive ground-shaking during the occurrence of a major seismic event. In addition, land along the aforementioned fault lines may be subject to liquefaction during the occurrence of such an a/ent. While the property within the District subject to the lien of Special Taxes is not located in a known fault zone, such property may nevertheless be subject to unpredictable seismic activity.

I n the event of a severe earthquake, fire, flood, drought, windstorm, mudslide or other natural disaster, there may be significant damage to both property and infrastructure in the District. As a result, Lennar Homes or a substantial portion of the individual property cwners may be unable or unwilling to pay the Special Taxes

43

when due. In addition, the value of land in the District could be diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes.

In recent years, wildfires have caused extensive damage throughout the State. In some instances, entire neighborhoods have been destroyed. Several of the fires that occurred in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events. Some commentators believe that climate change will Iead to even more frequent and more damaging wiIdfires i n the future. Property damage due to wildfire could result in a significant decrease in the market value of property in the District and in the ability orwillingness of property owners to pay Spedal Taxes.

Endangered Species

During the 1990s, there was an increase in activity at the State and federal level related to the possible listing of certain plant and animal species found in the Southern California area as endangered species. An increase in the number of endangered species would curtail development in a number of areas. At present, the property within the District is not known to be inhabited by any plant or animal species which is on the endangered species list or which either the California Fish and Game Commission or the United States Fish and Wildlife Service has proposed for addition to the endangered species list. Notwithstanding this fact, new species are proposed to be added to the State and federal protected lists on a regular basis. Any action by the State or federal governments to protect species located on or adjacent to the property within the District could negatively impact Lennar Homes’ ability to complete its the development as planned. This, in turn, could reduce the likelihood of timely payment of the Special Taxes and would likely reduce the value of the land estimated by the Appraiser and the potential revenues available at a foreclosure sale for delinquent Special Taxes. See Failure to Develop Properties” and Property Values” herein. Lennar Homes has represented to the District that it is not aware of any endangered species located on its property within the District.

Hazardous Substances

The presence of hazardous substances on a parcel may result i n a reduction in the value of a parcel. I n general, the owners and operators of a parcel may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stri ngent and si mi lar. U nder many of these laws, the owner or operator is obligated to remedy a hazardous substance condition of property whether or not the cwner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the taxed parcels be affected by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming the cwner, will become obligated to remedy theconditionjustas istheseller.

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

The value of the property within the District, as set forth herein and in the Appraisal Report, does not reflect the presence of any hazardous substance or the possible liability of the owner (or operator) for the

44

remedy of a hazardous substance condition of the property. Lennar Homes has represented to the District that it is not aware of any state or federally classified hazardous substances located on its property within the District, and does not belia/e that such a current liability exists with respect to any parcel owned by Lennar Homes in the District. Hcwever, it is possible that such liabilities do currently exist and that neither Lennar Homes nor the District is aware of them.

Payment of the Special Tax is not a Personal Obligation of the Property Owners

An cwner of a taxable parcel is not personally obligated to pay the Special Tax. Rather, the Special Tax is an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully the Special Tax, the Di stri ct has no recourse agai nst the property cwner.

Property Values

The value of the property within the District is a critical factor in determining the investment quality of the 2018 Bonds. If a property cwner is delinquent in the payment of Special Taxes, the District’s only remedy is to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to pay the Special Taxes. Reductions in property values due to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the Special Taxes. See “THE DISTRICT— Estimated Valueto-Lien Ratios.”

The Appraiser has estimated, on the basis of certain definitions, assumptions and limiting conditions contained in the Appraisal Report that as of February 1, 2018, the market value of the taxable property within the District was approximately $110,220,000. TheAppraisal Report is based on a number of assumptions and limiting conditions as stated in APPENDIX G—“APPRAISAL REPORT." The Appraisal Report does not reflect any possible negative impact which could occur by reason of future slew or no grewth voter initiatives, an economic downturn, any potential limitations on development occurring due to time delays, an inability of any landcwner to obtain any needed development appreval or permit, the presence of hazardous substances or other adverse soil conditions within the District, the listing of endangered species or the determination that habitat for endangered or threatened species exists within the District, or other similar situations.

Prospective purchasers of the 2018 Bonds should not assume that the land and imprevements within the District could be sold for the amount stated in the Appraisal Report at a foreclosure sale for delinquent Special Taxes. Inarriving atthe estimate of market value, the Appraiser assumes that any sale will besoldina competitive market after a reasonable exposure time, and assuming that neither the buyer or seller is under duress, which is not always present in a foreclosure sale. SeeAPPENDIX G—“APPRAISAL REPORT” fora description of other assumptions made by the Appraiser and for the definitions and limiting conditions used by the Appraiser. Any event which causes one of the Appraiser’s assumptions to be untrue could result in a reduction of the value of the land within the District from that estimated by the Appraiser.

The assessed values set forth in this Official Statement do not represent market values arrived at through an appraisal process and generally reflect only the sales price of a parcel when acquired by its current owner, adjusted annually by an amount determined by the County Assessor, generally not to exceed an increase of more than 2% per fiscal year. No assurance can be given that a parcel could actually be sold for its assessed value. See“—Risks of Real EstateSecuredlnvestmentsGenerally” abeve.

The actual market value of the property is subject to future events such as a dewnturn in the economy, occurrences of certain acts of nature and the decisions of various governmental agencies as to land use, all of which could adversely impact the value of the land in the District which is the security for the 2018 Bonds. As discussed herein, many factors could adversely affect property values within the District.

45

No assurance can be given that ary bid will be received for a parcel with delinquent Special Taxes offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all delinquent Special Taxes. See “SOURCES OF PAYMENT FOR THE 2018 BONDS — Special Taxes — Proceeds of Foreclosure Sales.”

Parity Taxes, Special Assessments and Land Development Costs

Property within the District is subject to taxes and assessments imposed by other public agencies also having jurisdiction ever the land within the District. See “THE DISTRICT — Direct and Overlapping I ndebtedness.”

The Special Taxes and any penalties thereon will constitute a lien against the lots and parcels of land on which they will be annually imposed until they are paid. Such lien is on a parity with all special taxes and special assessments levied by other agencies and is co-equal to and independent of the lien for general property taxes regardless of when they are imposed upon the same property. The Special Taxes have priority ever all existing and future private liens imposed on the property except, possibly, for liens or security interests held by the Federal Deposit Insurance Corporation. See“— Bankruptcy and Foreclosure” belcw.

Neither the District nor the School District has control ever the ability of other entities and districts to issue indebtedness secured by special taxes, ad valorem taxes or assessments payable from all or a portion of the property within the District. In addition, the landowners within the District may, without the consent or kncwledgeof the District or the School District, petition other public agencies to issue public indebtedness secured by special taxes and ad valorem taxes or assessments. Any such special taxes, ad valorem taxes or assessments may have a lien on such property on a parity with the Special Taxes and could reduce the estimated valueH:o-lien ratios for the property within the District described herein. See“SOURCES OF PAYMENT FOR THE 2018BONDS" and “THE DISTRICT — Direct and Overlapping I ndebtedness” and Estimated Value4:o-Lien Ratios.”

Disclosures to Future Purchasers

The willingness or ability of an owner of a parcel to pay the Special Tax even if the value is sufficient may be affected by whether or not the cwnerwas given due notice of the Special Tax authorization at the time the cwner purchased the parcel, was informed of the amount of the Special Tax on the parcel should the Special Tax be levied at the maximum tax rate and the risk of such a levy and, at the time of such a levy, has the ability to pay it as well as pay other expenses and obligations. The School District has caused a notice of the Special Tax to be recorded in the Office of the Recorder for the County against each parcel within the District. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a property within the District or lending of money thereon.

The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or longterm lessor of any lot, parcel, or unit subject to a Mello-Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code Section 1102.6b requires that in the case of transfers other than those ccvered by the abeve requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the abeve requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the wi 11 i ngness and abi I ity of the purchaser or lessor to pay the S pedal Tax when due.

Special Tax Delinquencies

Under previsions of the Act, the Special Taxes, from which funds necessary for the payment of principal of, and interest on, the 2018 Bonds are derived, will be billed to the properties within the District on

46

the regular ad valorem property tax bills sent to owners of such properties ty the County Tax Collector. The Act currently provides that such Special Tax installments are due and payable, and bear the same penalties and i nterest for non-pay ment, as do ad va I orem property tax i nstal I ments.

See “SOURCES OF PAYMENT FOR THE 2018 BONDS — Special Taxes — Proceeds of Foreclosure Sales” for a discussion of the previsions which apply, and procedures which the District is obligated to foilcw under the Fiscal Agent Agreement, in the event of delinquencies in the payment of Special Taxes. See Bankruptcy and Foreclosure” belcw, for a discussion of the policy of the Federal Deposit Insurance Corporation regarding the payment of special taxes and assessment and limitations on the District’s abi I i ty to f orecl osure on the I i en of the S peci al Taxes i n certai n ci rcumstances.

Pursuant to Section 53321(d) of the Gcvernment Code, under no circumstances will the Special Tax levied in any Fiscal Y ear against any Assessor's Parcel for which an occupancy permit for private residential use has been issued be increased as a consequence of delinquency or default by the owner or owners of ary other Assessor Parcel(s) within the District ty more than 10% abeve the amount that would have been la/ied in that Fiscal Y ear had there never been ary such delinquencies or defaults. As a result, in the event of Special Tax delinquencies or defaults, it is possible that the District may not be able to levy the necessary amount of Special Taxes to ccver debt service in a given year. However, subject to the limitations on the District’s ability to levy the necessary amount of Special Taxes as imposed ty Section 53321(d) of the Gcvernment Code, the District can levy Special Taxes on Undeveloped Property to make-up all or a portion of any shortfall in the Special Taxla/y.

As of May 3, 2018, the Special Taxes for Fiscal Year 2017-18 were delinquent in the amount of $12,606, which represented a delinquency rate of approximately 2.95%. See “THE DISTRICT—Delinquency History.”

TaxCutsandJ obsAct

H.R. 1 of the 115th U.S. Congress, knewn as the “Tax Cuts andj obs Act,” was enacted into law on December 22, 2017 (the “Tax Act’). The Tax Act makes significant changes to many aspects of the Code. For example, the Tax Act reduces the amount of mortgage interest expense and state and local income tax and property tax expense that individuals may deduct from their gross income for federal income tax purposes, which could increase the cost of home cwnership within Imprcvement Area No. 8D. Hcwever, neither the City nor the District can predict the effect that the Tax Act may have on the cost of home cwnership or the price of homes in Imprcvement Area No. 8D or the ability or willingness of homeewners to pay Special Taxes or property taxes.

FDIC/Federal Gcvernment I nterests in Properties

The ability of the District to collect interest and penalties specified ty the Act and to foreclose the lien of delinquent Special Taxes may be limited in certain respects with regard to parcels in which the FDIC, or other federal gcvernment entities such as Fannie Mae, Freddie Mac, the Drug Enforcement Agency, the I nternal Revenue S ervi ce or other federal agency, has or obtai ns an i nterest.

In the case of FDIC, in the event that any financial institution making a loan which is secured ty parcels is taken ever ty the FDIC and the applicable Special Tax is not paid, the remedies available to the District may be constrained. The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement’) prevides that taxes other than ad valorem taxes which are secured ty a valid lien in effect before the FDIC acquired an interest in a property will be paid unless the FDIC determines that abandonment of its interests is appropriate. The Policy Statement prevides that the FDIC generally will not pay installments of non-ad valorem taxes which are levied after the time the FDIC acquires its fee interest, nor will the FDIC recognize the validity of ary lien to secure payment except in certain cases where the Resolution Trust Corporation had an interest in property on or prior to December 31, 1995. Morecver, the

47

Policy Statement provides that, with respect to parcels on which the FDIC holds a mortgage lien, the FDIC will not permit its lien to be foreclosed out by a taxing authority without its specific consent, nor will the FDIC pay or recognize liens for any penalties, fines or similar claims imposed for the non-payment of taxes.

The FDIC has taken a position similar to that expressed in the Policy Statement in legal proceedings brought against Orange County in United States Bankruptcy Court and in Federal District Court. The Bankruptcy Court issued a ruling in favor of the FDIC on certain of such claims. Orange County appealed that ruling, and the FDIC cross-appealed. On August 28, 2001, the Ninth Circuit Court of Appeals issukia ruling favorable to the FDIC except with respect to the payment of pre-receivership liens based upon delinquent property tax.

The District is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency with respect to parcels in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sale would prevent or delay the foreclosure sale.

In the case of Fannie Mae and Freddie Mac, in the event a parcel of taxable property is cwned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or a private deed of trust secured by a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, the ability to foreclose on the parcel or to collect delinquent Special Taxes may be limited. Federal courts have held that, based on the supremacy clause of the United States Constitution “this Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and thej udges in every State shall be bound thereby, anything in the Constitution or Laws of any State to the contrary notwithstanding.” In the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal gcvernment interest. This means that, unless Congress has otherwise prcvided, if a federal gcvernment entity cwrts a parcel of taxable property but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to col lect the del i nquent taxes and assessments.

Morecver, unless Congress has otherwise prcvided, if the federal gcvernment has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government’s mortgage interest. For a discussion of risks associated with taxable parcels within the District becoming cwned by the federal government, federal government entities or federal gcvernment sponsored entities, see Insufficiency of Special Taxes.”

The District’s remedies may also be limited in the case of delinquent Special Taxes with respect to parcels in which other federal agencies (such as the Internal Revenue Service and the Drug Enforcement A dmi ni strati on) have or obtai n an i nterest.

Bankruptcy and Foreclosure

The collection of the Special Taxes and the ability of the School District to foreclose the lien of a delinquent Special Tax payment may be limited by bankruptcy, reorganization, insolvency, or other similar laws generally affecting creditors’ rights (such as the Soldier’s and Sailors’ Relief Act of 1940) or by the laws of the State relating to judicial foreclosure. See “SOURCES OF PAYMENT FOR THE 2018 BONDS — Special Taxes — Proceeds of Foreclosure Sales.” In addition, the prosecution of a foreclosure could be delayed due to crcwded local court calendars or legal delaying tactics. The various legal opinions to be delivered concurrently with the delivery of the 2018 Bonds (including Bond Counsel’s approving legal

48

opinion) will be qualified as to the enforceability of the various legal instruments by references to moratorium, bankruptcy, reorganization, insolvency, or other similar laws affecting the rights of creditors generally.

Although bankruptcy proceedings would not cause the lien of Special Taxes in the District to become extinguished, bankruptcy of a property cwner or of a partner or other equity cwner of a property cwner could result in a stay of enforcement of the lien for the Special Taxes, a delay in prosecuting superior court foreclosure proceedings, or adversely affect the ability or willingness of a property cwner in the District to pay the Special Taxes, and could result in the possibility of delinquent Special Taxes not being paid in full. In addition, the amount of any lien on property securing the payment of delinquent Special Taxes could be reduced if the value of the applicable property was determinki by the bankruptcy court to have become less than the amount of the lien, and the amount of the delinquent Special Taxes in excess of the reduced lien could then be treated as an unsecured clai m by the court. A ny such stay of the enforcement of the I ien for the S pedal Taxes, or any such delay or non-payment, would increase the likelihood of a delay or default in payment of the principal of and interest on the 2018 Bonds. Moreover, amounts received upon foreclosure sales in the District may not be sufficient to fully discharge the related delinquent Special Taxes. Further, no assurance can be provided that foreclosed property will actually be purchaski by a third-party. To the extent that a significant percentage of the taxable property in the District is the subject of bankruptcy proceedings, the payment of the Special Taxes and the ability of the School District to foreclose the lien of delinquent Special Taxes could be extremely curtailed by bankruptcy, insolvency, or other laws generally affecting creditors’ rights, or by the laws of the State relating to judicial foreclosure.

On J uly 30, 1992, the United States Court of Appeals for the Ninth Circuit issued an opinion in a bankruptcy case entitled In re Glasply Marine Industries, holding that ad valorem property taxes levied by a county in the State of Washington after the date that the property cwner filed a petition for bankruptcy were not entitled to priority over the claims of a secured creditor with a prior lien on the property. Although the court upheld the priority of unpaid taxes imposed before the bankruptcy petition, unpaid taxes imposed subsequent to the filing of the bankruptcy petition were declared to be “administrative expenses” of the bankruptcy estate, payable after the claims of all secured creditors. Asa result, the secured creditor was able to foreclose on the subject property and retain all the proceeds from the sale thereof except the amount of the pre-petition taxes. Pursuant to this holding, post-petition taxes would be paid only as administrative expenses and only if a bankruptcy estate has sufficient assets to do so. In certain circumstances, payment of such administrative expenses may be all owed to be deferred. Once the property is transferred out of the bankruptcy estate (through foreclosure or otherwise) it would be subject only to current ad valorem property taxes (i.e., not those accrui ng duri ng the bankruptcy proceed ng).

The Glasply decision is controlling precedent in bankruptcy court in the State. If Glasply were held to be applicable to the Special Taxes, a bankruptcy petition filing would prevent the lien for Special Taxes levied in subsequent fiscal years from attaching so long as the property was part of the estate in bankruptcy, which could reduce the amount of Special Taxes available to pay debt service on the 2018 Bonds. Hcwever, Glasply speaks as to ad valorem property taxes, and not special taxes, and no case law exists with respect to how a bankruptcy court would treat a lien for special taxes levied after the filing of a petition for bankruptcy.

It should also be noted that on October22, 1994, Congress enacted 11 U.S.C. §362(b)(18), which added a new exception to the automatic stay for ad valorem property taxes imposed by a political subdivision after the filing of a bankruptcy petition. Under this law, if a bankruptcy petition is filed on or after October 22, 1994, the lien for ad valorem property taxes in subsequent fiscal years will attach even if the property is part of the bankruptcy estate. Owners of 2018 Bonds should be aware that the potential effect of 11 U.S.C. §362(b)(18) ontheSpecial Taxes also depends upon whether a court were to determine that the Special Taxes shoul d be treated I i ke ad val orem property taxes for thi s purpose.

49

No Acceleration Prevision

The 2018 Bonds do not contain a prevision allowing for the acceleration of the 2018 Bonds in the a/ent of a payment default or other default under the terms of the 2018 Bonds or the Fiscal Agent Agreement or i n the event i nterest on the 2018 B onds becomes i ncl uded i n gross i ncome for federal i ncome tax purposes. Pursuant to the Fiscal Agent Agreement, an owner is given the right for the equal benefit and protection of all owners of the 2018 Bonds similarly situated to pursue certain remedies described in APPENDIX D — “SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT" and“— Limitations on Remedies.”

Loss of Tax Exemption

As discussed under the caption “TAX MATTERS” herein, interest on the 2018 Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the 2018 Bonds were issued as a result of future acts or omissions of the District in violation of its ccvenants in the Fiscal Agent Agreement with respect to compliance with certain previsions of the Internal Revenue Code of 1986. In addition, it is possible that future changes in applicable federal tax laws could cause interest on the 2018 Bonds to be included in gross income for federal income taxation or could otherwise reduce the equivalent taxable yield of such interest and thereby reduce the value of the 2018 Bonds. Should such an event of taxability occur, the 2018 Bonds are not subject to early redemption and will remain outstanding until maturity or until redeemed under the redemption previsions contained inthe Fiscal Agent Agreement.

Current or future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the 2018 Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. Legislative changes have been proposed in Congress, which, if enacted, would result in additional federal income tax being imposed on certain owners of tax- exempt state or local obligations, such as the 2018 Bonds. The introduction or enactment of ary of the pending or future legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the 2018 Bonds. Prospective purchasers of the 2018 Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which BondCounsel expresses no opinion.

It is possible that subsequent to the issuance of the 2018 Bonds there might be federal, State, or local statutory changes (or judicial or regulatory interpretations of federal, State, or local law) that affect the federal, State, or local tax treatment of the 2018 Bonds or the market value of the 2018 Bonds. Legislative changes have been introduced in Congress, which, if enacted, could result in additional federal income or state tax being imposed on owners of tax-exempt state or local obligations, such as the 2018 Bonds. The introduction or enactment of any of such changes could adversely affect the market value or liquidity of the 2018 Bonds. No assurance can be given that subsequent to the issuance of the 2018 Bonds such changes or interpretations will not occur. Before purchasing any of the 2018 Bonds, all potential purchasers should consult their tax advisors regarding possible statutory changes or judicial or regulatory changes or interpretations, and their collateral tax consequences relating to the 2018 Bonds. See“TAX MATTERS” below.

Limited Secondary Market

There can be no guarantee that there wi 11 be a secondary market for the 2018 B onds or, if a secondary market exists, that such 2018 Bonds can be sold for any particular price. Although the District has committed to provide certain statutorily required financial and operating information, there can be no assurance that such information will beavailable to 2018 Bond Owners on a timely basis. See “CONTINUING DISCLOSURE" and APPENDIX E—FORM OF CONTINUING DISCLOSURE AGREEMENT OF THE DISTRICT." Any failure to provide annual financial information, if required, does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of general market conditions, lack of current

50

information, the downgrade or absence of a credit rating for the 2018 Bonds or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price.

Proposition 218

An initiative measure commonly referred to as the “Right to Vote on Taxes Act” (the “Initiative”) was approved by the voters of the State at the Novembers, 1996 general election. The Initiative added ArticleX 111C and A rticleX 111D to the California Constitution. According to the “Title and Summary” of the Initiative prepared by the California Attorney General, the Initiative limits “the authority of local gcvernments to impose taxes and property-related assessments, fees and charges.” The previsions of the I nitiative as they may relate to community facilities district are subject to interpretation by the courts. The Initiative could potentially impact the Special Taxes available to the District to pay the principal of and interest on the 2018 B onds as descri bed bel ow.

Among other things, Section 3 of ArticleX 111C states that “. . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing ary local tax, assessment, fee or charge.” The Act prevides for a procedure which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. Hcwever, the Act prohibits a legislative body from adopting any resolution to reduce the rate of ary special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. On J uly 1,1997, a bill was signed into law by the Gcvemor of the State enacting Government Code Section 5854, which states that:

“Section 3 of ArticleX 111C of the California Constitution, as adopted at the Novembers, 1996, general election, shall not be construed to mean that any cwner or beneficial cwner of a municipal security, purchased before or after that date, assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights protected by Section 10 of Article I of the United States Constitution.”

Accordingly, although the matter is not free from doubt, it is likely that the I nitiative has not conferred on the voters the pewer to repeal or reduce the Special Taxes if such reduction would interfere with the timely reti rement of the 2018 B onds.

It may be possible, hcwever, for voters within the District or the Board, acting as the legislative body of the District, to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the 2018 Bonds, but which does reduce the maxi mum amount of Special Taxes that may be levied in any year belcw the existing levels. Furthermore, no assurance can be given with respect to the future levy of the Special Taxes in amounts greater than the amount necessary for the timely retirement of the 2018 Bonds. Therefore, no assurance can be given with respect to the levy of Special Taxes for Administrative Expenses. Nevertheless, to the maximum extent that the law permits it to do so, the District has covenanted that it will not initiate proceedings under the Act to reduce the maximum Special Tax rates on parcels of Developed Property within the District. In connection with the foregoing covenant, the Board has made a legislative finding and determination that ary elimination or reduction of Special Taxes below the foregoing level would interfere with the timely retirement of the 2018 Bonds. The District also has covenanted that, in the event an initiative is adopted which purports to alter the Rates and Method, it will commence and pursue legal action in order to preserve its ability to comply with the foregoing covenant. Hcwever, no assurance can be given as to the enforceability of the foregoing ccvenants.

51

With respect to the approval of theSpecial Taxes, onAugust 1, 2014, the California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in City of San Diego v. Melvin Shapiro, et al. (D063997) (the “San Diego Decision”). The case irvolved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego (the “City”). The CCFD is a financing district much like a community facilities district established under the previsions of the Act. The CCFD is comprised of all of the real property in the entire City. Hcwever, the special tax to be levied within the CCFD was to be levied only on hotel properties locatedwithintheCCFD.

The election authorizing the special tax was limited to owners of hotel properties and lessees of real property cwned by a gcvernmental entity on which a hotel is located. Thus, the election was not a registered voter election. Such approach to determining who would constitute the qualified electors of the CCFD was modeled after Section 53326(c) of the Act, which generally prcvides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may previde that the vote shall be by the landcwners 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 A rticleX 111 A, Section4 thereof and ArticleX 111C, Section2 thereof require that the electors in such an election be the regi stered voters wi thi n the di stri ct.

The facts of the San Diego Decision show that there were hundreds of thousands of registered voters within the CCFD (viz., all of the registered voters in the City). The elections held in the District had no registered voters within the District at the time of the election to authorize the Special Tax. I n the San Diego Decision, the Court expressly stated that it was not addressing the validity of landcwner 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 elections in the District. Morecver, Section 53341 of the Act prcvides 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 apprcved by the voters.” Similarly, Section 53359 of the Act prcvides that ary action to determine the validity of bonds issued pursuant to the Act be brought within 30 days of the voters approving the issuance of such bonds. Voters within the District apprcved the Special Tax and the issuance of bonds for the benefit of the District in 2016. Based on Sections 53341 and 53359 of the Act and analysis of existing laws, regulations, rulings and court decisions, Bond Counsel is of the opinion that no successful challenge to the Special Tax being levied in accordance with the Rates and Method may new be brought.

The interpretation and application of ArticleX 111C and A rti cl e X111D 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 ary remedy afforded by the courts. See “SPECIAL RISK FACTORS — Limitations on Remedies."

Ballot I nitiatives and Legislative Measures

Articles XIII A,XIII B, X111 C and XIII D were adopted pursuant to measures qualified for the ballot pursuant to California’s constitutional initiative process and the State Legislature has in the past enacted legislation which has altered the spending limitations or established minimum funding previsions for particular activities. On March 6,1995, in the case of Rossi v. Brcwn, the State Supreme Court held that an initiative can repeal a tax ordinance and prohibit the imposition of further such taxes and that the exemption from the referendum requirements does not apply to initiatives. From time to time, other initiative measures could be adopted by California voters or legislation enacted by the legislature. The adoption of any such initiative or legislation might place limitations on the ability of the State, the School District, or local districts to increase revenues or to increase appropriations or on the ability of Lennar Homes or its successors to complete the remaining proposed development within the District.

52

IRS Audit of Tax-Exempt Bond Issues

The Internal Revenue Service has initiated an expanded program for the auditing of tax-exempt bond issues, including both random and targeted audits. It is possible that the 2018 Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the 2018 Bonds might be affected as a result of such an audit of the 2018 Bonds (or by an audit of similar bonds). See “TAX MATTERS” belcw.

Limitations on Remedies

Remedies available to the owners of the 2018 Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the 2018 Bonds or to preserve the tax-exempt status of i nterest on the 2018 B onds.

Bond Counsel has limited its opinion as to the enforceability of the 2018 Bonds and of the Fiscal Agent Agreement to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or others similar laws affecting generally the enforcement of creditor’s rights, by equitable principles and by the exercise of judicial discretion and by limitations on remedies against public agencies in the State of California. The 2018 Bonds are not subject to acceleration. 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.

CONTINUING DISCLOSURE

District Continuing Disclosure

Pursuant to a Continuing Disclosure Agreement with David Taussig & Associates, Inc., as dissemination agent, the School District has agreed to prcvide, or cause to be provided, to the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be found at www.emma.msrb.org, on an annual basis by February 1 of each fiscal year beginning February 1, 2019 certain financial information and operating data concerning the District. The School District has further agreed to prcvide notice to EMMA of certain enumerated events. These covenants have been madeinordertoassistthe Underwriter in complying with Rule 15c2—12 adopted by the SEC. The full text of the District Continuing Disclosure Agreement is set forth in APPENDIX E. The inclusion of this information does not mean that the 2018 Bonds are secured by any resources or property of the School District or the District other than Net Special Tax Revenues and other amounts held under the Fiscal Agent Agreement. See “SOURCES OF PAYMENT FOR THE 2018BONDS" and “SPECIAL RISK FACTORS — Limited Obligations."

In connection with prior issuances, the School District, the various community facilities districts of the School District and the Riverside Unified School District Public Financing Authority (collectively, the “District Entities”) have undertaken to provide certain financial information and operating data relating to the respective District Entities. Within the past five years, the School District failed to file in a timely manner the audited financial statements for fiscal year 2012-13 required in connection with certain of the School District’s then-outstanding general obligation bonds and the general fund budget for fiscal year 2013-14 required in connection with certain of the School District’s then-outstanding certificates of participation. I n addition, the District Entities failed to file in a timely manner certain notices of listed events.

Developer Continuing Disclosure

To provide updated information with respect to the da/elopment within the District, the Da/eloper will enter into a Continuing Disclosure Agreement of the Developer (the “Developer Continuing Disclosure Agreement’) by and between the Developer and DavidTaussig& Associates, Inc., as dissemination agent, and will covenant to prcvide an Annual Report not later than J une 15 of each year beginning June 15, 2019, and a

53

Semiannual Report on each June 15 and December 15, beginning December 15, 2018, until satisfaction of certain conditions set forth in the Developer Continuing Disclosure Agreement. The Annual Report and the Semiannual Report will contain updates regarding the development within the District as outlined in Section 4 of the Developer Continuing Disclosure Agreement attached as Appendix F. In addition to its Annual Reports and Semiannual Reports, the Developer will agree to prcvide notices of certain events set forth in the Da/el oper C onti nui ng Di scl osure A greement.

The Developer’s obligations under the Developer Continuing Disclosure Agreement will terminate upon the earliest to occur of: (a) the legal defeasance, prior redemption or payment in full of all the 2018 Bonds; or (b) the date that 80% of the building permits for the planned residential development within the District have been issued.

Lennar Homes represents that, other than as set forth herein, in the last five years, it has not failed to comply in ary material respects with its previous continuing disclosure undertakings, specifically regarding its requirement to prcvide developer periodic reports or to prcvide notice of occurrence of enumerated events. Hcwever, in connection with a continuing disclosure obligation entered into with respect to the $12,850,000 County of El Dorado Community Facilities District No. 2014-1 (Carson Creek) Special Tax Bonds Series 2016, Lennar Homes was late in filing the periodic reports due on April 1, 2017 and October 1, 2017. The oversight was discovered in late January, 2018, and Lennar Homes promptly filed a curative report on February 1,2018.

TAX MATTERS

In the opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, interest on the 2018 Bonds is excluded from gross income for federal income tax purposes. In the further opinion of Bond Counsel, interest on the 2018 Bonds is exempt from State of California personal income tax. Bond Counsel notes that interest on the 2018 Bonds is not an item of tax preference for purposes of calculating the federal alternative mini mum tax imposed on individuals.

Bond Counsel’s opinion as to the exclusion from gross income for federal income tax purposes of interest on the 2018 Bonds is based upon certain representations of fact and certifications made by the School District, the Underwriter and others and is subject to the condition that the School District complies with all requi rements of the I nternal Revenue Code of 1986, as amended (the “Code”) that must be satisfied subsequent to the issuance of the 2018 B onds to assure that i nterest on the 2018 B onds wi 11 not become i ncl udable i n gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause i nterest on the 2018 B onds to be i ncl uded i n gross i ncome for federal i ncome tax purposes retroactive to the date of issuance of the 2018 Bonds. TheSchool District has ccvenantedtocomply withall such requi rements.

Should the interest on the 2018 Bonds become includable in gross income for federal income tax purposes, the 2018 Bonds are not subject to early redemption as a result of such occurrence and will remain outstanding until maturity or until otherwise redeemed in accordance with the Fiscal Agent Agreement.

Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the 2018 Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent 2018 Bond Owners from realizing the full current benefit of the tax status of such interest. Legislative proposals are announced from time to time which generally would limit the exclusion from gross income of interest on obligations like the 2018 Bonds to some extent for taxpayers who are individuals and whose income is subject to higher marginal income tax rates. Other proposals have been made that could significantly reduce the benefit of, or otherwise affect, the exclusion from gross income of interest on obligations like the 2018 Bonds. The introduction or enactment of ary such legislative proposals, clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the 2018 Bonds. Prospective purchasers of the 2018 Bonds should consult their cwn tax advisors regarding any pending or proposed federal or state tax

54

legislation, regulations or litigation, and regarding the impact of future legislation, regulations or litigation, as to which BondCounsel expresses no opinion.

Bond Counsel’s opinion may be affected by action taken (or not taken) or events occurring (or not occurri ng) after the date of i ssuance of the 2018 B onds. B ond Counsel has not undertaken to determi ne, or to inform any person, whether any such action or events are taken or do occur, or whether such actions or events may adversely affect the value or tax treatment of a 2018 Bond, and BondCounsel expresses no opinion with respect thereto.

Thelnternal Revenue Service (the “IRS”) has initiated an expanded program for auditing tax-exempt bond issues, including both random and targeted audits. It is possible that the 2018 Bonds will be selected for audit by the IRS. It is also possible that the market value of the 2018 Bonds might be affected as a result of such an audit (or by an audit of si mi lar 2018 B onds).

Although Bond Counsel has rendered an opinion that interest on the 2018 Bonds is excluded from gross income for federal income tax purposes provided the School District continues to comply with certain requirements of the Code, the accrual or receipt of interest on the 2018 Bonds may otherwise affect the tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient’s particular tax status and other items of income or deductions. Bond Counsel expresses no opinion regarding any such consequences. Accordingly, all potential purchasers should consult their tax advisors before purchasing any of the 2018 Bonds.

A copy of the proposed form of opinion of BondCounsel isattached heretoas APPENDIX B.

LEGAL MATTERS

The legal opinion of Best Best & Krieger LLP, Riverside, California, Bond Counsel, approving the validity of the 2018 Bonds in substantially the form set forth as APPENDIX B hereto, will be made available to purchasers atthe time of original delivery. Certainlegal matters will be passed upon for the District and the School District by Best Best & Krieger LLP, Riverside, California as counsel for the District and the School District and for the Underwriter by James F. Anderson Law Firm, A Professional Corporation, Laguna Hills, California, as counsel to the Underwriter. Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California, is serving as Disclosure Counsel to the District with respect to the 2018 Bonds.

ABSENCE OF LITIGATION

No litigation is pending or threatened concerning the validity of the 2018 Bonds and a certificate of the School District and District to that effect will be furnished to the Underwriter at the time of the original delivery of the 2018 Bonds. Neither the School District nor the District is aware of any litigation pending or threatened which questions the existence of the District or the School District or contests the authority of the District to levy and collect the Special Taxes or to issue and retire the 2018 Bonds.

NO RATING

The School District has not made and does not contemplate making application to any rating agency for the assignment of a rati ng to the 2018 B onds.

UNDERWRITING

The 2018 B onds are bei ng purchased by the U nderwriter. The U ndeiwriter has agreed to purchase the 2018 Bonds at a price of $15,532,197.65 (being $15,945,000.00 aggregate principal amount thereof, less net original issue discount of $173,627.35 and less Underwriter’s discount of $239,175.00). The purchase contract relating to the 2018 Bonds provides that the Underwriter will purchase all of the 2018 Bonds if any are

55

purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in the purchase contract, the apprcval of certain legal matters by counsel and certain other conditions.

The initial public offering prices stated on the inside front cover page of this Official Statement may be changed from time to time by the Underwriter. The Underwriter may offer and sell the 2018 Bonds to certain dealers (including dealers depositing bonds into investment trusts), dealer banks, banks acting as agents and others at prices I ewer than said public offering prices.

FINANCIAL INTERESTS

The fees being paid to the Underwriter, Bond Counsel, Disclosure Counsel, the Municipal Advisor to the School District, the Fiscal Agent and Underwriter’s Counsel are contingent upon the issuance and delivery of the 2018 Bonds. The fees being paid to the Appraiser and the Special Tax Consultant are not contingent upon the issuance and delivery of the 2018 Bonds. From time to time, Bond Counsel and Disclosure Counsel represent the U nderwriter on matters unrelated to the 2018 B onds.

PENDING LEGISLATION

The District is not aware of any significant pending legislation which would have material adverse consequences on the 2018 Bonds or the ability of the District to pay the principal of and interest on the 2018 B onds when due.

56

ADDITIONAL INFORMATION

The purpose of this Official Statement is to supply information to prospective buyers of the 2018 Bonds. Quotations and summaries and explanations of the 2018 Bonds and documents contained in this Official Statement do not purport to be complete, and reference is made to such documents for full and complete statements and their previsions. Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact.

The execution and delivery of this Official Statement by the Superintendent of the School District has been duly authorized by the Board of Education of the Riverside Unified School District acting in its capacity as the legislative body of the District.

COMMUNITY FACILITIES DISTRICT NO. 32 OF THE RIVERSIDE UNIFIEDSCHOOL DISTRICT

By: Is/David Hansen. Ph.D.__________________________Superintendent of the Riverside Unified School District

57

[THIS PAGE INTENTIONALLY LEFT BLANK]

APPENDIX A

RATES AND METHOD OF APPORTIONMENT OF SPECIAL TAX

The following sets forth the Rates and Method of Apportionment for the levy and collection of Special Taxes of Community Facilities District No. 32 of the Riverside Unified School District (the “ District’). An Annual Special Tax shall be levied on and collected in the District each Fiscal Year, in an amount determined through theapplicationofthe Rates and Method of Apportionment described belcw. All of the real propertyin the District, unless exempted by law or by the previsions hereof, shall be taxed for the purposes, to the extent, and in the manner herein previded.

RATE ANDMETHOD OF APPORTIONMENT FOR RIVERSIDE UNIFIED SCHOOL DISTRICT

COMMUNITY FACILITIES DISTRICT NO.32

A Special Tax as hereinafter defined shall be levied on all Assessor’s Parcels in Riverside Unified School District Community Facilities District No. 32 ("CFD No. 32") and collected each Fiscal Year commencing in Fiscal Year 2017-2018, in an amount determined by the Board of Education of the Riverside Unified School District through the application of the Rate and Method of Apportionment as described below. All of the real property in CFD No. 32, unless exempted by law or by the previsions hereof, shall be taxed for the purposes, to the extent and in the manner herein previded. Capitalized terms used in this rate and method of apportionment, including this preamble, shall have the meanings given such terms insertion A and Section H.

A. DEFINITIONS

The terms herei nafter set forth have the fol lowi ng meani ngs:

"Acre" or "Acreage" means the land area of an Assessor’s Parcel as shown on an Assessor’s Parcel Map, or if the land area is not shown on an Assessor’s Parcel Map, the land area shown on the applicable final map, parcel map, condominium plan, or other recorded County parcel map. An Acre equals 43,560 square feet of land area.

"Act" means the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Division 2 of Title 5 of the Government Code of the State of California.

A-l

"Administrative Expenses" means the following actual or reasonably estimated costs directly related to the administration of CFD No. 32: the costs of computing the Special Taxes and preparing the annual Special Tax collection schedules (whether by the School District or designee thereof or both); the costs of collecting the Special Taxes (whether by the County or otherwise); the costs of remitting the Special Taxes totheTrustee; the costs of theTrustee (including its legal counsel) in the discharge of the duties required of it under the I ndenture; the costs to the School District, CFD No. 32 or any designee thereof of complying with arbitrage rebate requirements; the costs to the School District, CFD No. 32 or any designee thereof of complying with School District, CFD No. 32 or obligated persons disclosure requirements associated with applicable federal and state securities laws and of the Act; the costs associated with preparing Special Tax disclosure statements and responding to public inquiries regarding the Special Taxes; the costs of the School District, CFD No. 32 or any designee thereof related to an appeal of the Special Tax; the costs associated with the release of funds from any escrow account; and the School District’s annual administration fees, and third party expenses. Administrative Expenses shall also include amounts estimated or advanced by the School District or CFD No. 32 for any other administrative purposes of CFD No. 32, including attorney’s fees and other costs related to commencing and pursuing any foreclosure, or other resolution of delinquentSpecial Taxes.

"Assessor’s Parcel" means a lot or parcel shown in an Assessor’s Parcel MapwithanassignedAssessor’s parcel number.

"Assessor’s Parcel Map" means an official map of the 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 below.

"Backup Special Tax" means the Special Tax applicable to each Assessor’s Parcel of Developed Property, as determined in accordance with Section C below.

"Board" means the Board of Education of the School District.

"Bonds" means any bonds or other debt (as defined in Section 53317(d) of the Act), whether in one or more series, issued by CFD No. 32 under the Act for the financing of authorized public facilities.

"CFD Administrator" means an official of the School District, or designee thereof, responsible for determining the Special Tax Requirement and providing for the levy and collection of the Special Taxes.

"CFD No. 32" means Riverside Unified School District Community Facilities District No. 32.

"County" means the County of Riverside, California.

" Developed Property" means, for each Fiscal Year, all Taxable Property, exclusive of Taxable Property Owner Association Property and Taxable Public Property, for which a building permit for new construction was issued prior to March 1 of the previous Fiscal Year.

"Final Map" means (i) a final map, or portion thereof, approved by the County pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) that creates individual lots or parcels for which building permits may be issued, or (ii) for condominiums, a final map approved by the County and a condominium plan recorded pursuant to California Civil Code Section 1352 creating such individual lots or parcels. The term “Final Map” shall not include any Assessor’s Parcel Map or subdivision map or portion thereof, that does not create individual lots for which a building permit may be i ssued, i ncl udi ng Assessor’s Parcel s that are desi gnated as remai nder parcels.

" Fiscal Year" means the period starting July 1 andendingonthefollowingjune30.

" I ndenture" means the indenture, fiscal agent agreement, resolution or other instrument pursuant to which Bonds are issued, as modified, amended and^>r supplemented from time to time.

" Land Use Class" meansany of theclasses listed inTable 1 below.

"Maximum Special Tax" means, for each Assessor’s Parcel, the Maximum Special Tax, determined in accordance with Section C below, that can be levied in any given Fiscal Year on such Assessor’s Parcel.

" Non-Residential Property" means all Developed Properly for which a building permits) was issued for a non-residential use.

"Outstanding Bonds" means all Bonds which are deemed to be outstanding under the I ndenture.

" Property Owner Association Property" means, for each Fiscal Year, any Assessor’s Parcel within the boundaries of CFD No. 32 that was owned by a property owner association, including any master or sub­association, as of J anuary 1 of the prior Fiscal Y ear.

" Proportionately" means, for Developed Property, that the ratio of the actual Special Tax levy to the Assigned Special Tax is equal for all Developed Properly. For Undeveloped Properly, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Undeveloped Property. For Taxable Public Property and Taxable Property Owner Association Properly, "Proportionately" means that the ratio of the actual Special Tax levy per Acre to the Maximum Special Tax per Acre is equal for all Assessor’s Parcels of Taxable Public Properly or Taxable Property Owner Association Property, as applicable.

" Public Property" means, for each Fiscal Year, any Assessor’s Parcel within CFD No. 32 that is owned by, irrevocably offered for dedication to, or dedicated to the federal government, theState, theCounty, the School District or any other public agency as of J une 30 of the prior Fiscal Year; provided however 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 in accordance with its use. To ensure that properly is classified as Public Properly in the first Fiscal Year after it is acquired by, irrevocably offered for dedication to, or dedicated to a public agency, the property owner shall notify the CFD Administrator in writing of such acquisition, offer, or dedication not later than June 30 of the Fiscal Year in which the acquisition, offer, or dedication occurred.

"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 shall be made by reference to the building permit(s) issued for such residential dwelling unit.

" Residential Property" means all Developed Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units.

"School District" means the Riverside Unified School District.

"Special Tax" means the special tax to be levied in each Fiscal Year on each Assessor’s Parcel of Taxable Properly to fund the Special Tax Requirement.

"Special Tax Requirement" means that amount required in any Fiscal Year for CFD No. 32 to: (i) pay debt service on all Outstanding Bonds payable in the calendar year commencing in such Fiscal Year; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement and rebate payments on the Bonds; (iii) pay Administrative Expenses; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds; (v) pay directly for acquisition or construction of facilities eligible to be financed by CFD No. 32 to the extent that the inclusion of such amount does not result in a Special Tax levy on Undeveloped Property; (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 CFD Administrator pursuant to the I ndenture.

"State" means the State of California.

"Tax Zone" means any one of the separate geographic areas within CFD No. 32 designated on Exhibit A herein as Tax Zone 1, Tax Zone 2, or Tax Zone 3.

"Tax Zone 1" means all property located within the area identified as Tax Zone 1 on the map included herein as Exhibit A.

"Tax Zone 2" means all property located within the area identified as Tax Zone 2 on the map included herein as Exhibit A.

"Tax Zone 3" means all property located within the area identified as Tax Zone 3 on the map included herein as Exhibit A.

"Taxable Property" means all of the Assessor’s Parcels within the boundaries of CFD No. 32 which are not exempt from the Special Tax pursuant to law or Section E below.

"Taxable Property Owner Association Property" means all Assessor’s Parcels of Property Owner Association Property that are not exempt pursuant to Section E below.

"Taxable Public Property" means all Assessor’s Parcels of Public Property that are not exempt pursuant to Section E below.

"T rustee" means the trustee or fiscal agent under the I ndenture.

"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Taxable Property Owner Association Property or Taxable Public Property.

ASSIGNMENTTO LANDUSE CATEGORIES

Each Fiscal Year, commencing with Fiscal Year 2017-2018, all Taxable Property within CFD No. 32 shall be assigned to a Tax Zone and classified as Developed Property, Taxable Property Owner Association Property, Taxable Public Property, or Undeveloped Property, and shall be subject to Special Taxes in accordance with the rate and method of apportionment determined pursuant to Sections C and D below.

The Assigned Special Tax for Residential Property shall be based on the Tax Zone in which the Assessor’s Parcel is located, the number of dwelling units on such Assessor’s Parcel, and the Residential Floor Area of the dwelling units located on such Assessor’s Parcel. The Assigned Special Tax for Non-Residential Property shal I be based on the Acreage of the Assessor’s Parcel.

MAXIMUM SPECIAL TAX

1. Developed Property

a. MaximumSpecial Tax

The Maximum Special Tax for each Assessor’s Parcel classified as Developed Property within a particular Tax Zone shall be the greater of (i) the amount derived by application of the Assigned Special Tax or (ii) the amount derived by application of the Backup Special Tax

b. Assigned Special Tax

The Assigned Special Tax for each Land Use Class within each Tax Zone is shown below in Tables 1 through 3.

TABLE 1AssignedSpecialTaxRatesfor Developed Property

TaxZone 1

Land Use Category Description

ResidentialFloor Space Assigned Special Tax Rate

1-1 Residential Properly > 4,000 sq. ft. $5,104 per Dwelling Unit

1-2 Residential Property 3,801 to 4,000 sq.ft $4,935 per Dwelling Unit

1-3 Residential Property 3,401 to 3,800 sq. ft $4,787 per Dwel 1 i ng U nit

1^ Residential Property 3,001 to 3,400 sq. ft $4,643 per Dwelling Unit

1-5 Residential Property 2,601 to 3,000 sq. ft $4,317 per DwellingUnit

1-6 Residential Property <2,601 sq.ft. $4,024 per DwellingUnit

1-7 Non-Residential Property N/A $19,326 per Acre

TABLE 2AssignedSpecialTaxRatesfor Developed Property

TaxZone2

Land Use Category Description

ResidentialFloor Space Assigned Special Tax Rate

2-1 Residential Properly > 4,200 sq. ft. $5,803 per DwellingUnit

2-2 Residential Property 3,801 to 4,200 sq.ft $5,634 per Dwelling Unit

2-3 Residential Property 3,401 to 3,800 sq. ft $5,470 per Dwelling Unit

2-4 Residential Property 3,201 to 3,400 sq. ft $5,044 per Dwelling Unit

2-5 Residential Property 3,001 to 3,200 sq. ft $4,618 per DwellingUnit

2-6 Residential Property < 3,001 sq. ft. $4,480 per DwellingUnit

2-7 Non-Residential Property N/A $16,118 per Acre

A-5

TABLE 3AssignedSpecialTaxRatesfor Developed Property

TaxZone 3

Land Use Category Description

ResidentialFloor Space Assigned Special Tax Rate

3-1 Residential Property > 4,500sq.ft. $5,977 per Dwelling Unit

3-2 Residential Property 4,201 to 4,500 sq.ft $5,798 per Dwelling Unit

3-3 Residential Property 4,001 to 4,200 sq.ft $5,624 per Dwelling Unit

3-4 Residential Property 3,801 to 4,000 sq.ft $5,455 per Dwelling Unit

3-5 Residential Property 3,401 to 3,800 sq. ft $5,302 per Dwelling Unit

3-6 Residential Property < 3,401 sq. ft. $4,955 per Dwelling Unit

3-7 Non-Residential Property N/A $16,366 per Acre

c. BackupSpecial Tax

The Backup Special Tax shall be calculated independently for each Tax Zone. The aggregate Backup Special Tax attributable to property within a Final Map within a Tax Zone shall be determined by multiplying the Acreage of all Taxable Property located within such Tax Zone, excluding current or expected Non-Residential Property, Taxable Public Property and Taxable Property Owner Association Property, if any, in such Final Map, by the amount shown in Table 4 for such Tax Zone and dividing the product by the total number of dwel Ii ng units expected to be constructed withi n such Tax Zone.

TABLE 4BackupSpecial Tax

All TaxZones

TaxZone BackupSpecial Tax

1 $19,326 per Acre

2 $16,118perAcre

3 $16,366 per Acre

Notwithstanding the foregoing, if all or any portion of a Final Map is subsequently changed or modified, then the Backup Special Tax for each Assessor’s Parcel of Residential Property in such Final Map, or the portion thereof that is changed or modified, shall bearate per Acre calculated as follows:

1. Determine the total BackupSpecialTaxesanticipatedtoapply to the changed or modified portion of the Final Map prior to the change or modification.

2. Divide the amount determined pursuant to paragraph 1 above by the total Acreage of Residential Property excluding Taxable Public Property andTaxable Property Owner Association Property which is ultimately expected to exist in

such changed or modified Final Map area, as reasonably determined by theCFD Administrator.

3. The result is the Backup Special Tax per Acre which shall be applicable to all Assessor's Parcels of Residential Property in such changed or modified Final Map.

2. Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property

The Maximum Special Tax for each Assessor’s Parcel of Undeveloped Property, Taxable Property Owner Association Property, and Taxable Public Property in a particular Tax Zone shall be equal to the amount shown i n the table below.

TABLE 5Maximum Special Taxes for Taxable Property Owner Association Property, Taxable Public Property, or

Undeveloped Property All TaxZones

TaxZone Maximum Special Tax

$19,326 per Acre

2 $16,118 per Acre

3 $16,366 per Acre

2. M ultiple Land Uses

In some instances an Assessor's Parcel may contain both Undeveloped Property and Developed Property. Furthermore, Developed Property may containmore than one Land UseClass.

In such cases, the Acreage of the Assessor’s Parcel shall be allocated between Developed Property and Undeveloped Property based the portion of the Assessor’s Parcel for which building permits had been issued prior to January 1 of the prior Fiscal Year and portion of the Assessor’s Parcel for which building permits had not been issued prior tojanuary 1 of the prior Fiscal Year. The Acreage that is considered Developed Property shall be allocated between Residential Property and Non-Residential Property based on the site plan. The Maximum Special Tax that can be levied on such Assessor’s Parcel shall be the sum of the Maximum Special Tax that can be levied on each type of property located on that Assessor’s Parcel.

The CFD Administrator’s allocation to each type of property shall be final.

METHODOF APPORTIONMENT OF THE SPECIAL TAX

For each Fiscal Year, commencing Fiscal Year 2017-2018, the Board shall determine the Special Tax Requirement and shall levy the Special Tax as follows:

First Prior to the issuance of the final series of Bonds (other than refunding Bonds), the Special Tax shall be levied on each Assessor’s Parcel of Developed Property at 10096 of the applicable Assigned Special Tax. Following the issuance of the final series of Bonds (other than refunding Bonds), the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Developed Property at up to 10096 of the applicable Assigned Special Tax to satisfy the Special Tax Requirement

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 Proportionately on each Assessor’s Parcel of Undeveloped Property at up to 10096 of the Maximum Special Tax for Undeveloped Property;

Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, then the levy of the Special Tax on each Assessor’s Parcel of Developed Property whose Maximum Special Tax is determined through the application of the BackupSpecial Tax shall be increased in equal percentages from the applicable Assigned Special Tax up to 100 percent of the Maximum Special Tax for each such Assessor’s Parcel;

Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, then the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Taxable Property Owner Association Property or Taxable Public Property at up to the Maximum Special Tax for Taxable Property Owner Association Property or Taxable Public Property.

Notwithstanding the above, pursuant to Section 53321(d)(3) of the California Government Code, under no circurrstances will the Special Tax levied in any Fiscal Year against any Assessor’s Parcel for which an occupancy permit for private residential use has ten issued be increased as a consequence of delinquency or default by the owner or owners of any other Assessor’s Parcel(s) within CFD No. 32 by more than 1CP6 above the amount that would have ten levied in that Fiscal Year had there never been any such delinquencies or defaults. To the extent that the levy of the Special Tax on certain Assessor’s Parcels is limited by the provision in the previous sentence, the levy of the Special Tax on each Assessor's Parcel of all other property shall continue in equal percentages at up to 10G& of theAssignedSpeciai Tax.

EXEMPTIONS

The Board shall not levy Special Taxes on (i) Property Owner Association Property or Public Property in Tax Zones 1 through 3 provided that an Assessor’s Parcel shall not be exempt and shall be classified as Taxable Property Owner Association Property and Taxable Public Property if exempting such property would reduce the sum of all Taxable Property to less than the minimum taxable Acreage amounts shown in the table below and (ii) any Parcels for which the obligation to pay the Special Tax has been prepaid in full pursuant to S ection G.

TABLE 6

TaxZone Mini mum Taxable Acreage

1 28.03 Acres

2 41.21 Acres

3 36.93 Acres

Tax-exempt status for the Acreage of Parcels or portions of Parcels of Public Property and Property Owner Association Property will be irrevocably assigned by the District in the chronological order in which such Parcels or portions of Parcels within each Tax Zone become Exempt Property.

Property Owner Association Property or Public Property that is not exempt from Special Taxes under this section shall be subject to the levy of the Special Tax and shall be taxed Proportionately as part of the fourth step insertion D above, at up to 100% of the applicable Maximum Special Tax for Taxable Property Owner Association Property or Taxable Public Property.

APPEALS/INTERPRETATION

Any taxpayer may file a written appeal of the Special Tax levied on his/her property with the CFD Administrator, 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 calculation of the Special Tax is in error. The CFD Administrator shall review the appeal, meet with the appellant if the CFD Administrator deems necessary, and advise the appellant of its determination. If the CFD Administrator agrees with the appellant, the CFD Administrator shall eliminate or reduce the Special Tax on the appellant’s properly and^r provide a refund to the appellant. If the CFD Administrator disagrees with the appellant and the appellant is dissatisfied with the determination, the appellant then has 30 days in which to appeal to the Board b/ filing a written notice of appeal with the clerk of the Board, provided that the appellant is current in his/her payments of Special Taxes. The second appeal must specify the reasons for its disagreement with the CFD Administrator’s determination.

Interpretations may be made by the Board by ordinance or resolution for purposes of clarifying any vagueness or ambiguity in this Rate and Method of Apportionment

MANNER OF COLLECTION

The Special Tax will be collected in the same manner and at the same time as ordinary ad valorem property taxes; provided, however, that CFD No. 32 may directly bill the Special Tax, may collect Special Taxes 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.

PREPAYMENT OF SPECIAL TAX

The fol lowi ng defi niti on appl i es to thi s S ecti on H:

"CFD Public Facilities Cost" means either $21.4 million in 2016 dollars, which shall increase by the I nflator onj uly 1, 2017, and on each J uly 1 thereafter, or such lower number as (i) shall be determined by the CFD Administrator as sufficient to provide the public facilities to be provided by CFD No. 32 under the authorized bonding program forCFD No. 32, or(ii) shall be determined by the Board concurrently with a covenant that it will not issue any more Bonds to be supported by Special Taxes levied under this Rate and Method of Apportionment as described in Section D.

"Construction Fund" means an account specifically identified in the Indenture to hold funds which are currently available for expenditure to acquire or construct public facilities eligible under the Act.

"Construction Inflation Index" means the Marshall & Swift Western Region Class D Wood Frame Index, or if the Marshall & Swift Western Region Class D Wood Frame Index ceases to be used by the State Allocation Board, a reasonably comparable index used by the State Allocation Board to estimate changes in school construction costs, or in the absence of such an index, the Engineering News Record, Construction Cost Index (Los Angeles Area) published by McGraw-Hill, Inc.

"Inflator" means the greater of (i) the annual percentage change in the Construction Inflation Index, as calculated for the twelve (12) months ending December 31 of the prior calendar year or (ii) three percent (3.0%).

"Future Facilities Costs" means the CFD Public Facilities Cost minus (i) public facility costs previously paid from the Construction Fund, (ii) moneys currently on deposit in the Construction Fund, and (iii) moneys currently on deposit i n an escrow fund that are expected to be avai lable to finance faci lities costs.

"Outstanding Bonds" means all Previously Issued Bonds which are deemed to be outstanding under the I ndenture after the f i rst i nterest and/or pri nci pal payment date fol I owi ng the current F i seal Y ear.

"Previously Issued Bonds" means all Bonds that have been issued by CFD No. 32 prior to the date of prepayment

1. Prepayment in Full

The obligation of an Assessor’s Parcel to pay the Special Tax may be prepaid and permanently satisfied as described herein; provided that a prepayment may be made only for Assessor’s Parcels of Developed Property or Undeveloped Property for which a building permit has been issued, 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 CFD Administrator with written notice of intent to prepay. Within 30 days of receipt of such written notice, the CFD Administrator shall notify such owner of the prepayment amount of such Assessor’s Parcel. The CFD Administrator may charge a reasonable fee for providing this service. Prepayment must be made not less than 45 days prior to the next occurring date that notice of redemption of Bonds from the proceeds of such prepayment may be given to the T rustee pursuant to the I ndenture.

The Prepayment Amount (defined below) shall be calculated as summarized below (capitalized terms as def i ned bel ow):

Total:

Bond Redemption Amountplus Redemption Premiumplus Future Facilities Amountplus Defeasance Amountplus Administrative Fees and Expensesless Reserve Fund Creditless Capital ized I nterest C reditequals PrepaymentAmount

As of the proposed date of prepayment, the Prepayment Amount (defined below) shall be calculated as follows:

Paragraph No.:

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 applicable for the Assessor’s Parcel to be prepaid. For Assessor’s Parcels of Undeveloped Property (for which a building permit has been issued) to be prepaid, 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 that Assessor’s Parcel.

3. (a) Divide the Assigned Special Tax computed pursuant to paragraph 2 by the total estimated Assigned Special Taxes for the entire CFD No. 32 based on the Developed Property Special Taxes which could be charged in the current Fiscal Year on all expected development through buildout of CFD No. 32, excluding any Assessor’s Parcels which have been prepaid, and

(b) Divide the Backup Special Tax computed pursuant to paragraph 2 by the estimated Backup Special Taxes at buildout of CFD No. 32 using the Backup Special Tax amount for the current Fiscal Year, 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 Outstanding Bonds to compute the amount of Outstanding Bonds to be retired and prepaid (the "Bond Redemption Amount!1).

A-10

5. Multiply the Bond Redemption Amount computed pursuant to paragraph 4 by the applicable redemption premium, if an/, on the Outstanding Bonds to be redeemed (the "Redemption Premium").

6. Compute the current Future Facilities Costs.

7. Multiply the larger quotient computed pursuant to paragraph 3(a) or 3(b) by the amount determinedpursuant to paragraph 6 to compute the amount of Future Facilities Costs to be prepaid (the "Future Facilities Amount!1).

8. Compute the amount needed to pay interest on the Bond Redemption Amount from the first bondinterest and/or principal payment date following the current Fiscal Year until the earliest redemption date for the Outstanding B onds.

9. Determine the Special Taxes levied on the Assessor’s Parcel in the current Fiscal Year which have notyet been paid.

10. Compute the minimum amount the CFD Administrator reasonably expects to derive from thereinvestment of the Prepayment Amount (as defined below) less the Future Facilities Amount and the Administrative Fees and Expenses (as defined below) from the date of prepayment until the redemption date for the Outstanding B onds to be redeemed with the prepayment.

11. A dd the amounts computed pursuant to paragraphs 8 and 9 and subtract the amount computed pursuantto paragraph 10 (the" Defeasance A mount!1).

12. Verify the administrative fees and expenses of CFD No. 32, including the costs of computation of theprepayment, the costs to invest the prepayment proceeds, the costs of redeeming Bonds, and the costs of recording any notices to evidence the prepayment and the redemption (the "Administrative Fees and Expenses").

13. If reserve funds for the Outstanding Bonds, if an/, are at or above 10096 of the reserve requirement (as defined in the Indenture) on the prepayment date, a reserve fund credit shall be calculated as a reduction in the applicable reserve requirement for the Outstanding Bonds to be redeemed pursuant to the prepayment (the "Reserve Fund Credit"). No Reserve Fund Credit shall be granted if reserve funds are below 100% of the reserve requirement

14. If any capitalized interest for the Outstanding Bonds will not have been expended at the time of 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 after such first interest and/or principal payment (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 "Prepayment Amount").

16. From the Prepayment Amount, the amounts computed pursuant to paragraphs 4, 5, 11, 13and14 shall be deposited into the appropriate fund as established under the I ndenture and be used to retire Outstanding Bonds or make debt service payments. The amount computed pursuant to paragraph 7 shall be deposited into the construction fund. The amount computed pursuant to paragraph 12 shall be retained by CFD No. 32.

The Prepayment Amount may be sufficient to redeem other than a $5,000 increment of B onds. I n such cases, the increment above $5,000 or integral multiple thereof will be retained in the appropriate fund establ ished under the I ndenture to be used with the next prepayment of B onds or to make debt service payments.

A-l 1

As a result of the payment of the current Fiscal Year’s Special Tax levy as determined under paragraph 9 (above), the CFD Administrator shall remove the current Fiscal Year’s Special Tax levy for such Assessor’s Parcel from the County tax rolls. With respect to any Assessor’s Parcel that is prepaid, the Board shall cause a suitable notice to be recorded in compliance with the Act, to indicate the prepayment of Special Taxes and the release of the Special Tax lien on such Assessor’s Parcel, and the obligation of such Assessor’s Parcel to pay the Special Tax shall cease.

Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Assigned Special Taxes that may be levied on Taxable Property (excluding Taxable Property Owner Association Property and Taxable Public Property) within CFD No. 32 both prior to and after the proposed prepayment, less expected Administrative Expenses, is at least 1.1 times the applicable annual debt service on all Outstanding Bonds.

2. Prepayment in Part

The Special Tax on an Assessor’s Parcel of Developed Property or an Assessor’s Parcel of Undeveloped Property for which a building permit has been issued may be partially prepaid. 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) xF +A

These terms have the fol I owi ng meani ng:

PP = the partial prepaymentPE = the PrepaymentAmountcalculatedaccordingtoSection H.1F = the percentage by which the owner of the Assessor’s Parcel(s) is partially

prepaying the Special Tax.A = theAdministrationFeesandExpensesfromSectionH.1

The owner of any Assessor’s Parcel who desires such partial prepayment shall notify the CFD Administrator of such owner’s intent to partially prepay the Special Tax and the percentage by which the Special Tax shall be prepaid. The CFD Administrator shall provide the owner with a statement of the amount required for the partial prepayment of the Special Tax for an Assessor’s Parcel within thirty (30) days of the request and may charge a reasonable fee for providing this service. With respect to any Assessor’s Parcel that is partially prepaid, the School District shall (i) distribute the funds remitted to it according to Section H.1, and (ii) indicate in the records of CFD No. 32 that there has been a partial prepayment of theSpecialTax and thataportion of theSpecial 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.

Notwithstanding the foregoing, no Special Tax prepayment shall be allowed unless the amount of Assigned Special Taxes that may be levied on Taxable Property (excluding Taxable Property Owner Association Property and Taxable Public Property) within CFD No. 32 both prior to and after the proposed prepayment, less expected Administrative Expenses, is at least 1.1 times the maximumannual debt service on all Outstanding Bonds.

TERM OF SPECIAL TAX

The Special Tax shall be levied for the period necessary to fully satisfy theSpecial Tax Requirement, but in no event shall it be levied after Fiscal Year 2059-2060.

A-12

J. RELIEF FROM BACKUP SPECIAL TAX

All Assessor’s Parcels within CFD No. 32 will be relieved simultaneously and permanently from the obligation to pay and disclose the Backup Special Tax if the Board determines that the total amount of the Special Taxes which could be levied in any Fiscal Year on all Assessor’s Parcels of Developed Property based on the Assigned Special Tax Rates for such Assessor’s Parcels less the expected Administrative Expenses would be at least equal to one hundred and ten percent (110%) of maxi mum annual debt service on the outstandi ng B onds.

A-13

[THIS PAGE INTENTIONALLY LEFT BLANK]

APPENDIX B

FORM OF OPINION OF BONDCOUNSEL

Bond Counsel will deliver an opinion for the 2018 Bonds substantially in the form set forth below.

May 17, 2018

Board of Education Riverside Unified School District 3380 14th Street Riverside, California 92501

Re: $15,945,000 Community Facilities District No. 32 of Riverside Unified School DistrictSeries 2018Special Tax Bonds

Ladies and Gentlemen:

We have acted as bond counsel in connection with the issuance by Riverside Unified School District (the “School District”) for Community Facilities District No. 32 of Riverside Unified School District, County of Riverside, State of California (the “District”), of $15,945,000 aggregate principal amount of the Community Facilities District No. 32 of the Riverside Unified School District Series 2018 Special Tax Bonds (the “Bonds”). The Bonds are issued pursuant to the previsions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the “Acf), a resolution adopted by the Board of Education of Riverside Unified School District (the “School District”) on April 17, 2018 (the “Resolution”), and a Fiscal Agent Agreement, dated as of May 1,2018, between the School District andU.S. Bank National Association, as fiscal agent (the “Agreement”).

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

Based upon such e>amination, we are of the opinion, as of the date hereof, that the proceedings referred to above have been taken in accordance with the laws and the Constitution of the State of California, and that the Bonds, having been issued in duly authorized form and executed by the proper officials and delivered to and paid for by the purchaser thereof, and the Agreement, having been duly authorized and executed by the proper officials, constitute the legally valid and binding obligations of the District enforceable in accordance with their terms subject to the qualifications specified below. Except where funds are otherwise available, as may be permitted by law, the Bonds are payable, as to both principal and interest, solely from certain special taxes to be levied and collected within the District and other funds available therefor held under the Agreement.

The Internal Revenue Code of 1986, as amended (the “Code”), sets forth certain investment, rebate and related requirements which must be met subsequent to the issuance and delivery of the Bonds for the interest on the Bonds to be and remain exempt from federal income taxation. Noncompliance with such requirements could cause the i nterest on the B onds to be subj ect to federal i ncome taxati on retroactive to the date of i ssuance of the B onds. Pursuant to the Agreement, the School District has covenanted to comply with the requirements of the Code and applicable regulations promulgated thereunder.

We are of the opinion that, under existing statutes, regulations, rulings and court decisions, and assuming compliance by the School District with the aforementioned covenants, the interest on the Bonds is excluded from gross income for purposes of federal income taxation and that interest on the Bonds is notan item of tax preference for purposes of calculating the federal alternative mini mum tax imposed on individuals.

B-l

We are further of the opinion that interest on the Bonds is exempt from State of California personal income tax.

Although interest on the Bonds is excluded from gross income for purposes of federal income taxation, the accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these tax consequences will depend on the recipients particular tax status or other items of income or deduction. We express no opi nion regardi ng any such consequences.

The opinions expressed herein may be affected by actions which may be taken (or not taken) or events which may occur (or not occur) after the date hereof. We have not undertaken to determi ne, or to i nform any person, whether any such actions or events are taken or occur or are not taken or do not occur.

The rights of the owners of the Bonds and the enforceability of the Bonds and the Agreement, may be subject to bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted, and their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity.

Respectfully submitted,

B-2

APPENDIX C

GENERAL INFORMATION CONCERNING THE REGION

The following information concerning the City of Riverside (the “City”), the County of Riverside (the “ County”) and the State of California (the “ State”) are presented as general background information. The Bonds are not an obligation of the City, the County or the State and the taxing the power of Perris, Menifee, the County and the State are not pledged to the payment of the Bonds.

Population

The following table offers population figures for the City, the County and the State for 2013 through2017.

Area 2013 2014 2015 2016 2017City of Riverside 315,400 317,781 320,868 323,666 326,792County of Riverside 2,266,290 2,291,699 2,318,762 2,348,213 2,384,783State of California 38,238,492 38,572,211 38,915,880 39,189,035 39,523,613

Source: California State Department of Finance, Demographic Research Unit March 2010 Benchmark.

Employment

The foil owing table shows the largest employers located in the City as of fiscal year 2017.

LARCESTEMPLOYERS City of Riverside

2017

Rank Name Employees Type of business1 County of Riverside 11,865 Publ i c A dmi ni strati on2 U niversity of California Riverside 8,686 Services: Educational3 Riverside Unified School District 4,000 Services: Educational4 Kaiser Permanente Riverside Medical Center 3,484 Services: Health5 City of Riverside 2,429 Publ i c A dmi ni strati on6 California Baptist University 2,285 Services: Educational7 Riverside Community Hospital 2,200 Services: Health8 Alvord Unified School District 1,800 Services: Educational9 UTC Aerospace Systems 1,200 Aerospace Manufacturer

10 Parkview Community Hospital 897 Services: Health

Source: City of Riverside Comprehensive Annual Financial Report, Fiscal Year Ended June 30, 2017.

C-l

The following table shews the largest employers located in the County as of fiscal year 2017.

LARGESTEMPLOYERS County of Riverside

2017

Rank Name1 County of Riverside2 March Air Reserve Base3 U niversity of California Riverside4 Amazon5 Kaiser Permanente Riverside Medical Center6 Corona-Norco Unified School District7 Riverside Unified School District8 Pechanga Resort Casi no9 Riverside U niversity Health Systems -

Medical Center10 E i senhewer M edi cal C enter

Employees Type of business or entity22,538 Publ i c A dmi ni strati on

8,686 National Security8,500 Services: Educational7,500 Retail Trade: General MerchandiseStores5,739 Services: Health5,399 Services: Educational4,236 Services: Educational4,000 A musement and Recreati on S ervi ces3,876 Services: Health

3,665 Services: Health

Source: County of Riverside Comprehensive Annual Financial Report, Fiscal Year Ended June 3Q 2017.

C-2

E mpl cymerit and I ndustry

Employment data by industry is net separately reported on an annual basis for Perris and Menifee but is compiled for the Riverside-San Bemardino-Ontario Metropolitan Statistical Area (the “MSA”), which includes all of Riverside and San Bernardino Counties. In addition to varied manufacturing employment, the MSA has large and growing commercial and service sector employment, as reflected in the table below.

The following table represents the Annual Average Labor Force and Industry Employment for the County for the period from 2013 through 2017.

RIVERSIDE-SAN BERNARDINO-ONTARIO MSA INDUSTRY EMPLOYMENT & LABOR FORCE -BY ANNUAL AVERAGE

2013 2014 2015 2016 2017Civilian Labor Force 1,893,000 1,920,100 1,956,900 1,984,900 2,023,200

Civilian Employment 1,706,900 1,765,300 1,828,200 1,866,600 1,920,400Civilian Unemployment 186,100 155,700 128,600 118,300 102,800

Civilian Unemployment Rate 9 .8% 8.1% 6.6% 6.0% 5.1%

Total Farm 14,500 14,400 14,800 14,600 14,400Total Nonfarm 1,233,300 1,289,300 1,353,100 1,401,900 1,451,600

Total Private 1,008,100 1,060,500 1,119,800 1,159,600 1,201,600Goods Producing 158,600 170,200 183,000 191,500 196,600Natural Resources and Mining 1,200 1,300 1,300 900 900Construction 70,000 77,600 85,700 92,000 97,000Manufacturing 87,300 91,300 96,100 98,600 98,700

Service Providing 1,074,700 1,119,100 1,170,100 1,210,500 1,255,000T rade, T ransportati on and Utilities 299,700 314,900 333,200 348,100 366,000

Wholesale Trade 56,400 58,900 61,600 62,800 63,700Retail Trade 164,800 169,400 174,300 178,000 182,100

Transportation, Warehousing and Utilities

78,400 86,600 97,400 107,300 120,200

Information 11,500 11,300 11,400 11,500 11,300Financial Activities 41,800 42,900 43,900 44,600 44,500Professional and BusinessServices 131,900 138,700 147,400 145,000 147,200Educational and Health Services 187,600 194,800 205,100 214,300 224,800Leisure and Hospitality 135,900 144,800 151,700 160,200 165,700Other Services 41,100 43,000 44,000 44,600 45,600Government 225.200 228.800 233.300 242.300 250.000

Total, All Industries 1.247.800 1.303.700 1.367.900 1.416.600 1.466.000

Note: Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households and personsinvolved in labor-management trade disputes. Employment reported by place of work. Items may not add to total due to independent rounding. The “Total, All Industries” dataisnot directly comparable to the employment data found inthisAPPENDIX C.

Source: State of California, Employment Development Department, Riverside-San Bernardino MSA Industry Employment & Labor Force -by Annual Average, March 2017 Benchmark.

The following table summarizes the labor force, employment and unemployment figures for the period from 2013 through 2017 for the City, the County, the State and the nation as a whole.

CITY OF RIVERSIDE COUNTY OF RIVERSIDE,

STATE OF CALIFORNIA AND UNITED STATES AverageAnnual Civilian Labor Force, Employment and Unemployment

Year and Area Labor F orce Employment^ U nemploymentPUnemployment

Rate(%)(3)

2013City of Riverside 142,000 128,500 13,400 9.5%Riverside County 996,400 897,700 98,700 9.9California 18,625,000 16,958,400 1,666,600 8.9U nited States(4) 155,389,000 143,929,000 11,460,000 7.4

2014City of Riverside 144,500 133,100 11,300 7.8%Riverside County 1,013,500 930,400 83,100 8.2California 18,758,400 17,351,300 1,407,100 7.5U nited States(4) 155,922,000 146,305,000 9,617,000 6.2

2015City of Riverside 147,800 138,400 9,400 6.4%Riverside County 1,035,700 966,300 69,400 6.7California 18,896,500 17,724,800 1,171,700 6.2U nited States(4) 157,130,000 148,834,000 8,296,000 5.3

2016City of Riverside 150,100 141,400 8,700 5.8%Riverside County 1,052,600 988,200 64,500 6.1California 19,093,700 18,048,800 1,044,800 5.5U nited States(4) 159,187,000 151,436,000 7,751,000 4.9

2017City of Riverside 152,000 144,200 7,700 5.1%Riverside County 1,072,500 1,016,200 56,300 5.2California 19,312,000 18,393,100 918,900 4.8U nited States(4) 160,320,000 153,337,000 6,982,000 4.4

^ Includes persons involved in labor-management trade disputes(2) Includesall persons withoutjobs who are actively seeking work.(3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded

figures in this table.(4) Not strictly comparable with data for prior yearsSource: California Employment Development Department, March 2017Benchmark and U.S. Department of Labor, Bureau of

Labor Statistics.

Personal I ncome

Personal I ncome is the income that is received by all persons from all sources. It is calculated as the sum of wage and salary disbursements, supplements towages and salaries, proprietors’ income with inventory valuation and capital consumption adjustments, rental income of persons with capital consumption adjustment, personal dividend income, personal interest income, and personal current transfer receipts, less contributions for government social insurance.

The personal income of an area is the income that is received by, or on behalf of, all the individuals who live in the area; therefore, the estimates of personal income are presented by the place of residence of the income recipients.

Total personal income in Riverside County increased by 38.2% between 2006 and 2016. The fol Icwi ng tables summari ze personal i ncome for Riverside County for 2006 through 2016.

RIVERSIDE COUNTY PERSONAL INCOME

2006-2016(Dollars in Thousands)

Year Riversi deCountyAnnual

PercentChange

20062007200820092010 2011 20122013201420152016

$63,538,333 66,347,611 67,367,683 65,359,484 66,904,690 71,213,948 73,158,724 75,223,346 79,066,137 84,429,454 87,827,068

10.2%4.41.5

(3.0)2.46.42.72.8 5.1 6.7 4.0

Source: U.S. Department of Commerce, Bureau of Economic Analysis

C-5

The following table summarizes per capita personal income for Riverside County, California and the United States for 2006-2016. This measure of income is calculated as the personal income of the residents of the area divided by the resident population of the area.

RIVERSIDE COUNTY,STATE OF CALIFORNIA ANDTHE UNITEDSTATES PERCAPITA PERSONAL INCOME

2006-2016

Year Riverside County California United States

2006 $31,574 $42,334 $38,1442007 31,972 43,692 39,8212008 31,932 44,162 41,0822009 30,446 42,224 39,3762010 30,380 43,323 40,2782011 31,847 45,854 42,4632012 32,301 48,359 44,2832013 32,828 48,555 44,4892014 34,044 51,317 46,4862015 35,883 54,664 48,4292016 36,782 56,308 49,204

Source: U.S. Department of Commerce, Bureau of Economic Analysis

B uilding Activity

The following table prcvides summaries of the building permit valuations and the number of new dvel I i ng units authorized i n the C ity and the County from 2012 through 2016.

BUILDING PERMIT VALUATIONS City of Riverside

2012-2016(Valuation in Thousands of Dollars)

2012 2013 2014 2015 2016Valuation ($000):

Residential $64,245 $30,646 $80,367 $89,166 $80,222Non-residential 53.007 115.561 70.046 124.254 148.266

Total* $117,252 $146,207 $150,413 $213,420 $228,488Residential Units:

Singlefamily 193 70 230 222 219Multi plefamily 168 51 85 224 254

Total 361 121 315 446 473

* Totals may notaddto sums becauseof rounding. Source: Construction I ndustry Research B oard.

C-6

BUILDING PERMIT VALUATIONS County of Riverside

2012-2016(Valuation in Thousands of Dollars)

2012 2013 2014 2015 2016Valuation ($000):

Residential $1,079,405 $1,375,593 $1,621,751 $1,536,742 $1,759,534N on-residential 657.596 790.000 814.990 911.465 1.346.020

Total* $1,737,001 $2,165,593 $2,436,741 $2,448,207 $3,105,554Residential Units:

Singlefamily 3,720 4,716 5,007 5,007 5,662Multi plefamily 909 1.427 1.931 1.189 1.039

Total 4,629 6,143 6,938 6,196 6,701

* Totals may notaddto sums becauseof rounding. Source: Construction I ndustry Research B oard.

Taxable Sales

The table belcw presents taxable sales for the years 2012 through 2016 for the City of Riverside.

TAXABLE SALES

CITY OF RIVERSIDE 2012-2016

(Dollars in Thousands)

Year Permits T axabl e T ransacti ons

2011 8,066 $4,109,1272012 8,484 4,238,9752013 7,673 4,612,9482014 8,051 5,072,6942015(l) 9,466 5,371,3632016 9,735 5,507,805

C-7

The table belcw presents taxable sales for the years 2012 through 2016 for the County.

TAXABLE SALES

COUNTY OF RIVERSIDE 2012-2016

(Dollars in Thousands)

Year Permits

2012 48,3162013 46,8052014 48,4532015(l) 55,8572016 57,771

T axabl e T ransacti ons

$28,096,00930,065,46732,035,68732,910,91034,231,144

(1) Beginning in 2015, the outlet counts in these reports shew the number of outlets that were active during the reporting period. Retailers that operate part-time are new tabulated with store retailers. Industry-level data for 2015 are not comparable to that of prior years

Source: CaliforniaState Board of Equalization, Research and Statistics Division.

C-8

APPENDIX D

SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AC ENT AC REE ME NT

The following is a summary of certain provisions of the Fiscal Agent Agreement not otherwise described in the text of the Official Statement. This summary is not intended to be definitive, and reference is made to the text of the Fiscal Agent Agreement for the complete provisions thereof.

AUTHORITY AND DE FI NITIONS

Definitions

U nless the context otherwise requires, the terms defined in the Fiscal Agent Agreement shall, for all purposes of the Agreement, of any Supplemental Agreement, and of any certificate, opinion or other document mentioned, have the meanings specified in the Agreement. All references in the Agreement to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of the Agreement, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to the Agreement as a whole and not to any particular Article, Section or subdivision hereof.

“Act’ means the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code.

“Administrative Expenses” means any or all of the follcwing: the fees and expenses of the Fiscal Agent (including any fees or expenses of its counsel), the expenses of the School District in carrying out its duties under the Agreement (including, but not limited to, the levying and collection of the Special Taxes) including the fees and expenses of its counsel, an allocable share of the salaries of School District staff directly related thereto and a proportionate amount of School District general administrative cverhead related thereto, any amounts paid ty the School District from its general funds pursuant to the Agreement hereof, the fees and expenses of the School District’s financial advisor, if any, and all other costs and expenses of the School District or the Fiscal Agent incurred in connection with the discharge of their respective duties under the Agreement and, in the case of the School District, in any way related to the administration of the District.

“Administrative Expense Fund” means the fund ty that name established ty the Agreement.

“Administrative Expense Requirement’ means the amount of $30,000 to be deposited in the Administrative Expense Fund for Administrative Expenses.

“Agreement’ means the Agreement, as it may be amended or supplemented from time to time ty any Supplemental Agreement adopted pursuant to the previsions hereof.

“Annual Debt Service” means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled, and(ii) the principal amount of the Outstanding Bonds scheduled to be paid.

“Auditor” means the Auditor-Controller of the County of Riverside.

“Authorized Officer” means any officer or emplcyee of the School District authorized ty the Board of Education or ty an Authorized Officer to undertake the action referenced in the Agreement as required to be undertaken ty an A uthori zed Off i cer.

“Board of Education” means the Board of Education of the School District.

D-l

“Bond Counsel” means ary attorney or firm of attorneys acceptable to the School District and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities.

“Bond Fund” means the fund by that name established by the Agreement.

“Bond Year” means the period beginning on the Closing Date and ending on September 1, 2018 and thereafter the peri od begi nni ng on each S eptember 2 and endi ng on the fd I cwi ng S eptember 1.

“Bonds” means, unless otherwise expressly provided, the Community Facilities District No. 32 of Riverside Unified School District 2018Special Tax Bonds authorized by and at any timeOutstanding pursuant to the Act and the Agreement; and if Parity Bonds are issued for the purpose of discharging the indebtedness on a portion of the Outstanding Bonds pursuant to the Agreement, “Bonds” shall include such Parity Bonds.

“Business Day” means ary day other than (i) aSaturday oraSunday or(ii) a day on which banking institutions in the State of California or in ary state in which the Fiscal Agent has its Principal Office are authorized or obligated by law or executive order to be closed.

“Capitalized Interest Sub-account’ means the sub-account by that name established in the Interest A ccount i n the B ond F und by the A greement.

“City” means the City of Riverside.

“City Certificate” means a written certificate of the City signed by the Chief Financial Officer or City Treasurer of the C ity.

“City Facilities” means the public facilities of the City the construction and acquisition of which are to be financed with the Proceeds deposited in the City Facilities Account as specified in thej oint Community Faci I i ti es A greement.

“City Facilities Account’ means the account by that name established in the Imprcvement Fund pursuant to the Agreement.

“Closing Date” means the date upon which there is an exchange of the Bonds for the proceeds representing payment of the purchase price of the Bonds by the Original Purchaser.

“Code” means the I ntemal Revenue Code of 1986, as amended.

“Continuing Disclosure Agreement’ means the Continuing Disclosure Agreement between the School District and the Special Tax Consultant, as Dissemination Agent thereunder, dated as of the Closing Date, as originally executed and as it may be amended from time to time in accordance with the terms thereof.

“Costs of Issuance” means items of expense payable or reimbursable directly or indirectly by the School District and related to the authorization, sale and issuance of the Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, including but not limited to the preliminary official statement and official statement regarding the Bonds, closing costs, filing and recording fees, initial fees and charges of the Fiscal Agent including its first annual administration fee and the fees of its counsel, expenses incurred by the School District in connection with the issuance of the Bonds and the establishment of the District, Bond (underwriter’s) discount, legal fees and charges, including the fees of Bond Counsel and Disclosure Counsel, financial advisor’s fees, charges for authentication, transportation and safekeeping of the Bonds and other costs, charges and fees in connection with theforegoing.

“Costs of Issuance Funcf’ means the fund by that name established by the Agreement.

D-2

“County” means the County of Riverside.

“County Certificate” means a written certificate of the County signed by the County Executive Officer or the Deputy County Executive Officer of the County.

“County Facilities” means the public facilities of the County the construction and acquisition of which are to be financed with the Proceeds deposited in the County Facilities Account as specified in the Joint Community Facilities Agreement.

“County Facilities Account’ means the account by that name established in the Improvement Fund pursuant to the Agreement.

“Debt Service” means the amount of interest and principal payable on the Bonds scheduled to be paid during the period of computation, excluding amounts payable during such period which relate to principal of the B onds which are scheduled to be reti red and paid before the begi nni ng of such period.

“Developer” means Lennar Homes of California, I nc., its successors and assigns.

“District’ means Community Facilities District No. 32 of Riverside Unified School District, County of Riverside, State of Cal ifornia.

“Facilities Special Tax” means the account by that name established in the Improvement Fund pursuant the A greement.

“Facilities Special Tax Revenues” means the portion of the Special Tax Revenues, if any, relating to Special Taxes that are levied by the School District in any Fiscal Year, in addition to the amount of Special Taxes required to pay Annual Debt Service on the Outstanding Bonds and Administrative Expenses, to pay directly or accumulate funds for paying the costs of authorized public facilities (as provided in clause (v) of the definition of Special Tax Requirement contained in the Rates and Method of Apportionment of Special Tax).

“Federal Securities” means any of the fd lowing whi chat the time of investment are legal investments under the laws of the State of Cal ifornia for the moneys proposed to be i nvested therei n:

(i) Cash; and

(ii) Direct general obligations of (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America), or obligations, the payment of principal of and interest on which is unconditionally guaranteed by, the United States of America.

“Fiscal Agent’ means U. S. Bank National Association, the Fiscal Agent appointed by the School District, acting as an independent fiscal agent with the duties and pcwers prcvided in the Agreement, its successors and assigns, and ary other corporation or association which may at any time be substituted in its place, as provided in the Agreement.

“ F i seal Y ear” means the twelve-month peri od extendi ng from J uly 1 i n a cal endar year to J une 30 of the succeedi ng year, both dates i ncl usive.

“ I mprovement F und” means the fund by that name establ i shed by the A greement.

“Independent Financial Consultant” means a firm of certified public accountants, a financial consulting firm, a consulting engineering firm or engineer which is notan employee of, or otherwise controlled by,theSchool District or theSpecial Tax Consultant.

“Information Services” means in accordance with then-current guidelines of the Securities and Exchange Commission, the Electronic Municipal Market Access System (referred to as “EMMA”), a facility of the Municipal Securities Rulemaking Board (at http://emma.msrb.org) or such service or services as the City may designate in a certificate delivered to the Fiscal Agent.

“Installment Payment(s)” means the payment of Special Taxes made to the County of Riverside - Tax Collectorwhich is due on Ncvember 1 orFebruary 1 of each Fiscal Year.

“Interest Account’ means the account by that name established in the Bond Fund pursuant to the Agreement.

“Interest Payment Dates” means March 1 and September 1 of each year, commencing September 1,2018.

“Investment Earnings” means all interest earned and any gains and losses on the investment of moneys i n any fund or account created by the A greement excl udi ng i nterest earned and gai ns and I osses on the i rvestment of moneys i n the Rebate F und.

“Joint Community Facilities Agreement’ means the Joint Community Facilities Agreement entered into by and among the School District, the County, the City and Lennar Homes of California, I nc., dated as of May 31, 2016, or thejoint Community Facilities Agreement entered into by and among the School District, the Water District and Lennar Homes of California, Inc., dated as of May 31, 2016, as appropriate.

“Maxi mum Annual DebtService” means the largest Annual Debt Service for ary Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds.

“Mitigation Agreement’ means the School Facilities Mitigation Agreement between Riverside Unified School District and Lennar Homes of California, Inc. dated May 31,2016.

“Moody’s” shall mean Moody’s Investors Service, a national rating service with offices in New York, New York.

“Net Special Tax Revenues” means the Special Tax Ra/enues less the Administrative Expense Requirement.

“Officer’s Certificate” means a written certificate of the School District signed by an Authorized Officer of the School District.

“Ordinance” means any ordinance of the School District or resolution of the Board of Education levyingtheSpecial Taxes.

“Original Purchaser” means the first purchaser of the Bonds from the School District.

“Outstanding,” when used as of ary particular time with reference to the Bonds, means (subject to the previsions of the Agreement) all Bonds except:

(i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation;

(ii) Bonds called for redemption which, for the reasons specified in the Agreement, are no longer entitled to any benefit under the Agreement other than the right to receive payment of the redemption price therefor;

(iii) Bonds paid or deemed to have been paid within the meaning of the Agreement; and

(iv) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the School District and authenticated by the Fiscal Agent pursuant to the Agreement or any Supplemental Agreement.

“Owner” means any person who shall be the registered cwner of any Outstanding Bond.

“Parity Bonds” means one or more series of Bonds issued by the District pursuant to the Agreement that are secured by a pledge of and I ien upon the Net S pedal Tax Ra/enues and funds pledged for the payment of the Bonds under the Agreement on a parity with the Outstanding Bonds.

“Permitted Investments” means:

(i) Federal Securities;

(ii) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by ary of the follcwing federal agencies and prcvided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself):

(a) U.S. Export-import BankDirect obligations or fully guaranteed certificates of beneficial cwnership

(b) Farmers Home Administration Certificates of beneficial cwnership

(c) Federal Financing Bank

(d) Federal Housing Administration Debentures

(e) General ServicesAdministration Participation certificates

(f) Gcvernment National MortqaqeAssociation(GNMA)GNMA -guaranteed mortgage-backed bonds GNMA -guaranteed passthrough obligations

(g) U.S. MaritimeAdministration Guaranteed TitleXI financing

(h) U .S. Department of H ousi nq and U rban Dev el opment Project NotesLocal Authority BondsNew Communities Debentures -United States gcvernment guaranteed debentures U.S. Public Housing Notes and Bonds -United States gcvernment guaranteed public housing notes and bonds;

(iii) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by ary of the follcwing nonTull faith and credit United States gcvernment agencies (stripped securities are only permitted if they have been stripped by the agency itself):

(a) Federal Home Loan BankSvstem S eni or debt obi i gati ons

D-5

(b) Federal Home Lean MortaaaeCorporation Participation CertificatesS eni or debt obi i gati ons

(c) Federal National MortqaqeAssociation Mortgage-backed securities and senior debt obligations

(d) Student Loan Marketing Association S eni or debt obi i gati ons

(e) Resolution Funding Corporation (REFCORP) obligations

(f) Farm Credit SystemConsolidated systemwide bonds and notes;

(iv) Money market funds registered under the Federal I nvestment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by Standard & Poor’s of “AAAm-G,” “AAA-m” or “AA-m” and, if rated ty Moody’s, rated “Aaa,” “Aal” or “Aa2” ty Moody’s, including funds for which the Fiscal Agent, its parent holding company, if any, or ary affiliates or subsidiaries of the Fiscal Agent or such holding company receive and retain a fee for services provided to the fund whether as a custodian, transfer agent, investment advisor or otherwise;

(v) Certificates of deposit secured at all times by collateral described in clauses (i) and/or (ii) above. Such certificates must be issued by commercial banks, including the Fiscal Agent and its affiliates, savings and loan associations or mutual savings banks. The collateral must be held ty a third party and the Fiscal Agent on behalf of the Owners of the Bonds must have a perfected first security interest in the collateral;

(vi) Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF including those that may be issued or previded by the Fiscal Agent and its affiliates;

(vii) I nvestment agreements with domestic or foreign banks, insurance companies or corporations the longterm debt or claims paying ability of which or, in the case of a guaranteed corporation, the longTerm debt of the guarantor, or, in the case of a monoline financial guaranty insurance company, the claims paying ability or financial strength, of the guarantor is rated in at least the double A category ty Standard & Poor’s and M oody’ s; provi ded that, by the terms of the i nvestment agreement:

(a) interest payments are to be made to the Fiscal Agent at times and in amounts as necessary to pay Debt Service on the Bonds (if the funds invested pursuant to the investment agreement are from the Reserve Fund);

(b) the investment agreement shall provide that the invested funds are available for withdrawal without penalty or premium at any time upon not more than seven (7) days’ prior notice (The City and the Fiscal Agent shall give or cause to be given notice in accordance with the terms of the i nvestment agreement so as to receive funds thereunder with no penalty or premi urn payable.);

(c) the investment agreement shall provide that it is the unconditional and general obi i gati on of, and i s not subordi nated to any other obi i gati on of, the previ der thereof;

(d) the City and the Fiscal Agent receive the opinion of domestic counsel (which opinion shall be addressed to the City and the Fiscal Agent) that such investment agreement is legal, valid,

D-6

binding and enforceable upon the provider in accordance with its terms and of foreign counsel (if applicable) in form and substance acceptable, and addressed to, the City and the Fiscal Agent;

(e) the investment agreement shall providethat if during its term

(1) the provider’s (or its guarantor’s) rating ty either Standards Poor’s or Moody’s falls below “AA- or “Aa3”, respectively, the provider shall, at its option, within ten (10) days of receipt of publication of such downgrade, either (i) collateralize the investment agreement by delivering or transferring in accordance with the applicable state and federal laws (other than ty means of entries on the prcvider’s books) to the City, the Fiscal Agent or a third party acting solely as agent therefor (the “Holder of the Collateral”) collateral free and clear of any third-party liens or claims, the market value of which collateral is maintained at one hundred four percent (104%) of securities identified in clauses (i) and(ii) of this definition; or(ii) assign the investment agreement and all of its obligations thereunder to a financial institution mutually acceptable to the prcvider, the City and the Fiscal Agent which is rated either in the first or second highest category ty Standards Poor’s and Moody’s; and

(2) the provider’s (or its guarantor’s) rating ty either Standards Poor’s or Moody’s is withdrawn or suspended or falls below “A- or “A3”, respectively, the provider must, at the direction of the City or the Fiscal Agent, within ten (10) days of receipt of such direction, repay the principal of and accrued but unpaid interest on the invested funds, in either case with no penalty or premi urn to the C i ty or the F i seal A gent; and

(f) the investment agreement shall provide and an opinion of counsel shall be rendered, in the event collateral is required to be pledged ty the prcvider under the terms of the investment agreement at the time such collateral is delivered, that the Holder of the Collateral has a perfected first priority security interest in the collateral, ary substituted collateral and all proceeds thereof (in the case of bearer securities, this shall mean the Holder of the Collateral is in possession of such collateral); and

(g) the investment agreement shall providethat if during its term

(1) the provider shall default in its payment obligations, the provider’s obligations under the investment agreement shall, at the direction of the City or the Fiscal Agent, be accelerated and amounts invested and accrued but unpaid interest thereon shall be paid to the City or the Fiscal Agent, as appropriate; and

(2) the prcvider shall become insolvent, not pay its debts as they become due, be declared or petition to be declared bankrupt, etc. (“event of insolvency”), the prcvider’s obligations shall automatically be accelerated and amounts invested and accrued but unpaid interest thereon shal I be paid to the City or the Fiscal Agent, as appropriate;

(viii) Commercial paper rated, at the time of purchase, “Prime-1” ty Moody’s and “A-l” or better ty Standards Poor’s;

(ix) Bonds or notes issued by ary state or municipality which are rated by Moody’s and Standard & Poor’s i n one of the two hi ghest rati ng categori es assi gned ty them;

(x) Federal funds or bankers acceptances with a maximum term of one year of any bank, including the Fiscal Agent and its affiliates, which has an unsecured, uninsured and unguaranteed obligation ratingof “Prime-1” or“A3” or better by Moody’s and “A-l” or better by Standard & Poor’s;

(xi) Repurchase agreements which satisfy the following criteria:

D-7

(a) Repurchase agreements must be between the City or the Fiscal Agent and an entity which is:

(1) A primary dealer on the Federal Reserve reporting dealer list which is rated “A” or better by Standard & Poor’s and Moody’s, or

(2) A bankrated“A” or abcve by Standards Poor’s and Moocfy’s; or

(3) A corporation the longterm debt or claims paying ability of which, or in the case of a guaranteed corporation, the longterm debt of the guarantor, or, in the case of a monoline financial guaranty insurance company, the claims paying ability or financial strength of the guarantor, is rated in at I east the double A category by Standards Poor’s and Moody’s.

(b) The written agreement must i ncl ude the fd I owi ng:

(1) S ecuriti es whi ch are acceptabl e for transfer are:

(A) direct obligations of the United States gcvernment, or

(B) obligations of federal agencies backed by the full faith and credit of the United States of America (or the Federal National Mortgage Association (FNMA) or the Federal H ome L can M ortgage C orporati on (F H L M C)),

(2) The cd lateral must be delivered to the City or the Fiscal Agent (if the Fiscal Agent is not supplying the col lateral) or a third party acting as agent for the Fiscal Agent (if the Fiscal Agent is supplying the cdlateral) before or simultaneous with payment (perfection by possession of certificated securities),

(3) (A) The securities must be valued weekly, markedTo-market at current market price plus accrued interest, and

(B) The value of the cdlateral must be at least equal to one hundred four percent (104%) of the amount of money transferred by the Fiscal Agent to the dealer, bank or corporation under the agreement plus accrued interest. If the value of the securities held as collateral i s reduced bel cw one hundred four percent (104%) of the val ue of the amount of money transferred by the Fiscal Agent, then additional acceptable securities and/or cash must be prcvided as collateral to bring the value of the collateral to one hundred four percent (104%); prcvided, however, that if the securities used as collateral are those of FNMA or FHLMC, then the value of the cdlateral must equal to one hundred five percent (105%) of the amount of money transferred by the F i seal A gent;

(xii) Forward delivery agreements (FDA) or forward purchase and sale agreements (FPSA) having as the underlying investment property irvestments of the type which are identified in dauses (i), (ii), (Hi) or (viii) of this Section; and

(xiii) the Local Agency Investment Fund in the State Treasury of the State of California as permitted by the State Treasurer pursuant toSection 16429.1 oftheCaliforniaGcvernmentCode.

“Principal Account’ means the account by that name established in the Bond Fund pursuant to the Agreement.

“Principal Office” means with respect to the payment, registration, surrender, exchange or transfer of any Bond or Bonds, the principal corporate trust office or agency office of the Fiscal Agent in St. Paul, M i nnesota, or such other off i ces as the F i seal A gent may desi gnate.

D-8

“Proceeds,” when used with reference to the Bonds, means the aggregate principal amount of the Bonds, plus accrued interest and premium, if any, less original issue discount, if any.

“Project’ means the public facilities which are to be financed with the proceeds of the sale of the bonds of the District as described in Resolution No. 2016/17-01 adopted by the B card of Education on July 18, 2016.

“Rate and Method of Apportionment’ means the Rate and Method of Apportionment of Special Tax for the District.

“Rebate Certificate” means the certificate delivered by the School District upon the delivery of the Bonds relating to Section 148 of the Code, or any functionally similar replacement certificate.

“Rebate Fund” means the fund ty that name established ty theAgreement.

“Record Date” means the fifteenth (15th) day of the month preceding the month in which an Interest Payment Date occurs whether or not such day is a B usiness Day.

“Regulations” means the temporary and permanent regulations of the United States Department of the Treasury promulgated undertheCode.

“Representation Letter” means the representation letter which the School District has delivered to The Depository Trust Company (“DTC”) with respect to the utilization of the book-entry system maintained ty DTC for the issuance and registration of bonds.

“Reserve Fund” means the fund ty that name established ty theAgreement.

“Reserve Requirement” means on any date in any Bond Year (a) the lesser of (i) ten percent (10%) of the proceeds of the sale of the Bonds, (ii) Maximum Annual DebtServiceon the Bonds or (iii) 125 percent of averageAnnual Debt Service on the Bonds, as determined by theSchool District.

“Resolution” means Resolution No. 2017/18-28 adopted by the Board of Education on April 17,2018.

“School District’ means Riverside Unified School District.

“School Facilities Account’ means the account by that name established in the Improvement Fund pursuant to theAgreement.

“Securities Depositories” means The Depository Trust Company, 55 Water Street, 50th Floor, New York, New York 10041-0099, Call Notification Department, Fax (212) 855-7232; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other securities depositories as theSchool District may designate in an Officer’s Certificate delivered to the Fiscal Agent.

“Special Reserve” means a reserve account established and held by the School District from the revenues of Special Taxes that are levied in the District for the purpose of providing amounts which the Board of Education has determined are necessary to pay directly or accumulate funds for paying the costs of authorized public facilities, as permitted ty the Rates and Method of Apportionment of Special Tax, and which the Board of Education has determined will be available on an interim basis for the payment of Debt Service on the B onds to the extent that the Net Special Tax Revenues for any Fiscal Year are insufficient to pay the full amount of Annual Debt Service that is payable in the Bond Year that commences in such Fiscal Year, e.g., for Fiscal Y ear 2018-19, the B ond Y ear that commenced on S eptember 2, 2018.

D-9

“Special Tax Consultant” means the firm or person with whom the School District contracts for professional services in connection with the calculation of the amounts of the Special Taxes to be levied on parcels of taxable property in the District to pay Annual Debt Service.

“Special Taxes” or “Special Tax” means the special taxes la/ied by the Board of Education on parcels of taxabl e property wi thi n the Di stri ct pursuant to the A ct and the A greement.

“Special Tax FuncT means the fund by that name established by theAgreement.

“Special Tax Prepayments” means amounts received by the School District as prepayments of all ora portion of the Special Tax obligati on of a parcel of property in the District.

“Special Tax Prepayments Account” means the account by that name established in the Bond Fund pursuant to theAgreement.

“Special Tax Revenues” means the proceeds of the Special Taxes received by the School District, including any scheduled payments, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes in the amount of said lien and interest and penalties thereon.

“Standard & Poor’s” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., a national rating service with offices in New York, New York.

“Surplus Account” means the account by that name established in the Special Tax Fund pursuant to theAgreement.

“Water District” means Western Municipal Water District of Riverside County.

“Water District Certificate” means a written certificate of the Water District signed by the Chief Financial Officer of the Water District.

“Water District Facilities Account’ means the account by that name established in the Improvement Fund pursuant to the Agreement.

“Water Facilities” means the public facilities of the Water District the construction and acquisition of which are to be financed for with the Proceeds deposited in the Water District Facilities Account as specified intheJointCommunity Facilities Agreement.

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

Improvement Fund

(A) Establishment of Improvement Fund. There is established in the Agreement, as a separate fund to be held by the Fiscal Agent, the “Community Facilities District No. 32 of Riverside Unified School District Special Tax Bonds Improvement Fund.” There are also established under the Agreement as separate accounts in the Improvement Fund, to be held by the Fiscal Agent, the “School Facilities Account”, the “Water District Facilities Account”, the “County Facilities Account’ and the “City Facilities Account’ to the credit of which deposits shall be made as required by the Agreement. In addition, there is also established under the Agreement as a separate account in the Improvement Fund, to be held by the Fiscal Agent, the “Facilities Special Tax Account,” to the credit of which deposits shall be made as required by theAgreement. Moneys in

D-10

the I mprcvement Fund, and all accounts therein, shall be held by the Fiscal Agent for the benefit of the School District, the Water District, the County and the City, as prcvided belcw, and shall be disbursed, except as otherwise provided in the Agreement, for the payment or reimbursement of the costs of the design, acquisition and construction of the Project.

If, pursuant to the Mitigation Agreement and after consultation with the Developer, the School District determines that the amount on deposit in the School Facilities Account, the City Facilities Account, the County Facilities Account, or the Water District Facilities Account exceeds the amount needed for the related facilities, as determined in accordance with the Mitigation Agreement, then the Fiscal Agent, upon written instruction from the School District (upon which the Fiscal Agent may conclusively rely) shall transfer such excess amount to one or more of the School Facilities Account, the City Facilities Account, the County Facilities Account or the Water District Facilities Account, as directed in writing; prcvided, however, that ary amount to be deposited in the Water Facilities Account, the City Facilities Account, or the County Facilities Account when combined with all other amounts deposited therein or expended therefrom, respectively, shall not exceed the Greatest Share Rule, as defined in the Mitigation Agreement. If the Greatest Share Rule is reached for any one or more of the Water Facilities Account, the City Facilities Account, or the County Facilities Account (herein the “Subject Accounts)”), then any remaining amounts not already allocated will be split equally between the School Facilities Account and the Subject Accounts) so as to maintain compliance with the G reatest Share Rule.

(B) Procedure for Disbursement.

(1) School Facilities Account. Disbursements from the School Facilities Account shall be made by the Fiscal Agent upon receipt of an Officer’s Certificate which shall:

(a) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid; and

(b) certify that no portion of the amount then being requested to be disbursed was set forth in any Officer’s Certificate previously filed with the Fiscal Agent requesting disbursement, and that the amount bei ng requested is an appropriate di sbursement from the School Faci I ities Account.

(2) Water District Facilities Account. Disbursements from the Water District Facilities A ccount shal I be made by the F i seal A gent upon recei pt of a W ater Di stri ct C ertifi cate whi ch shall:

(a) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid;

(b) certify that the amount required to be disbursed is for payment of costs related to the construction and acquisition of the Water District Facilities as described in the Joint Community Facilities Agreement; and

(c) certify that no portion of the amount then being requested to be disbursed was set forth in any Water District Certificate previously filed with the Fiscal Agent requesting disbursement, and that the amount being requested is an appropriate disbursement from the Water District Facilities Account.

If any amount on deposit in the Water District Facilities Account will not be disbursed for payment of the costs of the construction and acquisition of the Water District Facilities, the Fiscal Agent shall, upon receipt of written directions from the School District (upon which the Fiscal Agent may conclusively rely) transfer such amount to the School FacilitiesAccount.

(3) County Facilities Account. Disbursements from the County Facilities Account shall be made by the Fiscal Agent upon receipt of a County Certificate which shall:

D-l 1

(a) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid;

(b) certify that the amount required to be disbursed is for payment of costs related to the construction and acquisition of the County Facilities as described in the Joint Community Facilities Agreement; and

(c) certify that no portion of the amount then being requested to be disbursed was set forth in any County Certificate previously filed with the Fiscal Agent requesting disbursement, and that the amount being requested is an appropriate disbursement from the County Facilities Account.

If ary amount on deposit in the County Facilities Account will not be disbursed for payment of the costs of the construction and acquisition of the County Facilities, the Fiscal Agent shall, upon receipt of written directions from the School District (upon which the Fiscal Agent may conclusively rely) transfer such amount to the School Facilities Account.

(4) City Facilities Account. Disbursements from the City Facilities Account shall be made by the Fiscal Agent upon receipt of a City Certificate which shall:

(a) set forth the amount required to be disbursed, the purpose for which the disbursement is to be made and the person to which the disbursement is to be paid;

(b) certify that the amount required to be disbursed is for payment of costs related to the construction and acquisition of the City Facilities as described in thejoint Community Facilities Agreement; and

(c) certify that no portion of the amount then being requested to be disbursed was set forth in any City Certificate previously filed with the Fiscal Agent requesting disbursement, and that the amount bei ng requested is an appropriate disbursement from the City Facilities Account.

If ary amount on deposit in the City Facilities Account will not be disbursed for payment of the costs of the construction and acquisition of the City Facilities, the Fiscal Agent shall, upon receipt of written directions from the School District (upon which the Fiscal Agent may conclusively rely) transfer such amount to the School Facilities Account.

(5) Facilities Special Tax Account. Disbursements from the Facilities Special Tax Account shall be made by the Fiscal Agent on each March 2 and September 2, upon receipt of an Officer’s Certificate which shall be consistent with the previsions of the Mitigation Agreement, for the following purposes:

(a) transfer to the School Facilities Account to be used for the purposes set forth inthe Agreement;

(b) transfer to the Water District Facilities Account to be used for the purposes setforth i n the A greement;

(c) transfer to the County Facilities Account to be used for the purposes set forth inthe Agreement; and

(d) transfer to the City Facilities Account to be used for the purposes set forth in theAgreement.

D-12

In no event shall amounts on deposit in the Facilities Special Tax Account be deposited in the City Facilities Account, the County Facilities Account, or the Water District Facilities Account in amounts that would cause a violation of the Greatest Share Rule as defined in the Mitigation Agreement. If the Greatest Share Rule is reached for any one or more of the Water Facilities Account, the City Facilities Account, or the County Facilities Account (herein, the “Subject Account(s)”), then any remaining amounts not already allocated will be split equally between the School Facilities Account and one or more of the Subject Accounts as determined by the School District and set forth in an Officer’s Certificate (upon which the Fiscal Agent may conclusively rely) so as to maintain compliance with the Greatest Share Rule.

Not sooner than one year after the issuance of the final series of Parity Bonds, the School District shall prcvide an Officer’s Certificate directing the Fiscal Agent to close the Facilities Special Tax Account; prcvided, hcwever, that before filing such Officer’s Certificate with the Fiscal Agent, the School District shall prcvide the Developer at least thirty (30) days prior written notice of its intent to close the Facilities Special Tax Account.

(C) I rvestment. Moneys in the I mprcvement Fund and each account therein shall beinvestedand deposited in accordance with the Agreement. I rvestment Earnings shall be retained by the Fiscal Agent in the appropriate account in the I mprcvement Fund to be used for the purposes of such account.

(D) Closing of Fund. Upon the filing of an Officer’s Certificate stating that the portions of the Project which are to be f i nanced with the moneys on deposit i n the I mprcvement Fund and al I accounts therei n have been completed and that all costs of such portions of the Project have been paid or are not required to be paid from the I mprcvement Fund, and further stating that moneys on deposit in the I mprcvement Fund are not needed to complete such portions of the Project or reimburse the cost thereof, the Fiscal Agent shall transfer the amount, if any, remaining in the I mprcvement Fund and all accounts therein to the Principal Account of the Bond Fund to be used to pay the principal of the Bonds; prcvided hcwever, before filing such Officer’s Certificate with the Fiscal Agent, the School District shall prcvide the Developer at least thirty (30) days prior written notice of its intent to file the Officer’s Certificate.

(E) Officer’s Certificate, Water District Certificate, County Certificate or City Certificate. Upon receipt of an Officer’s Certificate or a Water District Certificate, County Certificate or City Certificate delivered pursuant to the Agreement, the Fiscal Agent is authorized to act thereon without further inquiry and shall not be responsible for the accuracy of the statements made in such Officer’s Certificate, Water District Certificate, County Certificate or City Certificate or the application of the funds disbursed pursuant thereto, and shall be absolutely protected and incur no liability in relying on such Officer’s Certificate, Water District Certificate, County Certificate or City Certificate.

Special Tax Fund

(A) Establishment of Special Tax Fund. There is established under the Agreement, as a separate fund to be held by the Fiscal Agent, the “Community Facilities District No. 32 of Riverside Unified School District Special Tax Bonds Special Tax Fund” to the credit of which the School District shall deposit, within ten (10) Business Days of receipt, the Special Tax Revenues received by the School District and any other amounts required by the Agreement to be deposited therein. There is also established under the Agreement in the Special Tax Fund, as a separate account to be held by the Fiscal Agent, the “Surplus Account’ to the credit of which amounts shall be deposited as prcvided in the Agreement. Moneys in the Special Tax Fund shall be held in trust by the Fiscal Agent for the benefit of the School District and the Owners of the Bonds, shall be disbursed as prcvided below and, pending disbursement, shall be subject to a lien in favor of the Owners of the Bonds.

Notwithstanding the foregoing, any amounts received by the School District which constitute Special Tax Prepayments shall be transferred by the School District immediately upon receipt to the Fiscal Agent for deposit by the Fiscal Agent in the Special Tax Prepayments Account established pursuant to the Agreement.

D-13

(B) Disbursements. As soon as practicable after the receipt from the School District of ary Special Tax Revenues, but no later than ten (10) Business Days after such receipt, the Fiscal Agent shall withdraw from the Special Tax Fund and deposit in the Administrative Expense Fund, an amount which is estimated by the School District, in an Officer’s Certificate (upon which the Fiscal Agent may conclusively rely), to be sufficient, together with the amount then on deposit in the Administrative Expense Fund, to pay the Administrative Expenses during the current Fiscal Year in an amount not to exceki the Administrative Expense Requirement.

From the amount then remaining on deposit in the Special Tax Fund, including the amount, if any, on deposit in the Surplus Account, the Fiscal Agent shall, as soon as the amount on deposit in the Special Tax Fund is sufficient, deposit in the Reserve Fund such amount as the School District shall direct in an Officer’s Certificate (upon which the Fiscal Agent may conclusively rely), to be withdrawn from the Special Tax Fund and deposited in the Reserve Fund to make the amount on deposit therein equal to the Reserve Requirement.

Thereafter, on or before each Interest Payment Date, the Fiscal Agent shall deposit in the Interest Account and the Principal Account of the Bond Fund the amounts required for payment of interest on or interest on and principal of the Bonds, as provided in the Agreement.

Thereafter, on or before each Interest Payment Date, the Fiscal Agent shall deposit in the Facilities Special Tax Account the amounts collected ty the District as a result of the levy of the Facilities Special Taxes at the maximum rate on Developed Property prior to the issuance of the final series of Parity Bonds, as set forth in an Officer’s Certificate (upon which the Fiscal Agent may conclusively rely).

If after such deposits are made to the Administrative Expense Fund, the Reserve Fund, the Interest Account, the Principal Account, and the Facilities Special Tax Account there are funds remaining on deposit in the Special Tax Fund, including the amount, if any, on deposit in the Surplus Account, the School District shall instruct the Fiscal Agent ty an Officer’s Certificate (upon which the Fiscal Agent may conclusively rely) to transfer such amount from the Special Tax Fund (including such account) to and deposit it in the Reserve Fund to the extent that the amount on deposit therein is less than the Reserve Requirement. Such Officer’s Certificate shall specify the amount which is to be transferred from the Special Tax Fund (including such account) and deposited in the Reserve Fund. If the amount on deposit in the Special Tax Fund exceeds the amount required to be transferred to the Reserve Fund, the School District may instruct the Fiscal Agent in such Officer’s Certificate to transfer such excess amount, or a portion thereof, to the Administrative Expense Fund to pay any Administrative Expenses identified by the School District in an Officer’s Certificate (upon which the Fiscal Agent may conclusively rely), for the current Fiscal Year in excess of the Administrative Expense Requi rement and thereafter transfer any remai ni ng balance to the S urpl us Account.

On or before the March 1 I nterest Payment Date in each Bond Year, if the amount of other moneys which is on deposit in the Special Tax Fund is less than the amount of the interest on the Bonds which is due on such Interest Payment Date, the Fiscal Agent shall transfer from the Surplus Account, to the extent of moneys on deposit therein and available for transfer, to and deposit such moneys in the Interest Account in an amount not to exceed the amount of such defi ci ency to pay the ful I amount of the i nterest on the B onds whi ch is due and payable on such Interest Payment Date. On or before the September 1 Interest Payment Date in each Bond Y ear, if the amount of other moneys which is on deposit in the Special Tax Fund is less than the amount of the interest on and principal of the Bonds which is due on such Interest Payment Date, the Fiscal Agent shall transfer from the Surplus Account of the Special Tax Fund, to the extent of moneys on deposit therein and available for transfer, to and deposit such moneys in the I nterest Account and the Principal Account in amounts not to exceed the amount of such deficiency to pay the full amount of the interest on and principal of the Bonds which is due and payable on such Interest Payment Date. On or before May 30 of each year, commencing on May 30,2019, the Fiscal Agent shall notify the School District of the amount which is then on deposit i n the S urpl us Account and of the aggregate amount of the i nterest on and pri nci pal of the B onds which will become due and payableon March 1 andSeptember 1 of the foil cwing cal endary ear.

D-14

If on September 2 immediately following the end of the Fiscal Year in which such Special Taxes were levied there are extra monies on deposit in the Surplus Account and the amount on deposit in the Reserve Fund is not equal to the Reserve Requirement, the Fiscal Agent shall withdraw from the Surplus Account and deposit to the Reserve F und an amount which shal I sati sfy the Reserve Requi rement.

If on September 2 immediately following the end of the Fiscal Year in which such Special Taxes were levied there are extra monies on deposit in the Surplus Account and the amount on deposit in the Reserve Fund is equal to the Reserve Requirement, the Fiscal Agent shall withdraw from the Surplus Account and deposit to the School Facilities Account of the Improvement Fund an amount equal to the Facilities Special Tax Revenues, as identified in an Officer’s Certificate upon which the Fiscal Agent may conclusively rely).

On September 2 of each year, and after the transfer of the Facilities Special Tax Revenues set forth abcve, beginning on September 2, 2018, the amount on deposit in the Special Tax Fund (including the amount on deposit in the Surplus Account), together with the amount then on deposit in the Principal Account of the Bond Fund (but not the amounts, if any, on deposit in the Interest Account or the Special Tax Prepayments Account), shall not exceed the greater of (i) one year’s earnings on such amount, or (ii) onetwelfth(l/12th) of Annual Debt Service for the then current B ond Y ear. If on September 2 of ary year the amounts on deposit in the Special Tax Fund (including the Surplus Account), together with the amount then on deposit in the Principal Account, exceeds the maximum amount allowable pursuant to the preceding sentence, the excess, as determined by the School District and communicated in an Officer’s Certificate (upon which the Fiscal Agent may conclusively rely), shall be transferred from the Special Tax Fund to and deposited in the Reserve Fund to the extent that the amount on deposit therein is less than the Reserve Requirement. The School District may elect to have any such excess remaining in the Surplus Account of the Special Tax Fund remitted back to the School District to be used for any lawful purpose. The School District shall make such election in a written communication to the Fiscal Agent (upon which the Fiscal Agent may conclusively rely) and upon receipt thereof, the Fiscal Agent shall direct the payment of any such excess monies in the Surplus Account to the School District, as specified therein. If any such excess remains in the Special Tax Fund after any such amount is transferred from the Special Tax Fund to the Reserve Fund, and after ary such Facilities Special Tax Revenues are returned to the School District, it shall be transferred from the Special Tax Fund and deposited to the Administrative Expense Fund.

(C) Investment. Moneys in the Special Tax Fund shall be invested and deposited in accordance with the Agreement. I nvestment Earnings shall be retained in the Special Tax Fund to be used for the purposes of such fund.

Administrative Expense Fund

(A) Establishment of Administrative Expense Fund. There is established in the Agreement, as a separate fund to be held by the Fiscal Agent, the “Community Facilities District No. 32 of Riverside Unified School District Special Tax Bonds Administrative Expense Fund” to the credit of which deposits shall be made as required by the Agreement. Moneys in the Administrative Expense Fund shall be held in trust by the Fiscal Agent for the benefit of the School District, and shall be disbursed as provided below.

(B) Disbursement. Amounts in the Administrative Expense Fund shall be withdrawn by the Fiscal Agent and paid to the School District or its order upon receipt by the Fiscal Agent of an Officer’s Certificate stating the amount to be withdrawn, that such amount is to be used to pay an Administrative Expense (or a Cost of Issuance) and the nature of such Administrative Expense (or Cost of Issuance).

Annually, not later than the last day of each Fiscal Year, the Fiscal Agent shall withdraw ary amount then remaining in the Administrative Expense Fund that has not been allocated by an Officer’s Certificate received by the Fiscal Agent from the School District to pay Administrative Expenses which are expected to be incurred in the succeeding Fiscal Y ear prior to the receipt by the School District of Special Tax Revenues for such succeeding Fiscal Year and transfer such amount to the Surplus Account.

D-l 5

(C) Investment. Subject to the provisions of subsection (B) abcve, moneys in the AdministrativeExpense Fund shall be invested and deposited in accordance with the Agreement. Investment Earnings shall be retai ned by the F i seal A gent i n the A dmi ni strati ve E xpense F und to be used for the purposes of such fund.

Costs of I ssuance Fund

(A) Establishment of Costs of Issuance Fund. There is established under the Agreement, as a separate fund to be held by the Fiscal Agent, the “Community Facilities District No. 32 of Riverside Unified School District Special Tax Bonds Costs of Issuance Fund” to the credit of which a deposit shall be made as required by the Agreement. Moneys in the Costs of Issuance Fund shall be held in trust by the Fiscal Agent and shall be disbursed as provided in theAgreement for the payment or reimbursement of Costs of Issuance.

(B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed to pay Costs of Issuance, as set forth in a requisition containing respective amounts to be paid to the designated payees, signed by an Authorized Officer and delivered to the Fiscal Agent on the Closing Date. The Fiscal Agent shall pay all Costs of Issuance upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in such requisition, or upon receipt of an Officer’s Certificate requesting payment of a Cost of Issuance not listed on the initial requisition delivered to the F i seal A gent on the CI osi ng Date. The F i seal A gent shal I mai ntai n the C osts of I ssuance F und for a peri od of ninety (90) days from the Closing Date and shall then transfer and deposit any moneys remaining therein, i ncl udi ng any I nvestment E arni ngs thereon, to the S chool Faci I i ti es A ccount of the I mprovement F und.

(C) I nvestment. Moneys in the Costs of Issuance Fund shall be invested and deposited in accordance with the Agreement. Investment Earnings shall be retained by the Fiscal Agent in the Costs of I ssuance F und to be used for the purposes of such fund.

SPECIAL TAX REVENUES; BOND FUND; RESERVE FUND

Pledge of Net Special Tax Revenues

The Bonds (including any Parity Bonds that may be issued) shall be secured by a first and prior pledge of and lien upon (which shall be perfected in the manner and to the extent previded in the Agreement) all of the Net Special Tax Revenues, all moneys on deposit in the Special Tax Fund, all moneys on deposit in the Principal Account and the Interest Account of the Bond Fund, all moneys on deposit in the Surplus Account of the Special Tax Fund and all moneys on deposit in the Reserve Fund. The Bonds (including any Parity Bonds that may be issued) shall be equally secured by a pledge of and lien upon the Net Special Tax Revenues and such moneys without priority for number, date of Bond, date of execution or date of delivery; and the payment of the interest on and principal of the Bonds (including any Parity Bonds that may be issued) and any premium upon the redemption of any thereof shall be and is secured by a first and prior pledge of and lien upon the Net Special Tax Revenues and such moneys. The Net Special Tax Revenues and all moneys deposited into such accounts are dedicated under the Agreement in their entirety to the payment of the principal of the Bonds (including ary Parity Bonds that may be issued), and interest and ary premium on, the Bonds (including ary Parity Bonds that may be issued), as provided in the Agreement and in the Act, until all of the Bonds (including any Parity Bonds that may be issued) have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose inaccordance with theAgreement. If Parity Bonds are issued for the purpose of discharging the indebtedness on a portion of the Outstanding Bonds pursuant to the Agreement, the provisions of the Agreement shall apply to such Parity Bonds to the same extent and with the same effect as the/ apply to the B onds.

Bond Fund

(A) Deposits. There is established under the Agreement, as a separate fund to be held by the Fiscal Agent, the “Community Facilities District No. 32 of Riverside Unified School District Special Tax

D-16

Bonds Bond Fund” to the credit of which deposits shall be made as required by the Agreement and any other provision of the Agreement or the Act. There are established under the Agreement in the Bond Fund, as separate accounts to be held by the Fiscal Agent, the “Interest Account’ and the “Principal Account.” There is also established under the Agreement the Interest Account, as a separate sub-account to be held by the Fiscal Agent, the “Capitalized Interest Sub-account’ to the credit of which a deposit shall be made as required by the Agreement. There is also established in the Bond Fund under the Agreement, as a separate account to be held by the Fiscal Agent, the “Special Tax Prepayments Account’ to the credit of which deposits shall be made as required by the Agreement and paragraph (2) of subsection (B) belcw. Moneys in the Bond Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as prcvided belcw, and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds.

(B) Disbursements.

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

(a) Interest Account. On or before each Interest Payment Date, the Fiscal Agent shall deposit in the Interest Account the amount required to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest becoming due and payable on the Bonds on such date. No deposit need be made into the Interest Account on any Interest Payment Date if the amount on deposit therein i s at I east equal to the i nterest becomi ng due and payabl e on the B onds on such date. A11 moneys i n the I nterest Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity). All amounts on deposit in the Interest Account, except in the Capitalized Interest Sub-account, on the first day of any Bond Year, to the extent not required to pay any interest then having become due and payable on the Outstanding Bonds, shall be withdrawn therefrom by the Fiscal Agent and transferred to the Surplus Account.

(i) Capitalized I nterest Sub-account. On or before the I nterest Payment Date which occurs on September 1, 2018, the Fiscal Agent shall withdraw from the Capitalized Interest Sub­account and transfer to the I nterest Account the amount which is necessary to cause the amount on deposit in the Interest Account to be equal to the amount of interest which is due and payable on the Outstanding Bonds on such Interest Payment Date. The amount, if any, on deposit in the Capitalized Interest Sub-account on September 2, 2018 shall be withdrawn by the Fiscal Agent and transferred to the Interest Account of the Bond Fund and the Capital i zed I nterest S ub-account shal I be cl osed.

(b) Principal Account. On or before each I nterest Payment Date which occurs on March 1, the Fiscal Agent shall deposit in the Principal Account the amount requi red to cause the aggregate amount on deposit in the Principal Account on March 1 to equal one-half of the principal amount of the B onds becoming due and payable on the next succeeding September 1 pursuant to the Agreement. On or before each Interest Payment Date which occurs on September 1, the Fiscal Agent shall deposit in the Principal Account the amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of the Bonds becoming due and payable on such Interest Payment Date pursuant to the Agreement, or the redemption price of the Bonds (consisting of the principal amount thereof and any applicable redemption premium) required to be redeemed on such date pursuant to any of the previsions of the Agreement. All moneys in the Principal Account shall be used and withdrawn by the Fiscal Agent solely for the purpose of (i) paying the principal of the Bonds at the maturity thereof, or (ii) paying the principal of and premium (if any) on any Bonds upon the redemption thereof pursuant to the Agreement. All amounts on deposit in the Principal

D-17

Account on the fi rst day of ary B ond Y ear, to the extent not requi red to pay the pri nci pal of any Outstandi ng Bonds then having become due and payable, shall be withdrawn therefrom and transferred to the Surplus Account.

On the first Business Day following the September 1 Interest Payment Date, the Fiscal Agent shall transfer ary moneys remaining on deposit in the Bond Fund (including the Interest Account and the Principal Account), other than moneys on deposit in the Special Tax Prepayments Account to the Surplus Account.

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

On September 2 of each year, beginning on September 2, 2018, the amount on deposit in the Bond Fund (including the amount on deposit in the Principal Account but not including, hcwever, the amounts on deposit in the I nterest Account and the Special Tax Prepayments Account) shall not exceed the greater of (i) one year’s earnings on such amounts, or(ii) one^welfth (1/12th) of Annual Debt Service for the then current Bond Year. If on September 2 of any year the amount on deposit in the Bond Fund (other than such excluded amounts), exceeds the maximum amount allowable pursuant to the preceding sentence, the excess shall be transferred by the Fiscal Agent, pursuant to the written direction from an Authorized Officer as prcvided in the Agreement. On September 2 of each year, after any such excess amount has been transferred as hereinabcve provided, the amount on deposit in the Bond Fund (other than such excluded amounts), shall not exceed the greater of (i) one year’s earnings thereon, or (ii) one^welfth (1/12th) of Annual Debt Service for the then current B ond Y ear.

(2) Special Tax Prepayments Account Deposits and Disbursements. Within five (5) Business Days after receiving a Special Tax Prepayment, the School District shall deliver the amount thereof to the Fiscal Agent, together with an Officer’s Certificate notifying the Fiscal Agent that the amount being delivered is a Special Tax Prepaymentwhich is to be deposited in the Special Tax Prepayments Account. Upon receiving a Special Tax Prepayment from the School District and such an Officer’s Certificate, the Fiscal Agent shall deposit the amount of the Special Tax Prepayment in the Special Tax Prepayments Account. Such an Officer’s Certificate may be combined with the Officer’s Certificate which the School District is required to deliver to the Fiscal Agent pursuant to the Agreement. A portion of the moneys on deposit in the Special Tax Prepayments Account shall be transferred ty the Fiscal Agent to the Principal Account on the next date for which notice of the redemption of the Bonds can timely be given under the Agreement and shall be used to redeem the Bonds on the redemption date selected in accordance with the Agreement. The portion of the moneys on deposit in the Special Tax Prepayments Account representing funded interest on a portion of the Outstanding Bonds shall be transferred by the Fiscal Agent, upon receipt of an Officer’s Certificate directing such transfer and specifying the amount to be transferred (upon which the Fiscal Agent may conclusively rely), to the I nterest Account on or before each I nterest Payment Date prior to and including the I nterest Payment Date on which the redemption of such Bonds will occur. Pending such transfers, the moneys on deposit in the Special Tax Prepayments Account shall be invested in Permitted Investments at such yield as Bond Counsel may determi ne i s necessary to preserve the excl usi on of i nterest on the B onds from gross i ncome for purposes of federal income taxation. Investment Earnings on moneys on deposit in the Special Tax Prepayments Account shall be retained in such account.

D-18

Amounts in the Bond Fund, including all accounts therein, shall also be withdrawn and deposited in the Rebate F und as provi ded i n the A greement.

(C) Investment. Moneys in the Bond Fund, including all accounts therein, shall be invested and deposited in accordance with the Agreement. Investment Earnings shall be retained in the Bond Fund, except to the extent they are required to be deposited by the Fiscal Agent in the Rebate Fund in accordance with the Agreement. Investment earnings with respect to moneys in the Special Tax Prepayments Account shall be retained therein as specified in paragraph (2) of subsection (B) above.

Reserve Fund

(A) Establishment of Fund. There is established under the Agreement, as a separate fund to be held by the Fiscal Agent, the “Community Facilities District No. 32 of Riverside Unified School District Special Tax Bonds Reserve Fund” to the credit of which a deposit shall be made as required by the A greement, which deposit is equal to the Reserve Requirement, and to which deposits shall be made as provided in the Agreement.

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

(C) Transfer Due to Deficiency in Interest and Principal Accounts. Whena/er transfer is made from the Reserve Fund to the Interest Account or the Principal Account due to a deficiency in either such account, the Fiscal Agent shall prcvide written notice thereof to the School District.

(D) Transfer of Excess of Reserve Requirement. Whenever, on ary September 2, the total of the amount in the Reserve Fund, less Investment Earnings resulting from the investment of the funds therein which pursuant to the Agreement must be rebated to the United States, exceeds the then applicable Reserve Requirement, the Fiscal Agent shall prcvide written notice to the School District of the amount of the excess. Upon receiving written direction from an Authorized Officer (upon which the Fiscal Agent may conclusively rely), the Fiscal Agent shall, subject to the requirements of the Agreement, transfer an amount from the Reserve Fund which wi 11 reduce the amount on deposit therei n to an amount equal to the Reserve Requi rement to the Interest Account and the Principal Account to be used for the payment of the interest on and principal of the B onds on the next succeed ng I nterest Payment Date i n accordance with the Agreement.

(E) Transfer When Balance Exceeds Outstanding Bonds. Whena/er the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, the Fiscal Agent shall, upon receiving written direction from an Authorized Officer (upon which the Fiscal Agent may conclusively rely), transfer the amount in the Reserve Fund to the Interest Account and the Principal Account to be applied, on the next succeeding I nterest Payment Date, to the payment and redemption, in accordance with the Agreement, of al I of the Outstandi ng B onds. I n the event that the amount avai lable to be so transferred from the Reserve F und to the Interest Account and the Principal Account exceeds the amount required to pay and redeem the Outstanding Bonds, the excess shall be transferred to the School District to be used for any lawful purpose of the School District.

(F) Transfers on Payment of Special Tax Obligations. Whenever the School District receives a Special Tax Prepayment for a lot or parcel of property within the District, the School District shall by an Officer’s Certificate notify the Fiscal Agent thereof and of the amount by which the Reserve Fund is to be reduced and which is transferable from the Reserve Fund to the Principal Account of the Bond Fund, which

D-19

amount shall be specified in the Officer’s Certificate. Each such Officer’s Certificate shall be accompanied by a report of the Special Tax Consultant verifying the accuracy of the calculation of the amount to be transferred from the Reserve Fund to the Principal Account (“Verification”). Upon receipt of each such Officer’s Certificate and Verification, upon which the Fiscal Agent may conclusively rely, the Fiscal Agent shall at such time as the amount of such Special Tax Prepayment will be used to redeem Bonds, as provided in the Agreement, transfer the amount specified in such Officer’s Certificate to the Principal Account and use such amount, together with the amount of such Special Tax Prepayment, to redeem Bonds, as prcvided in the Agreement. Notwithstanding the preceding previsions of the Agreement, no amount shall be transferred from the Reserve Fund to the Principal Account if the amount on deposit in the Reserve Fund is, or as a result of such transfer would be, less than the Reserve Requirement.

(G) I nvestment. Moneys in the Reserve Fund shall be invested and deposited in accordance with the Agreement. I nvestment Earnings shall be retained in the Reserve Fund to be used for the purposes of such fund, except to the extent they are required to be deposited by the Fiscal Agent in the Rebate Fund in accordance with the Agreement.

OTHER COVENANTS OF THE SCHOOL DISTRICT

Punctual Payment

The School District will punctually pay or cause to be paid the principal of and interest and any premium on the Bonds when and as due in strict conformity with the terms of the Agreement and any Supplemental Agreement to the extent that the Special Tax Revenues are available therefor, and it will faithfully observe and perform all of the conditions, covenants and requirements of the Agreement and all Supplemental Agreements and of the Bonds.

Special Obligation

The Bonds are special obligations of the School District and the District and are payable solely from and secured solely by the Net Special Tax Revenues and the amounts in the Bond Fund, the Reserve Fund and theSpecial TaxFund, including all accounts and sub-accounts therein.

Extension of Time for Payment

In order to prevent any accumulation of claims for i nterest after maturity, the School District shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the B onds and shal I not, di rectly or i ndi rectly, be a party to the appreval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the School District, such claim for interest so extended or funded shall not be entitled, in case of default under the Agreement, to the benefits of the Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.

Against Encumbrances

The School District shall not encumber, pledge or place any charge or lien upon any of the Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien in the Agreement created for the benefit of the B onds, except as permitted by the Agreement.

Books and Accounts

The School District shall keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the School District in which complete and correct entries shall be made

D-20

of all transactions relating to the expenditure of amounts disbursed from the Administrative Expense Fund. Such books of record and accounts shall at all times during business hours, upon reasonable notice, be subject to the inspection of the Fiscal Agent and the Owners of not less than ten percent (10%) of the aggregate principal amount of the Bonds then Outstanding, or thei r representatives duly authorized in writing.

Protection of Security and Rights of Owners

The School District will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the School District, theBonds shall be incontestable by the School District.

Collection of Special Tax Revenues

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

On or within five (5) Business Days of May 1 of each year, the Fiscal Agent shall prcvide the School District with a notice stating the amount then on deposit in the Special Tax Fund (including the amount, if ary, on deposit in the Surplus Account), the Bond Fund and the Reserve Fund. The receipt of such notice by the School District or the failure of the Fiscal Agent to give such notice shall in no way affect the obligations of the School District underthefollcwing two paragraphs. The Fiscal Agent shall have no liability if it does not prcvide such notice to the School District.

The School District shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Act by August 10 of each year (or such later date as may be authorized by the Act or ary amendment thereof) that the Bonds are Outstanding, such that the computation of the levy is complete before the final date on which the Auditor will accept the transmission of the Special Tax amounts for the parcels within the District for i ncl usi on on the tax rol I for the F i seal Y ear then begi nni ng. U pon the compl eti on of the computati on of the amounts of the levy of the Special Taxes, the School District shall prepare or cause to be prepared, and shall transmit to the Auditor, such data as the Auditor requires to include the levy of the Special Taxes on the tax roll. Notwithstanding the preceding previsions of this paragraph, the Board of Education may elect, as permitted by the Act, to collect the Special Taxes to be levied for ary Fiscal Year directly from the cwners of the parcels of taxable property upon which the Special Taxes are levied rather than by transmitting the Special Taxes to the Auditor for collection on the tax roll; provided that, in such event, the School District shall otherwise comply with the previsions of the Agreement.

TheSchool District shall fixandlevy the amount of Special Taxes within the District required for the payment of the principal of and interest on ary Outstanding Bonds becoming due and payable during the ensuing calendar year, including ary replenishment or expenditure of the Reserve Fund, and the amount estimated to be sufficient to pay the Administrative Expenses during such calendar year. The Special Taxes so levied shall not exceed the authorized amounts for the District as provided in the Rates and Method of Apportionment of Special Tax.

The Special Taxes shall be payable and be collected (except in the event of judicial foreclosure proceedi ngs pursuant to the A greement) i n the same manner and at the same ti me and i n the same i nstal I ments as the general taxes on real property are payable, and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property.

The School District will not, in collecting the Special Taxes or in processing ary such judicial foreclosure proceedings, exercise ary authority which it has pursuant to Sections 53340, 53344.1, 53356.1 and 53356.8 of the California Government Code in ary manner which would materially and adversely affect the

D-21

interests of the Bondcwners and, in particular, will not permit the tender of Bonds in full or partial payment of any Special Taxes except upon receipt of a certificate of an Independent Financial Consultant that to accept such tender will not result in the School District having insufficient Net Special Tax Revenues to pay the principal of and interest on the Bonds remaining Outstandingfollcwing such tender.

In determining the amount of Special Taxes to be levied in ary Fiscal Year, the School District shall not apply ary amount that may be available in the Special Reserve to reduce the amount of the Special Taxes that would require to be levied to pay the full amount of the principal of and interest on the outstanding Bonds becoming due and payable in the ensuing calendar year, replenish ary amount that may have been expended from the Reserve F und, and pay esti mated A dmi ni strative E xpenses duri ng such cal endar year.

Reduction of Maximum Special Tax Rates

The School District covenants that, to the extent that it is legally permitted to avoid doing so, it will not initiate and conduct proceedings to reduce the maximum rates of Special Taxes which are authorized to be levied on taxable parcels or property within the District (the “Maximum Rates”).

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

Further Assurances

The School District will adopt, make, execute and deliver any and all such further ordinances, resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to faci I itate the performance of the A greement, and for better assuri ng and corifi rmi ng unto the Owners of the Bonds of the rights and benefits provided in the A greement.

Tax Ccvenants

TheSchool District ccvenants that:

(A) It will not take ary action or omit to take ary action, which action or omission, if reasonably expected on the date of the initial issuance and delivery of the Bonds, would have caused any of the Bonds to be “arbitrage bonds” withinthe meaning of Section 103(b) andSection 148 of theCode;

(B) It will not take ary action or omit to take ary action, which action or omission, if reasonably expected on the date of initial issuance and delivery of the Bonds, would result in loss of exclusion from gross income for purposes of federal income taxation under Section 103(a) of the Code of interest paid with respect to the Bonds;

(C) It will not take ary action or omit to take ary action, which action or omission, if reasonably expected on the date of initial issuance and delivery of the Bonds, would have caused any of the Bonds to be “private activity bonds” within the meaning of Section 141 of theCode;

(D) It will comply with the Rebate Certificate as a source of guidance for achieving compliance with the Code; and

(E) In order to maintain the exclusion from gross income for purposes of federal income taxation of interest paid with respect to the Bonds, it will comply with each applicable requirement of Section 103 and Sections 141 through 150 of theCode.

D-22

The covenants of the School District contained in the Agreement shall survive the payment, redempti on or defeasance of B onds pursuant to the A greement.

Ccvenant to Foreclose

The School District covenants under the Agreement with and for the benefit of the Owners of the Bonds that, except under the circumstances prcvidedfor inthefollcwing paragraph, (i) it will order, and cause to be commenced, judicial foreclosure proceedings against properties with three or more delinquent Installment Payments of Special Taxes by October 1 following the close of the Fiscal Year in which the third delinquent Installment Payment of Special Taxes was due, and(ii) except under the circumstances provided for in the following paragraph, it will commence judicial foreclosure proceedings against all properties with delinquent Special Taxes by October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than ninetyTive percent (95%) of the total Special Taxes that were levied, and diligently pursue to completion such foreclosure proceedings.

Notwithstanding the covenant in clause (ii) of the preceding paragraph, if on October 1 following the close of any Fiscal Year, the School District determines that the amount that is then available in the Special Reserve is not less than $60,000, the School District shall not be required to order, and cause to be commenced, judicial foreclosure proceedings against any parcels of property in the District unless such parcels have three or more delinquent Installment Payments of Special Taxes due.

Prepayment of Special Taxes

The School District shall cause all applications of cwners of property in the District to prepay and satisfy theSpecial Tax obligation for their property to be reviewed by theSpecial Tax Consultant and shall not accept ary such prepayment unless such consultant certifies in writing that following the acceptance of the proposed prepayment by the School District and the redemption of Bonds with such prepayment, the maximum amount of theSpecial Taxes that may be levied on all Parcels of Developed Property in the District whichfollcwingsuch prepayment will be subject to the levy of theSpecial Taxes will be equal to at least (i) an amount equal to one hundred twenty percent (120%) of M axi mum A nnual Debt S ervi ce on the B onds that wi 11 remain Outstanding following such redemption, plus (ii) Administrative Expenses in the amount of $30,000. For purposes of the Agreement, the terms “Parcels” and “Developed Property” have the meanings given to them in the Rates and Method of Apportionment of Special Tax.

Calculation of Prepayments

The School District will not include in any calculation of the amount necessary to prepay and permanently satisfy theSpecial Tax obligation of any parcel of taxable property in the District a portion of the amount then on deposit in the Reserve Fund, if at the time of such calculation the amount on deposit in the Reserve Fund is less than the Reserve Requirement.

Issuance of Additional Bonds

In addition to the Bonds, but subject to the maximum bonded indebtedness limit, the District may issue one or more additional series of Parity Bonds payable from the Net Special Tax Revenues on a parity with the Bonds, in such principal amount as may be determined by the District, under a separate agreement entered into by the District and the Fiscal Agent. Any such Parity Bonds will be secured by a lien on the Net S pedal Taxes on a parity with the outstanding B onds.

(a) Additional Bonds. The District may issue such Parity Bonds for the purpose of funding additional facilities, upon compliance with the conditions precedent set forth in the Agreement, i ncl udi ng without I i mitation the fd lowi ng:

D-23

(A) Separate Funds: Debt Service Reserve Fund. The agreement providing for the issuance of such Parity Bonds must provide for the establishment of separate funds and accounts.

The agreement providing for issuance of the Parity Bonds must provide for one of the following: (i) a deposit to a reserve account for the Parity Bonds in an amount defined in such agreement, and such agreement must expressly declare that the Owners of such Parity B onds wi 11 have no interest in or claim to the Reserve Fund and that the Owners of the Bonds covered by the Reserve Fund will have no interest in or claim to such other reserve account; or (ii) no deposit to another reserve account, as long as such agreement expressly declares that the owners of such Parity Bonds wi 11 have no i nterest i n or clai m to the Reserve F und.

(2) Value. The value of the property subject to the Special Tax (to be determined by reference to either or some combination of an appraisal prepared by an MAI appraiser selected by the District, with a date of value no earlier than 90 days before the date the proposed Parity Bonds would be issued, or the assessed values shown on the last equalized County assessor’s property tax rol I s) shal I be at I east five ti mes the sum of:

(i) the aggregate principal amount of all Bonds then outstanding, plus

(ii) the aggregate principal amount of the series of Parity Bonds proposed to beissued, plus

(iii) the aggregate principal amount of any overlapping special tax or fixed assessment liens on the parcels in the District subject to the levy of Special Taxes.

(3) Coverage. The amount of the maximum Special Taxes that may be levied in each Fiscal Year under the Ordinance must at least equal 110% of the total Annual DebtService on the then-outstanding Bonds, the proposed Parity Bonds and the Administrative Expense Requirement in the then-current fiscal year.

(B) Refunding Bonds. Notwithstanding the foregoing, the District may issue Refunding Bonds as Parity Bonds without the need to satisfy the value and coverage tests described above.

Refunding Bonds means bonds issued by the District, the net proceeds of which are used to refund all or a portion of the then-outstanding Bonds; prcvided that the principal and interest on the Refunding Bonds to their final maturity date is less than the principal and interest on the Bonds being refunded to their final maturity date, and the final maturity of the Refunding Bonds is not later than the fi nal maturity of the B onds bei ng refunded.

(C) Subordinate Bonds. Nothing in the Agreement prohibits the District from issuing any other bonds or otherwise incurring debt secured by a pledge of the Net Special Tax Revenues subordinate to the pledge thereof under the Agreement.

Continuing Disclosure

The School District and the Special Tax Consultant, as Dissemination Agent, covenant and agree under the Agreement that they will comply with and cany out all of the previsions of the Continuing D i scl osure A greement.

D-24

INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS;LIABILITY OF THE SCHOOL DISTRICT

Deposit and I investment of M oneys i n F unds

Subjectinall respects to the previsions of the Agreement, moneys i n any fund or account created or established by the Agreement and held by the Fiscal Agent shall be invested by the Fiscal Agent in Permitted Investments, as directed pursuant to an Officer’s Certificate filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments. In the absence of ary such Officer’s Certificate, the Fiscal Agent shall invest any such moneys in Permitted Investments described in paragraph (iv) of the definition of Permitted I nvestments in the Agreement. The Fiscal Agent shall not have any responsibility for determining the legality of ary Permitted Investments. The Fiscal Agent shall have no obligation to pay additional interest or maximize investment income on ary funds held by it. Neither the School District nor the Owners of the Bonds shall have any claim of ary kind against the Fiscal Agent in connection with investments properly made pursuant to the Agreement. Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account, subject, hewever, to the requirements of the A greement for transfer of I nvestment E arni ngs i n funds and accounts.

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

Subject in all respects to the provisions of the Agreement, investments in ary and all funds and accounts may be commingled in a single fund for purposes of making, holding and disposing of investments, notwithstanding provisions in the A greement for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent under the Agreement, previded that the Fiscal Agent shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as previded in the Agreement.

The Fiscal Agent shall sell at the highest price reasonably obtainable (previded that the highest of ary three bids received by the Fiscal Agent shall be deemed the highest price reasonably obtainable), or present for redemption, ary investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited, and the Fiscal Agent shall not be liable or responsible for ary loss resulting from the acquisition or disposition of any such investment security in accordance with the Agreement.

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

The Fiscal Agent may make ary investments under the Agreement through its cwn bond or i nvestment department or trust i nvestment department, or those of its parent or any aff i I iate.

RebateFund; Rebate to the United States

There is created under the Agreement, to be held by the Fiscal Agent, as a separate fund distinct from all other funds and accounts held by the Fiscal Agent under the A greement, the RebateFund. The Fiscal Agent shall, in accordance with written directions received from an Authorized Officer, deposit into the Rebate Fund moneys transferred by the School District to the Fiscal Agent pursuant to the Rebate Certificate or moneys

D-25

transferred by the Fiscal Agent from the Bond Fund or the Reserve Fund. The Rebate Fund shall be held either uninvested or invested only in Federal Securities at the direction of the School District. Moneys on deposit in the Rebate Fund shall be applied only to payments made to the United States, to the extent such payments are required by the Rebate Certificate. The Fiscal Agent shall, upon written request and direction of the School District, make such payments to the U nited States.

The Fiscal Agent’s sole responsibilities under the Agreement are to fdlow the written instructions of the Schod District pertaining hereto. The Schod District shall be responsible for any fees and expenses i ncurred by the F i seal A gent pursuant to the A greement.

The Fiscal Agent shall, upon written request and direction from the School District, transfer to or upon the order of the Schod District ary moneys on deposit in the Rebate Fund in excess of the amount, if any, requi red to be mai ntai ned or held therei n i n accordance with the Rebate Certifi cate.

Liability of School District

The School District shall not incur ary responsibility in respect of the Bonds or the Agreement other than in connection with the duties or obligations explicitly in the Agreement or in the Bonds assigned to or imposed upon it. The Schod District shall not be liable in connection with the performance of its duties under the Agreement, except for its own negligence or willful default. The Schod District shall not be bound to ascertain or inquire as to the performance or observance of any of the terms, conditions, ccvenants or agreements of the Fiscal Agent in the Agreement or of ary of the documents executed by the Fiscal Agent in connection with the B onds.

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

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

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

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

D-26

Employment of Agents by School District

I n order to perform its duties and obligations under the Agreement, the School District may emplcy such persons or entities as it deems necessary or advisable. The School District shall not be liable for ary of the acts or omissions of such persons or entities employed by it in good faith under the Agreement, and shall be entitled to rely, and shall be fully protected in doing so, upon the opinions, calculations, determinations and directions of such persons or entities.

THE FISCAL AGENT

Appointment of Fiscal Agent

U. S. Bank National Association, is appointed under the Agreement as Fiscal Agent, registrar and paying agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in the Agreement, and no implied covenants or obligations shall be read into the A greement agai nst the F i seal A gent.

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

The School District may remeve the Fiscal Agent initially appointed, and any successor thereto, and may appoi nt a successor or successors thereto, but any such successor shal I be a bank or trust company havi ng a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000, and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of the Agreement, the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

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

If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of theAgreementwithinfortyTive(45) days afterthe Fiscal Agent shall have given to the School Districtwritten notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent, at the expense of the School District, or any Owner may apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent.

L iability of Fiscal Agent

The recitals of facts, covenants and agreements in the A greement and in the Bonds contained shall be taken as statements, covenants and agreements of the School District and the District, and the Fiscal Agent assumes no responsibility for the correctness of the same, nor makes any representations as to the validity or sufficiency of the Agreement or of the Bonds, nor shall the Fiscal Agent incur any responsibility in respect thereof, other than in connection with the duties or obligations in the A greement or in the Bonds assigned to or

D-27

imposed upon it. The Fiscal Agent shall not be liable in connection with the performance of its duties under the Agreement, except for its cwn negligence or willful misconduct. The Fiscal Agent assumes no responsibility or liability for ary information, statement or recital in any offering memorandum or other disclosure material prepared or distri buted with respect to the issuance of the B onds.

In the absence of bad faith, the Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Fiscal Agent and conforming to the requirements of the Agreement. Except as prcvided above in this paragraph, the Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith, reasonably and in accordance with the terms of theAgreement, upon ary resolution, order, notice, request, consent or waiver, certificate, statement, affidavit, or other paper or document which it shal I i n good fai th reasonably bel i eve to be genui ne and to have been adopted or si gned by the proper person or to have been prepared and furnished pursuant to ary prevision of the Agreement, and the Fiscal Agent shall not be under any duty to make any i nvesti gati on or i nqui ry as to any statements contai ned or matters referred to i n any such i nstrument.

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

No prevision of the Agreement shall require the Fiscal Agent to expend or risk its cwn funds or otherwise incur ary financial liability in the performance of any of its duties under the Agreement, or in the exercise of any of its rights or powers.

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

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

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

All indemnification and releases from liability granted in the Agreement to the Fiscal Agent shall extend to the directors, officers and emplcyees of the Fiscal Agent.

Information

The Fiscal Agent shall provide to the School District such information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent under the Agreement as the School District shall reasonably request, including, but not limited to, quarterly statements reporting funds held and transactions by the Fiscal Agent.

Notice to Fiscal Agent

The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon ary notice, resolution, request, consent, order, certificate, report, warrant, Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Fiscal Agent may consult with counsel, who may be counsel to the School District, with regard to legal questions, and the advice

D-28

or opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered ty the Fi seal Agent under the Agreement i n good faith and i n accordance therewith.

Whenever in the administration of its duties under the Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be preved or established prior to taking or suffering any action under the Agreement, such matter (unless other evidence in respect thereof be in the Agreement specifically prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively preved and established ty a certificate of the School District, and such certificate shall be full warranty to the Fiscal A gent for any acti on taken or suffered under the previ si ons of the A greement or ary S uppl emental A greement upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may requi re such additional evidence as to it may seem reasonable.

Compensation, Indemnification

The School District shall pay to the Fiscal Agent from time to time reasonable compensation for all services rendered as Fiscal Agent under the Agreement, and also all reasonable expenses, charges, fees and other disbursements, including those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties under the Agreement, and the Fiscal Agent shall have a first priority lien therefor on ary funds at any time held by it under the Agreement, and the Fiscal Agent shall pay and reimburse all expenses, charges, fees and other disbursements, including those of its attorneys, agents and employees, incurred in connection therewith from the funds held ty it under the Agreement. The School District further agrees, to the extent permitted ty applicable law, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents, harmless against ary liabilities which it may incur in the exercise and performance of its pewers and duties under the Agreement which are not due to its negligence or willful misconduct. The obligation of the School District under theAgreement shall survive resignation or remeval of the F i seal A gent under the A greement and payment of the B onds and di scharge of the A greement.

Books and Accounts

The Fiscal Agent shall keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries shall be made of all transactions made by it and with respect to the expenditure of amounts disbursed from the Bond Fund, the Special Tax Fund, the Administrative Expense Fund, the Reserve Fund and the Costs of Issuance Fund. Such books of record and accounts shall, upon reasonable notice, at all times during business hours be subject to the inspection of the School District and the Owners of not less than ten percent (10%) of the aggregate principal amount of the B onds then Outstandi ng, or thei r representatives duly authori zed i n wri ti ng.

MODIFICATION OR AMENDMENT OF THE AGREEMENT

Amendments Permitted

(A) The Agreement and the rights and obligations of the District and the School District and of the Owners of the Bonds may be modified or amended at ary time by a Supplemental Agreement pursuant to the aff i rmative vote at a meeti ng of the Owners, or with the written consent, without a meeti ng, of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in the Agreement. No such modification or amendment shall (i) extend the maturity of ary Bond or the time for paying interest thereon, or otherwise alter or impair the obligation of the School District on behalf of the District to pay the principal of, and the interest and any premium on, ary Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation of any pledge of or lien upon the Special Tax Revenues, or the moneys on deposit in the Bond Fund or the Reserve Fund, superior to or on a parity with the pi edge and lien created for the benefit of the Bonds (except as otherwise permitted ty the Act, the laws of the State of California or the Agreement), (iii) reduce the percentage of Bonds required for the amendment hereof, or (iv) reduce the principal amount of or redemption premium on any Bond or reduce

D-29

the interest rate thereon. Any such amendment may not modify any of the rights or obligations of the Fiscal Agent without its written consent. The School District shall deliver to the Fiscal Agent an opinion of counsel that any such Supplemental Agreement entered into by the School District and the Fiscal Agent complies with the previsions of the Agreement and the Fiscal Agent may conclusively rely on such opinion.

(B) The Agreement and the rights and obligations of the District and the School District and the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the foil owing purposes:

(1) to add to the ccvenants and agreements of the School District in the Agreement contained, other ccvenants and agreements thereafter to be observed, or to limit or surrender any right or pewer i n the A greement reserved to or conferred upon the S chool Distri ct;

(2) to make modifications not adversely affecting any Outstanding Bonds in any materialrespect;

(3) to make such previsions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective previsions of the Agreement, or in regard to questions arising under the Agreement, as the School District and the Fiscal Agent may deem necessary or desirable and not i nconsistent with the Agreement, and which shall not adversely affect the rights of the Owners;

(4) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code relating to required rebate of moneys to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of i nterest on the B onds or to conform with the Regulations; or

(5) to previde for the issuance of Parity Bonds pursuant to the Agreement for the purpose of paying and discharging the indebtedness of a portion of the Outstanding Bonds (a “Partial Discharge”); previded that follcwing the issuance of such Parity Bonds Maximum Annual Debt Service on the Bonds that will remain Outstanding follcwing such Partial Discharge and such Parity Bonds will be less in each subsequent Bond Year than Maximum Annual Debt Service on the Outstanding Bonds before the issuance of such Parity Bonds.

Owners’ Meetings

TheSchool District may at any time call a meeting of the Owners. In such event, the School District is authorized to fix the time and place of any such meeting and to previde for the giving of notice thereof and to fix and adopt rules and regulations for the conduct of the meeting.

Procedure for Amendment with W ritten Consent of Owners

The School District and the Fiscal Agent may at any time enter into a Supplemental Agreement amending the previsions of the Bonds or of the Agreement or any Supplemental Agreement, to the extent that such amendment is permitted by the Agreement, to take effect when and as previded in the A greement. A cop/ of the S uppl emental A greement, together wi th a request to Owners for thei r consent thereto, shal I be mai I ed b/ first class mail, postage prepaid, by the Fiscal Agent to each Owner of Bonds Outstanding, but failure to mail copies of the Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as previded in the Agreement.

Such a Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least sixty percent (60%) in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as previded in the Agreement and a notice shall have been mailed as previded in the Agreement. Each such consent shall be effective only if accompanied by proof

D^O

of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by the Agreement. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal A gent pri or to the date when the noti ce prcvi ded for i n the A greement has been mai I ed.

After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Agreement, the School District shall mail a notice to the Owners in the manner hereinbefore provided in Agreement for the mailing of the Supplemental Agreement, stating in substance that the S uppl emental A greement has been consented to by the Owners of the requi red percentage of B onds and wi 11 be effective as provided in the A greement (but failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of the papers required by the Agreement to be filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise hereinabcve specifically provided in the Agreement) upon the School District, the District and the Owners of all Bonds then Outstanding at the expiration of sixty (60) days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such sixty (60)-day period.

Disqualified Bonds

Bonds cwned or held for the account of the School District, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in the Agreement, and shall not be entitled to vote upon, consent to, or parti ci pate i n any acti on prcvi ded for i n the A greement.

Effect of Supplemental Agreement

From and after the time any Supplemental Agreement becomes effective pursuant to the Agreement, the Agreement shal I be deemed to be modifi ed and amended i n accordance therewith, and the respective rights, duties and obligations under the Agreement of the School District and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced under the Agreement subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Agreement shall be deemed to be part of the terms and conditions of the Agreement for any and all purposes.

E ndorsement or Replacement of Bonds I ssued After Amendments

The School District may determine that Bonds issued and delivered after the effective date of any action taken as provided in the Agreement shall bear a notation, by endorsement or otherwise, in form approved by the School District, as to such action. In that case, upon demand of the Owner of any Bond O utstandi ng at such effective date and upon presentati on of hi s B ond for that purpose at the P ri nci pal Off i ce of the Fiscal Agent or at such other office as the School District may select and designate for that purpose, a suitable notation shall be made on such Bond. The School District may determine that new Bonds, so modified as in the opinion of the School District is necessary to conform to such action, shall be prepared, executed and del ivered. I n that case, upon demand of the Owner of any B onds then Outstandi ng, such new B onds shal I be exchanged at the Principal Office of the Fiscal Agent without cost to any Owner, for like Bonds then Outstanding, upon surrender of such Bonds.

D^l

Amendatory E ndorsement of Bonds

The provisions of the Agreement shall not prevent any Owner from accepting ary amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds.

MISCELLANEOUS

Discharge of Agreement

If the School District shall pay and discharge the indebtedness on all or a portion (a “Partial Di scharge”) of the Outstandi ng B onds i n any one or more of the fol I owi ng ways:

(A) by well and truly paying or causing to be paid the principal of and interest and ary premi urn on such B onds, as and when the same become due and payabl e;

(B) by depositing with the Fiscal Agent, in trust, at or before maturity, an amount of money which, together with the amounts then on deposit in the Bond Fund, the Special Tax Fund (including the Surplus Account) and the Reserve Fund, or in the event of a Partial Discharge, the appropriate portion of such amounts, as determined by the School District and confirmed by an I ndependent Financial Consultant, is fully sufficient to pay such Bonds, including all principal, interest and redemption premiums, if ary; or

(C) by irrevocably depositing with the Fiscal Agent, in trust, cash or non-callable Federal Securities in such amount as the School District shall determine, as confirmed by an Independent Financial Consultant, will, together with the interest to accrue thereon and amounts then on deposit in the Bond Fund, the Special Tax Fund (including the Surplus Account) and the Reserve Fund, or in the event of a Partial Discharge, the appropriate portion of such amounts, as determined by the School District and confirmed by an Independent Financial Consultant, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates;

and if such Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as in the Agreement provided or prevision satisfactory to the Fiscal Agent shall have been made for the giving of such notice; then, at the election of the School District, and notwithstanding that ary Bonds shall not have been surrendered for payment, the pledge of the Net Special Tax Revenues and other funds previded for in the Agreement and all other obligations of the School District and the District under the Agreement with respect to such Bonds shall cease and terminate, except the obligation of the School District to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid all sums due thereon, the obligation of the S chool Di stri ct to pay al I amounts ewi ng to the F i seal A gent pursuant to the A greement, and the obi i gati ons of the School District pursuant to the covenants contained in the Agreement; and thereafter Special Taxes shall not be payable to the Fiscal Agent with respect to such Bonds. Notice of such election shall be filed with the Fiscal Agent. The satisfaction and discharge of the Agreement with respect to all of the Outstanding Bonds shall be without prejudice to the rights of the Fiscal Agent to charge and be reimbursed by the School District for the expenses which it shall thereafter incur in connection with the Agreement.

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

D^2

APPENDIX E

FORM OF CONTINUING DISCLOSURE AGREEMENT OF THE SCHOOL DISTRICT

This Continuing Disclosure Agreement (the “Disclosure Agreement”), dated as of May 1, 2018, is by and between Riverside Unified School District (the “School District”), on behalf of Community Facilities District No. 32 of the Riverside Unified School District (the “District”), and David Taussig & Associates, Inc., as dissemination agent, in connection with the issuance and delivery by the School District of the Community Facilities District No. 32 of the Riverside Unified School District Series 2018 Special Tax Bonds (the “Bonds”). The Bonds are being issued pursuant to that certain Fiscal Agent Agreement by and between the School District and U.S. Bank National Association, as fiscal agent (the “Fiscal Agent”), dated as of May 1, 2018 (the “Fiscal A gent Agreement’). TheSchool District covenants as follcws:

SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the School District, for the benefit of the Owners and Beneficial Owners of the B onds and in order to assist the Participating Underwriter in complying with the Rule (as defined belcw).

SECTION 2. Definitions. In addition to the definitions set forth in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:

“Annual Report” shall mean ary Annual Report provided by the School District pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

“Beneficial Owner” shall mean any person which (a) has the pcwer, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, ary Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the cwner of any Bonds for federal income purposes.

“Disclosure Representative” shall mean the Superintendent of the School District, the Deputy Superintendent or his or her designee, or such other officer or emplcyee as the School District shall designate i n wri ti ng to the Di ssemi nati on A gent from ti me to ti me.

“Dissemination Agent’ shall mean, initially, David Taussig & Associates, Inc., or ary successor Dissemination Agent designated in writing by the School District which has filed with the then current Dissemination Agent a written acceptance of such designation.

“ E M MA” shal I mean the EI ectroni c M uni ci pal M arket A ccess system of the M S R B.

“Listed Events” shall mean any of the events listed in Section 5(a) and (b) of this Disclosure Agreement.

“MSRB” shall mean the Municipal Securities Rulemaking Board and any successor entity designated under the Rule as the repository for filings made pursuant to the Rule.

“ParticipatingUnderwriter” shall mean Piperjaffray & Co.

“Repository” shall mean the MSRB or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. U nless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal MarketAccess (EMMA) website of the MSRB, currently located at http://emma.msrb.org.

E-l

“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 ti me to ti me.

“School District’ shall mean the Riverside Unified School District.

“Special Taxes” shall mean the special taxes levied within the District of the District pursuant to the applicable Rates and Method of Apportionment of Special Tax.

SECTION 3. Prevision of Annual Reports.

(a) Not later than February 1 immediately following the end of the School District’s fiscal year, commencing February 1, 2019, the School District shall provide, or shall cause the Dissemination Agent to provide, to the Repository an Annual Report in electronic format and accompanied by identifying information as prescribed to the MSRB which is consistent with the requirements of Section4 of this Disclosure Agreement. 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 Section4 of this Disclosure Agreement; previded that the audited financial statements of the School District may be submitted separately from and later than the balance of the A nnual Report if they are not avai lable by the date requi red abeve for the filing of the Annual Report.

An Annual Report shall be previded at least annually notwithstanding any fiscal year longer than 12 calendar months. The School District’s fiscal year is currently effective from J uly 1 to the immediately succeedingj une 30 of the following year. The School District will promptly notify the Repository of a change i n the fiscal year dates.

(b) In the event that the Dissemination Agent is an entity other than the School District, then the previsions of this Section 3(b) shall apply. Not later than fifteen (15) business days prior to the date specified in subsection (a) for providing the Annual Report to the Repository, the School District shall provide the Annual Report to the Dissemination Agent. If by fifteen (15) business days prior to such date the Dissemination Agent has not received a copy of the Annual Report, the Dissemination Agent shall contact the School District to determine if the School District will be filing the Annual Report in compliance with subsection (a). TheSchool District shall previdea written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the School District and shall have no duty or obligation to review suchAnnual Report.

(c) If the School District is the Dissemination Agent and the School District is unable to provide to the Repository an A nnual Report by the date required in subsection (a), theSchool District shall, inatimely manner, send a notice to the Repository in substantially the form attached to this Disclosure Agreement as Exhibit A. If the Dissemination Agent is other than the School District and if the Dissemination Agent is unable to verify that an Annual Report has been previded to the Repository by the date required in subsection (a), the Dissemination Agent shall, in a timely manner, send a notice to the Repository, in substantially the form attached as ExhibitA.

(d) The Di ssemi nati on A gent shal I:

(i) determine each year prior to the date for previding the Annual Report the name and address of the Repository if other than the MSRB; and

(ii) promptly after receipt of the Annual Report, file a report with the School District certifying that the A nnual Report has been previded pursuant to this Disclosure Agreement, stating the date it was previded.

E-2

(e) Notwithstanding ary other provision of this Disclosure Agreement, all filings shall be made inaccordancewiththeMSRB's EMMA system or in another manner approved under the Rule.

SECTION 4. Content of Annual Reports. The Annual Report shall contain or include ty reference:

(a) Financial Statements. The audited financial statements of the School District for the most recent fiscal year of the School District then ended. If the audited financial statements are not available by the time the Annual Report is required to be filed, the Annual Report shall contain any unaudited financial statements of the School District in a format similar to the audited financial statements, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. Audited financial statements of the School District shall be audited by such auditor as shall then be required or permitted by State law or the Fiscal Agent Agreement. Audited financial statements shall be prepared in accordance with generally accepted accounting principles as prescribed for governmental units by the Governmental Accounting Standards Board; prcvided, however, that the School District may from time to time, if required by federal or state legal requirements, modify the basis upon which its financial statements are prepared. In the event that the School District shall modify the basis upon which its financial statements are prepared, the School District shall provide a notice of such modification to the Repository, including a reference to the specific federal or state law or regulation specifically describing the legal requirements for the change i n accounti ng basi s.

(b) Financial and Operating Data. The Annual Report shall contain or incorporate by reference the fol I cwi ng i nf ormati on:

(i) the principal amount of Bonds outstanding and current debt service schedule as of September 2 of each year;

(ii) the balance in each fund under the Fiscal Agent Agreement as of the September 2 preceding the filing of the Annual Report, including the Reserve Fund and a statement of the Reserve Requi rement for the B onds;

(iii) a summary of the Special Taxes levied on Undeveloped Property and Developed Property (as defined in the Rates and Method of Apportionment of Special Tax for the District) within the District, the maximum annual Special Tax, an update on Table 5 and an update of Table 3 based on the assessed value of such land, as shewn on the assessment roll of the Riverside County Assessor last equalized pri or to the S eptember 30 next precedi ng the A nnual Report date;

(iv) the number of building permits issued for property located in the District, until building permits have been issued for all lots in the District;

(v) ary changes to the Rates and Method of Apportionment of the Special Tax for the D i stri ct approved or submitted to the el ectors for approval pri or to the f i I i ng of the A nnual Report;

(vi) the status of ary foreclosure actions being pursued ty the School District with respect to delinquent Special Taxes;

(vii) the delinquency rate for the Special Taxes for the preceding fiscal year and the identity of any property cwner whose delinquent Special Taxes represent more than 5% of the amount levied and the assessed valueto-lien ratios of such delinquent properties; and

(viii) any information not already included under (i) through (vii) above that the School District is required to file in its annual report to the California Debt and Investment Advisory Commission pursuant to the previsions of the Mello-Roos Community Facilities Act of 1982, as amended.

In addition to any of the information expressly required to be provided under paragraphs (a) or (b) of this Section, the School District shall provide such further information, if any, as may be necessary to make the specifically required statements set forth in clauses (i) to (viii), in the light of the circumstances under which they were made, not mislead ng.

(c) Any or all of the items listed in (a) or (b) abcve may be included by specific reference to other documents, including official statements of debt issues of the School District or related public entities, which have been submitted to EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the MSRB through EMMA. The School District shall clearly identify each such other document so included by reference.

SECTION 5. Reporting of Listed Events.

(a) Pursuant to the previsions of this Section 5, the School District shall give, or cause the Dissemination Agent to give, notice to the Repository of the occurrence of ary of the following events with respect to the B onds i n a ti mely manner not more than ten (10) busi ness days after the event:

1. principal and interest payment delinquencies;

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

3. unscheduled draws on credit enhancements reflecting financial difficulties;

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

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

6. defeasances;

7. tender offers;

8. bankruptcy, i nsolvency, receivershi p or si mi lar proceed ngs; and

9. rati ngs changes.

Note: for the purposes of the event identified in subparagraph (8), the event is considered to occur when any of the fol I owi ng occur the appoi ntment of a receiver, T mstee or si mi I ar off i cer for an obligated person in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or gcvernmental authority has assumed jurisdiction ever substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing gcvernmental body and officials or officers in possession but subject to the supervision and orders of a court or gcvernmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or gcvernmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person

(b) Pursuant to the previsions of this Section 5, the School District shall give, or cause to be given, notice of the occurrence of ary of the following events with respect to the Bonds, if material, in accordance with Section 5(d) belcw:

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

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

3.fiscal agent;

4.

5.

6.

7.

appointment of a successor or additional fiscal agent or the change of the name of a

non-payment related defaults;

modifications to the rights of Bond cwners;

bond calls; and

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

(c) Upon the occurrence of a Listed Event under Section 5(b) abcve, the School District shall as soon as possible determine if such event would be material under applicable federal securities laws.

(d) If the School District determines that knowledge of the occurrence of a Listed Event under Section 5(b) would be material under applicable federal securities laws, the School District shall file a notice, or cause the Dissemination Agent to file a notice, of such occurrence with the Repository in a timely manner not more than 10 busi ness days after the event.

(e) The School District hereby agrees that the undertaki ng set forth in this Disclosure Agreement is the responsibility of the School District and that the Dissemination Agent shall not be responsible for determining whether the School District’s instructions to the Dissemination Agent under this Section 5 comply with the requirements of the Rule.

SECTION 6. Termination of Reporting Obligation. The obligations of the School District and the Dissemination Agent under this Disclosure Agreement shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the B onds, the School District shal I give notice of such termi nation i n the same manner as for a L isted Event under Section 5(a).

SECTION 7. Dissemination Agent. TheSchool District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be David Taussig & Associates, Inc. The Dissemination Agent may resign by providing (i) thirty days written notice to the School District, and (ii) upon appointment of a new DisseminationAgent hereunder.

SECTION 8. Amendment.

(a) This Disclosure Agreement may be amended, by written agreement of the parties, without the consent of the Owners, if all of the following conditions are satisfied: (1) such amendment is made in connection with a change in circumstances that arises from a change in legal (including regulatory) requirements, a change in law, or a change in the identity, nature or status of the School District or the type of business conducted thereby, (2) this Disclosure Agreement as so amended would have complied with the requirements of the Rule as of the date of this Disclosure Agreement, after taking into account ary amendments or interpretations of the Rule, as well as ary change in circumstances, (3) the School District shall have delivered to the Dissemination Agent an opinion of a nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the School District and the Participating Underwriter, to the

E-5

same effect as set forth in clause (2) above, (4) the School District shall have delivered to the Dissemination Agent an opinion of nationally recognized bond counsel or counsel expert in federal securities laws, addressed to the School District, to the effect that the amendment does not materially impair the interests of the Owners or Beneficial Owners, or such amendment shall have been approved by the Owners in the same manner as an amendment to the Fiscal Agent Agreement, and (5) the School District shall have delivered copies of such opinion and amendment to the Repository.

(b) This Disclosure Agreement also may be amended by written agreement of the parties upon obtaining consent of Owners in the same manner as prcvided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of the Owners of the Bonds; provided that the conditions set forth in Section 8(a)(1), (2) and (3) have been satisfied.

(c) To the extent any amendment to this Disclosure Agreement results in a change in the type of financial information or operating data provided pursuant to this Disclosure Agreement, the first Annual Report provided thereafter shall include a narrative explanation of the reasons for the amendment and the i mpact of the change i n the type of operati ng data or fi nancial i nformation bei ng prcvided.

(d) If an amendment is made to the basis on which financial statements are prepared, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Such comparison shall include a quantitative and, to the extent reasonably feasible, qualitative discussion of the differences in the accounting principles and the impact of the change in the accounti ng pri nci pies on the presentation of the f i nancial i nformation.

SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the School District from disseminating ary other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in ary Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the School District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the School District shall have no obligation under this Disclosure Agreement to update such information or include it in ary future Annual Report or notice of occurrence of a Listed Event.

The School District acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 1 Ob-5 promulgated under the Securities Exchange Act of 1934, as amended, may apply to the School District, and that under some circumstances compliance with this Disclosure Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the School District under such laws.

SECTION 10. Default. Intheeventof a failure of the School District orthe DisseminationAgentto comply with ary provision of this Disclosure Agreement, any Owner or Beneficial Owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the School District and/or the Dissemination Agent to comply with their respective obligations underthis Disclosure Agreement. A default underthis Disclosure Agreement shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Agreement in the event of ary failure of the School District or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance.

SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the School District agrees to indemnify and save the Dissemination Agent and its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of their pcwers and duties hereunder, including the costs and expenses (including attorneys’

E-6

fees) of defending against ary claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. Any Dissemination Agent other than the School District shall be paid (i) compensation by the School District for its services provided hereunder in accordance with a schedule of fees to be mutually agreed to; and (ii)all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review ary information provided to it by the School District pursuant to this Disclosure Agreement. The obligations of the School District under this Section shall survive resignation or remcval of the Dissemination Agent and payment of the Bonds. No person shall have any right to commence ary action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination Agent shall not be liable under ary circumstances for monetary damages to ary person for any breach under this Disclosure Agreement.

The Dissemination Agent may file reports, notices and other information as required by this Disclosure Agreement electronically to the Repository. If the School District is equipped to receive such information electronically, the Dissemination Agent will include the School District in ary simultaneous electronic dissemination of materials.

SECTION 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the School District, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from ti me to ti me of the B onds, and shal I create no ri ghts i n any other person or entity.

SECTION 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall bean original and all of which shall constitute but one and the same instrument.

SECTION 14. Gevening Law. This Disclosure Agreement shall be construed and governed in accordance with the laws of the State of California.

E-7

SECTION 15. Notices. Notices shall be prcvided, as required hereunder, to the applicable addressees belcw:

School District: Riverside Unified School District3380 14th Street Riverside, CA 92501 Telephone: (951) 788-7135 Facsimile: (951) 788-5668 Attention: Deputy Superintendent

Dissemination A gent: DavidTaussig& Associates, Inc.5000 Birch Street Newport Beach, CA 92660 Telephone: 949-955-1500 Facsimile: 949-480-0034

SECTION 16. Severability. Incaseary one or more of the previsions contained herein shall forany reason be held to be irvalid, illegal or unenforceable in ary respect, such invalidity, illegality or unenforceability shall not affect ary other prevision hereof.

SECTION 17. Merger. Ary person succeeding to all or substantially all of the Dissemination Agent’s corporate trust business shall be the successor Dissemination Agent without the filing of ary paper or any further act.

RIVERSIDE UNIFIEDSCHOOL DISTRICT

Superintendent of the Riverside Unified School District on behalf of Community Facilities District No. 32 of the Riverside Unified School District

DAVID TAUSSIG & ASSOCIATES, INC., as DisseminationAgent

By:________________Its: Authorized Officer

E-8

EXHIBIT A

NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: Riverside Unified School District, on behalf of Community Facilities District No. 32 of the Riverside Unified School District

Name of Bond Issue: Community Facilities District No. 32 of the Riverside Unified School District Series 2018Special Tax Bonds

Date of Issuance: May 17,2018

NOTICE IS HEREBY GIVEN that the Riverside Unified School District, on behalf of Community Facilities District No. 32 of the Riverside Unified School District, (the “School District’) has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Agreement relating thereto, dated as of May 1, 2018. [The School District anticipates that the Annual Report will be filed by________.]

Dated:__________

-------------------------------------------------------------------------------------------------------------------------- 9as DisseminationAgent

cc: RiversideUnifiedSchool District

E-9

[THIS PAGE INTENTIONALLY LEFT BLANK]

APPENDIX F

FORM OF CONTINUING DISCLOSURE AGREEMENT OF THE DEVELOPER

This Developer Continuing Disclosure Agreement (the “Disclosure Agreement’) dated as of May 17, 2018 is executed and delivered by Lennar Homes of California, Inc. (the “Developer”) and David Taussig & Associates, Inc., as dissemination agent (the “Dissemination Agent’), in connection with the execution and delivery by the Riverside Unified School District (the “School District’), on behalf of Community Facilities District No. 32 of the Riverside Unified School District (the “District’), of the $15,945,000 Community Facilities District No. 32 of the Riverside Unified School District Series 2018 Special Tax Bonds (the “Bonds”). The Bonds are being issued pursuant to a resolution adopted on April 17, 2018 (the “Resolution”), by the Board of Education of the School District, acting as the legislative body of the District, and the Fiscal Agent Agreement, dated as of May 1, 2018, by and between the School District and U.S. Bank National Association, as fiscal agent. The Developer ccvenants and agrees as follcws:

SECTION 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and del ivered by the Devel oper to assi st the U nderwri ter i n the marked ng of the B onds.

SECTION 2. Definitions. Unless otherwise defined in this Section, the following capitalized terms shall have the f d I cwi ng meani ngs:

“Affiliate” shall mean, with respect to the Developer, (a) each Person that, directly or indirectly, cwns or contrds, whether beneficially or as an agent, guardian or other fiduciary, twentyTive percent (25%) or more of any class of Equity Securities of the Developer, or (b) each Person that controls, is controlled by or is under common contrd with the Developer or ary Affiliate of the Developer; provided, hcwever, that in no case shall the District be deemed to be an Affiliate of the Developer for purposes of this Disclosure Agreement. For the purpose of this definition, “control” of a Person shall mean the possession, directly or indirectly, of the pcwer to direct or cause the direction of its management or pdicies, whether through the ownership of voting securities, by contract or otherwise.

“Annual Report” shall mean any Annual Report prcvided by the Developer on or prior to J une 15 of each year, commendngj une 15, 2019, pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

“Beneficial Owner” shall mean any person which has or shares the pcwer, directly or indirectly, to make investment decisions concerning ownership of the Bonds (including persons holding Bonds through nominees, depositories or other intermediaries).

“Dissemination Agent” shall mean initially David Taussig & Associates, Inc., acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Developer and which has filed with the Developer and the District a written acceptance of such designation.

“District’ shall mean Community Facilities District No. 32 of the Riverside Unified School District.

“EMMA” shall mean the Electronic Municipal MarketAccess system of the MSRB.

“Equity Securities” of any Person shall mean (a) all common stock, preferred stock, participations, shares, general partnership interests or other equity interests in and of such person (regardless of hew designated and whether or not voting or non-voting) and(b) all warrants, options and other rights to acquire any of the foregoing.

“Government Authority” shall mean ary national, state or local government, ary political subdivision thereof, any department, agency, authority or bureau of any of the foregoing, or ary other Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“Listed Event’ shall mean ary of the events listed inSection 5(a) of this Disclosure Agreement.

“MSRB” shall mean the Municipal Securities Rulemaking Board.F-l

“Official Statement’ shall mean the Official Statement, dated May 3, 2018, relating to the Bonds.

“Person” shall mean ary 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 Securities and Exchange Commission to receive reports pursuant to the Rule. Unless otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.

“Rule” shall mean Rule 15c2—12(b)(5) adopted by the Securities and Exchange Commission under the Securities ExchangeActof 1934, as the same may be amended from time to time.

“Semiannual Report” shall mean any report to be prcvided by the Developer on or prior to December 15 of each year, commencing December 15, 2018, pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

“State” shall mean the State of California.

“Underwriter” shall mean the original underwriter of the Bonds, which is Piperjaffray & Co.

SECTION 3. Prevision of Annual Reports and Semiannual Report.

(a) Until such time as the Developer’s reporting requirements terminate pursuant to Section 6 belcw, the Developer shall, or upon receipt of the Annual Report from the Developer the Dissemination Agent shall, not later than June 15 of each year, commencing J une 15, 2019, prcvide to the Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. If, in any year, J une 15 falls on a Saturday, Sunday or a holiday, such deadline shall be extended to the next following day that is not a Saturday, Sunday, or holiday. 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 prcvided in Section 4 of this Disclosure Agreement.

In addition, until such time as the Developer’s reporting requirements terminate pursuant to Section 6 belcw, the Developer shall, or upon receipt of the Semiannual Report from the Developer the Dissemination Agent shall, not later than December 15 of each year, commencing Decemberl5, 2018, prcvide to the Repository a Semiannual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. If, in any year, December 15 falls on a Saturday, Sunday ora holiday, such deadline shall be extended to the nextfollcwing day that is not a Saturday, Sunday, or holiday. The Semiannual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as prcvided in Section 4 of this D i scl osure A greement.

(b) Not later than fifteen (15) calendar days prior to the date specified in subsection (a) for providing the Annual Report and the Semiannual Report to the Repository, the Developer (i) shall prcvide the Annual Report or the Semiannual Report, as applicable, to the Dissemination Agent or (ii) shall prcvide notification to the Dissemination Agent that the Developer is preparing, or causing to be prepared, the Annual Report or the Semiannual Report, as applicable, and the date which the Annual Report or the Semiannual Report, as applicable, is expected to be filed. If by such date, the Dissemination Agent has not received a cop/ of the Annual Report or the Semiannual Report, as applicable, or notification as described in the preceding sentence, the Dissemination Agent shall notify the Developer of such fai I ure to receive the report.

(c) If the Dissemination Agent is unable to prcvide an Annual Report or Semiannual Report to the Repository by the applicablej une 15th or December 15th or to verify that an Annual Report or Semiannual Report has been prcvided to the Repository by the Developer by the applicable June 15th or December 15th, the Dissemination Agent shall send a notice to the Repository in the form required by the Repository.

F-2

(d) The Di ssemi nati on A gent shal I:

(i) determine each year prior to the date for providing the Annual Report and the Semiannual Report the name and address of the Repository; and

(ii) promptly after receipt of the Annual Report or the Semiannual Report, as applicable, file a report with the Developer and the District certifying that the Annual Report or the Semiannual Report, as applicable, has been provided pursuant to this Disclosure Agreement, stating the date it was provided to the Repository.

(e) Notwithstanding any other prevision of this Disclosure Agreement, ary of the required filings hereunder shal I bemadeinaccordancewiththeMSRB’s EMMA system.

SECTION 4. Content of Annual Report and Semiannual Report.

(a) The Developer’s Annual Report and Semiannual Report shall contain or include by reference the information which is updated through a date which shall not be more than 60 days prior to the date of the filing of the Annual Report or the Semiannual Report, as applicable, relating to thefollcwing:

1. An update (if ary) to the information relating to the Developer and its Affiliates under the captions in the Official Statement entitled “PROPERTY OWNERSHIP AND THE DEVELOPMENT" (except that no updates are required on the disclosure for the Developer’s development experience). Such updates shall include, but not be limited to, the estimated remaining cost of the Developer and its Affiliates to complete any of the public improvements in the District and status of construction for the nonresidential property currently cwned by the Developer (to the extent the same remains owned by the Developer or an Affiliate) (collectively, the “Developer I mprovements”).

2. A ry significant amendments to land use entitlements that are knewn to the Developer with respect to parcels cwned by the Developer or its Affiliates within the District.

3. The number of building permits pulled in the reporting period and the cumulative total of building permits pulled for the property in the District.

(b) Ary and all of the items listed abeve 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 theMSRB. The Developer shall clearly identify each such other document so included by reference.

SECTION 5. Reportinq of Siqnificant Events.

(a) Pursuant to the previsions of this Section 5, the Developer shall give, or cause to be given, notice of the occurrence of ary of the following a/ents, if material under clauses (b) and (c) as soon as practicable after the Devel oper obtai ns kncwl edge of ary of the f d I ewi ng a/ents:

1. Failure to pay ary real property taxes, special taxes or assessments leviedwithinthe District on a parcel owned by the Developer or ary Affiliate;

2. Material default by the Developer or any Affiliate on ary loan with respect to the construction or permanent financing of the Developer I mprevements to which the Developer or ary Affiliate has been providki a notice of default;

3. Material default by the Developer or any Affiliate on any loan secured by property within the District cwned by the Developer or ary Affiliate to which the Developer or any Affiliate has been prcvided a notice of default;

4. Payment default by the Developer or ary Affiliate on any loan of the Developer or ary Affiliate (whether or not such loan is secured by property within the District) which is beyond any applicable cure period in such loan and, in the reasonable judgment of the Developer, such payment default will adversely affect the completion of the development of parcels within the District, or would materially adversely affect the financial condition of the Developer or its Affiliates or their respective ability to complete development of property within the District as described in the Official Statement;

5. The filing of ary proceedings with respect to the Developer in which the Developer may be adjudicated as bankrupt or discharged from ary or all of its debts or obligations or granted an extension of time to pay debts or a reorganization or readj ustment of its debts;

6. The filing of any proceedings with respect to an Affiliate in which the Affiliate may be adjudicated as bankrupt or discharged from ary or all of its debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts, if such adjudication will adversely affect the completion of the development of parcels within the District, or would materially adversely affect the financial condition of the Developer or its Affiliates and their respective ability to complete development of the property withinthe District as described in the Official Statement; and

7. The filing of ary lawsuit against the Developer or ary of its Affiliates (for which the Developer has notice, as through receipt of service of process) which, in the reasonable judgment of the Developer, will adversely affect the completion of the da/elopment of parcels within the District as described in the Official Statement, or litigation which if decided against the Developer, or any of its Affiliates, in the reasonable judgment of the Developer, would materially adversely affect the financial condition of the Developer or its Affiliates and their respective ability to complete development of the property within the Di strict as described inthe Official Statement.

(b) W hena/er the Developer obtai ns knowledge of the occurrence of a L isted Event, the Developer shal I as soon as possible determine if such event would be material under applicable federal securities laws. The Dissemination Agent shall have no responsibility to determine the materiality of any of the Listed Events.

(c) If the Developer determines that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the Developer shall promptly (i) file a notice of such occurrence with the Dissemination Agent which shall then distribute such notice to the Repository, with a copy to the District, or (ii) file a notice of such occurrence with the Repository, with a copy to the Dissemination Agent and the District.

SECTION 6. Termination of Reporting Obligation. The Developer’s obligations under this Disclosure Agreement shal I termi nate upon the earl ier to occur of the fol Icwi ng events:

(a) the legal defeasance, prior redemption or payment in full of all of the Bonds, or

(b) the date that eighty percent (80%) of the building permits for the planned residential development within the District have been issued.

If such termination occurs prior to the final maturity of the Bonds, the Developer shall give notice of such termi nati on i n the same manner as for a L i sted Event hereunder.

SECTION 7. Dissemination Agent. The Developer may from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge ary such Dissemination Agent, with or without appointing a successor Dissemination Agent. If the Dissemination Agent is not the Developer, the Dissemination Agent shall not be responsible in any manner for the form or content of any notice or report prepared by the Developer pursuant to this Disclosure Agreement. The Dissemination Agent may resign by providing (i) thirty days written notice to the Developer and the Dissemination Agent and (ii) upon appointment of a new Dissemination Agent hereunder.

SECTION 8. Amendment: Waiver. Notwithstanding any other prevision of this Disclosure Agreement, the Developer may amend this Disclosure Agreement, and any prevision of this Disclosure Agreement may be waived, previded that the following conditions are satisfied:

(a) If the amendment or waiver relates to the previsions of Sections 3(a), 4 or 5, it may only be made in connection with a change i n ci rcumstances that arises from a change i n Iegal requi rements or a change i n law;

(b) The amendment or waiver either (i) is apprcved by the owners of the Bonds in the same manner as previded in the Resolution with the consent of cwners of the Bonds, or (ii) does not, in the opinion of nationally recognized bond counsel addressed to the District and the Dissemination Agent, materially impair the interests of the owners or Beneficial Owners of the Bonds; and

(c) The Developer, or the Dissemination Agent, shall have delivered copies of the amendment and any opinions delivered under (b) abeve to the District and the Trustee.

In the event of any amendment or waiver of a prevision of this Disclosure Agreement, the Da/eloper shall describe such amendment in the next Annual Report or Semiannual Report, and shall include, as applicable, a narrative explanati on of the reason for the amendment or waiver.

SECTION 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Developer from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Agreement. If the Developer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Developer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

The Developer acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule 1 Ob-5 promulgated under the Securities Exchange Act of 1934, may apply to the Developer, and that under some circumstances compliance with this Disclosure Agreement, without additional disclosures or other action, may not fully discharge all duties and obligations of the Developer under such laws.

SECTION 10. Default. In the event of a failure of the Developer or the Dissemination Agent to comply with any prevision of this Disclosure Agreement, the Underwriter or any owner or Beneficial Owner of the Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developer or the Dissemination Agent to comply with its obligations under this Disclosure Agreement. Notwithstanding the foregoing sentence, the sole remedy under this Disclosure Agreement in the event of any failure of the Developer or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance. Neither the Developer nor the Dissemination Agent shall have any liability to any holder or beneficial owner of the Bonds or any other party for monetary damages or financial liability of any kind whatsoever ari sing from or relating to this Disclosure Agreement; previded, hewever, that nothing in this agreement is intended to limit in any way whatsoever ary liability with respect to the Securities Act of 1933, as amended, or any other state or federal securities laws.

SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall not be deemed to be acting in ary fiduciary capacity for the Developer, the Underwriter, owners of the Bonds or Beneficial Owners or any other party. The Dissemination Agent may rely and shall be protected in acting or ref rai ni ng from acti ng upon a di recti on from the Devel oper or an opi ni on of nati onal ly recogni zed bond counsel. N o person shall have any right to commence ary action against the Dissemination Agent seeking any remedy other than to compel specific performance of this Disclosure Agreement. The Dissemination Agent may conclusively rely upon the Annual Report or Semiannual Report previded to it by the Developer as constituting the Annual Report or Semiannual Report required of the Developer in accordance with this Disclosure Agreement and shall have no duty or obligation to review such Annual Report or Semiannual Report. The Dissemination Agent shall have no duty to prepare the Annual Report or Semiannual Report nor shall the Dissemination Agent be responsible for filing any

F-5

Annual Report or Semiannual Report not provided to it by the Developer in a timely manner in a form suitable for filing with the Repositories. Any company succeeding to all or substantially all of the Dissemination Agent’s business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any paper or any further act.

SECTION 12. Developer as Independent Contractor. In performing underthis Disclosure Agreement, it is understood that the Developer is an i ndependent contractor and not an agent of the Distri ct.

SECTION 13. Notices. Notices should be sent in writing to the following addresses. The fdlcwing information may be conclusively relied upon until changed in writing.

Developer:

D i ssemi nati on A gent:

U ndeiwriter:

Lennar Homes of Cal ifornia, I nc. 980 Montecito Drive, Suite 302 Corona, California 92879 Attn: RyanWoosley

David Taussig & Associates 5000 B irch Street, Suite 6000 Newport Beach, CA 92660 Attn: Nehal Thumar

PiperJ affray & Co.2321 Rosecrans Avenue, Suite 3200 El Segundo,California90245 Attn: Public Finance

SECTION 14. Beneficiaries. This Disclosure Agreement shall inuresdely tothe benefit of the Developer, the District, the Dissemination Agent, the Underwriter and owners of the Bonds and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

SECTION 15. California Law. The validity, interpretation and performance of this Disclosure Agreement shal I be governed by the laws of the State of Cal ifornia.

SECTION 16. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall bean original and all of which shall constitute but one and the same instrument.

LENNAR HOMES OF CALIFORNIA, INC., a California corporation

By: _____________________________________________A uthori zed S i gnatory

DAVID TAUSSIG & ASSOCIATES, INC., as Dissemination Agent

By: ______________________Authorized Representative

F-6

APPENDIX G

BOOK-ENTRY ONLY SYSTEM

The information in this section concerning DTC and DTC’s book-entry only system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial cwnershi p i nterests i n the Bonds, payment of pri nci pal, premi urn, if any, accreted val ue and i nterest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial cwnership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information prcvided by DTC to the District which the District believes to be reliable, but the District and the Underwriter do not and cannot make ary independent representations concerning these matters and do not take responsibility for the accuracy or completeness thereof. Neither the DTC, Direct Participants, Indirect Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

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

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the previsions of Section 17A of the Securities Exchange Act of 1934. DTC holds and prevides asset servicing for ever 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from ever 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 mevement 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-cwned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities ClearingCorporationandFixedlncomeClearingCorporation,all of which are registered clearing agencies. DTCC is cwned 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 Commissi on. More information about DTC can befoundatwww.dtcc.com.

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

To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect ary change in beneficial cwnership. DTC has no kncwledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts

G-l

such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

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

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

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

Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the District or the Fiscal Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Fiscal Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Fiscal Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

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

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

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

THE FISCAL AGENT, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.

G-2

APPENDIX H

APPRAISAL REPORT

H-l

[THIS PAGE INTENTIONALLY LEFT BLANK]

APPRAISAL REPORT

COVERING

Community Facilities District No. 32 of the R i versi de U ni fi ed S chool D i stri ct,

(Citrus Heights)

DATE OF VALUE:

February 1, 2018

SUBMITTED TO:

Riverside Unified School District 338014th St.Riverside, CA 92501

Attn: MaysKakishChief Business Official

DATE OF REPORT: SUBMITTED BY:

February 16, 2018 Stephen G. White, MAI 1370 N. Brea Blvd., Suite 255 Fullerton, CA 92835

Stephen G. White, MAIReal Estate Appraiser

1370 N, BREA SLVD., SUITE 255 • FULIE.RTON, CALIFORNIA 92835-4173 <71-4) 7 3S-IS95 • FAX (7IA» ?3©~A37f

February 16, 2018

Riverside Unified School District Re: Community Facilities District No. 323380 14th St. (Citrus Heights)Riverside, CA 92501

Attn: MaysKakishC hi ef B usi ness Offi ci al

Dear Mrs. Kakish:

In accordance with your request and the District’s authorization, I have completed an appraisal of the taxable properties within the above-referenced Community Facilities District (CFD). The taxable properties included in this appraisal consist of a total of 343 single-family residential lots within three separate product types of homes being developed by L ennar H omes, and shown i n the fol I owi ng tabl e:

Product TvoeCompleted

HomesHomes Under Construction

VacantLots

TotalLots

Orchard 63 19 25 107Hill Crest 43 7 59 109Floral Ridge 0 2 125 127

106 28 209 343

The purpose of thi s apprai sal i s to esti mate the separate aggregate market val ues of the as i s condition of the properties within each of the three separate product types, reflecting the status of the completed-sold homes (closed builder sales), completed-unsold homes (i ncl udi ng model homes), homes under construed on and vacant lots. Thi s al so al I ocates the values to Individual Owners (completed-sold homes) and Builder Ownership (completed- unsold homes, homes under construction and vacant lots), and also to Developed Property (building permit issued as of February 1,2018) and Undeveloped Property.

I n addition, this appraisal reflects the proposed CFD bond financing, with effective tax rates estimated at ±2.0% based on average total property taxes, including special taxes for this CFD, and average appraised val ues for the Orchard and Hi II Crest homes.

B ased on the general i nspecti ons of the properti es and analysi s of matters perti nent to val ue, the following conclusions of market value have been arrived at, subject to the Assumptions andLiniting Conditions, and as of February 1, 2018:

MRS. MAYS KAKISH FEBRUARY 16,2018 PAGE 2

No. Developed UndevelopedProduct Tvoe Lots Property Property Total

OrchardIndividual Owners (completed-sold homes) 57 $34,200,000 $0 $34,200,000

Builder Ownership(completed-unsold homes) 6 $3,210,000 $0 $3,210,000Builder Ownership (homes under construction) 19 $5,870,000 $0 $5,870,000

Builder Ownership (vacant lots) 25 $980,000 $3,920,000 $4,900,000107 $44,260,000 $3,920,000 $48,180,000

Hill CrestIndividual Owners (completed-sold homes) 37 $24,420,000 $0 $24,420,000

Builder Ownership(completed-unsold hones) 6 $3,450,000 $0 $3,450,000Builder Ownership (homes under construction) 7 $2,450,000 $0 $2,450,000

Builder Ownership (vacant lots) 59 $1,410,000 $8,990,000 $10,400,000109 $31,730,000 $8,990,000 $40,720,000

Floral RidgeBuilder Ownership (homes under construction) 2 $820,000 $0 $820,000

Builder Ownership (vacant lots) 125 $0 $20,500,000 $20,500,000127 $820,000 $20,500,000 $21,320,000

TOTALS 343 $76,810,000 $33,410,000 $110,220,000

(ONE HUNDRED TEN MILLION TWO HUNDRED TWENTY THOUSAND DOLLARS)

The following is the balance of this 45-page Appraisal Report which includes the Certification, Assumptions and Limiting Conditions, definitions, property data, exhibits, val uati on and market data from whi ch the val ue concl usi ons were derived

Sincerely,

Stephen G. White, MAI(StateCertifiedGeneral Real Estate Appraiser No. AG013311)

SGW:sw Ref: 18001

TABLE OF CONTENTSPAGES

Certification, Assumptions and Limiting Conditions, Purpose and I ntended U se/U ser of the A pprai sal, S cope of the A pprai sal,Effective Date of the A pprai sal (Date of Value), PropertyRights Appraised, Definitions, Exposure Time........................ 5-9

GENERAL PROPERTY DATA

Location Map, Location, Description of Surroundings, AerialPhoto, Map of Citrus Heights, Overview of Citrus Heights,Streets& Access, Utilities, Zoning/C eneral PI an/Approvals, TopographyA/iews, Drainage/Flood Hazard, Soil/Geologic/Seismic Conditions, Environmental Conditions, Title Report,Residential Market Overview, Highest& BestUse.................. 10-20

ORCHARD............................................................................................... 21-32

HILL CREST........................................................................................... 33-39

FLORAL RIDGE ..................................................................................... 40-43

ADDENDA

Qual i f i cati ons of A pprai ser............................................................... 44-46

CERTIFICATION

I certi fy that, to the best of my knowl edge and bel i ef:

• The statements of fact contai ned i n thi s report are true and correct.

• The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions.

• I have no present or prospective interest in the properties that are the subject of this report, and no personal interest with respect to the parties involved.

• I have no bias with respect to the properties that are the subject of this report or to the parties involved with this assignment.

• My engagement in this assignment was not contingent upon developing or reporting predetermined results.

• My 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 the appraisal.

• I have made a general i nspecti on of the properti es that are the subj ect of thi s report.

• No one provided significant real property appraisal assistance to the person signing this Certification, other than data research by rry associate, Kirsten Patterson.

• I have performed no services, as an appraiser or in any other capacity, regarding the subject properties within the three-year period prior to accepting this assignment.

• The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice.

• The use of this report is subject to the requirements of the Appraisal Institute relating to revia/v by its duly authorized representatives.

A s of the date of thi s report, I have compl eted the requi rements of the conti nui ng educati on program of the Appraisal Institute.

Stephen G. White, MAI(StateCertifiedGeneral Real Estate Appraiser No. AG013311)

5

ASSUMPTIONS AND LIMITING CONDITIONS

This apprai sal has been based upon the fdIcwing assumptions and Iimiting conditions:

1. No responsibility is assumed for the legal descriptions provided or for matters pertaining to legal or title considerations. Title to the properties is assumed to be good and marketable unless otherwise stated.

2. The properti es are apprai sed free and cl ear of any or all I i ens or encumbrances uni ess otherwise stated.

3. Responsible ownership and competent property management are assumed.

4. The information furnished by others is believed to be reliable, but no warranty is given for its accuracy.

5. All engineering studies, if applicable, are assumed to be correct. Any plot plans or other i 11 ustrati ve materi al i n thi s report are i ncl uded only to hel p the reader vi sual i ze the property.

6. It is assumed that there are no hidden or unapparent conditions of the properties, subsoil, or structures that render them more or less valuable. No responsibility is assumed for such conditions or for obtaining the engineering studies that may be requi red to di scover them.

7. It is assumed that the properties are in full compliance with all applicable federal, state and local environmental regulations and laws unless the lack of compliance is stated, descri bed and consi dered i n the apprai sal report.

8. 11 i s assumed that the properti es conform to al I appl i cabl e zoni ng and use regul ati ons and restrictions unless a nonconformity has been identified, described and considered i n the apprai sal report.

9. It is assumed that all required licenses, certificates of occupancy, consents and other legislative or administrative authority from any local, state or national government or private entity or organization have been or can be obtained or renewed for any use on whi ch the val ue esti mates contai ned i n the report are based.

10. It is assumed that the use of the land and improvements is confined within the boundaries or property lines of the properties described and that there are no encroachments or trespasses unless noted i n the report.

11. Unless otherwise stated in this report, the existence of hazardous materials, which may or may not be present on the properties, was not observed by the appraiser. However, the appraiser is not qualified to detect such substances. The presence of such substances may affect the val ue of the properly, but the val ues esti mated i n thi s

6

ASSUMPTIONS AND LIMITING CONDITIONS, Conti nui ng

appraisal are based on the assumption that there is no such material on or in the properties that would cause a loss in value. No responsibility is assumed for such conditions or for any expertise or engineering knowledge required to disccver them The cl i ent shoul d retai n an expert i n thi s fi el d, i f desi red

12. Possession of this report, or a copy thereof, does not carry with it the right of publ i cati on, uni ess otherwi se authori zed. 11 i s understood and agreed that thi s report will be utilized in the Official Statement, as required for the CFD bond issuance.

13. The appraiser, by reason of this appraisal, is not required to give further consultation or testimony or to be in attendance in court with reference to the properties in question unless arrangements have previously been made.

SPECIAL ASSUMPTIONS

1. It has been assumed that there are no soil, geologic, seismic or environmental conditions that would negatively impact the existing or planned uses of the subject properties.

2. An estimate of the remaining costs and fees to get the subject lots from their as is condition to finished lot condition has been provided by the builder/broperty owner, and these estimates have been relied upon in this appraisal as being reasonably accurate and reliable; in addition, the valuations have reflected the proposed CFD bond financing such that the deductions of estimated remaining costs/fees do not include any amounts that are to be funded by the CFD bond proceeds.

7

PURPOSE AND INTENDED USE AJSER OF THE APPRAISAL

The purpose of this appraisal is to estimate the market values of the as is condition of the taxable properties located within Community Facilities District No. 32 of the Riverside Unified School District (Citrus Heights), reflecting the proposed CFD bond financing. It is intended that this Appraisal Report is to be used by the client, consisting of the Riverside Unified School District, and other appropriate parties as part of the CFD bond i ssuance.

SCOPE OF THE APPRAISAL

11 i s the i ntent of thi s apprai sal that al I appropri ate data consi dered perti nent i n the val uati on of the subject properties be collected, confirmed and reported in an Appraisal Report, in conformance with the Uniform Standards of Professional Appraisal Practice (USPAP) and the guidelines of the California Debt and Investment Advisory Commission (CDIAC). The scope of work has i ncl uded an i denti fi cati on of the apprai sal probl em to be solved, whi ch i n thi s case i s the market val ue of the taxabl e subj ect properti es i n as i s condi ti on as of the date of value of the appraisal; a general inspection of the subject properties and their surroundings; obtaining of pertinent property data on the subject properties, including review of various maps and documents relating to the properties and the existing and planned home construction; obtaining of comparable home sales and land sales from a variety of sources; analysis of all of the data to the market value conclusions; and compl eti on of the A pprai sal R eport.

EFFECTIVE DATE OF THE APPRAISAL (DATE OF VALUE)

The effective date of the apprai sal or the date of val ue for thi s apprai sal i s February 1, 2018.

PROPERTY RIGHTS APPRAISED

This appraisal is of the fee simple interest in the subject properties, subject to the CFD special tax and assessment I iens.

DEFINITION OF MARKET VALUE

The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure i n a competitive market under al I conditi ons requi site to a fai r sal e, with the buyer and seller each acting prudently, knowledgeably, and for self-interest, and assuming that neither is under undue duress (The Dictionary of Real Estate Appraisal, 6th Edition)

DEFINITION OF FEE SIMPLE INTEREST (ESTATE)

Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the gcvernmental powers of taxation, eminent domain, police power, and escheat. (The Dictionary of Real Estate Appraisal, 6th Edition)

8

DEFINITION OF MASS APPRAISAL

The process of valuing a universe of properties as of a given date using standard methodol ogy, empl ay i ng common data, and al I owi ng for stati sti cal testi ng. Often associ ated with real property tax assessment valuation. (The Dictionary of Real Estate Appraisal, 6th Edition)

DEFINITION OF FINISHED LOT

This term describes the condition of residential lots in a single-family subdivision for detached homes in which the lots are fully improved and ready for homes to be built. This reflects that the lots have all development entitlements, infrastructure improvements completed, finish grading completed, all in-tract utilities extended to the property line of each lot, street improvements completed, common area imprcvements/Iandscaping (associated with the tract) completed, resource agency permits (if necessary), and all development fees paid, exclusive of building permit fees, in accordance with the conditions of approval of the sped fi c tract map.

DEFINITION OF BLUE-TOPPED LOT

This term describes residential lots in a single-family subdivision for detached homes in which the lots and streets have been rough graded, and the offsite infrastructure of streets and uti I ities are compl eted to the tract, but not withi n the tract.

EXPOSURE TIME

This is defined as the estimated length of time the properly 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 or date of value of the appraisal. Assuming a reasonable marketing effort and at or reasonably near market value, I have concluded that the exposure time for the completed homes as well as for the homes under construction and the vacant lots would have been within 4 months for a sale to be negotiated, and at least several more months for the sales to close.

9

10

GENERAL PROPERTY DATA

LOCATION

The community of Citrus Heights is located along the east side of McAllister St. at Citrus Heights Dr. and extending easterly for just under a mile, within unincorporated Riverside County but adjacent to the south of the Riverside City Limits. This location is just a mile to the southwest of Van Buren Blvd. and M ocki ngbi rd Canyon R d., about a rri I e to the north of EI Sobrante R d., and j ust over 2 miles southeast of the 91 Freeway.

DESCRIPTION OF SURROUNDINGS

Citrus Heights is located in a hilly and semi-rural area that is generally a residential area but also with much undeveloped land and open space. To the north of Citrus Heights is hilly and undeveloped land with some scattered estate homes on large lots, and further north are various agricultural uses within the City of Riverside and also the California Citrus State Historic Park. To the east and north east is the community of Canyon Ridge Estates comprising custom and semi-custom homes and remaining vacant lots. Farther east are scattered homes on large lots and vacant land extending to Van Buren Blvd. and Mockingbird Canyon Rd.

To the south of Citrus Heights is mostly hilly and vacant land, with some agricultural uses and estate homes fronting on McAllister St. and El Sobrante Rd. Adjacent to the south of the easterly portion of Citrus Heights grading is underway for a community of homes called Tramonte which is being developed by CV Communities. The community will comprise 171 lots with minimum lot sizes of ±14,000 s.f. and projected average home size of +4,100 s.f. Farther south, at the northeast corner of McAllister St. and El Sobrante Rd. is vacant land planned for residential development by Christopher Homes with a tract originally called Lake Ranch with 272 lots, but entitlement is still underway.

Across McAllister St. to the southwest, west and northwest are various residential tracts that have been built over many years. Victoria Grove is a gated, master- planned community of 1,120 homes extending north and west from the northwest corner of El Sobrante and McAllister St. and built in the early 2000’s. Farther north, and to the west of Citrus Heights, are the communities of The Orchard and Orchard View, built in the 1980’s and early 2000’s respectively, and on minimum half-acre lots with homes ranging in size from 1,800 s.f. up to 4,100 s.f. and many with views. On both sides of McAllister St. as it curves westward are the communities of Sierra Heights and Sierra Estates built by Lennar and Standard Pacific Homes from 2007 to 2011, with homes ranging in size from 2,965 s.f. to 4,314 s.f. To the west of these tracts, at the southeast corner of McAllister St. and Praed St. is a tract of 22 lots with homes being built by Griffin Communities, ranging in size from 3,315 s.f. to 4,442 sf., with closed sales commencing in October 2017. Current asking prices are from the high $700,000’s to the low $900,000’s.

11

Citrus Heights Community

SHHRajj•\ f’rMj

#%>•MallMmmssm.i------- ,r—

s •••• r:p‘ ' v'V

•i H 4<-

.x-

pspi

"£

•!:,

■ <■**.

CITRUS HEIGHTS TRACT 36390

PHASED TM AND F=?ACT MAP EXHlBlr 3/C2/15

___I Orchard

HiM Crest

I.... I Floral Ridge

OVERVIEW OF CITRUS HEIGHTS

The community of Citrus Heights is planned to comprise atotal of 343 single-family homes within three different product types of homes. In addition, the community will include eight community parks and a master trail system, plus much additional open space comprising water quality /detention basins, hillside and terraced areas, and natural drainage courses. The community comprises a total of 333.7 acres of which 106 acres are within the 343 single-family lots, 7.3 acres are within the eight park sites, 5.7 acres are within the four water quality/detention basins, and nearly 170 acres are withi n the other open space areas.

The three different product types of homes are summarized as follows:

Orchard: to be 107 homes of 2,413 s.f. to4,125 s.f., on ±8,000 s.f. minimum lots

Hill Crest: to be 109 homes of 2,832 s.f. to4,644s.f., on ±12,000 s.f. minimum lots

Floral Ridge: to be 127 homes of 2,391 s.f. to4,830 s.f., on ±10,000 s.f. minimum lots

The Orchard product type has 63 completed homes, 19 homes under construction and 25 vacant lots, and the Hill Crest product type has 43 completed homes, 7homes under construction and 59 vacant lots. TheFloral Ridge product type has two model homes currently under construction and nearing completion, with construction to start on production homes in the near future.

I nformati on on si x of the communi ty parks i s as fol I ows:

Mockingbird Park: picnic tables, bench seating areas, a decomposed granite walking path and community multi-purpose trail.

Arrcyo Park: a climbing boulder activity center.

Blossom Park: a tot lot, open turf play area and multiple bench seating areas.

Gage Park: a shaded picnic area, tot lot, interactive water play zone and unique decorative leaf-shaped paving with a picnic table and barbecue.

H eights Par k: an adult outdoor gym and open turf.

Valencia Park: a small citrus orchard and walking paths.

II i s noted that two of these parks have been compl eted and the others are sti 11 graded or semi-graded dirt areas. In addition, there will be an extensive trail system throughout the community, including the Riverside County Regional Park trail that will cross diagonally through the community and extend beyond the community to the east and southwest.

14

STREETS ANDACCESS

The primary access to the Citrus Heights community is from McAllister St. to Citrus Heights Dr., and then to Sweet Ave. and MinnedaAve. Secondary access is by the extension of Citrus Heights Dr. northeasterly to Van Buren Blvd., just under a mile to the northeast.

McAllister St. is atwo-lane street that extends northerly from El Sobrante Rd., past Citrus Heights Dr., and nearby to the north it becomes McAllister Parkway and curves westerly and then southwest and terminates at La Sierra Ave. Citrus Heights Dr. is atwo-lane street that extends easterly from McAllister St. for a short distance, and then curves northerly and northeasterly to connect with Van Buren Blvd. Van Buren Blvd. is a 4-lane divided roadway that extends northwesterly to the 91 Freeway and beyond, and curves easterly near the junction with Mockingbird Canyon Rd. and terminates at the 215 Freeway about 8 miles to the east.

Sweet Ave. is a two-lane street that extends southeast from Citrus Heights Dr. at a poi nt j ust to the east of M cA 11 i ster St. 11 i s a two-l ane i n-tract resi denti al street that extends southerly through the west end of the community, then curves easterly and extends along the southerly edge of the community, then curves northerly at the east end of the community and becomes Mardi Gras Ln. Sweet Ave. is the collector street that provides access to all of the streets for the Orchard product type, and provides access to some of the streets for the Hill Crest product type as well as some Hill Crest lots fronti ng di rectly on Sweet Ave.

MinnedaAve. is atwo-lane street that extends southeasterly from Citrus Heights Dr. near the northerly end of the communi ty, and currently termi nates j ust to the north of future Fleur Blvd. at the northwesterly corner of the Floral Ridge product type. It al so extends northerly from Sweet Ave. and currently termi nates nearby to the north of Sea Grape Dr. When completed it will extend through the center of the communi ty and through the FI oral R i dge product type.

Most of the in-tract streets have been completed, other than those within the northerly part of the Hill Crest product type and the westerly part of the Floral Ridge product type i n the center of the community.

UTILITIES

All utilities are available to the community, and have been installed in the major streets and most of the in-tract streets as part of the development of the community. The uti I i ti es are provi ded as fol I ows:

• Water & Sewer:• Electric:• Gas:• Telephone:• Cable:

Western Municipal Water District Southern California EdisonSouthern California Gas Company AT& T V er i zon C ommuni cati ons Adel phia Cable

15

ZONING/GENERAL PLAN/APPROVALS

The Citrus Heights community is located within the El Sobrante Policy Area of the Lake MathewsA/Voodcrest Area Plan. The current County zoning designation is Specific Plan No. 325, Amendment No. 1, and the General Plan designation is Rural Community - Very Low Density Residential. The more specific approvals for the overall Citrus Heights community are by the final tract map for Tract No. 36390 which recorded on May 25, 2016, and which permits the 343 single-family lots

TOPOGRAPHY /VIEWS

The overall community comprises significantly undulating and hilly areas, with a I ow area i ncl udi ng natural drai nage courses that extend north-south through the west center part of the community and around the Harrison Dam facility. This results in higher areas at the west and east/southeast parts of the community, and lower/relatively flat areas at the south central part of the community. Surrounding areas to the east and south generally slope up abcve the Citrus Heights community, precl udi ng vi ews i n those di recti ons.

Due to the terracing of the lots and streets within the community, a number of the lots have territorial and distant mountain views to the west or north. Several of the lots at the northerly end of the Hill Crest product type have good city lights and mountain views to the north and mountain views to the west. Many other lots within the community back to the open space and drainage course areas with these limited but more open views.

DRAINAGE/FLOOD HAZARD

Drainage is within master-planned facilities that have been constructed throughout the community, and also offsite as necessary. These facilities have been designed to handle at I east the 100-year storm flows. PerFEMA Flood Insurance Rate Map Nos. 060245-06065C0720G and 060245-06065C1385G dated August 28, 2008, the 343 subject lots are located in Zone X which indicates areas that are determined to be outside the 100-and 500-year floodplains and out of the Special Flood Hazard Area

SOI L /CEOLOGIC/SE ISM IC CONDITIONS

Tentative Tract Map 36390 noted that the subject properties are not subject to I iguefacti on or other geological hazard and are notwithin a Special StudiesZone. In addition, a letter to Lennar Homes fromAltaCaliforniaGeotechnical Inc. pertaining to Citrus Heights Project, Tract 36390, states the foil owing:

“Geotechnical recommendations for the development of the site were presented in Alta, 2012. The recommendations included unsuitable soil removals and recompaction, overexcavation, slope construction for stability, and foundation/improvement recommendations. Alta provided geotechnical observation and testing during

16

SOIL /GEOLOG 1C/SEISM 1C CONDITIONS, Continuing

grading/construction operations, per the referenced grading reports, to confirm that the geotechnical recommendations were implemented during grading/tonstruction.

From a geotechnical standpoint, development of the project under the purview of referenced reports is considered to have been accomplished in general conformance with the project specifications and governing agency requirements. The geotechnical mitigations presented in Alta, 2012 were suitably accomplished in the areas covered by the referenced reports.”

Thus, thi s apprai sal has assumed that there are no soi I, geol ogi c or sei smi c condi ti ons that would negatively impact the conti nued or pianned use of the subject properties.

ENVIRONMENTAL CONDITIONS

It has been assumed that all necessary environmental permits and approvals were obtained for development of the lots as existing. This assumes that any required mitigation measures were completed, and that there are no other environmental conditions, including endangered species or significant habitat, watercourses or wetl ands that woul d have a negative effect on the exi sti ng or pi anned devel opment.

TITLE REPORT

A Preliminary Report covering 270 of the 343 subject lots by North American Title Company and updated November 27, 2017 has been reviewed. Noted exceptions include various easements for public utilities, roads, drainage and fuel modification purposes to entities including County of Riverside, Western Municipal Water district of Riverside County, Riverside County Flood Control and Water Conservation District, Southern California Edison Company and Southern California Gas Company. In addition, Notices of Special Tax Lien were recorded on August 1, 2016 for County of Riverside Community Facilities District No. 16-1M and on August 2, 2016 for Community Facilities District No. 32 of Riverside Unified School District.

It is noted that these exceptions are fairly typical for master-planned communities and residential subdivisions, and have been incorporated into the tract map so as to provide for the lots to be developable with homes as completed and planned. In addition,the maximum special tax for County of Riverside CFD No. 16-1M isfairly minor at $396.80 for single family properties (FY 2016-17), and CFD No. 32 is the subject of thi s apprai sal.

RESIDENTIAL MARKET OVERVIEW

According to CoreLogic, home prices across Southern California continue their gradual upward trend, wi th a year ever year i ncrease of 8.2% in medi an pri ce pai d i n December 2017, as the economy continues to grow, mortgage rates remain low and competition over limited inventory drives up prices. The median price in the six- county region was $507,500 in December, up from $469,000 ayear earlier and a new

17

RESIDENTIAL MARKET OVERVIEW, Continuing

all-time high since the previous peak of the market at $505,000 in mid 2007. Total home sales in 2017 were up 2% from 2016, reflecting minimal gains in resales of houses and condos, but nearly a 5% gai n for new construed on homes. 11 i s noted that i n December, sal es of mi d to hi gh cost homes represented a si i ghtly I arger share than typical with the number of sales of homes in excess of $500,000 the highest it has been since mid 2007.

Home sales data provided by CoreLogic for December 2017 indicates that the gradual upward momentum experi enced throughout the Southern Cal i forni a regi on i s mirrored both in Riverside County and the City of Riverside (it is noted that the subject properties are located just outside of the City of Riverside boundary line).

According to CoreLogic, there were a total of 3,438 home sales in December across the County, including both single family homes and condos, and reflecting new home sales as well as resales. The median price County-wide was $365,000, up from $345,000 the prior year which represents a 5.8% increase.

I n the City of Riverside, there were a total of 361 sales in December 2017 with a reported medi an pri ce of $414,500 whi ch was up 15.1 % from $360,000 i n December 2016. Resales (excluding new home sales) within the subject community zip code of 92503 (which represents areas both within and outside of the City of Riverside) in December 2017 indicated a medi an price of $410,000, upl8.8% from a year prior.

The subject community of Citrus Heights comprises an upper-end home product with above average size and pricing. Many such neighborhoods have been and continue to be built in this area of Lake Matthews/Mockingbird Canyon area, with Bella Vista Estates by Griffin Communities currently selling nearby to the west with homes from 3,315 sf. to 4,442 s.f., and current asking prices from the high $700,000’s to the low $900,000’s. CV Communities has begun grading for their project to be called Tramonte adjacent to the south of Citrus Heights, where they plan homes with an average size of 4,100 s.f. And farther to the east, Diversified Pacific is nearing build-out of their 30-lot community called The Estate Collection at Woodcrest featuring homes from 3,284 s.f. to 4,282 s.f. with pricing from the low $700,000’s to the $1,000,000’s.

In addition to active home projects, there are various future projects in the pipeline including Christopher Homes’ 2724ot Lake Ranch currently in the planning stage, 72 finished lots on MariposaAve. northeast of Mockingbird Canyon Rd. owned by Far West Industries who reportedly plan to begin construction in the near future, and 72 finished lots owned by KB Home called The Trails at Mockingbird Canyon though the builder’s plans for the site may be undergoing revision. Various other entitled and un-entitled residential projects have been or are being marketed for sale to builders but according to land brokers knowledgeable about current market condi ti ons, bui I ders are sti 11 tentative about purchasi ng I arge I ots for I arger and

18

RESIDENTIAL MARKET OVERVIEW, Continuing

higher-priced product. Marketing has been put on hold on a number of these sites in the nearby area waiting until conditions evidence a stronger demand for large homes on large lots

Lastly, it is noted that the Tax Cuts and Jobs Act (TCJA) enacted into law on December 22, 2017 lowered the cap on 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 cap of $10,000 on deductions for state and local taxes (state income tax, property tax and sales tax). The cap on the mortgage interest deduction would have minimal, if any, impact on homebuyers in the subject Citrus Heights community in which only five of the homes in the Hill Crest product type have sold ever $750,000 (up to $791,502), thus with mortgages typically well under the $750,000 threshold. However, it remains to be seen whether the other factors in the TCJA have any effect on the housing market in the Inland Empire and more specifically pertaining to price levels in the Citrus Heights community.

HIGHEST ANDBEST USE

The term highest and best use is defined as the reasonably probable and legal use of vacant land or an impreved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum productivity. Furthermore, the highest and best use of land or a site as though vacant is defined as among all reasonable, alternative uses, the use that yields the highest present land value, after payments are made for labor, capital, and coordination.

In terms of legal permissibility, single-family residential development is permitted by the zoning/Specific Plan, General Plan and tract map approvals. In terms of physical possibility, the lots have been or soon will be graded to fairly flat buildable pads and all necessary infrastructure has been or soon will be completed in order to allow for the construction of homes that has been completed or is planned on the lots.

In terms of the financial feasibility, as previously discussed in the Residential Market Overview, the current residential market conditions for Riverside County and the City of Riverside are relatively strong and have continued to show much improvement over the past year and more, other than some slowness in the higher- priced segment. While homes in the Citrus Heights community are relatively higher-priced, the pricing for the Orchard and Hill Crest product types from the high $400,000’s to the high $700,000’s, or averages in the ±$600,000 to $660,000 range i s on the I ow si de of the “ hi gher-pri ced” product that i s si ower, at I east for resi denti al lotjand sales.

19

HIGHEST AND BEST USE, Continuing

It is noted that the specific market for the Citrus Heights community evidences reasonably good demand and absorption rates. This is evidenced by the Orchard product type with 57 closed sales since late September 2016, or about 3.6 closed sales per month since that time, or 12 closed sales since October 2017 (3.0 per month) with 11 currently pending sales. The larger and higher-priced Hill Crest product type was slower with 37 closed sales since October 2016 or about 2.3 per month, but an increased absorption of 13 closed sales since November 2017 (4.3 per month) with 12 currently pending sales.

In terms of the maximum productivity, this is represented by the homes that have been and are being built on the subject lots, with an appropriate array of home sizes withi n the three product types.

In summary, on the three product types of homes, the highest and best use is concluded to be as imprcved for the completed homes and as planned for the homes under construction and the vacant lots.

20

ORCHARD

PROPERTY DATA

Location

This product type is located in several different areas in the west and south central parts of the Citrus Heights community. At the west side, the lots are located along the west side of SweetAve. on Cordial Cr., Sunnycal Ave., Capri cornio St. andFarm B el I e BI vd., and al ong the east si de of Sweet Ave. on A utumn G ol d Ct. In the south central area the lots are located along the north side of Sweet Ave. on SatsumaAve., Paragon Cr., Clementine Ct., Carista Blvd., Moon Beam Dr., and also on Old M i ssi on Ct. westerly from M i nneol a Ave.

Record Owner/Ownership History

As of the February 1, 2018 date of value, individual homeowners owned 57 of the lots (Lots 15 to 63, 89, 90, 92 to 95, 97 & 98) and Lennar Homes of California, Inc. owned the remaining 50 lots (Lots 1, 7 to 14, 64 to 88, 91, 96 & 99 to 112).

Lennar Homes of California, Inc. purchased the land for the Citrus Heights community from CV Inland Investments 1, LP by deed recordedJanuary 14, 2014. This was part of a larger portfolio of properties including development sites in three other cities. The price allocation to Citrus Heights was reportedly ±533,767,000 or ±598,446 per lot for the land in raw physical condition with prior entitling work, and Lennar subseguently completed the entitling for the current Citrus Heights project.

The 57 sal es to the i ndivi dual homeowners cl osed from September 29, 2016 through January 10, 2018 at net sale prices ranging from $485,817 to $703,465. I n addition, as of February 1, 2018 there were 11 pending sales that were due to close from February 23, 2018 through J une 27, 2018.

Legal Description

The 1071 ots are descri bed as L ots 1 & 7 to 112 of Tract N o. 36390, i n the County of Riverside, State of California, as filed in Book 450, Pages 46 through 102, inclusive, of Maps.

Assessor Data-2017/18

The Orchard product type compri ses the fd I owi ng A ssessor Parcel N os.:

269-510-001 & 007 to 030 269-511-001 to 006 269-520-001 to 008 269-530-001 to 024 269-531-001 to 030 269-540-001 to 014

22

PROPERTY DATA, Continuing

The current assessed values range from $23,165 to $200,000 for land and $0 to $539,993 for improvements, or totals of $23,165 to $739,993. The tax rate area is 88-006 with an indicated tax rate of 1.11447%, but the total or effective tax rate, including special taxes for this CFD, is 1.97% based on the average total property taxes for al I tax cl asses and the average apprai sed val ue for the homes.

No. of Lotslot Sizes

This product type comprises a total of 107 lots, considered as a minimum size of ±3,000 s.f., with a minimum pad size of ±7,700 s.f. or 77 x 1 lCf; actual lot sizes range from 8,276 s.f. to 23,087 s.f. or an average of 10,784 s.f.

Description of Homes/Status of Construction

These 107 lots are being developed by Lennar Homes with a product type called Orchard at Citrus Heights. As of the February 1, 2018 date of value, there were 57 completed-sold homes (closed builder sales); 6 completed-unsold homes (including the 3 models); 19 homes under construction of which 6 were estimated to be ±90% compl eted, 6 were esti mated to be ±3C% compl eted, and 7 were i n the early stage of forrri ng for foundati ons; and 25 vacant I ots that were i n near fi ni shed condi ti on.

Note: The Developed Property comprises 87 lots which includes the 57 completed- sold homes (Lots 15 to 63, 89, 90, 92 to95, 97& 98); the 6 completed-unsold homes (Lots 8, 9, 10, 88, 91 & 96); the 6 homes @ 90% completion (Lots 64, 65, 77, 78, 79 & 80); the 6 homes @ 3C% completion (Lots 75, 75, 76, 81, 82 & 83); the 7 homes in the early stage of construction (Lots 66 to 72); and 5 of the vacant lots (Lots 73 & 84 to 87). The Undeveloped Property comprises the remaining 20 lots which are vacant I ots (Lots 1, 7, 11 tol4& 99toll2).

There are four fl oor pi ans, and per marketi ng i nformati on are descri bed as fol I ows:

Plan 1: 2,413 s.f., one-story, with 3 to 4 bedrooms, 2Vz baths, great room, nook, dining room, and laundry: optional den or bedroom4; and a 3-bay garage and covered patio.

Plan 2: 2,820 s.f., one-story, with 3 to 5 bedrooms, 3K> baths, great room, dining room, and laundry: optional bedroom 3 or teen room and optional den or bedroom 5; and a 2-bay garage and separate 1 -bay garage, and covered patio.

Plan 3: 3,823 s.f., two story, with 5 bedrooms, 3 baths, great room, dining room, flex room (den or office), master bedroom retreat, and second floor bonus room and laundry: and a 2- bay garage with large storage area and a covered patio.

Plan 4 (4124 Next Gen by Lennar): 4,125 s.f., two story; main home has 5 bedrooms, 3K> baths, great room, nook/dining room, and upstairs loft and laundry; also a first floor private suite connected to the main home and with a private entrance, including 1 or 2 bedrooms (retreat or optional bedroom 2), kitchenette, living room and laundry; anda 3-bay garage.

23

PROPERTY DATA, Continuing

Per building permit data, the 57 completed-sold homes range in size from 2,413 s.f. to 4,125 s.f. or an average of 3,441 s.f.; and the 6 completed-unsold homes are an average size of 3,757 s.f.

VALUATION

Method of Analysis

For the completed-sold homes, the analysis is of the aggregate value on a mass appraisal basis ty means of the Sales Comparison Approach. Primary consideration is given to the builder sales of the subject homes, and secondary consideration is given to recent builder sales of the Hill Crest at Citrus Heights homes as well as recent sales of reasonably similar homes from other nearby neighborhoods. For the completed-unsold homes, the analysis considers a discount due to the bulk ownership by the builder with the discount reflecting holding/sales costs, minor fi ni shi ng costs and profit i n order to sel I off the homes.

For the homes under construction, a simplified Cost Approach is used in which the val ue i s based on an esti mate of construed on costs expended pi us the esti mated val ue of the vacant lot as if in finished condition. The analysis of the vacant lots as if in finished condition is based on the Sales Comparison Approach, considering recent sales of residential land or bulk lots over a widespread area in this general part of Riverside County.

Analysis of 57 Completed-Sold Homes

The sales of these 57 homes by the builder closed from September 29, 2016 through January 10, 2018 at net sale prices (inclusive of premiums/bptions and net of incentives/toncessions) ranging from $485,817 to $703,465 or an average of $600,100 for an average home size of 3,441 s.f., or $174.40 per s.f. It is noted that many of the earlier sales were negotiated from April through December 2016, or aboutayearto21 months ago.

Considering the most recent 12 sales that closed from October 2017 and thereafter, the average net price was $608,500 for an average home size of 3,447 s.f., or $176.53 per s.f. This is in slight contrast to the earliest 15 sales that closed in 2016 and indicated an average net price of $599,800 for an average home size of 3,468 sf., or $172.95 per s.f. This would tend to indicate a minor price increase from late 2016 to late 2017, however it is noted that a greater percentage of the more recent sales have superior locations/lot premiums.

However, as of February 1, 2018 there were 11 pending sales that indicated an average net price of $601,400 for an average home size of 3,476 s.f., or $173.01 per sf. This is slightly below the average for the most recent 12 closed sales, but

24

VALUATION, Continuing

primarily due to a lower percentage of lot premiums for the pending sales. In general, the closed and pending sales tend to support fairly stable pricing over the entire sales period.

Thus, considering the average home size of 3,441 s.f. for the 57 completed-sold homes, the averages at ±5600,000 support close indications as an average at current date, and the indication at $608,500 supports a close but firm upper limit indication due to the greater percentage of superi or I ocati onsj ot premi urns.

As discussed next in this report for the Hill Crest homes, the most recent 13 closed sales plus the 12 pending sales indicate an average net price of $661,200 for an average home size of 3,774 s.f., or $175.20 per s.f. The larger average home size than the subject Orchard homes would tend to result in a lower price per s.f., but this is offset ty the larger lot sizes of the Hill Crest product type as well as the greater percentage of lots with location,View premiums. Thus, due to the larger home size and other superior factors, the average of $661,200 supports a far upper limit as an average for the subject Orchard homes, and the indication at $175.20 per s.f. supports a cl oser i ndi cati on as fd I ows:

3,441 s.f. <S> $175.20£.f. =$602,900

Lastly, resales of homes have been considered from the Sierra Heights and Sierra Estates neighborhoods that are located nearby to the north and northwest of the west end of the Citrus Heights community, and shown in the fd I owing table:

No. AddressRec.Date Price

Home Size (sf)

YearBuilt

LotSize Remarks

1 16099 Hillsmont 9/22/17 $689,000 2,965 2007 20,473 3-car garage; good cond./Well upgraded; pool /spa; outdoor kitchen; fi repit

2 12826 Granite Pass 10/20/17 $635,000 3,296 2008 20,473 3-car garage; good condition; upgrades; view

3 12777Cathedral Ridge 10/27/17 $675,000 3,600 2010 20,038 2-car garage; good condition; upgraded; $5,000 concession

4 13026 Solomon Peak 10/31/17 $720; 000 3,737 2007 20,038 4-car garage; good condition; upgraded; well landscaped

5 16254 Sierra Heights 1/23/18 $748,000 3,737 2010 37,462 2-car garage; good cond; upgraded interior; pool /spa; outdoor kitchen

$693,400 3,467 (Avg.; $20Q00/s.f.)

These homes have HOA dues of $155 per month for common area landscaping and a small neighborhood park, but there is no CFD thus the tax rate is much lower than for the subject homes. The average home size of 3,467 s.f. is slightly larger than the average of 3,441 s.f. for the subject homes; the lots are significantly larger; the much

25

VALUATION, Continuing

la/ver tax rate is a superior factor; and the well upgraded condition of the homes and/br yards is superior to the average of the subject homes. Thus, the average of $693,400 supports a far upper limit indication as an average for the subject homes, and the average of $200.00 per s.f. also supports a far upper limit indication as fdlows:

3,441 s.f. <S> $200.00£.f. = $688,200

In summary, the indications of average value for the 57 completed-sold homes are cl ose i ndi cati ons at ±5600,000 to $603,000, a cl ose but f i rm upper limit indi cati on at $608,500, and far upper limit indications from $661,200 to $693,400. The concl usi on i s an average val ue of $600,000 for the 57 homes.

A nalysi s of 6 C ompl eted4J n sol d H omes

These are the 3 model homes plus 3 production homes, with an average size of 3,757 sf., or much larger than the average of 3,441 s.f. for the completed-sold homes. Itis noted that as of February 1, 2018, there was a pendi ng sale on one of the production homes that was due to close February 23, 2018, and the other two homes were still available.

Consi deri ng the I arger average si ze of these compl eted-unsd d homes, and al so that 3 of these homes are the well upgraded models, the initial value conclusion is higher than for the completed-sold homes though still a conservative average of $630,000. Then, a discount of 15% is applied to reflect holding/sales costs, minor finishing costs and profit in order to sell off the homes, resulting in an average value of $535,000.

Analysisof 19FlomesUnder Construction

For the 6 homes that were estimated to be ±9C% completed, I have considered a cost amount of 90% of ±560.00 per s.f. estimated direct construction costs, or $54.00 per sf. on the average home size of 3,522 s.f. for these 6 homes, or an amount rounded to $190,000. This is added to the estimated value of $230,000 for the vacant lot in finished condition as discussed later, resulting in a total of $420,000 as an average for these 6 homes.

For the 6 homes that were estimated to be ±30% completed, the cost amount is 30% of ±560.00 per s.f. direct construction costs, or $18.00 per s.f. on the average home size of 3,589 s.f. for these 6 homes, or an amount rounded to $60,000. This is added to the estimated value of $230,000 for the vacant lot in finished condition, resulting i n a total of $290,000 as an average for these 6 homes.

For the 7 homes that were in the early stage of construction, no cost allocation is added ever and above the esti mated vacant I ot val ue of $230,000.

26

VALUATION, Continuing

Analysisof 25 Vacant Lots

A search was made for recent sales of bulk single-family lots located in Riverside and nearty areas. Due to the limited amount of pertinent closed sales, consideration has also been given to available properties, offers and prior pending deals. The pertinent factor of comparison is the price per finished lot. Then, a deduction from estimated finished lot value is made for the remaining costs and fees to get the subject lots from as is condition to finished condition, resulting in avalue indication for the as is condition.

The tabul ati on of the perti nent I and data i s as fol I ows:

No. Location /APNRec.Date

No. Lots Min Size

Price/Lot Price/Fin Lot Remarks

1 E’ly corner Dufferin Ave./McAIlister Pkwy.& Praed St., Riverside area/lini incorporated 136-110-029 to 050

3/16/16 2215,852

$68,182$235,000

Wasvacant/lindulating land; buyer processed all approvals and new building 3,315^4,442 s.f. homes as BellaVistaEstates; no CFD

2 N/5 KrameriaAve. at Gallery Heights Dr., Riverside area/lini incorporated273-060 & 061

1/5/17 23±31,000

$34,783$250,000

Vacant lots in blue-topped condition with recorded tract map; Gallery Heights; Woodcrest area of estate homes; no CFD

3 MariposaAve. to NandinaAve. at Porter Ave., Riverside area/unincorporated 273-310-011,046-049; 273-330-004

Available 51±1 -acre

$76,470$261,470

Vacant rolling/hilly land with approved tentative tract map and fi rial engi neeri ng; septi c area tough development site with rocky soil

4 NWC HarbartDr. & Bradley St.,Riverside242-14,15& 30(ptns)

Available 8220,000

n^±$300,000

Vacant rolling/hilly land pi us 8 semi-finished lots with approved tentative tract map and fi rial eng.; no CFD; Kunny Ranch

5 SWC & SEC Spring Mountain Rd. &Pigeon Pass Rd., Riverside area/lini ncorp. 255-21 (ptn)

Available 2577,200

n^±$175,000

Spring Mountain Ranch, Phase 2B; lots to be delivered in blue-topped condition with final map ready to record; existing CFD

6 Both sides Lawson Rd., N£> Hunt Rd. & SW/O 15 Fwy.,Temescal Valley/linincorp. 283-140-004,006-010; 283-250-004

PriorN ego’s

5412,000

n^$265,000-$280,000

Vacant flat/bol 1 ing/hi 1 ly land with approved tent, tract map; no CFD; home pricing anticipated in the $700,000’s

7 W’ly corner Santiago Canyon Rd. & TowheeLn.,Temescal Canyon/unincorp. 290-660 (ptn.)

6/29/17 1925,000’s& 6,000’s

$78,125$205,000

Vacant mass graded land with approved tentative tract map and final engineering; 106® 5,000 sf lots & 86® 6,000 sf; existing CFD’s

Data No. 1 is located at the easterly corner of Dufferin Ave./McAllister Pkwy. and Praed St. in unincorporated County area nearby to the south of Riverside and less than a mile to the northwest of the Citrus Heights community. 11 consi sted of vacant and undulating land on which the buyer, Griffin Residential, processed all approvals for 22 lots, 15,852 s.f. to 25,242 s.f. or an average of ±20,500 s.f. in size with mostly usable area, and no CFD. The sale closed in March 2016 at the price of $1,500,000 or $68,182 per lot, and reflecting an estimate of $235,000 per finished lot. The buyer is now building the Bella Vista Estates project with homes ranging in size from 3,315 s.f. to 4,442 sf. and pricing from ±5800,000 to $900,000.

27

VALUATION, Continuing

I n comparison to the subject, the general location is considered to be fairly similar but lacking the amenities of a master-planned community is slightly inferior; the bulk size of 22 lots is similar; the minimum^ypical lot size is significantly larger which is a superior factor and results in the potential for the larger and much higher- priced homes that are being built; the unentitled and raw physical condition at time of sale is inferior from a risk factor to the subject as near finished lots; the lack of CFD results in a lower tax rate to home buyers which i s a superior factor; and only a rri nor upward ti me adj ustment i s consi dered for the date of sal e. Overal I, downward adjustments for the superior factors of much larger lot sizes/superior development potential and lack of CFD are partially offset ty upward adjustments for the inferior entitlement/physical condition and date of sale, resulting in a close but firm upper limit indication of value for the subject at $235,000 per finished lot.

Data No. 2 is located on the north side of Krameria Ave. at Gallery Heights Dr., and extendi ng north to V an B uren B Ivd. i n the uni ncorporated W oodcrest area, nearby to the south of Riverside. It consisted of 23 lots, ±31,000 s.f. minimum size and an average size of closer to 37,000/38,000 s.f., with a recorded tract map, which had been graded some years prior plus initial construction of utilities, and no existing CFD. The sale to Capital Pacific closed in January 2017 at the price of $800,000 or $34,783 per lot, with finished lots estimated at $250,000 per lot. The buyer’s plans are unknown, but homes in the general area range up to and just ever $1,000,000.

In comparison to the subject, the location is considered to be superior though partially offset by the lack of master-planned community amenities; the bulk size of 23 lots is similar; the minimum and average lot size is substantially larger with the potential for much larger and higher-priced homes; the entitled condition is similar but the physical condition is inferior resulting in greater risk; the lack of an existing CFD is a superior factor; and the date of sale is fairly similar. Overall, downward adjustments for the superior factors of location, lot size and lack of CFD are slightly offset by an upward adjustment for the ri sk factor of the physical condition, resulting i n a fi rm upper I i mit i ndi cati on of val ue for the subj ect at $250,000 per fi ni shed I ot.

Data No. 3 is located between Mariposa Ave. south to NandinaAve. along Porter Ave., also in the unincorporated Woodcrest area and nearby to the south of Riverside. It consists of vacant raw land that is roll ing/hi lly and fairly rocky, with an approved tentative tract map and final engineering for 51 lots, ±1-acre minimum size but with pad sizes ranging from 13,000 s.f. to 25,000 s.f., and no existing CFD. The property has been marketed for several months at the asking price of $3,900,000 or $76,470 per lot, with finished lots estimated at $261,470 per lot. Thus far, there has been some interest but no offers, and the broker considers the price to be near market though recogni zi ng that thi s i s a tough devel opment si te whi ch may si ow the i nterest level ty builders.

28

VALUATION, Continuing

The comparison to the subject is similar to that for Data No. 2 except that these lots are even I arger but the devel opment ri sk i s much greater. Consi deri ng al so that thi s is only an asking price and no offers as yet, a far upper limit indication of value is indicated for the subject at $261,470 per finished lot.

Data No. 4 is located at the northwest corner of Harbart Dr. and Bradley St., extending north toward Overlook Pkwy., in the Alessandro Heights area of the City of Riverside. This property is referred to as Kunny Ranch and it consists of vacant and mostly raw land that is rolling/hilly, plus 8 lots in semi-finished condition. There is an apprcved tentative tract map and final engineering on the balance of the site, resulting in a total of 82 lots, ±20,000 s.f. minimum and typical size, with pads averagi ng over 18,000 s.f., and no exi sti ng CF D. The property was bri efly marketed I ast year then pul I ed back, and now i s sti 11 avai I abl e though the market for thi s I arger product is fairly slow. The broker considers that a sale of these lots would result in a price reflecting $300,000 per finished lot.

Again, the comparison to the subject is similar to that for Data Nos. 2 and 3. At best, this data item is of general interest, indicating a much higher price than for Data Nos. 1 and 2, and supporting a far upper limit indication of value for the subject at $300,000 per finished lot.

Data No. 5 is located at Spring Mountain Rd. and Pigeon Pass Rd. in the master- planned community of Spring Mountain Ranch, which is unincorporated County area that is nearby to the north of Riverside and just to the south of the City of Grand Terrace. It consists of 257 lots, 7,200 s.f. minimum size, that comprise Phase 2B of Spring Mountain Ranch and are to be delivered in blue-topped condition with a final map ready to record, with about 15% of the lots having views, and an existing CFD. The lots are currently being marketed with no firm deal yet in place, and the broker anti ci pates a pri ce ref I ecti ng $175,000 per f i ni shed I ot.

In comparison to the subject, the general location is considered to be inferior though the amenities of the master-planned community are similar; the bulk size of 257 lots is substantially larger and would tend to result in a lower price per lot; the minimum lot size is smaller; the entitled condition is similar but the physical condition is slightly inferior; and the existing CFD is similar. Overall, upward adjustments for the inferior factors of location, bulk size, lot size and physical condition result in a far I ower I i rri t i ndi cati on of val ue for the subject at $ 175,000 per fi ni shed I ot.

Data No. 6 is located along both sides of Lawson Rd., nearby to the north and northeast of Hunt Rd. and nearby to the southwest of the 15 Freeway in the unincorporated Temescal Valley area nearby to the south of Corona. It consists of unimprcved flat and rolling/billy land in raw physical condition but with an apprcved tentative tract map for 54 lots, 12,000 s.f. minimum size, and no existing CFD. The project is cal led Monarch Ridge, and described as a ±47-acre future gated

29

VALUATION, Continuing

community located adjacent to the Trilogy and Glen Ivy communities within Temescal Valley. About a year ago there were negotiations based on a price of $280,000 per finished lot, and as of September 2017 there were other negotiations based on a price of $265,000 per finished lot with price points for homes in the $700,000’s. Ultimately, a deal did not take place and the seller is now processing fi nal engi neeri ng i n order to sel I the project ready for a gradi ng permit.

In comparison to the subject, the location is considered to be slightly superior, more than offsetting to the lack of master-planned community amenities; the bulk size of 54 lots is similar; the minimum lot size is larger; the entitled and physical condition are inferior with greater risk of achieving finished condition; and the lack of CFD is superi or. Overal I, downward adj ustments for the superi or factors of I ocati on, I ot si ze and lack of CFD are only partially offset ty an upward adjustment for the risk due to the inferior enti tl ed/phy si cal condition, resulting in a far upper limit indication of val ue for the subject at $265,000 per fi ni shed I ot.

Data No. 7 is located at the westerly corner of Santiago Canyon Rd. and Towhee Ln., at the south end of the master-planned community of Sycamore Creek which is in the unincorporated Temescal Canyon area about 5 miles southerly of Corona. It consists of vacant land in partially mass graded condition for 192 lots, 106 at 5,000 sf. minimum and 86 at 6,000 s.f. minimum, with an approved tentative tract map and f i nal engi neeri ng, and wi th exi sti ng C F D ’ s. T he sal e to L ennar FI omes cl osed i n June 2017 at the price of $15,000,000 or $78,125 per lot, with finished lots estimated at $205,000 per lot. The buyer initially was considering homes of 2,400 s.f. to 3,400 sf. plus the Next Gen plan of 4,100 s.f., with pricing from the mid-$400,000’s to mi d-$500,000’s.

In comparison to the subject, the general location and being within a master-planned community are considered to be fairly similar; the bulk size of 192 lots is much larger which could tend to result in a minor discount for size; the minimum lot sizes are much smaller; the entitled and physical condition are inferior resulting in greater risk; the existing CFD’s are similar; and the date of sale is fairly similar. Overall, upward adjustments for the inferior factors of bulk size, lot size and entitled/physical condition result in a firm lower limit indication of value for the subject at $205,000 per fi ni shed lot.

In summary, on the basis of finished lots, the data supports a far lower limit indication at $175,000, a closer but still firm lower limit indication at $205,000, a close but firm upper limit indication at $235,000, a firm upper limit indication at $250,000, and far upper limit indications at $261,470 to $300,000. The conclusion for the subject lots is $230,000 per finished lot.

30

VALUATION, Continuing

Lastly, a deduction is made for the remaining costs and fees to get the subject lots from as is semi-finished condition to fully finished condition. Per information provided ty the builder, the cost categories include design & planning, impact fees, grading, sewer imprcvements, water imprcvements, storm drain improvements, street improvements, dry utility improvements, and parks/1 andscapi ngAvalIs. The indicated total remaining costs allocated to the Orchard product type are $833,702, net of costs/fees to be funded ty the CF D bond proceeds from the fi rst i ssuance.

Thus, the i ndi cati on of as i s val ue for the 25 vacant I ots i s cal cul ated as fd I ows:

25 lotsas if finished condition® $230,000= $5,750,000Less costs to complete: - 833,702Value, As Is Condition: $4,916,298

Rd. $4,900,000

Conclusion of Value

Based on the foregdng, the total value indication for the Orchard product type in its as is condition, is calculated as follows:

57 completed-sold homes <S> $600,000 = 6 completed-unsold homes @ $535,000 = 6 homes under construction <8> $420,0006 homes under construction <8> $290,0007 homes under construction <3> $230,000 25 vacant lots =

$34,200,000 $ 3,210,000 $ 2,520,000 $ 1,740,000 $ 1,610,000 $ 4,900,000

Value Indication, As Is Condition: $48,180,000

Thus, as the result of this analysis, I have arrived at the foil owing overall conclusion of market value for the as i s condition of the subject Orchard product type, subject to the Assumptions and Limiting Conditions, and as of February 1,2018:

$48,180,000

(FORTY-EIGHT MILLION ONE HUNDRED EIGHTY THOUSAND DOLLARS)

Then, the cverall value conclusion is allocated to the individual owners (completed- sold homes) and the builder ownership (completed-unsold homes, homes under construction and vacant lots), and also allocated to Developed Property and Undeveloped Property. As previously indicated, the Developed Property includes all but 20 of the vacant I ots, and the U ndevel oped P roperty i ncl udes the 20 vacant I ots.

T he val ue al I ocati on i s as fol I ows:

31

VALUATION, Continuing

No.Lots Developed Undeveloped Market Value

Individual Owners (Completed-5old Horres): 57 $34,200,000 $0 $34,200,000B ui Ider Ownershi p (C ompleted-U nsold H orres): 6 $3,210,000 $0 $3,210,000

Builder Ownership (Homes Under Construction): 19 $5,870,000 $0 $5,870,000Builder Ownership (Vacant Lots): 25 $980,000 $3,920,000 $4,900,000

107 $44,260,000 $3,920,000 $48,180,000

32

HILL CREST

HILL CREST

PROPERTY DATA

Location

This product type is located in the central and southeast parts of the Citrus Heights community, other than the 3 model homes on Cordial Cr. at the northwest end of the community. In the central area the lots are located along the westerly side of MinnedaAve. and on both sides of Key Lime Blvd. In the southeast area the lots are located on both sides of Sweet Ave. and on Sea Grape Dr., Blanco Ln., Kumquat Cr., Grapefruit Ave., Citrange Ave. and Lemonade Cr.

Record Owner/Ownership History

As of the February 1, 2018 date of value, individual homeowners owned 37 of the lots (Lots 246, 249 to 252, 260 to 263, 265 to 292) and Lennar Homes of California,I nc. owned the remaining 72 lots (Lots 2, 3, 4, 238 to 245, 247, 248, 253 to 259, 264 & 293 to 343).

The purchase of the land by Lennar Homes of California, Inc. in 2014 was previously di scussed for the Orchard product type.

The 37 sales to the individual homeowners closed from October 12, 2016 through January 31, 2018 at net sale prices ranging from $573,190to $791,502. In addition, as of February 1, 2018 there were 12 pending sales that were due to close from February 28, 2018 through J uly 17, 2018.

Legal Description

The 109 lots are described as Lots 2, 3, 4 & 238 to 343 of Tract No. 36390, in the County of Riverside, State of California, as filed in Book 450, Pages 46 through 102, inclusive, of Maps.

Assessor Data-2017/18

The Hill Crest product type comprises the following Assessor Parcel Nos.:

269-510-002 to 004 269-541-001 269-542-001 to 003 269-590-001 to 021 269-591-001 to 013 269-600-001 to 017 269-610-001 to 023 269-611-001 to 015 269-620-001 to 013

34

PROPERTY DATA, Continuing

The current assessed values range from $23,165 to $210,000 for land and $0 to $600,545 for improvements, or totals of $23,165 to $810,545. The tax rate area is 88-006 with an indicated tax rate of 1.11447%, but the total or effective tax rate, including special taxes for this CFD, is 2.01% based on the average total property taxes for al I tax cl asses and the average apprai sed val ue for the homes.

No. of Lotslot Sizes

This product type comprises a total of 109 lots, considered as a minimum or typical size of ±12,000 s.f., with a minimum^ypical pad size of ±10,400 s.f. or 80’ x ISO1; actual lot sizes range from 9,148 s.f. to 37,026 s.f. or an average of 15,130 sf.

Description of Homes/Status of Construction

These 1091 ots are bei ng devel oped by L ennar H omes with a product type cal I ed H i 11 Crest at Citrus Heights. As of the February 1, 2018 date of value, there were 37 completed-sold homes (closed builder sales); 6 completed-unsold homes (including the 3 models); 7 homes under construction that were estimated to be ±50% completed; and 59 vacant lots that ranged from partially to near finished condition.

Note: The Developed Property comprises 58 lots which includes the 37 completed- sold homes (Lots 246, 249 to 252, 260 to 263, 265 to 292); the 6 completed-unsold homes (Lots 2, 3, 4, 247, 248 & 264); the 7 homes under construction (Lots 253 to 259); and 8 of the vacant lots (Lots 253 to 259). The Undeveloped Property compri ses the remai ni ng 51 I ots whi ch are vacant I ots (L ots 293 to 343).

There are three fl oor pi ans, and per marked ng i nformati on are descri bed as fol I ows:

Plan 1: 2,832 s.f., one-story, with 3 to 4 bedrooms, 2Vz baths, great room, nook, dining room, and laundry: optional den or bedroom 4; and a 2-bay garage and separate 1-bay garage, front courtyard and rear covered patio.

Plan 2: 3,615 s.f., two-story, with 5 bedrooms, 3K> baths, great room, nook/dining room, hobby room, second floor loft and laundry: and a 2-bay garage plus oversized tandem garage, front porch, side courtyard or optional California Room, and rear covered patio.

Plan 3 (4644 Next Gen by Lennar): 4,644 s.f., two story; main home has 4 bedrooms, 2Vz baths, great room, dining room, large entry, large second floor loft with deck, master retreat, laundry, 2-bay garage, front courtyard and rear covered patio; also a first floor private suite connected to the main home and with a private entrance, including 1 bedroom, living room with kitchenette, private 1 -bay garage and private rear covered patio.

Per building permit data, the 37 completed-sold homes range in size from 2,832 s.f. to 4,644 s.f. or an average of 3,702 s.f.; and the 6 completed-unsold homes are an average size of 3,695 s.f.

35

VALUATION

Method of Analysis

This is similar to the previous analysi s of the Orchard product type.

Analysis of 37 Completed-Sold Homes

The sales of these 37 homes by the builder closed from October 12, 2016 through January 31, 2018 at net sale prices (inclusive of premiums/bptions and net of incentives/toncessions) ranging from $573,190 to $791,502 or an average of $662,300 for an average home size of 3,702 s.f., or $178.90 per s.f. It is noted that many of the earlier sales were negotiated from April through December 2016, or aboutayearto21 months ago.

Consi deri ng the most recent 13 sal es that cl osed from N cvember 2017 and thereafter, the average net price was $672,600 for an average home size of 3,830 s.f., or $175.61 pers.f. While this is a higher average price than for all 37 homes, the higher price is offset by the larger average size than for all 37 homes. It is also noted that the average price is slightly lower than for the earliest 8 sales that closed in 2016 at the average net price of $680,400 and for a similar average home size of 3,836 s.f. However, this differential is offset by the 8 earlier sales having a higher percentage of superi or I ocati onsj ot premi urns than the more recent 13 sal es.

In addition, as of February 1, 2018 there were 12 pending sales that indicated an average net price of $648,800 for an average home size of 3,714 s.f., or $174.69 per s.f. This is below the average price for all 37 homes and for a fairly similar average home size. However, this differential is due to the pending sales having a lower percentage of homes with view locations.

Overal I, thi s sal es data supports fai rly stabl e pri ci ng over the ti me peri od of the sal es from 2016 through current date. Thus, considering the average home size of 3,702 s.f. for the 37 completed-sold homes, the average of $662,300 supports a close indication at current date, the average of $648,800 supports a firm lower limit indication, and the averages of $672,600 and $680,400 support firm upper limit indications.

As previously discussed for the Orchard homes, the most recent 12 closed sales plus the 11 pending sales indicate an average net price of $605,100 for an average home size of 3,461 s.f., or $174.83 per s.f. Due to the smaller average home size, as well as the smaller lot sizes and lower percentage of homes with location,View premiums, the average of $605,100 supports a far lower limit indication as an average for the subject Hill Crest homes, and the indication at $174.83 per s.f. supports a closer but sti 11 fi rm I ower I i mi t i ndi cati on as fd I ows:

3,702 s.f. <S> $174.83£.f. = $647,200

36

VALUATION, Continuing

Lastly, the resales of homes from the nearby Sierra Heights and Sierra Estates neighborhoods, as previously discussed for the Orchard product type, indicated an average sale price of $693,400 for an average home size of 3,467 s.f. While the average home size is smaller than the average of 3,702 s.f. for the subject homes, this is offset by the superior factors of the much larger lot sizes, the much lower tax rate and the well upgraded condition of the homes and/or yards. Thus, the average of $693,400 supports a fi rm upper limit indication of value as an average for the subject homes.

I n summary, the indications of average value for the 37 completed-sold homes are a far lower limit indication at $605,100, closer but still firm lower limit indications at $647,200 and $648,800, a close indication at $662,300, and firm upper limit indications from $672,600 to $693,400. The conclusion is an average value of $660,000 for the 37 homes.

A nalysi s of 6 C ompl eted4J n sol d H omes

These are the 3 model homes plus 3 production homes, with an average size of 3,695 sf., or fairly similar to the average of 3,702 s.f. for the completed-sold homes. It is noted that as of February 1, 2018, there was a pendi ng sale on one of the production homes that was due to close February 28, 2018, and the other two homes were still available.

Considering the similar average size of these completed-unsdd homes, but also that 3 of these homes are the well upgraded models, the initial value conclusion is si ightly higher than for the completed-sold homes though still a conservative average of $675,000. Then, a discount of 15% is applied to reflect hoi ding/sales costs, minor finishing costs and profit in order to sell off the homes, resulting in an average value of $575,000.

Analysis of 7 Homes Under Construction

For the 7 homes that were estimated to be ±5C% completed, I have considered a cost amount of 50% of ±560.00 per s.f. estimated direct construction costs, or $30.00 per sf. on the average home size of 3,717 s.f. for these 7 homes, or a rounded amount of $110,000. This is added to the estimated value of $240,000 for the vacant lot in finished condition, as discussed later, resulting in a total of $350,000 as an average for these 7 homes.

Analysis of 59 Vacant Lots

This is similar to the previous analysis of the vacant lots for the Orchard product type, though recognizing that these Hill Crest lots are larger in terms of total area and ty pi cal pad si zes, and al so that these I ots are bei ng devel oped wi th I arger and hi gher-

37

VALUATION, Continuing

priced homes. Thus, the land data would support a higher value than $230,000 per finished lot as concluded for the Orchard product type, but still under the $250,000 per finished lot range.

Alternatively, it is considered that the $230,000 conclusion for the Orchard product type indicates a .38 or 38% finished lot ratio ($230,000 $600,000 estimatedaverage home value). Due to the larger and higher-priced homes of the subject Hill Crest product type, a slightly lower finished lot ratio of 36-37% is concluded to be supportabl e due to the greater ri sk factor, resul ti ng i n the fol I owi ng:

$660,000 est. avg. home value x .36-37 = $237,600 to $244,200/finished lot

The conclusion for the subject lots is $240,000 per finished lot.

Lastly, the deduction is made for the remaining costs and fees to get the subject lots from as is semi-finished condition to fully finished condition. This was previously discussed in the analysis for the Orchard product type, and the indicated total remaining costs allocated to the Hill Crest product type are $3,739,631, net of costs/fees to be funded ty the CF D bond proceeds from the fi rst i ssuance. Thi s total amount is much higher than for the Orchard product type due to the greater number of remaining vacant lots as well as some of the lots being in only partially finished condition at current date.

Thus, the i ndi cati on of as i s val ue for the 59 vacant I ots i s cal cul ated as fd I ows:

59 lots as if finished condition® $240,000= $14,160,000Less costs to complete: - 3,739,631Value, As Is Condition: $10,420,369

Rd. $10,400,000

Conclusion of Value

Based on the foregoing, the total value indication for the Hill Crest product type in its as i s condition, i s calculated as fd lows:

37 completed-sold homes <S> $660,000 =6 completed-unsold homes @ $575,000 =7 homes under construction <3> $350,000 59 vacant lots =

$24,420,000 $ 3,450,000 $ 2,450,000 $10,400,000

Value Indication, As Is Condition: $40,720,000

38

VALUATION, Continuing

Thus, as the result of this analysis, I have arrived at the foil owing overall conclusion of market value for the as is condition of the subject Hill Crest product type, subject to the Assumptions and Limiting Conditions, and as of February 1,2018:

$40,720,000

(FORTY MILLION SEVEN HUNDRED TWENTY THOUSAND DOLLARS)

Then, the overall value conclusion is allocated to the individual owners (completed- sold homes) and the builder ownership (completed-unsold homes, homes under construction and vacant lots), and also allocated to Developed Property and Undeveloped Property. As previously indicated, the Developed Property includes the completed-sdd homes, the completed-unsold homes, the homes under construction and 8 of the vacant lots, and the Undeveloped Property includes the remaining 51 vacant lots.

T he val ue al I ocati on i s as fol I ows:

No.Lots Developed Undeveloped Market Value

Individual Owners (Completed-5old Homes): 37 $24,420,000 $0 $24,420,000B ui Ider Ownershi p (C ompleted-U nsold H orres): 6 $3,450,000 $0 $3,450,000

Builder Ownership (Homes Under Construction): 7 $2,450,000 $0 $2,450,000Builder Ownership (Vacant Lots): 59 $1,410,000 $8,990,000 $10,400,000

109 $31,730,000 $8,990,000 $40,720,000

39

FLORAL RIDGE

FLORAL RIDGE

PROPERTY DATA

Location

This product type is located in the northeast part of the Citrus Heights community, easterly from Minneda Ave., other than the 2 model homes on Cordial Cr. at the northwest end of the community. The other lots are located along Mardi Gras Ln., Fleur Blvd., Constantino St., Rain Cross Cr., Constance Ave., Shade Leaf Dr., Fruit Cr., Zest Ct. and Sd Ave.

Record Owner/Ownership History

A s of the F ebruary 1,2018 date of val ue, L ennar H omes of Cal i forni a, I nc. owned al I 127 lots. The purchase of the land by Lennar Homes of California, Inc. in 2014was previously di scussed for the Orchard product type.

Legal Description

The 127 lots are described as Lots 5, 6 & 113 to 237 of Tract No. 36390, in the County of Riverside, State of California, as filed in Book 450, Pages 46 through 102, inclusive, of Maps.

Assessor Data-2017/18

The Hill Crest product type comprises the following Assessor Parcel Nos.:

269-510-005 & 006 269-550-001 to 020 269-551-001 to 009 269-560-001 to 009 269-561-001 to 022 269-570-001 to 023, 25 & 026 269-580-001 to 019 269-581-001 to 021

The current assessed values for each parcel are $23,165 for land and $0 for i mprovements. The tax rate area i s 88-006 wi th an i ndi cated tax rate of 1.11447%, but it is assumed that the total or effective average tax rate, including special taxes for thi s C F D, wi 11 be si mi I ar to the Orchard and H i 11 C rest product types or ±2.0%.

No. of Lotslot Sizes

This product type comprises a total of 127 lots, considered as a rrinimumAypi cal size of ±10,000 s.f., with a minimum pad size of ±9,000 s.f. or 75’ x 1201; actual lot sizes range from 9,148 s.f. to 28,314 s.f. or an average of 14,131 s.f.

41

PROPERTY DATA, Continuing

Description of Homes/Status of Construction

These 127 lots are planned to be developed by Lennar Homes with a product type called Floral Ridge at Citrus Heights. Asof the February 1, 2018 date of value, the 2 model homes were under construction and estimated to be ±80-90% completed, and the remaining 125 lots were vacant and ranged from partially to near finished condition.

Note: The Developed Property comprises the 2 homes under construction (Lots 5 & 6) and the Undeveloped Property comprises the 125 vacant lots (Lots 113 to 237).

There will be five floor plans, and per available marketing information are described as follows:

Plan 1: 2,391 s.f., one-story, with 4 bedrooms, 3 baths, and a 2-bay garage.

Plan 2: 2,832 s.f., one-story, with 3 bedrooms, 2Vz baths, and a 3-bay garage.

Plan 3: 3,615 s.f., two-story, with 5 bedrooms, 4K> baths, and a 2-bay garage.

Plan 4: 4,644 s.f., two-story, with 5 bedrooms, 4K> baths, and a 3-bay garage.

Plan 5: 4,830 s.f., two-story, with 5 bedrooms, 4K> baths, and a 2-bay garage.

Per building permit data, the 2 model homes are sizes of 2,391 s.f. and 4,830 sf.

VALUATION

Method of Analysis

This is similar to the previous analyses.

Analysisof 2 HomesUnder Construction

For these 2 homes that were esti mated to be ±80-90% completed, I have considered a cost amount of 85% of ±$60.00 per s.f. estimated direct construction costs, or $51.00 per s.f. on the average home size of 3,611 s.f., or a rounded amount of $180,000. This is added to the estimated value of $230,000 for the vacant lot in finished condition, as discussed later, resulting in a total of $410,000 as an average for these 2 homes.

Analysisof 125 Vacant Lots

This is similar to the previous analyses of the vacant lots for the Orchard and Hill Crest product types. Considering that the lot sizes and home sizes for this product type are I arger than the Orchard product type but smal I er than the H i 11 Crest product

42

VALUATION, Continuing

type, the concl usion would tend to be ever $230,000 but under $240,000 per fi ni shed lot. However, considering also the larger bulk size of 125 lots, the conclusion is at the I ower end of thi s range or a concl usi on of $230,000 per fi ni shed I ot.

Lastly, the deduction is made for the remaining costs and fees to get the subject lots from as is semi-finished condition to fully finished condition. The indicated total remaining costs allocated to the Floral Ridge product type are $8,234,546, net of costs/fees to be funded ty the CFD bond proceeds from the first issuance. Again, thi s total amountismuch higher than for the Orchard or Hill Crest product types due to the greater number of remaining vacant lots as well as many of the lots being in only partially finished condition at current date.

Thus, the indication of as is value for the 125 vacant lots is calculated as follows:

125 lots as if finished condition <S> $230,000 Less costs to complete:Value, As Is Condition:

$28,750,000 - 8,234,546$20,515,454

Rd. $20,500,000

Conclusion of Value

B ased on the foregoi ng, the total val ue i ndi cati on for the FI oral R i dge product type i n its as i s condition, i s calculated as fd lows:

2 homes under construction <S> $410,000 125 vacant lots =

Value Indication, As Is Condition:

$ 820,000 $20,500,000

$21,320,000

Thus, as the result of this analysis, I have arrived at the foil owing overall conclusion of market value for the as is condition of the subject Floral Ridge product type, subject to the Assumptions and Limiting Conditions, and as of February 1,2018:

$21,320,000

(TWENTY-ONE MILLION THREE HUNDRED TWENTY THOUSAND DOLLARS)

Then, the overall value conclusion is allocated as follows:

Builder Ownership (Homes Under Construction):Builder Ownership (Vacant Lots):

No.Lots Developed Undeveloped Market Value

2 $820,000 $0 $820,000125 $0 $20,500,000 $20,500,000127 $820,000 $20,500,000 $21,320,000

43

ADDENDA

QUALIFICATIONSOF

STEPHEN G. WHITE, MAI

PROFESSIONAL EXPERIENCE

Real Estate Appraiser si nee 1976.

1983 through current date: Self-employed; office located at 1370 N. Brea Blvd., Suite 255, Fullerton, CA 92835 (Phone: 714-738-1595)

1976-1982: Employed by Cedric A. White, J r., MAI, independent appraiser located in Anaheim.

Real estate appraisals have been completed on most types of properties for purposes of fair market value, leased fee value, leasehold value, easement value, partial acquisitions and severance damages.

PROFESSIONAL ORGANIZATIONS

Member, Appraisal Institute; MAI designation obtained 1985

Affiliate Member, Pacific West Association of Realtors

LICENSES

Licensed by theState of California as a Certified General Real Estate Appraiser; BREA IDNo.AG 013311; valid through S eptember 22, 201 &

EDUCATION

B.A. Econonics& Business, Westmont Col lege, Santa Barbara (1976)

Appraisal Institute Courses:Basic Appraisal Principles, Methods and Techniques Capitalization Theory and Techniques U rban Properties Litigation ValuationStandards of Professional Appraisal Practice

Numerous seminars and continuing education on various appraisal subjects, including valuation of easements and leased fee interests, litigation, the money market and its impact on real estate, and standards of professional appraisal practice.

COURT/TESTIMONY EXPERIENCE

Qualified as an expert witness in the Superior Courts of Orange, Los Angeles, Riverside and San Bernardino Counties; also for the Assessment Appeals Board of Orange and Los Angeles Counties.

TYPES OF PROPERTY APPRAISED

Residential: vacant lots, acreage and subdivisions; single family residences, condominiums, townhomes and apartment complexes.

Commercial: vacant lotsAcreage; office buildings, retaiChopping centers, restaurants, hotels/motels.

I ndustrial: vacant lots and acreage; warehouses, manufacturing buildings, R& D buildings, industrial parks, mini-warehouses.

Special Purpose: mobilehome parks, churches, automobile agencies, medical buildings, convalescent hospitals, easements, leased fee and leasehold interests.

44

QUALIFICATIONS, Page2

CLIENT LIST

Corporations:

A era Energy British Pacific Properties BSI Consultants Crown Central Petroleum Firestone Building Materials Food maker Realty Corp.Greyhound Lines Holiday Rambler Corp.International Baking Co.Johnson Controls Kampgrounds of America Knowlwood Restaurants La Habra Products, Inc.

Developers:

Brighton Homes Brookfield Citation BuildersDavison-Ferguson Investment Devel.D.T. Smith HomesIrvine CompanyKathryn Thompson Developers

Law Firms:

Arnstein& Lehr LLP Baldikoski, KlotzS Dragonette Best, Best& KriegerLLP Bowie, Arneson, WilesS Giannone Bye, Hatcher & Piggott Callahan, McCune& Willis Cooksey, Coleman & Howard Dawson & Dawson HaniltonS Samuels Horgan, Rosen, Beckham & Coren Kirkland & Ellis Latham& Watkins LLP McKee, Charles C.Mosich, NicholasJ.Long, David M.Nossaman, Guthner, Knox& Elliott, LLP

Financial Institutions:

A hmanson T rust C ompany Barclays Bank Chi no Valley Bank Continental Bank First I interstate Mortgage First Niagara Bank First Wisconsin Bank

MCP FoodsMerrill Lynch Relocation Orangeland RV Park Pacific Scientific Penhall International Pic 'N Save Stores Sargent-F I etcher C o. Shell-Western E&P Southern Distributors Corp. Southern California Edison The Home Depot Tooley and Company Wastewater Disposal Co.

MarkTaylor, Inc.Mission ViejoCo.Premier Homes Presley Homes Rockefellers Associates TaylorWoodrow Homes Unocal Lands Development

Oliver, BarrS Vose Ollestad, FreedmanS Taylor Palmieri, Tyler, Wiener, WilhelmS

Waldron LLP Paul, Hastingsjonofsky S

Walker LLP Piggott, George B.Pothier, Rose Rosenthal S Zimmerman RossWerschingS WolcottLLP RutanS Tucker, LLP SikoraS Price, Inc.Smiths Politiski Williams, GeroldG.Woodruff, SpradlinS Smart, P.C. Yates, Sealy M.

NorthMarqPacific Western BankSan Clemente Savings S LoanSecurity Pacific BankS unwest BankU nited Cal if. Savi ngs B ankW ashi ngton S quare Capital

45

QUALIFICATIONS, Page3

C ities:

Anaheim Baldwin Park B uena Park City of Industry Cypress Dana Point Duarte Fontana Fullerton

Counties:

County of Orange

La Habra Laguna Beach Lake Elsinore Long Beach Mission Viejo Orange Placentia Riverside Seal Beach

San Clemente San Diego San Marino Santa Ana Santa FeSprings Stanton Temecula Tustin Yorba Linda

County of Riverside

Other Governmental:

Agua Mansa I ndustrial G rowth Association El ToroWater DistrictFederal Deposit I nsurance Corporation (FDl C) Kern County Employees Retirement Association Lee Lake Water Dist.

M etropol i tan W ater D i stri ct O range C ounty W ater Di stri ct Trabuco Canyon Water District U.S. Postal Service

School Districts:

Alvord Unified School Dist AnaheimUnion HighSchool Dist. Anaheim City School Dist. BanningUnifiedSchool Dist. BeaumontUnifiedSchool Dist. Capistrano Unified School Dist.Castaic Union School Dist Cypress School Dist.EtiwandaSchool Dist.Fullerton CollegeFullertonJointUnion HighSchool Dist. Fullerton School Dist. GardenGrcveUnifiedSchool Dist. Irvine Unified School Dist. LakeElsinoreUnifiedSchool Dist. MorenoValley UnifiedSchool Dist.

Newhall School Dist. Newport-MesaUnifiedSchod Dist OrangeUnifiedSchool Dist PalmSpringsUnifiedSchool Dist. Placentia-Yorba Linda Unified Dist. Poway UnifiedSchool Dist.Rialto Unified School Dist.RomolandSchool Dist.Saddleback Valley Unif. School Dist. SanJacintoUnifiedSchool Dist. SantaAnaUnifiedSchool Dist.Saugus Union School Dist So. OrangeCnty. Comm. College Dist. Westside Union School Dist Williams. HartUnion HighSchl. Dist. Victor Elementary School Dist.

Churches^ hurch Organizations:

Calvary Church, SantaAnaCentral BaptistChurch, PomonaChristian& MissionaryAllianceChurch,SantaAnaChristian Church FoundationCongregational Church, FullertonFirst Church of the Nazarene

Lutheran Church, Missouri Synod Presbytery of Los Rancho St. Mark’s Lutheran Church, Hac. Hts. United MethodistChurch Vineyard Christian Fellowship Y orba L i nda U nited M ethodist Church

Other:Beverly Hospital Biola University

Cedars-Sinai Medical Center Claremont U niversity Consortium

46

$15,945,000COMMUNITY FACILITIES DISTRICT NO. 32

OF THE RIVERSIDE UNIFIED SCHOOL DISTRICT SERIES 2018 SPECIAL TAX BONDS

CERTIFICATE OF THE CLERK REGARDINGRESOLUTION NO. 2017/18-28

I, Kathy Y. Allavie, the duly appointed and acting Clerk of the Board of Education of Riverside Unified School District, hereby certify that attached hereto is a true, correct and complete copy of Resolution No. 2017/18-28 adopted by the Board of Education of Riverside Unified School District on April 17, 2018, that such resolution has not been amended, supplemented or repealed, and that such resolution remains in full force and effect as of the date of this certificate.

Dated: May 17, 2018

C.Clerk of^ Board of Education Kiversme unified School District

15326.00042130489649 I

$15,945,000COMMUNITY FACILITIES DISTRICT NO. 32

OF THE RIVERSIDE UNIFIED SCHOOL DISTRICT SERIES 2018 SPECIAL TAX BONDS

CERTIFICATE OF THE CLERK REGARDINGRESOLUTION NO. 2017/18-28

I, Kathy Y. Allavie, the duly appointed and acting Clerk of the Board of Education of Riverside Unified School District, hereby certify that attached hereto is a true, correct and complete copy of Resolution No. 2017/18-28 adopted by the Board of Education of Riverside Unified School District on April 17, 2018, that such resolution has not been amended, supplemented or repealed, and that such resolution remains in full force and effect as of the date of this certificate.

Dated: May 17, 2018

C.Clerk of^ Board of Education Kiversme unified School District

15326.00042130489649 I

RESOLUTION NO. 2017/18-28

RESOLUTION OF THE BOARD OF EDUCATION OF RIVERSIDE UNIFIED SCHOOL DISTRICT AUTHORIZING THE ISSUANCE OF BONDS OF COMMUNITY FACILITIES DISTRICT NO. 32 DESIGNATED SERIES 2018 SPECIAL TAX BONDS, APPOINTING FISCAL AGENT, APPROVING FISCAL AGENT AGREEMENT AND BOND PURCHASE AGREEMENT AND AUTHORIZING NEGOTIATION OF TERMS OF THE SALE OF SAID BONDS, APPROVING PRELIMINARY OFFICIAL STATEMENT AND AUTHORIZING PREPARATION OF FINAL OFFICIAL STATEMENT AND APPROVING CONTINUING DISCLOSURE AGREEMENT

WHEREAS. Community Facilities District No. 32 of the Riverside Unified School District, County of Riverside. State of California (the “■District'1), was established on July 18. 2016 by adoption by the Board of Education (the "'Board of Education'1) of Riverside Unified School District (the "School District'’) of Resolution No. 2016/17-01; and

WHEREAS, on July 18, 2016, the Board of Education also adopted Resolution No. 2016/17-02 determining the necessity for the District to incur bonded indebtedness in an aggregate principal amount not to exceed $30,000,000; and

WHEREAS, on July IS, 2016, consolidated special elections were held within the District and there was submitted to the qualified voters of the District, among other propositions, the proposition of whether a bonded indebtedness in an aggregate principal amount not to exceed $30,000,000 should be incurred by and for the District for the purpose of financing public school facilities for the benefit of the District (the "School Facilities”), certain public facilities of the County of Riverside (the "County Facilities'1). Western Municipal Water District of Riverside County (the "Water District Facilities") and the City of Riverside (the "City Facilities"), and more than two-thirds of the votes cast in such consolidated special elections were cast in favor of incurring such bonded indebtedness, and the District is therefore authorized to issue bonds in an aggregate principal amount not to exceed $30,000,000 for the purposes set forth in said proposition; and

WHEREAS, the Board of Education has determined that it is necessary that bonds ot the District designated "Community Facilities District No. 32 of Riverside Unified School District Series 2018 Special Tax Bonds'1 (the "Bonds”) be issued in an aggregate principal amount which shall not exceed $17,000,000 to finance the design, construction and acquisition of the School Facilities, the County Facilities, the Water District Facilities and the City Facilities; and

WHEREAS, the principal of and interest on the Bonds will be secured by special taxes to be levied on parcels of taxable property in the District (the "Special Taxes"); and

15326.00042U0465159.2

WHEREAS, pursuant to Section 53345.8 of the California Government Code, the Board of Education, as the legislative body of the District, may sell bonds of the District only if it determines prior to the award of the sale of such bonds that the value of the real property that would be subject to the special tax to pay debt service on the bonds will be at least three (3) times the principal amount of the bonds to be sold and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Mello-Roos Community Facilities Act of 1982 (Section 53311, et seq., of the California Government Code) or a special assessment levied on property within the District; and

WHEREAS, the appraised value of the taxable property within the District, based upon an appraisal prepared by Stephen G. White, MAI (the “Appraiser”), and as set forth in the report of such appraiser dated February 16, 2018 (the “Appraisal”), was $110,2203)00 as ol February 1,2018; and

WHEREAS, the properly within the District is not subject to the levy of special taxes nor have any assessments been levied on such property to pay debt sendee on any other bonds, and the property within the District, will, upon the sale of the Bonds therefor, be subject only to the levy of the Special Taxes which are to be levied thereon to pay the principal of and interest on the Bonds; and

WHEREAS, if the Bonds are issued and sold in an aggregate principal amount that does not exceed $17,000,000, the appraised value of the parcels of real property within the District that will be subject to the levy of the Special Taxes, as set forth in the Appraisal, will be more than three (3) times the principal amount of the Bonds and the principal amount of all other bonds outstanding that are secured by a special tax or a special assessment levied on property within the District; and

WHEREAS, there has been presented to the Board of Education a form of Bond Purchase Agreement whereby Piper J affray & Co. (the “Underwriter”) has olfered to purchase the Bonds from the School District (the “Bond Purchase Agreement”) and a form of Preliminary Official Statement relating to the Bonds (the “Preliminary Official Statement”); and

WHEREAS, there has also been presented to the Board of Education a form of Fiscal Agent Agreement with respect to the Bonds to be executed and delivered by the School District and U.S. Bank National Association, as Fiscal Agent (the “Fiscal Agent Agreement”), whereby the Fiscal Agent will authenticate and deliver the Bonds and perform certain other duties; and

WHEREAS, there has also been presented to the Board of Education a form of Continuing Disclosure Agreement to be executed and delivered by the School District and the Special Tax Consultant, as Dissemination Agent (the “Continuing Disclosure Agreement”), for the benefit of the owners of the Bonds and in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) of the Securities and Exchange Commission, as amended (the “Rule”); and

WHEREAS, the Board of Education has considered the forms of the Fiscal Agent Agreement, the Continuing Disclosure Agreement, the Bond Purchase Agreement and the Preliminary Official Statement and has determined that it is in the best interest of the owners of

-2 -

15326.00042\3046S159.2

property in and the future residents of the District that the Board of Education authorize the issuance and sale of the Bonds and the execution and delivery of said agreements and approve and authorize the distribution of the Preliminary Official Statement, subject to the conditions hereinafter contained;

NOW. THEREFORE. BE IT RESOLVED, DETERMINED AND ORDERED BY THE BOARD OF EDUCATION OF RIVERSIDE UNIFIED SCHOOL DISTRICT AS FOLLOWS:

Section 1. Findings. The Board of Education finds (a) that the preceding recitals are true and correct, (b) that the sale of the Bonds at private sale, without advertising for bids, will result in a lower overall cost to the District, (c) that if the Bonds are issued and sold in an aggregate principal amount that does not exceed $17,000,000, the value of the parcels of real property within the District which will be subject to the levy of the Special Taxes to pay the principal of and interest on the Bonds, based on the appraiser! value of such parcels, as determined by the Appraiser and as set forth in the Appraisal, will be more than three (3) times the principal amount of the Bonds; (d) the issuance of the Bonds complies with the School District’s Debt Management Policy.

Section 2. Authorization of the Issuance of the Bonds. The Board of Education authorizes the issuance and sale of the Bonds in an aggregate principal amount which shall not exceed $17,000,000. The Superintendent and the Chief Business Officer and Governmental Relations (“Chief Business Officer”) are authorized and directed to lake all steps and actions which are necessary to accomplish the issuance, sale and delivery' of the Bonds pursuant to the authorization given by and the conditions specified in this resolution. The President and the Clerk of the Board of Education arc authorized to execute the Bonds for and on behalf of the School District and the District by their manual or facsimile signatures. The Bonds shall be dated as of their date of delivery pursuant to the Bond Purchase Agreement.

Section 3. Approval of Fiscal Agent Agreement, The Fiscal Agent Agreement which provides generally for (i) the authentication and delivery by the Fiscal Agent of the Bonds, (ii) the establishment and administration by the Fiscal Agent of certain funds and accounts for the benefit of the School District, the County, the Water District the City and the owners of the Bonds, (in) the payment by the Fiscal Agent of the principal of and interest on the Bonds from the Special Tax Revenues (as defined therein), and (iv) the performance of other duties by the Fiscal Agent, is approved in the form submitted to the Board of Education at the meeting at which this resolution is adopted, and the President or the Vice President of the Board of Education, the Superintendent and the Chief Business Officer are each authorized to execute and deliver said agreement on behalf of the School District and the District.

Section.4. Appointment of Professionals. The Board of Education hereby authorizes and approves the following professionals to provide services in connection with the issuance of the Bonds:

(o) Fiscal Agent. U.S. Bank National Association is appointed as Fiscal Agentpursuant lo the Fiscal Agent Agreement and to take any and all action provided therein to he taken by the Fiscal Agent;

-3-15r26.00(Hl2\304<>S 159.2

(b) Municipal Advisor. Fieldman, Rolapp & Associates, Inc. is hereby appointed to provide municipal advisory services;

(c) Bond Counsel, Best Best & Kriegcr LLP is hereby appointed as Bond Counsel in connection with the issuance of the Bonds;

(d) Special Tax Consultant. David Taussig & Associates, Inc. is hereby appointed as Special Tax Consultant in connection with the issuance of the Bonds; and

(e) Disclosure Counsel Stradling Yocca Carlson & Rauth is hereby appointed as Disclosure Counsel in connection with the issuance of the Bonds.

Section 5. Approval of Preliminary Official Statenie3it;,,Piuparatipn of,.FinalOfficial Statement. The Preliminary Official Statement is approved, and the Superintendent and the Chief Business Officer are each authorized to consent to and assist in the preparation of such modifications thereto as may be specified by the District, The Superintendent and the Chief Business Officer are each authorized to determine, with the assistance of Disclosure Counsel, when the Preliminary Official Statement is to be deemed final within the meaning of the Rule and to deliver a certificate to that effect to the Underwriter. The Underwriter is authorized to distribute the Preliminary Official Statement as approved hereby, or as modified with the consent of the Superintendent and the Chief Business Officer, to prospective purchasers of the Bonds. The Superintendent and the Chiet Business Officer and fieldman Rolapp & Associates, municipal advisor to the School District (the “Municipal Advisor”) are authorized to participate in the preparation of the Final Official Statement, based on the Preliminary Official Statement, and such modifications thereto as may be agreed to by the Municipal Advisor and the Underwriter. The President or the Vice President of the Board of Education, the Superintendent and the Chief Business Officer are each authorized to sign the Final Official Statement on behalf of the School District and the District.

Section 6. Issuance and Sale of Bonds. The Board of Education approves and authorizes the issuance and sale of the Bonds by negotiation with the Underwriter pursuant to the Bond Purchase Agreement between the School District and the Underwriter in the form presented to the Board of Education at the meeting at which this resolution is adopted, together with any changes therein or additions thereto which are deemed advisable by the Superintendent and the Chief Business Officer upon consultation with Bond Counsel and the Municipal Advisor. The Superintendent and the Chief Business Officer are each authorized and directed to execute and deliver the final form of the Bond Purchase Agreement on behalf of the School District and the District upon the submission of an offer by the Underwriter to purchase the Bonds, which offer is acceptable to the Superintendent and the Chief Business Officer and is consistent with the requirements of this resolution; provided that the true interest cost of the Bonds shall not exceed six percent (6.00%) per annum; the purchase price to be paid by the Underwriter for the purchase of the Bonds shall not be less than an amount equal to ninety-eight and one-half percent (98.5%) (exclusive of original Issue discount) of the aggregate principal amount of the Bonds; the last maturity of the Bonds shall be paid and redeemed no later than September I f 2048. When the Superintendent or the Chief Business Officer has negotiated the Bond Purchase Agreement with the Underwriter within the parameters specified above and when the other terms and conditions of the Bond Purchase Agreement are satisfactory to the Superintendent or the Chief

-4-15126.00042130465159.2

Business Officer and Best Best & Krieger LLP (“Bond Counsel”), the Superintendent or the Chief Business Officer is authorized to execute and deliver the Bond Purchase Agreement to the Underwriter on behalf of the School District and the District.

.Section ?. Accountability Measures. Pursuant to Section 53410 of theCalifornia Government Code, the issuance of and sale of the Bonds is subject to the following accountability measures:

(a) The proceeds of the Bonds shall be applied only for the specific purposes identified in the propositions regarding the authorization of the District inclining bonded indebtedness which the qualified electors of the District approved in the election held on July 18, 2016;

(b) Except as otherwise provided in the Fiscal Agent Agreement, the proceeds of the sale of the Bonds shall be deposited in the funds and accounts established pursuant to the Fiscal Agent Agreement and the proceeds deposited in each such fund or account shall be expended as provided in the Fiscal Agent Agreement with respect to each such fund or account; and

(c) The Superintendent or the Chief Business Officer shall file a report with the Board of Education at least once in each calendar year, beginning in 2019, which shall contain the information required by Section 53411 of the California Government (’ode with respect to the expenditure of the proceeds of the sale of the Bonds and the status of the construction and acquisition of the public facilities comprising the Project (as defined in the Fiscal Agent Agreement).

Section 8. Findings Regarding the Lew and Rates of Special Taxes. The Board of Education finds that the School District will covenant in the Fiscal Agent Agreement, for the benefit of the owners of the Bonds, that, to the extent it is legally permitted to avoid doing so. it will not initiate proceedings under the Mello-Roos Community Facilities Act of 1982 to reduce the maximum rates of Special Taxes which are authorized to be levied on taxable parcels of property within the District (the “Maximum Rates”). The Board of Education further finds and determines that any reduction or limitation of the Special Tax rates below the Maximum Rates would interfere with the timely retirement of the Bonds.

Section 9. Approval of Continuing Disclosure Agreement. The Continuing Disclosure Agreement is approved in the form submitted to the Board of Education at the meeting at which this resolution is adopted, and the Superintendent or the Chief Business Officer is authorized to execute and deliver said agreement on behalf of the School District and the District.

Section 10. Modifications. The approval of the Fiscal Agent Agreement, the Continuing Disclosure Agreement and the Bond Purchase Agreement given by this resolution shall apply to any modification or amendment of any of said agreements which is agreed upon and approved by Bond Counsel and the Superintendent or the Chief Business Officer as being necessary to carry out the provisions thereof and the authorization and direction provided in this resolution.

-5-

15326.O0U42UO465159.2

Section 11. Further Action. The Superintendent or the Chief Business Officer are authorized to lake any and ail action with respect to the execution and delivery of the Fiscal Agent Agreement, the Continuing Disclosure Agreement and the Bond Purchase Agreement and the issuance, sale and delivery of the Bonds, which in the opinion of Bond Counsel is necessaryin order for the authorization and direction provided in this resolution to be carried out.

Section 12. Conditions of Approval. The approvals, authorization and directiongiven by this resolution arc conditioned upon the satisfaction of the requirements of Section 6 hereof with respect to the issuance and sale of the Bonds. The officers oi the School District designated above shall not take any action with respect to the execution and delivery of the Fiscal Agent Agreement, the Continuing Disclosure Agreement and the Bond Purchase Agreement or the issuance, sale and delivery of the Bonds unless and until such conditions are satisfied; provided, however, that upon satisfaction of such conditions, this resolution shall be fully effective and shall be carried out by such officers without further approval or action of the Board of Education. The approvals, authorization and direction provided by this resolution shall continue, subject to the satisfaction of such conditions, until December 31, 2018, and the Bonds may be sold, and the Bonds, the Fiscal Agent Agreement, the Continuing Disclosure Agreement, the Bond Purchase Agreement, the Preliminary Official Statement and the Final Official Statement may be dated, entered into, executed and delivered or distributed, as appropriate, on any date selected by the Superintendent or the Chief Business Officer, the Municipal Advisor and the Underwriter prior to said date.

Section 13. Effective Date. This resolution shall take effect upon adoption and shall remain in effect until December 31, 2018.

PASSED AND ADOPTED by the Board of Education of Riverside Unified School District at its regular meeting held on the 17th day of April, 2018 by the following vote:

AYES: §

NOES:

ABSENT:

ABSTAIN:

15326.0004200465159.26-

STATE OF CALIFORNIA )) ss,

COUNTY OF RIVERSIDE )

I, Kathy Y, Allavie, Clerk of the Board of Education of Riverside Unified School District, do hereby certify that the above and foregoing is a full, hue and correct copy of Resolution No. 2017/18-28 of said Board, and that the same has not been amended or repealed.

Dated:

[5326 000420046515V27-