NEW ISSUE - BOOK-ENTRY ONLY RATING: Standard & Poor’s: “AAA” (MBIA Insured) See “RATINGS” STATE OF CALIFORNIA COUNTY OF RIVERSIDE In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions and assuming certain representations and compliance with certain covenants and requirements discussed herein, interest and original issue discount on the Bonds is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from California personal income tax. The difference between the issue price of a Bond (the first price at which a substantial amount of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. See “TAX MATTERS.” $10,435,000 COMMUNITY FACILITIES DISTRICT NO. 89-1 OF THE COUNTY OF RIVERSIDE SPECIAL TAX REFUNDING BONDS, SERIES 2006 Dated: Delivery Date Due: September 1, as shown herein The Special Tax Refunding Bonds, Series 2006 (the “Bonds”) are authorized pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, and are payable from certain special taxes to be levied on property within Community Facilities District No. 89-1 of the County of Riverside (the “District”), according to the Rate and Method of Apportionment of Special Tax approved by the voters within the District and by the Board of Supervisors of the County of Riverside (the “County”). Payment of the principal of and interest on the Bonds is secured by a pledge of and lien upon the special taxes as described herein. The Bonds will be issued pursuant to a Bond Indenture (the “Indenture”) dated as of September 1, 2006 between the District and The Bank of New York Trust Company, N.A., as trustee (the “Trustee”). The Bonds are limited obligations of the District and are payable solely from revenues derived from the Special Taxes (as defined herein) that will be levied annually on and collected from the owners of the taxable land within the District and from certain other funds pledged pursuant to the Indenture, all as further described herein. The Bonds are being issued to provide for the defeasance and refunding of outstanding bonds of the District, to fund a reserve account, and to pay costs of issuing the Bonds. See “REFUNDING PLAN.” The Bonds will be issued as fully registered bonds in the name of Cede & Co., as nominee of The Depository Trust Company, New York, N.Y. (“DTC”), and will be available to ultimate purchasers in the denomination of $5,000 each or any integral multiple thereof pursuant to the book-entry system maintained by DTC. Ultimate purchasers of the Bonds will not receive certificates representing their interests in the Bonds. Interest on the Bonds is payable semiannually on March 1 and September 1 of each year, commencing March 1, 2007. Payments of the principal of, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co., by the Trustee, so long as DTC or Cede & Co. is the registered owner of the Bonds. Disbursements of such payments to DTC’s Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of DTC’s Participants and Indirect Participants, as more fully described herein. See “THE BONDS - Book-Entry System.” The Bonds are subject to optional and extraordinary redemption as discussed herein. See “THE BONDS – Optional Redemption” and “- Extraordinary Redemption From Prepayments.” The scheduled payment of principal of and interest on the Bonds when due will be guaranteed under a financial guaranty insurance policy to be issued concurrently with the delivery of the Bonds by MBIA Insurance Corporation.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE DISTRICT, THE COUNTY, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE DISTRICT OR THE COUNTY BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM THE SPECIAL TAXES AND OTHER FUNDS PLEDGED PURSUANT TO THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.

MATURITY SCHEDULE (See Inside Cover Page)

The purchase of the Bonds involves certain risks. See the section of this Official Statement entitled “SPECIAL RISK FACTORS” for a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. This cover page contains information for quick reference only. It is not a complete summary. Investors should read the entire Official Statement to obtain information essential to making an informed investment decision. The Bonds are offered, when, as and if issued, subject to approval as to their legality by Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel, and certain other conditions. Certain legal matters will be passed on for the District by Best Best & Krieger LLP, Riverside, California, as Disclosure Counsel, and by the County Counsel of the County of Riverside, and for the Underwriter by Nossaman Guthner Knox & Elliott LLP, Irvine, California. It is anticipated that the Bonds in book-entry form will be available for delivery through the book-entry system of DTC in New York, New York on or about September 26, 2006.

Dated: September 13, 2006 MATURITY SCHEDULE (SERIAL BONDS)

Maturity Date Principal Interest (September 1) Amount Rate Yield CUSIP No.(1) 2007 $495,000 4.000% 3.400% 76911FQA5 2008 385,000 4.000 3.460 76911FQB3 2009 405,000 4.000 3.490 76911FQC1 2010 420,000 4.000 3.520 76911FQD9 2011 435,000 4.000 3.550 76911FQE7 2012 455,000 4.000 3.600 76911FQF4 2013 470,000 4.000 3.650 76911FQG2 2014 490,000 4.000 3.700 76911FQH0 2015 510,000 4.000 3.750 76911FQJ6 2016 530,000 3.700 3.820 76911FQK3 2017 550,000 4.000 3.900(2) 76911FQL1 2018 570,000 4.000 3.970(2) 76911FQM9 2019 595,000 4.000 4.050 76911FQN7 2020 620,000 4.125 4.150 76911FQP2 2021 645,000 4.125 4.220 76911FQQ0 2022 670,000 4.125 4.270 76911FQR8 2023 700,000 4.250 4.320 76911FQS6 2024 730,000 4.250 4.370 76911FQT4 2025 760,000 4.250 4.400 76911FQU1

(1) Copyright 1995-2006, American Bankers Association. CUSIP data herein is provided by Standard & Poor’s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. CUSIP numbers are provided only as a convenience for reference. Neither the District nor the Underwriter assumes any responsibility for the accuracy of such numbers. (2) Priced to call on September 1, 2016. THE COUNTY OF RIVERSIDE

BOARD OF SUPERVISORS

Bob Buster, Chairman 1st District Supervisor

John F. Tavaglione, Vice Chairman 2nd District Supervisor

Marion Ashley 3rd District Supervisor

Jeff Stone 4th District Supervisor

Roy Wilson 5th District Supervisor

OFFICERS

Larry Parrish Joe S. Rank County Executive Officer County Counsel

Dean Deines Paul McDonnell Deputy County Executive Officer Treasurer-Tax Collector

PROFESSIONAL SERVICES

Bond Counsel Special Tax Consultant Stradling Yocca Carlson & Rauth Albert A. Webb Associates a Professional Corporation Riverside, California Newport Beach, California

Financial Advisor Disclosure Counsel Fieldman, Rolapp & Associates Best Best & Krieger LLP Irvine, California Riverside, California

Appraiser Verification Consultant Bruce W. Hull & Associates, Inc. Grant Thornton LLP Ventura, California Minneapolis, Minnesota

Trustee The Bank of New York Trust Company, N.A. Los Angeles, California TABLE OF CONTENTS INTRODUCTION ...... 1 THE DISTRICT ...... 25 General...... 1 Location...... 25 The District ...... 1 Development Status and Property Ownership...... 25 Sources of Payment for the Bonds...... 2 Summary of Formation Proceedings...... 27 Property Values ...... 3 Rate and Method of Apportionment of Description of the Bonds ...... 4 Special Tax...... 27 Bond Insurance ...... 4 Fiscal Year 2006-07 Special Tax Levy ...... 28 Tax Matters...... 4 Special Tax Delinquencies...... 30 Professionals Involved in the Offering ...... 4 SPECIAL RISK FACTORS...... 30 Special Risks...... 5 Insufficiency of Special Taxes ...... 30 Continuing Disclosure ...... 5 Adjustable Rate Home Loans...... 31 Other Information ...... 5 Undeveloped Property...... 31 REFUNDING PLAN ...... 5 The Appraisal and Value-to-Lien Ratios ...... 32 Refunded Bonds...... 5 Parity Taxes and Special Assessments...... 32 Sources and Uses of Funds ...... 6 Special Tax Delinquencies...... 32 THE BONDS ...... 6 Future Indebtedness ...... 33 Description of the Bonds ...... 6 Disclosures to Future Purchasers of Land...... 33 Authority for Issuance ...... 7 Payment of Special Taxes ...... 33 Purpose of the Bonds...... 7 Bankruptcy ...... 34 Optional Redemption...... 7 Payments by FDIC ...... 34 Extraordinary Redemption from Prepayments ...... 8 Geologic, Topographic and Natural Disaster Notice of Redemption...... 8 Conditions ...... 35 Registration and Transfer of Bonds...... 9 Hazardous Substances...... 35 Issuance of Additional Bonds...... 10 Constitutional Amendment ...... 36 Debt Service Schedule...... 10 Future Initiatives ...... 36 Book-Entry System...... 10 Loss of Tax Exemption ...... 36 Discontinuance of Book-Entry System...... 12 Limited Secondary Market...... 37 BOND INSURANCE ...... 12 Limitations on Remedies...... 37 The Policy...... 12 CONTINUING DISCLOSURE ...... 37 MBIA Insurance Corporation ...... 13 LEGAL OPINION ...... 38 Regulation...... 13 TAX MATTERS ...... 38 Financial Strength Ratings of MBIA...... 13 NO LITIGATION ...... 39 MBIA Financial Information...... 14 RATINGS...... 40 Incorporation of Certain Documents by Reference 14 UNDERWRITING...... 40 SECURITY FOR THE BONDS...... 15 FINANCIAL INTERESTS ...... 40 The Special Taxes...... 15 PENDING LEGISLATION ...... 41 Special Tax Fund ...... 18 MISCELLANEOUS...... 41 Reserve Account...... 19 Investment of Moneys ...... 19 Appendix A - Amended and Restated Rate and Method Covenant for Superior Court Foreclosure...... 20 of Apportionment of Special Tax...... A-1 Property Values ...... 20 Appendix B - Specimen Financial Guaranty Insurance Direct and Overlapping Debt and Value-to-Lien Policy...... B-1 Ratios ...... 21 Appendix C - Appraisal...... C-1 Other Financing Districts...... 24 Appendix D - Summary of Certain Provisions of the Bond Indenture...... D-1 Appendix E - Form of Bond Counsel’s Opinion...... E-1 Appendix F - Continuing Disclosure Agreement...... F-1

i IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL THE BONDS TO CERTAIN DEALERS AND DEALER BANKS AND BANKS ACTING AS AGENTS AT PRICES LOWER THAN THE PUBLIC OFFERING PRICES STATED ON THE COVER PAGE HEREOF AND SAID PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITER. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. This Official Statement speaks only as of its date, and the information contained herein is subject to change. This Official Statement and any continuing disclosure documents of the District are intended to be made available through the District at the address indicated below. The District has undertaken to provide certain continuing disclosure pursuant to a Continuing Disclosure Agreement, as described herein. Copies of the resolutions and other documents relating to the issuance of the Bonds are available upon request, and upon payment to the District of a charge for copying, mailing and handling, from the office of the County Executive Officer of the County of Riverside at 4080 Lemon Street, Fourth Floor, Riverside, California 92501. No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations in connection with the offer or sale of the Bonds described herein, other than as 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 District or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts. The information set forth herein has been obtained from the District and other sources believed to be reliable, but the accuracy or completeness of such information is not guaranteed by, and should not be construed as a representation by, the District or the Underwriter. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder will, under any circumstances, create any implication that there has been no change in the affairs of the District since the date hereof. All summaries contained herein of any resolutions, the Indenture, or other documents are made subject to the provisions of such documents and do not purport to be complete statements of any or all such provisions. THE UNDERWRITER HAS REVIEWED THE INFORMATION SET FORTH IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH ITS RESPONSIBILITIES UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES PERTAINING TO THE BONDS, BUT DOES NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF THE INFORMATION. MBIA Insurance Corporation (“MBIA”) does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Financial Guaranty Insurance Policy and MBIA set forth in the section entitled “BOND INSURANCE.” Additionally, MBIA makes no representation regarding the Bonds or the advisability of investing in the Bonds.

ii

$10,435,000 COMMUNITY FACILITIES DISTRICT NO. 89-1 OF THE COUNTY OF RIVERSIDE SPECIAL TAX REFUNDING BONDS, SERIES 2006

INTRODUCTION

General

This Official Statement, including the cover pages, table of contents and Appendices hereto, is provided to furnish certain information in connection with the issuance and sale by Community Facilities District No. 89- 1 of the County of Riverside ( the “District”) of its bonds designated Special Tax Refunding Bonds, Series 2006 in the aggregate principal amount of $10,435,000 (the “Bonds”). The Bonds will be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Resolution No. CFD 2006-01 adopted by the Board of Supervisors of the County (the “Board of Supervisors”), acting as the legislative body of the District, on August 29, 2006 and a Bond Indenture dated as of September 1, 2006 (the “Indenture”) between the District and The Bank of New York Trust Company, N.A., as trustee (the “Trustee”). The Bonds will be issued only as fully registered bonds in the denominations of $5,000 each or any integral multiple thereof and will be dated as of and bear interest from the date of their delivery at the rates set forth on the inside cover page hereof.

The Bonds are being issued for the purpose of defeasing and refunding the outstanding Special Tax Refunding Bonds of the District which were issued on February 27, 2001 and are outstanding in the aggregate principal amount of $9,640,000 (the “Prior Bonds”), funding a reserve account and paying costs of issuing the Bonds. See “REFUNDING PLAN.”

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 the 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 will have the meaning set forth in “APPENDIX D - SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE.”

The District

The District contains approximately 765 acres. It is located in an unincorporated area in the western portion of the County, southeast of the City of Corona, west of the City of Perris, and northwest of Lake Elsinore along Interstate Highway 15. The property in the District has been and is being developed by Shea Homes, Inc. (“Shea Homes”).

Shea Homes reports that as of August 22, 2006, there were 1,030 individually owned single family homes and 15 individually owned condominium units in the District. The two remaining tracts in the District where homes are being built and sold are Tract No. 31742, where 329 single family homes will be located, and Tract No. 31622, where 170 condominium units will be located. Shea Homes reports that as of August 22, 2006, 233 homes in Tract No. 31742 had been sold to individual homeowners and escrows had been opened for the sale of 34 homes. Shea Homes reports that as of August 22, 2006, in Tract No. 31622, all lots had been graded to finished lot condition, 15 condominium units had been sold to individual homeowners, and escrows had been opened for the sale of 42 condominium units. Shea Homes also reports that as of August 22, 2006, approximately 33 single family homes in Tract No. 31742 and approximately 62 condominium units in Tract No. 31622 were under construction. Shea Homes reports that at build-out there will be a total of 1,234 single family homes and 170 condominium units in the District. See “THE DISTRICT – Development Status and Property Ownership.”

An aerial photograph of the District is included in Appendix C – Appraisal.

1 The Special Tax levied on parcels of Developed Property (as defined in the Amended and Restated Rate and Method of Apportionment of Special Tax for the District) in fiscal year 2006-07 represents 100% of the total Special Tax levy, and no Special Tax was levied on any parcel of Undeveloped Property in the District. The total amount of the Special Tax levied on parcels in the District that are owned by Shea Homes represents 17.91% of the total Special Tax levy for fiscal year 2006-07. The Amended and Restated Rate and Method of Apportionment of Special Tax for the District (the “Rate and Method of Apportionment of Special Tax”) is contained in Appendix A. No Special Tax was levied in fiscal year 2006-07 on parcels of Approved Property, as defined in the Rate and Method of Apportionment of Special Tax, or on the golf course property.

The District was formed 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”). The Act was enacted by the California Legislature to provide an alternative method of financing certain public facilities and services, especially in developing areas. When duly established, a community facilities district is a legally constituted governmental entity established for the purpose of financing specific facilities and services within defined boundaries. Subject to approval by a two-thirds vote of the qualified voters within a community facilities district and compliance with the provisions of the Act, a community facilities district may issue bonds and may levy and collect special taxes to repay such bonded indebtedness.

The District was authorized at the time of its formation to incur bonded indebtedness in the amount of $35,000,000. Bonds of the District were issued in 1991 in the principal amount of $14,000,000 to finance public facilities for the District. The Prior Bonds were issued for the purpose of refunding all of the outstanding bonds of the District. See “REFUNDING PLAN – Refunded Bonds.” The Indenture provides that the District will not issue any Parity Bonds (i.e., bonds that are payable out of the Net Taxes and which rank on a parity with the Bonds) for the purpose of financing additional public facilities.

Sources of Payment for the Bonds

As used in this Official Statement, “Special Tax” is the special tax that has been authorized pursuant to the Act to be levied on taxable land within the District pursuant to the Act and in accordance with the Rate and Method of Apportionment of Special Tax. See APPENDIX A - “AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The District has covenanted in the Indenture to pay principal of and interest on the Bonds from the Net Taxes (defined below) and amounts deposited in the Special Tax Fund established pursuant to the Indenture (except amounts deposited in the Administrative Expense Account), including amounts on deposit in the Reserve Account. See “SECURITY FOR THE BONDS - The Special Taxes.” Pursuant to the Indenture, the payment of principal of and interest on the Bonds is secured by a pledge of the Net Taxes (i.e., Gross Taxes less the amount deposited in the Administrative Expense Account).

The Net Taxes are the primary security for the payment of principal of and interest on the Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Trustee in the Special Tax Fund (except amounts held in the Administrative Expense Account), including the Reserve Account.

The District has covenanted for the benefit of the Owners of the Bonds that it will commence judicial foreclosure proceedings against properties with delinquent Special Taxes in excess of $5,000 by the October 1 following the close of each fiscal year in which such Special Taxes were due, and that it will commence judicial foreclosure proceedings against all properties with delinquent Special Taxes by the October 1 following the close of each fiscal year in which it receives Special Taxes in an amount which is less than 95% of the total Special Taxes levied and diligently pursue to completion such foreclosure proceedings. See “SECURITY FOR THE BONDS - The Special Taxes” and “ - Covenant for Superior Court Foreclosure.”

As additional security for the Bonds, on the date of the issuance of the Bonds, $889,279.88 of the proceeds of the sale of the Bonds will be deposited in the Reserve Account. Amounts on deposit in the Reserve Account will be used solely for the purpose of paying the principal of, and interest on, the Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient. See “SECURITY FOR THE BONDS – Reserve Account.” 2 Subject to the maximum annual amounts of Special Taxes contained in the Rate and Method of Apportionment of Special Tax, if the amount in the Reserve Account is less than the Reserve Requirement, the District has covenanted to restore the amount in the Reserve Account to the Reserve Requirement by the inclusion of a sufficient amount in the next annual Special Tax levy within the District. The ability of the Board of Supervisors, in its capacity as the legislative body of the District, to increase the annual Special Taxes levied in the District to replenish the Reserve Account is subject to the maximum annual amounts of Special Taxes authorized by the qualified voters of the District. The moneys in the Reserve Account will be used only for payment of the principal of, and interest and any redemption premium on, the Bonds and, at the direction of the District, for deposit in the Rebate Fund. See “SECURITY FOR THE BONDS – Reserve Account.”

In fiscal year 2006-07, the Special Tax levied on parcels of Developed Property (as defined in the Rate and Method of Apportionment of Special Tax) represents 100% of the total Special Tax levy, and no Special Tax was levied on any parcel of Undeveloped Property in the District. No Special Tax was levied in fiscal year 2006-07 on parcels of Approved Property, as defined in the Rate and Method of Apportionment of Special Tax, or on the golf course property.

Neither the faith and credit nor the taxing power of the District, the County, the State of California (the “State”) or any political subdivision thereof is pledged to the payment of the Bonds. Except for the Special Taxes, no other taxes are pledged to the payment of the Bonds. The Bonds are not general or special obligations of the County or general obligations of the District, but are limited obligations of the District payable solely from the Special Taxes as more fully described herein.

Property Values

An appraisal of the property in the District dated July 24, 2006 (the “Appraisal”), was prepared by Bruce W. Hull & Associates, Inc., of Ventura, California (the “Appraiser”). The Appraiser has estimated that as of July 15, 2006 (the date of value for the Appraisal) (i) the market value of the property in the District that was owned by Shea Homes that consisted of 118 single family residential lots in Tract 31742, lots in Tract 31662 where 164 condominium units were being constructed, a 14.5 acre commercial site, and a 1.78 acre parcel upon which 11 model homes had been constructed was $79,825,000; (ii) the market value of the lots in Tract No. 31742 where 82 homes had been constructed and sold to homeowners and the lots in Tract 31662 where six condominium units had been sold to homeowners, but which had not been valued by the County Assessor, was $49,690,000; (iii) the assessed value, as determined by the County Assessor, of the parcel where the sales office- tour center is located, which is owned by Shea Homes, and two parcels where the lodge-recreation center and sports club and the adjacent parking lot are located, which are owned by a homeowners’ association, was $5,285,000; and (iv) the total assessed value of the existing 936 homes in the District that have been sold to homeowners, as determined by the County Assessor and shown on the 2006-07 assessment roll, was $379,560,000. The Appraiser was not asked to and did not determine a separate market value for these 936 homes. However, the Appraiser’s research showed that sales prices of homes in the District that had been resold in 2006 exceeded the County Assessor’s assessed valuations for those homes. The total value of the property in the District, including the assessed value of the 936 homes, as determined by the Appraiser, is $514,360,000. The Appraiser did not determine a value for the golf course property as no Special Tax was levied on that property in fiscal year 2006-07 and it is expected that it will not be necessary to levy Special Taxes on the golf course property in future fiscal years to pay debt service on the Bonds. A copy of the Appraisal is contained in “APPENDIX C - APPRAISAL.”

The ratio of the total amount of the appraised value and the assessed value of property in the District (not including the golf course property), as determined by the Appraiser, to the amount of bonded indebtedness (the “Value-to-Lien Ratio”) which will be outstanding and secured by property taxes, special taxes and assessments levied on property in the District, upon the issuance of the Bonds, will be approximately 49.29 to 1. See “SPECIAL RISK FACTORS – Property Values” and “- Direct and Overlapping Debt and Value-to-Lien Ratios.”

3 Description of the Bonds

The Bonds will be issued and delivered as fully registered Bonds, registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to actual purchasers of the Bonds (the “Beneficial Owners”) in the denominations of $5,000 or any integral multiple thereof, under the book-entry system maintained by DTC, only through brokers and dealers who are, or act through, DTC Participants, as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Bonds.

Principal of, premium, if any, and interest on the Bonds is payable by the Trustee to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. In the event that the book-entry system is discontinued with respect to the Bonds, the Beneficial Owners will become the registered Owners of the Bonds and will be paid principal and interest by the Trustee, as described herein. See “THE BONDS - Book-Entry System” and “- Discontinuance of Book-Entry System.”

Bond Insurance

On the date of the delivery of the Bonds, MBIA Insurance Corporation will issue its financial guaranty insurance policy guaranteeing payment of the principal of and interest on the Bonds. A specimen of the financial guaranty insurance policy is set forth in Appendix B. See “BOND INSURANCE.”

Tax Matters

In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel (“Bond Counsel”), based on existing statutes, regulations, rulings and judicial decisions and assuming compliance with certain covenants and requirements described herein, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. It is the further opinion of Bond Counsel that interest on the Bonds is exempt from State of California personal income tax. The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount, and, in the opinion of Bond Counsel, the amount of original issue discount that accrues to the owner of the Bond is excluded from gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax. See “TAX MATTERS.”

Professionals Involved in the Offering

The Bank of New York Trust Company, N.A., Los Angeles, California, will act as Trustee under the Indenture, as the initial Dissemination Agent under the Continuing Disclosure Agreement and as Escrow Bank under the Escrow Agreement. E. J. De La Rosa & Co., Inc., is the Underwriter for the Bonds. All proceedings in connection with the issuance and delivery of the Bonds are subject to the approval of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, Bond Counsel. Certain legal matters will be passed on for the District by Best Best & Krieger LLP, Riverside, California, as Disclosure Counsel, and by the County Counsel, and for the Underwriter by Nossaman Guthner Knox & Elliott LLP, Irvine, California. Other professional services have been performed by Albert A. Webb Associates, Riverside, California, as Special Tax Consultant, Bruce W. Hull & Associates, Inc., Ventura, California, as Appraiser, Fieldman, Rolapp & Associates, Irvine, California, as Financial Advisor and Grant Thornton LLP, Minneapolis, Minnesota, as Verification Consultant.

For information concerning circumstances in which certain of the above-named professionals may have a financial or other interest in the offering of the Bonds, see “FINANCIAL INTERESTS.”

4 Special Risks

See the section of this Official Statement entitled “SPECIAL RISK FACTORS” for a discussion of risk factors which should be considered, in addition to the other matters set forth herein, in considering the investment quality of the Bonds. The purchase of the Bonds involves risks, and the Bonds may not be appropriate investments for some types of investors.

Continuing Disclosure

The District has covenanted for the benefit of the Owners of the Bonds to provide certain financial information and operating data relating to the District by not later than April 1 of each year commencing on April 1, 2007 (the “Annual Reports”), and to provide notices of the occurrence of certain enumerated events, if determined by the District to be material. The Annual Reports will be filed by the Trustee, as Dissemination Agent, on behalf of the District, with each Nationally Recognized Municipal Securities Information Repository and with any State Repository which may be designated by the State. The notices of material events will be filed by the Trustee, as Dissemination Agent, on behalf of the District with the Municipal Securities Rulemaking Board and with any such State Repository which may be designated. The specific nature of the information to be contained in the Annual Reports or the notices of material events is set forth in “APPENDIX F – CONTINUING DISCLOSURE AGREEMENT.” These covenants have been made in order to assist the Underwriter in complying with Rule 15c2-12(b)(5) of the Securities and Exchange Commission.

Other Information

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

Brief descriptions of the Bonds, certain sections of the Indenture, security for the Bonds, special risk factors, the District and other information are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. The descriptions herein of the Bonds, the Indenture, and other resolutions and documents are qualified in their entirety by reference to the forms thereof and the information with respect thereto included in the Bonds, the Indenture, such resolutions and other documents. All such descriptions are further qualified in their entirety by reference to laws and to principles of equity relating to or affecting generally the enforcement of creditors’ rights.

Copies of such documents may be obtained from the office of the County Executive Officer of the County of Riverside, 4080 Lemon Street, Fourth Floor, Riverside, California 92501.

REFUNDING PLAN

Refunded Bonds

The Bonds are being issued to defease and refund the outstanding Prior Bonds which are outstanding in the aggregate principal amount of $9,640,000. Upon the issuance of the Bonds, the Prior Bonds will no longer be secured by or be payable from the Special Taxes. To accomplish the defeasance and refunding of the outstanding Prior Bonds, on the date of the delivery of the Bonds (the “Delivery Date”), the Trustee will transfer proceeds of the sale of the Bonds to The Bank of New York Trust Company, N.A., as Escrow Bank (the “Escrow Bank”) pursuant to an Escrow Agreement dated as of September 1, 2006, between the District and the Escrow Bank (the “Escrow Agreement”). On the Delivery Date, the amount of the Bond proceeds transferred to the Escrow Bank will be deposited in an Escrow Fund established pursuant to the Escrow Agreement.

Moneys in the Escrow Fund (which include proceeds of the Bonds and other available moneys) will be applied to the redemption of the Prior Bonds on September 1, 2009, pursuant to the fiscal agent agreement relating to the Prior Bonds and the Escrow Agreement. The moneys in the Escrow Fund, together with investment earnings thereon, will be held to pay principal of and interest on the Prior Bonds through September 1, 2009, and to pay the redemption prices for the Prior Bonds on September 1, 2009. 5 The sufficiency of the moneys deposited in the Escrow Fund, and expected earnings from the investment of such moneys, to pay the principal of and interest on the Prior Bonds through September 1, 2009 and to pay the redemption prices for the Prior Bonds on September 1, 2009 has been verified by Grant Thornton LLP, Minneapolis, Minnesota (the “Verification Consultant”). The moneys deposited in the Escrow Fund will be invested by the Escrow Bank in certain “federal securities” or held uninvested in cash, as provided in the Escrow Agreement. The interest rates on and the maturity dates of those federal securities will be designed to insure that the Escrow Bank (as fiscal agent for the Prior Bonds) will have sufficient funds to pay the full amount of the principal of and interest on the Prior Bonds when due and to pay the redemption prices for the Prior Bonds on September 1, 2009. Assuming the accuracy of the Verification Consultant’s computations, the obligation of the District to pay the principal of, premium, if any, and interest on the Prior Bonds will be defeased, and the Prior Bonds will be redeemed on September 1, 2009.

Sources and Uses of Funds

The Bond proceeds and other available funds will be applied as follows:

Sources of Funds Principal Amount of Bonds $10,435,000.00 Net Bond Premium 14,325.40 Other Available Funds(1) 1,977,806.98 Total Sources $12,427,132.38

Uses of Funds Administrative Expense Account $ 50,000.00 Reserve Account 889,279.88 Acquisition and Construction Fund 596,000.00 Escrow Fund 10,360,034.56 Costs of Issuance(2) 531,817.94 Total Uses $12,427,132,38

(1) Includes amounts from the reserve fund, the construction fund, the special tax fund, the earnings fund and the administrative expense account for the Prior Bonds. (2) To pay costs of issuance, including Underwriter’s discount, the premium of MBIA Insurance Corporation for the issuance of its financial guaranty insurance policy, legal fees, printing costs, special tax consultant fees, financial advisor fees, Trustee fees, District administrative fees and other costs of issuance.

THE BONDS

Description of the Bonds

The Bonds will be issued only as fully registered bonds in the denominations of $5,000 each or any integral multiple thereof and will be dated as of and bear interest from the date of their delivery at the rates set forth on the inside cover page hereof. The Bonds will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), and will be available for purchase by Beneficial Owners under the book-entry system maintained by DTC. See “Book-Entry System” below.

The principal of the Bonds and any premium due upon the redemption thereof will be payable in lawful money of the United States by check of the Trustee at the principal office of the Trustee upon presentation and surrender of such Bonds.

Interest on the Bonds is payable by check of the Trustee mailed by first class mail, postage prepaid, on each March 1 and September 1, commencing March 1, 2007 (each an “Interest Payment Date”), until the principal amount of a Bond has been paid or made available for payment, to the registered Owner thereof at 6 such registered Owner’s address as it appears on the registration books maintained by the Trustee at the close of business on the Record Date preceding the Interest Payment Date. (The Record Date is the fifteenth day of the month preceding an Interest Payment Date.) At the written request of the Owner of at least $1,000,000 in aggregate principal amount of Outstanding Bonds filed with the Trustee prior to any Record Date, interest on such Bonds will be paid to such Owner on each succeeding Interest Payment Date by wire transfer of immediately available funds to an account in the United States designated in such written request.

Interest on any Bond shall be payable from the Interest Payment Date next preceding the date of authentication of that Bond, unless (i) such date of authentication is an Interest Payment Date in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication or (iii) the date of authentication is prior to the close of business on the first Record Date occurring after the issuance of such Bond in which event interest shall be payable from the dated date of such Bond; provided, however, that if at the time of authentication of such Bond, interest is in default, interest on that Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment on that Bond or, if no interest has been paid or made available for payment on that Bond, interest on that Bond shall be payable from its dated date.

So long as DTC is the securities depository for the Bonds, the Trustee will pay the principal of and interest on the Bonds to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners of the Bonds is the responsibility of DTC Participants. See “Book-Entry System” below.

The Bonds will mature and are payable on September 1 in the principal amounts and years as shown on the inside cover page of this Official Statement.

Authority for Issuance

The District was established in 1989 and a bonded indebtedness in the amount of $35,000,000 was authorized pursuant to the Act and a resolution adopted by the Board of Supervisors of the County (the “Board of Supervisors”). Under the provisions of the Act, since there were fewer than 12 registered voters residing within the District at the time of the election, the owners of the land within the District were entitled to cast one vote for each acre or portion of an acre of land which they owned within the District. At an election held on July 11, 1989 the landowners within the District voted to authorize the District to incur bonded indebtedness in the amount specified above and to approve, for the purpose of repaying the bonded indebtedness, the annual levy of Special Taxes to be levied within the District. In 2000 the Board of Supervisors conducted proceedings pursuant to the Act to make changes in the authorized facilities to be financed by the District and to the Rate and Method of Apportionment of Special Tax for the District. At an election on December 12, 2000, the property owners in the District approved the proposed changes by more than a two-thirds vote. See “THE DISTRICT – Summary of Formation Proceedings.”

Purpose of the Bonds

The Bonds are being issued to finance the defeasance and refunding of the outstanding Prior Bonds, fund the Reserve Account and pay costs of issuing the Bonds. See “REFUNDING PLAN.”

Optional Redemption

The Bonds may be redeemed, at the option of the District, prior to their respective maturity dates on any Interest Payment Date on or after September 1, 2013, in whole, or in part, from such maturities as are selected by the District and by lot within a maturity, from funds derived by the District from any source, at the following redemption prices (expressed as a percentage of the principal amount to be redeemed), together with accrued interest to the date of redemption:

7 Redemption Dates Redemption Price September 1, 2013 and March 1, 2014 103% September 1, 2014 and March 1, 2015 102 September 1, 2015 and March 1, 2016 101 September 1, 2016 and any Interest Payment Date thereafter 100

In the event the District elects to redeem Bonds as provided above, the District shall give written notice to the Trustee of its election to so redeem, the redemption date and the principal amount of the Bonds of each maturity to be redeemed. The notice to the Trustee shall be given at least 60 but no more than 90 days prior to the redemption date, or by such later date as is acceptable to the Trustee, in its sole discretion.

Extraordinary Redemption from Prepayments

The Bonds are subject to extraordinary redemption as a whole, or in part on a pro rata basis among maturities, on any Interest Payment Date, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account, plus amounts transferred from the Reserve Account pursuant to the Indenture, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:

Redemption Dates Redemption Prices Any Interest Payment Date prior to September 1, 2014 103% September 1, 2014 and March 1, 2015 102 September 1, 2015 and March 1, 2016 101 September 1, 2016 and any Interest Payment Date thereafter 100

Notice of Redemption

So long as the Bonds are held in book-entry form, notices of the redemption of Bonds will be mailed to DTC, or its nominee, and not to the Beneficial Owners of the Bonds.

When Bonds are due for redemption under the Indenture, the Trustee shall give notice, in the name of the District, of the redemption of such Bonds. Such notice of redemption shall (a) specify the CUSIP numbers, the bond numbers and the maturity date or dates of the Bonds selected for redemption, except that where all of the Bonds are subject to redemption, or all the Bonds of one maturity, are to be redeemed, the bond numbers of such Bonds need not be specified; (b) state the date fixed for redemption and surrender of the Bonds to be redeemed; (c) state the redemption price; (d) state the place or places where the Bonds are to be redeemed; (e) in the case of Bonds to be redeemed only in part, state the portion of each such Bond which is to be redeemed; (f) state the date of issue of the Bonds as originally issued; (g) state the rate of interest borne by each Bond being redeemed; and (h) state any other descriptive information needed to identify accurately the Bonds being redeemed as shall be specified by the Trustee. Such notice shall further state that on the date fixed for redemption, there shall become due and payable on each Bond or portion thereof called for redemption, the principal thereof, together with any premium, and interest accrued to the redemption date, and that from and after such date, interest thereon shall cease to accrue and be payable. At least 30 days but no more than 45 days prior to the redemption date, the Trustee shall mail a copy of such notice, by first class mail, postage prepaid, to the respective Owners of such Bonds at their addresses appearing on the Bond Register. See “Registration and Transfer of Bonds” below.

With respect to any notice of optional redemption of Bonds, such notice may state that such redemption shall be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such Bonds to be redeemed and that, if such moneys shall not have been so received, said notice shall be of no force and effect and the Trustee shall not be required to redeem such Bonds. In the event that such notice of redemption contains such a condition and such moneys are not so received, the redemption shall not be made, and the Trustee shall within a reasonable time 8 thereafter give notice, in the manner in which the notice of redemption was given, that such moneys were not so received.

The actual receipt by the Owner of any Bond of notice of such redemption shall not be a condition precedent to redemption, and neither the failure to receive nor any defect in such notice shall affect the validity of the proceedings for the redemption of such Bonds, or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such redemption has been given as herein provided shall be conclusive as against all parties and the Owner shall not be entitled to show that he or she failed to receive notice of such redemption.

In addition to the foregoing notice, further notice shall be given by the Trustee as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed.

Each further notice of redemption shall be sent not later than the date that notice of redemption is mailed to the Bondowners pursuant to the provisions above, by registered or certified mail or overnight delivery service (or by such other means acceptable to a recipient) to DTC and to any other registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds as determined by the Trustee, and to one or more of the national information services that the Trustee determines are in the business of disseminating notice of redemption of obligations such as the Bonds.

Notice of redemption having been duly given, as provided above, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption: (i) the Bonds, or portions thereof, designated for redemption shall, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in the Indenture; (ii) upon presentation and surrender thereof at the office of the Trustee, the redemption price of such Bonds shall be paid to the Owners thereof; (iii) as of the redemption date, the Bonds, or portions thereof designated for redemption, shall be deemed to be no longer Outstanding and such Bonds or portions thereof shall cease to bear further interest; and (iv) as of the date fixed for redemption, no Owner of any of the Bonds, or portions thereof so designated for redemption, shall be entitled to any of the benefits of the Indenture, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts made available therefor.

Upon surrender of any Bond to be redeemed in part only, the District will execute and the Trustee will authenticate and deliver to the Bondowner, at the expense of the District, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity.

Registration and Transfer of Bonds

The Indenture provides that the Trustee will keep, at its office, sufficient books for the registration and transfer of the Bonds (the “Bond Register”). The Owner of a Bond will be the person in whose name it is registered in the Bond Register.

Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of Bonds for other authorized denominations of the same maturity and issue. Whenever any Bond or Bonds shall be surrendered for registration of transfer or exchange, the District shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds of the same issue and maturity, for a like aggregate principal amount. The Trustee will not be required to register transfers or make exchanges of Bonds (i) for a period of 15 days next preceding any selection of Bonds to be redeemed, or (ii) any Bonds chosen for redemption.

Appendix D contains a summary of additional provisions of the Indenture.

9 Issuance of Additional Bonds

The Indenture provides that the District will not issue any Parity Bonds (i.e., bonds that are payable out of the Net Taxes and which rank on a parity with the Bonds) for the purpose of financing the construction of additional public facilities.

Debt Service Schedule

The following is the debt service schedule for the Bonds.

Debt Service Schedule

Year Ending Total Debt September 1 Principal Interest Service 2007 $495,000 $394,279.88 $889,279.88 2008 385,000 403,903.76 788,903.76 2009 405,000 388,503.76 793,503.76 2010 420,000 372,303.76 792,303.76 2011 435,000 355,503.76 790,503.76 2012 455,000 338,103.76 793,103.76 2013 470,000 319,903.76 789,903.76 2014 490,000 301,103.76 791,103.76 2015 510,000 281,503.76 791,503.76 2016 530,000 261,103.76 791,103.76 2017 550,000 241,493.76 791,493.76 2018 570,000 219,493.76 789,493.76 2019 595,000 196,693.76 791,693.76 2020 620,000 172,893.76 792,893.76 2021 645,000 147,318.76 792,318.76 2022 670,000 120,712.50 790,712.50 2023 700,000 93,075.00 793,075.00 2024 730,000 63,325.00 793,325.00 2025 760,000 32,300.00 792,300.00 Totals $10,435,000 $4,703,520.02 $15,138,520.02

Book-Entry System

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

DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 2.2 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other 10 organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and Members of the National Securities Clearing Corporation, Fixed Income Clearing Corporation and Emerging Markets Clearing Corporation (NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. 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 Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

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

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

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

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

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

Principal, redemption price and interest 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 detailed information from the District or the Trustee, on the 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 11 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 Participants and not of DTC, the Trustee, or the District, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal, redemption price and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

Discontinuance of Book-Entry System

DTC may discontinue providing its services with respect to the Bonds at any time by giving notice to the Trustee and discharging its responsibilities with respect thereto under applicable law, or the District may terminate participation in the system of book-entry transfers through DTC or any other securities depository at any time. In the event that the book-entry system is discontinued, the District will execute, and the Trustee will authenticate and make available for delivery, replacement Bonds in the form of registered bonds.

BOND INSURANCE

The following information has been furnished by MBIA Insurance Corporation (“MBIA) for use in this Official Statement. Reference is made to Appendix B for a specimen of the financial guaranty insurance policy that will be issued by MBIA.

MBIA does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the Policy and MBIA set forth in this section. Additionally, MBIA makes no representation regarding the Bonds or the advisability of investing in the Bonds.

The Policy

Concurrently with the issuance of the Bonds, MBIA will issue its Financial Guaranty Insurance Policy for the Bonds (the “Policy”).

The Policy unconditionally and irrevocably guarantees the full and complete payment required to be made by or on behalf of the District to the Trustee or its successor of an amount equal to (i) the principal of (either at the stated maturity or by an advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Bonds as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed by the Policy shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless MBIA elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such payment which is subsequently recovered from any Owner of the Bonds pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Owner within the meaning of any applicable bankruptcy law (a “Preference”).

MBIA's Policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Bonds. MBIA's Policy does not, under any circumstance, insure against loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fund redemptions); (ii) any payments to be made on an accelerated basis; (iii) payments of the purchase price of Bonds upon tender by an owner thereof; or (iv) any Preference relating to (i) through (iii) above. MBIA's Policy also does not insure against nonpayment of principal of or interest on the Bonds resulting from the insolvency, negligence or any other act or omission of the Trustee or any other paying agent for the Bonds.

Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by MBIA from the 12 Trustee or any owner of a Bond the payment of an insured amount for which is then due, that such required payment has not been made, MBIA on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such insured amounts which are then due. Upon presentment and surrender of such Bonds or presentment of such other proof of ownership of the Bonds, together with any appropriate instruments of assignment to evidence the assignment of the insured amounts due on the Bonds as are paid by MBIA, and appropriate instruments to effect the appointment of MBIA as agent for such owners of the Bonds in any legal proceeding related to payment of insured amounts on the Bonds, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners or the Trustee payment of the insured amounts due on such Bonds, less any amount held by the Trustee for the payment of such insured amounts and legally available therefor.

MBIA Insurance Corporation

MBIA Insurance Corporation (“MBIA”) is the principal operating subsidiary of MBIA Inc., a New York Stock Exchange listed company (the “Company”). The Company is not obligated to pay the debts of or claims against MBIA. MBIA is domiciled in the State of New York and licensed to do business in and subject to regulation under the laws of all 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United States and the Territory of Guam. MBIA, either directly or through subsidiaries, is licensed to do business in the Republic of France, the United Kingdom and the Kingdom of Spain and is subject to regulation under the laws of those jurisdictions.

The principal executive offices of MBIA are located at 113 King Street, Armonk, New York 10504 and the main telephone number at that address is (914) 273-4545.

Regulation

As a financial guaranty insurance company licensed to do business in the State of New York, MBIA is subject to the New York Insurance Law which, among other things, prescribes minimum capital requirements and contingency reserves against liabilities for MBIA, limits the classes and concentrations of investments that are made by MBIA and requires the approval of policy rates and forms that are employed by MBIA. State law also regulates the amount of both the aggregate and individual risks that may be insured by MBIA, the payment of dividends by MBIA, changes in control with respect to MBIA and transactions among MBIA and its affiliates.

The Policy is not covered by the Property/Casualty Insurance Security Fund specified in Article 76 of the New York Insurance Law.

Financial Strength Ratings of MBIA

Moody's Investors Service, Inc. rates the financial strength of MBIA “Aaa.”

Standard & Poor's, a division of The McGraw-Hill Companies, Inc. rates the financial strength of MBIA “AAA.”

Fitch Ratings rates the financial strength of MBIA “AAA.”

Each rating of MBIA should be evaluated independently. The ratings reflect the respective rating agency's current assessment of the creditworthiness of MBIA and its ability to pay claims on its policies of insurance. Any further explanation as to the significance of the above ratings may be obtained only from the applicable rating agency.

The above ratings are not recommendations to buy, sell or hold the Bonds, and such ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward revision or withdrawal of any of the 13 above ratings may have an adverse effect on the market price of the Bonds. MBIA does not guaranty the market price of the Bonds nor does it guaranty that the ratings on the Bonds will not be revised or withdrawn.

MBIA Financial Information

As of December 31, 2005, MBIA had admitted assets of $11.0 billion (unaudited), total liabilities of $7.2 billion (unaudited), and total capital and surplus of $3.8 billion (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities. As of June 30, 2006, MBIA had admitted assets of $11.3 billion (unaudited), total liabilities of $6.9 billion (unaudited), and total capital and surplus of $4.3 billion (unaudited) determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities.

For further information concerning MBIA, see the consolidated financial statements of MBIA and its subsidiaries as of December 31, 2005 and December 31, 2004 and for each of the three years in the period ended December 31, 2005, prepared in accordance with generally accepted accounting principles, included in the Annual Report on Form 10-K of the Company for the year ended December 31, 2005 and the consolidated financial statements of MBIA and its subsidiaries as of June 30, 2006 and for the six month period ended June 30, 2006 and June 30, 2005 included in the Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2006, which are hereby incorporated by reference into this Official Statement and shall be deemed to be a part hereof.

Copies of the statutory financial statements filed by MBIA with the State of New York Insurance Department are available over the Internet at the Company’s web site at http://www.mbia.com and at no cost, upon request to MBIA at its principal executive offices.

Incorporation of Certain Documents by Reference

The following documents filed by the Company with the Securities and Exchange Commission (the “SEC”) are incorporated by reference into this Official Statement:

(1) The Company’s Annual Report on Form 10-K for the year ended December 31, 2005; and

(2) The Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006.

Any documents, including any financial statements of MBIA and its subsidiaries that are included therein or attached as exhibits thereto, filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, and prior to the termination of the offering of the Bonds offered hereby shall be deemed to be incorporated by reference in this Official Statement and to be a part hereof from the respective dates of filing such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein, or contained in this Official Statement, shall be deemed to be modified or superseded for purposes of this Official Statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Official Statement.

The Company files annual, quarterly and special reports, information statements and other information with the SEC under File No. 1-9583. Copies of the Company’s SEC filings (including (1) the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, and (2) the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006 and June 30, 2006 are available (i) over the Internet at the SEC’s web site at http://www.sec.gov; (ii) at the SEC’s public reference room in Washington D.C.; (iii) over the Internet at the Company’s web site at http://www.mbia.com; and (iv) at no cost, upon request to MBIA at its principal executive offices.

14 In the event the Insurer were to become insolvent, any claims arising under a policy of financial guaranty insurance are excluded from coverage by the California Insurance Guaranty Association, established pursuant to Article 14.2 (commencing with Section 1063) of Chapter 1 of Part 2 of Division 1 of the California Insurance Code.

SECURITY FOR THE BONDS

The Bonds are special, limited obligations of the District payable only from amounts pledged pursuant to the Indenture and from no other sources.

The Special Taxes are the primary security for the payment of debt service on the Bonds. The District has covenanted in the Indenture to pay principal of and interest on the Bonds from the Net Taxes (which are Special Tax revenues deposited in the Special Tax Fund, except the amounts deposited in the Administrative Expense Account). Special Tax revenues include the revenues from the levy of the Special Taxes received by the District, including any scheduled payments and Prepayments of the Special Taxes, the net proceeds of the redemption of delinquent Special Taxes or the sale of the property sold as a result of foreclosure of the lien of delinquent Special Taxes, and penalties and interest thereon.

In the event that the Special Tax revenues are not received when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Trustee in the Special Tax Fund (except amounts held in the Administrative Expense Account), including amounts held in the Reserve Account, for the exclusive benefit of the Owners of the Bonds.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE COUNTY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE SPECIAL TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE COUNTY BUT ARE SPECIAL OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM THE SPECIAL TAXES AND OTHER AMOUNTS PLEDGED UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.

In the event that delinquencies occur in the receipt of the Special Taxes in any fiscal year, the Special Tax levy in the following fiscal year may be increased up to the maximum amounts permitted under the Rate and Method of Apportionment of Special Tax. Although the Special Tax levy may be increased in the District, Special Tax revenues resulting from the increase may not be available to cure any delinquencies for a period of one year or more. In addition, an increase in the Special Tax levy may adversely affect the ability or willingness of property owners to pay their Special Taxes.

The Special Taxes

The District has covenanted that the Board of Supervisors of the County, as the legislative body of the District, shall levy the Special Tax in an amount sufficient, together with other amounts on deposit in the Special Tax Fund, to pay the principal of and interest on the outstanding Bonds when due, the Administrative Expenses, and any amount required to replenish the Reserve Account of the Special Tax Fund to the Reserve Requirement. Any Special Tax levy, however, is limited to the maximum rates of Special Taxes authorized by the qualified electors of the District, as set forth in the Rate and Method of Apportionment of Special Tax, and no assurance can be given that the necessary amounts will in fact be collected in any given year. See “THE DISTRICT - Rate and Method of Apportionment of Special Tax” and Appendix A.

The Special Taxes will be billed with property taxes and collected by the County Treasurer. Any Special Taxes levied on leasehold or other possessory interests in property in the District will be collected by the County Treasurer on the unsecured tax roll of the County. When received, Special Taxes will be deposited in the Special Tax Fund.

15 Although the Special Taxes will be levied on taxable parcels within the District, they do not constitute a personal indebtedness of the property owners. There is no assurance that the property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if financially able to do so. See “SPECIAL RISK FACTORS - Payment of Special Taxes.”

The Act provides that under no circumstances will the Special Tax levied on any parcel of property in the District that is used for private residential purposes be increased by more than 10% as a consequence of delinquency or default in the payment of Special Taxes by the owner of any other parcel or parcels of property in the District.

If funds are transferred by the Trustee from the Reserve Account to the Interest Account or the Principal Account in the Special Tax Fund to pay annual debt service on the outstanding Bonds as a result of delinquencies in the payment of the Special Taxes levied in the District, the Board of Supervisors will levy Special Taxes on property in the District to restore the Reserve Account to the Reserve Requirement. However the amount of the Special Taxes that may be levied in any fiscal year may not exceed the maximum rates of Special Taxes that are provided for in the Rate and Method of Apportionment of Special Tax and is subject to the limitations described in the preceding paragraph. No assurance can be given, therefore, that the Board of Supervisors will be able to levy a sufficient amount of Special Taxes to restore the Reserve Account to the Reserve Requirement.

Table 1 below shows the coverage that would be provided by Special Taxes if they were levied at the maximum rates only on parcels of Developed Property in the District as of July 1, 2006 with respect to maximum annual debt service on the Bonds and annual Administrative Expenses. Developed Property is defined in the Rate and Method of Apportionment of Special Tax as all parcels of Taxable Property (a) which are included in a Final Map which was recorded prior to January 1 of the preceding fiscal year, and (b) for which a building permit was issued prior to April 1 of the preceding fiscal year.

16 Table 1 Debt Service Coverage From Special Taxes Levied on Developed Property (July 1, 2006)

Projected Tax Projected Maximum Class(1) Rate Units or Acres(2) Special Taxes

A $987 253 $249,711 B $766 749 $573,734 C $610 214 $130,540 Non-Residential $2,500 8.4 $21,000

Total Maximum Taxes $974,985

Maximum Annual Debt Service $889,280(3)

Debt Service Coverage Ratio 1.10%

Annual Administrative Expenses(4) $50,000

Maximum Annual Debt Service Plus Administrative Expenses $939,280

Debt Service and Administrative Expense Coverage Ratio 1.04% ______(1) Land Use Classes from the Rate and Method of Apportionment of Special Tax. See Appendix A. (2) Parcels of Developed Property as of July 1, 2006. (3) Estimated maximum annual debt service on the Bonds. (4) Administrative Expense amount included in the Special Tax levy for fiscal year 2006-07.

Source: Albert A. Webb Associates

Pursuant to the Rate and Method of Apportionment of Special Tax, parcels for which a final map was recorded prior to January 1 of the preceding fiscal year and for which a building permit was not issued prior to April 1 of the preceding fiscal year – which are designated as “Approved Parcels” – are subject to the levy of the Special Tax after the Special Tax is levied on parcels of Developed Property up to 100% of the Maximum Special Tax. For fiscal year 2006-07 there were 101 Approved Parcels. No Special Tax was levied on any of those Approved Parcels for fiscal year 2006-07. However, building permits have been issued for those parcels and they will, therefore, be subject to the levy of the Special Tax in fiscal year 2007-08 as parcels of Developed Property.

The Special Tax levied on parcels of Developed Property (as defined in the Rate and Method of Apportionment of Special Tax) in fiscal year 2006-07 represents 100% of the total Special Tax levy, and no Special Tax was levied on any parcel of Undeveloped Property in the District. The District expects that it will not be necessary to levy the Special Tax on parcels of Undeveloped Property in future fiscal years to pay debt service on the Bonds. See the Rate and Method of Apportionment of Special Tax in Appendix A.

Table 2 below shows the coverage, with respect to maximum annual debt service on the Bonds and annual Administrative Expenses, that would be provided by Special Taxes levied at the maximum rates on parcels of Developed Property in the District, including 101 parcels of Approved Property that were not taxed in fiscal year 2006-07 but will be taxed as Developed Property in fiscal year 2007-08.

17 Table 2 Debt Service Coverage From Special Taxes Proposed Levy on Developed Property (July 1, 2007)

Maximum Tax Projected Maximum Class(1) Rate Units or Acres(2) Special Taxes

A $987 302 $298,074 B $766 777 $595,182 C $610 238 $145,180 Non-Residential $2,500 8.4 $21,000

Total Maximum Special Taxes $1,059,436

Maximum Annual Debt Service $793,504(3)

Debt Service Coverage Ratio 1.34%

Annual Administrative Expenses(4) $50,000

Maximum Annual Debt Service Plus Administrative Expenses $843,504

Debt Service and Administrative Expense Coverage Ratio 1.26% ______(1) Land Use Classes from the Rate and Method of Apportionment of Special Tax. See Appendix A. (2) Estimated number of parcels of Developed Property as of July 1, 2007. Includes 101 parcels that were classified as Approved Parcels in fiscal year 2006-07 but will be classified as Developed Property in fiscal year 2007-08. No Special Tax was levied on these parcels for fiscal year 2006-07. (3) Estimated maximum annual debt service on the Bonds. (4) Administrative Expense amount that was included in Special Tax levy for fiscal year 2006-07.

Source: Albert A. Webb Associates Special Tax Fund

The Indenture establishes a fund to be held by the Trustee designated the Special Tax Fund (the “Special Tax Fund”). The amount of all Special Taxes levied and collected within the District, amounts received by the District as a prepayment of Special Taxes for one or more parcels in the District and proceeds from the sale of property in the District for delinquent Special Taxes (the “Gross Taxes”) will be deposited in the Special Tax Fund and, except as otherwise authorized by the Indenture, will be used for the purpose of paying the principal of, and interest on, the Bonds, and paying Administrative Expenses of the District.

The Gross Taxes received by the Trustee from the District will be deposited into the Special Tax Fund. Amounts in the Special Tax Fund (except the amount on deposit in the Administrative Expense Account) will constitute a trust fund held for the benefit of the Owners of the Bonds to be applied to the payment of the interest on and principal of the Bonds and, so long as any of the Bonds or interest thereon remain outstanding, will not be used for any other purpose, except as permitted by the Indenture. Moneys held by the Trustee in the Special Tax Fund may be invested in certain “Authorized Investments” which are identified in the Indenture. See “APPENDIX D - “SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE.”

18 The Indenture provides that the amounts on deposit in the Special Tax Fund, except for the portion of any Special Tax Prepayment to be deposited in the Redemption Account, shall be allocated, in order of priority, to:

(1) the Administrative Expense Account of the Special Tax Fund amounts necessary to make timely payment of Administrative Expenses;

(2) the Interest Account of the Special Tax Fund an amount such that the balance in the Interest Account one Business Day prior to each Interest Payment Date will be equal to the installment of interest due on the Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date which remains unpaid;

(3) the Principal Account of the Special Tax Fund an amount such that the balance in the Principal Account one Business Day prior to September 1 of each year will equal the principal payment due on the Bonds maturing on such September 1 and any principal payment due on the previous September 1 which remains unpaid.;

(4) the Redemption Account of the Special Tax Fund the amount (if any) needed to make the balance in the Redemption Account one Business Day prior to each September 1 equal to the Sinking Payment due on any Outstanding Bonds on such September 1;

(5) the Reserve Account, the amount (if any) needed to restore the amount of the Reserve Account to the Reserve Requirement; and

(6) the Rebate Fund the amount (if any) required by the Indenture.

Any remaining amounts in the Special Tax Fund will be transferred to the Surplus Fund.

Reserve Account

Concurrently with the issuance of the Bonds, $889,279.88 of proceeds of the sale of the Bonds, an amount equal to the Reserve Requirement, will be deposited in the Reserve Account in the Special Tax Fund. Amounts on deposit in the Reserve Account will be used solely for the purpose of paying the principal of, including Sinking Fund Payments, and interest on, the Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due and for the purpose of making any required transfer to the Rebate Fund. The Reserve Requirement is the amount as on any date of calculation equal to the least of (i) 10% of the original proceeds of the Bonds and Parity Bonds, if any, (ii) Maximum Annual Debt Service on the Outstanding Bonds and Parity Bonds, if any, and (iii) 125% of average Annual Debt Service on the Outstanding Bonds and Parity Bonds, if any. See Appendix D – Summary of Certain Provisions of the Bond Indenture – Reserve Account of the Special Tax Fund.

Investment of Moneys

Moneys in the funds and accounts created by the Indenture and held by the Trustee will be invested at the written direction of the District by the Trustee in certain Authorized Investments which will be deemed at all times to be a part of such funds and accounts. In the absence of any such written direction, the Trustee will invest any such moneys in money market funds of the type described in the Indenture.

19 Covenant for Superior Court Foreclosure

In the event of a delinquency in the payment of any installment of Special Taxes, the District is authorized by the Act to order institution of an action in the Superior Court of the County to foreclose any lien therefor. Such an action may result in the real property subject to such Special Taxes being sold at judicial foreclosure sale. The ability of the District to foreclose the lien of delinquent Special Taxes may be limited in certain instances, such as by the bankruptcy of the property owner, and may require prior consent of the obligor in the event the property is owned by or in receivership of the Federal Deposit Insurance Corporation. See “SPECIAL RISK FACTORS - Bankruptcy” and “- Payments by FDIC.”

The District has covenanted, in the Indenture, that it will commence judicial foreclosure proceedings against parcels with total Special Tax delinquencies in excess of $5,000 (not including interest and penalties thereon) by the October 1 following the close of each Fiscal Year in which the last of such Special Taxes were due and will commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Taxes levied in such Fiscal Year, and diligently pursue to completion such foreclosure proceedings; provided, however, that, notwithstanding the foregoing, the District may elect to accept payment from a property owner of at least the enrolled amount but less than the full amount of the penalties, interest, costs and attorneys’ fees related to a Special Tax delinquency, if permitted by law. Notwithstanding the foregoing, in certain instances the amount of a Special Tax delinquency on a particular parcel is so small that the cost of appropriate foreclosure proceedings will far exceed the Special Tax delinquency, and in such cases foreclosure proceedings may be delayed by the District until there are sufficient Special Tax delinquencies accruing to such parcel (including interest and penalties thereon) to warrant the foreclosure proceedings cost.

Under current law, a judgment debtor (property owner) has at least 120 days from the date of service of the notice of levy in which to redeem the property to be sold. If a judgment debtor fails to redeem and the property is sold, his only remedy is an action to set aside the sale, which must be brought within 90 days of the date of sale. This remedy is not available unless the judgment creditor purchases the property at the foreclosure sale. If, as a result of such an action, a foreclosure sale is set aside, the judgment is revived, the judgment creditor is entitled to interest on the revived judgment, and any liens extinguished by the sale are revived as if the sale had not been made.

Property Values

An appraisal of the property in the District dated July 24, 2006 (the “Appraisal”) was prepared by Bruce W. Hull & Associates, Inc., of Ventura, California (the “Appraiser”). The Appraiser has estimated that as of July 15, 2006 (the date of value for the Appraisal) (i) the market value of the property in the District that was owned by Shea Homes that consisted of 118 single family residential lots in Tract 31742, lots in Tract 31662 where 164 condominium units were being constructed, a 14.5 acre commercial site, and a 1.78 acre parcel upon which 11 model homes had been constructed was $79,825,000; (ii) the market value of the lots in Tract No. 31742 where 82 homes had been constructed and sold to homeowners and the lots in Tract 31662 where six condominium units had been sold to homeowners, but which had not been valued by the County Assessor, was $49,690,000; (iii) the assessed value, as determined by the County Assessor, of the parcel where the sales office- tour center is located, which is owned by Shea Homes, and two parcels where the lodge-recreation center and sports club and the adjacent parking lot are located, which are owned by a homeowners’ association, was $5,285,000; and (iv) the total assessed value of the existing 936 homes in the District that have been sold to homeowners, as determined by the County Assessor and shown on the 2006-07 assessment roll, was $379,560,000. The Appraiser was not asked to and did not determine a separate market value for these 936 homes. However, the Appraiser’s research showed that sales prices of homes in the District that had been resold in 2006 exceeded the County Assessor’s assessed valuations for those homes. The total value of the property in the District, including the assessed value of the 936 homes, as determined by the Appraiser, is $514,360,000. The Appraiser did not determine a value for the golf course property as no Special Tax was levied on that property in fiscal year 2006-07 and it is expected that it will not be necessary to levy Special Taxes on the golf course property in future fiscal years to pay debt service on the Bonds. A copy of the Appraisal is contained in “APPENDIX C - APPRAISAL.” 20 The ratio of the appraised values and assessed values of taxable property in the District, as reported in the Appraisal (not including the golf course property), to the aggregate principal amount of the Bonds and the other bonded indebtedness which is secured by property taxes, special taxes and assessments levied on property in the District is 49.29 to 1. See Table 5 below.

The foregoing ratio represents a District-wide average and the actual ratios for parcels of land vary. No assurance can be given that the foregoing ratio can or will be maintained during the period of time that the Bonds are Outstanding in that the actual value of the property may vary from that estimated by the Appraiser, and the District has no control over the amount of additional indebtedness that may be issued in the future by other governmental agencies, the payment of which, through the levy of a tax or an assessment, is on a parity with the Special Taxes. A copy of the Appraisal is contained in “APPENDIX C - APPRAISAL.”

Direct and Overlapping Debt and Value-to-Lien Ratios

Table 3 below shows the total property taxes, assessments and other charges levied on property in the District in fiscal year 2006-07 and the existing authorized indebtedness payable from taxes and assessments that may be levied within the District as of July 1, 2006. The abbreviations in the column under the heading “Type” in Table 3, have the following meanings: “SPCL” means a special assessment; “CFD” means community facilities district special taxes; “GO” means ad valorem taxes for general obligation bonds; “WTR” means water standby charges or assessments; “SWR” means sewer standby charges or assessments; and “1%” means the one percent of assessed value general property tax levy. Since Table 3 shows direct and overlapping bonded indebtedness as of July 1, 2006, it includes as bonded indebtedness for the District the principal amount of the outstanding Prior Bonds as of that date.

21 Table 3 Direct and Overlapping Debt Summary

I. Assessed Value $403,842,019

II. Secured Property Tax Roll CFD Description of Tax Bill Type Parcels Total Levy % Applicable Parcels Levy Amount COMMUNITY FACILITIES DIST 89-1 CFD 1,209 $942,620 100.000% 1,209 $942,620 FLD CNTL STORMWATER/CLEANWATER WTR 262,519 $1,714,132 0.141% 813 $2,414 R&T CODE 482 PENALTY ASMNT SPL 6,060 $1,734,923 0.041% 2 $716 NW MOSQUITO & VECTOR CONTROL DISTRICT SPL 137,076 $420,171 2.084% 831 $8,758 LEE LAKE STANDBY SWR 765 $304,442 21.364% 72 $65,042 MWD STANDBY WEST WTR 226,354 $3,401,915 0.391% 836 $13,291 CORONA-NORCO UNIFIED SCHOOLS GO 596,927 $53,830,737 0.080% 836 $43,182 RIVERSIDE COMMUNITY COLLEGE GO 513,330 $19,151,877 0.279% 833 $53,349 METROPOLITAN WTR DEBT SV GO 430,514 $5,247,279 0.294% 833 $15,409 GENERAL PURPOSE 1% 786,893 $1,518,149,874 0.195% 836 $2,964,055 2005-2006 TOTAL PROPERTY TAX LIABILITY $4,108,836 TOTAL PROPERTY TAX AS A PERCENTAGE OF 2005-2006 ASSESSED VALUATION 1.02%

III. Land Secured Bond Indebtedness Outstanding Direct and CFD Amount Overlapping Bonded Debt Type Issued Outstanding % Applicable Parcels of Debt COUNTY OF RIVERSIDE CFD 89-1 REFUNDING CFD $10,945,000 $9,910,000 100.000% 1,209 $9,910,000 TOTAL OUTSTANDING LAND SECURED BONDED INDEBTEDNESS* $9,910,000

IV. General Obligation Bond Indebtedness Outstanding Direct and CFD Amount Overlapping Bonded Debt Type Issued Outstanding % Applicable Parcels of Debt CORONA-NORCO UNIFIED SCHOOLS GO $63,789,622 $56,544,621 2.466% 836 $1,394,268 RIVERSIDE COMMUNITY COLLEGE GO $65,000,000 $57,416,109 0.727% 833 $417,158 METROPOLITAN WATER DISTRICT GO $850,000,000 $418,190,000 0.025% 833 $102,839 TOTAL GENERAL OBLIGATION BONDED DEBT* $1,914,265

Authorized Direct and CFD Amount Overlapping Bonded Debt Type Authorized Unissued % Applicable Parcels Applicable CORONA-NORCO UNIFIED SCHOOLS GO $65,000,000 $1,210,378 2.466% 836 $29,845 RIVERSIDE COMMUNITY COLLEGE GO $350,000,000 $285,000,000 0.727% 833 $2,070,675 METROPOLITAN WATER DISTRICT GO $850,000,000 $0 0.025% 833 $0 TOTAL UNISSUED GENERAL OBLIGATION BONDS* $2,100,520

TOTAL OUTSTANDING AND UNISSUED GENERAL OBLIGATION BONDED INDEBTEDNESS $4,014,786

TOTAL OF ALL OUTSTANDING DIRECT AND OVERLAPPING BONDED DEBT $11,824,265 ASSESSED VALUE TO ALL OUTSTANDING DIRECT AND OVELAPPING BONDED DEBT 34.15:1 TOTAL OF ALL OUTSTANDING AND UNISSUED DIRECT AND OVERLAPPING BONDED DEBT $13,924,786 ASSESSED VALUE TO ALL OUTSTANDING AND UNISSUED DIRECT AND OVERLAPPING BONDED DEBT 29.00:1

* Additional bonded debt or available bond authorization may exist but is not shown because a tax was not levied for the referenced fiscal year. ______Source: Albert A. Webb Associates

22 Table 4 below provides the Assessed Value-to-Lien Ratios with respect to the Prior Bonds and other overlapping debt for parcels of property in the District. The assessed values were derived from the records of the County Assessor. Table 4 does not include value-to-lien ratios for overlapping general obligation bonds for fiscal years 2001-02 through 2004-05 because this information was not recorded by the District for those fiscal years.

Table 4 Assessed Values and Value-to-Lien Ratios (Fiscal Years 2001-02 through 2006-07)

Total Direct & Value-to- Prior Bonds Value-to-Lien Overlapping Overlapping Lien All Fiscal Year Assessed Value(1) Outstanding Prior Bonds G.O. Bonds Debt Debt

2001-02 $5,761,124 $10,945,000 0.53:1 ------2002-03 $20,631,264 $10,855,000 1.90:1 ------2003-04 $83,404,897 $10,635,000 7.84:1 ------2004-05 $164,903,043 $10,405,000 15.85:1 ------2005-06 $315,445,574 $10,150,000 31.08:1 $1,495,254 $11,405,254 27.66:1 2006-07 $403,842,019 $9,910,000 40.75:1 $1,914,265(2) $11,824,265(2) 34.15:1(2) ______

(1) Assessed Values (AV) are based on information provided in the Riverside County Assessor’s records for each Fiscal Year and may not accurately reflect true market value. (2) From Table 3.

Source: Albert A. Webb Associates

Table 5 shows the value-to-lien ratios with respect to the principal amount of the Bonds by property ownership category for the four categories of property for which values are given in the Appraisal, i.e., parcels that are owned by individual homeowners for which the County Assessor’s assessed values for fiscal year 2006- 07 include the value of the residence constructed thereon, residential and condominium parcels that are owned by Shea Homes, the sales office-tour center parcel owned by Shea Homes and the recreation center and sports club parcels owned by the homeowners’ association, and the “gap parcels” that are owned by individual homeowners, but for which the County Assessor’s assessed values for fiscal year 2006-07 did not include the value of the residence constructed thereon. The values given in the table for the parcels that are owned by individual homeowners, the sales office-tour center parcel and the homeowners’ association parcels are based on the County Assessor’s assessed values for fiscal year 2006-07 which are provided in the Appraisal. The values given in the table for gap parcels are appraised values from the Appraisal.

The total amount of $942,628.56 shown in the first column of Table 5 is the amount of the Special Taxes that were levied in fiscal year 2006-07 to pay debt service on the Prior Bonds and Administrative Expenses in the amount of $50,000. The total amount of the principal of and interest on the Bonds that is due in the Bond Year ending on September 1, 2007 (i.e., $889,280) plus Administrative Expenses in the amount of $50,000 equals $939,280. See Table 1 on page 17. Interest on the Bonds that is due on March 1, 2007 and interest on and principal of the Bonds that are due on September 1, 2007 will be paid with the revenues from the collection of the Special Taxes that were levied in fiscal year 2006-07.

23 Table 5 Value-to-Lien Ratios Based on Ownership

Percent of Value-to- 2006-07 Special Number Special Total Value of Lien for the Lien Owners Tax Levy (1) of Parcels Tax Levy Parcels (2) Bonds(3) Ratios

Individual Homeowners (4) $704,003.94 936 74.69% $379,560,000.00 $7,793,399.68 48.70:1

Shea Homes (5) 148,500.56 284 15.75% 79,825,000.00 1,643,917.24 48.56:1

Shea Homes/Association (6) 20,302.78 3 2.15% 5,285,000.00 224,753.97 23.51:1

Gap Parcels (7) 69,821.28 88 7.41% 49,690,000.00 772,929.11 64.29:1 $942,628.56 1,311 100.00% $514,360,000.00 $ 10,435,000.00 49.29:1 ______(1) Special Tax levy to pay debt service on the Prior Bonds and Administrative Expenses. Revenues from the collection of these Special Taxes will be used to pay debt service on the Bonds and Administrative Expenses. (2) Values for Gap Parcels and parcels owned by Shea Homes are from the Appraisal. Value for parcels owned by individual homeowners is based on County Assessor’s assessed values for fiscal year 2006-07 as reported in the Appraisal. (3) Allocation of principal amount of the Bonds based on Percent of Special Tax Levy. (4) Parcels identified in Section 3 of the Appraisal as being owned by individual homeowners. (5) All Parcels owned by Shea Homes except the golf course parcels. Includes 11 model homes on a single parcel, and 101 parcels of Approved Property, as defined in the Rate and Method of Apportionment of Special Tax, that were not taxed in fiscal year 2006-07. (6) Assessed value for three parcels classified as Developed/Non-Residential Property. (7) Parcels identified in Section 2 of the Appraisal as Gap Parcels which are owned by individual homeowners.

Source: Albert A. Webb Associates

The total value for the 284 parcels that are shown in Table 5 as being owned by Shea Homes includes the value of 101 parcels of Approved Property, as defined in the Rate and Method of Apportionment of Special Tax, upon which no Special Tax was levied in fiscal year 2006-07. The Appraiser did not determine a separate value for these parcels. If the Special Tax had been levied on these parcels, the Value-to-Lien Ratio for the 284 parcels that were owned by Shea Homes would be less than what is shown in Table 5.

Other Financing Districts

The District has no control over the amount of additional debt payable from taxes or assessments levied on all or a portion of the property within the District which may be incurred in the future by other governmental agencies, including but not limited to the Lee Lake Water District and the Corona-Norco Unified School District or any other governmental agency having jurisdiction over all or a portion of the property within the District. Furthermore, nothing prevents the owners of property within the District from consenting to the issuance of additional debt by other governmental agencies which would be secured by taxes or assessments on a parity with the Special Taxes. To the extent such indebtedness is payable from assessments, other special taxes levied pursuant to the Act or ad valorem property taxes, such assessments, special taxes and taxes will be secured by liens on the property within the District on a parity with a lien of the Special Taxes.

Accordingly, the debt on the property within the District could increase, without any corresponding increase in the value of the property, and thereby severely reduce the ratio that exists at the time the Bonds are issued between the value of the property and the debt secured by the Special Taxes and other taxes and assessments which may be levied on the property. The incurring of such additional indebtedness could also affect the ability and willingness of the property owners within the District to pay the Special Taxes when due.

24 Moreover, in the event of a delinquency in the payment of Special Taxes, no assurance can be given that the proceeds of any foreclosure sale of property with delinquent Special Taxes would be sufficient to pay the delinquent Special Taxes.

THE DISTRICT

Location

The District contains approximately 765 acres. It is located in an unincorporated area in the western portion of the County, southeast of the City of Corona, west of the City of Perris, and northwest of Lake Elsinore along Interstate Highway 15. The property in the District has been and is being developed by Shea Homes, Inc., a Delaware corporation (“Shea Homes”) as an “active adult” residential community which has been marketed as “Trilogy at Glen Ivy.” Trilogy at Glen Ivy is an age restricted community that is designed to appeal to persons who are age 55 and older. The community contains a golf course, a lodge-recreation center and a sports club. Shea Homes advises that at build-out the community will contain 1,234 single family homes and 170 condominium units.

An aerial photograph of the District is included in the Appraisal in Appendix C.

Development Status and Property Ownership

The discussion in this section is based on information provided by Shea Homes, Inc, the developer of the property in the District.

Shea Homes reports that as of August 22, 2006, there were 1,030 individually owned single family homes and 15 individually owned condominium units in the Triology at Glen Ivy community. The two remaining tracts in the community are Tract No. 31742, where 329 single family homes will be located, and Tract No. 31622, where 170 condominium units will be located. Shea Homes reports that as of August 22, 2006, 233 homes in Tract No. 31742 had been sold to individual homeowners, and escrows had been opened for the sale of 34 homes. Eleven model homes are located on a separate 1.78 acre parcel that is owned by Shea Homes. Shea Homes also reports that as of August 22, 2006, in Tract 31622, all lots had been graded to finished lot condition, four model units had been constructed, 15 condominium units had been sold to individual homeowners and escrows had been opened for the sale of 42 condominium units. Shea Homes further reports that as of August 22, 2006, approximately 33 single family homes in Tract No. 31742 and approximately 62 condominium units in Tract No. 31622 were under construction.

Shea Homes expects that escrows for the sale of all of the remaining single family homes in Tract No. 31742 will be closed by the end of April 2008; and that escrows for all of the remaining condominium units in Tract No. 31622 will be closed by the end of May 2008.

The Special Tax levied on parcels of Developed Property (as defined in the Rate and Method of Apportionment of Special Tax) in fiscal year 2006-07 represents 100% of the total Special Tax levy, and no Special Tax was levied on any parcel of Undeveloped Property in the District. The total amount of the Special Tax levied on parcels in the District that are owned by Shea Homes represents 17.91% of the total Special Tax levy for fiscal year 2006-07. No Special Tax was levied in fiscal year 2006-07 on parcels of Approved Property, as defined in the Rate and Method of Apportionment of Special Tax, or on the golf course property.

25 26 Summary of Formation Proceedings

The District was established in 1989. Pursuant to the Act, the Board of Supervisors adopted a resolution declaring its intention to establish the District and a resolution declaring its intention that the District incur a bonded indebtedness.

The Board of Supervisors conducted consolidated public hearings on the formation of the District, the levy of special taxes pursuant to the Rate and Method of Apportionment of Special Tax, and the incurring of bonded indebtedness by the District. The Board of Supervisors adopted a resolution establishing the District and approving the Rate and Method of Apportionment of Special Tax. The Board of Supervisors also adopted a resolution determining the necessity of the District incurring a bonded indebtedness in an aggregate principal amount not to exceed $35,000,000.

At a special election on July 11, 1989, the owners of the property within the boundaries of the District authorized the District to incur a bonded indebtedness in an amount not to exceed $35,000,000 and approved the Rate and Method of Apportionment of Special Tax to pay the principal of and interest on the bonds of the District. At that election, the qualified voters of the District also authorized the District to incur a bonded indebtedness in an aggregate principal amount not to exceed $35,000,000 for the purpose of financing specified public facilities.

In 2000 the Board of Supervisors conducted proceedings pursuant to the Act to make changes in the authorized facilities to be financed by the District and to the Rate and Method of Apportionment of Special Tax for the District. At a special election on December 12, 2000, the property owners in the District approved the proposed changes by more than a two-thirds vote.

Rate and Method of Apportionment of Special Tax

Pursuant to the Amended and Restated Rate and Method of Apportionment of Special Tax, the Board of Supervisors will levy the Special Taxes on parcels of taxable property within the District to pay the principal of, and interest on, the outstanding Bonds. No assurance can be given that property owners within the District will be able and willing to pay the Special Taxes which will be levied on their properties.

Pursuant to the Rate and Method of Apportionment of Special Tax, for each Fiscal Year, the Special Tax is levied to satisfy the Special Tax Requirement first on Parcels of Developed Property up to 100 percent of the Maximum Special Tax; if additional funds are needed to satisfy the Special Tax Requirement, the Special Tax is levied on Parcels of Approved Property at up to 100 percent of the Maximum Special Tax; and if additional funds are required to satisfy the Special Tax Requirement, the Special Tax is levied on Parcels of Undeveloped Property. If additional funds were required after the Special Tax was levied as provided in the preceding sentence, the Special Tax would be levied on the Golf Course Property. No Special Tax was levied on the Golf Course Property in fiscal year 2006-07, and it is anticipated that it will not be necessary to levy Special Taxes on the Golf Course Property in fiscal year 2007-08.

Approved Property is defined in the Rate and Method of Apportionment of Special Tax as all parcels for which a final subdivision map was recorded prior to January 1 of the preceding fiscal year and for which a building permit was not issued prior to April 1 of the preceding fiscal year. No Special Tax was levied in fiscal year 2006-07 on 101 parcels that were classified as Approved Property. However, since building permits were issued for these parcels after April 1, 2006, Special Taxes will be levied on them as parcels of Developed Property in fiscal year 2007-08.

The Rate and Method of Apportionment of Special Tax is attached as “Appendix A.”

27 Fiscal Year 2006-07 Special Tax Levy

Table 6 below shows the amounts of Special Taxes that were levied for fiscal year 2006-07 on parcels of property owned by Shea Homes and on parcels of property owned by all other persons, and the percentage of the total Special Tax levy that was levied on such parcels.

Table 6 Property Ownership and Special Tax Obligations (Fiscal Year 2006-07)

Percent of Total Owner Name Parcels Total Special Tax Special Tax Shea Homes(1) 287 $168,803 17.91% All Others(2) 1,024 $773,825 82.09% Totals 1,311 $942,629 100.00%

______(1) All parcels owned by Shea Homes except the golf course parcels. Includes 11 model homes on a single parcel and 101 parcels of Approved Property, as defined in the Rate and Method of Apportionment of Special Tax, that were not taxed in fiscal year 2006-07. Also includes one parcel owned by Shea Homes where the sales office-tour center is located, and two parcels where the lodge-recreation center and the sports club are located that are owned by a homeowners’ association. (2) Includes 936 parcels that are owned by homeowners and 88 Gap Parcels (i.e., 82 single family homes and six condominium units).

Source: Albert A. Webb Associates

The Special Tax levied on parcels of Developed Property (as defined in the Rate and Method of Apportionment of Special Tax) in fiscal year 2006-07 represents 100% of the total Special Tax levy, and no Special Tax was levied on any parcel of Undeveloped Property in the District. The total amount of the Special Tax levied on parcels in the District that are owned by Shea Homes represents 17.91% of the total Special Tax levy for fiscal year 2006-07.

The 287 parcels that are shown in Table 6 as being owned by Shea Homes include 101 parcels of Approved Property, as defined in the Rate and Method of Apportionment of Special Tax, upon which no Special Tax was levied in fiscal year 2006-07. If the Special Tax had been levied on these parcels, the percentage of the total Special Tax levy for fiscal year 2006-07 that would have been levied on parcels owned by Shea Homes would have been greater than 17.91%.

Table 7 shows the total burden of taxes and assessments, including the Special Taxes, levied on residential parcels in the District for fiscal year 2006-07 as a percentage of the base sales prices, as reported in the Appraisal, for the three classes of residences for which Maximum Special Tax Rates are established in the Rate and Method of Apportionment of Special Tax. Class A is a single family attached or detached Dwelling Unit that is 2,001 or more square feet in size, Class B is a single family attached or detached Dwelling Unit that is 1,500 to 2,000 square feet in size, and Class C is a single family attached or detached Dwelling Unit that is 1,499 or less square feet in size.

28 Table 7 Taxes and Assessments for Residential Parcels as a Percentage of Base Sales Prices (Fiscal Year 2006-07)

Class A Class B Class C

Base Sales Price $594,490 $480,490 $401,490 (as of July 1, 2006)

Ad Valorem Property Taxes General Property Tax (1.00%) $5,945 $4,805 $4,015 Corona-Norco USD G.O. Bond 87 68 58 Riverside Community College District G.O. Bonds 107 86 72 Metropolitan Water District G.O. Bonds 31 25 21 Subtotal Ad Valorem Taxes $6,170 $4,985 $4,166

Special Taxes for Debt Service The Special Tax $954 $741 $590

Assessments for Services Flood Control District Stormwater/Cleanwater $4 $4 $4 NW Mosquito Abatement and Vector Control District 11 11 11 Metropolitan Water District Standby Charge 9 9 9 Subtotal $24 $24 $24

Subtotal Assessments & Special Taxes $978 $765 $614

TOTAL TAXES AND ASSESSMENTS $7,148 $5,749 $4,780

Taxes and Assessments as Percentage of Base Price 1.20% 1.20% 1.19% ______Source: Albert A. Webb Associates

29 Special Tax Delinquencies

Table 8 below shows historical Special Tax delinquencies for property in the District for fiscal years 2000-01 through 2005-06.

Table 8 Historical Special Tax Delinquencies (Fiscal Years 2000-01 through 2005-06)

Special Delinquent Number Tax Tax Special Tax Delinquency(1) Amount Delinquent Delinquency Year Levied Amount Charges Due Parcels Percentage 2005-06 $925,131.06 $12,108.00 $1,574.04 $13,682.04 19 1.31% 2004-05 $925,131.00 $1,566.00 $767.34 $2,333.34 2 0.17% 2003-04 $925,131.00 $0.00 $0.00 $0.00 0 0% 2002-03 $927,182.00 $0.00 $0.00 $0.00 0 0% 2001-02 $927,182.00 $0.00 $0.00 $0.00 0 0% 2000-01 $980,979.00 $0.00 $0.00 $0.00 0 0% Totals $5,610,736.06 $13,674.00 $2,341.38 $16,015.38

______(1) These charges include a 10% penalty on each past due installment and 1.5% per month “redemption penalty” (or “interest”) on the original delinquent amount, which begins to accrue July 1 of the tax year following the delinquency.

Source: Albert A. Webb Associates

SPECIAL RISK FACTORS

The following is a discussion of certain special risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of the Bonds. This discussion does not purport to be comprehensive or definitive. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of the property owners in the District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the District to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District.

Insufficiency of Special Taxes

Pursuant to the Rate and Method of Apportionment of Special Tax, the annual amount of Special Tax to be levied on each taxable parcel in the District will generally be based on its development status as determined pursuant to the Rate and Method of Apportionment of Special Tax. See Appendix A and “THE DISTRICT - Rate and Method of Apportionment of Special Tax.” To the extent undeveloped property does not become developed property, the collection of Special Taxes will be dependent on the willingness and ability of the owners of undeveloped property to pay such Special Taxes when due.

The Act provides that if any property in the District not otherwise exempt from the Special Taxes is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Taxes will continue to be levied on and enforceable against the public entity that acquired the property. The Act also provides that if property subject to the Special Taxes is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Taxes with respect to that property is to be treated as if it were a special assessment and paid from the eminent domain award. The constitutionality and operative effect of these provisions of the 30 Act have not been tested in the courts. If for any reason property subject to the Special Taxes becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government or another public agency, subject to the limitation of the maximum authorized Special Taxes, the Special Taxes will be reallocated to the remaining parcels of taxable property in the District. This would result in the owners of the remaining properties in the District paying a greater amount of the Special Taxes and could have an adverse effect on the timely payment of the Special Taxes. Moreover, if a substantial portion of land in the District became exempt from the Special Taxes because of public ownership, or otherwise, the maximum Special Taxes which could be levied on the remaining land in the District might not be sufficient to make the payments required to pay principal of and interest on the outstanding Bonds and a default in the payment of such principal and interest could occur.

Adjustable Rate Home Loans

In the past four years, many persons have financed the purchase of new homes using loans with adjustable interest rates that start low and are subject to being reset at higher rates on a specified date or upon the occurrence of specified conditions. Many of these loans allow the borrower to pay interest only for an initial period (e.g., five years). Currently, in Southern California as many as 79% of outstanding home loans are adjustable rate loans. In the opinion of some economists, the significant increase in home prices in this time period (more than 65% since 2002) has been driven, in part, by the ability of home purchasers to access adjustable rate loans. These economists predict that as interest rates on more conventional loans increase and as the interest rates on adjustable rate loans are reset (and payments are increased) there will be a decrease in home prices due to the fact that fewer borrowers will be able to qualify for adjustable rate loans or conventional loans.

Many borrowers who purchased homes with adjustable rate loans have refinanced before the interest reset date to obtain loans with fixed interest rates and payments that are lower than the reset interest rates and the resulting payments. However, as interest rates on conventional loans increase, borrowers will not be able to refinance adjustable rate loans at lower interest rates. Some economists are concerned that such a reduction in home prices will result in many existing homeowners having loan balances that exceed the value of their homes.

For the reasons discussed above, homeowners in the District who purchase their homes with adjustable rate loans may experience difficulty in making their loan payments and paying the Special Taxes levied on their property. This would result in an increase in the Special Tax delinquency rate in the District and depletion of the Reserve Account. If there were significant delinquencies in Special Tax collections in the District and the Reserve Account were depleted, there could be a default in the payment of principal of and interest on the Bonds.

Economists have also predicted that if housing prices decline, bankruptcies are likely to increase. Bankruptcy by homeowners with delinquent Special Taxes would delay the commencement and completion of foreclosure proceedings to collect delinquent Special Taxes. See “Special Tax Delinquencies,” “Payment of Special Taxes” and “Bankruptcy” below and “SECURITY FOR THE BONDS – Covenant for Superior Court Foreclosure.”

Undeveloped Property

A portion of the property within the District is undeveloped. Undeveloped property is less valuable per acre than developed property, especially if there are no plans to develop such property or if there are severe restrictions on the development of such property. Undeveloped property also provides less security to the Bondowners should it be necessary for the District to foreclose on undeveloped property due to the nonpayment of the Special Taxes. A slowdown in or cessation of the development of land in the District could impair the ability and willingness of the owners of undeveloped property to make Special Tax payments, and could greatly reduce the value of such property in the event it has to be foreclosed upon to collect delinquent Special Taxes.

No Special Tax was levied on undeveloped property in fiscal year 2006-07.

31 The Appraisal and Value-to-Lien Ratios

The Appraiser has estimated, on the basis of certain definitions, assumptions and limiting conditions contained in the Appraisal, that as of July 15, 2006, the value of the property in the District was $514,360,000.

A copy of the Appraisal is contained in “APPENDIX C - APPRAISAL.”

The District does not make any representation as to whether the appraised value or the assessed value of the land in the District or the value-to-lien ratios for such land will remain at the appraised or assessed value or the ratios discussed above. Moreover, purchasers of the Bonds should not assume that the property within the District could be sold at its appraised or assessed value at a foreclosure sale to collect delinquent Special Taxes.

Purchasers of the Bonds should also understand that property values may vary throughout the District. Consequently, the ratios discussed under “SECURITY FOR THE BONDS - Property Values” are not consistent among different parcels in the District. See “SECURITY FOR THE BONDS - Direct and Overlapping Debt and Value-to-Lien Ratios” and “- Other Financing Districts.” These inconsistent property values are significant because the only remedy available to the District for collection of delinquent Special Taxes is to initiate judicial foreclosure proceedings against the properties with delinquent Special Taxes.

The Appraisal should be reviewed for a complete description of the assumptions made by the Appraiser.

Parity Taxes and Special Assessments

Property within the District is subject to taxes and assessments imposed by public agencies other than the District or the County that also have jurisdiction over the land within the District. See “SECURITY FOR THE BONDS - Direct and Overlapping Debt and Value-to-Lien Ratios” and “- Other Financing Districts.” The Special Taxes and any penalties and interest thereon will constitute a lien upon the lots and parcels of land in the District upon which the Special Taxes will annually be levied until they are paid. Such lien is on a parity with special taxes and special assessments levied by other agencies and is coequal to and independent of the lien for general property taxes regardless of when they are imposed upon the same property. The Special Taxes have priority over all existing and future private liens imposed on property in the District. The District has no control, however, over the ability of other agencies and districts to incur indebtedness secured by special taxes or assessments payable from all or a portion of the property in the District. Any such special taxes or assessments will be secured by a lien on such property on a parity with the lien of the Special Taxes and any penalties and interest thereon.

Special Tax Delinquencies

Under provisions of the Act, the Special Taxes, from which funds necessary for the payment of principal of, and interest on, the Bonds are derived, will be billed to the properties in the District on the regular property tax bills sent to owners of such properties. The Special Tax installments are due and payable on the same dates, and bear the same penalties and interest for non-payment, as general ad valorem property tax installments. Special Tax installments cannot be paid separately from general ad valorem property tax payments. Therefore, the unwillingness or inability of a property owner to pay general property tax bills, as evidenced by property tax delinquencies, may also indicate an unwillingness or inability to make general property tax payments and Special Tax installment payments in the future.

The total amount of the Special Taxes levied on property in the District for fiscal year 2005-06 was $925,131.06. Of that amount, $12,108 is delinquent for a delinquency rate of 1.31%.

See “THE DISTRICT – Special Tax Delinquencies.” See also “SECURITY FOR THE BONDS – Reserve Account” and “ - Covenant for Superior Court Foreclosure,” for a discussion of the obligations of the District in the event of delinquency in the payment of Special Tax installments.

32 Future Indebtedness

Some of the owners of land in the District may eventually wish to construct improvements in addition to those being financed with the proceeds of the Bonds. The cost of those additional improvements may increase the public and private debt for which the land in the District is security over that contemplated at the time of the issuance of the Bonds, and such increased debt could impair the ability and willingness of the property owners to pay the Special Taxes levied on property in the District. Further, in the event any additional improvements or fees are financed through the establishment of an assessment district or another community facilities district, any taxes or assessments levied to finance such improvements will be secured by a lien on a parity with the lien of the Special Taxes. See “SECURITY FOR THE BONDS - Direct and Overlapping Debt and Value-to-Lien Ratios” and “- Other Financing Districts.”

Disclosures to Future Purchasers of Land

The Board of Supervisors has recorded a notice of the lien of the Special Taxes for the District in the Office of the County Recorder of the County. Title insurance companies normally refer to such notices in title insurance reports. However, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser of property in the District or a lender will consider such Special Tax obligation in the purchase of such property or the lending of money. Failure to disclose the existence of the Special Taxes or the full amount of the debt on the property in the District may affect the ability and willingness of future owners of land in the District to pay the Special Taxes when due.

The Act requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel or unit subject to a community facilities district 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 covered by the above 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 above requirements, or failure by a purchaser or lessee to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessee to pay the Special Tax when due.

Payment of Special Taxes

The levy of special taxes can result in a significantly greater property tax burden being imposed upon properties within a community facilities district than in other areas of a city or county, and this added burden can result in problems in the collection of the special taxes. In some community facilities districts, the property owners have refused to pay the special taxes and have commenced litigation challenging the special taxes, the establishment of the community facilities district and the bonds issued by the district.

The Special Taxes, from which funds necessary for the payment of principal of, and interest on, the Bonds are derived, will be billed to the properties in the District on the regular property tax bills sent to owners of such properties. Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do regular property tax installments. Special Tax installment payments cannot be made separately from property tax payments. Therefore, the unwillingness or inability of a property owner to pay regular property tax bills, as evidenced by property tax delinquencies, may also indicate an unwillingness or inability to make regular property tax payments and Special Tax installment payments in the future. See “THE DISTRICT - Special Tax Delinquencies.”

An owner of a taxable parcel is not personally obligated to pay the Special Taxes which are levied on his or her parcel. Instead, the Special Taxes are an obligation which is secured only by a lien upon the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to fully secure the Special Taxes, the District has no recourse against the owner.

33 See “SECURITY FOR THE BONDS – Reserve Account” and “- Covenant for Superior Court Foreclosure,” for a discussion of the obligations of the District in the event of delinquency in the payment of Special Tax installments.

The ability of the District to increase the amount of Special Taxes which may be levied and to pay costs of foreclosure proceedings may be limited by voter initiative. See “Constitutional Amendment” and “Limitations on Remedies” below.

Bankruptcy

The payment of property owners’ taxes and the ability of the District to foreclose the lien of delinquent unpaid Special Taxes pursuant to the foreclosure covenant, may be limited by bankruptcy, insolvency, or other laws generally affecting creditors’ rights or by the laws of the State relating to judicial foreclosure. See “Limitations on Remedies” below and “SECURITY FOR THE BONDS - Covenant for Superior Court Foreclosure.” The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion) will be qualified, as to the enforceability of the various legal documents, by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally.

Although bankruptcy proceedings would not cause the Special Taxes to become extinguished, the amount of any lien on property securing the payment of delinquent Special Taxes could be reduced if the value of the property were determined by the bankruptcy court to have become less than the amount of the lien. The amount of the delinquent Special Taxes in excess of the reduced lien would then be treated as an unsecured claim by the court. Further, bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings. Such a delay would increase the likelihood of a delay or default in payment of the principal of, and interest on, the Bonds and the possibility of delinquent tax installments not being paid in full. The prosecution of foreclosure proceedings could also be delayed for other reasons, including crowded court calendars and procedural delaying tactics. See “Limitations on Remedies” below.

Pursuant to the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, enacted by Congress on April 14, 2005, the lien for special taxes established after the filing of a petition in bankruptcy will be treated thereafter as a lien for ad valorem taxes.

Payments by FDIC

The ability of the District to collect interest and penalties allowed by State law and to foreclose on property with delinquent Special Taxes may be limited if the Federal Deposit Insurance Corporation (the “FDIC”) has or obtains an interest in the property. The FDIC would obtain such an interest by taking over a financial institution which has made a loan which is secured by real property within the District.

The FDIC has issued a policy statement (the “Policy Statement”) which provides that real property owned by the FDIC is subject to state and local property taxes only if those taxes are assessed according to the property’s value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the affairs of the institution for which the FDIC is acting, unless abandonment of the FDIC’s interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay or recognize liens for such amounts. If any property taxes (including interest) on FDIC owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay the taxes. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC’s consent. In addition the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without its consent.

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

The District is unable to predict what effect the FDIC’s application of the Policy Statement would have if there were a delinquency in Special Taxes levied on a parcel in the District in which the FDIC had an interest. However, it should be assumed that there would not be a buyer at a foreclosure sale if the FDIC’s lien could not be foreclosed. It should also be assumed that the District will be unable to foreclose on any parcel owned by the FDIC. In either event, there would be a draw on the Reserve Account and, if the delinquency continued, there could be a default in payment of principal of and interest on the Bonds.

Geologic, Topographic and Natural Disaster Conditions

The market value of the land and improvements within the District could be adversely affected by a variety of factors, particularly those which may affect infrastructure and other public improvements and private improvements of the land and the continued habitability and enjoyment of such improvements. These factors include geologic conditions (such as earthquakes), topographic conditions (such as land slides) and natural disasters (such as flood, drought and fire).

The occurrence of any of these conditions could result in damage to improvements of varying seriousness which may entail significant repair or replacement costs. Depending on the severity of the damage, repair or replacement may never occur either because of the magnitude of cost or because repair or replacement will not facilitate habitability or other use, or because other considerations may preclude such repair or replacement. Consequently, the occurrence of any of these conditions could result in a significant decrease in the market value of affected property or in such property becoming unmarketable.

The property in the District is located partly within an Alquist-Priolo Special Situation Zone. The Glen Ivy North and Glen Ivy South Earthquake Fault Zones cross portions of the District. There are three other active faults within a 35 mile radius of the District. These are the Newport-Inglewood, San Jacinto and San Andreas Faults.

Hazardous Substances

One of the most serious risks which may affect the value of property is the discovery of a hazardous substance. Under federal and State law, an owner or operator of property is obligated to remedy a hazardous substance condition on the property regardless of whether he is responsible for the presence or handling of the hazardous substance. The discovery of a hazardous substance on any property in the District would result in a reduction of the value of the property by at least an amount equal to the cost of remedying the condition, because a prospective purchaser of the property would, upon becoming the owner of the property, become obligated, to the same extent as the seller, to remedy the condition.

The District has not conducted any investigation to determine whether any of the owners of (or operators on) any of the property in the District has a current liability for any hazardous substance. However, it is possible that current or potential liabilities exist which are unknown to the District.

Further, it is possible that hazardous substance liabilities may arise as a result of a future reclassification of a substance, which may be present on property in the District, as a hazardous substance. Additionally, such liabilities could arise not only from the presence of a hazardous substance but from the method of handling a substance.

35 Constitutional Amendment

An initiative measure commonly referred to as the “Right to Vote on Taxes Act” (the “Initiative”), Proposition 218, was approved by the voters of the State of California at the November 5, 1996 general election. The Initiative added Article XIII C (“Article XIII C”) and Article XIII D to the California Constitution. According to the “Title and Summary” of the Initiative prepared by the California Attorney General, the Initiative limits “the authority of local governments to impose taxes and property-related assessments, fees and charges.”

Among other things, Section 3 of Article XIII C states that “... the initiative power will not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge.” The District believes, however, that Article XIII C confers on the voters no greater power as to the reduction or repeal of the Special Taxes than the power reserved to the legislative body of the District (i.e., the Board of Supervisors).

The Act imposes on the Board of Supervisors a statutory duty to levy that amount of Special Taxes which is required for the payment of the principal of and interest on the Bonds, including any necessary replenishment of bond reserve funds and any amount required by federal law to be rebated to the United States for the Bonds (the “Minimum Levy”). In addition, the Act prohibits the Board of Supervisors from adopting any resolution to reduce the rates of the Special Taxes or terminate the levy of the Special Taxes pledged to repay the Bonds unless it determines that the reduction or termination of the Special Taxes would not interfere with the timely retirement of the Bonds. Accordingly, the District believes that the Initiative has not conferred on the voters the power to repeal or reduce the Special Taxes below the amounts required for the Minimum Levy. However, the application of the Initiative will ultimately be determined by the courts. It is not possible to predict, with certainty, how the courts will interpret the Initiative or the nature of any remedy that may be granted by the courts. See “Limitations on Remedies” below.

Further, no assurance can be given regarding the future levy of the Special Taxes in amounts greater than the level required for the Minimum Levy. The District has covenanted in the Indenture that it will not initiate proceedings to reduce the maximum Special Tax rates unless it receives a certificate from an Independent Financial Consultant that (i) such changes will not reduce the maximum Special Taxes that may be levied in each year on property in the District to an amount which is less than the sum of estimated Administrative Expenses plus 110% of the Annual Debt Service due in each future Bond Year; (ii) such changes will not reduce the maximum Special Taxes that may be levied on Developed Property upon the buildout of such parcels in each year after buildout to an amount which is less than the sum of estimated Administrative Expenses plus 110% of the Annual Debt Service due in each future Bond Year as of the date of such proposed reduction; and (iii) the District is not delinquent in the payment of the principal of or interest on the Bonds.

Future Initiatives

The Initiative was submitted to and approved by the voters of the State pursuant to the State’s constitutional initiative process. The Supreme Court of the State has held that an initiative can repeal a tax ordinance and prohibit the imposition of further such taxes and that the exemption of taxes from the referendum requirements does not apply to initiatives. From time to time, other initiative measures could be adopted by the voters of the State. The adoption of any such initiative might place limitations on the ability of the State, the District and other local districts to increase revenues or increase appropriations or on the ability of the property owners to complete the remaining proposed development of the land in the District.

Loss of Tax Exemption

As discussed in “TAX MATTERS” below, interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued, as a result of future acts or omissions of the District in violation of its covenants in the Indenture. Should such an event of taxability occur, the Bonds are not subject to a special redemption and will remain outstanding until maturity or until redeemed under the mandatory redemption section of the Indenture. See “Limitations on Remedies” below. 36 Limited Secondary Market

There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that the 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 be available to Bondowners on a timely basis. The failure to provide the required financial information does not give rise to monetary damages but only an action for specific performance. Occasionally, because of general market conditions, lack of current information, or the absence of a credit rating for bonds, or because of adverse history or economic prospects associated with a particular bond issue, secondary marketing practices in connection with a bond issue are suspended or terminated. Also, prices of bond issues for which a market is being made will depend upon current circumstances, and could be substantially different from the original purchase price.

Limitations on Remedies

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

Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Indenture to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium, or other similar laws affecting generally the enforcement of creditors’ rights, by equitable principles, by the exercise of judicial discretion and by limitations on legal remedies against public agencies in the State. Additionally, the Bonds are not subject to acceleration in the event of the breach of any covenant or duty under the Indenture. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation, or modification of Bondowner rights.

CONTINUING DISCLOSURE

The District has covenanted for the benefit of the Owners of the Bonds to provide certain financial information relating to the District by April 1 of each year commencing on April 1, 2007 (the “Annual Reports”), and to provide notices of the occurrence of certain enumerated events, if deemed by the District to be material. The Annual Reports will be filed by the Trustee, as Dissemination Agent, on behalf of the District with each Nationally Recognized Municipal Securities Information Repository and with any State Repository which may be designated by the State of California. The notices of material events will be filed by the Trustee, as Dissemination Agent, on behalf of the District with the Municipal Securities Rulemaking Board and any such State Repository which may be designated.

Pursuant to the Continuing Disclosure Agreement, under circumstances and upon satisfaction of requirements specified therein, the District may amend the Continuing Disclosure Agreement or the Continuing Disclosure Agreement may be amended with the approval of the Bondowners in the manner provided therein. The District’s obligations under the Continuing Disclosure Agreement will terminate upon the defeasance, prior redemption or payment in full of all of the Bonds. The provisions of the Continuing Disclosure Agreement are intended to be for the benefit of the Bondowners and will be enforceable by the Bondowners. However, any enforcement action by any Bondowner will be limited to a right to obtain specific enforcement of the District’s obligations under the Continuing Disclosure Agreement, and any failure by the District to comply with the provisions of the agreement will not be an event of default under the Indenture. See “APPENDIX F - CONTINUING DISCLOSURE AGREEMENT.”

During the past five years, the County (as the administrator for the District and a public financing authority) has on two occasions failed to file an annual report by the date specified in the continuing disclosure undertaking. On one occasion, the dissemination agent failed to file the annual report for the District which the County had timely provided to the dissemination agent. The annual report was filed promptly after the County became aware that the dissemination agent had not filed the report by the filing date. The second late filing involved the Riverside County Public Financing Authority Rancho Villages Projects/AD No. 159 Series 2003 37 (Junior Lien Bonds) (the “2003 Series”). The annual report was prepared for filing on April 1 which is the filing date for the other two bond issues relating to Assessment District No. 159. However, the filing date for the 2003 Series was in February. The annual reports for all three series of bonds (1999, 2000 and 2003) were provided to the dissemination agent on March 17, 2004.

LEGAL OPINION

The legal opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California, approving the validity of the Bonds, in substantially the form set forth as Appendix E hereto, will be made available to purchasers at the time of original delivery of the Bonds.

Bond Counsel’s engagement is limited to a review of the legal procedures required for the issuance of the Bonds and to rendering an opinion as to the matters set forth in Appendix E hereto. Bond Counsel has not been engaged to prepare this Official Statement and expresses no opinion as to the matters discussed herein.

TAX MATTERS

In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax. Bond Counsel notes that, with respect to corporations, interest on the Bonds may be included as an adjustment in the calculation of alternative minimum taxable income which may affect the alternative minimum tax liability of such corporations.

The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of the same maturity is to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond Owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by the Bond Owner will increase the Bond Owner’s basis in the Bond. In the opinion of Bond Counsel, the amount of original issue discount that accrues to the owner of a Bond is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax.

Bond Counsel’s opinion as to the exclusion from gross income of interest (and original issue discount) on the Bonds is based upon certain representations of fact and certifications made by the District and others and is subject to the condition that the District complies with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds to assure that interest (and original issue discount) on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District has covenanted to comply with all such requirements.

The amount by which a Bond Owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally, the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium, which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Bond Owner’s basis in the applicable Bond (and the amount of tax- exempt interest received) and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond Owner realizing a taxable gain when a Bond is sold by the Owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the Owner. Purchasers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable Bond premium. 38 The Internal Revenue Service (the “IRS”) has initiated an expanded program for the auditing of tax- exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of other similar bonds).

Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. The Indenture and the Tax Certificate relating to the Bonds permit certain actions to be taken or to be omitted if a favorable opinion of Bond Counsel is provided with respect thereto. Bond Counsel expresses no opinion as to the exclusion from gross income of interest (and original issue discount) on the Bonds for federal income tax purposes with respect to any Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation.

Although Bond Counsel has rendered an opinion that interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes provided that the District continues to comply with certain requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest (and original issue discount) with respect to the Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any such tax consequences. Accordingly, before purchasing any of the Bonds, all potential purchasers should consult their tax advisors with respect to collateral tax consequences relating to the Bonds.

A copy of the proposed form of opinion of Bond Counsel is attached hereto as Appendix E.

NO LITIGATION

At the time of delivery of and payment for the Bonds, the District will certify that there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or regulatory agency, public board or body pending or threatened against the County or the District affecting their existence, or the titles of their respective officers, or seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture, or the collection or application of the Special Tax to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Indenture, the agreement entered into between the County and the Underwriter for the sale of the Bonds (the “Bond Purchase Agreement”), or any other applicable agreements or any action of the County or the District contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement or any amendment or supplement thereto, or contesting the powers of the County or the District or their authority with respect to the Bonds or any action of the County or the District contemplated by any of said documents, nor, to the knowledge of the District, is there any basis for any such action, suit, proceeding, inquiry of investigation.

However, the County has been named and served in two pending lawsuits filed in the Riverside County Superior Court challenging the County’s Comprehensive General Plan approved on October 7, 2003. The lawsuits allege that the County did not comply with the California Environmental Quality Act (“CEQA”) and/or violated various planning and zoning statutes in adopting the Comprehensive General Plan. These cases are (i) Endangered Habitats League v. County of Riverside (RIC 402952) and (ii) Fountainhead Country Club, LLC, et al. v. County of Riverside, et al. (RIC 405631). If either of these actions were to result in a judgment invalidating the Comprehensive General Plan, the court could suspend the power of the County to issue building permits, to grant zoning changes and/or to approve subdivision maps thereby potentially adversely affecting the further development of the property within the District.

Endangered Habitats League v. County of Riverside (RIC 402952) was filed November 5, 2003. The petitioners seek a Writ of Mandate alleging the failure of the County to comply with CEQA in adopting the County’s Comprehensive General Plan. Specifically, the petitioners allege that the County failed to consider the individual and cumulative traffic, air quality, noise, public services, and biological impacts and to provide for feasible mitigation of each in preparing the Environmental Impact Report. The petitioners seek to have the 39 approval of the Comprehensive General Plan set aside and to require the County to comply with the provisions of CEQA. Petitioner’s principal concern is with the alleged inadequacy of the principal transportation arterials. The County has been engaged in settlement negotiations with the petitioners. No trial date has been set by the court.

Fountainhead Country Club, LLC, et al. v. County of Riverside, et al. (RIC 405631) was filed on January 5, 2004. The petitioners filed a Petition for Writ of Mandate and a Complaint for Preliminary and Permanent Injunctive Relief, Declaratory Relief, and Damages whereby the petitioners seek to have the Comprehensive General Plan set aside and have the treatment of certain property owned by the petitioner Fountainhead Country Club, LLC, declared a taking by inverse condemnation. Several years ago the County approved a specific plan for the property currently owned by the petitioner Fountainhead Country Club, LLC in an unincorporated area of the County south/southwest of the City of Temecula. The proposed project contemplated residential development around an eighteen-hole golf course. The County rescinded the specific plan and redesignated the petitioner’s property. The County has been engaged in settlement negotiations with the petitioners. No trial date has been set by the court.

If the settlement negotiations are not successful with respect to these lawsuits and if either petitioner prevails, the court must fashion its ruling to conform with Section 65755 of the California Government Code. This section allows for the court to, among other things, suspend the authority of the County to issue building permits and all other related permits, suspend the authority of the County to grant any and all categories of zoning changes, variances, or both, and suspend the authority of the County to grant subdivision map approval for any and all categories of subdivision map approvals. However, this section also provides the court with discretion to exclude any approved specific plan or tract map from the terms of its ruling.

RATINGS

Standard & Poor’s Ratings Services, a Division of The McGraw-Hill Companies, Inc. (“Standard & Poor’s”) is expected to assign its municipal bond rating of “AAA” to the Bonds with the understanding that upon delivery of the Bonds, the Financial Guaranty Insurance Policy will be issued by MBIA Insurance Corporation. An explanation of the significance of the rating may be obtained from Standard & Poor’s Ratings Services at 25 Broadway, New York, New York 10004. There is no assurance that this rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by Standard & Poor’s, if, in its judgment, circumstances so warrant. Any downward revision or withdrawal of the rating may have an adverse effect on the market price of the Bonds.

UNDERWRITING

The Bonds are being purchased through negotiation by E. J. De La Rosa & Co., Inc. (the “Underwriter”). The Underwriter has agreed to purchase the Bonds at an aggregate purchase price of $10,344,244.95 (which is the principal amount of $10,435,000.00 plus a net premium in the amount of $14,325.40 and less the Underwriter’s discount in the amount of $105,080.45). The purchase contract for the Bonds provides that the Underwriter will purchase all of the Bonds, if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in such purchase contract, the approval of certain legal matters by counsel and certain other conditions.

The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside cover page hereof. The offering prices may be changed from time to time by the Underwriter.

FINANCIAL INTERESTS

In connection with issuance of the Bonds, fees payable to certain professionals, including the Underwriter, Stradling Yocca Carlson & Rauth, a Professional Corporation, as Bond Counsel, Best Best & Krieger LLP, as Disclosure Counsel, The Bank of New York Trust Company, N.A., as Trustee, and Fieldman,

40

[THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX A

AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX FOR COMMUNITY FACILITIES DISTRICT NO. 89-1 (MOUNTAIN COVE) COUNTY OF RIVERSIDE

A Special Tax (all capitalized terms are defined in Section A. Definitions below), shall be applicable to each Parcel of Taxable Property located within the boundaries of Community Facilities District No. 89-1. The amount of Special Tax to be levied each Fiscal Year commencing in Fiscal Year 2001-2002 for a Parcel shall be determined by the Board, acting in its capacity as the legislative body of CFD No. 89-1, by applying the appropriate tax rate methodology as set forth in Sections B, C and D below for Taxable Property. All of the property in CFD No. 89-1, unless exempted by law or by the provisions of Section E below, shall be taxed for the purposes, to the extent and in the manner, herein provided.

A. DEFINITIONS

“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, comprising Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California.

“Administrative Expenses” means all actual or reasonably estimated costs and expenses of the County to carry out its duties as the administrator of CFD No. 89-1, as allowed by the Act, which shall include, without limitation, all costs and expenses arising out of or resulting from the annual levy and collection of the Special Tax, trustee fees, rebate compliance calculations fees, any litigation or appeals involving CFD No. 89-1, continuing disclosure undertakings of the County as imposed by applicable laws and regulations, communication with bondholders and normal administrative expenses.

“Administrator” means the County Executive Officer of the County, or his/her designee.

“Approved Property” means, for any Fiscal Year, all Parcels for which a Final Map was recorded prior to January 1 of the preceding Fiscal Year and for which a building permit was not issued prior to April 1 of the preceding Fiscal Year.

“Assessor's Parcel Map” means an official map of the Assessor of the County designating Parcels by assessor’s parcel number.

“Board” means the Board of Supervisors of the County.

“Bond(s)” means bonds, notes, or other indebtedness of CFD No. 89-1 payable from Special Taxes.

“Bond Year” means the one-year period ending each September 1.

“CFD No. 89-1” means Community Facilities District No. 89-1 (Mountain Cove) of the County established pursuant to the Act by adoption of Resolution No. 89-198 by the Board.

“County” means the County of Riverside of the State of California.

“Developed Property” means, for any Fiscal Year, all Parcels of Taxable Property, (a) which are included in a Final Map which was recorded prior to January 1 of the preceding Fiscal Year, and (b) for which a building permit was issued prior to April 1 of the preceding Fiscal Year.

“Exempt Property” means any Parcel which is exempt from Special Taxes pursuant to Section E below.

A-1 “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 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. 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 issued.

“Fiscal Year” means the period from and including July 1 of any year to and including the following June 30.

“Golf Course Property” means all Parcels that are designated as golf course property as specified on Tentative Tract Map No. 29416 and generally specified in the Specific Plan.

“Indenture” means the fiscal agent agreement, trust agreement, bond indenture, or other instrument pursuant to which Bonds are issued, as the same may be amended from time to time.

“Land Use Class” means any of the classes listed in Tables 1 and 2 in Sections B and C.

“Maximum Special Tax” means the highest Special Tax that can be levied on a Parcel in any Fiscal Year in accordance with Section C.

"Net Taxable Acreage" means the acreage of a Parcel as indicated by the most recent Assessor's Parcel Map.

“Non-Residential Property” means all Parcels of Approved Property or Developed Property, which have been developed or are identified in the Specific Plan for non-residential use.

“Parcel(s)” means, for each Fiscal Year, a lot or parcel shown on an Assessor's Parcel Map with an assigned Parcel number as of January 1 of the preceding Fiscal Year.

“Planning Area” means a geographical area that has been designated as a planning area in the Specific Plan.

“Principal Prepayment” means the principal amount of the Bonds to be paid or redeemed with the proceeds of a prepayment of Special Taxes.

“Property Owners’ Association Property” means, for any Fiscal Year, any Parcel, which, prior to January 1 of the preceding Fiscal Year has been conveyed, dedicated to, or irrevocably offered for dedication to a property owner association, including any master or sub-association.

“Proportionately” means, with respect to the Parcels within a classification of Property, that the ratio of the actual Special Tax levy to the Maximum Special Tax is the same for all Parcels within such classification of Property.

“Public Property” means any Parcel within the boundaries of CFD No. 89-1 that is used for rights-of-way or any other purpose and is owned by, dedicated to, or irrevocably offered for dedication to the federal government, the State of California, the County, a city, or any other public agency, 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.

“Residential Property” means all Parcels of Approved Property or Developed Property, which have been developed or designated in the Specific Plan for residential use.

“Single Family Attached Dwelling Units” means all dwelling units for which building permits have been issued for attached residential development, which includes condominium units.

“Single Family Detached Dwelling Units” means all dwelling units for which building permits have been issued for detached residential development. A-2 “Special Tax(es)” means the special tax to be levied, in each Fiscal Year, on each Parcel of Taxable Property to fund the Special Tax Requirement.

“Special Tax Requirement” means that amount required in any Fiscal Year to pay: (1) principal of and interest coming due on all outstanding Bonds of CFD No. 89-1 in the Bond Year commencing in such Fiscal Year, (2) Administrative Expenses, (3) costs of credit enhancement for the Bonds, (4) the amount needed to replenish any reserve fund for the Bonds, (5) any amount required to be rebated the United States of America with respect to the Bonds, (6) an amount equal to any Special Tax delinquency in the prior Fiscal Year, less a credit for funds already on deposit in the funds established under the Indenture and available to reduce the annual Special Tax Requirement, as determined by the Administrator pursuant to the Indenture.

“Specific Plan” means the Specific Plan No. 221 dated as of May 23, 2000, or as subsequently modified, supplemented or amended.

“Square Feet” means the number of square feet provided on a building permit issued by Riverside County Building and Safety. This includes the area measured from the inside surface of the home.

“Taxable Property” means all Parcels in CFD No. 89-1, which are not exempt from the levy of Special Taxes pursuant to the Act or Section E below.

“Undeveloped Property” means, for any Fiscal Year, all Parcels of Taxable Property, which are not Approved Property, Developed Property, Golf Course Property, Property Owners’ Association Property, or Public Property.

B. ASSIGNMENT TO LAND USE CLASS

For each Fiscal Year (commencing with the 2001-2002 Fiscal Year) all Parcels of Taxable Property shall be classified either as Approved Property, Developed Property, Undeveloped Property, or Golf Course Property. All Parcels other than Exempt Property shall be subject to the levy of the Special Tax in accordance with the rates and method of apportionment set forth in Sections C and D below.

Within Approved Property and Developed Property, all Parcels shall be further classified as Residential Property or Non-Residential Property. Residential Property which is Developed Property, will be classified as listed in Table 1:

Table 1 Residential Property Land Use Classes in CFD No. 89-1

Land Use Class A Single Family Attached/Detached Dwelling Unit with 2001 or more Square Feet

B Single Family Attached/Detached Dwelling Unit with 1500 - 2000 Square Feet C Single Family Attached/Detached Dwelling Unit with 1499 or less Square Feet

C. MAXIMUM SPECIAL TAX

1. Maximum Special Tax

The Maximum Special Tax for all classifications of Taxable Property is set forth in Table 2. The Maximum Special Tax applicable to each Parcel shall be obtained by multiplying the applicable Maximum Special Tax rate for the Parcel by one of the following: A-3 (a) The Net Taxable Acreage of the Parcel, for Parcels classified as Undeveloped Property, Non- Residential Property, or Golf Course Property; or

(b) The number of residential units for the Parcel, for Parcels classified as Residential Property.

For any Parcel that has prepaid pursuant to Section H., the Maximum Special Tax for that Parcel shall be zero.

Table 2 Maximum Special Tax by Land Use Class

Maximum Land Use Class Special Tax Approved Property Residential Property $800/lot Non-Residential Property $2,500/acre Developed Property Residential Property A $987/unit B $766/unit C $610/unit Non-Residential Property $2,500/acre Golf Course Property $5,600/acre Undeveloped Property $7,599/acre

D. METHOD OF APPORTIONMENT OF THE SPECIAL TAX

Starting with Fiscal Year 2001-2002 and for each subsequent Fiscal Year, the Board shall determine the amount of Special Taxes to be levied in order to satisfy the Special Tax Requirement for such Fiscal Year. The Board shall levy the Special Taxes as follows until it has levied the amount necessary to satisfy the Special Tax Requirement for said Fiscal Year:

First: The Special Tax shall be levied Proportionately on each Parcel of Developed Property, exclusive of Exempt Property, up to 100 percent of the Maximum Special Tax;

Second: If additional funds are needed after the first step has been completed, the Special Tax shall be levied Proportionately on each Parcel of Approved Property, exclusive of Exempt Property, up to 100 percent of the Maximum Special Tax;

Third: If additional funds are needed after the first and second steps have been completed, the Special Tax shall be levied Proportionately on each Parcel of Undeveloped Property, exclusive of Exempt Property, up to 100 percent of the Maximum Special Tax;

Fourth: If additional funds are needed after the three steps above have been completed, the Special Tax shall be levied on each Parcel of Golf Course Property, exclusive of Exempt Property, up to 100 percent of the Maximum Special Tax.

Notwithstanding the above, under no circumstances will the Special Taxes levied against any Parcel of Developed Property which is Residential Property be increased by more than ten percent (10%) per Fiscal Year as a consequence of delinquency or default in the payment of Special Taxes by the owner(s) of any other Parcel(s) within the District.

A-4 E. EXEMPTIONS

Land conveyed or irrevocably offered for dedication to a public agency after formation of CFD No. 89-1, and not otherwise exempt pursuant to this Section E, shall be subject to the levy of Special Tax pursuant to Section 53317.3 or Section 53317.5 of the Government Code.

Notwithstanding the above, the Special Tax shall not be imposed upon any of the following:

(1) The Board shall not levy Special Taxes on up to 317 Acres of Public Property, except as otherwise provided in Section 53317.3 of the Government Code.

(2) The Board shall not levy Special Taxes on up to 117.2 Acres of Property Owners’ Association Property.

(3) All Parcels located in Planning Areas 2 and 17 (open space), 9B and 16 (Property Owners’ Association Property), and 15 (non-conforming property) as identified in the Specific Plan. If such property is not used for exempted property it shall be subject to the levy of Special Tax.

F. APPEALS

Any property owner claiming that the amount or application of the Special Tax is not correct and requesting a refund may file a written notice of appeal with the Administrator once the Special Tax in dispute has been paid but, not later than 12 months after the mailing of the property tax bill on which Special Tax appears. The Administrator shall promptly review the appeal, and if necessary, meet with the property owner, consider written and oral evidence regarding the amount of the Special Tax, convene the CFD Special Tax Review Board and decide the appeal. This procedure shall be exclusive and its exhaustion by any property owner shall be a condition precedent to any legal action by such owner.

G. MANNER OF COLLECTION, PENALTIES, PROCEDURE AND LIEN PRIORITY

The Special Taxes shall be collected in the same manner and at the same time as ad valorem property taxes and shall be subject to the same penalties, and the same procedure, sale and lien priority in case of delinquency as is provided for ad valorem taxes; provided, however, that the County may collect Special Taxes at a different time or in a different manner and may covenant to foreclose and may actually foreclose on delinquent Parcels as permitted by the Act if necessary to meet the financial obligations of CFD No. 89-1.

H. PREPAYMENT OF SPECIAL TAX

The Special Tax obligation for Developed Property may be prepaid in whole at any time. A prepayment may be made only if there are no delinquent Special Taxes with respect to such Parcel at the time of prepayment. An owner of a Parcel intending to prepay their Special Tax obligation shall provide the Administrator of CFD No. 89-1 with a written notice of intent to prepay and within 10 business days of receipt of such notice, the Administrator shall notify such owner of the prepayment amount. The Special Tax to be prepaid will equal the sum of the amounts calculated under paragraphs below:

Developed Property

1. Compute the applicable Bond Principal Prepayment Amount: Shall be the greater of:

(a) Divide the Parcel’s Maximum Special Tax for the Parcel’s applicable Land Use Class for the Fiscal Year in which the prepayment is to be made by the projected Maximum Tax at build out of $1,037,362. Multiply the amount computed under the previous sentence by the outstanding Bonds to determine the Principal Prepayment; or A-5 (b) Divide the Parcel’s acreage by the total taxable acreage of 162 acres. Multiply the amount computed under the previous sentence by the outstanding Bonds to determine the Principal Prepayment.

2. Compute the applicable Bond Principal Prepayment premium: Multiply the Principal Prepayment by the applicable premium set forth in the Indenture to determine the Bond redemption premium, if any, due on the first date on which Bonds may be redeemed with such Principal Prepayment.

3. Compute the interest payable with respect to the Principal Prepayment: Compute the interest payable on the principal amount of the Bonds to be paid with the Principal Prepayment to the first date that Bonds may be redeemed with such proceeds under the Indenture. Subtract from such total the amount of any Special Taxes paid and collected for such Parcel which are available to be applied toward the payment of the Principal Prepayment and the interest payable as calculated pursuant to this paragraph 3.

4. Compute the applicable Administrative Expenses: Compute the amount of any Administrative Expenses of CFD No. 89-1 relating to the prepayment as determined by the Administrator, including, but not limited to, the costs of computing and verifying the amount of the prepayment, the costs of redeeming the Bonds and the cost of recording any notices to evidence the prepayment of Special Taxes and the redemption of Bonds.

5. Compute the applicable reserve fund credit: If under the terms of the Indenture the deposit of the prepaid Special Taxes will result in a transfer of amounts from any reserve fund established for such Bonds under the Indenture, then the amount to be transferred shall be treated as a reduction in the amount of Special Taxes to be prepaid on such Parcel.

6. Compute the applicable defeasance credit: Compute the amount the Administrator reasonably expects to derive from the reinvestment of the Special Tax prepayment until the redemption date for the Bonds. This amount shall be treated as a reduction in the amount of Special Taxes to be prepaid on such Parcel.

Golf Course Property

The Golf Course Property owner may request a prepayment calculation if there is no remaining Undeveloped Property and the conditions of Section J. (b) and (c) are satisfied. The Administrator shall establish the prepayment amount so as not to result in the maximum amount of Special Taxes which could be levied on remaining Parcels of Taxable Property for any Fiscal Year being less than 110 percent of maximum annual debt service plus 100% of the annual Administrative Expenses on the outstanding Bonds of CFD 89-1.

I. Term of Special Tax

Special Taxes shall be levied for the period necessary to satisfy the Special Tax Requirement, but in no event shall it be levied after Fiscal Year 2040-2041 for all properties except for Golf Course Property. The Golf Course Property will be obligated to pay the Special Tax until the Bonds have been paid in full or until the Special Tax obligation has been prepaid or has been released pursuant to Section J below.

A-6 J. Release of Obligation to Pay and Disclose Special Tax for CFD No. 89-1 on Golf Course Property

All Parcels of Golf Course Property shall be relieved permanently from the obligation to pay and disclose the Special Taxes if:

(a) The Administrator determines that the annual debt service required for the Bonds, when compared to the Special Taxes that may be levied against all Parcels of Developed Property, result in 110% coverage service plus 100% of the annual Administrative Expenses for the remaining term of the Bonds; and

(b) The Bond reserve fund is at reserve requirement pursuant to the Indenture; and

(c) There are at least 600 occupied residential dwelling units, for which the Special Tax has not been prepaid, that have maintained a delinquency rate below 6.0% for a period of three (3) consecutive Fiscal Years.

A-7 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX B

SPECIMEN FINANCIAL GUARANTY INSURANCE POLICY [THIS PAGE INTENTIONALLY LEFT BLANK] FINANCIAL GUARANTY INSURANCE POLICY MBIA Insurance Corporation Armonk, New York 10504

Policy No. [NUMBER] MBIA Insurance Corporation (the "Insurer"), in consideration of the payment of the premium and subject to the terms of this policy, hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete payment required to be made by or on behalf of the Issuer to [PAYING AGENT/TRUSTEE] or its successor (the "Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in such amounts and at such times as such payments of principal would have been due had there not been any such acceleration, unless the Insurer elects in its sole discretion, to pay in whole or in part any principal due by reason of such acceleration); and (ii) the reimbursement of a such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured Amounts." "Obligations" shall mean:

[PAR] [LEGAL NAME OF ISSUE]

Upon receipt of telephonic or telegraphic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written notice by registered or certified mail, by the Insurer from the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is then due, that such required payment has not been made, the Insurer on the due date of such payment or within one business day after receipt of notice of such nonpayment, whichever is later, will make a deposit of funds, in an account with U.S. Bank Trust National Association, in New York, New York, or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations, such instruments being in a form satisfactory to U.S. Bank Trust National Association, U.S. Bank Trust National Association shall disburse to such owners, or the Paying Agent payment of the Insured Amounts due on such Obligations, less any amount held by the Paying Agent for the payment of such Insured Amounts and legally available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any Obligation. As used herein, the term "owner" shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer, or any designee of the Issuer for such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the underlying security for the Obligations. Any service of process on the Insurer may be made to the Insurer at its offices located at 113 King Street, Armonk, New York 10504 and such service of process shall be valid and binding. This policy is non-cancellable for any reason. The premium on this policy is not refundable for any reason including the payment prior to maturity of the Obligations. In the event the Insurer were to become insolvent, any claims arising under a policy of financial guaranty insurance are excluded from coverage by the California Insurance Guaranty Association, established pursuant to Article 14.2 (commencing with Section 1063) of Chapter 1 of Part 2 of Division 1 of the California Insurance Code. IN WITNESS WHEREOF, the Insurer has caused this policy to be executed in facsimile on its behalf by its duly authorized officers, this [DAY] day of [MONTH, YEAR].

MBIA Insurance Corporation

President

Attest: Assistant Secretary STD-R-CA-7 01/05 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX C

APPRAISAL

PREPARED BY BRUCE W. HULL & ASSOCIATES, INC. [THIS PAGE INTENTIONALLY LEFT BLANK] SUMMARY APPRAISAL REPORT – COMPLETE APPRAISAL

COMMUNITY FACILITY DISTRICT NO. 89-1 (Mountain Cove Specific Plan) Temescal Valley, County of Riverside State of California (Appraiser’s File No. 2006-516)

Prepared For County of Riverside 4080 Lemon Street, 4th Floor Riverside, California 92501

Prepared By Bruce W. Hull & Associates, Inc. 1056 E. Meta Street, Suite 202 115 E. Second Street, Suite 100 Ventura, California 93001 Tustin, California 92780 (805) 641-3275 (714) 544-9978 (805) 641-3278 [Fax] (714) 544-9985 [Fax] July 24, 2006

Mr. Jerry Norris County Executive Office County of Riverside 4080 Lemon Street, 4th Floor Riverside, California 92501

Reference: Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside, State of California

Dear Mr. Norris:

At the request and authorization of the County of Riverside, I have completed a summary appraisal report for the above-referenced project. Community Facilities District No. 89-1 (“CFD No. 89-1”) consists of approximately 815 acres being developed in the area known as Interstate 15 Corridor in the City of Corona. Shea Homes (“Shea”) is the developer of the project. The project has been developed with 936 homes (Section 3) that have sold over the last six years and listed on the Assessor’s roll for 2006-2007. Shea is developing the last two tracts, which consist of 329 (Tract 31742) single family lots and 170 (Tract 31662) condominium units. Tract 31742 has 129 individual homeowners that are listed on the Assessor’s roll and 82 Gap parcels. Tract 31662 has six Gap properties, a model home complex of four condominium units, and 8 units in escrow, scheduled to close in the next two weeks, and two condominium units that are standing inventory. The balance of the tract is under development and is classified as finished lots for valuation purposes. The valuation method includes the Sales Comparison Approach and Discounted Cash Flow Analysis for the completed homes and model complex owned by Shea.

The appraisal report is divided into four sections.

Section 1 identifies the Shea ownership and the valuation of these parcels. In addition to the above mentioned tracts, Shea also owns a 14.5-acre commercial parcel. The value for the Section 1 properties is estimated at:

$79,825,000

Section 2 identifies and assigns a value for what will be referred to as Gap parcels. These are assessor parcels for which the Riverside County Assessor’s Office has not yet reflected the current market value for a single family residence which had been purchased by an individual homeowner as of the date of value. In the case of the subject Tract 31742 there are 82 homes that have been sold to homeowners and six condominium units in Tract 31662. In addition I have identified assessor parcel numbers in which the Riverside County Assessor has assigned a partial value and the total assessed value did not reflect the current market value. The value for the Section 2 properties is estimated at:

$49,690,000 Mr. Jerry Norris County of Riverside July 24, 2006 Page Two

Section 3 is a listing of the assessor parcel numbers and assessed values of the existing 936 individual homeowners as reflected on the fiscal year 2006-07 Riverside County Assessor’s roll. The total assessed value for the Section 3 properties is:

$379,560,000

Section 4 is a listing of the Riverside County Assessor’s value of the tour center owned by Shea, and the sport club and and recreation facilities owned by the Homeowners’ Association as reflected on the fiscal year 2005-06 Riverside County Assessor’s roll. The total assessed value is:

$5,285,000

The above values are stated subject to the Assumptions and Limiting Conditions of this report and the Appraiser’s Certification as of July 15, 2006.

This is report is a Summary Appraisal Report that is intended to comply with the reporting requirements set forth under Standard Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice for a Summary Appraisal Report. The appraised value contained within this report is being estimated subject to the special tax lien of CFD No. 89-1 of the County of Riverside. The report is also intended to comply with the appraisal standard by California Debt Advisory and Investment Commission (“CDIAC”), (July 2004). As such, it might not include full discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser’s file. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report.

This letter of transmittal is part of the attached report, which sets forth the data and analyses upon which our opinion of value is, in part, predicated. Respectfully submitted,

BRUCE W. HULL & ASSOCIATES, INC.

Bruce W. Hull, MAI State Certified General Real Estate Appraiser (AG004964)

BWH:dh Attachment TABLE OF CONTENTS

Assumptions and Limiting Conditions ...... i Purpose of the Appraisal...... 1 The Subject Property...... 1 Intended Use of the Report ...... 3 Definitions...... 3 Property Rights Appraised...... 4 Effective Date of Value ...... 4 Date of Report...... 4 Appraisal Development and Reporting Process ...... 5 Description of General and Immediate Areas...... 7 City of Corona...... 12 Immediate Surroundings...... 16 Riverside County Housing Market ...... 18 Community Facilities District No. 89-1...... 21 Mountain Cove Specific Plan ...... 22 Property Description Section 1 Properties...... 23 Property Description Section 2 Properties – Gap Parcels...... 28 Property Description Section 3 Properties – Assessor’s Roll...... 29 Property Description Section 4 Properties - Other ...... 30 Highest and Best Use Analysis...... 31 Section 1 - Valuation Process/Conclusions ...... 44 Section 2 – List of Gap Parcels...... 53 Section 3 – List of Existing Homeowners ...... 54 Section 4 – Other Properties ...... 55 Marketing and Exposure Time...... 56 Appraisal Report Summary...... 57 Appraiser’s Certification...... 59 ADDENDA Residential Detached Lot Sales Summary Chart Improved Residential Sales Summary Chart Multi-Family Land Sales Summary Chart Commercial/Retail Market Data Summary Chart Discounted Cash Flow- Existing Homes Owned by Shea List of Gap Parcels List of Riverside County Assessor’s Parcel Numbers of Existing Homeowners List of Shea ownership Appraiser’s Qualifications ASSUMPTIONS AND LIMITING CONDITIONS

1. This report is a Summary Appraisal Report which is intended to comply with the reporting requirements set forth under Standard Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice for a Summary Appraisal Report. As such, it might not include full discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser’s files. The information contained in this report is specific to the needs of the client and for the intended use stated in this report. The appraiser is not responsible for unauthorized use of this report. 2. No responsibility is assumed for legal or title considerations. Title to the property is assumed to be good and marketable unless otherwise stated in this report. 3. The property is appraised subject to the Community Facilities District No. 89-1, County of Riverside special tax lien. 4. Responsible ownership and competent property management are assumed unless otherwise stated in this report. 5. The information furnished by others is believed to be reliable. However, no warranty is given for its accuracy. 6. All engineering is assumed to be correct. Any plot plans and illustrative material in this report are included only to assist the reader in visualizing the property. 7. It is assumed that there are no hidden or unapparent conditions of the property, subsoil, or structures that render it more or less valuable. No responsibility is assumed for such conditions or for arranging for engineering studies that may be required to discover them. 8. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless otherwise stated in this report. 9. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless nonconformity has been stated, defined, and considered in this appraisal report. 10. It is assumed that all required licenses, certificates of occupancy, and other legislative or administrative authority from any local, state, or national governmental or private entity or organization have been or can be obtained or renewed for any use on which the value estimates contained in this report are based. 11. Any sketch included in this report may show approximate dimensions and is included only to assist the reader in visualizing the property. Maps and exhibits found in this report are provided for reader reference purposes only. No guarantee as to accuracy is expressed or implied unless otherwise stated in this report. No survey has been made for the purpose of this report. Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates, Inc. Page i 12. It is assumed that the utilization of the land and improvements is within the boundaries or property lines of the property described, and that there is not encroachment or trespass unless otherwise stated in this report. 13. The appraiser is not qualified to detect hazardous waste and/or toxic materials. Any comment by the appraiser that might suggest the possibility of the presence of such substances should not be taken as confirmation of the presence of hazardous waste and/or toxic materials. Such determination would require investigation by a qualified expert relating to asbestos, urea-formaldehyde foam insulation, or other potentially hazardous materials, which may affect the value of the property. The appraiser’s value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value unless otherwise stated in this report. No responsibility is assumed for any environmental conditions, or for any expertise or engineering knowledge required to discover them. The appraiser’s descriptions and resulting comments are the result of the routine observations made during the appraisal process. 14. Any proposed improvements are assumed to be completed in a good workmanlike manner in accordance with the submitted plans and specifications. 15. The distribution, if any, of the total valuation in this report between land and improvements applies only under the stated program of utilization. The separate allocations for land and buildings must not be used in conjunction with any other appraisal, and are invalid if so used. 16. Neither all nor any part of the contents of this report shall be conveyed to any person or entity, other than the appraiser’s client, through advertising, solicitation materials, pubic relations, news, sales, or other media without the written consent and approval of the authors, particularly as to valuation conclusions, the identity of the appraiser or firm with which the appraiser is connected, or any reference to the Appraisal Institute or MAI. Further, the appraiser or firm assumes no obligation, liability, or accountability to any third party. If this report is placed in the hands of anyone but the client, client shall make such party aware of all the assumptions and limiting conditions of the assignment. 17. The Americans with Disabilities Act (“ADA”) became effective on January 26, 1992. The appraiser has made no specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. Nor is the appraiser a qualified expert as to the requirements of the Act. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since the appraiser has no direct evidence relating to this issue, a possible noncompliance with the requirements of ADA in estimating the value of the property has not been considered. 18. It is assumed that there are no environmental concerns that would slow or thwart development of the subject properties, and the soils are adequate to support the highest use conclusion. Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates, Inc. Page ii 19. It is assumed that the improvements and/or benefits that result from the funding of Community Facilities District No. 89-1 of the County of Riverside have accrued to the subject property.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates, Inc. Page iii Community Facilities District No. 89-1 County of Riverside, California

INTERSTATE 15

TEMESCAL CANYON RD.

TRILOGY PKWY.

N BOUNDARIES ARE APPROXIMATE

Bruce W. Hull & Associates, Inc. Aerial Photo – Air Views –7/1/06 PURPOSE OF THE APPRAISAL

The purpose of this Summary Appraisal Report is to provide the appraiser’s best estimate of value of the fee simple estate subject to the special tax lien of CFD No. 89-1 for the subject property described in Sections 1 and 2 and to report the assessed values for the subject property described in Sections 3 and 4. The subject property is located in the Temescal Valley, County of Riverside; State of California. In the case at hand, the market value of the subject property described in Sections 1 and 2 will be estimated in its “as is” condition taking into consideration the benefits of the CFD No. 89-1 Special Tax Bonds.

THE SUBJECT PROPERTY

The subject property consists of approximately 815 acres of land. The developer of the project is Shea Homes who is marketing it as Trilogy at Glen Ivy. The project has been under development and has been marketing homes for the last several years. The majority of the project has been developed with the last two tracts now under construction. There is a golf course as well as sports/recreation club facilities.

On February 8, 2000 the County of Riverside approved Specific Plan No. 221, Amendment No. 2, which provides for the development of the site. On May 23, 2000 the County approved corresponding changes to the County General Plan, Zoning Ordinances, and other entitlements in order to permit the General Plan, Zoning Ordinance, and other entitlements. Specific Plan No. 221 was originally approved in 1998. The last two tracts to be developed have final tract maps. Tract 31742 was recorded February 15, 2005 and consists of 329 lots of which 129 have been constructed and sold to homeowners and listed on the Assessor’s roll. There are 82 homes that have been sold to homeowners and not listed on the Assessor’s roll (“Gap Properties”). In addition there are there are 16 homes in escrow that are under construction. Tract 31662 was recorded on July 6, 2005 and is being developed to 170 condominium units. The site is graded to a finished lot condition and vertical construction is occurring. There are 6 Gap properties and two units considered to be standing inventory. In addition there are 8 units in escrow scheduled to close imminently. The balance is under construction or finished lots.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 1 Owner or Merchant Map No. of APN Lot /Tract No Builder Acres Use Units 290190077 Lot 264 of Tr. 21946-1 Shea 14.53 Commercial land N/A 290290007 Lot 266 of Tr. 29146-1 Shea 2.54 Tour Center N/A Refer to addendum Refer to addendum Shea N/a Model homer complex, 295 standing inventory of completed homes, and finished lots Refer to addendum Refer to addendum Gap parcels N/A Residential – SFD and 88 condominiums Refer to addendum Tracts 29146, 30819, Owners on N/A Residential-SFD 936 and portions of tract Assessor’s 31742 roll

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 2 INTENDED USE OF THE REPORT

It is the appraisers’ understanding that the client, the County of Riverside, will utilize this report in determining the feasibility of refunding the bonds of CFD No. 89-1.

DEFINITIONS

Market Value

The term “Market Value” as used in this report is defined as:

"The most probable price which a specified interest in real property is likely to bring under all of the following conditions:

1. Consummation of sale occurs as of a specified date. 2. An open and competitive market exists for the property interest appraised. 3. The buyer and seller are each acting prudently and knowledgeably. 4. The price is not affected by undue stimulus. 5. The buyer and seller are typically motivated. 6. Both parties are acting in what they consider their best interest. 7. Marketing efforts were adequate and a reasonable time was allowed for exposure in the open market 8. Payment was made in cash in U.S. dollars or in terms of financial arrangements comparable thereto. 9. The price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.”1

Finished Lot

The term “Finished Lot” as used in this report is defined as: “A parcel which has legal entitlements created by a recorded subdivision map with construction of all improvements as indicated on the approved plans including rough grading, erosion control measures, sewer and water improvements, storm drain facilities, dry utilities, street improvements, retaining walls, perimeter walls and fencing, streetscape, slope landscaping, entry monuments. This term assumes the payment of all applicable development fees with the exception of building permit and architectural plan check fees.”

1 The Appraisal of Real Estate, 11th Edition (definition adopted by the Appraisal Institute in 1993). Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 3 Gap Parcel

The term “Gap Parcel” as used in this report is defined as:

“A parcel which the County Assessor has not yet reflected the current market value on its current tax roll.”

PROPERTY RIGHTS APPRAISED

The property rights being appraised in Sections 1 and 2 are of a fee simple interest subject to existing easements of record and subject to County of Riverside CFD 89-1. The definition of “fee simple estate” is stated as follows:

“Ownership of a title in fee establishes the interest in property known as the fee simple estate – i.e., absolute ownership unencumbered by any other interest of estate, subject only to the limitation imposed by the governmental powers of taxation, eminent domain, police power, and escheat.”2

EFFECTIVE DATE OF VALUE

The subject property is valued as of July 24, 2006

DATE OF REPORT

The date of this report is July 24, 2006

2 The Appraisal of Real Estate, 11th Edition, 1996.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 4 APPRAISAL DEVELOPMENT AND REPORTING PROCESS

As previously stated, the purpose of this Summary Appraisal Report is to provide the appraiser’s best estimate of the market value for the subject property in Sections 1 and 2 and to report the assessed values for the subject property described in Sections 3 and 4. This appraisal will be presented in the format described below.

• A Regional and Community Description followed by a description of the Immediate Area surrounding the subject property • A Riverside County Residential Analysis • A brief description of Community Facilities District No. 89-1 of the County of Riverside. • A Property Description of the Subject Property • A Highest and Best Use Analysis • Section 1 Valuation of Shea Remaining Ownership • Section 2 Gap Parcels • Section 3 Listing of the Assessed Values of the Existing Homeowners • Section 4 which lists the Assessed Value of the Tour center, and Recreation Facilities • Appraisal Report Summary

In valuing the subject property in Section 1 and 2, the value estimate will be based upon the highest and best use conclusion using the Sales Comparison Approach. The Sales Comparison Approach to value is defined as:

“the process in which a market value estimate is derived by analyzing the market for similar properties and comparing these properties to the subject property”3

In the Sales Comparison Approach, market value is estimated by comparing properties similar to the subject properties that have recently been sold, are listed for sale, or are under contract. Residential property in the subject marketplace is typically sold on the basis of a finished lot. All of the lots are in a finished lot condition.

3 The Appraisal of Real Estate, 11th Edition, 1996. Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 5 The due diligence of this appraisal assignment included the following.

1. Compiling certain demographic information and related data to the subject properties to determine a feasibility/demand analysis. 2. Gathering and analyzing information on the subject marketplace, including reviewing several brokerage house publications on historical and projected growth in the subject market, and researching the micro and macro economics within Riverside County and the City of Corona. 3. Inspecting the subject property. 4. Interviewing the subject developer in order to obtain estimated costs relating to the development of the subject property based on its highest and best use conclusion. 5. Searching the area for comparable sales, inspecting and verifying the relevant data for both commercial and residential property along with golf course land transactions. 6. Inspecting the model homes and interviewing sales representatives. 7. Searching the area for comparable new home residential projects in order to obtain comparable improved residential product. 8. Providing a review of cost estimates to develop the subject properties to finished lots prepared by the developer’s consultants. 9. Reviewing the residential development product for the Tracts 31662 and 31742.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 6 DESCRIPTION OF GENERAL AND IMMEDIATE AREAS

Location

The subject property is located in the western portion of Riverside County (the “County”) in the City of Corona, adjacent to the City of Riverside city limits and is the County seat. The County encompasses approximately 7,300 square miles, which includes large expanses of undeveloped deserts, valleys, canyons, and mountains. The County is the major recipient of outward urban pressure from Orange and Los Angeles Counties, as well as northerly growth from San Diego County. Although located at the periphery of most urban activity in Southern California, the County, in particular the westerly region is clearly perceived by most observers as a major growth area well into the foreseeable future. Because of mountain ranges limiting road access into Los Angeles and Orange Counties, Riverside and San Bernardino Counties are considered to belong to the same Metropolitan Statistical Area (“MSA”). This MSA is also known as the Inland Empire. Affordable family housing has been one of the principal assets of this MSA.

Transportation

The subject property is situated south of the 91 Freeway near Lincoln Avenue. Four major freeways bisect the County. Interstate 15 travels in a northerly/southerly direction, with access to Barstow and Nevada to the north and to San Diego to the south where it approaches the international border with Mexico. The 91 Freeway travels in an easterly/westerly direction and provides access to Orange and Los Angeles Counties to the west and connects with the 60 Freeway and Interstate 215 to the north in San Bernardino County. The 60 Freeway provides access to the west to Los Angeles and to the east where it combines with Interstate 10, providing access to Arizona. Interstate 215 travels in a northerly/southerly direction in the County providing access that generally parallels Interstate 15 to the east.

The County is well served by Amtrak and Metrolink as well as several rail freight lines. The Ontario International Airport provides air service and is located approximately 25 miles northwest of the subject in San Bernardino County. In addition to car and plane travel, the County has one of the most extensive trucking corridors with the interstate and state freeways bisecting the County.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 7 Population

The County has experienced an increasing growth pattern for several decades, with the population more than doubling between 1960 and 1980. Between 1980 and 1990, there was an increase in population of over 65 percent, with the largest numerical gains in the incorporated areas of Moreno Valley, Corona, and Riverside. The largest population percentage gains have been seen in the southwestern portion of the County. This area includes all of the greater Temecula Valley, such as the communities of Anza, Aguanga, Wildomar, Murrieta, Murrieta Hot Springs, and the Rancho California/Temecula area.

Per the California Department of Finance, the population of the County as of January 1, 2005 was 1,877,000. This represents an increase of 3.8 percent over the past year and an average annual percentage of approximately 3.6 percent over the prior 5 years.

Economy

The Riverside, San Bernardino, and Ontario MSA had a strong employment record over the past ten years. The most significant gains were seen in the areas of construction, finance, insurance, real estate, services and retail trade. The least amount of growth during this time was seen in agriculture and the wholesale trade.

The unemployment rate for the MSA is estimated at 5.0 percent (June 2006, Employment Development Department), which is an increase from May, 2006 when the unemployment rate was 4.3 but a significant improvement from August 1995 when the unemployment rate was 10 percent. Individually, the County has a 4.9 percent unemployment rate while San Bernardino County also has a 5.0 percent unemployment rate. The current unemployment rate for Riverside/San Bernardino MSA of 5.0 percent compares favorably to both the current California unemployment rate of 4.9 percent and to the current U.S. unemployment rate of 4.8 percent. The following table depicts the County in relationship to unemployment rates of the surrounding counties.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 8 Jurisdiction As of Unemployment Rate Los Angeles County 6/06 4.7% Riverside County 6/06 4.9% San Bernardino County 6/06 5.0% Orange County 6/06 3.7% San Diego County 6/06 4.2%

Source: State of California E.D.D.

Although the County’s unemployment rate is slightly higher than some surrounding counties, it is favorable to that of both the State of California and the nation.

The tragedy of September 11, 2001 and further terrorist activities affected the economy within the United States. A recession, which began in mid-2001, was described as “mild”, and economists stated that we were in an economic recovery mode, albeit a mild one. As the Iraq conflict erupted, the economy seemed to stay sluggish. Since the initial portion of the conflict has ended, the economy was on a slight upturn, leveled off and more recently has turned upward again. On a more micro level, within Southern California new home projects are enjoying continued good sales rates, mostly due to the historically low interest rates throughout 2002, 2003 and 2004 along with the emergence of non-conventional financing alternatives in 2004 and in 2005. In 2005 sales remained strong, however, it should be noted that the Federal Reserve has increased Federal Reserve rates for the 16th time since June 2004. Thus far, these increases have not appeared to dampen new home sales, however, the most recent sales statistics do not account for the most recent rate hikes. Non-conventional financing alternatives such as 40-year amortized loans, variable loans and no-interest first year loans have increased sharply in order to accommodate buyers.

Government/ Environmental

The County is home to the Stephens Kangaroo Rat (“SKR”), which is listed on the endangered species list by the Federal Government. For the past ten years the County has had a Habitat Preserve Agency (the “Agency”) in order to counter the extinction of this protected animal. In

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 9 1995 the Agency was designated a success with enough habitat lands protected and thus, a reduction was made in the Agency. In order to obtain this degree of success the Agency required SKR acreage fees from developers in order to purchase conservation habitat acreage. Due to the success of the Agency, the degree of urgency is considerably less than in previous years. In December 2003 the State of California acquired 9,117 acres between the Cites of Beaumont and San Jacinto for preservation. Reportedly these lands have the “world’s highest concentration” of SKR and other endangered species according to the Endangered Habitat League.

New possible endangered species that are affecting the County include the Coastal Sagebrush, which is the habitat for the California Gnatcatcher. Due to the County’s success with the SKR conservation, it is anticipated that, if needed, the County will perform the same function for similar endangered species.

The County has recently initiated a Multi-Species Habitat Conservation Plan. The County Board of Supervisors has approved a fee increase from $859 to $1,651 per residential unit and up to $5,620 per acre for commercial property.

The Pacific Legal Foundation (“PLF”) has filed two lawsuits charging the government with flawed critical habitat designations for 42 California species. According to a press release by PLF on March 30, 2005, the “critical habitat” designations for more than 40 California species fail to meet the scientific and legal standards required under the federal Endangered Species Act.

On September 20, 2005 the United States Fish and Wildlife Service had agreed to perform status reviews for all 194 California species that PLF filed suits against earlier in the year. Although the endangered Species Act requires that the government review the status of listed species every five years, the Fish and Wildlife Services had failed to perform the reviews for about two-thirds of California’s listed species. Under the terms of the agreement, the Fish and Wildlife Service agreed to perform all of the reviews over the next eight years.

The Inland Empire Area received approximately $12 million in federal grants in 2003 to buy habitat land for endangered species, including some sites the Pacific Legal Foundation lawsuit would target. It is the appraisers’ understanding that property that has been graded or has

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 10 received grading permits will not have any further habitat issues and will not be affected by the lawsuit. All of the subject property has been graded, thus, will not be affected by this issue.

Education

The subject area is served by the Corona-Norco Unified School District, which operates seven high schools, six middle schools, and 28 elementary schools. Higher education is available within an hours drive at a University of California campus at Riverside, or California State University campuses in San Bernardino, Fullerton, and Pomona.

There are 16 higher educational institutions within approximately 30 minutes of Corona. These include University of California Riverside, Cal State Polytechnic, Harvey Mudd College, Keck Graduate School of Applied Life Sciences, Loma Linda University, Cal State San Bernardino, Claremont Colleges and the University of Redlands.

Summary

Residential growth in the County during the late 1980s was explosive. The influence for this growth pattern was primarily commuters from Los Angeles, Orange and San Diego Counties who were drawn to the area by its affordable housing and quiet country setting. As job growth declined during the recession of the early 1990s, fewer commuters came to the area, creating a significant downward pressure on real estate sales and prices. However, the growing economy since the latter half of the 1990s achieved and surpassed the previous real estate values in the County. The first half of the decade has seen significant appreciation and strong sales with a slowdown to more normal appreciation in the past year. Although current national economic conditions have been volatile in the last year (i.e., stock market, Iraq conflict, increasing oil prices, increasing interest rates), the subject area’s economy is considered good, with the new housing market in the area still considered positive. Although there are some signs pointing to a slowdown in the residential market, other factors still appear strong. Appreciation is still expected to occur for the year 2006, however, at a lesser rate than the previous few years. The Southern California housing market appears to have withstood the uncertain economy thus far and is expected to continue to grow due to the continuation of low interest rates, economic diversification and a scarcity of available land for new development.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 11 CITY OF CORONA

General Area

The City of Corona (the “City”) is located approximately 45 miles southeast of Los Angeles and is the second largest city in the County of Riverside with a present land area of approximately 34 square miles. Corona, which incorporated in 1886, had an early local economy based on agricultural production of citrus crops.

Population

Corona had an estimated population as of January 1, 2005 of 144,070 per the California State Department of Finance which is a 0.01 percent decrease from the January 2004 population estimate of 144,274. The current population estimate indicates a 176 percent increase over the 1988 figure of 52,206. The largest of these gains occurred during 1988 and 1989, which reflected two large annexations. As previously stated the slight decrease between January 2004 and January 2005 was actually 0.01 percent. This decrease reflects the essential build-out of South Corona.

The average age of people residing in Corona is 29.9 years old, lower than that of surrounding Los Angeles and Orange Counties. Corona has a higher education level than some surrounding counties with over 60 percent of its adults having attended college. In addition, the college degree attainment is 40 percent higher than the average in the County.

Housing

More than 10,500 new homes were built in the City during the final decade of the past century. Several master planned communities and new housing tracts were developed in the area known as South Corona. However, by the end of 2000 housing development had slowed considerably due to the limited amount of remaining land for development. Of the total dwelling units within the City, approximately 65 percent are detached single-family residences ranging in age from new construction to in excess of 50 years. The average household occupancy in the City is 3.14 persons. This is higher in comparison with the County, which averages 2.68 persons per household, however is considered typical of many suburban markets. Current residential

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 12 development within the City is either along the I-15 corridor in the newly developing master planned community of Dos Lagos or infill parcels which are difficult to develop or assemble, such as the subject properties.

Transportation

Corona is well served by the California freeway system, being bisected by the 91 Freeway and Interstate 15. The 91 Freeway connects Corona to Orange County on the southwest and to Riverside and San Bernardino Counties on the northeast. The 91 Freeway is one of the area’s busiest freeways with a substantial amount of congestion in the westbound direction during the morning hours and in the eastbound direction during the evening hours. This is due to the number of commuters living in the County and employed in Orange and Los Angeles Counties. The express lanes on the 91 Freeway opened in 1997. These express lanes are a toll-road system which helped alleviate the traffic congestion. In late 1998 the Eastern Transportation Corridor opened, making a direct connection from the 91 Freeway at the westernmost portion of Corona into the Irvine Spectrum area in Orange County. This connection made commuting to jobs in South Orange County a one-half hour commute rather than an hour or more due to traffic. This corridor is a part of the toll road system with tolls upwards of $3.50 each way.

Interstate 15 connects Corona to San Diego County to the south and to San Bernardino County to the north. Interstate 15 is a major freeway providing access to both the Canadian and the Mexican borders. Interstate 15 has become more congested over the past few years. There is a major interchange between the 91 Freeway and Interstate 15 in the heart of the City.

Corona is contiguous to the main line for the Burlington and Santa Fe Railroad and is served by 26 daily truck carriers. A Metrolink train line from Riverside into Orange County recently opened. Ontario International Airport is 15 miles to the northwest and is served by most major airlines. The Corona Municipal Airport is available for general aviation use. In addition, John Wayne Airport in Orange County is approximately 30 minutes away.

Economy

In the early 1980s developers viewed Corona as a commuter area to Orange and Los Angeles Counties with less expensive land for development bringing a building boom to the city. In the Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 13 late 1980s prices spiked with the recession of the early 1990s taking away most of the earned appreciation. The later half of the 1990s again created significant appreciation in the City, along with the majority of Southern California. The first five years of the new century has continued the upward portion of the latest real estate cycle with prices continuing to increase, however with slower growth for the past year. Land development within the City has slowed considerably due to the limited availability of developable lands. Due to the scarcity of available land within the city limits, development has moved outside of Corona to the outlying areas of Mira Loma to the north and the I-15 corridor to the south.

More than 62,000 people work in Corona. This equates to a job for approximately every two persons living in the City. The average household income within the City exceeds $75,945 while over 25 percent of all households have earnings of over $100,000. According to the City of Corona’s Economic Development Department the disposable income of the residents of Corona increases an average of 5 to 7 percent per year.

Currently there are over 5.8 million square feet of new retail, office and industrial buildings under construction within the City. Corona’s industrial base is over 30 million square feet and generates over 35 percent of the City’s total sales tax revenue. There are over 2,750 acres zoned for light, medium and heavy industrial uses within the city limits. There are several new projects under development. Corona Pointe, a 52-acre mixed-use project at Interstate 15 and Magnolia will eventually add 535,000 square feet of office space to Corona. The Crossings at Corona has completed Phase I and is proposed at build-out for 1.2 million square feet of retail, restaurant and entertainment space. Hidden Valley Plaza at Interstate 15 and Hidden Valley Parkway consists of 300,000 square feet of retail space. Dos Lagos is proposed for a 650,000 square foot lifestyle center along with unique dining and executive housing. Office space demand was previously limited to local professionals with Corona. Offices were typically interspersed among the retail projects along strip commercial corridors. However, with the substantial amount of growth in Corona, along with executive housing being developed, there are three new, three-story Class A office buildings totaling over 200,000 square feet.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 14 Summary

Corona has been in transition over the past 15 years. Previously, a first-time homebuyer area offering an affordable housing alternative to Los Angeles and Orange Counties, Corona now has executive homes selling as quickly as affordable homes. The average household income is substantially higher than that of the County. Business within Corona is booming with several new office and retail centers open and leasing quickly. The slowdown of the early 1990s is now considered history without any lingering effects on the economy. The location of Corona, midway between Orange, Los Angeles and San Diego Counties, makes it an excellent location for business and distribution of product. However, the City is essentially built out. The majority of the master planned communities (Chase Ranch, Empire Homes, Mountain Gate, Corona Ranch, Eagle Glen) are built out. Land available for development, such as the subject, is in strong demand within Corona.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 15 IMMEDIATE SURROUNDINGS

The subject property is located at Temescal Canyon Road and Trilogy Parkway, west of Interstate 15. The area includes incorporated areas of the City of Corona as well as unincorporated areas of Riverside County and is referred to as Temescal Valley.

The area has been experiencing less construction as developable land becomes limited. The following are the more significant projects within the immediate area of the subject property.

Eagle Glen Specific Plan is a master planned residential development that consists of 1,460 dwelling units, a golf course, a 20-acre park, an elementary school, a neighborhood commercial center, and limited commercial on 975 acres. This project is located at the northwest corner of Cajalco Road, west of Interstate 15.

Dos Lagos is a 540-acre development east of Temescal Canyon Road and south of Cajalco Road. This project has been approved for 659 dwelling units, 10 acres of commercial, 60 acres of entertainment commercial, 20 acres of office/research & development, 19 acres of business park, 2 hotel sites, a golf course, a wastewater treatment plant, and open space. Development is occurring throughout the community.

Wild Rose Business Park is west of Knabe Road, south of a development proposed as The Retreat in the unincorporated area of Riverside County. The first phase consisting of 88 acres has been developed with 6 buildings totaling 600,000 square feet. The second phase is recently completed, with additional buildings. There are a total of 3 phases with an estimated 1.3 million square feet of buildings planned.

An Industrial Park is located immediately north of the project site and south of the El Cerrito neighborhood in the City of Corona. This site consists of 78.1 acres and has been approved.

Corona Crossings is located at the corner of Cajalco Road and Interstate 15. This 103-acre commercial development will consist of over 4,000,000 square feet of mixed use commercial uses. The development is anchored by Kohl’s and Target and has a multi screen theater as well as restaurants and other specialty stores.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 16 Sycamore Creek is a master planned development south of Glen Ivy Road and Interstate 15 in the unincorporated area of Riverside County. The project has approvals for 1753 dwelling units, parks, and a fire station on 715 acres. Development is occurring throughout the community.

The Retreat is a residential development consisting of 540 units on a total of 1,032 acres. The majority of the site is in open space and a golf course (840 acres). It is located west of Weirick Road and west of Interstate 15.

Temescal Hills is a proposed development that is located north of Sycamore Creek and east of Interstate 15. This proposed development is for 1,250 residential units on 960 acres.

Montecito Ranch is a 305-lot development that is located south of Clay Canyon Road and west of Knabe Road in the unincorporated area of Riverside County.

Mission Clay (Serrano Specific Plan) is at the southeast quadrant of Temescal Canyon Road and Interstate 15.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 17 RIVERSIDE COUNTY HOUSING MARKET

Per the County of Riverside Economic Development Department, the January 2005 population of the County is 1,877,000, which is a 3.8 percent increase from 2004 and an average annual percentage of approximately 3.6 percent over the previous 5 years. An influx of residents from Orange and Los Angeles Counties looking for more affordable housing was instrumental in population increases within the County. The County is one of the fastest growing regions in the United States. The area of Temecula Valley is anticipated to increase substantially, partially due to the affordability of land in the area and the location with good access for commuters to Orange and Los Angeles Counties. The location is considered desirable due to availability of land. This is evidenced by the explosive growth of industrial development in the Eastvale/Mira Loma area over the past 10 years and along the Interstate 15 corridor in Temescal Valley over the past five years.

Economic growth in the Riverside-San Bernardino area has been strong, with over 51,400 new jobs added in 1999 and over 35,000 new jobs added in both the years 2000 and 2001 and 28,000 new jobs in 2002. Between January 2003 and January 2004 over 18,000 new jobs were added depicting a 1.8% growth rate. Between October 2004 and October 2005, there were 20,900 new jobs added, a growth rate of 1.8 percent per the State of California Economic Development Department. The most recent statistics continue to show economic job growth in the region. Total jobs have increased 24,600 from June 2005 to June 2006. In contrast to the balance of Southern California, the Inland Empire has experienced over 18 years of employment growth despite the early 1990s recession and the job losses in the rest of the Southern California region. While job growth slowed to a low of 0.6 percent in 1993, it still showed a positive gain. In the latter part of the 1990s, the Inland Empire experienced several major economic events that facilitated job growth, including the construction of the Ontario Mills Mall, the Ontario Airport expansion, the Ontario Convention Center, the California Speedway, the Diamond Valley Lake, the Temecula Mall, Corona Crossroads, and a major expansion at the University of California, Riverside. Unemployment has remained the same over the past year and while Riverside's rate is higher than some surrounding counties (Orange County at 3.7 percent and San Diego at 4.2 percent), the current rate of 5.0 percent in the Riverside/San Bernardino area is significantly

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 18 lower than the area’s 1995 high of 10.0 percent and compares favorably to both the state and the nation.

Per Market Pointe Residential Trends Executive Summary for the 2nd quarter of 2006 (“Market Pointe Report”), the Corona Norco sub-market is responsible for approximately 14 percent of the new home sales activity of the West Riverside County submarket. This percentage is a decrease from 30 percent throughout the 1990s due to the essential build-out of South Corona, however, up from the early 2000s due to the sales within the Eastvale and Temescal Valley area. The current activity relates to areas outside of the City of Corona such as the Eastvale/Jurupa area and south along Interstate 15 where land is still available.

Home prices rose steadily between 2001 and mid-2005 in West Riverside County. Per The Market Pointe Report the weighted average new home price for a detached home in the West Riverside County as of the end of the second quarter 2006 was $478,763, nearly unchanged from the previous quarter. This represents both the attached and detached market. The attached sector had an upward shift in the average home size of nearly 15% resulting in a price increase of nearly 10%. The larger increase in home size resulted in a value ratio decline of nearly 5%. The detached sector had a price decline of 1.6% with the average home size increasing 1.1%, which resulted in a value ratio decline of nearly 3%.

The Market Pointe Report indicates that a “more telling statistic that the increase in number of developments is the increase in inventory. The total inventory, including homes released and unsold and those in future phases of current development increased by over 1,400 units (7.9%).

In summary, there has been a decline in sales numbers, and a leveling of prices in the subject market. Currently a slowdown suggested the torrid increase in prices has abated. The year 2000 saw less appreciation but a significant increase in sales numbers due to lack of supply. The year 2001 saw an increase in price and a significant increase in sales while both the years 2002 and 2003 continued with strong price increases and increases in sales numbers. However, price still appears to be a major factor in attracting buyers to the Riverside County Northwest sub-market marketplace. The attached product has reappeared in the subject marketplace to accommodate first-time buyers with new attached units selling very well. The economic and population growth in the area suggest that demand for housing is still positive even with other indicators Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 19 indicating uncertainty (i.e. stock market volatility, terrorist activities, oil prices, high interest rates). In conclusion, the subject area’s growth is anticipated to create the need for new housing projects in the area, although at much slower rates.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 20 COMMUNITY FACILITIES DISTRICT NO. 89-1

Community Facilities District No. 89-1 of the County of Riverside was formed in 1989, and in June 1991 the District issued Series A Bonds of 1991 Bonds to finance a portion of the infrastructure facilities that the District is authorized to finance, consisting of water and wastewater facilities and incidental expenses (“1991 Project”).

The Series “A” Bonds were issued in 1991 and had an authorization of $14,000,000. The direct benefits to the subject property and the estimated costs of the public facilities financed by the 1991 Bonds were:

Item Cost

Water Reservoir 2.8 MG $156,724 16-Inch Offsite Transmission Main $557,001 Wastewater Treatment Plant $4,383,054 Eagle Valley Water Line Extension $350,000 Eagle Valley Water Line Purchase $648,915 Lee Lake Water System – Phase 18 $1,083,000 1290 Zone Water Main $0 1600 Zone Reservoir $902,000 1600 Zone Pump Station $0 Lee Lake Trunk Sewer $721,576 On-Site Sewer and Water System $0 Engr., Plan Check, Fees $1,397,555 Contingency $451,296 LLWD Administration $240,956

Total $10,892,0774

4 Reader should be aware that authorization of debt for a Mello-Roos merely sets an upper limit to the amount of any bond issue. Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 21 MOUNTAIN COVE SPECIFIC PLAN

The area where the subject property is located was previously used as orange groves; development was initially slowed due to the presence of biological and environmental issues that have since been mitigated. The project is nearing completion with the last two tracts being developed.

The Mountain Cove Specific Plan (Specific Plan No. 221 with Amendment No. 1 and Final Environmental Impact Report No. 237) was originally approved by the County of Riverside on November 7, 1998. Per the Specific Plan the Land Use Summary is as follows:

Planning Gross No. Of Area Land Use Acreage Units 4 Medium Density 18 72 Residential 8 Medium Density 35 169 Residential 10 Medium Density 18 68 Residential 13 Medium Density 28 134 Residential 1 Medium High 24 171 5 Medium High 18 95 6 Medium High 24 117 7 Medium High 21 149 9 Medium High 24 168 2 High Density 3 153 3 High Density 30 324 14 Recreation Center 6 15 R.V. Center 4 16 Commercial 3 17 Commercial 9 18 Equestrian Center 2 19 Golf Course 156 20 Club House 6 21 Open Space 284 Total Specific Plan Area 7135

5 Original Specific Plan acreage. Subsequent annexations have occurred. Total acreage estimated at 815 acres. Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 22 PROPERTY DESCRIPTION - SECTION 1 PROPERTIES

Location: Both sides of Trilogy Parkway, west of Temecula Canyon Parkway, County of Riverside.

Legal Description: There are several tract maps that have been recorded on the site. These are listed under the Entitlement heading within this Property Description as well as earlier in this report.

Property Owner: Shea Homes

Three-Year Sales History: The master developer has owned the majority of the subject project for more than 3 years. As the master developer, Shea has built and sold a number of homes over the last three years. These are addressed in Sections 2 and 3 of this report.

Assessor Parcel Numbers/Assessed Value: Please refer to the Addendum for a list of the Assessor’s parcel numbers and Assessed values.

Size/Shape: The ownership is diverse and includes single family lots, condominium development under construction, golf course, and a commercial lot. The acreage was previously detailed in this report under the section “The Subject Property”. Lot sizes in Tract 31742 range from 3,500 to 5,000 square feet.

Zoning: The property is zoned Specific Plan (Mountain Cove Specific Plan) per the County of Riverside. Specific Plan No. 221 with Amendment No. 1 was approved by the County of Riverside on November 7, 1998. Per the Specific Plan the allowed uses were previously discussed under the section Mountain Cove Specific Plan.

Entitlements: All of the entitlements have been received for development.

Topography and Drainage: The subject property is located in the Temescal Valley, between the foothills of the Santa Ana Mountains and the Gavilan Plateau to the east. The development has been developed with an engineered street storm drainage system. Tracts currently under development have been designed for engineered storm drainage system.

Soils: The underlying soils of the site include eight types of soils variations on the subject, from very fine to sandy loam to various rocks outcropping.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 23 The site has been developed to single family homes through most of the development. The tracts under construction have been graded.

It is an assumption of this report that the soils are adequate to support the highest and best use conclusion stated within this report.

Seismic: The subject property is located partially within the Alquist-Priolo Special Situation Zone. The Glen Ivy North and Glen Ivy South Earthquake Fault Zones cross portions of the project. There may be other earthquakes, epic centered along the three active faults within a 35 mile radius of the subject project. These include the Newport Inglewood, San Jacinto and the San Andreas Faults.

Flood Zone: The subject property is not within a designated flood zone according to FEMA map 060245 1390B dated November 20, 1996.

Environmental: It is an assumption of this report that all mitigation measures stated in the EIR document have been adhered to. In addition, it is the appraisers’ understanding that environmental approvals have been obtained.

Streets/Access: The subject project is located along both sides of Trilogy Parkway Road, west of Temescal Canyon Road, in the County of Riverside.

Interstate 15 is a major north/south freeway, which provides access to both international borders with Mexico and Canada. Temescal Canyon Road parallels Interstate 15 beginning at Ontario Avenue and terminating at Lake Street in Lake Elsinore.

Utilities: The following utility and public service entities will provide services to the subject project.

Water/Sewer: Lee Lake Water District Electricity: Edison Company Natural Gas: The Gas Company Telephone: SBC Verizon School District: Corona-Norco Unified School District

Current Condition: The subject project is in various stages of development. The condition is described below.

APNs 290040064, 2900190064, 2900280002, 003, 004, 2900290004, 2900420048, and 049 consist of the golf course and golf club. Total acreage per the assessor maps is 198 acres.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 24 APN 290190077 is a 14.52 acre commercial site that is located at the northwest corner of Temescal Canyon Road and Trilogy Parkway. It is currently in a raw condition.

APN 2900290002 consists of 11 model homes on 1.78 acres.

Tract 31662 is a condominium development under construction. The site has currently been graded with the model homes that are complete as well as two units that are standing inventory and 7 units that are escrow, scheduled to close within the next two weeks. There are 170 proposed units on this 26.62 acre tract. While a condominium development the site is being developed as two units per building on a typical pad of 4,200 square feet.

Tract 31742 is a 329-lot development currently under construction as well as having completed homes. 129 homes have been completed and sold to homeowners that are listed on the Assessor’s roll. There are 82 gap properties and the remaining 118 lots are owned by Shea and in various stages of construction, ranging from finished lots to homes under construction.

APN 2900290007 is the existing tour center/sales office that is located on 2.76 acres of land.

Costs to Complete: The subject property has finished lots therefore; there are no costs to complete.

Improvements: There are 15 models that are offered in Trilogy that are being marketed in four neighborhoods.

The Descano Selection offers three floor plans. The Sage (Plan 3520), the Pummelo (Plan 3530), and the Sycamore (Plan 3540).

Current pricing is from $381,990 to $420,990. The homes are of conventional architectural design with tile roofs, stucco exteriors, roll-up garage doors with automatic openers and front yard landscaping. Interiors include tile entryways, HVAC, multi-media prep systems, ceramic countertops, Beech cabinetry, pantries, and walk-in closets. The floor plans are detailed as follows:

Room Floors/ Builder Plan Count Parking Sq. Ft. Owned 3520 2/2 1 / 2 1,293 4 3530 2/2 1 / 2 1,412 3 3540 2/2 1 / 2 1,508 2

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 25 The Santiago Collection consists of five models ranging in size from 1,552 to 1,966 square feet with current pricing from $444,990 to $515,990. The homes are of conventional architectural design with tile roofs, stucco exteriors, roll-up garage doors with automatic openers and front yard landscaping. Interiors include tile entryways, HVAC, multi-media prep systems, gourmet kitchens with ceramic countertops, Beech cabinetry, pantries, and walk-in closets. The floor plans are detailed as follows:

Room Floors/ Builder Plan Count Parking Sq. Ft. Owned 4050 2/2 1 / 2 1,552 4 4060 2/2 1 / 2 1,661 2 4070 2/2 1 / 2 1,758 4 4080 2/2 1 / 2 1,896 3 4090 2/2 1 / 2 1,966 1

The Escalante Collection consists of three floor plans ranging in size from 2,198 to 2,216 square feet with current pricing from $580,990 to $607,990. The Escalante Collection is within a gated community with golf course frontage. The homes are of a conventional design tile roofs, stucco exteriors, central and side-yard courtyards, ornamental iron, roll-up garage doors with automatic openers and front yard landscaping. Interiors include designer selected tile, wood-burning gas fireplaces, HVAC, multi- media prep systems, raised panel doors, interior laundry rooms, walk-in closets, and gourmet kitchens with ceramic countertops, Beech cabinetry and pantries. The plans are detailed as follows:

Room Floors/ Builder Plan Count Parking Sq. Ft. Owned 5010 3/3.5 1 / 2+ 2,198 3 5020 2/2.5 1 / 3 2,253 2 5030 2/2.5 1 / 3 2,216 3

The Cobblestone Collection consists of four floor plans ranging in size from 1,389 to 2,051 square feet with current pricing from $352,990 to $455,990 (plus golf course frontage). The Cobblestone Collection is condominium development within a gated community with golf course frontage. The homes are of a conventional design tile roofs, stucco exteriors, central and side-yard courtyards, ornamental iron, roll-up garage doors with automatic openers and front yard landscaping. Interiors include designer selected tile, wood-burning gas fireplaces, HVAC, multi- media prep systems, raised panel doors, interior laundry rooms, walk-in closets, and gourmet kitchens with ceramic countertops, Beech cabinetry and pantries. Optional elevators are available for Plans 3023 and 3024. The plans are detailed as follows: Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 26 Room Floors/ Builder Plan Count Parking Sq. Ft. Owned 3011 2/2 1 / 1+ 1,389 4 3012 2/2.5 1 / 1+ 1,597 4 3023 2/2.5 1 / 2 2,208 2 3024 2/2.5 1/2 2,051 4

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 27 PROPERTY DESCRIPTION SECTION 2 PROPERTIES- GAP PARCELS

Gap parcels which have been sold within the past year, however, not yet reflected on the Riverside County 2006/2007 Assessor’s Roll.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 28 PROPERTY DESCRIPTION SECTION 3 PROPERTIES – ASSESSOR’S ROLL

Individual homeowners which are listed on the Riverside County 2006/2007 Assessor’s Roll. These are homes that have been purchase since 2002.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 29 PROPERTY DECRIPTION SECTION 4 PROPERTIES - OTHER

This represents the tour center owned by Shea, and the recreation facilities owned by the Homeowner’s Association.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 30 HIGHEST AND BEST USE ANALYSIS

The highest and best use is a basic concept in real estate valuation due to the fact that it represents the underlying premise (i.e., land use) upon which the estimate of value is based. In this report the highest and best use is defined as:

“The reasonably probable and legal use of vacant land or improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value”6

Proper application of this analysis requires the subject property to first be considered as if vacant in order to identify the “ideal” improvements in terms of use, size and timing of development. The existing improvements (if any) are then compared to the “ideal” improvements to determine if the use should be continued, altered, or demolished preparatory to redevelopment of the site with a more productive or ideal use.

In the following analysis we have considered the site’s probable use, or those uses which are physically possible; the legality of use, or those uses which are allowed by zoning or deed restrictions; the financially feasible use, or those uses which generate a positive return on investment; and the maximally productive use, or those probable permissible uses which combine to give the owner of the land the highest net return on value in the foreseeable future.

As Vacant

Physically Possible Uses

The subject property is irregular in shape and contains approximately 815 gross acres of land. The majority of the site has been developed to single family homes with two remaining tracts under construction in various stages of development. All normal utilities are available to service the subject project. No unusual soil conditions or environmental issues were apparent upon my physical inspection. It is an assumption of this appraisal that the soils on the subject property are adequate to support the highest and best use conclusion. It is further assumed that there are no environmental issues, which would slow or thwart development of the subject properties.

6 The Appraisal of Real Estate, 11th Edition, 1996 Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 31 Access is considered to be good via Interstate 15 to Temescal Canyon Road and Trilogy Parkway. Surrounding uses for the subject project include existing new residential neighborhoods to the north, new commercial development (Corona Crossings and Dos Lagos) to the northeast, and new industrial development the east.

The size and shape of the subject property makes it physically suited for various land uses. The property is divided by Trilogy Parkway. The location of the west portion of the project with freeway frontage suggests commercial development. The remaining lands that have been entitled (Tracts 31742 and 31662) have been graded to a finished lot with vertical construction and completed homes in both tracts.

Based on this analysis, the subject property is suitable for various land uses; however, the location and physical condition suggests both residential and commercial development.

Legality of Use

The subject property is located within the boundaries of the County of Riverside, the entity responsible for regulating land use through the implementation of a general plan and zoning ordinance. The project is zoned Specific Plan (Mountain Cove Specific Plan) allowing for a mixed use master planned community including residential, retail, and golf course uses. In addition several tract maps have been recorded and development has occurred on the majority of the project. Tracts 31742 and 31662 are the remaining tracts to be developed. Tract 31662 is approved for 170 condominium unit of which six have been sold to individual homeowners and Tract 31742 is approved for 329 lots of which 211 been sold to individual homeowners.

Based on the legality of use analysis, the type of development for which the subject project can be utilized is limited to residential, commercial, and golf use. This is consistent with the findings of the physical possible uses.

Feasibility of Development

The third and fourth considerations in the highest and best use analysis are economic in nature, i.e., the use that can be expected to be most profitable.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 32 The subject project opened in 2001 and has sold 1,024 (936 on the Assessor’s roll and 88 Gap Properties) homes to individual homeowners for an absorption rate of 17 dwelling units per month.

The last two remaining tracts are being developed and sales continue at a reasonable rate.

The history and current marketing of the subject residential development indicates that the project is financially feasible.

Maximally Productive

In light of the current sales and leasing activity in the Corona marketplace, coupled with the aforementioned analysis, in my opinion, the subject project is feasible for the proposed residential neighborhoods with an adequate profit level to entice an experienced builder.

Conclusion – If Vacant

The final determinant of highest and best use as vacant is the interaction of the previously discussed factors (i.e., physical, legal, financial feasibility and maximum productivity considerations). Based upon the foregoing analysis, it is my opinion that the highest and best use for the subject project, as vacant, is for the Mountain Cove Master Plan.

Highest and Best Use – As Improved

The majority of the development has been constructed with single family homes. These have occurred over the last four years and the construction appears to be of good quality and design. In addition there have been recreation facilities that include a sports club and a lodge. All of these improvements are of good quality and design.

My conclusion is that the highest and best use for the existing single family residences and the recreation facilities of subject project is for the continued use, as improved.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 33 SECTION 1 VALUATION PROCESS/CONCLUSIONS

The valuation of the subject project will be presented as follows. Section 1 will value the Shea ownership absent the golf course and tour center. Section 2 will value the gap parcels. Section 3 will list the assessed values of the existing single family homeowners. Section 4 lists the assessed value of the golf course, tour center, and recreation facilities. The Sales Comparison Approach to Value will be utilized in Section 1, which was defined earlier in this report.

In Section 1 the houses under construction will be valued on the basis of a finished lot rather than attributing value to a partially complete improvement. In the valuation for the lots, I will conclude on a finished lot and then consider the remaining costs (if any) to improve the lands to a true “finished lot” condition. The builder-owned completed homes will be valued using a DCF analysis in order to take into consideration the retail value of the homes, the costs to sell off the homes, the costs to carry the homes, the risk and the time value of money over the period needed in order to sell off the homes. In the case of the individually owned homes, I will report a value consisting of the concluded base price of the homes. This is considered to be a minimum value as most buyers purchase some upgrades and/or options which increases the value of the property. These are not considered in my concluded base values.

In the case of the lots owned by Shea are considered to be finished lots.

In determining the finished lot or retail value utilized in the valuation for the subject properties, I will utilize the Sales Comparison Approach. In the Sales Comparison Approach the market value is estimated by comparing properties similar to the subject properties that have recently been sold, are listed for sale, or are under contract (i.e. for which purchase offers and a deposit have been recently submitted). Next, the costs associated with the subject development (to bring each neighborhood from its current condition to the finished lot or “retail” condition) need to be determined along with a construction schedule. These costs then need to be deducted from the finished lot values. In addition, the administration and carrying costs during the absorption period need to be considered along with an appropriate discount rate.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 34 Market Data Discussion - Single-Family Detached Lots

I have searched the area and found the ten transactions summarized in the addendum to be comparable to the subject property.

Data No. 1 refers to the current offer in on a property consisting of four single-family detached lots with a minimum lot size of 14,000 square feet located in Corona near I-15. The property is adjacent to a 21 lot development currently under construction. The offer is for $450,000 for the four lots in an “as is” condition. The development costs to bring the property to finished lots have been estimated in a range from $800,000 to $1,200,000. Using the low end of the range suggests a finished lot of $312,500 while the higher end of the range suggests $412,500. The property was in escrow in December for $650,000; however escrow was cancelled in January. The current offer is from the adjoining landowner. These lots are not located within a CFD. In comparison to the subject property this location is considered to be slightly inferior, however, the overall tax rate is superior, and lot size and the fact it is not a closed sale make this market data superior.

Data Nos. 2, 3 and 4 pertain to two escrows and a recent closing within Chino in the master planned community known as The Preserve. Chino is located approximately five miles northwest of the city limits of Corona with a slightly inferior location when compared to Corona. Data No. 2 is in regards to 48 lots with a minimum lot size of 6,000 square feet. Centex is in escrow to purchase the property on the basis of a $315,000 finished lot. Data No. 3 is in regards to 51 lots with a minimum lot size of 5,000 square feet. Lennar Homes is in escrow to purchase the lots on the basis of a $300,000 finished lot. Data No. 4 pertains to 55 lots with a minimum lot size of 4,050 square feet. Shea Homes purchased the lots on the basis of $278,000 per finished lot. All of these market data are located within a proposed CFD with similar overall tax rates in comparison to the subject properties. In comparison to the subject property these sales are considered to be inferior in lot sizes, however, Data Nos. 2 and 3 are not yet closed sales which suggest the upper limit of the value range.

Data No. 5 refers to the current escrow of 44 lots located in the College Park Specific Plan in Chino. The lots have a minimum lot size of 9,350 square feet. This specific plan is near the prison creating an inferior surrounding neighborhood. Sun Cal is selling the lots on the basis of a

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 35 $280,000 finished lot. The lands are due to close in a mass graded condition. This data is located within a CFD with similar proposed overall tax rates. In comparison to the subject property these lots are inferior in location.

Data No. 6 refers to the sale of 37 lots in Corona with a 10,000 square foot minimum to Woodbridge Homes. Blackmon Homes sold the lots in June 2005 on the basis of a $410,000 finished lot. The actual sales price was $12,313,796 with finishing costs estimated at $2,856,204. The property was in a partially finished condition at time of sale with the seller completing other additional improvements and the buyer doing some minor finishing construction. The buyer may use offsite model homes which allow a builder to pay a premium for the land. This property is an infill, level parcel located within a CFD. When compared to the subject property these lots are considered superior in size.

Data Nos. 7, 8 and 9 refer to land sales within the Eastvale/ Mira Loma Area north of Corona. Eastvale is located along Interstate 15 north of the 91 Freeway. This area has been transitioning from dairy lands to new residential development over the past 10 years. Data No. 7 pertains to the current escrow of 172 lots being purchased by DR Horton on the basis of a $270,000 finished lot. Data No. 8 refers to the March 2006 Van Daele purchase of 72 lots from John Laing homes. The 7,200 square foot minimum lots were purchased in a partially finished condition on the basis of a $283,179 finished lot. Data No. 9 is in regards to the September 2005 purchase of 94 lots by Centex (from TriMark Pacific). The lots had a minimum lot size of 7,200 square feet and were purchased on the basis of a $248,000 finished lot. All three market data are located within CFD’s with similar overall tax rates. In comparison to the subject property these data are considered to be slightly inferior in location and lot size.

Data No. 10 pertains to the sale of a property located in northern Corona near I-15 and Corona Street (adjacent to Data No. 1). Logan Homes purchased the 21 lots with a minimum square footage of 14,000 in December 2004 on the basis of a $229,224 finished lot. This included a sales amount of $2,350,000 and finishing costs of $2,470,553. This property was in a raw condition with approved mapping and partially approved grading plans. There was a risk of underground rock at time of grading of the property. This property is located within a CFD. In comparison to the subject property this market data is considered inferior in location; date of sale

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 36 and due to the unknown amount of underground rock at time of sale, however superior due to the size of the lots.

The market data is summarized below:

Data Lot Size Date of Finished No. (SF) Sale Lot Price Comparison to Subject 1 14,000 Offers $312,500- Superior $412,500 2 6,000 Escrow $315,000 Superior 3 5,000 Escrow $300,000 Similar 4 4,050 1/06 $278,000 Inferior – location 5 9,350 Escrow $280,000 Inferior – location: superior lot size 6 10,000 6/05 $410,000 Superior – lot size 7 7,200 Escrow $270,000 Inferior – location Superior – not closed sale; larger lot size 8 7,200 3/06 $283,179 Inferior – location; superior lot size 9 7,200 9/05 $248,000 Inferior – location 10 14,000 12/04 $229,224 Inferior – condition, location, date of sale Superior – lot size

The market data has an overall range of $229,224 to $412,500 per finished lot. Data Nos. 1 and 6 are the highest sales at $312,500-$412,500 (depending on actual costs) and $410,000 per finished lot. Data No. 1 is not yet closed and has been through one cancelled escrow which would suggest it is at the high end of the market data range. Although Data No. 6 is considered superior, this sale appears high in comparison to the remainder of the market data. Data Nos. 2 thru 5 are all located in Chino, a slightly inferior location. Data Nos. 2, 3 and 5 are all escrows which, again, sets the upper limit of value. Data Nos. 7, 8 and 9 all refer to lots in the Eastvale/Mira Loma area north of Corona which is considered an inferior location. Market Data No. 10 was sold in a raw land condition with some unknown rock issues which could increase grading costs substantially. The subject properties have all been developed, thus there is no development risk remaining.

Market Data Discussion – Super pad Sales – Attached and Small Lot Residential Units

I have searched the area and found the four transactions described below to be comparable to the subject property to be developed as condominiums.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 37 Data No. 1 pertains to the recent closing (May 2006) of a parcel within Crown Valley Village Phase III in Temecula. Richland sold the 127 unit site to Taylor Woodrow on the basis of a $175,000 finished lot. The property is located within a CFD with similar overall tax rates. The overall density on the project will be 10 dwelling units per acre. In comparison to the subject property, this transaction is considered to be similar.

Data No. 2 refers to the current escrow of Planning Area 7 within the master planned community of College Park in Chino. Sun Cal was the master developer of the site and sold this planning area to Standard Pacific on the basis of a $122,126 finished pad. The proposed product is for triplexes. The escrow is anticipated to close fall of 2006. College Park is located near Chino State Prison and is located within a CFD. The overall density is in the seven to eight unit per acre range. In comparison to the subject property, this sale is considered to be inferior in location.

Data No. 3 is in regards to the sale of Planning Area 12 within the Dos Lagos master planned community in Corona. SE Corporation is the master developer of Dos Lagos which consists of several residential neighborhoods, a proposed lifestyle center and commercial/office lands. Taylor Woodrow purchased the site with an overall density of 10.53 dwelling units per acre on the basis of a $143,873 finished pad in July 2005. This transaction was negotiated in mid-2004, prior to a substantial amount of appreciation in the subject marketplace. In comparison to the subject property, this transaction is considered to be similar in location and inferior in date of negotiation.

Data No. 4 refers to the purchase of a 106 unit site located in the successful master planned community of Harveston in Temecula. Meritage purchased the lands in November 2004. The property was sold in a blue-topped condition with plans for small detached lots with a minimum lot size of 3,100 square feet. The property is located within a CFD. In comparison to the subject property this sales is considered to be inferior due to location and date of sale.

Retail/Commercial Market Data Discussion

I have searched the area for other comparable transactions for commercial /retail development which are summarized below.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 38 Data No. CR-1 is located opposite the commercial parcel within the subject property. This site does not have freeway frontage. According to the seller’s representative, the property is optioned at $7.87 per square foot. This site is at the southwest corner of Trilogy Parkway and Temescal Canyon Road. There is an Alquist-Priolo zone (earthquake study zone) which bisects the property. The site is being sold in a raw condition with surrounding streets in place. There is no CFD on this site.

Data No. CR-2 pertains to the sale of a 7-acre parcel in February 2005. The property was in a raw land condition and was generally level at street grade. Bungalow Investments (Neil Gascon) was the seller and Transcan Temecula LLC is the buyer of the property. The site is zoned for professional office use and is proposed for a mixed use commercial/retail center. The site sold for $10.92 per square foot.

Data No. CR-3 refers to the January 2005 sale of a 1.5-acre parcel directly south of the subject property at Weirick Road and Interstate 15. The site sold for $13.27 per square foot in a raw condition, generally level with streets and utilities to the property. The parcel is at an off ramp with excellent access. The seller carried an approximate 75 percent first trust deed.

Data No. CR-4 pertains to the August 2004 sale of a 4.73-acre parcel located in Temecula on Jefferson. The parcel rears to Interstate 15, thus having some frontage. Temecula’s Elite purchased the property from Rancho California Gateway, LLC on the basis of $14.35 per square foot. The property is level and has been rough graded.

Data No. CR-5 refers to the July 2004 sale between Ralph’s Grocer Company and Cahan La Sierra, LLC. The property is located at La Sierra and Indiana Avenues in Riverside and wraps around an existing Chevron gas station. The 7.47-acre parcel sold on the basis of $16.13 per square foot. The site was purchased for a Ralph’s supermarket neighborhood center. This property was involved in a double escrow (closed on same day). The previous sale was for $15.21 per square foot.

Data No. CR-6 is also located in the Temescal Valley just northwest of Glen Eden Road. Sycamore Creek Marketplace purchased the site in June 2004 for $3.78 per square foot. The site is adjacent to the Sycamore Creek Master Planned community. The buyer is proposing a retail

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 39 shopping center on the site. This property was raw at the time of sale and is not located within a CFD.

Data No. CR-7 refers to a June 2004 sale located in Lake Elsinore at the northeast corner of Central and Collier. RSM Development purchased the property which consists of 24.5 acres for $5.28 per square foot. The buyer purchased the property to hold for future development. This property is raw with no entitlements; however, it does have freeway orientation.

Data No. CR-8 is located at the southeast corner of Interstate 215 and the 60 Freeway near Moreno Valley. The 86 acres were purchased for $6.73 per square foot and are proposed as a portion of a 180 acre regional center. Transcan Temecula LLC purchased the property from the Canyon Springs Mall. The property closed in January 2004. The property was raw with off sites in place at time of sale.

Data No. CR-9 refers to a January 16, 2004 sale which is located in the City of Corona. The 3.673 acre parcel is located at Benjamin Avenue, north of Sampson between Magnolia and the 91 Freeway. The property sold for $7.19 per square foot. The property was purchased by Dennis Ray to hold for future development. The site was rough graded with all off sites in place at time of sale. This property is not located within a CFD.

Data No. CR-10 pertains to a 5.5-acre parcel which sold for $11.07 per square foot. The property is located at the southeast corner of Overland Drive and Ynez Road in Temecula, south of the subject property. Huntco purchased the site to construct a 23,000 square foot shopping center and two pads. The property was raw with all off sites in place at time of sale in June 2003. This property is not located within a CFD.

Data No. CR-11 is located along Hamner Avenue in the City of Norco, north of the subject project along Interstate 15. E.D.D. Investment Company purchased the site to hold for future development. The 2.19-acre parcel was purchased in February 2003 for $9.26 per square foot. The site was in a raw condition with all off sites in place.

Data No. CR-12 refers to a 7.04-acre parcel located at the south corner of Madison and Los Alamos in Murrieta. Arowant Springs Investment purchased the property for $9.47 per square

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 40 foot as a portion of a future power center. The site has Interstate 15 orientation, however no off- ramps. The property is not located within a CFD.

The subject property has been listed for $12.00 per square foot and there have been no current offers. The subject property will benefit from an identity to the overall master plan of Trilogy.

SHEA OWNERSHIP – Tracts 31742, 31662 and Commercial Land Parcel

Tract 31742 and 31662 is currently under development with 45 completed homes. The commercial land is raw.

First, the land owned by Shea will be valued and then the completed builder owned homes will be valued. In both instances a DCF will be considered.

Remaining Lands Owned by Shea

In determining the market value for the subject remaining lands I have reviewed several types of market data and concluded on the following values. The single family lots are considered to be at the upper end of the range due to the golf course frontage that is available on a number of the lots and the views amenity.

Tract 31742 $250,000 finished lot Tract 31662 $175,000 per unit Commercial land $10.00 per square foot Tract 31742 118 lots x $250,000 = $29,500,000 Tract 31662 150 units x $175,000 = $26,250,000 Commercial Land 14.52 acres, 632,491 s.f. x $10 per sq. foot = $6,324,910, Say = $6,325,000

Summary –Total Shea Land

Tract 31749 $29,500,000 Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 41 Tract 31662 $26,250,000 Commercial land $6,325,000 Total $62,075,000

Existing Inventory Homes (Retail Value)

Due to the current single ownership of the Shea 45 homes (over 95 percent complete), 16 in escrow and due to close upon completion) and the model complex of 15, a DCF is needed in order to arrive at a bulk value which takes into account the retail value of the homes, absorption time to sell the homes, administrative expenses, and a discount rate.

The retail value will first be addressed. A review of the current sales prices (as detailed in the gap portion of the project with the current sales prices) as well as a review of resale activity within the last year (as detailed in Section 3). In addition a listing of comparable properties is located in the Addenda of this report.

Sage

The most appropriate data for Plan 3520 are:

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 3520 2/2 1 / 2 1,293 $295-$299 Resales 3520 2/2 1 / 2 1,293 $301 Resales 3530 2/2 1 / 2 1,412 $313.03 Resales 3540 2/2 1 / 2 1,508 $341.52

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $295 per square foot and has been successfully marketed at that price. Current escrows of this plan range from $380,990 to $383,990. I have concluded at a base value of this plan at $380,000 ($293.89 per sq. foot).

Pummelo

The most appropriate data for Plan 3530 are:

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 42 Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 3530 2/2 1 / 2 1,412 $283-$286 Resales 3520 2/2 1 / 2 1,293 $301 Resales 3530 2/2 1 / 2 1,412 $313.03 Resales 3540 2/2 1 / 2 1,508 $341.52

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $283-296 per square foot. Current escrows of this plan range from $399,990 to $401,990. I have concluded at a base value of this plan at $400,000 ($283.29 per sq. foot).

Sycamore

The most appropriate data for Plan 3540 are:

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 3540 2/2 1 / 2 1,508 $277-$281 Resales 3520 2/2 1 / 2 1,293 $301 Resales 3530 2/2 1 / 2 1,412 $313.03 Resales 3540 2/2 1 / 2 1,508 $341.52

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $277-281 per square foot. Current escrow of this plan is $420,990. I have concluded at a base value of this plan at $420,000 ($278.54 per sq. foot).

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 43 Santiago

The most appropriate data for Plan 4050 are:

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 4050 2/2 1 / 2 1,552 $286-$294 Resales 4050 2/2 1 / 2 1,552 $331-368 Resales 4070 2/2 1 / 2 1,758 $336-405 1 1 4/2.5 2 / 2 1,976 $262.14

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $286-294 per square foot and has been successfully marketed at that price. Current escrows of this plan range from $452.990 to $672,262 (golf course frontage). I have concluded at a base price of this plan at $445,000 ($285.62 per sq. foot).

Manzanita

The most appropriate data for Plan 4060 are:

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 4060 2/2 1 / 2 1,671 $280-283 Resales 4060 2/2 1 / 2 1,671 $362 Resales 4070 2/2 1 / 2 1,758 $336-405 1 1 4/2.5 2 / 2 1,976 $262.14

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $280-283 per square foot. Current escrow of this plan is $462,990. I have concluded at a base price of this plan at $460,000 ($275.28 per sq. foot).

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 44 Tenja

The most appropriate data for Plan 4070 are:

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subject 4070 2/2 1 / 2 1,758 $274-$278 Resales 4060 2/2 1 / 2 1,671 $362 Resales 4070 2/2 1 / 2 1,758 $336-405 1 1 4/2.5 2 / 2 1,976 $262.14

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $274 to $278 per square foot. The current escrows for this plan range from $480,990 to $487,990. I have concluded at a base value of $485,000 ($275.88).

Laguna

The most appropriate data for Plan 4080 are:

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 4080 2/2 1 / 2 1,896 $261-$267 Resales 4060 2/2 1 / 2 1,671 $362 Resales 4070 2/2 1 / 2 1,758 $336-405 1 1 4/2.5 2 / 2 1,976 $262.14

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $261-$267 per square foot. Current escrows of this plan range from $494.990 to $517,990. I have concluded at a base price of this plan at $495,000 ($261.07 per sq. foot)

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 45 Satsuna

The most appropriate data for Plan 4090 are:

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 4090 2/2 1 / 2 1,896 $255-262 Resales 4060 2/2 1 / 2 1,671 $362 Resales 4070 2/2 1 / 2 1,758 $405 Resale 5030 2/2.5 2 / 2 2,216 $327

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject floor plan has a current base price (excluding options) of $261-$267 per square foot. However the only lot that is being valued is a mode that fronts the golf course. I have taken into consideration the comparable resales that are also golf course frontage. I have concluded at a value of $650,000 ($342.08 per sq. foot)

Escalante Collection

The most appropriate data for Plan 5010 are:

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 5010 2/2.5 1 / 2+ 2,198 $269-$288 Resales 4070 2/2 1/2 1,758 $333 1 2 3/2.5 2 /3 2,167 $247.80 2 2 4/3 2/ 2 2,261 $264.78

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $269-288 per square foot. Current escrows of this plan range from $590,990 to $592,990. I have concluded at a base price of this plan at $585,000 ($266.15 per sq. foot)

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 46 The most appropriate data for Plan 5020 are:

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 5020 2/2.5 1 / 2 2,241 $264-$268 Resales 4070 2/2 1/2 1,758 $333 1 2 3/2.5 2 /3 2,167 $247.80 2 2 4/3 2/ 2 2,261 $264.78

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $264 to $268 per square foot. Current escrow of this plan is $545,990. I have concluded at a base price of this plan at $545,000 ($243.19 per sq. foot).

The most appropriate data for Plan 5030 are:

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 5030 2/2.5 1 / 3 2,216 $268-$274 Resale 5030 2/2.5 1 /3 2,216 $327.16 2 2 4/3 2/3 2,261 $264.78 3 2221 4/2 2 / 3 2,221 $253.26

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $268-$274 per square foot. Current escrows of this plan range from $549,990 to $673,990. I have concluded at a base price of this plan at $550,000 ($248.19 per sq. foot).

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 47 The Cobblestone Collection

The most appropriate data for Plan 3023

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 3023 2/2 1 /2 2,028 $214-222 4 4 3/2.5 2 /2 1,722 $233.44 5 3 3/2.5 2/2 1.825 $262.46

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $214-$222 per square foot. Current escrows of this plan range from $444,990 to $460,000. I have concluded at a base price of this plan at $425,000 ($209.56 per sq. foot).

The most appropriate data for Plan 3024

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 3024 2/2 1 /2 2,051 $217-219 4 4 3/2.5 2 /2 1,722 $233.44 5 3 3/2.5 2/2 1.825 $262.46

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $217-$219 per square foot. Current escrows of this plan range from $419,990 to $500,000. I have concluded at a base price of this plan at $450,000 ($219.04 per sq. foot).

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 48 The most appropriate data for Plan 3011

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 3011 2/2 1 /2 1,389 $254-259 4 3 2/2 2 /2 1,502 $231.89 5 1 2/2.5 2/2 1.638 $266.78

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $254-$259 per square foot. Current escrows of this plan range from $319,990 to $325,990. I have concluded at a base price of this plan at $320,000 ($230.38 per sq. foot).

The most appropriate data for Plan 3012

Data Model Rm. Ct. Flrs/Pkg. Sq. Ft. Price/SF Subj. 3012 2/2 1 /2 1,597 $240-244 4 3 2/2 2 /2 1,502 $231.89 5 1 2/2.5 2/2 1.638 $266.78

All comparables are of similar quality design and appeal. Adjustments were considered (when applicable) for location, lot size, sales concessions, CFD fees, common area benefits, total square footage, room count, garage space, and other amenities. The subject has a current base price (excluding options) of $244-$244 per square foot. Current escrows of this plan range from $349,990 to $420,990. I have concluded at a base price of this plan at $350,000 ($219.16 per sq. foot).

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 49 Retail Value Conclusion

Several of the homes have golf course frontage, which has a lot premium of $100,000 to $150,000. This is substantiated not only by sales within the subject project, but golf course premiums at The Retreat and Dos Lagos, two golf course oriented communities within proximity to the subject project. These premiums will be reflected in the homes that front the golf course.

One of each plan is a model home (the Descanso Collection has no completed homes other than the model homes). Per interviews with homebuilders, upgrades and landscape/hardscape of up to $75,000 are installed in the model homes. However, homebuilders generally consider this a marketing cost and do not anticipate recovering this investment on a dollar for dollar basis. I am considering a premium on each model home. The total gross revenue is shown on the following page.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 50 Plan No. No. of Units Amenities Price/Unit Total 4050 3 --- $445,000 $1,335,000 4050 1 Golf Course $600,000 $600,000 4060 2 --- $460,000 $920,000 4070 3 --- $485,000 $1,445,000 4070 1 Model/Golf Course $625,000 $625,000 4080 2 --- $495,000 $990,000 4080 1 Model/Golf Course $650,000 $650,000 4090 1 Model/Golf Course $650,000 $650,000 5010 1 Model/Golf Course $725,000 $725,000 5010 2 --- $585,000 $1,170,000 5020 1 Model/Golf Course $750,000 $750,000 5020 1 --- $545,000 $545,000 5030 2 Model/Golf Course $675,000 $1,350,000 5030 1 --- $550,000 $550,000 3520 1 Model/Golf Course $550,000 $550,000 3520 3 --- $380,000 $1,140,000 3530 1 Model $460,000 $460,000 3530 2 --- $400,000 $800,000 3540 1 Model $475,000 $475,000 3540 1 --- $420,000 $420,000 3011 3 --- $320,000 $960,000 3011 1 Model/ $360,000 $360,000 3012 1 Model $450,000 $450,000 3012 3 --- $350,000 $1,050,000 3023 1 Model $460,000 $460,000 3023 1 --- $425,000 $425,000 3024 1 Model $500,000 $500,000 3024 3 --- $450,000 $1,350,000 Total $21,715,000

Absorption Period

In order to arrive at an absorption period for the subject homes, I have analyzed the absorption of the subject project. The Trilogy development opened June 4, 2001. As of the date of value there have been homes, which represent a monthly absorption of 17 dwelling units.

I have concluded that the 45 builder-owned homes (15 models included) will be absorbed within a six-month period (7.5 units per month).

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 51 Expenses

In determining an expense rate I have interviewed several builders in the subject area as to their expenses on selling existing inventory. Expenses include marketing and general administrative costs. These costs typically range from 4 to 8 percent depending on varying factors such as absorption period, intensity of marketing, etc. I have estimated 3 percent for marketing expenses and 3 percent for general and administrative costs for a total of 6 percent in expenses.

Profit

Several interviews with merchant builders in the area were conducted in order to determine an appropriate profit percentage for the subject properties. In the past developers typically attempted to achieve a 10 to 12 percent profit based on gross sales proceeds. During the early 1990s recession this range was lowered considerably to 6 to 10 percent with some builders drastically lowering their profit potential in order to maintain their work force. As the market improved, so did the profits. Several economic indicators are suggesting another downturn in the economy although the subject housing market still remains moderate. I am considering a 10 percent profit in our analysis for this project.

Discount Rate

In selecting a discount rate, the following was completed.

1. Interviews with merchant builders in the Riverside area. 2. Review of current market conditions including current market rates as well as yields reflected in other markets (i.e., GNMA, corporate bonds, etc.). 3. The quality, construction, historical sales and product on the subject property.

I have concluded at a discount rate of 10 percent for the subject properties.

Discounted Cash Flow Summary-Existing Inventory of Homes

The discounted revenue (refer to the addendum) for the subject existing inventory is $17,748,748 say $17,750,000.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 52 SECTION 2 – LIST OF GAP PARCELS

Included in the Addenda of this report is a list of the gap parcels. The sales prices, in my opinion, represent market value based on (1) the subject transactions; (2) the resale’s (listed in Section 3); and (3) the competing developments (located in the Addenda). In most cases, the sales price includes options, and lot premiums.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 53 SECTION 3 – LIST OF EXISTING HOMOWNERS

Included in the Addenda of this report is a list of the County Assessor’s parcel numbers of existing homeowners. I have also collected and noted resale activity that has occurred in 2006. As evidenced by the resale’s that have occurred all are greater than the assessed value. I have formed the opinion that the assessed roll is a minimum market value based on (1) the resale activity that is noted; and (2) the new sales activity that is occurring (see Section 1), competing development (as listed in the Addenda).

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 54 SECTION 4 – OTHER PROPERTIES

The following parcels represents the assessed values of the tour center owned by Shea, and the recreation facilities that are owned by Trilogy Homeowner’s Association. According to the special tax consultant, these are the only parcels that are subject to the special tax of CFD 89-1. The parcels that are owned by The Trilogy Homeowner’s Association are not subject to ad valorem taxes but are subject to the special tax lien of CFD No. 89-1. The Assessed Values for these parcels are based on 2005/200 Assessor’s roll (These parcels had been valued through 2005/2006 and subject to advalore taxes until recently, when they have been exempted based on an agreement that had previously been executed).

Assessor Parcel Number Ownership Assessed Value Use

290290007 Shea Homes Inc. $1,344,513 Tour Center 290290009 Triology at Glen Ivy $1,762,971 Rec Center 290290010 Triology at Glen Ivy $2,178,173 Sports Club

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 55 MARKETING AND EXPOSURE TIME

It is the appraiser’s estimation that both the marketing and exposure time for the subject property would be under 12 months if placed on the open market in today’s market conditions at the concluded market value. It should be noted that the value concluded via the DCF is for a bulk purpose.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 56 APPRAISAL REPORT SUMMARY

This appraisal assignment was to estimate the fair market value of the subject property as described in Sections 1 and 2 and the listing of Assessed Value in Sections 3 and 4. The subject property is within a master planned community known as Trilogy, located in the County of Riverside, south of the City of Corona, in the Temescal Valley. Shea is the master developer of the community.

The report was prepared in four sections.

Section 1 was the valuation of the remaining lands and homes that are owned by Shea. A DCF analysis was considered for the homes.

Remaining Lands Owned by Shea $62,075,000 Remaining Existing Homes Owned by Shea $17,750,000

Total $79,825,000

Section 2 referred to the gap parcels. These consist of 88 homes that have been sold to individual homeowners, but not yet listed on the 2006/2007 tax roll for the County of Riverside.

$49,689,055 $49,690,000(R) Section 3 refers to the assessed value of 936 homes that are listed on the 2006/2007 tax roll for the County of Riverside.

$379,559,563 $379,560,000 (R) Section 4 refers to the Assessed Value for the golf course and tour center that are owned by Shea and the recreation facilities that are owned by the homeowners.

$5,285,000 The preceding values are stated subject to the Assumptions and Limiting Conditions and Appraiser’s Certification as of the 15th day of July, 2006.

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 57 APPRAISER’S CERTIFICATION

I certify to the best of our knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and is our personal, unbiased professional analyses, opinions, and conclusions.

3. I have no present or prospective interest in the property that is the subject of this report and we have no personal interest or bias with respect to the parties involved.

4. My compensation is not contingent upon the reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value estimate, the attainment of a stipulated result, or the occurrence of a subsequent event.

5. This appraisal was not based on a requested minimum valuation, a specific valuation, or the approval of any specified amount.

6. My analyses, opinions, and conclusions were developed, and this report has been prepared in conformity with the Uniform Standards of Professional Appraisal Practice.

7. I have made a personal inspection of the property that is the subject of this report.

8. No one provided significant professional assistance to the persons signing this report.

9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute.

10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

11. As of the date of this report, Bruce W. Hull has completed the requirements of the continuing education program of the Appraisal Institute.

Bruce W. Hull, MAI State Certified General

Summary Appraisal Report – Complete Appraisal Community Facilities District No. 89-1 (Mountain Cove Specific Plan) County of Riverside Bruce W. Hull & Associates Inc. Page 58 ADDENDA Residential Detached Lot Sales Summary Chart Residential Detached Lot Sales Summary Chart

# of Lot Size Finished Location Buyer Seller Sales Date Lots (SF) Price/Lot Comments E/S of Corona Avenue, E/O I-15 N/A N/A Current 4 12,000 $312,500 - Development costs have a range of $800K to City of Corona Negotiation $412,500 $1.2M. Several offers at asking price. Fell out of escrow once. No CFD. N/O Bickmore Ave, E/O Rincon Meadows Avenue Centex Lewis Escrow 48 6,000 Located within the master planned community (TTM 17610) $315,000 known as The Preserve. Within CFD with Chino similar overall tax rates. N/O Bickmore Avenues, W/O Creek Avenue Lennar Lewis Escrow 51 5,000 $300,000 Located within the master planned community (TTM 17613) known as The Preserve. Within CFD with Chino similar overall tax rates. S/O Forest Park Drive and Forest Park Shea Lewis 1/06 55 4,050 $278,000 Southern portion of this development backs to (TTM 17150) Edison easement/lines. Within CFD with similar Chino overall tax rates. PA 8 College Park Specific Plan Confidential Sun Cal Escrow 44 9,350 $280,000 15.2 acre site to be transferred in a mass graded Chino condition. Within CFD. Near men’s facility. S/S Chase Drive, E/O Fullerton Woodbridge Blackmon 6/05 37 10,000 $410,000 Purchased in a partially finished condition with South Corona seller doing additional improvement post closing. Within CFD. NEC Schliesman and Archibald D.R. Horton Richland Escrow 172 7,200 $270,000 Anticipated to close upon obtaining grading Eastvale Area permit. Within CFD. N/S Cloverdale Avenue at Harrison Avenue Van Daele John 3/06 72 7,200 $283,179 Purchased in a partially finished condition. Eastvale Area Laing Within CFD. NW of Archibald and Schleisman Centex TriMark 9/05 94 7,200 $248,000 Closed in an unimproved condition upon final Eastvale Area Pacific map approval. Within proposed CFD. E/S of Corona Avenue, E/O I-15 Logan IC Corona 12/04 21 14,000 $229,224 Purchased in a unimproved condition with City of Corona Homes mapping in place and grading permit approved. Subject property within CFD. Improved Residential Sales Summary Chart Improved Residential Sales Summary Chart

Project Name/ Data No. Location/Developer Plan Room Count Size (SF) Floors/Parking Lot Size Sales Price Price/SF 1 Amethyst at Sycamore Creek, 1 3/3 2,150 2/2 6,000 sf $527,000 $245.11 Sycamore Creek Masterplan, 2 3/2.5 2,167 2/3 $537,000 $247.80 Corona 3 4/2.5 2,317 2/3 $559,000 $241.26 4 4/3.5 2,587 2/3 $575,000 $222.26 2 Almont at Heartland, 1 4/2.5 1,976 2/3 6,000 sf $517,990 $262.14 Heartland Masterplan, Corona 2 4/3 2,261 2/3 $557,990 $264.78 3 5/3 2,679 2/3 $524,950 $195.81 4 6/3 2,856 2/3 $599,790 $210.01 3 Steeplechase North, Mallory 2085 3/2 2,085 1/3 7,000 sf $553,000 $262.22 Court/South of Cloverdale, 2221 4/2 2,221 2/3 $560,500 $252.36 Corona 4 Shady Grove at Dos Lagos, 1 1/1.5 912 1/1 Fourplex $289,900 $316.98 Corona 2 2/2 1,187 1/2 $342,000 $288.12 3 2/2 1,505 2/2 $349,000 $231.89 4 3/2.5 1,722 2/2 $402,000 $233.44 5 Market Street at Dos Lagos, 1 2/2.5 1,638 2/2 Townhomes $437,000 $266.78 Corona 2 3/2.5 1,775 2/2 $449,000 $252.95 3 3/2.5 1,825 2/3 $479,000 $262.46 Multi-Family Land Sales Summary Chart Multi-Family Land Sales Summary Chart

Sales Finished Location Buyer Seller Date # of Lots Lot Size (SF) Price/Lot Comments Crown Valley Village Phase III Taylor Woodrow Richland 5/06 127 10 dwelling $175,000 Site is 13 gross acres to close upon approval of TTM Auld Road at Pourroy Road units per acre in mass graded condition for $105,000 per lot with French Valley finishing costs estimated at $70,000 per lot. Within CFD. PA 7 of College Park Standard Pacific Sun Cal Escrow 85 Triplex/7.3 $122,126 In master planned community of College Park. Near Chino dwelling units Chino State Prison. Within CFD. Sold in mass per acre graded condition for $9,117,246 with finishing pad costs of $14,864 per unit. PA 12 Dos Lagos Taylor Woodrow SE Corporation 7/05 236 10.53 dwelling $143,873 Sold in mass graded condition for $86,017 per unit. Corona units per acre Within CFD and master planned community. Harveston Meritage Lennar 11/04 106 3,100 sf $196,000 Sold in blue-topped condition. Within CFD. Temecula Commercial/Retail Market Data Summary Chart Commercial/Retail Market Data Summary Chart

Sales Price/ Data Location Buyer Seller Size Sales Price Date Site Condition SF Comments CR-1 SWC Trilogy Parkway Confidential Ben Day 609,840 sf $4,800,000 Escrow Raw, level with $7.87 Zoned retail/Commercial. and Temescal Canyon (14 Ac) surrounding Alquist Priolo zone bisects Rd, Temescal Valley streets in place the property. CR-2 Winchester Road and Transcan Temecula Bungalow Inv. 311,454 $3,400,000 2/05 Raw, level $10.92 Zoned for Professional Sky Canyon Road, LLC (7.15 Ac) Office use. Planned mixed Temecula use retail/commercial center. CR-3 SESC I-15 & Weirick Samghabadl Benedikt 68,082 $890,000 1/5/05 Raw, level $13.27 Zoned CPS County. Seller Road, Temescal Valley (1.54 Ac) financing. CR-4 28182 Jefferson, Temecula’s Elite Rancho Calif. 206,039 $2,957,000 8/24/04 Rough graded, $14.35 Zoned Highway Tourist. Temecula Gateway LLC (4.73 Ac) level Rears to I-15. Buyer plans retail with office in rear. CR-5 La Sierra and Indiana, Ralphs Grocery Cahan La 325,393 $5,250,000 7/04 L’s around $16.13 Purchased for a Ralphs Riverside Sierra, LLC (7.47 Ac) Chevron supermarket center. CR-6 I-15, NW of Glen Eden Sycamore Creek Indian Truck 764,914 $2,889,000 6/8/04 Raw with $3.78 Adjacent to Sycamore Road, Temescal Valley Marketplace Trail Dev. (17.560 Ac) offsites to Creek Master Plan for Corp. property. proposed retail center. CR-7 NEC Central & Collier, RSM Development Schmid Trust 1,069,616 $5,650,000 6/02/04 Raw with $5.28 Planned for future Lake Elsinore (24.555 Ac) offsites to prop. development. CR-8 SEC I-215 and 60 Transcan Canyon 3,746,160 $25,200,000 1/16/04 Raw with $6.73 Portion of 180 acre Freeway, Riverside Springs Mall (86.00 Ac) offsites in place regional center. CR-9 Benjamin Avenue N/O Dennis Ray Dwyer 159,996 $1,150,000 1/16/04 Rough Graded $7.19 Purchased to hold for Sampson, Corona Instruments (3.673 Ac) (all offsites) future development. CR-10 SEC Overland Drive Hundly Trs. Eli Lilly Co. 239,580 $2,653,000 6/6/03 Raw with all $11.07 To construct 23,000 sf and Ynez Rd, (5.5Ac) offsites in place shopping center and two Temecula pads. CR-11 Hamner Ave, S/O 2nd E.D.D. Invest. Hundley Trs. 95,396 $883,000 2/28/03 Raw with all $9.26 Hold for future Street, Norco Company (2.19 Ac) offsites in place development. CR-12 Wraps around S/C of Arowant Springs Ivy Madison 306,662 $2,905,000 3/15/03 Raw with all $9.47 Portion of 200,000 sf Madison & Los Inv. (7.04 Ac) offsites in place power center. Alamos, Murrieta DISCOUNTED CASH FLOW EXISTING HOMES OWNED BY SHEA

Triology

MONTH Months MONTH 1 MONTH 2 MONTH 3 MONTH 4 MONTH 5 MONTH 6 TOTAL 6 INCOME:

Retail Sales 21,750,000 $3,625,000 $3,625,000 $3,625,000 $3,625,000 $3,625,000 $3,625,000 $21,750,000

TOTAL INCOME $3,625,000 $3,625,000 $3,625,000 $3,625,000 $3,625,000 $3,625,000 $21,750,000

EXPENSES: Marketing & Carrying Expenses 6% ($217,500) ($217,500) ($217,500) ($217,500) ($217,500) ($217,500) ($1,305,000) Profit 10% ($362,500) ($362,500) ($362,500) ($362,500) ($362,500) ($362,500) ($2,175,000)

TOTAL EXPENSES ($580,000) ($580,000) ($580,000) ($580,000) ($580,000) ($580,000) ($3,480,000)

NET CASH FLOW $3,045,000 $3,045,000 $3,045,000 $3,045,000 $3,045,000 $3,045,000 $18,270,000 Discount Factor 10% 0.9917 0.9835 0.9754 0.9673 0.9594 0.9514

DISCOUNTED CASH FLOW $3,019,835 $2,994,877 $2,970,126 $2,945,580 $2,921,236 $2,897,094 $17,748,748

CUMULATIVE DISCOUNTED $3,019,835 $6,014,712 $8,984,838 $11,930,418 $14,851,655 $17,748,748 $17,748,748 CASH FLOW LIST OF GAP PARCELS Gap Item # APN Lot Tract Cat Owners Date Price 1 290510001 1 31742 G Wood 6/28/2005 429,691 2 290510029 188 31742 G Manasra 8/14/2005 507,799 3 290510030 189 31742 G Leman 8/17/2005 663,712 4 290510031 204 31742 G Yoon 2/14/2006 468,490 5 290510032 205 31742 G Kim 2/18/2006 445,990 6 290510033 206 31742 G Garren 2/5/2006 505,990 7 290510034 207 31742 G Geronda 3/23/2006 496,099 8 290510035 208 31742 G Not 7/21/2006 517,999 9 290510036 209 31742 G Not 6/30/2006 539,924 10 290510037 210 31742 G Martin 3/10/2006 761,839 11 290510038 215 31742 G Coogan 4/24/2006 488,990 12 290510039 216 31742 G Robinso 1/15/2006 508,661 13 290510040 217 31742 G Tunstall 5/13/2006 502,790 14 290510043 220 31742 G Harris 5/18/2006 473,990 15 290510066 280 31742 G Rogers 9/30/2005 401,145 16 290510067 281 31742 G Wilson 9/4/2005 401,485 17 290510068 282 31742 G Martinez 2/1/2006 416,990 18 290510069 283 31742 G Cox 2/8/2006 400,990 19 290510070 284 31742 G Hatch 2/12/2006 449,990 20 290510071 285 31742 G Elmore 1/10/2006 482,852 21 290510072 286 31742 G Ferguso 4/14/2006 517,819 22 290500024 40 31742 G Handjian 2/28/2006 688,990 23 290500025 41 31742 G Johnson 5/13/2006 668,990 24 290500043 173 31742 G Opitz 8/31/2005 547,309 25 290500048 178 31742 G Kim 12/5/2005 411,620 26 290500053 183 31742 G Eves 2/1/2006 533,090 27 290500055 287 31742 G Fisher 3/11/2006 485,990 28 290500056 288 31742 G Forcatto 2/27/2006 470,990 29 290500057 289 31742 G Jared 4/26/2006 496,990 30 290500058 290 31742 G Williams 4/23/2006 478,990 31 290500060 292 31742 G Valbuen 2/6/2006 462,990 32 290500061 293 31742 G Herrera 2/26/2006 478,990 33 290500066 298 31742 G Gwyn 2/3/2006 483,990 34 290490001 43 31742 G Jensen- 1/27/2006 679,245 35 290490008 50 31742 G Burnett 2/19/2006 742,990 36 290490009 51 31742 G Hong 2/5/2006 740,990 37 290490010 52 31742 G Arslain 11/30/200 531,959 38 290490011 53 31742 G Bailey 3/10/2006 502,637 39 290490014 56 31742 G Chalmer 4/26/2006 684,990 40 290490015 57 31742 G Kymm 12/9/2005 732,000 41 290490016 58 31742 G Rainey 4/24/2006 691,990 42 290490017 59 31742 G Colema 4/24/2006 795,990 43 290490018 60 31742 G Steger 12/10/200 908,758 44 290490019 61 31742 G Steger 4/27/2006 908,758 45 290490021 63 31742 G Not 6/29/2006 698,990 46 290490022 64 31742 G Moore 5/4/2006 805,490 47 290490025 117 31742 G Thornto 12/10/200 517,611 48 290490026 118 31742 G Lucus 12/10/200 584,803 49 290490027 119 31742 G Odegard 12/26/200 586,711 50 290490029 121 31742 G Lopez 1/13/2006 783,438 51 290490030 122 31742 G Below 1/28/2006 762,410 52 290490031 123 31742 G Enright 3/13/2006 556,599 53 290490032 124 31742 G Wright 11/14/200 607,730 54 290490033 125 31742 G Safir 2/5/2006 578,070 55 290490034 126 31742 G Frohlkin 4/9/2006 574,848 56 290490035 127 31742 G Gaines 11/14/200 579,067 57 290490036 128 31742 G Caotron 2/12/2006 558,990 58 290490037 129 31742 G Botich 2/12/2006 527,990 59 290490038 130 31742 G Kerske 3/3/2006 536,990 60 290490044 136 31742 G Berg 3/10/2006 521,311 61 290490045 137 31742 G Balhorn 6/22/2005 676,885 62 290490061 166 31742 G Dorante 12/11/200 440,728 63 290490065 185 31742 G Wanam 4/7/2006 538,757 64 290490066 186 31742 G Vander 4/4/2006 511,221 65 290490067 187 31742 G Requejo 12/30/200 490,054 66 290490068 190 31742 G Reeves 2/7/2006 649,990 67 290490069 191 31742 G Smith 2/14/2006 664,990 68 290490070 192 31742 G Stilley 10/29/200 603,187 69 290490071 193 31742 G Daniel 12/30/200 579,843 70 290490072 194 31742 G Lane 2/14/2006 512,990 71 290490073 195 31742 G Wolff 2/18/2006 632,990 72 290490074 196 31742 G Not 6/30/2006 635,990 73 290490075 197 31742 G McCorkl 2/1/2006 632,990 74 290490076 198 31742 G McClure 2/13/2006 500,490 75 290490077 199 31742 G Mills 2/12/2006 496,490 76 290490078 200 31742 G Song 3/26/2006 477,214 77 290490079 201 31742 G Rivard 3/3/2006 466,490 78 290490080 202 31742 G Mobilia 2/2/2006 505,490 79 290490081 203 31742 G Carter 2/5/2006 489,490 80 290490082 211 31742 G Maralez 1/16/2006 719,662 81 290490083 212 31742 G Odette II1/19/2006 709,950 82 290490084 213 31742 G Not 6/22/2006 659,990 83 290291032 162 31662 G Finklest 6/30/2006 550,115 84 290291034 164 31662 G Meeks 6/29/2006 491,067 85 290291036 166 31662 G Warner 6/27/2006 497,663 86 290291038 168 31662 G Fawar 6/28/2006 488,667 87 290291039 169 31662 G Thomas 6/29/2006 420,068 88 290291007 7 31662 G Moore 6/23/2006 352,075 $49,689,055 LIST OF RIVERSIDE COUNTY ASSESSOR’S PARCEL NUMBERS OF EXISTING HOMEOWNERS Assessors roll # Parcel Base Year Land Value Value Total Date Sales Price 1 290310001-8 2006 COLLINS VICTOR R 204,000 535,500 739,500 2 290310002-9 1995 FITCH BARBARA 76,114 177,603 253,717 3 290310003-0 2003 FARINACCI EDA 142,015 261,775 403,790 4 290310004-1 2006 ASH HOWARD R 163,200 591,600 754,800 5 290310005-2 2003 VONDEMBUSSCHE GLENN 142,015 286,469 428,484 6 290310006-3 2003 WYATT JOHN D 142,015 303,426 445,441 7 290310007-4 2004 RAMEY SCOTT 83,232 353,736 436,968 8 290310008-5 2003 BARKER JAMES W 142,015 297,597 439,612 9 290310009-6 2003 MCLAIN SHERYL B 134,597 193,946 328,543 10 290310010-6 2006 ANN NUGENT REALTOR 1202 244,800 285,600 530,400 11 290310011-7 2003 CAIN LINDA 132,476 216,203 348,679 12 290310012-8 2003 ROLFE DAVID G 133,537 204,545 338,082 13 290310013-9 2003 LIEVANOS ALEX 133,537 205,604 339,141 14 290310014-0 2003 JULIANO BILLIE R 134,597 188,965 323,562 15 290310015-1 2005 ROOKHUYZEN LAWRENCE S 153,000 434,418 587,418 16 290310016-2 2003 LENNOX JOYCE H 134,597 189,389 323,986 17 290310017-3 2003 JOHNSON MILES 135,655 215,886 351,541 18 290310018-4 2003 YOO DUCK SOO 90,083 142,439 232,522 19 290310019-5 2003 ZIMMERMAN FRANK A 85,845 137,246 223,091 20 290310020-5 2003 BALHORN DOUGLAS D 85,845 190,344 276,189 21 290310021-6 2003 OSBERG RONALD A 85,845 239,413 325,258 22 290310022-7 2004 VONBOECKMANN THOMAS 84,896 164,380 249,276 23 290310023-8 2003 FRENCH JERRY R 85,845 166,087 251,932 24 290310024-9 2003 JAKOSITZ JOHN WILLIAM 84,784 280,428 365,212 25 290310025-0 2003 MERHISH FERRIS EUGENE 84,784 161,622 246,406 26 290310026-1 2003 TONKINS MICHELLE 84,784 133,218 218,002 27 290310027-2 2003 HALL DANIEL L 84,784 150,812 235,596 28 290310028-3 2003 DYER PAUL J 84,784 149,221 234,005 29 290310029-4 2003 GOLDMAN MELVIN 84,784 273,433 358,217 30 290310030-4 2003 STELLABOTT ROBERT 84,784 304,306 389,090 31 290310031-5 2003 BENKO JOSEPH A 84,784 294,841 379,625 32 290310032-6 2003 HORVATH JOSEPH T 84,784 290,709 375,493 33 290310033-7 2003 ZIMMERMAN VIDA M 84,784 280,110 364,894 34 290310034-8 2003 STILLION EDWIN L 84,784 293,888 378,672 35 290310035-9 2003 DAVIES GEOFFREY A 84,784 283,501 368,285 36 290310036-0 2006 GRIFFIN JOHN L 160,000 415,000 575,000 37 290310037-1 2004 ZURBORG WESLEY D 83,232 322,524 405,756 38 290310038-2 2004 HARRIS ALMETA 85,312 263,221 348,533 39 290310039-3 2003 CIRCELLA ROBERT 84,784 147,632 232,416 40 290310040-3 2003 HANISCH ROSEMARIE 84,784 140,637 225,421 41 290310041-4 2003 DELONG PATRICA J 84,784 140,955 225,739 42 290310042-5 2003 JEWETT V NORMAN 84,784 172,219 257,003 43 290310043-6 2003 CARUSO GEORGIA A 84,784 150,494 235,278 44 290310044-7 2003 WALLEN JERRY R 84,784 152,084 236,868 45 290310045-8 2003 DUPAUL JOSEPH K 84,784 150,494 235,278 46 290310046-9 2003 MUNROE JAMES R 84,784 146,254 231,038 47 290310047-0 2003 SELING ALBERT F 84,784 152,084 236,868 48 290310048-1 2003 DUNCAN MATTHEW S 84,784 153,462 238,246 49 290310049-2 2003 MARTINEZ CARLOS 84,784 129,827 214,611 50 290310050-2 2003 AMMANN ARMIN A 120,819 218,853 339,672 51 290310051-3 2003 OCONNOR JOSEPH P 120,819 222,032 342,851 52 290310052-4 2006 ODEKIRK WAYNE 240,000 390,000 630,000 53 290310053-5 2003 YOCOM PRISCILLA L 122,938 200,305 323,243 54 290310054-6 2005 ESPOSITO CARMEN A 153,000 515,100 668,100 55 290310055-7 2003 COPLAND M ROBERT 132,476 299,928 432,404 56 290310056-8 2006 PHILLIPS MARY SUE 240,000 510,000 750,000 57 290310057-9 2006 APPLETON ALAN J 244,800 566,100 810,900 58 290310058-0 2003 MUMFORD DONALD L 132,476 305,652 438,128 59 290310059-1 2003 PENGUE ARTHUR F 132,476 269,194 401,670 60 290310060-1 2003 CONENNA BEN T 129,297 262,094 391,391 61 290310061-2 2003 DENISAC RAUL 87,963 162,364 250,327 62 290310062-3 2003 STEINMANN HANS G 135,655 293,676 429,331 63 290310063-4 2003 KOVAC ALAN R 133,537 221,820 355,357 64 290310064-5 2003 VEJE ANDREW C 135,655 204,651 340,306 65 290320001-9 2003 HOYT GEORGE W 145,194 215,037 360,231 66 290320002-0 2003 SMITH WLLIAM MITCHELL 151,553 209,631 361,184 67 290320003-1 2003 NASH MICHAEL T 161,091 282,654 443,745 68 290320004-2 2003 SCALLON VINCENT 175,929 296,008 471,937 69 290320005-3 2003 WHITTAKER JAMES R 197,126 289,967 487,093 70 290320006-4 2003 MAY GARY L 201,365 287,350 488,715 71 290320007-5 2003 NICHOLLS FRANK 192,886 263,788 456,674 72 290320008-6 2003 ANGARD SUSAN W 181,228 301,201 482,429 73 290320009-7 2003 BRYANT GERALD L 173,810 247,044 420,854 74 290320010-7 2004 SEGUIN CAROLYN L 84,784 355,146 439,930 75 290320011-8 2003 ERPELDING FRANK 149,434 204,969 354,403 76 290320012-9 2003 LOWE DANIEL W 148,374 229,026 377,400 77 290320013-0 2006 HALLER THOMAS 244,800 339,150 583,950 78 290320014-1 2003 JERECZEK MONTOYA 148,374 193,311 341,685 79 290320015-2 2003 ERDMANN FRANCIS M 148,374 228,814 377,188 80 290320016-3 2003 BENOIT RONALD L 148,374 227,755 376,129 81 290320017-4 2003 TWYMAN WILLIAM E 146,254 236,340 382,594 82 290320018-5 2003 MARTINEZ STEVEN Z 146,254 221,820 368,074 83 290320019-6 2003 GRAMS JAMES P 146,254 185,785 332,039 84 290320020-6 2004 STAHL BERNARD 84,784 341,262 426,046 85 290320021-7 2004 GALKIN ALLEN A 84,784 287,847 372,631 4/14/2006 712,000 86 290320022-8 2004 KIRBY WAYNE T 84,784 336,492 421,276 87 290320023-9 1975 BOLES EDWARD R 53,058 44,200 97,258 88 290320024-0 2006 EUDY CHARLES L 244,800 402,900 647,700 89 290320025-1 2003 HELMICK KEITH G 120,626 223,812 344,438 90 290320026-2 2004 ORTT JAMES O 84,784 364,049 448,833 91 290320027-3 2004 LUNA PETE R 84,784 344,441 429,225 92 290320028-4 2004 CONLEY JON 84,784 431,279 516,063 93 290320029-5 2004 ALLEN THOMAS P 84,784 280,355 365,139 94 290320030-5 2004 VANDERPOOL RONALD 84,784 344,177 428,961 95 290320031-6 2004 BATTLE ARTHUR K 84,896 262,915 347,811 96 290320032-7 2004 SMITH JOHN N 84,784 256,052 340,836 97 290320033-8 2004 TAYLOR JAMES M 84,784 218,533 303,317 98 290320034-9 1985 MORGAN MICHAEL 37,150 183,168 220,318 99 290320035-0 2004 SMITH BIRGITTA E 84,784 240,684 325,468 100 290320036-1 2006 LOREE PAMALA J 160,000 325,000 485,000 101 290320037-2 2003 BAUM STEPHEN 86,904 218,747 305,651 102 290320038-3 2003 HART DAVID C 89,024 263,152 352,176 103 290320039-4 2003 SMITH WILLIAM H 87,963 224,258 312,221 104 290320040-4 2003 DAVIS JAMES R 91,144 178,155 269,299 105 290320041-5 2003 BASTA DONALD L 86,904 221,820 308,724 106 290320042-6 2003 GARNER JACK L 89,024 221,926 310,950 107 290320043-7 2003 SCHULTZ RAYMOND 93,262 194,900 288,162 4/21/2006 585,500 108 290320044-8 2003 BAVARO DONNA M 85,845 192,886 278,731 109 290320045-9 2006 MCGINLEY THEDA 163,200 321,300 484,500 110 290320046-0 2004 CHAVEZ JOSEPH 83,232 254,898 338,130 111 290320047-1 2003 HEINBAUGH HAROLD 84,784 251,918 336,702 112 290320048-2 2003 KORN MILO 85,845 200,941 286,786 113 290320049-3 2006 TAYLOR CHERYL H 163,200 270,300 433,500 114 290320050-3 2003 ROGERS AUSTIN G 84,784 163,000 247,784 115 290320051-4 2003 LYNCH WILLIAM F 84,784 124,953 209,737 116 290320052-5 2003 SMITH FRANK A 84,784 142,333 227,117 117 290320053-6 2005 SEBASTO RONALD L 163,200 397,800 561,000 118 290320054-7 2003 WILLIAMS PAUL R 84,784 146,678 231,462 119 290320055-8 2003 COOGAN JOHN B 97,502 181,653 279,155 120 290320056-9 2003 GOGERTY LYLA 97,502 162,681 260,183 121 290320057-0 2003 SHAVER HOWARD W 95,383 148,374 243,757 122 290320058-1 2003 MILLIDGE CHARLES W 84,784 122,090 206,874 123 290320059-2 2003 CHO CHANG HYON 91,144 137,670 228,814 124 290320060-2 2006 ARTHUR MARILYN A 160,000 270,000 430,000 125 290320061-3 2003 KLEID RONA 84,784 225,105 309,889 126 290320062-4 2003 ALATORRE EDWARD 86,904 249,586 336,490 127 290320063-5 2003 MILLER ROBERT C 85,845 201,047 286,892 128 290320064-6 2003 REDDING DONALD E 85,845 318,158 404,003 129 290320065-7 2003 TOLLI RALPH 90,083 299,590 389,673 130 290320066-8 2003 SHAW MARILYN 87,963 252,024 339,987 131 290320067-9 2003 DUGGAN KENNETH H 84,784 312,010 396,794 132 290320068-0 2003 SPERO FRANK 84,784 266,863 351,647 133 290320069-1 2001 STEVENS EVERETT G 88,961 289,382 378,343 134 290320070-1 2003 THAESLER WOLF R 84,784 137,564 222,348 135 290320071-2 2004 NEIGHBOURS MARIE E 84,896 152,559 237,455 136 290320072-3 2005 GREENE TAMBRA M 163,200 192,780 355,980 137 290320073-4 2004 MURPHY BRUCE E 84,784 171,161 255,945 138 290320074-5 2004 FRANZ DAVID L 84,784 199,454 284,238 139 290320075-6 2006 MALHOTRA SATISH 163,200 237,500 400,700 140 290320076-7 2004 GIBBS DWAINE G 84,784 195,748 280,532 141 290320077-8 2004 COLLINS GLENN W 84,784 393,723 478,507 3/3/2006 800,000 142 290320078-9 2004 SCHROEDER ROBERT 84,784 233,266 318,050 143 290320079-0 2007 GILBERT KENNETH H 131,417 245,879 377,296 1/19/2006 605,000 144 290320080-0 2004 SILVERMAN JOHN L 84,784 272,691 357,475 145 290320081-1 2006 SILVERMAN JOHN L 163,200 372,300 535,500 146 290320082-2 2004 CHIN ADA TRUST 84,784 309,786 394,570 147 290320083-3 2004 WERNER ROY 133,537 246,037 379,574 148 290320084-4 2004 RAUSA DOROTHY E 84,784 272,161 356,945 149 290320085-5 2004 HEINZE WILLIAM C 84,784 309,574 394,358 150 290320086-6 2004 DICIACCIO JIM 84,784 292,616 377,400 151 290320087-7 2003 MONTENEGRO ROBERT 120,819 244,075 364,894 152 290330001-0 2002 RILEY JACQUALYN J 64,859 215,122 279,981 153 290330002-1 2005 REED DANNY L 163,200 264,180 427,380 154 290330003-2 2002 PHILLIPS GLENDA 97,290 216,203 313,493 155 290330004-3 2002 GROSS KENNETH J 97,290 227,553 324,843 156 290330005-4 2002 BUSER JOSEPH J 97,290 285,387 382,677 157 290330006-5 2002 WEIDAW KENNETH R 97,290 247,012 344,302 158 290330007-6 2002 BEAUBIEN THOMAS S 97,290 262,147 359,437 159 290330008-7 2002 SCHAUERMAN MELVIN 97,290 299,441 396,731 160 290330009-8 2006 KALMIKOV JO ANN 240,000 377,500 617,500 161 290330010-8 2002 MOUNT LEILA MAE 97,290 199,988 297,278 162 290330011-9 2002 SATTERFIELD JAMES L 97,290 242,146 339,436 163 290330012-0 2002 DALESSIO WILLIAM D 97,290 219,985 317,275 164 290330013-1 2002 LACROIX JAMES W 97,290 252,417 349,707 165 290330014-2 2002 GRIFFIN GRANT D 97,290 275,117 372,407 166 290330015-3 2002 SHINNEFIELD CHARLES 64,859 161,569 226,428 167 290330016-4 2003 CAMPBELL WILLIAM 84,784 121,348 206,132 168 290330017-5 2003 BURKS LEROY 86,480 123,235 209,715 169 290330018-6 2006 MARTINEZ ANNETTE 160,000 240,000 400,000 170 290330019-7 2007 FELDER WILLIAM 75,670 144,855 220,525 1/13/2006 442,000 171 290330020-7 2002 SCHAFER EDWARD W 64,859 181,611 246,470 172 290330021-8 2002 MCCONAUGHY BARBARA 97,290 265,930 363,220 173 290330023-0 2002 BUSH DONALD C 89,723 321,062 410,785 174 290330025-2 2002 PORTIK ROBERT E 75,670 234,579 310,249 175 290330026-3 2002 BROSEK IVAN J 75,670 213,501 289,171 176 290330027-4 2006 COLLINS LOUIS 160,000 355,000 515,000 177 290330028-5 2002 MIGLIOZZI NICHOLAS R 64,859 201,068 265,927 178 290330029-6 2002 WOOTEN KENNETH J 64,859 187,555 252,414 179 290330030-6 2002 COLE ROBERTA R 54,050 222,148 276,198 180 290330031-7 2002 ROOKER SIDNEY P 75,670 234,040 309,710 181 290330032-8 2002 SULLIVAN ELIZABETH J 75,670 232,418 308,088 182 290330033-9 2002 GUNDER DAVID W 75,670 207,014 282,684 183 290330034-0 2006 DENTON NORMAN 163,200 275,400 438,600 184 290330035-1 2002 SWARTZ PEGGY S 75,670 194,539 270,209 185 290330040-5 2002 PEREZ FRANK 97,290 317,278 414,568 186 290330041-6 2002 BEHNAM ESTHER M 95,128 236,958 332,086 187 290340001-1 2002 ZORNES MARJORIE L 97,290 223,689 320,979 188 290340002-2 2002 SULLIVAN LUCILE E 97,290 227,497 324,787 189 290340003-3 2002 CRISANTI JAMES 97,290 268,632 365,922 190 290340004-4 2003 PICCIRELL WILMA H 139,449 213,284 352,733 191 290340005-5 2002 TUDOR WILHELMINA 97,290 227,553 324,843 192 290340006-6 2002 DONLEY MYRON R 97,290 280,522 377,812 193 290340007-7 2003 BURNSED JANE L 183,772 220,283 404,055 194 290340008-8 2003 FEATHERSTONE DONALD 224,311 320,899 545,210 195 290340009-9 2003 ROMEY GEORGE 229,715 302,900 532,615 196 290340010-9 2003 RAHN ROBERT L 229,715 270,470 500,185 197 290340011-0 2003 JOHNSON RICHARD M 209,176 347,979 557,155 198 290340012-1 2002 AUSLANDER HERMAN 219,382 302,578 521,960 199 290340013-2 2003 ZURBORG LINDA 216,203 301,494 517,697 1/18/2006 725,000 200 290340014-3 2003 FRIEDMAN NINA N 209,314 259,019 468,333 201 290340015-4 2003 BREWSTER WILLIAM 213,501 288,954 502,455 202 290340016-5 2003 HUTCHENS JOHN 205,393 271,898 477,291 203 290340017-6 2003 KELLER FRANCIS G & DIANE 194,582 191,285 385,867 204 290340018-7 2003 PLOWMAN BOYD R 203,484 282,018 485,502 205 290340019-8 2003 CLARK CALVIN M 95,128 222,148 317,276 206 290340020-8 2002 HOWARD LEWIS E 91,885 213,716 305,601 207 290340021-9 2003 HAASE WILLIAM J 95,128 183,880 279,008 208 290340022-0 2002 STANTON THOMAS B 94,046 182,042 276,088 209 290340023-1 2003 COLBATH CHERYL 90,804 143,017 233,821 210 290340024-2 2003 PEARCE TONI M 87,963 138,411 226,374 211 290340025-3 2002 GAARD BERNARD L 89,723 168,637 258,360 212 290340026-4 2003 SPARKS COLLEEN V 90,804 124,450 215,254 213 290340027-5 2003 TITUS PATRICIA 95,128 190,410 285,538 214 290340028-6 2003 GALE HENRY L 97,290 116,857 214,147 215 290340029-7 2003 STANLEY SHARON G 97,290 164,097 261,387 216 290340032-9 2002 PIRRO LUCY ANN 89,723 213,932 303,655 217 290340033-0 2005 HOEY JAMES 89,723 229,861 319,584 218 290340034-1 2003 BUTTES LARRY V 89,723 219,770 309,493 219 290340035-2 2003 REDMAN KATHRYN 91,885 209,716 301,601 220 290340036-3 2003 SPIRO MALCOLM J 105,939 208,527 314,466 221 290340037-4 2004 FISHER BARBARA A 83,232 222,645 305,877 222 290340038-5 2003 FEHN MATHEW 89,723 222,688 312,411 223 290340039-6 2003 REDDICKS THALIA B 89,723 218,797 308,520 224 290340040-6 2003 LAVENTURE ORVILLE 91,885 204,850 296,735 225 290340041-7 2003 HUIZINGH DONALD J 92,966 132,965 225,931 226 290340042-8 1984 DAVIS ELLI ANNA 92,620 148,854 241,474 227 290340043-9 2003 PLANK ROGER A 90,804 145,936 236,740 228 290340044-0 2003 HOLMES JEAN E 90,804 115,828 206,632 229 290340045-1 2003 VENABLE LINDA B 90,804 159,773 250,577 230 290340047-3 2003 BANICK REBECCA J 91,885 188,095 279,980 231 290340048-4 2003 AMES LAWRENCE 92,966 192,015 284,981 232 290340049-5 2006 HENDRICKSON SUSAN 163,200 272,340 435,540 233 290340050-5 2002 MARGIOTTA MARY F 64,859 154,585 219,444 234 290340051-6 2002 JONES NANCY JO 64,859 147,057 211,916 235 290340052-7 2003 WEAVER JUDY A 96,209 150,799 247,008 236 290340053-8 2002 COTA ANGELINA H 75,670 185,393 261,063 237 290340054-9 2002 DONDE DAVID 54,050 189,177 243,227 238 290340055-0 2002 LEE ANNA L 75,670 161,070 236,740 239 290340056-1 2002 ANDERSON JONI L 75,670 157,826 233,496 240 290340057-2 2002 ZEMKE VIRGINIA L 64,859 165,934 230,793 241 290340058-3 2003 GUST JAMES 91,885 144,747 236,632 242 290340059-4 2002 RODRIGUEZ B & J FAMILY 64,859 162,692 227,551 243 290340060-4 2002 KELLY ARTHUR T 75,670 177,825 253,495 244 290340061-5 2002 STEIN RONALD E 64,859 159,449 224,308 245 290340065-9 2003 OHANLON JAMES L 95,128 184,204 279,332 246 290340066-0 2003 MANLEY HOWARD 91,885 154,908 246,793 247 290340068-2 2003 STANFIELD JACK L 100,533 265,930 366,463 248 290350001-2 2004 WALKER JANICE A 84,784 234,114 318,898 249 290350002-3 2004 SKUBIC MARTIN F 84,784 252,024 336,808 250 290350003-4 2004 GIBILTERRA ANGELO 84,784 227,013 311,797 251 290350004-5 2004 WALKER JOHN A 84,784 222,813 307,597 252 290350005-6 2004 CARTER LESLIE A 84,896 327,722 412,618 253 290350006-7 2004 ELY NANCY A 84,784 324,822 409,606 254 290350007-8 1997 CLEGHORN JOHN H 54,771 130,727 185,498 255 290350008-9 2004 JOY M 84,784 291,026 375,810 256 290350009-0 2004 MAXWELL RANDY A 84,784 249,375 334,159 257 290350010-0 2004 POWERS BERNARD R 84,784 342,110 426,894 258 290350011-1 1994 GALVAN WILLIAM 74,621 277,451 352,072 259 290350012-2 2004 WOLF MICHAEL R 84,784 286,893 371,677 260 290350013-3 2004 DETVILER DONALD F 84,784 278,415 363,199 261 290350014-4 2004 ZACKOWSKI WILLIAM 83,232 314,408 397,640 262 290350015-5 2004 FRANK WALTER 83,232 295,369 378,601 263 290350016-6 2004 SHINN YUNG HEE 83,232 291,207 374,439 264 290350017-7 2004 WAILES RORI LEE 83,232 319,610 402,842 5/6/2006 560,000 265 290350018-8 2004 MAXSON MARLIN J 83,232 286,630 369,862 266 290350019-9 2004 DETVILER JOHN T 83,232 355,816 439,048 267 290350020-9 2004 ENGER WILLIAM C 83,232 382,671 465,903 268 290350021-0 2004 SEVERSON PAUL M 83,232 403,987 487,219 269 290350022-1 2004 RO SEOP 83,232 342,530 425,762 270 290350023-2 2004 CLAUSI JOHN 83,232 397,953 481,185 271 290350024-3 2004 DIRKSEN FREDRICK J 83,232 353,215 436,447 272 290350025-4 2004 BOOHER MARY F 83,232 290,999 374,231 273 290350026-5 2004 TURNER THOMAS R 83,232 336,777 420,009 274 290350027-6 2004 WALSH IRENE C 83,232 293,600 376,832 275 290350028-7 2003 KAHLKE JOHN 84,784 185,161 269,945 276 290350029-8 2003 BUTTERFIELD BRUCE 85,845 183,666 269,511 277 290350030-8 2003 BICKLEY JIMMY R 84,784 187,057 271,841 278 290350031-9 2002 PEACOCK BONNIE J 44,103 133,968 178,071 279 290350032-0 2003 MASI LORETTA G 84,784 139,260 224,044 280 290350033-1 2005 GALE RICHARD E 166,464 179,418 345,882 281 290350034-2 2006 HUBER CHARLES P 84,784 193,567 278,351 282 290350035-3 2003 OKIISHI HAROLD T 84,784 192,992 277,776 283 290350036-4 2003 HATCHER OAKERETHA 84,784 179,851 264,635 284 290350037-5 2003 KNICHEL DOROTHY B 84,784 131,438 216,222 285 290350038-6 1999 CUFF BOBBIE L 47,667 154,334 202,001 286 290350039-7 2004 DARGER JUANITA 84,784 227,215 311,999 287 290350040-7 2004 BLAKE SUSAN 84,784 130,250 215,034 3/31/2006 390,000 288 290350041-8 2004 STJOHN PHYLIS 84,784 136,822 221,606 289 290350042-9 2003 BALLINGER RICHARD 84,784 153,355 238,139 290 290350043-0 2004 HAZEN BILL 84,784 191,821 276,605 291 290350044-1 2003 DAVIS GREGORY L 85,845 201,629 287,474 292 290350045-2 2003 BUCK VIRGIL S 87,434 266,650 354,084 293 290350046-3 2003 LENHART PATRICIA A 87,434 193,840 281,274 294 290350047-4 2003 CRUMMEL ROBERT B 87,434 230,510 317,944 295 290350048-5 2003 KIM JIN SU 87,434 177,519 264,953 296 290350049-6 2003 GARDELLA ANDREW J 87,434 202,955 290,389 297 290350050-6 2003 SMALLWOOD MAUREEN 87,434 146,254 233,688 298 290350051-7 2003 CANTU GARY 87,434 160,774 248,208 299 290350052-8 2003 WARE LORRAINE A 87,434 181,122 268,556 300 290350053-9 2004 EMC ASSOC 83,232 164,383 247,615 301 290350054-0 2003 SMITH DANIEL J 86,374 171,055 257,429 302 290350055-1 2003 MOORE CAROLYN A 87,434 124,739 212,173 303 290350056-2 2003 WATSON MARJORIE A 87,434 153,462 240,896 304 290350057-3 2006 WILSON MARY A 163,200 224,400 387,600 305 290350058-4 2003 BREWSTER WILLIAM 86,904 167,450 254,354 306 290350059-5 2003 KENDALL KIM A 86,904 142,015 228,919 307 290350060-5 2004 ROBERTS HUGH F 84,784 206,664 291,448 308 290350061-6 2006 GARCIA JORGE E 160,000 220,000 380,000 309 290350062-7 2004 THOMPSON QUINTEN 83,232 207,651 290,883 310 290350063-8 2004 CAMPBELL JOHN F 83,232 218,194 301,426 311 290350064-9 2006 CALVIN ROBERT LEE 160,000 252,000 412,000 312 290350065-0 2006 COFFMAN PAUL J 160,000 290,000 450,000 313 290350066-1 2004 MEDVED FRANCES A 83,232 196,219 279,451 314 290350067-2 2004 BLOKZYL LEONARD E 83,232 195,699 278,931 315 290350068-3 2004 NEWHOUSE PATRICIA 83,232 179,364 262,596 316 290350069-4 2004 MCADAMS JOHN J 83,232 190,393 273,625 317 290350070-4 1980 DEMARIO JOSEPH F 35,779 89,480 125,259 318 290350071-5 2004 FIORI DODD W 83,232 204,958 288,190 319 290350072-6 2006 HAZARD VICTORIA M 163,200 220,320 383,520 320 290350073-7 2004 SHULMAN SAUL L 84,784 207,725 292,509 321 290350074-8 2004 ROETTELE GARY J 83,232 180,821 264,053 322 290350075-9 2005 COOPER CHERYL 81,600 374,340 455,940 323 290350076-0 2004 DANIELS CASS H 84,784 167,133 251,917 324 290350077-1 2006 BARNES HELEN J 160,000 265,000 425,000 325 290350078-2 2006 GOMEZ JANET B 160,000 214,000 374,000 326 290350079-3 2006 GALLOWAY JAMES W 160,000 275,000 435,000 327 290360001-3 2004 GOMEZ JESSE G 84,784 292,192 376,976 328 290360002-4 2005 LEVY JOEL V 163,200 456,960 620,160 329 290360003-5 2004 SCHNEIDER ROBERT H 84,784 350,058 434,842 330 290360004-6 2004 ROBLES RAYMOND 84,784 350,694 435,478 331 290360005-7 2004 STEPHENSON PAUL M 84,784 353,238 438,022 332 290360006-8 2004 COOK RICHARD S 84,784 344,534 429,318 333 290360007-9 2004 MOORE THEODORE 84,784 313,388 398,172 334 290360008-0 2004 LAMM CYNTHIA M 84,784 349,769 434,553 335 290360009-1 2004 CARR ELIZABETH A 83,232 318,466 401,698 336 290360010-1 2004 SMITH CHRISTOPHER A 83,232 313,160 396,392 337 290360011-2 2004 JACOBY JANIS G 83,232 318,154 401,386 338 290360012-3 2004 JORGENSEN EDWIN H 83,232 361,330 444,562 339 290360013-4 2006 KIM EUGENE J 163,200 397,800 561,000 340 290360014-5 2004 ROMERO RICARDO O 83,232 313,264 396,496 341 290360015-6 2004 CORDER PATRICIA 83,232 304,733 387,965 342 290360016-7 2004 WADLEY MELVIN L 150,858 301,820 452,678 343 290360017-8 2004 THOMPSON RICHARD 150,858 292,872 443,730 344 290360018-9 2004 HA BYUNG OK 150,858 252,505 403,363 345 290360019-0 2004 EVANS WILLIAM M 84,784 285,092 369,876 346 290360020-0 2004 DONATO ARTHUR B 84,784 196,596 281,380 347 290360021-1 2004 WILLIAMS RICHARD 84,784 192,144 276,928 348 290360022-2 2004 RABRICH ALAN D 84,784 254,886 339,670 349 290360023-3 2004 NEAL BRIAN L 48,523 187,371 235,894 350 290360024-4 2004 LEE CONSTANCE H 84,784 224,151 308,935 351 290360025-5 2004 JOHNSON JOE BOYD 84,784 225,105 309,889 352 290360026-6 2004 LOOMANS HARRY J 84,784 236,658 321,442 353 290360027-7 2004 THURLOW KATHY J 84,784 216,309 301,093 354 290360028-8 2004 BULLOCK HENRY J 84,784 205,499 290,283 355 290360029-9 1991 OH MOON ZA 59,389 216,457 275,846 356 290360030-9 2004 HENDERSON WILLIAM 84,784 331,617 416,401 357 290360031-0 2004 LEE YONG E 84,784 268,982 353,766 358 290360032-1 2004 KIENLE PETER J 84,784 222,880 307,664 359 290360033-2 2004 VILLINES CAROLYN 84,784 222,244 307,028 360 290360034-3 2005 SHAW KERRY 81,600 376,380 457,980 361 290360035-4 2004 FLANAGAN JOHN F 84,784 256,158 340,942 362 290360036-5 1999 LUCCHESE SAM M 57,357 160,604 217,961 363 290360037-6 2004 GENTILE ANGELO 83,232 328,766 411,998 5/2/2006 515,000 364 290360038-7 2004 HANSEN JAMES E 84,784 235,279 320,063 365 290360039-8 2004 UHART EDUARDO 84,784 242,698 327,482 366 290360040-8 2004 KIM TAE SOON 84,784 319,006 403,790 367 290360041-9 2004 THODE JOSEPHINE 83,232 217,443 300,675 368 290360042-0 2004 OTT PATRICIA 84,784 144,135 228,919 369 290360043-1 2006 STARKE VIRGINIA W 160,000 277,500 437,500 370 290360044-2 2004 DELLITH HANS B 84,891 129,956 214,847 371 290360045-3 2004 LINTON CAROL J 84,784 162,787 247,571 372 290360046-4 2004 VENTURELLI MARY C 84,784 163,741 248,525 373 290360047-5 2004 SAMUEL GLORIA M 84,784 134,278 219,062 374 290360048-6 2004 SELL SANDRA 84,784 219,276 304,060 3/29/2006 515,000 375 290360049-7 2004 HARLIN JUDY C 84,784 130,357 215,141 376 290360050-7 2004 EMERSON WILLARD C 84,784 157,595 242,379 377 290360051-8 2004 ERVIN JOHN 84,784 166,920 251,704 378 290360052-9 2004 MONTGOMERY LESLIE 83,232 260,100 343,332 379 290360053-0 2004 HAKE JOSEPH L 84,784 190,449 275,233 380 290360054-1 2004 WARD NEAL R 84,784 144,135 228,919 381 290360055-2 2006 KEMP CHARLES S 160,000 285,000 445,000 382 290360056-3 2004 MACK MARGARET L 83,232 353,736 436,968 383 290360057-4 2004 DONEGAN ANNIE 84,784 218,959 303,743 384 290360058-5 2004 JOHNSON BARBARA A 84,784 248,103 332,887 385 290360059-6 2004 GOLDSTEIN HERMAN 84,784 218,853 303,637 386 290360060-6 2004 DAVIS MARC W 84,784 263,046 347,830 387 290360061-7 1994 REED MARGARET 81,864 251,802 333,666 388 290360062-8 2004 MARRONE ROBERT P 84,784 218,216 303,000 389 290360063-9 2006 CORRADO LINDA L 163,200 357,000 520,200 390 290360064-0 2004 CROSS MARLENE M FAMILY 84,784 224,893 309,677 391 290360065-1 2004 EDMUNDSON KATHLEEN 84,784 222,561 307,345 392 290360066-2 2006 MILLER MARTHA 160,000 260,000 420,000 393 290360067-3 2004 ALEJANDRE MARY T 84,784 196,066 280,850 394 290360068-4 2004 DANDIE DARRELL K 84,784 224,682 309,466 395 290360069-5 2004 GEOFFRION ADOLPH J 84,784 341,792 426,576 396 290370001-4 2004 ROBINSON SARAH 150,858 237,523 388,381 397 290370002-5 2004 KLEIST JOSEPH E 150,858 237,523 388,381 398 290370003-6 2005 DYAL TERRY A 83,232 367,026 450,258 399 290370004-7 2005 KASAI GEORGE H 83,232 372,351 455,583 400 290370005-8 2005 WORTHY CLAUDE L 83,232 330,327 413,559 401 290370006-9 2005 BOSTRE PRIMITIVO M 83,232 338,295 421,527 402 290370007-0 2005 WINDHAM CYNTHIA 83,232 233,270 316,502 403 290370008-1 2005 BLAIR MARCELLA M 83,232 427,019 510,251 404 290370009-2 2005 JO BYUNG YOL 83,232 448,462 531,694 405 290370010-2 2005 CURET ROBERT L 83,232 370,461 453,693 406 290370011-3 2005 SEEBERG DONALD W 83,232 512,981 596,213 407 290370012-4 2005 MELENDEZ DANIEL 83,232 498,191 581,423 408 290370013-5 2005 OCONNOR JAMES R 83,232 470,730 553,962 409 290370014-6 2005 CARPENTER CHARLES 166,464 420,321 586,785 410 290370015-7 2005 ROWLAND WILLIAM F 83,232 527,259 610,491 411 290370016-8 2005 NUSSBAUM CHRISTINE 166,464 491,955 658,419 412 290370017-9 2005 WALTHER JAMES A 166,464 381,826 548,290 413 290370018-0 2005 BRENLIN JANE L 83,232 523,916 607,148 414 290370019-1 2005 TROMMLER ROBERT 104,040 488,675 592,715 415 290370020-1 2005 PAOLISSO ELAINE S 83,232 450,592 533,824 416 290370021-2 2005 OUTHUIJSE JOHN H 83,232 487,427 570,659 417 290370022-3 2005 NAVARRE GERALD L 83,232 525,402 608,634 418 290370023-4 2005 SNIDER JANE A 104,040 549,851 653,891 419 290370024-5 2005 RIVERA BRIAN S 163,200 457,980 621,180 420 290370025-6 2005 ARONSON CATHERINE 163,200 403,920 567,120 421 290370026-7 2005 HARRIS CHARLES E 163,200 390,660 553,860 422 290370027-8 2005 CHO OK KYU 166,464 312,640 479,104 423 290370028-9 2004 HEWITT ROBERT A 83,232 278,098 361,330 424 290370029-0 2005 HAYES JOHN 83,232 300,798 384,030 425 290370030-0 2004 ARMANINO STEVEN G 83,232 361,434 444,666 426 290370031-1 2005 PORTER PRENTIS 83,232 520,200 603,432 427 290370032-2 1990 PETERS DONALD 89,250 212,839 302,089 428 290370033-3 2004 LONG ROBERT G 83,232 407,836 491,068 429 290370034-4 1977 BAKER REX O 14,459 10,245 24,704 430 290370035-5 2005 DOSE THOMAS L 83,232 509,796 593,028 431 290370036-6 2004 MCLEAN JOHN A 83,232 429,114 512,346 432 290370037-7 2004 CAVANESS LARRY A 83,232 349,574 432,806 433 290370038-8 2004 IN SOOCHANG 83,232 209,640 292,872 434 290370039-9 2004 LANEY THERESA 83,232 175,619 258,851 435 290370040-9 2004 PENNEY BEN C 83,232 179,989 263,221 436 290370041-0 2004 VETTEL STEVEN W 83,232 167,504 250,736 437 290370042-1 2006 SCHAFFER MARIE K ESTATE 160,000 220,000 380,000 438 290370043-2 2004 ALLEN W 83,232 224,102 307,334 439 290370044-3 2004 REITZ YEMIKO AMY 83,232 188,006 271,238 440 290370045-4 2004 PRUST CLINTON A 83,232 295,473 378,705 441 290370046-5 2005 KENNEDY EDWARD L 163,200 341,700 504,900 442 290370047-6 2004 HAWKINS SUELYN H 83,232 261,660 344,892 443 290370048-7 2004 SCARCELLI PATRICIA 83,232 280,387 363,619 444 290370049-8 2004 SHNEIDER VICTOR 83,232 291,312 374,544 445 290370050-8 2004 REYNOLDS GENE E 83,232 272,688 355,920 446 290370051-9 2004 BAKER JOHN E 83,232 299,947 383,179 447 290370052-0 2004 VEGA NANCY G 83,232 299,843 383,075 448 290370053-1 2004 DAVIS W BEN 83,232 222,853 306,085 449 290370054-2 2004 LARA HAROLD 83,232 243,349 326,581 450 290370055-3 2004 TANDY THOMAS E 83,232 344,164 427,396 451 290370056-4 2004 FLACK HUGH 83,232 289,751 372,983 452 290380001-5 2006 CARLSON DONALD G 163,200 277,950 441,150 453 290380002-6 2006 KIM TAE SOON 163,200 284,070 447,270 454 290380003-7 2006 RUBIN JEROME 163,200 393,210 556,410 455 290380004-8 2006 HALLER RONALD A 163,200 400,860 564,060 456 290380005-9 2006 DREW HOWARD M 163,200 344,760 507,960 457 290380006-0 2006 DAYEN STEPHEN W 163,200 288,150 451,350 458 290380007-1 2006 GREWAL NAVRAJ 160,000 220,500 380,500 459 290380008-2 2006 PIERCE FRANK L 160,000 275,500 435,500 460 290380009-3 2006 HUNTER CAROLYN A 163,200 276,930 440,130 461 290380010-3 2006 JONES RICHARD A 163,200 325,380 488,580 462 290380011-4 2006 WANG FRANCIS N 163,200 465,120 628,320 463 290380012-5 2006 LANE WOODROW W 163,200 509,490 672,690 464 290380013-6 2006 KOZAK JOSEPH J 163,200 455,430 618,630 465 290380014-7 2006 BROGNA JOSEPH A 163,200 580,890 744,090 466 290380015-8 2006 DUFF RALPH J 163,200 490,661 653,861 467 290380016-9 2006 CROUNSE DONALD 163,200 662,146 825,346 468 290380017-0 2006 FORGEY GAYLE L 163,200 608,430 771,630 469 290380018-1 2006 NEAL ESTHER 160,000 591,500 751,500 470 290380019-2 2006 PETERSON MARVIN 163,200 450,840 614,040 471 290380020-2 2006 SIMEROTH HAROLD H 163,200 469,200 632,400 472 290380021-3 2006 VANPELT DONALD R 160,000 387,000 547,000 473 290380022-4 2006 THOMPSON CARL E 163,200 471,750 634,950 474 290380023-5 2006 QUINETTE BILLIE 163,200 486,515 649,715 475 290380024-6 2006 PHAN NGHIA T 163,200 643,110 806,310 476 290380025-7 2006 BENJAMIN JOAN B 160,000 630,000 790,000 477 290380026-8 2006 SHAHLAVI MIRFARHAD 160,000 615,000 775,000 478 290380027-9 2006 STEVENSON DONALD 160,000 655,000 815,000 479 290380028-0 2006 SCOTT DUNCAN A 160,000 610,000 770,000 480 290380029-1 2005 KALEEL DON 153,000 664,020 817,020 481 290380030-1 2005 JONES LARRY 163,200 351,390 514,590 482 290380031-2 2006 SAVINO INV 163,200 343,230 506,430 483 290380032-3 2005 JUN JUNG SOOK 163,200 261,040 424,240 484 290380033-4 2006 BARRY MARIAN 163,200 199,920 363,120 485 290380034-5 2006 RUIZ PATRICIA J 163,200 307,020 470,220 486 290380035-6 2005 KUZMIC JOHN J 163,200 440,130 603,330 487 290380036-7 2005 RAMIREZ FRANK 163,200 248,880 412,080 488 290380037-8 2005 CARTOLANO ROBERT 163,200 245,310 408,510 489 290380038-9 2005 ENGLAND WALTER G 163,200 277,950 441,150 490 290380039-0 1998 JOHNSON DAVID G 35,751 193,432 229,183 491 290380040-0 2005 SEELIG LEOPOLD 163,200 274,890 438,090 492 290380041-1 2005 GARCIA BEATRICE 163,200 217,770 380,970 493 290380042-2 2005 NICKUM JOHN L 163,200 170,340 333,540 494 290380043-3 2006 KIM YOUNG OOK 163,200 260,100 423,300 495 290380044-4 2005 MAACK WILLIAM H 163,200 213,180 376,380 496 290380045-5 2005 HERMAN MARTIN D 163,200 161,160 324,360 497 290380046-6 2005 MATTHEWS BEDFORD 163,200 299,880 463,080 498 290380047-7 2005 MORRELL VERONICA 163,200 269,790 432,990 499 290380048-8 2005 HARRIS JOHN 163,200 297,330 460,530 500 290380049-9 2005 CLINE OTTO E 163,200 547,230 710,430 501 290380050-9 2006 RUZIC STEVAN 163,200 550,800 714,000 502 290380051-0 2006 YEN FRANK S 163,200 428,910 592,110 503 290380052-1 2006 MCCLURE DONNA J 160,000 299,000 459,000 504 290380053-2 2000 BURGESS ALAN C 61,856 151,832 213,688 505 290380054-3 2006 DUNN KEVIN 163,200 286,110 449,310 506 290380055-4 2006 DAWSON ROBERT E 163,200 437,070 600,270 507 290380056-5 2006 TROMMLER ROBERT 160,000 198,000 358,000 508 290380057-6 2006 GILLMER ILISA C 163,200 290,190 453,390 509 290380058-7 2006 SYRKO THOMAS M 160,000 471,500 631,500 510 290380059-8 2006 DEERING NORMAN 163,200 486,030 649,230 511 290380060-8 2006 KULOW ROBERT F 163,200 249,390 412,590 512 290380061-9 2006 POWELL PAUL 163,200 279,990 443,190 513 290380062-0 2006 ZASTERA THOMAS J 163,200 309,570 472,770 514 290380063-1 2006 LEE JUNG K 163,200 315,690 478,890 515 290380064-2 2006 HENDRICKSON SAM 163,200 293,250 456,450 516 290380065-3 2006 CARTER LONNIE R 163,200 350,370 513,570 517 290380066-4 2006 EICHER MARY 163,200 245,310 408,510 518 290380067-5 2006 REINOEHL DAVID E 163,200 424,320 587,520 519 290380068-6 2006 DUARTE GILBERT 163,200 223,074 386,274 520 290380069-7 2006 BOLANO ANTONIO B 160,000 270,000 430,000 521 290380070-7 2006 COSTELLO WALTER C 163,200 290,190 453,390 522 290380071-8 2005 JACOB AGNES I 102,000 336,450 438,450 523 290380072-9 2000 ELKIN RICHRAD L 89,973 133,417 223,390 524 290380073-0 2005 MATTSSON CARL G 102,000 457,980 559,980 525 290380074-1 2005 NEWELL EILEEN M 102,000 338,436 440,436 526 290390001-6 2006 WERNLI JODY B 163,200 661,080 824,280 527 290390002-7 2005 MONTGOMERY LINDA 163,200 566,610 729,810 528 290390003-8 2006 CAUTHEN EARL 188,700 606,900 795,600 529 290390004-9 2005 TURINO BARBARA 163,200 464,100 627,300 530 290390005-0 2006 GREENE BETTE L 163,200 423,300 586,500 531 290390006-1 2005 LANG GENE C 163,200 468,180 631,380 532 290390007-2 2006 DESPRES RICHARD C 163,200 445,740 608,940 533 290390008-3 2005 EVANS LAURENCE 163,200 391,680 554,880 534 290390009-4 2006 COOPER EDITH 163,200 408,510 571,710 535 290390010-4 2006 OLSON DUANE 163,200 422,280 585,480 536 290390011-5 2005 FLIEDNER RICHARD B 163,200 417,180 580,380 537 290390012-6 2006 MARTINEZ PHILLIP 163,200 407,490 570,690 538 290390013-7 2005 DELACRUZ ANATOLIA 163,200 460,530 623,730 539 290390014-8 2005 DELACRUZ ANDRES 163,200 527,730 690,930 540 290390015-9 2006 BEHRENS JERRY R 163,200 540,600 703,800 541 290390016-0 2005 AVETTA EDWARD D 163,200 500,310 663,510 542 290390017-1 2005 CORONA EMILIO N 163,200 556,920 720,120 543 290390018-2 1998 PEARSON MICHAEL W 137,054 303,909 440,963 544 290390019-3 2005 BRIGGS HAROLD D 163,200 351,390 514,590 545 290390020-3 2005 POPE JAMES P 163,200 398,820 562,020 546 290390021-4 2005 SMITH CAMERON M 163,200 298,350 461,550 547 290390022-5 2005 MISSOURI JACK 163,200 306,510 469,710 548 290390023-6 2006 RICHARDS TIMOTHY 160,000 390,000 550,000 549 290390024-7 2005 REICHLING STEVEN 163,200 268,770 431,970 550 290390025-8 2005 CANO JAMES O 163,200 206,980 370,180 551 290390026-9 2005 RENFELDT STEVEN 163,200 167,280 330,480 552 290390027-0 2005 STEPHENSON GLENN L 163,200 206,346 369,546 553 290390028-1 2005 HANNA GEORGE H 163,200 417,690 580,890 554 290390029-2 1995 KAISER GERARD 68,949 129,251 198,200 555 290390030-2 2005 GRAVEN MARY LEE 163,200 337,620 500,820 556 290390031-3 2005 SANDERS KIYOKO 163,200 221,850 385,050 557 290390032-4 2005 ELMORE RUSSELL L 163,200 311,610 474,810 558 290390033-5 2005 PEREZ FRANCISCO 163,200 217,770 380,970 559 290390034-6 2003 JOHNSON RONALD J 105,982 222,561 328,543 560 290390035-7 1995 CALDERON RUBEN 55,306 181,905 237,211 561 290390036-8 2005 FALIKS BARBARA 163,200 215,220 378,420 562 290390037-9 2005 LUSBY JOHN 163,200 219,810 383,010 563 290390038-0 2005 ROSS MATTHEW A 163,200 427,890 591,090 564 290390039-1 2004 MOORE HELEN J 84,784 335,328 420,112 565 290390040-1 2000 BANNOWSKY CLARENCE 63,092 162,897 225,989 566 290390041-2 2006 BRAVO VELIA 160,000 340,000 500,000 567 290390042-3 2005 WOEHRER MICHAEL 163,200 273,360 436,560 568 290390043-4 2005 BEAM RICHARD L 163,200 258,185 421,385 569 290390044-5 2003 DYKEMAN MARVIN E 79,486 257,535 337,021 570 290390045-6 2005 CONLIN VIRGINIA A 163,200 255,000 418,200 571 290390046-7 2002 OMLOR STEPHEN F 44,103 205,640 249,743 572 290390047-8 2005 KATSIS KAYE 163,200 307,020 470,220 573 290390048-9 2005 CHAPEK JAMES T 163,200 265,710 428,910 574 290390049-0 2005 PETERSON CONSTANCE 163,200 467,160 630,360 575 290390050-0 2005 KAWAKITA MAMIKO 163,200 251,940 415,140 576 290390051-1 2005 MINNEY CURT A 163,200 244,290 407,490 577 290390052-2 2005 VILLASENOR ANTONIO 163,200 196,350 359,550 578 290390053-3 2006 CALHOUN SHERYL 163,200 239,700 402,900 579 290390054-4 2005 BARR JERRY J 163,200 228,163 391,363 580 290390055-5 2005 SUSSMAN BETTY 163,200 294,270 457,470 581 290390056-6 2006 CONRAD THOMAS G 163,200 270,300 433,500 582 290390057-7 2005 LIGUORI DIANE M 163,200 218,250 381,450 583 290390058-8 2005 RAY ORIE A 163,200 238,680 401,880 584 290390059-9 2005 CHEN ELAINE L 163,200 223,380 386,580 585 290390060-9 2005 RAEL ROBERT R 163,200 236,922 400,122 586 290390061-0 2005 CHEN ELAINE L 163,200 302,940 466,140 587 290390062-1 1987 MUNCAN SIMEON 42,851 119,998 162,849 588 290390063-2 2005 GRANA STEVE 163,200 308,656 471,856 589 290390064-3 2005 MANGANO SALVATORE 163,200 346,800 510,000 590 290390065-4 2005 MONAGHEN IRENE 163,200 275,400 438,600 591 290390066-5 2005 CAMPBELL ELAINE C 163,200 312,120 475,320 592 290390067-6 2006 FOLLESTAD JAN 163,200 309,060 472,260 593 290400001-6 2005 NEUSTADT JEFFREY 163,200 353,940 517,140 594 290400002-7 2005 RIGGS GLORIA M 163,200 271,830 435,030 595 290400003-8 2005 OLIVER ANN 81,600 348,093 429,693 596 290400004-9 2005 DUNNAM CARRIE J 81,600 325,628 407,228 597 290400005-0 2005 JAVAD SHAHRIAR 81,600 393,247 474,847 598 290400006-1 2005 OWEN RICHARD R 81,600 383,521 465,121 599 290400007-2 2005 PARK SOON H 163,200 293,250 456,450 600 290400008-3 2005 GAGNON WILLIAM J 166,464 255,510 421,974 601 290400009-4 2005 HOSKING JAMES 104,040 378,705 482,745 602 290400010-4 2005 MYERS DAVID P 83,232 449,088 532,320 603 290400011-5 2006 MILLER THOMAS E 160,000 360,000 520,000 604 290400012-6 2005 JAMES WILLIAM S 83,232 501,825 585,057 605 290400013-7 2005 HERNANDEZ JOHN 83,232 505,153 588,385 606 290400014-8 2005 DYCK COLLEEN 83,232 479,104 562,336 607 290400015-9 2005 KISHIMOTO EDDIE 83,232 522,849 606,081 608 290400016-0 2005 TSAO ERIC 83,232 472,645 555,877 609 290400017-1 2005 ERBST DAVID R 83,232 355,309 438,541 610 290400018-2 2005 POE ROBERT A 83,232 390,821 474,053 611 290400019-3 2005 CLARK RICHARD 83,232 385,030 468,262 612 290400020-3 1987 REED PATRICIA A 89,172 234,947 324,119 613 290400021-4 2005 COHEN ROBERT 83,232 523,711 606,943 614 290400022-5 2001 MCKENNA JAMES W 112,467 281,059 393,526 615 290400023-6 2005 CAMERON ROBERT J 81,600 342,108 423,708 616 290400024-7 2005 KEUL JAMES J 81,600 317,268 398,868 617 290400025-8 2005 DELANEY BARBARA 81,600 286,547 368,147 618 290400026-9 2005 CONLEY J BARRE 81,600 254,490 336,090 619 290400027-0 2005 FORTH KATHY 81,600 261,120 342,720 620 290400028-1 2005 DIEHL JAMES F 81,600 264,307 345,907 621 290400029-2 1993 LEE BOSU 76,112 110,573 186,685 622 290400030-2 2005 LONGERBONE JAMES 81,600 275,792 357,392 623 290400031-3 2005 CONERLY PAMELA R 81,600 288,382 369,982 624 290400032-4 2005 MEDINA BILL 81,600 294,713 376,313 625 290400033-5 2005 PARK CHUNG S 81,600 297,049 378,649 626 290400034-6 2005 SYNN NUNG M 83,232 301,317 384,549 627 290400035-7 2005 TAKS MAURICE 83,232 354,256 437,488 628 290400036-8 2005 JEROTZ KAREN 83,232 342,811 426,043 629 290400037-9 2005 JAVAD SHAHRIAR 166,464 196,115 362,579 630 290400038-0 2005 ULLRICH PALMA 83,232 352,280 435,512 631 290400039-1 2005 ASENSI ESTELLE 83,232 383,045 466,277 632 290400040-1 2005 CRAIG JAMES M 83,232 368,414 451,646 633 290400041-2 2005 BUTLER JOHN 83,232 446,932 530,164 634 290400042-3 2005 MEYER MICHAEL D 83,232 531,870 615,102 635 290400043-4 2005 PHILLIPS JOSEPH 83,232 457,271 540,503 636 290400044-5 2005 BIONDI DAVID 166,464 403,155 569,619 637 290400045-6 2005 MCBRIDE CHARLES W 83,232 513,249 596,481 638 290400046-7 1999 COON LAWRENCE T 140,412 122,860 263,272 639 290400047-8 2005 JOHNSON CHARLES W 81,600 419,730 501,330 640 290400048-9 2005 JENSEN JONES DONNA 163,200 322,359 485,559 641 290400049-0 2005 RUSSUM DOUGLAS R 81,600 365,670 447,270 642 290400050-0 2005 STOFFEL KENNETH P 81,600 353,940 435,540 643 290400051-1 2005 JACOBSON PAUL T 81,600 372,810 454,410 644 290400052-2 2005 OUTHUIJSE JOHN 81,600 466,723 548,323 645 290400053-3 2005 PALMER FRED M 81,600 404,345 485,945 646 290400054-4 2005 KORNBLUTH STUART 163,200 216,240 379,440 647 290400055-5 2005 HOLMES ROBERT D 163,200 227,970 391,170 648 290400056-6 2005 ALLEN LALAYNIA 163,200 247,860 411,060 649 290400057-7 2005 CANALE MARIO A 80,342 164,724 245,066 650 290400058-8 2005 NASH MICHAEL T 163,200 173,910 337,110 651 290400059-9 2005 SCHUSTER GLENN A 163,200 205,530 368,730 652 290400060-9 2005 CARLZ LINDA 163,200 177,480 340,680 653 290400061-0 2006 RAY JANICE ESTATE OF 163,200 218,280 381,480 654 290400062-1 2005 GARTNER CHARLES M 163,200 189,210 352,410 655 290400063-2 2005 FERRALL PAUL J 163,200 260,100 423,300 656 290400064-3 2005 CARLSON EDWARD J 163,200 262,650 425,850 657 290400065-4 2005 ZOBA ROSE M 163,200 284,580 447,780 658 290400066-5 2005 HUELDEN ROY H 163,200 253,470 416,670 659 290400067-6 2005 SOULE ALLEN C 163,200 211,650 374,850 660 290400068-7 2005 MATOSSIAN JOHN H 163,200 172,380 335,580 661 290400069-8 2005 KNOX JANE 163,200 230,520 393,720 662 290400070-8 2005 BERGER CAROL 163,200 278,970 442,170 663 290400071-9 2005 EADINGTON THOMAS 163,200 178,500 341,700 664 290400072-0 1975 SEIFERT BARBARA 13,406 38,006 51,412 665 290400073-1 2005 PROKOPOW MARY 83,232 237,137 320,369 666 290400074-2 2005 SAMSON IRENE 83,232 325,688 408,920 667 290400075-3 2005 COHN MATILDA R 83,232 223,972 307,204 668 290400076-4 2005 PURSLEY ABBY L 83,232 296,624 379,856 669 290400077-5 2005 JOHNSON VICKI M 166,464 198,716 365,180 670 290400078-6 2005 SIROTA ROBERT 83,232 284,023 367,255 671 290400079-7 2006 MARTINEZ DORIS J 163,200 316,200 479,400 672 290400080-7 2005 WHEAT DOROTHY J 166,464 223,165 389,629 673 290400081-8 2005 DAUGHERTY ALTON 166,464 212,241 378,705 674 290400082-9 1985 THUNSTROM WAYNE 39,407 146,405 185,812 675 290400083-0 2005 MEYER BILL C 166,464 245,534 411,998 676 290400084-1 2005 ELLSWORTH AMY 163,200 248,525 411,725 677 290400085-2 2006 CICARELLI JOE 163,200 295,800 459,000 678 290400086-3 2005 UENO WATARU 163,200 214,710 377,910 679 290400087-4 2005 FALKENSTEIN ROBERT 163,200 328,440 491,640 680 290400088-5 2005 PACHECO PETER H 163,200 222,360 385,560 681 290400089-6 2005 HANNA DARYL D 163,200 212,670 375,870 682 290410001-7 2005 KOZIEL GREGORY T 83,232 416,388 499,620 683 290410002-8 2005 LISA KENNETH J 83,232 388,678 471,910 684 290410003-9 2005 ABLER SHIRLEY J 83,232 396,865 480,097 685 290410004-0 2005 DAHLIN KAREN 83,232 419,274 502,506 686 290410005-1 2005 BORDEAUX ROBERT 83,232 458,414 541,646 687 290410006-2 2005 LANCASTER JAMES E 83,232 346,889 430,121 688 290410007-3 2005 SMITH MICHAEL S 83,232 417,727 500,959 689 290410008-4 2006 MOORE JACK E 160,000 636,000 796,000 690 290410009-5 2005 SANKEY MELVIN D 83,232 451,551 534,783 691 290410010-5 2005 NAITO SHUNICHI 83,232 448,232 531,464 692 290410011-6 2005 WEBB CLIFFORD M 83,232 389,109 472,341 693 290410012-7 2005 JOHNSON ROBERT H 83,232 281,937 365,169 694 290410013-8 2005 GRILLO JACK J 83,232 402,605 485,837 695 290410014-9 2005 SMITH ROBERT L 83,232 447,892 531,124 696 290410015-0 2005 KUHNS LESTER A 83,232 483,164 566,396 697 290410016-1 2005 ORR JAMES J 166,464 473,382 639,846 698 290410017-2 2004 DEACON GEORGE 83,232 362,579 445,811 699 290410018-3 2004 JANUS MICHAEL J 83,232 420,321 503,553 700 290410019-4 2004 STAUB PETER K 83,232 416,576 499,808 701 290410020-4 2004 CLARKE CHARLES J 83,232 332,095 415,327 702 290410021-5 2005 SHERWOOD RICHARD 83,232 363,099 446,331 703 290410022-6 2004 KENGEN JOHN H 83,232 329,806 413,038 704 290410023-7 2004 PATLIAN RONALD L 83,232 402,426 485,658 705 290410024-8 2005 GUZZETTA MARYANN 83,232 374,858 458,090 706 290410025-9 2005 WAKAI EIKO 83,232 278,312 361,544 707 290410026-0 2006 WILKINS MARC 166,464 196,115 362,579 708 290410027-1 2005 PLOUM CHRISTIAAN J 83,232 293,327 376,559 709 290410028-2 1975 MICHLES JAMES L 11,611 45,689 57,300 710 290410029-3 2005 AUBEL ALICE 83,232 197,843 281,075 711 290410030-3 2005 CONTRERA ALFRED 83,232 238,990 322,222 712 290410031-4 2005 CARTER KATHLEEN J 83,232 245,653 328,885 713 290410032-5 2005 CONTRERA VIRGINIA 83,232 239,812 323,044 714 290410033-6 2005 FRANCO ESTHER 83,232 297,904 381,136 715 290410034-7 2005 GORELIK STEPHEN L 83,232 331,351 414,583 716 290410035-8 2006 OLSTHOORN TED 160,000 354,000 514,000 717 290410036-9 2005 WATKINS ROBERTA 83,232 300,329 383,561 718 290410037-0 2005 EPPS SHARON K 163,200 331,500 494,700 719 290410038-1 2005 GERHARDT PAUL B 83,232 432,286 515,518 720 290410039-2 2005 FEILTEAU GEORGE W 83,232 372,463 455,695 721 290410040-2 2005 STEVENSON LORETTA 83,232 333,968 417,200 722 290410041-3 2005 REVERS CAROL ANN 83,232 478,063 561,295 723 290410042-4 2005 CHAO EDMUND Y 83,232 408,357 491,589 724 290410043-5 2005 PANGA DANTE B 83,232 470,645 553,877 725 290410044-6 2005 THOMSON JAMES D 83,232 425,003 508,235 726 290410045-7 2005 CUDER JOHN A 83,232 328,526 411,758 727 290410046-8 2005 WARE NORMAN W 83,232 333,216 416,448 728 290410047-9 2005 BIRD MICHAEL D 83,232 356,857 440,089 729 290410048-0 2005 CAVANAGH JOSEPH 83,232 432,013 515,245 730 290410049-1 1999 HOSFELD BRUCE A 70,102 254,526 324,628 731 290410050-1 2005 SOLBERG DONALD A 83,232 281,237 364,469 732 290410051-2 2005 HSZIEH GEORGE C 83,232 271,544 354,776 733 290410052-3 2005 HUH YU BEN 83,232 268,746 351,978 734 290410053-4 2006 GALARZE WILLIAM D 160,000 268,000 428,000 735 290410054-5 2006 SOULAGES RICHARD 112,200 285,600 397,800 736 290410055-6 2005 ROBISON MICHAEL D 83,232 247,224 330,456 737 290410056-7 2005 DECARLO MARVIN C 83,232 297,659 380,891 738 290410057-8 2005 WAKAI HARRY H 98,124 247,511 345,635 739 290410058-9 2005 WHITELEY RICHARD 83,232 272,584 355,816 740 290410059-0 2005 HUNTINGTON RENE P 83,232 296,514 379,746 741 290410060-0 2005 GRUBER BERT N 83,232 413,636 496,868 742 290410061-1 2005 CONVERSE LEROY 163,200 386,500 549,700 743 290410062-2 2005 TSAO ERIC 83,232 287,007 370,239 744 290410063-3 2005 CARNEY WILLIAM J 83,232 303,165 386,397 745 290410064-4 2005 COMER RONALD L 166,464 166,464 332,928 746 290410065-5 2005 SWAZES STANLEY 166,464 224,206 390,670 747 290410066-6 2005 KURE STAN K 83,232 394,146 477,378 748 290410067-7 2005 LANDAU NANCY 83,232 254,604 337,836 749 290410068-8 2005 ESTORGE JOHN 83,232 273,570 356,802 750 290410069-9 2005 PASCUAL GARY 83,232 438,325 521,557 751 290410070-9 2005 PFEFFER JAMES C 83,232 356,669 439,901 752 290410071-0 2005 CHAPMAN GEORGE F 83,232 432,519 515,751 753 290410072-1 2002 PETERSEN EDWIN J 78,726 185,009 263,735 754 290410073-2 2005 COLOMBERO RONALD 83,232 284,710 367,942 755 290410074-3 2001 DRYER ELMER J 57,357 232,300 289,657 756 290410075-4 2005 CLARK EDWARD 83,232 390,150 473,382 757 290410076-5 2006 HOYT MARY ANN 160,000 327,500 487,500 758 290410077-6 2005 CHAN LORETTA K 83,232 273,702 356,934 759 290410078-7 2005 ROGERS JOHN M 83,232 231,573 314,805 760 290410079-8 2005 RIVAS MARION C 83,232 224,181 307,413 761 290410080-8 2005 GREENWOOD KENNETH 83,232 248,152 331,384 762 290410081-9 2005 ORIOLA NOLA 83,232 228,888 312,120 763 290410082-0 2005 SADEGHIAN 83,232 197,785 281,017 764 290410083-1 2005 LO SIMON 166,464 216,403 382,867 765 290410084-2 2005 ROHRBACH WALTER 83,232 233,400 316,632 766 290410085-3 2000 PROUD MICHAEL D 61,856 206,941 268,797 767 290420001-8 2004 BRUCE ROBERT 83,232 434,367 517,599 768 290420002-9 2004 STRYKER RICHARD E 83,232 295,471 378,703 769 290420003-0 2004 SAUNDERS JENNIE B 83,232 237,211 320,443 770 290420004-1 2004 LAICATO ANTHONY 83,232 209,640 292,872 771 290420005-2 2004 KEHL KENNETH R 83,232 184,983 268,215 772 290420006-3 2005 DAVILA PEDRO J 83,232 276,746 359,978 773 290420007-4 2004 RONNEBURG H 83,232 257,915 341,147 774 290420008-5 2004 ZACHARIAS RONALD 83,232 266,342 349,574 775 290420009-6 1977 BURBANK RUDY 20,689 59,099 79,788 776 290420010-6 2004 HIROSE GARY 83,232 332,950 416,182 777 290420011-7 2004 SCHOLIN BURTON R 83,232 317,113 400,345 778 290420012-8 2004 WYATT CHARLES C 83,232 223,061 306,293 779 290420013-9 2004 MOORE JEFFIE L 83,232 233,257 316,489 780 290420014-0 1988 KIRKPATRICK MICHAEL 62,931 138,752 201,683 781 290420015-1 2004 KADLEC STEPHEN F 83,232 193,306 276,538 782 290420016-2 2004 SMITH DONALD M 83,232 257,290 340,522 783 290420017-3 2004 JONES RONALD H 83,232 282,468 365,700 784 290420018-4 2005 DEMATTEIS JOHN A 166,464 213,282 379,746 785 290420019-5 2004 STARK ROBERT 83,232 288,398 371,630 786 290420020-5 2004 POLITO VINCENT 83,232 282,468 365,700 787 290420021-6 2004 RANDLES MICHAEL F 83,232 262,701 345,933 788 290420022-7 2004 LOU WALTER 83,232 261,244 344,476 789 290420023-8 2004 MILAM RONALD A 83,232 291,832 375,064 790 290420024-9 2004 BLYLEVEN RONALD J 83,232 427,626 510,858 791 290420025-0 2004 LIN LILLIAN 83,232 379,746 462,978 792 290420026-1 2004 CHUNG HONG T 83,232 375,272 458,504 793 290420027-2 2004 CHAPUT CLAYTON A 83,232 356,337 439,569 794 290420028-3 2004 ULMER WILLIAM W 83,232 369,342 452,574 795 290420029-4 2004 FIX JOHN F 83,232 408,981 492,213 796 290420030-4 2004 LAWSON DOLORES M 83,232 294,225 377,457 797 290420031-5 2004 HOPPKE LAWRENCE 83,232 324,084 407,316 798 290420032-6 2004 CERVANTES MARLENE 83,232 302,799 386,031 799 290420033-7 2004 EASTIS RONALD L 83,232 347,909 431,141 800 290420034-8 2004 MACENAS GERALD 83,232 261,140 344,372 801 290420035-9 2004 DAY KIM 83,232 249,279 332,511 802 290420036-0 2004 CRAMER DALLAS 83,232 283,613 366,845 803 290420037-1 2004 PLATENAK JOETTE 83,232 187,438 270,670 804 290420038-2 2004 TARPINIAN PETER M 83,232 265,302 348,534 805 290420039-3 2005 WAKAI HARRY 83,232 254,898 338,130 806 290420040-3 2005 KIRK MARY K 83,232 238,585 321,817 807 290420041-4 2005 SWIONTEK HELEN A 83,232 285,589 368,821 808 290490002-6 2006 URBAN JOHN G 160,000 432,500 592,500 809 290490003-7 2006 JONES LLOYD 180,000 427,689 607,689 810 290490004-8 2006 LEE ANTHONY 160,000 449,000 609,000 811 290490005-9 2006 HARMON PAUL E 160,000 395,000 555,000 812 290490006-0 1984 ALLEN NONETTE A 57,601 124,308 181,909 813 290490007-1 2003 SPIKER JOHN W 271,243 409,091 680,334 814 290490039-0 2006 MONROE MARY 160,000 311,000 471,000 815 290490040-0 2006 ANDERSON JEFFERY 160,000 361,000 521,000 816 290490041-1 2006 GACHUPIN BONNIE S 160,000 226,000 386,000 817 290490042-2 2003 PLATT WILLIAM B 59,454 177,286 236,740 818 290490043-3 2006 WADUM DAVID E 160,000 314,000 474,000 819 290490046-6 2006 BOSE RICHARD R 160,000 541,000 701,000 820 290490047-7 2006 COSGROVE JOHN D 160,000 536,500 696,500 821 290490048-8 2006 SCHWEICKHARDT 160,000 518,500 678,500 822 290490049-9 2006 BRETT JAMES E 160,000 521,000 681,000 823 290490050-9 2000 BLOSE WADE L 61,856 198,505 260,361 824 290490051-0 2006 MORRIS CATHERINE I 160,000 322,700 482,700 825 290490052-1 2006 GUSTAFSON ROBERT 160,000 341,000 501,000 826 290490053-2 2006 KIM SANG SHIN 160,000 388,000 548,000 827 290490054-3 2006 ANDERSON CARL R 160,000 377,000 537,000 828 290490055-4 2006 BUTCHER JAMES E 160,000 317,500 477,500 829 290490056-5 2006 BURCHFIELD LARRY 160,000 247,500 407,500 830 290490057-6 2006 REMIGIO RICHARD R 160,000 232,500 392,500 831 290490058-7 2006 RADAM GERHARD 160,000 265,000 425,000 832 290490059-8 2006 POPKEN JAMES R 160,000 248,500 408,500 833 290490060-8 1993 ALBRITTON CHERRIL Y 76,112 216,931 293,043 834 290490062-0 2006 PETERS MARCELLA K 160,000 316,500 476,500 835 290490063-1 2006 STAAB LAWRENCE J 160,000 319,273 479,273 836 290490064-2 2006 BAE MOO HYUN 160,000 287,000 447,000 837 290500001-5 2006 SISNEROS CASEY C 160,000 307,000 467,000 838 290500002-6 2006 ELY ROSEMARY A 160,000 269,192 429,192 839 290500003-7 2006 BOLANOS ALVARO 160,000 217,000 377,000 840 290500004-8 2006 AMANS JEREL 160,000 286,700 446,700 841 290500005-9 2006 SEBEK WILLIAM C 160,000 331,500 491,500 842 290500006-0 2006 PEPE RALPH 160,000 308,000 468,000 843 290500007-1 2001 SAMMARCELLI RONALD 66,156 216,913 283,069 844 290500008-2 2006 WALDHAUSER BENNIE 160,000 319,000 479,000 845 290500009-3 2006 LUCAS PATRICIA A 160,000 264,500 424,500 846 290500010-3 2006 ERVIN SAM N 160,000 289,500 449,500 847 290500011-4 2006 VANTVLIE OSCAR E 160,000 250,000 410,000 848 290500012-5 2006 LABRADOR ARTURO 160,000 313,000 473,000 849 290500013-6 2006 SARNANA ARTHUR V 160,000 328,000 488,000 850 290500014-7 2006 POST JAMES E 160,000 471,500 631,500 851 290500015-8 2006 STEELE STANELY E 160,000 612,500 772,500 852 290500016-9 2006 HEMMINGS PETER L 160,000 549,000 709,000 853 290500017-0 2006 MORROW THOMAS 160,000 501,000 661,000 854 290500018-1 2006 WEISHAAR MICHAEL J 160,000 519,000 679,000 855 290500019-2 2006 JANECEK WILMER G 160,000 523,000 683,000 856 290500020-2 2006 THORP NORMAN 160,000 363,000 523,000 857 290500021-3 2006 MOORE DEBORAH 160,000 539,000 699,000 858 290500022-4 2006 DUFFY DENNIS R 160,000 535,000 695,000 859 290500023-5 2006 FORD DOVER 160,000 505,000 665,000 860 290500026-8 2006 WASHINGTON EDGAR 160,000 549,000 709,000 861 290500027-9 2006 CHALMERS TRACY 160,000 342,500 502,500 862 290500028-0 2006 LOSCH FRANCES F 160,000 383,500 543,500 863 290500029-1 2004 ROSSOW RIENHARD D 74,186 262,835 337,021 864 290500030-1 2006 DIXON BRUCE 160,000 287,000 447,000 865 290500031-2 2006 WALBRUN PAUL A 160,000 363,500 523,500 866 290500032-3 2006 OLESON CHARLENE L 160,000 237,800 397,800 867 290500033-4 2006 ROSIER NICHOLAAS M 160,000 381,000 541,000 868 290500034-5 1998 TAYLOR TIMOTHY R 53,627 147,224 200,851 869 290500035-6 2006 RYAN MICHAEL J 160,000 320,500 480,500 870 290500036-7 2006 JUN JUNG SOOK 160,000 212,500 372,500 871 290500037-8 2006 SALDAVIA JOSEPH B 160,000 287,500 447,500 872 290500038-9 2006 BROWN BETTY A 160,000 314,000 474,000 873 290500039-0 2006 EVANS JOHN W 160,000 318,500 478,500 874 290500040-0 2006 WEISER JUDITH A 160,000 351,000 511,000 875 290500041-1 2006 ROQUE SALVADOR M 160,000 413,000 573,000 876 290500042-2 2006 LACASELLA JOSEPHINE 160,000 363,500 523,500 877 290500044-4 2006 BEADOR JOSEPH E 160,000 433,500 593,500 878 290500045-5 2000 ROSS ROBERT G 56,233 166,192 222,425 879 290500046-6 2006 YANG LINDA 160,000 291,500 451,500 880 290500047-7 2006 LEE ERIC 160,000 250,500 410,500 881 290500049-9 2006 BESSLER YELENA 160,000 247,000 407,000 882 290500050-9 2006 RAY BRIAN A 160,000 258,000 418,000 883 290500051-0 2006 JOHNSON GORDON A 160,000 232,500 392,500 884 290500052-1 2006 JONES LARRY 160,000 280,000 440,000 885 290500054-3 1979 SHELTON JAMES A 41,421 146,241 187,662 886 290500059-8 2006 KASHISAZ HOSSEIN A 160,000 263,000 423,000 887 290500062-0 2006 BERNAL NONY 160,000 249,500 409,500 888 290500063-1 2006 AGUILERA DAVID G 160,000 290,000 450,000 889 290500064-2 2006 RASTAVAN TIM 160,000 198,000 358,000 890 290500065-3 2006 KHAZRAEI LAURI 160,000 286,500 446,500 891 290500067-5 2006 MINAIE PECHMAN 160,000 280,000 440,000 892 290500068-6 2006 WALTHERS JAMES D 160,000 289,500 449,500 893 290500069-7 2006 WILLIAMS ROBERT 160,000 362,000 522,000 894 290500070-7 2006 STEPHENSON WILLIAM 160,000 277,000 437,000 895 290500071-8 2006 GIRON CESAR R 160,000 284,500 444,500 896 290500072-9 2006 LEE CHOUNG SOO 160,000 314,000 474,000 897 290500073-0 2006 POLYDOROS GEORGE 160,000 298,000 458,000 898 290500074-1 2006 BECERRA CARLOS A 160,000 300,500 460,500 899 290500075-2 2006 HOCK MARTIN 160,000 270,000 430,000 900 290500076-3 2006 TORRANCE ROBERT L 160,000 314,000 474,000 901 290500077-4 2006 PATEL CHANDRAKANT 160,000 303,000 463,000 902 290500078-5 2006 GALLOWAY WILLIAM 160,000 264,500 424,500 903 290500079-6 1999 WILSON JERRY E 57,357 176,664 234,021 904 290500080-6 2006 KIM RICHARD F 160,000 333,000 493,000 905 290500081-7 2006 MARTINEZ DANNY R 160,000 292,000 452,000 906 290500082-8 2006 BEESON EARL E 160,000 353,000 513,000 907 290500083-9 1994 GUNNERSEN JON G 62,181 145,514 207,695 908 290510002-7 2006 SONG HAEUN 160,000 340,094 500,094 909 290510003-8 2006 ZINKUS GEORGE A 160,000 291,000 451,000 910 290510004-9 2006 MCKEEVER JOHN 160,000 362,500 522,500 911 290510005-0 2006 GLASS LYLE B 160,000 334,500 494,500 912 290510006-1 2006 RISCH CHARLES R 160,000 229,000 389,000 913 290510007-2 2006 SIRISUK CHAICHAN 160,000 212,500 372,500 914 290510008-3 2006 MARTIN JOHN L 160,000 313,500 473,500 915 290510009-4 2006 BOYER RONALD F 160,000 243,500 403,500 916 290510010-4 2006 HEALEY GERARD J 160,000 244,000 404,000 917 290510011-5 1992 MOON VIRGINIA 8,055 26,014 34,069 918 290510012-6 2006 DZAMA GEORGE E 160,000 314,000 474,000 919 290510013-7 2006 ROPER JAMES L 160,000 365,500 525,500 920 290510014-8 2006 CLEMENSEN STACEY 160,000 320,500 480,500 921 290510015-9 2006 PHILLIPS RAY 160,000 273,000 433,000 922 290510016-0 2006 BRETTING HAZEL D 160,000 316,000 476,000 923 290510073-1 2006 SHORTRIDGE RICHARD 160,000 337,000 497,000 924 290510074-2 2006 EBY JEFFREY R 160,000 287,000 447,000 925 290510075-3 2006 CHUN KEE SOOK 160,000 277,500 437,500 926 290510076-4 2006 RHO BYUNG Y 160,000 317,000 477,000 927 290510077-5 2006 ABELL DORIS L 160,000 315,000 475,000 928 290510078-6 2006 GIORDANO BRUCE A 160,000 223,000 383,000 929 290510079-7 2006 SAGARA TAEKO 160,000 222,000 382,000 930 290510080-7 2006 LEVY EMMA K 160,000 198,000 358,000 931 290510081-8 2006 BAE SANG HYUN 160,000 210,000 370,000 932 290510082-9 2006 GRANT SHARON P 160,000 235,500 395,500 933 290510083-0 2006 ANGEL DAN M 160,000 225,000 385,000 934 290510084-1 2006 FIZDALE JOHN J 160,000 280,000 440,000 935 290510085-2 2006 PARKS DAVID M 160,000 330,000 490,000 936 290510086-3 2006 JU YOUNG J 160,000 270,500 430,500 $379,559,563 Shea Ownership Item # APN Lot Tract Cat Model List/Sales Price 1 290490012 54 31742 I 4050 672,626 2 290490013 55 31742 E 4070 487,990 3 290490020 62 31742 E 5030 549,990 4 290490023 65 31742 E 5010 592,990 5 290490024 66 31742 E 5020 545,990 6 290510017 67 31742 F 7 290510018 68 31742 F 8 290510019 69 31742 F 9 290510020 70 31742 F 10 290510021 71 31742 F 11 290520001 72 31742 F 12 290520002 73 31742 F 13 290520003 74 31742 F 14 290520004 75 31742 F 15 290520005 76 31742 F 16 290520006 77 31742 F 17 290520007 78 31742 F 18 290520008 79 31742 F 19 290520009 80 31742 F 20 290520010 81 31742 F 21 290520011 82 31742 F 22 290520012 83 31742 F 23 290520013 84 31742 F 24 290520014 85 31742 F 25 290520015 86 31742 F 26 290520016 87 31742 F 27 290520017 88 31742 F 28 290520018 89 31742 F 29 290520019 90 31742 F 30 290520020 91 31742 F 31 290520021 92 31742 F 32 290520022 93 31742 F 33 290520023 94 31742 F 34 290520024 95 31742 F 35 290520025 96 31742 F 36 290520026 97 31742 F 37 290520027 98 31742 F 38 290520028 99 31742 F 39 290520029 100 31742 F 40 290520030 101 31742 F 41 290520031 102 31742 F 42 290520032 103 31742 F 43 290520033 104 31742 F 44 290520034 105 31742 F 45 290520035 106 31742 F 46 290520036 107 31742 F 47 290520037 108 31742 F 48 290520038 109 31742 F 49 290510022 110 31742 F 50 290510023 111 31742 F 51 290510024 112 31742 F 52 290510025 113 31742 F 53 290510026 114 31742 F 54 290510027 115 31742 F 55 290510028 116 31742 F 56 290490028 120 31742 I 5030 673,990 57 290490085 214 31742 E 5010 590,990 58 290510041 218 31742 E 4060 462,990 59 290510042 219 31742 E 4070 480,990 60 290510044 221 31742 E 4080 494,990 61 290510045 222 31742 E 4050 443,990 62 290510046 223 31742 E 3520 385,990 63 290510047 224 31742 I 3540 420,990 64 290510048 225 31742 E 3530 399,990 65 290510049 226 31742 E 3520 380990 66 290510050 227 31742 F 67 290510051 228 31742 F 68 290510052 229 31742 F 69 290510053 230 31742 F 70 290510054 231 31742 F 71 290510055 232 31742 F 72 290510056 233 31742 F 73 290510057 234 31742 F 74 290510058 235 31742 F 75 290520039 236 31742 F 76 290520040 237 31742 F 77 290520041 238 31742 F 78 290520042 239 31742 F 79 290520043 240 31742 F 80 290520044 241 31742 F 81 290520045 242 31742 F 82 290520046 243 31742 F 83 290520047 244 31742 F 84 290520048 245 31742 F 85 290520049 246 31742 F 86 290520050 247 31742 F 87 290520051 248 31742 F 88 290520052 249 31742 F 89 290520053 250 31742 F 90 290520054 251 31742 F 91 290520055 252 31742 F 92 290520056 253 31742 F 93 290520057 254 31742 F 94 290520058 255 31742 F 95 290520059 256 31742 F 96 290520060 257 31742 F 97 290520061 258 31742 F 98 290520062 259 31742 F 99 290520063 260 31742 F 100 290520064 261 31742 F 101 290520065 262 31742 F 102 290520066 263 31742 F 103 290520067 264 31742 F 104 290520068 265 31742 F 105 290520069 266 31742 F 106 290520070 267 31742 F 107 290520071 268 31742 F 108 290520072 269 31742 F 109 290520073 270 31742 F 110 290520074 271 31742 F 111 290520075 272 31742 F 112 290510059 273 31742 F 113 290510060 274 31742 F 114 290510061 275 31742 E 3520 383,990 115 290510062 276 31742 I 4080 517,990 116 290510063 277 31742 E 4050 451,990 117 290510064 278 31742 E 4070 480,990 118 290510065 279 31742 E 3530 401,990 119 290291001 31662 M 3012 120 290291002 31662 M 3024 121 290291003 31662 M 3011 122 290291004 31662 M 3023 123 290291005 31662 E 3012 370,990 124 290291006 31662 I 3024 455,990 125 290291008 31662 I 3023 444,990 126 290291009 31662 E 3012 349,990 127 290291010 31662 I 3024 419,990 128 290291011 31662 129 290291012 31662 130 290291013 31662 131 290291014 31662 132 290291015 31662 133 290291016 31662 134 290291017 31662 135 290291018 31662 136 290291019 31662 137 290291020 31662 138 290291021 31662 139 290291022 31662 140 290291023 31662 141 290291024 31662 142 290291025 31662 143 290291026 31662 144 290291027 31662 145 290291028 31662 146 290291029 31662 147 290291030 31662 148 290291031 31662 E 3012 355,990 149 290291033 31662 E 3011 319,990 150 290291035 31662 E 3011 319,990 151 290291037 31662 E 3011 325,990 152 290291040 31662 E 3024 440,990 153 290291042 31662 154 290291043 31662 155 290291044 31662 156 290291045 31662 157 290291046 31662 158 290291047 31662 159 290291048 31662 160 290291049 31662 161 290291050 31662 162 290291051 31662 163 290291052 31662 164 290291053 31662 165 290291054 31662 166 290291055 31662 167 290291056 31662 168 290291057 31662 169 290291058 31662 170 290291059 31662 171 290291060 31662 172 290291061 31662 173 290291062 31662 174 290291063 31662 175 290291064 31662 176 290291065 31662 177 290291066 31662 178 290291067 31662 179 290291068 31662 180 290291069 31662 181 290291070 31662 182 290291071 31662 183 290291072 31662 184 290291073 31662 185 290291074 31662 186 290291075 31662 187 290291076 31662 188 290291077 31662 189 290291078 31662 190 290291079 31662 191 290291080 31662 192 290291081 31662 193 290291082 31662 194 290291083 31662 195 290291084 31662 196 290291085 31662 197 290292001 31662 198 290292002 31662 199 290292003 31662 200 290292004 31662 201 290292005 31662 202 290292006 31662 203 290292007 31662 204 290292008 31662 205 290292009 31662 206 290292010 31662 207 290292011 31662 208 290292012 31662 209 290292013 31662 210 290292014 31662 211 290292015 31662 212 290292016 31662 213 290292017 31662 214 290292018 31662 215 290292019 31662 216 290292020 31662 217 290292021 31662 218 290292022 31662 219 290292023 31662 220 290292024 31662 221 290292025 31662 222 290292026 31662 223 290292027 31662 224 290292028 31662 225 290292029 31662 226 290292030 31662 227 290292031 31662 228 292292032 31662 229 290292033 31662 230 290292034 31662 231 290292035 31662 232 290292036 31662 233 290292037 31662 234 290292038 31662 235 290292039 31662 236 290292040 31662 237 290292042 31662 238 290292043 31662 239 290292044 31662 240 290292045 31662 241 290292046 31662 242 290292047 31662 243 290292048 31662 244 290292049 31662 245 290292050 31662 246 290292051 31662 247 290292052 31662 248 290292053 31662 249 290292054 31662 250 290292055 31662 251 290292056 31662 252 290292057 31662 253 290292058 31662 254 290292059 31662 255 290292060 31662 256 290292061 31662 257 290292062 31662 258 290292063 31662 259 290292064 31662 260 290292065 31662 261 290292066 31662 262 290292067 31662 263 290292068 31662 264 290292069 31662 265 290292070 31662 266 290292071 31662 267 290292072 31662 268 290292073 31662 269 290292074 31662 270 290292075 31662 271 290292076 31662 272 290292077 31662 273 290292078 31662 274 290292079 31662 275 290292080 31662 276 290292081 31662 277 290292082 31662 278 290292083 31662 279 290292084 31662 280 290292085 31662 281 290292086 31662 282 290292087 31662 Model home complex of 11 homes on APN 290290002,014 not on the above list. Total 282 +11=293 APPRAISER’S QUALIFICATIONS QUALIFICATIONS OF BRUCE W. HULL, MAI

Business Locations: 1056 E. Meta Street, Suite 202 Ventura, California 93001 (805) 641-3275 * Facsimile (805) 641-3278 E-MAIL ADDRESS - [email protected]

Direct Correspondence to Ventura Location

115 E. Second Street, Suite 100 Tustin, California 92780 (949) 581-2194 * Facsimile (949) 581-2198

Bruce W. Hull & Associates, Inc. is an appraisal firm that provides a wide variety of appraisal assignments for public agencies, developers and financial institutions.

The principal, Bruce W. Hull, MAI, has been in the appraisal field since graduation in 1969 from Westmont College, Santa Barbara. After being employed by the Ventura County Assessor's Office for five years, he established an appraisal company in Orange County in 1974. In August of 1995 he established an office in Ventura while maintaining an Orange County location. While most of the appraisal assignments are in Southern California, assignments have been completed in areas from San Francisco/Bay Area and Lake Tahoe to San Diego.

The appraisal assignments completed have been diverse in nature, including such property types as large masterplanned developments, shopping centers, large retail uses, and mitigation land. A brief summary of the more challenging assignments is given on the following pages.

MASTERPLANNED DEVELOPMENT These are typically more than 1,000 acres in size and have a wide variety of residential product, often ranging from condominiums to large estate type of properties. In addition, there is often a commercial use within the development. I have been involved in the following projects.

Lake Sherwood, Hidden Valley Wood Ranch, Simi Valley Rancho San Clemente, San Clemente Towne Center, Rancho Santa Margarita Rancho Trabuco North and South, Rancho Santa Margarita Hunters Ridge, Fontana The Corona Ranch, Corona Mountain Cove, Temescal Mountain Gate, South Corona The Foothill Ranch, Corona Orangecrest, City of Riverside Aliso Viejo, County of Orange Talega Valley, City of San Clemente/County of Orange Otay Ranch, City of Chula Vista RETAIL USE Consultant to City of Long Beach regarding a 30 acre site (Long Beach Naval Hospital) which the City was acquiring from the US Navy for inclusion in a 100 acre shopping center site.

Towne Center, Rancho Santa Margarita, is a masterplanned project which contains two shopping centers (Towne Center, 160,000 SF plus a Target Store, 122,000 SF; Plaza Antonio, 165,000 SF).

Mission Grove, City of Riverside, is a 395,362 SF center which included a K-Mart Department Store among the major tenants.

Victoria Gardens Masterplan was a proposed mixed use project consisting of 3,065 acres of land which included a mixture of residential (2,150 acres); commercial (335 acres of which 91.9 acres was a regional center site); schools; parks; and open space for the remainder of the lands.

Menifee Village, Riverside County, is a 1977 acre masterplanned development which had approvals for 5,256 units. The assignment included the valuation of Planning Area 2-7 which was a commercial site that had been developed with a Target Store, Ralph's Market, and in-line stores (190,000 SF with eventually being a 257,000 SF center).

MITIGATION LANDS These assignments involved valuing lands that are considered mitigation lands which are often acquired by public agencies or nonprofit organizations.

Bolsa Chica, Huntington Beach, a 42-acre site which was part of a larger wetlands conservation program. This particular acreage was unique since it was subject to "tidal flushing" and had both fresh and saltwater impacting the lands. This assignment was completed for Metropolitan Water District.

San Joaquin Marsh, City of Irvine, consisted of approximately 289 acres of wetlands which were acquired for use as a "buffer" zone by the Irvine Ranch Water District. Eagle Valley, a 1072-acre parcel near Lake Matthews in Riverside County, was acquired by Metropolitan Water District for use as a water treatment plant and buffer zone.

Poormans Reservoir, Moreno Valley, a 38-acre site acquired by the City of Moreno Valley for preservation/open space use. ASSESSMENT DISTRICTS/BOND ISSUES Have been involved in the appraisals of the following Bond Issues regarding Community Facilities Districts and/or Assessment Districts. (This represents a partial list of assignments completed from 1990 thru Present.)

CFD No. 9 (Orangecrest - Impr. Areas 1, 3 & 5); City of Riverside CFD No. 2000-1 (Crosby Estate @ Rancho Santa Fe); Solana Beach CFD No. 2001-01 (Murrieta Valley U.S.D.);Murrieta CFD No. 90-1 (Lusk-Highlander); City of Riverside Otay Ranch SPA I - CFD No. 99-2; City of Chula Vista CFD No. 7 (Victoria Grove); County of Riverside CFD No. 10 (Fairfield Ranch); City of Chino Hills CFD No. 2000-1; Tejon Industrial Complex; Lebec CFD No. 99-1; Santa Margarita Water District CFD No. 97-3; City of Chula Vista CFD No. 2 (Riverside Unified School District); City of Riverside CFD No. 89-1; City of Corona Lake Sherwood A.D. Refunding; County of Ventura CFD No. 9; City of Chino Hills CFD NO. 88-12; City of Temecula CFD No. 90-1 (Refunding); City of Corona A.D. No. 97-1-R; City of Oxnard A.D. No. 96-1; Valley Center Municipal Water District; San Diego County A.D. No. 96-1; City of Oxnard CFD No. 88-1 (Saddleback Valley Unified School Dist.); Rancho Santa Margarita CFD No. 89-2 (Saddleback Valley Unified School Dist.); Rancho Santa Margarita CFD No. 89-3 (Saddleback Valley Unified School Dist); Rancho Santa Margarita Centex A.D. No. 95-1; City of Corona Coyote Hills A.D. No. 95-1; City of Fullerton Sycamore Creek A.D. No. 95-1; City of Orange Prop. CFD No. 2 (Riverside Unified School District); City of Riverside CFD No. 91-1; City of Rancho Cucamonga Prop. CFD No. 2; City of Chino CFD No. 9; County of San Bernardino A.D. No. 89-1; City of Corona CFD No. 87-1 (Series B); City of Moreno Valley CFD No. 90-1; City of Corona CFD No. 89-1; (Saddleback Valley Unified School District); Orange County A.D. No. 96-1; City of Oxnard A.D. Nos. 86-3, 87-1 and 89-1 (Refunding); City of Oxnard CFD No. 90-1; City of Corona CFD No. 1 (Refunding); City of Jurupa CFD No. 88-12; City of Temecula PARTIAL LIST OF CLIENTS Have completed appraisal assignments for a wide variety of clients. A partial list of these includes the following.

Anaheim City Unified School District Bank of America NT & SA Bank of Montreal Bear, Stearns & Co., Inc. Best Best & Krieger LLP (Law Firm) Carpinteria Valley Unified School District Chino Unified School District Citicorp, N.A. City of Brea City of Chino City of Chino Hills City of Chula Vista City of Colton City of Corona City of Fullerton City of Huntington Beach City of Jurupa City of Mission Viejo City of Moreno Valley City of Orange City of Oxnard City of Rancho Cucamonga City of Riverside City of San Bernardino City of San Marcos City of Temecula Coast Federal Bank Colton Joint Unified School District County of Los Angeles County of Orange County of Riverside County of San Bernardino County of Ventura Downey Savings and Loan Federal National Mortgage Association (FNMA) Federal Deposit Insurance Corporation (FDIC) Fieldman, Rolapp & Associates (Financial Consultants) Irvine Ranch Water District Irvine Unified School District Jurupa Community Services District Metrobank Metropolitan Water District Meserve, Mumper & Hughes (Law Firm) Munger, Tolles & Olson LLP (Law Firm) Murrieta Valley Unified School District Rialto Unified School District Riverside Unified School District Saddleback Valley Unified School District Santa Margarita Water District Sidley & Austin (Law Firm) Solana Beach Unified School District Southern California Edison Company Stone & Youngberg LLC (Bond Underwriters) Talmantz Aviation The Irvine Company Wells Fargo Bank Wells Fargo Mortgage Company Weyerhaeuser Mortgage Company

COURT EXPERIENCE Qualified Expert Witness in the following courts:

United States District Court/Central District of California, Los Angeles Los Angeles County Superior Court Orange County Superior Court Riverside County Superior Court Ventura County Superior Court

ORGANIZATIONS Member - Appraisal Institute (No. 6894)

LICENSES Real Estate Broker - State of California Certified General Real Estate Appraiser - State of California (Certificate: AG004964)

GUEST SPEAKER (for) UCLA Symposium on Mello Roos Districts – 1988,2001, and 2005

"Exploring the Rumors & Realities of Land Secured Debt in California" - Conference sponsored by Stone & Youngberg, LLC, bond underwriters, held in Los Angeles on January 15, 1992

"Appraisals for Land Secured Financing" presentation for Stone & Youngberg, LLC, bond underwriters, held at San Francisco Headquarters on March 5, 1998

MISCELLANEOUS Member Advisory Panel to California Debt Advisory Commission regarding Appraisal Standards for Land Secured Financing (May, 1994) and (June 2004) [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX D

SUMMARY OF CERTAIN PROVISIONS OF THE BOND INDENTURE

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

Definitions:

“Account” means any account created pursuant to the Indenture.

“Acquisition and Construction Fund” means the fund by that name established pursuant to the Indenture.

“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311 et seq. of the California Government Code.

“Administrative Expense Account” means the Account by that name of the Special Tax Fund created and established pursuant to the Indenture.

“Administrative Expenses” means the administrative costs with respect to the calculation and collection of the Special Taxes, including all attorneys’ fees and other costs related thereto, the fees and expenses of the Trustee, any fees and related costs for credit enhancement for the Bonds or any Parity Bonds which are not otherwise paid as Costs of Issuance, any costs related to the District’s compliance with state and federal laws requiring continuing disclosure of information concerning the Bonds and the District, and any other costs otherwise incurred by the County staff on behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of Formation or the Resolution of Change and any obligation of the District under the Indenture.

“Administrator of the District” means the County Executive Officer or any other person or persons designated by the County Executive Officer by a written certificate signed by the County Executive Officer and containing the specimen signature of each such person.

“Annual Debt Service” means the principal amount of any Outstanding Bonds and/or Parity Bonds payable in a Bond Year either at maturity or pursuant to a sinking fund payment and any interest payable on any Outstanding Bonds and Parity Bonds in such Bond Year, if the Bonds and/or any Parity Bonds are retired as scheduled.

“Appraisal” means the appraisal of the taxable property in the District dated July 15, 2006 delivered in connection with the initial sale and issuance of the Bonds.

“Authorized Investments” means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein:

(1) for all purposes including defeasance investments in refunding escrow accounts (the Trustee is entitled to rely upon investment direction of the District as a certification that such investment is a Permitted Investment):

(a) cash (insured at all times by the Federal Deposit Insurance Corporation or otherwise collateralized with obligations described in paragraph (2) below); or

(b) direct 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;

D-1 (2) For all purposes other than defeasance investments in refunding escrow accounts:

(a) obligations of any of the following federal agencies which obligations represent the full faith and credit of the United States of America, including: Export-Import Bank, Rural Economic Community Development Administration (formerly the Farmers Home Administration), General Services Administration, U.S. Maritime Administration, Government National Mortgage Association (GNMA), U.S. Department of Housing & Urban Development (PHA’s), Federal Housing Administration and Federal Financing Bank;

(b) direct obligations of any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America: senior debt obligations rated “Aaa” by Moody’s or “AAA” by S&P issued by the Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC), senior debt obligations of the Federal Home Loan Bank System, the Student Loan Marketing Association, the Resolution Funding Corp. and the Farm Credit System and senior debt obligations of other government sponsored agencies approved by the Insurer;

(c) U.S. dollar denominated deposit accounts, federal funds and bankers’ acceptances with domestic commercial banks (including those of the Trustee and its affiliates) which have rating on their short term certificates of deposit on the date of purchase of “A-1” or “A-1+” by S&P and “P-1” by Moody’s and maturing no more than 360 days after the date of purchase (ratings on holding companies are not considered as the rating of the bank);

(d) commercial paper which is rated at the time of purchase in the single highest classification, “A-1+” by S&P and “P-1” by Moody’s and which matures not more than 270 days after the date of purchase;

(e) investments in a money market fund rated “AAAm” or “AAAm-G” or better by S&P, including funds for which the Trustee or its affiliates provide investment advisory or other management services;

(f) pre-refunded Municipal Obligations defined as follows: Any bonds or other obligations or any state of the United States of America of any agency, instrumentality or local governmental unit of any such state, which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and

(i) which are rated, based on an irrevocable escrow account or fund (the “escrow”), in the highest rating category of S&P and Moody’s or any successors thereto; or

(ii) (1) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (b) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (2) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate;

(g) investment agreements approved in writing by the Insurer (supported by appropriate opinions of counsel) with notice to S&P;

D-2 (h) The State of California Local Agency Investment Fund; provided that the Trustee may restrict investments in such Fund to the extent necessary to keep moneys available for the purposes of the Indenture.

(i) The Riverside County Treasurer’s Investment Pool.

“Authorized Representative of the County” means the County Executive Officer or any other person or persons designated by the County Executive Officer by a written certificate signed by the County Executive Officer and containing the specimen signature of each such person.

“Bond Counsel” means an attorney at law or a firm of attorneys selected by the District of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia.

“Bond Insurer” means MBIA Insurance Corporation, or any successor or assignee thereof.

“Bond Register” means the books which the Trustee will keep or cause to be kept on which the registration and transfer of the Bonds and any Parity Bonds will be recorded.

“Bondowner” or “Owner” means the person or persons in whose name or names any Bond or Parity Bond is registered.

“Bonds” means the Community Facilities District No. 89-1 of the County of Riverside Special Tax Refunding Bonds, Series 2006.

“Bond Year” means the twelve month period commencing on September 2 of each year and ending on September 1 of the following year, except that the first Bond Year for the Bonds or an issue of Parity Bonds will begin on the Delivery Date and end on the first September 1 which is not more than 12 months after the Delivery Date.

“Business Day” means a day which is not a Saturday or Sunday or a day of the year on which banks in New York, New York, Los Angeles, California, or the city where the corporate trust office of the Trustee is located, are not required or authorized to remain closed.

“Certificate of the Special Tax Administrator” means a certificate of the Administrator of the District, or any successor entity appointed by the County, to administer the calculation and collection of the Special Taxes.

“Code” means the Internal Revenue Code of 1986, as amended, and any Regulations, rulings, judicial decisions, and notices, announcements, and other releases of the United States Treasury Department or Internal Revenue Service interpreting and construing it.

“Continuing Disclosure Agreement” means that certain Continuing Disclosure Agreement dated as of September 1, 2006, executed by and between the District and The Bank of New York Trust Company, N.A., together with any amendments thereto.

“Costs of Issuance” means the costs and expenses incurred in connection with the issuance and sale of the Bonds or any Parity Bonds, including the acceptance and initial annual fees and expenses of the Trustee, legal fees and expenses, the premium payable to the Bond Insurer, costs of printing the Bonds and Parity Bonds and the preliminary and final official statements for the Bonds and Parity Bonds, fees of financial consultants and advisors and all other related fees and expenses, as set forth in a Certificate of the Authorized Representative of the County.

“Costs of Issuance Fund” means the Costs of Issuance Fund created and established pursuant to the Indenture. D-3 “County” means the County of Riverside, California.

“Delivery Date” means, with respect to the Bonds and each issue of Parity Bonds, the date on which the bonds of such issue were issued and delivered to the initial purchasers thereof.

“Depository” means The Depository Trust Company, New York, New York, and its successors and assigns as securities depository for the Certificates, or any other securities depository acting as Depository under the Indenture.

“Developed Property” means real property within the District for which a building permit has been issued.

“District” means Community Facilities District No. 89-1 of the County of Riverside established pursuant to the Act and the Resolution of Formation.

“Earnings Fund” means the fund by that name established pursuant to the Indenture in which there are established the Accounts described in the Indenture.

“Escrow Agent” means The Bank of New York Trust Company, N.A., as the 2001 Fiscal Agent and as escrow agent under the Escrow Agreement.

“Escrow Agreement” means the Escrow Agreement dated as of September 1, 2006 by and between the District and The Bank of New York Trust Company, N.A., as escrow agent.

“Escrow Fund” means the fund by that name established pursuant to the Escrow Agreement dated as of September 1, 2006, by and between the District and The Bank of New York Trust Company, N.A.

“Federal Securities” means the investments described under subsection (1) of the definition of Authorized Investments.

“Fiscal Year” means the period beginning on July 1 of each year and ending on the next following June 30.

“Gross Taxes” means the amount of all Special Taxes, including Prepayments, received by the District, together with the proceeds collected from the sale of property pursuant to the foreclosure provisions of the Indenture for the delinquency of such Special Taxes remaining after the payment of all costs related to such foreclosure actions or any settlement thereof.

“Independent Financial Consultant” means a financial consultant or firm of such consultants generally recognized to be well qualified in the financial consulting field, appointed and paid by the District, who, or each of whom:

(1) is in fact independent and not under the domination of the District or the County;

(2) does not have any substantial interest, direct or indirect, in the District or the County; and

(3) is not connected with the District or the County as a member, officer or employee of the District or the County, but who may be regularly retained to make annual or other reports to the District or the County.

“Interest Account” means the account by that name created and established in the Special Tax Fund pursuant to the Indenture.

D-4 “Interest Payment Date” means each March 1 and September 1, commencing March 1, 2007; provided, however, that, if any such day is not a Business Day, interest up to the Interest Payment Date will be paid on the Business Day next succeeding such date.

“Investment Agreement” means one or more agreements for the investment of funds of the District complying with the criteria therefor as set forth in Subsection (g) of the definition of Authorized Investments herein.

“Legislative Body” means the Board of Supervisors of the County of Riverside acting ex officio as the legislative body of the District.

“Maximum Annual Debt Service” means the maximum sum obtained for any Bond Year prior to the final maturity of the Bonds and any Parity Bonds by adding the following for each Bond Year:

(1) the principal amount of all Outstanding Bonds and Parity Bonds payable in such Bond Year either at maturity or pursuant to a sinking fund payment; and

(2) the interest payable on the aggregate principal amount of all Bonds and Parity Bonds Outstanding in such Bond Year if the Bonds and Parity Bonds are retired as scheduled.

“Moody’s” means Moody’s Investors Service, its successors and assigns.

“Municipal Bond Insurance Policy” means the insurance policy issued by the Bond Insurer guaranteeing the scheduled payment of principal of and interest on the Bonds when due.

“Net Taxes” means Gross Taxes minus amounts set aside to pay Administrative Expenses.

“Nominee” means the nominee of the Depository, which may be the Depository.

“Ordinance” means Ordinance No. 680, as amended by Ordinance No. 680.1 and Ordinance No. 680.2, adopted by the Board of Supervisors of the County, providing for the levying of the Special Tax.

“Outstanding” or “Outstanding Bonds and Parity Bonds” means all Bonds and Parity Bonds theretofore issued by the District, except:

(1) Bonds and Parity Bonds theretofore cancelled or surrendered for cancellation in accordance with the Indenture;

(2) Bonds and Parity Bonds for payment or redemption of which moneys will have been theretofore deposited in trust (whether upon or prior to the maturity or the redemption date of such Bonds or Parity Bonds), provided that, if such Bonds or Parity Bonds are to be redeemed prior to the maturity thereof, notice of such redemption will have been given as provided in the Indenture or any applicable Supplemental Indenture for Parity Bonds; and

(3) Bonds and Parity Bonds which have been surrendered to the Trustee for transfer or exchange pursuant to the Indenture or for which a replacement has been issued pursuant to the Indenture.

“Parity Bonds” means all bonds, notes or other similar evidences of indebtedness issued after the execution of the Indenture, payable out of the Net Taxes and which, as provided in the Indenture or any Supplemental Indenture, rank on a parity with the Bonds and with bonds issued to refund all or a portion of the Bonds.

“Participants” means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds Bonds or Parity Bonds as securities depository.

D-5 “Person” means natural persons, firms, corporations, partnerships, associations, trusts, public bodies and other entities.

“Prepayments” means any amounts paid by the District to the Trustee and designated by the District as a Prepayment of Special Taxes for one or more parcels in the District made in accordance with the RMA.

“Principal Account” means the account by that name created and established in the Special Tax Fund pursuant to the Indenture.

“Principal Office of the Trustee” means the office of the Trustee located in Los Angeles, California, or such other office or offices as the Trustee may designate from time to time, or the office of any successor Trustee where it principally conducts its business of serving as trustee under indentures pursuant to which municipal or governmental obligations are issued, except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term will mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business will be conducted.

“Project” means those public facilities described in the Resolution of Formation or the Resolution of Change which are to be acquired or constructed within and outside of the District, including all engineering, planning and design services and other incidental expenses related to such facilities and other facilities, if any, authorized by the qualified electors within the District from time to time.

“Project Costs” means the amounts necessary to finance the Project, to create and replenish any necessary reserve funds, to pay the initial and annual costs associated with the Bonds or any Parity Bonds, including, but not limited to, remarketing, credit enhancement, Trustee and other fees and expenses relating to the issuance of the Bonds or any Parity Bonds and the formation of the District, and to pay any other “incidental expenses” of the District, as such term is defined in the Act.

“Rating Agency” means Moody’s and Standard & Poor’s, or both, as the context requires.

“Rebate Fund” means the fund by that name established pursuant to the Indenture.

“Rebate Regulations” means any final, temporary or proposed Regulations promulgated under Section 148(f) of the Code.

“Record Date” means the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day.

“Redemption Account” means the account by that name created and established in the Special Tax Fund pursuant to the Indenture.

“Regulations” means the regulations adopted or proposed by the Department of Treasury from time to time with respect to obligations issued pursuant to Sections 103 and 141 to 150 of the Code.

“Representation Letter” means the Blanket Letter of Representations from the District and the Paying Agent to the Depository as described in the Indenture.

“Reserve Account” means the account by that name created and established in the Special Tax Fund pursuant to the Indenture.

“Reserve Requirement” means that amount as of any date of calculation equal to the least of (i) 10% of the original proceeds of the Bonds and Parity Bonds, if any, (ii) Maximum Annual Debt Service on the then Outstanding Bonds and Parity Bonds, if any; and (iii) 125% of average Annual Debt Service on the then Outstanding Bonds and Parity Bonds.

D-6 “Resolution of Annexation” means Resolution No. 99-04 adopted by the Legislative Body on December 7, 1999.

“Resolution of Change” means Resolution No. CFD 2000-14 adopted by the Legislative Body on December 19, 2000.

“Resolution of Consideration” means Resolution No. CFD 2000-6 adopted by the Legislative Body on October 24, 2000.

“Resolution of Formation” means Resolution No. 89-230 adopted by the Board of Supervisors of the County on June 6, 1989, pursuant to which the Board of Supervisors of the County formed the District.

“Resolution of Intention” means Resolution No. 89-198 adopted by the Board of Supervisors of the County on April 25, 1989 stating the County’s intention to form the District.

“RMA” means the Rate and Method of Apportionment of Special Taxes for the District approved by the qualified electors of the District at the December 19, 2000 election, as amended from time to time.

“Sinking Fund Payment” means the annual payment to be deposited in the Redemption Account to redeem any Parity Bonds which are designated as Term Bonds.

“Special Tax Fund” means the fund by that name created and established pursuant to the Indenture.

“Special Taxes” means the taxes authorized to be levied by the District on property within the District in accordance with the Ordinance, the Resolution of Formation, the Resolution of Annexation and the Resolution of Change, the Act and the voter approvals obtained at the elections in the District, as such proceedings may be amended or supplemented pursuant to State law, including any scheduled payments, the net proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and penalties and interest thereon.

“Standard & Poor’s” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., its successors and assigns.

“Supplemental Indenture” means any supplemental indenture amending or supplementing the Indenture pursuant to the Indenture.

“Surplus Fund” means the fund by that name created and established pursuant to the Indenture.

“Tax Certificate” means the certificate by that name to be executed by the District on a Delivery Date to establish certain facts and expectations and which contains certain covenants relevant to compliance with the Code.

“Tax-Exempt” means, with reference to an Authorized Investment, an Authorized Investment the interest earnings on which are excludable from gross income for federal income tax purposes pursuant to Section 103(a) of the Code, other than one described in Section 57(a)(5)(C) of the Code.

“Treasurer” means the Treasurer-Tax Collector of the County of Riverside.

“Trustee” means The Bank of New York Trust Company, N.A., a national banking association duly organized and existing under the laws of the United States of America, at its principal corporate trust office in Los Angeles, California, and its successors or assigns, or any other bank, association or trust company which may at any time be substituted in its place as provided in the Indenture and any successor thereto.

“2001 Administrative Expense Fund” means the account by that name created and established pursuant to the 2001 Indenture. D-7 “2001 Bonds” means the Community Facilities District No. 89-1 of the County of Riverside Special Tax Bonds issued on February 27, 2001 in the aggregate principal amount of $10,945,000 of which $9,640,000 aggregate principal amount are outstanding and being defeased with among other moneys, a portion of the proceeds of the Bonds.

“2001 Earnings Fund” means the fund by that name created and established pursuant to the 2001 Indenture.

“2001 Fiscal Agent” means The Bank of New York Trust Company, N.A., a national banking association duly organized and existing under and by virtue of the laws of the United States of America, at its trust office in Los Angeles, California, as successor 2001 Fiscal Agent under the 2001 Indenture.

“2001 Indenture” means the Bond Indenture dated as of February 1, 2001, by and between the District and The Bank of New York Trust Company, N.A., as successor 2001 Fiscal Agent, pursuant to the terms thereof.

“2001 Reserve Fund” means the Bond Reserve Fund created and established pursuant to the 2001 Indenture.

“2001 Special Tax Fund” means the fund by that name created and established pursuant to the 2001 Indenture.

“Underwriter” means E.J. De la Rosa, Inc. with respect to the Bonds and, with respect to each issue of Parity Bonds, the institution or institutions, if any, with whom the District enters into a purchase contract for the sale of such issue.

“Verification” will have the meaning contained in the definition of Authorized Investments.

Type and Nature of Bonds and Parity Bonds. Neither the faith and credit nor the taxing power of the County, the State of California, or any political subdivision thereof other than the District is pledged to the payment of the Bonds or any Parity Bonds. Except for the Net Taxes, no other taxes are pledged to the payment of the Bonds or any Parity Bonds. The Bonds and any Parity Bonds are not general or special obligations of the County nor general obligations of the District, but are limited obligations of the District payable solely from certain amounts deposited by the District in the Special Tax Fund (exclusive of the Administrative Expense Account), as more fully described herein. The District’s limited obligation to pay the principal of, premium, if any, and interest on the Bonds and any Parity Bonds from amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) is absolute and unconditional, free of deductions and without any abatement, offset, recoupment, diminution or set-off whatsoever. No Owner of the Bonds or any Parity Bonds may compel the exercise of the taxing power by the District (except as pertains to the Special Taxes) or the County or the forfeiture of any of their property. The principal of and interest on the Bonds and any Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of the County, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are not a legal or equitable pledge, charge, lien, or encumbrance upon any of the District’s property, or upon any of its income, receipts or revenues, except the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) which are, under the terms of the Indenture and the Act, set aside for the payment of the Bonds, any Parity Bonds and interest thereon and neither the members of the Legislative Body or the Board of Supervisors of the County nor any persons executing the Bonds or any Parity Bonds, are liable personally on the Bonds or any Parity Bonds, by reason of their issuance.

Notwithstanding anything to the contrary contained in the Indenture, the District will not be required to advance any money derived from any source of income other than the Net Taxes for the payment of the interest on or the principal of the Bonds or any Parity Bonds, or for the performance of any covenants contained herein. The District may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose.

D-8 Equality of Bonds and Parity Bonds and Pledge of Net Taxes. Pursuant to the Act and the Indenture, the Bonds and any Parity Bonds will be equally payable from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account), without priority for number, date of the Bonds or Parity Bonds, date of sale, date of execution, or date of delivery, and the payment of the interest on and principal of the Bonds and any Parity Bonds and any premiums upon the redemption thereof, will be exclusively paid from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account), which are set aside for the payment of the Bonds and any Parity Bonds. Amounts in the Special Tax Fund (other than the Administrative Expense Account therein) will constitute a trust fund held for the benefit of the Owners to be applied to the payment of the interest on and principal of the Bonds and any Parity Bonds and so long as any of the Bonds and any Parity Bonds or interest thereon remain Outstanding will not be used for any other purpose, except as permitted by the Indenture or any Supplemental Indenture. Notwithstanding any provision contained in the Indenture to the contrary, Net Taxes deposited in the Rebate Fund and the Surplus Fund will no longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the Rebate Fund, the Surplus Fund, the Acquisition and Construction Fund, the Costs of Issuance Fund or the Administrative Expense Account of the Special Tax Fund will be construed as a trust fund held for the benefit of the Owners.

Nothing in the Indenture or any Supplemental Indenture will preclude: (i) subject to the limitations contained under the Indenture, the redemption prior to maturity of any Bonds or Parity Bonds subject to call and redemption and payment of said Bonds or Parity Bonds from proceeds of refunding bonds issued under the Act as the same now exists or as amended after the execution of the Indenture, or under any other law of the State of California; or (ii) the issuance, subject to the limitations contained herein, of Parity Bonds which will be payable from Net Taxes.

Description of Bonds; Interest Rates. The Bonds and any Parity Bonds will be issued in fully registered form in denominations of $5,000 or any integral multiple thereof. The Bonds and any Parity Bonds of each issue will be numbered as desired by the Trustee.

The Bonds will be dated as of their Delivery Date and will mature and be payable on September 1 in the years and in the aggregate principal amounts and will be subject to and will bear interest at the rates set forth in the Indenture.

Interest will be payable on each Bond and Parity Bond from the date established in accordance with the Indenture on each Interest Payment Date thereafter until the principal sum of that Bond or Parity Bond has been paid; provided, however, that if at the maturity date of any Bond or Parity Bond (or if the same is redeemable and will be duly called for redemption, then at the date fixed for redemption) funds are available for the payment or redemption thereof in full, in accordance with the terms of the Indenture, such Bonds and Parity Bonds will then cease to bear interest. Interest due on the Bonds and Parity Bonds will be calculated on the basis of a 360- day year comprised of twelve 30-day months.

Book-Entry System. The Bonds will be initially delivered in the form of a separate single fully registered Bond (which may be typewritten) for each of the maturities of the Bonds. Upon initial delivery, the ownership of each such Bond will be registered in the registration books kept by the Trustee in the name of the Nominee as nominee of the Depository. Except as provided in the Indenture, all of the Outstanding Bonds will be registered in the registration books kept by the Trustee in the name of the Nominee. At the election of the District, any Parity Bonds may also be issued as book-entry bonds registered in the name of the Nominee as provided herein, in which case the references in the Indenture to “Bonds” will be applicable to such Parity Bonds.

With respect to Bonds registered in the registration books kept by the Trustee in the name of the Nominee, the District and the Trustee will have no responsibility or obligation to any such Participant or to any Person on behalf of which such a Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the District and the Trustee will have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Trustee, of any notice with respect to the Bonds, including any notice of D-9 redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in the Bonds to be redeemed in the event the Bonds are redeemed in part, or (iv) the payment to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Trustee, of any amount with respect to principal of, premium, if any, or interest due with respect to the Bonds. The District and the Trustee may treat and consider the Person in whose name each Bond is registered in the registration books kept by the Trustee as the holder and absolute owner of such Bond for the purpose of payment of the principal of, premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Trustee will pay all principal of, premium, if any, and interest due on the Bonds only to or upon the order of the respective Owner, as shown in the registration books kept by the Trustee, or their respective attorneys duly authorized in writing, and all such payments will be valid and effective to satisfy and discharge fully the District’s obligations with respect to payment of the principal, premium, if any, and interest due on the Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the registration books kept by the Trustee, will receive a Bond evidencing the obligation of the District to make payments of principal, premium, if any, and interest pursuant to the Indenture. Upon delivery by the Depository to the Trustee and the District of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in the Indenture will refer to such new nominee of the Depository.

In order to qualify the Bonds and any Parity Bonds which the District elects to register in the name of the Nominee for the Depository’s book-entry system, the authorized representative of the Trustee is authorized by the Indenture to execute from time to time and deliver to such Depository the Representation Letter. The execution and delivery of the Representation Letter will not in any way limit the provisions of the Indenture or in any other way impose upon the District or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the registration books kept by the Trustee. The Trustee has agreed to take all action necessary to continuously comply with all representations made by it in the Representation Letter. In addition to the execution and delivery of the Representation Letter, the Authorized Representatives of the District are authorized to take any other actions, not inconsistent with the Indenture, to qualify the Bonds for the Depository’s book-entry program.

In the event (i) the Depository determines not to continue to act as securities depository for the Bonds, or (ii) the District determines that the Depository will no longer so act, then the District will discontinue the book-entry system with the Depository. If the District fails to identify another qualified securities depository to replace the Depository then the Bonds so designated will no longer be restricted to being registered in the registration books kept by the Trustee in the name of the Nominee, but will be registered in whatever name or names Persons transferring or exchanging Bonds will designate, in accordance with the provisions of the Indenture.

Notwithstanding any other provisions of the Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal, premium, if any, and interest due with respect to such Bond and all notices with respect to such Bond will be made and given, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository.

The initial Depository under the Indenture will be The Depository Trust Company, New York, New York. The initial Nominee will be Cede & Co., as Nominee of The Depository Trust Company, New York, New York.

Creation of Funds; Application of Proceeds. The Indenture has created and established the following funds and accounts, which will be maintained by the Trustee:

D-10 (1) The Special Tax Fund (the “Special Tax Fund”) (in which there will be established and created an Interest Account, a Principal Account, a Redemption Account, a Reserve Account and an Administrative Expense Account.)

(2) The Rebate Fund (the “Rebate Fund”).

(3) The Costs of Issuance Fund (the “Costs of Issuance Fund”). (4) The Acquisition and Construction Fund (the “Acquisition and Construction Fund”).

(5) The Surplus Fund (the “Surplus Fund”).

(6) The Earnings Fund (the “Earnings Fund”).

The amounts on deposit in the foregoing funds, accounts and subaccounts will be held by the Trustee and the Trustee will invest and disburse the amounts in such funds, accounts and subaccounts in accordance with the provisions of the Indenture and will disburse investment earnings thereon in accordance with the provisions of the Indenture.

In connection with the issuance of any Parity Bonds, the Trustee, at the direction of the Authorized Representative of the County, may create new funds, accounts or subaccounts, or may create additional accounts and subaccounts within any of the foregoing funds and accounts for the purpose of separately accounting for the proceeds of the Bonds and any Parity Bonds.

Deposits to and Disbursements from Special Tax Fund.

(a) Except for the portion of any Prepayment to be deposited to the Redemption Account, the Trustee will, on each date on which the Special Taxes are received from the District, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Owners. The Trustee will transfer the Special Taxes on deposit in the Special Tax Fund on the dates and in the amounts set forth in the following Sections, in the following order of priority, to:

(1) the Administrative Expense Account of the Special Tax Fund;

(2) the Interest Account of the Special Tax Fund;

(3) the Principal Account of the Special Tax Fund;

(4) the Redemption Account of the Special Tax Fund;

(5) the Reserve Account of the Special Tax Fund;

(6) the Rebate Fund; and

(7) the Surplus Fund.

(b) At maturity of all of the Bonds and Parity Bonds and, after all principal and interest then due on the Bonds and Parity Bonds then Outstanding has been paid or provided for and any amounts owed to the Trustee have been paid in full, moneys in the Special Tax Fund and any accounts therein may be used by the District for any lawful purpose.

Administrative Expense Account of the Special Tax Fund. The Trustee will transfer from the Special Tax Fund and deposit in the Administrative Expense Account of the Special Tax Fund from time to time amounts necessary to make timely payment of Administrative Expenses as set forth in a Certificate of the Administrator of the District. Moneys in the Administrative Expense Account of the Special Tax Fund may be D-11 invested in any Authorized Investments as directed in writing by the Administrator of the District and will be disbursed as directed in a Certificate of the Administrator of the District.

Interest Account and Principal Account of the Special Tax Fund. The principal of and interest due on the Bonds and any Parity Bonds until maturity, other than principal due upon redemption, will be paid by the Trustee from the Principal Account and the Interest Account of the Special Tax Fund, respectively. For the purpose of assuring that the payment of principal of and interest on the Bonds and any Parity Bonds will be made when due, after making the transfer required by the Indenture, at least one Business Day prior to each March 1 and September 1, the Trustee will make the following transfers from the Special Tax Fund first to the Interest Account and then to the Principal Account; provided, however, that to the extent that deposits have been made in the Interest Account or the Principal Account from the proceeds of the sale of an issue of the Bonds, any Parity Bonds, or otherwise, the transfer from the Special Tax Fund need not be made; and provided, further, that, if amounts in the Special Tax Fund (exclusive of the Reserve Account) are inadequate to make the foregoing transfers, then any deficiency will be made up by transfers from the Reserve Account:

(a) To the Interest Account, an amount such that the balance in the Interest Account one Business Day prior to each Interest Payment Date will be equal to the installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date which remains unpaid. Moneys in the Interest Account will be used for the payment of interest on the Bonds and any Parity Bonds as the same become due.

(b) To the Principal Account, an amount such that the balance in the Principal Account one Business Day prior to September 1 of each year, commencing September 1, 2007, will equal the principal payment due on the Bonds and any Parity Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account will be used for the payment of the principal of such Bonds and any Parity Bonds as the same become due at maturity.

Redemption Account of the Special Tax Fund.

(a) With respect to each September 1 on which a Sinking Fund Payment is due, after the deposits have been made to the Administrative Expense Account, the Interest Account and the Principal Account of the Special Tax Fund as required by the Indenture, the Trustee will next transfer into the Redemption Account of the Special Tax Fund from the Special Tax Fund the amount needed to make the balance in the Redemption Account one Business Day prior to each September 1 equal to the Sinking Fund Payment due on any Outstanding Bonds and Parity Bonds on such September 1; provided, however, that if amounts in the Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency will be made up by an immediate transfer from the Reserve Account, if funded, pursuant to the Indenture. Moneys so deposited in the Redemption Account will be used and applied by the Trustee to call and redeem Parity Bonds in accordance with any Sinking Fund Payment schedule in the Supplemental Indenture for such Parity Bonds.

(b) After making the deposits to the Administrative Expense Account, the Interest Account and the Principal Account of the Special Tax Fund pursuant to the Indenture and to the Redemption Account for Sinking Fund Payments then due pursuant to the preceding paragraph and in accordance with the District’s election to call Bonds for optional redemption as set forth in the Indenture, or to call Parity Bonds for optional redemption as set forth in any Supplemental Indenture for Parity Bonds, the Trustee will transfer from the Special Tax Fund and deposit in the Redemption Account moneys available for the purpose and sufficient to pay the principal and the premiums, if any, payable on the Bonds or Parity Bonds called for optional redemption; provided, however, that amounts in the Special Tax Fund (other than the Administrative Expense Account therein) may be applied to optionally redeem Bonds and Parity Bonds only if immediately following such redemption the amount in the Reserve Account will equal the Reserve Requirement.

(c) Prepayments deposited to the Redemption Account will be applied on the redemption date established pursuant to the Indenture, together with money transferred from the Reserve Account pursuant to the Indenture, to the payment of the principal of, premium, and interest on the Bonds and Parity Bonds to be redeemed with such Prepayments. D-12 (d) Moneys set aside in the Redemption Account will be used solely for the purpose of redeeming Bonds and will be applied on or after the redemption date to the payment of principal of and premium, if any, on the Bonds to be redeemed upon presentation and surrender of such Bonds and in the case of an optional redemption or an extraordinary redemption from Prepayments to pay the interest thereon; provided, however, that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption Account may be used to purchase Outstanding Bonds in the manner hereinafter provided. Purchases of Outstanding Bonds may be made by the District at public or private sale as and when and at such prices as the District may in its discretion determine but only at prices (including brokerage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside for an optional redemption or an extraordinary redemption, the premium applicable at the next following call date according to the premium schedule established pursuant to the Indenture, as applicable, or in the case of Parity Bonds the premium established in any Supplemental Indenture. Any accrued interest payable upon the purchase of Bonds or Parity Bonds may be paid from the amount reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next following Interest Payment Date.

Reserve Account of the Special Tax Fund. There will be maintained in the Reserve Account of the Special Tax Fund an amount equal to the Reserve Requirement. The amounts in the Reserve Account will be applied as follows:

(a) Moneys in the Reserve Account will be used solely for the purpose of paying the principal of, including Sinking Fund Payments, and interest on the Bonds and any Parity Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due and for the purpose of making any required transfer to the Rebate Fund pursuant to the Indenture upon written direction from the District. If the amounts in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund are insufficient to pay the principal of, including Sinking Fund Payments, or interest on, any Bonds or Parity Bonds when due, or amounts in the Special Tax Fund are insufficient to make transfers to the Rebate Fund when required, the Trustee will withdraw from the Reserve Account for deposit in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund or the Rebate Fund, as applicable, moneys necessary for such purposes.

(b) Whenever moneys are withdrawn from the Reserve Account, after making the required transfers referred to in the Indenture, the Trustee will transfer to the Reserve Account from available moneys in the Special Tax Fund, or from any other legally available funds which the District elects to apply to such purpose, the amount needed to restore the amount of such Reserve Account to the Reserve Requirement. Moneys in the Special Tax Fund will be deemed available for transfer to the Reserve Account only if the Trustee determines that such amounts will not be needed to make the deposits required to be made to the Administrative Expense Account, the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund on or before the next September 1. If amounts in the Special Tax Fund together with any other amounts transferred to replenish the Reserve Account are inadequate to restore the Reserve Account to the Reserve Requirement, then the District will include the amount necessary to restore the Reserve Account to the Reserve Requirement in the next annual Special Tax levy to the extent of the maximum permitted Special Tax rates.

(c) In connection with a redemption of Bonds pursuant to the Indenture or Parity Bonds in accordance with any Supplemental Indenture, or a partial defeasance of Bonds or Parity Bonds in accordance with the Indenture, amounts in the Reserve Account may be applied to such redemption or partial defeasance so long as the amount on deposit in the Reserve Account following such redemption or partial defeasance equals the Reserve Requirement. The District will set forth in a Certificate of the Special Tax Administrator the amount in the Reserve Account to be transferred to the Redemption Account on a redemption date or to be transferred pursuant to the Indenture to partially defease Bonds, and the Trustee will make such transfer on the applicable redemption or defeasance date, subject to the limitation in the preceding sentence.

(d) Notwithstanding any provision herein to the contrary, moneys in the Reserve Account in excess of the portion of the Reserve Requirement required to be on deposit therein (other than investment D-13 earnings) will be withdrawn from such Reserve Account by the Trustee on each September 2 and will be transferred in the order of priority as specified in the Indenture.

Surplus Fund. After making the transfers required by the Indenture, as soon as practicable after each September 1, and in any event prior to each October 1, the Trustee will transfer all remaining amounts in the Special Tax Fund to the Surplus Fund, unless on or prior to such date, it has received a Certificate of the Administrator of the District directing that certain amounts be retained in the Special Tax Fund because the District has included such amounts as being available in the Special Tax Fund in calculating the amount of the levy of Special Taxes for such Fiscal Year pursuant to the Indenture. Moneys deposited in the Surplus Fund will be transferred by the Trustee at the direction of the Administrator of the District (i) to the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund to pay the principal of, including Sinking Fund Payments, premium, if any, and interest on the Bonds and any Parity Bonds when due in the event that moneys in the Special Tax Fund and the Reserve Account of the Special Tax Fund are insufficient therefor; (ii) to the Reserve Account in order to replenish the Reserve Account to the Reserve Requirement; (iii) to the Administrative Expense Account of the Special Tax Fund to pay Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense Account of the Special Tax Fund are insufficient to pay Administrative Expenses; or (iv) to purchase Outstanding Bonds for cancellation.

In the event that the District reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any Outstanding Bonds or Parity Bonds, the District will notify the Trustee in a Certificate of the Special Tax Administrator and the Trustee will segregate such amount into a separate subaccount and the moneys on deposit in such subaccount of the Surplus Fund will be invested at the written direction of the District in Authorized Investments, the interest on which is excludable from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals and corporations under the Code) or in Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds to which such amounts are to be applied, unless, in the opinion of Bond Counsel, investment at a higher yield will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes.

Costs of Issuance Fund.

(a) The moneys in the Costs of Issuance Fund will be disbursed by the Trustee pursuant to a Certificate of the Administrator of the District, and any balance therein will be transferred by the Trustee to the Special Tax Fund as directed in writing by the Administrator of the District.

(b) The moneys in the Costs of Issuance Fund will be applied exclusively to pay the Costs of Issuance. Amounts for Costs of Issuance will be disbursed by the Trustee from the Costs of Issuance Fund as specified in a request for disbursement of Costs of Issuance, substantially in the form in the Indenture, which must be submitted in connection with each requested disbursement. Each such request for disbursement will be sufficient evidence to the Trustee of the facts stated therein and the Trustee will have no duty to confirm the accuracy of such facts.

(c) On February 1, 2007, or as soon thereafter as the Trustee receives a Certificate of the Administrator of the District stating that all or a specified portion of the amount remaining in the Costs of Issuance Fund is no longer needed to pay Costs of Issuance, the Trustee will transfer all or such specified portion, as applicable, of the moneys remaining on deposit in the Costs of Issuance Fund to the Principal Account or Redemption Account of the Special Tax Fund or to the Surplus Fund, as directed in the Certificate, provided that in connection with any direction to transfer amounts to the Surplus Fund there will have been delivered to the Trustee with such Certificate an opinion of Bond Counsel to the effect that such transfer to the Surplus Fund will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes. Amounts transferred to the Redemption Account of the Special Tax Fund will be used to redeem Bonds in accordance with the Indenture.

D-14 Earnings Fund. All earnings, except earnings on the Administrative Expense Fund, the Costs of Issuance Fund and the Rebate Fund which will remain therein, on all Funds and Accounts are to be placed in the Earnings Fund. Upon receipt of such earnings, the Trustee will disburse from the Earnings Fund earnings pursuant to a written direction of the District in the following order of priority:

(1) Earnings in excess of the Yield on the Bonds will be transferred to the Rebate Fund pursuant to a written direction of the Administrator of the District. Any amount remaining in the Earnings Fund after the deposit to the Rebate Fund calculated in accordance with the Indenture has been satisfied will be applied by the Trustee in the priorities set forth below.

(2) To the Administrative Expense Account, the amount needed to pay the Administrative Expenses.

(3) To the Reserve Account, the amount required to bring the balance in such Account to the Reserve Requirement required to be on deposit therein.

(4) Any remaining balance to the Special Tax Fund.

Investments. Moneys in the Funds, Accounts and Subaccounts held under the Indenture may be invested by the Trustee as directed in writing by the District, from time to time, in Authorized Investments subject to the following restrictions:

(a) Moneys in the Costs of Issuance Fund and the Acquisition and Construction Fund will be invested in Authorized Investments which will by their terms mature, or in the case of an Investment Agreement are available without penalty, as close as practicable to the date the District estimates the moneys represented by the particular investment will be needed for withdrawal from the Costs of Issuance Fund and the Acquisition and Construction Fund. Notwithstanding anything herein to the contrary, amounts in the Costs of Issuance Fund six months after the Delivery Date for the Bonds will be invested by the District only in Authorized Investments the interest on which is excluded from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals and corporations under the Code) or in Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds from which such proceeds were derived, unless in the opinion of Bond Counsel such restriction is not necessary to prevent interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes from being included in gross income for federal income tax purposes.

(b) Moneys in the Interest Account, the Principal Account and the Redemption Account of the Special Tax Fund will be invested only in Authorized Investments which will by their terms mature, or in the case of an Investment Agreement are available for withdrawal without penalty, on such dates so as to ensure the payment of principal of, premium, if any, and interest on the Bonds and any Parity Bonds as the same become due.

(c) Moneys in the Reserve Account of the Special Tax Fund may be invested only in Authorized Investments which, taken together, have a weighted average maturity not in excess of five years; provided that such amounts may be invested in an Investment Agreement to the later of the final maturity of the Bonds or any Parity Bonds so long as such amounts may be withdrawn at any time, without penalty, for application in accordance with the Indenture; and provided that no such Authorized Investment of amounts in the Reserve Account allocable to the Bonds or an issue of Parity Bonds will mature later than the respective final maturity date of the Bonds or the issue of Parity Bonds, as applicable.

(d) Moneys in the Rebate Fund will be invested only in Authorized Investments of the type described in clause (1)(b) of the definition thereof which by their terms will mature, as nearly as practicable, on the dates such amounts are needed to be paid to the United States Government pursuant to the Indenture or in Authorized Investments of the type described in clause 2(e) of the definition thereof.

D-15 (e) In the absence of written investment directions from the District, the Trustee will invest solely in Authorized Investments specified in clause (2)(e) of the definition thereof.

The Trustee will sell, or present for redemption, any Authorized Investment whenever it may be necessary to do so in order to provide moneys to meet any payment or transfer to such Funds and Accounts or from such Funds and Accounts. For the purpose of determining at any given time the balance in any such Funds and Accounts, any such investments constituting a part of such Funds and Accounts will be valued at their cost, except that amounts in the Reserve Account will be valued at the market value thereof at least semiannually on or before each Interest Payment Date. In making any valuations under the Indenture, the Trustee may utilize such computerized securities pricing services as may be available to it, including, without limitation, those available through its regular accounting system, and conclusively rely thereon. Notwithstanding anything herein to the contrary, the Trustee will not be responsible for any loss from investments, sales or transfers undertaken in accordance with the provisions of the Indenture.

The Trustee may act as principal or agent in the making or disposing of any investment and will be entitled to its customary fee for making such investment. The Trustee may sell or present for redemption, any Authorized Investment so purchased whenever it will be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Authorized Investment is credited, and, subject to the provisions of the Indenture, the Trustee will not be liable or responsible for any loss resulting from such investment. For investment purposes, the Trustee may commingle the funds and accounts established under the Indenture, but will account for each separately.

Acquisition and Construction Fund.

(a) The moneys in the Acquisition and Construction Fund shall be applied exclusively to pay the Project Costs. Amounts for Project Costs shall be disbursed by the Trustee from the Acquisition and Construction Fund as specified in a request for disbursement of Project Costs, substantially in the form attached to the Indenture, which must be submitted in connection with each requested disbursement. Each such request for disbursement shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts.

(b) Upon receipt of a Certificate of the Administrator of the District stating that all or a specified portion of the amount remaining in the Acquisition and Construction Fund is no longer needed to pay Project Costs, the Trustee shall transfer all or such specified portion, as applicable, of the moneys remaining on deposit in the Acquisition and Construction Fund to the Redemption Account of the Special Tax Fund or to the Surplus Fund to purchase Outstanding Bonds for cancellation, as directed in the Certificate, provided that in connection with any direction to transfer amounts to the Surplus Fund there shall have been delivered to the Trustee with such Certificate an opinion of Bond Counsel to the effect that such transfer to the Surplus Fund will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes. Amounts transferred to the Redemption Account of the Special Tax Fund shall be used to redeem Bonds in accordance with the Indenture.

Warranty. The District will preserve and protect the security pledged under the Indenture to the Bonds and any Parity Bonds against all claims and demands of all persons.

Covenants. So long as any of the Bonds or Parity Bonds issued under the Indenture are Outstanding and unpaid, the District makes the following covenants with the Bondowners under the provisions of the Act and the Indenture (to be performed by the District or its proper officers, agents or employees), which covenants are necessary and desirable to secure the Bonds and Parity Bonds and tend to make them more marketable; provided, however, that said covenants do not require the District to expend any funds or moneys other than the Special Taxes and other amounts deposited to the Special Tax Fund:

(a) Punctual Payment; Against Encumbrances. The District has covenanted under the Indenture that it will receive all Special Taxes in trust for the Owners and will cause the deposit of all Special D-16 Taxes with the Trustee immediately upon their apportionment to the District, and the District will have no beneficial right or interest in the amounts so deposited except as provided by the Indenture. All such Special Taxes will be disbursed, allocated and applied solely to the uses and purposes set forth herein, and will be accounted for separately and apart from all other money, funds, accounts or other resources of the District. Notwithstanding the provision of the Indenture, the District will have the right to accept less than the minimum bid on any delinquent parcel, and is indemnified from legal claim from Owners of the Bonds, if the Legislative Body determines that the acceptance of less than the minimum bid or another action is in the best interest of the District and in compliance with applicable State law.

The District has covenanted under the Indenture that it will duly and punctually pay or cause to be paid the principal of and interest on every Bond and Parity Bond issued under the Indenture, together with the premium, if any, thereon on the date, at the place and in the manner set forth in the Bonds and the Parity Bonds and in accordance with the Indenture to the extent that Net Taxes and other amounts pledged under the Indenture are available therefor, and that the payments into the Funds and Accounts created under the Indenture will be made, all in strict conformity with the terms of the Bonds, any Parity Bonds, and the Indenture, and that it will faithfully observe and perform all of the conditions, covenants and requirements of the Indenture and all Supplemental Indentures and of the Bonds and any Parity Bonds issued under the Indenture.

The District will not mortgage or otherwise encumber, pledge or place any charge upon any of the Net Taxes except as provided in the Indenture, and will not issue any obligation or security having a lien or charge upon the Net Taxes superior to or on a parity with the Bonds, other than Parity Bonds. Nothing herein will prevent the District from issuing or incurring indebtedness which is payable from a pledge of Net Taxes which is subordinate in all respects to the pledge of Net Taxes to repay the Bonds and the Parity Bonds.

(b) Levy of Special Tax. The Legislative Body has covenanted under the Indenture to levy the Special Tax in an amount sufficient, together with other amounts on deposit in the Special Tax Fund, to pay (1) the principal of and interest on the Bonds and any Parity Bonds when due, (2) the Administrative Expenses, and (3) any amounts required to replenish the Reserve Account of the Special Tax Fund to the Reserve Requirement (the “Special Tax Requirement”). The District has further covenanted under the Indenture that it will take no actions that would discontinue or cause the discontinuance of the Special Tax levy or the District’s authority to levy the Special Tax prior to the earlier of June 30, 2041 or the date on which no Bonds or Parity Bonds are Outstanding.

The Special Taxes will be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, provided, however, that the District may directly bill all or part of the Special Taxes, and may collect the Special Taxes at a different time or in a different manner if deemed appropriate by the District.

(c) Commence Foreclosure Proceedings. Pursuant to Section 53356.1 of the Act, the District has covenanted under the Indenture with and for the benefit of the Owners of the Bonds and any Parity Bonds that it will commence judicial foreclosure proceedings against parcels with total Special Tax delinquencies in excess of $5,000 (not including interest and penalties thereon) by the October 1 following the close of each Fiscal Year in which the last of such Special Taxes were due and will commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the October 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Taxes levied in such Fiscal Year, and diligently pursue to completion such foreclosure proceedings; provided, however, that, notwithstanding the foregoing, the District may elect to accept payment from a property owner of at least the enrolled amount but less than the full amount of the penalties, interest, costs and attorneys’ fees related to a Special Tax delinquency, if permitted by law. Notwithstanding the foregoing, in certain instances the amount of a Special Tax delinquency on a particular parcel is so small that the cost of appropriate foreclosure proceedings will far exceed the Special Tax delinquency and in such cases foreclosure proceedings may be delayed by the District until there are sufficient Special Tax delinquencies accruing to such parcel (including interest and penalties thereon) to warrant the foreclosure proceedings cost.

D-17 The District has covenanted under the Indenture that it will deposit the net proceeds of any foreclosure in the Special Tax Fund and will apply such proceeds remaining after the payment of Administrative Expenses to make current payments of principal and interest on the Bonds and any Parity Bonds, to bring the amount on deposit in the Reserve Account up to the Reserve Requirement and to pay any delinquent installments of principal or interest due on the Bonds and any Parity Bonds.

(d) Payment of Claims. The District will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the Net Taxes or other funds in the Special Tax Fund (other than the Administrative Expense Account therein), or which might impair the security of the Bonds or any Parity Bonds then Outstanding; provided, however, that nothing herein contained will require the District to make any such payments so long as the District in good faith will contest the validity of any such claims.

(e) Books and Accounts. The District will keep proper books of records and accounts, separate from all other records and accounts of the District, in which complete and correct entries will be made of all transactions relating to the Bonds, the levy of the Special Tax and the deposits to the Special Tax Fund. Such books of records and accounts will at all times during business hours be subject to the inspection of the Trustee or of the Owners of not less than 10% of the principal amount of the Bonds or the Owners of not less than 10% of any issue of Parity Bonds then Outstanding or their representatives authorized in writing.

(f) Federal Tax Covenants. Notwithstanding any other provision of the Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds and any Parity Bonds issued on a tax-exempt basis for federal income tax purposes will not be adversely affected for federal income tax purposes, the District has covenanted under the Indenture to comply with all applicable requirements of the Code necessary to preserve such exclusion from gross income.

(g) Reduction of Maximum Special Taxes. The District has found and determined that, historically, delinquencies in the payment of special taxes authorized pursuant to the Act in community facilities districts in Southern California have from time to time been at levels requiring the levy of special taxes at the maximum authorized rates in order to make timely payment of principal of and interest on the outstanding indebtedness of such community facilities districts. For this reason, the District has determined in the Indenture that a reduction in the maximum Special Tax rates authorized to be levied on parcels in the District below the levels provided in the Indenture would interfere with the timely retirement of the Bonds and Parity Bonds. The District determines it to be necessary in order to preserve the security for the Bonds and Parity Bonds to covenant, and, to the maximum extent that the law permits it to do so, the District has covenanted, that it will not initiate proceedings to reduce the maximum Special Tax rates for the District, unless, in connection therewith, the District receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that (i) such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the sum of estimated Administrative Expenses plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such proposed reduction; (ii) such changes do not reduce the maximum Special Taxes that may be levied on Developed Property upon the buildout of such parcels in each year after buildout to an amount which is less than the sum of estimated Administrative Expenses plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such proposed reduction; and (iii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds.

(h) Covenants to Defend. The District has covenanted under the Indenture that, in the event that any initiative is adopted by the qualified electors in the District which purports to reduce the maximum Special Tax below the levels specified in the Indenture above or to limit the power of the District to levy the Special Taxes for the purposes set forth in the Indenture, it will commence and pursue legal action in order to preserve its ability to comply with such covenants.

(i) Limitation on Right to Tender Bonds. The District may adopt a policy pursuant to Section 53341.1 of the Act permitting the tender of Bonds or Parity Bonds in full payment or partial payment of D-18 any Special Taxes; provided, however, that the District will have first received a certificate from an Independent Financial Consultant that the acceptance of such a tender will not result in the District having insufficient Special Tax revenues to pay the principal of and interest on the Bonds and Parity Bonds when due and to pay estimated Administrative Expenses when due.

(j) Continuing Disclosure. The District has covenanted under the Indenture to comply with the terms of the Continuing Disclosure Agreement and with the terms of any agreement executed by the District with respect to any Parity Bonds to assist the Underwriter in complying with Rule 15(c)2-12 adopted by the Securities and Exchange Commission.

(k) Further Assurances. The District will make, execute and deliver any and all such further agreements, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of the Indenture and for the better assuring and confirming unto the Owners of the Bonds and any Parity Bonds of the rights and benefits provided in the Indenture.

Supplemental Indentures or Orders Not Requiring Bondowner Consent. The District may from time to time, and at any time, without notice to or consent of any of the Bondowners, but with the prior consent of the Bond Insurer, adopt Supplemental Indentures for any of the following purposes:

(a) to cure any ambiguity, to correct or supplement any provisions in the Indenture which may be inconsistent with any other provision therein, or to make any other provision with respect to matters or questions arising under the Indenture or in any additional resolution or order, provided that such action is not materially adverse to the interests of the Bondowners;

(b) to add to the covenants and agreements of and the limitations and the restrictions upon the District contained in the Indenture, other covenants, agreements, limitations and restrictions to be observed by the District which are not contrary to or inconsistent with the Indenture as theretofore in effect or which further secure Bond or Parity Bond payments;

(c) to provide for the issuance of any Parity Bonds, and to provide the terms and conditions under which such Parity Bonds may be issued, subject to and in accordance with the provisions of the Indenture;

(d) to modify, amend or supplement the Indenture in such manner as to permit the qualification of the Indenture under the Trust Indenture Act of 1939, as amended, or any similar federal statute in effect after the execution of the Indenture, or to comply with the Code or regulations issued under the Indenture, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which will not materially adversely affect the interests of the Owners of the Bonds or any Parity Bonds then Outstanding;

(e) in connection with the modification, alteration or amendment of the RMA in any manner, so long as the Trustee receives a certificate satisfying the conditions of the Indenture; or

(f) to modify, alter, amend or supplement the Indenture in any other respect which is not materially adverse to the Bondowners.

Supplemental Indentures or Orders Requiring Bondowner Consent. Exclusive of the Supplemental Indentures described in the Indenture, with the prior consent of the Bond Insurer, the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding will have the right to consent to and approve the adoption by the District of such Supplemental Indentures as will be deemed necessary or desirable by the District for the purpose of waiving, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in the Indenture; provided, however, that nothing in the Indenture will permit, or be construed as permitting, (a) an extension of the maturity date of the principal, or the payment date of interest on, any Bond or Parity Bond; (b) a reduction in the principal amount of, or redemption premium on, any Bond or Parity Bond or the rate of interest thereon; (c) a preference or priority of any Bond or Parity Bond over any other Bond or Parity Bond; or (d) a reduction in the aggregate principal amount of the D-19 Bonds and Parity Bonds the Owners of which are required to consent to such Supplemental Indenture, without the consent of the Owners of all Bonds and Parity Bonds then Outstanding.

Events of Default. Any one or more of the following events will constitute an “Event of Default”:

(a) default in the due and punctual payment of the principal of or redemption premium, if any, on any Bond or Parity Bond when and as the same will become due and payable, whether at maturity as therein expressed, by declaration or otherwise;

(b) default in the due and punctual payment of the interest on any Bond or Parity Bond when and as the same will become due and payable; or

(c) except as described in (a) or (b), default will be made by the District in the observance of any of the agreements, conditions or covenants on its part contained in the Indenture, the Bonds or any Parity Bonds, and such default will have continued for a period of 30 days after the District will have been given notice in writing of such default by the Trustee or the Owners of 25% in aggregate principal amount of the Outstanding Bonds and Parity Bonds.

The Trustee has agreed to give notice to the Owners as soon as practicable upon the occurrence of an Event of Default under (a) or (b) above and within 30 days of the Trustee’s knowledge of an event of default under (c) above.

If an Event of Default will have occurred and be continuing and if requested so to do by the Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds and Parity Bonds and if indemnified to its satisfaction, the Trustee will be obligated to exercise such one or more of the rights and powers conferred by the Indenture, as the Trustee, being advised by counsel, will deem most expedient in the interests of the Owners of the Bonds and Parity Bonds.

No remedy herein conferred upon or reserved to the Trustee or to the Owners is intended to be exclusive of any other remedy. Every such remedy will be cumulative and will be in addition to every other remedy given under the Indenture or now or in existence after the execution of the Indenture, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law.

Application of Revenues and Other Funds After Default. All amounts received by the Trustee pursuant to any right given or action taken by the Trustee under the provisions of the Indenture and any other funds held by the Trustee relating to the Bonds and Parity Bonds will be applied by the Trustee in the following order upon presentation of the several Bonds and Parity Bonds:

First, to the payment of the fees, costs and expenses of the Trustee in declaring such Event of Default and in carrying out the provisions of the Indenture, including reasonable compensation to its agents, attorneys and counsel, and to the payment of all other outstanding fees and expenses of the Trustee; and

Second, to the payment of the whole amount of interest on and principal of the Bonds and Parity Bonds then due and unpaid, with interest on overdue installments of principal and interest to the extent permitted by law at the net effective rate of interest then borne by the Outstanding Bonds and Parity Bonds; provided, however, that in the event such amounts will be insufficient to pay in full the full amount of such interest and principal, then such amounts will be applied in the following order of priority:

D-20 (a) first to the payment of all installments of interest on the Bonds and Parity Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing;

(b) second, to the payment of all installments of principal, including Sinking Fund Payments, of the Bonds and Parity Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing; and

(c) third, to the payment of interest on overdue installments of principal and interest on the Bonds and Parity Bonds on a pro rata basis based on the total amount then due and owing.

Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, will have taken any action, by judicial proceedings or otherwise, pursuant to its duties under the Indenture, whether upon its own discretion or upon the request of the Owners of twenty-five percent (25%) in aggregate principal amount of the Bonds and Parity Bonds then Outstanding, it will have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds and Parity Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee will not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds and Parity Bonds under the Indenture opposing such discontinuance, withdrawal, compromise, settlement or other such litigation. Any suit, action or proceeding which any Owner of Bonds or Parity Bonds will have the right to bring to enforce any right or remedy under the Indenture may be brought by the Trustee for the equal benefit and protection of all Owners of Bonds and Parity Bonds similarly situated and the Trustee is appointed (and the successive respective Owners of the Bonds and Parity Bonds issued under the Indenture, by taking and holding the same, will be conclusively deemed so to have appointed it) the true and lawful attorney in fact of the respective Owners of the Bonds and Parity Bonds for the purposes of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners of the Bonds and Parity Bonds as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact.

Non-Waiver. Nothing in the Indenture, or in the Bonds or the Parity Bonds, will affect or impair the obligation of the District, which is absolute and unconditional, to pay the interest on and principal of the Bonds and Parity Bonds to the respective Owners of the Bonds and Parity Bonds at the respective dates of maturity, as herein provided, out of the Net Taxes and other moneys herein pledged for such payment.

A waiver of any default or breach of duty or contract by the Trustee or any Owners will not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of the Trustee or any Owner of any of the Bonds or Parity Bonds to exercise any right or power accruing upon any default will impair any such right or power or will be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy conferred upon the Trustee or the Owners by the Act or by the Indenture may be enforced and exercised from time to time and as often as will be deemed expedient by the Trustee or the Owners, as the case may be.

Limitations on Rights and Remedies of Owners. No Owner of any Bond or Parity Bond issued under the Indenture will have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon the Indenture, unless (a) such Owner will have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds and Parity Bonds then Outstanding will have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners will have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee will have refused or omitted to comply with such request for a period of sixty (60) days after such written request will have been received by, and said tender of indemnity will have been made to, the Trustee.

D-21 Such notification, request, tender of indemnity and refusal or omission are declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds and Parity Bonds of any remedy under the Indenture; it being understood and intended that no one or more Owners of Bonds and Parity Bonds will have any right in any manner whatever by his or their action to enforce any right under the Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of the Indenture will be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds and Parity Bonds.

The right of any Owner of any Bond and Parity Bond to receive payment of the principal of and interest and premium (if any) on such Bond and Parity Bond as herein provided or to institute suit for the enforcement of any such payment, will not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of the Indenture or any other provision of the Indenture.

Termination of Proceedings. In case the Trustee will have proceeded to enforce any right under the Indenture, and such proceedings will have been discontinued or abandoned for any reason, or will have been determined adversely, then and in every such case, the District, the Trustee and the Owners will be restored to their former positions and rights under the Indenture, respectively, with regard to the property subject to the Indenture, and all rights, remedies and powers of the Trustee will continue as if no such proceedings had been taken.

Defeasance. If the District will pay or cause to be paid, or there will otherwise be paid, to the Owner of an Outstanding Bond or Parity Bond the interest due thereon and the principal thereof, at the times and in the manner stipulated in the Indenture or any Supplemental Indenture, then the Owner of such Bond or Parity Bond will cease to be entitled to the pledge of Net Taxes, and, other than as set forth below, all covenants, agreements and other obligations of the District to the Owner of such Bond or Parity Bond under the Indenture and any Supplemental Indenture relating to such Parity Bond will thereupon cease, terminate and become void and be discharged and satisfied. In the event of a defeasance of all Outstanding Bonds and Parity Bonds pursuant to the Indenture, the Trustee will execute and deliver to the District all such instruments as may be desirable to evidence such discharge and satisfaction, and the Trustee will pay over or deliver to the District’s general fund all money or securities held by it pursuant to the Indenture which are not required for the payment of the principal of, premium, if any, and interest due on such Bonds and Parity Bonds.

Any Outstanding Bond or Parity Bond will be deemed to have been paid within the meaning expressed in the first paragraph of the Indenture if such Bond or Parity Bond is paid in any one or more of the following ways:

(a) by paying or causing to be paid the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same become due and payable;

(b) by depositing with the Trustee, in trust, at or before maturity, money which, together with the amounts then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Account) and the Earnings Fund and available for such purpose, is fully sufficient to pay the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same will become due and payable; or

(c) by depositing with the Trustee or another escrow bank appointed by the District, in trust, Federal Securities, in which the District may lawfully invest its money, in such amount as will be sufficient, together with the interest to accrue thereon and moneys then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Account) and the Earnings Fund and available for such purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same will become due and payable.

If paid as provided above, then, at the election of the District, and notwithstanding that any Outstanding Bonds and Parity Bonds will not have been surrendered for payment, all obligations of the District under the Indenture and any Supplemental Indenture with respect to such Bond or Parity Bond will cease and terminate, except for the obligation of the Trustee to pay or cause to be paid to the Owners of any such Bond or Parity D-22 Bond not so surrendered and paid, all sums due thereon and except for the federal tax covenants of the District contained in the Indenture or any covenants in a Supplemental Indenture relating to compliance with the Code. Notice of such election will be filed with the Trustee not less than ten days prior to the proposed defeasance date, or such shorter period of time as may be acceptable to the Trustee. In connection with a defeasance under (b) or (c) above, there will be provided to the District a verification report from an independent nationally recognized certified public accountant stating its opinion as to the sufficiency of the moneys or securities deposited with the Trustee or the escrow bank to pay and discharge the principal of, premium, if any, and interest on all Outstanding Bonds and Parity Bonds to be defeased in accordance with the Indenture, as and when the same will become due and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that the Bonds or Parity Bonds being defeased have been legally defeased in accordance with the Indenture and any applicable Supplemental Indenture.

Upon a defeasance, the Trustee, upon request of the District, will release the rights of the Owners of such Bonds and Parity Bonds which have been defeased under the Indenture and any Supplemental Indenture and execute and deliver to the District all such instruments as may be desirable to evidence such release, discharge and satisfaction. In the case of a defeasance under the Indenture of all Outstanding Bonds and Parity Bonds, the Trustee will pay over or deliver to the District any funds held by the Trustee at the time of a defeasance, which are not required for the purpose of paying and discharging the principal of or interest on the Bonds and Parity Bonds when due. The Trustee will, at the written direction of the District, mail, first class, postage prepaid, a notice to the Bondowners whose Bonds or Parity Bonds have been defeased, in the form directed by the District, stating that the defeasance has occurred.

In connection with defeasance, the District will cause to be delivered to the Bond Insurer copies of (i) the Verification Report, (ii) any escrow deposit agreement, (iii) the opinion of Bond Counsel described in the preceding paragraph and/or a certificate of discharge of the Trustee with respect to the Bonds being defeased. Bonds will be deemed Outstanding unless and until they are in fact paid and retired or the above criteria are met. The Bond Insurer will be provided with final drafts of the above-referenced documentation not less than five Business Days prior to the funding of the escrow.

Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness. The District may at any time after the issuance and delivery of the Bonds under the Indenture issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expense Account therein) and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds theretofore issued under the Indenture or under any Supplemental Indenture for the purpose of refunding all or a portion of the Bonds or any Parity Bonds then Outstanding. The District will not issue Parity Bonds for the purposes of funding additional Project costs. Parity Bonds may only be issued subject to the following additional specific conditions, which are made conditions precedent to the issuance of any such Parity Bonds:

(a) The District will be in compliance with all covenants set forth in the Indenture and any Supplemental Indenture then in effect and a certificate of the District to that effect will have been filed with the Trustee; provided, however, that Parity Bonds may be issued notwithstanding that the District is not in compliance with all such covenants so long as immediately following the issuance of such Parity Bonds the District will be in compliance with all such covenants.

(b) The issuance of such Parity Bonds will have been duly authorized pursuant to the Act and all applicable laws, and the issuance of such Parity Bonds will have been provided for by a Supplemental Indenture duly adopted by the District which will specify the terms of the Bonds.

(c) The District will have received the following documents or money or securities, all of such documents dated or certified, as the case may be, as of the date of delivery of such Parity Bonds by the Trustee (unless the District will accept any of such documents bearing a prior date):

(1) a certified copy of the Supplemental Indenture authorizing the issuance of such Parity Bonds; D-23 (2) a written request of the District as to the delivery of such Parity Bonds;

(3) an opinion of Bond Counsel and/or general counsel to the District to the effect that (i) the District has the right and power under the Act to adopt the Indenture and the Supplemental Indentures relating to such Parity Bonds, and the Indenture and all such Supplemental Indentures have been duly and lawfully adopted by the District, are in full force and effect and are valid and binding upon the District and enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors’ rights); (ii) the Indenture creates the valid pledge which it purports to create of the Net Taxes and other amounts as provided in the Indenture, subject to the application thereof to the purposes and on the conditions permitted by the Indenture; and (iii) such Parity Bonds are valid and binding limited obligations of the District, enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors’ rights) and the terms of the Indenture and all Supplemental Indentures thereto and entitled to the benefits of the Indenture and all such Supplemental Indentures, and such Parity Bonds have been duly and validly authorized and issued in accordance with the Act (or other applicable laws) and the Indenture and all such Supplemental Indentures; and a further opinion of Bond Counsel to the effect that, assuming compliance by the District with certain tax covenants, the issuance of the Parity Bonds will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds and any Parity Bonds theretofore issued on a tax-exempt basis, or the exemption from State of California personal income taxation of interest on any Outstanding Bonds and Parity Bonds theretofore issued;

(4) a certificate of the District containing such statements as may be reasonably necessary to show compliance with the requirements of the Indenture;

(5) a certificate of an Independent Financial Consultant certifying that in each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding following the issuance of the Parity Bonds proposed to be issued is less than the Annual Debt Service on the Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds;

(6) such further documents, money and securities as are required by the provisions of the Indenture and the Supplemental Indenture providing for the issuance of such Parity Bonds.

Bond Insurance Provisions. Notwithstanding anything to the contrary set forth in the Indenture, the following provisions will apply as long as the Municipal Bond Insurance Policy is in full force and effect.

(a) In the event that, on the second Business Day, and again on the Business Day, prior to an Interest Payment Date, the Trustee has not received sufficient moneys to pay all principal of and interest on the Bonds due on such Interest Payment Date, the Trustee will immediately notify the Bond Insurer or its designee on the same Business Day by telephone or telegraph, confirmed in writing by registered or certified mail, of the amount of the deficiency.

(b) If the deficiency is made up in whole or in part prior to or on the Interest Payment Date, the Trustee will so notify the Bond Insurer or its designee.

(c) In addition, if the Trustee has notice that any Owner of a Bond has been required to disgorge payments of principal of or interest on the Bonds to a trustee in bankruptcy or creditors or others pursuant to a final judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to such Owner within the meaning of any applicable bankruptcy laws, then the Trustee will notify the Bond Insurer or its designee of such fact by telephone or telegraphic notice, confirmed in writing by registered or certified mail.

(d) The Trustee is irrevocably designated, appointed, directed and authorized to act as attorney-in-fact for Owners of the Bonds as follows:

D-24 (1) If and to the extent there is a deficiency in amounts required to pay interest on the Bonds, the Trustee will (A) execute and deliver to U.S. Bank Trust National Association, or its successors under the Municipal Bond Insurance Policy (the “Insurance Paying Agent”), in form satisfactory to the Insurance Paying Agent, an instrument appointing the Bond Insurer as agent for such Owners in any legal proceeding related to the payment of such interest and an assignment to the Bond Insurer of the claims for interest to which such deficiency relates and which are paid by the Bond Insurer, (B) receive as designee of the respective Owners (and not as Trustee) in accordance with the tenor of the Municipal Bond Insurance Policy payment from the Insurance Paying Agent with respect to the claims for interest so assigned, and (C) disburse the same to such respective Owners; and

(2) If and to the extent of a deficiency in amounts required to pay principal of the Bonds, the Trustee will (A) execute and deliver to the Insurance Paying Agent in form satisfactory to the Insurance Paying Agent an instrument appointing the Bond Insurer as agent for such Owner in any legal proceeding relating to the payment of such principal and an assignment to the Bond Insurer of any of the Bond surrendered to the Insurance Paying Agent of so much of the principal amount thereof as has not previously been paid or for which moneys are not held by the Trustee and available for such payment (but such assignment will be delivered only if payment from the Insurance Paying Agent is received), (B) receive as designee of the respective Owners (and not as Trustee) in accordance with the tenor of the Municipal Bond Insurance Policy payment therefor from the Insurance Paying Agent, and (C) disburse the same to such respective Owners.

(e) Payments with respect to claims for interest on and principal of Bonds disbursed by the Trustee from proceeds of the Municipal Bond Insurance Policy will not be considered to discharge the obligation of the Authority with respect to such Bonds, and the Bond Insurer will become the owner of such unpaid Bonds and claims for the interest in accordance with the tenor of the assignment made to it under the provisions of the Indenture or otherwise.

(f) Irrespective of whether any such assignment is executed and delivered, the Authority and the Trustee has agreed under the Indenture for the benefit of the Bond Insurer that,

(1) They recognize that to the extent the Bond Insurer makes payments, directly or indirectly (as by paying through the Trustee), on account of principal of or interest on the Bonds, the Bond Insurer will be subrogated to the rights of such Owners to receive the amount of such principal and interest from the Authority, with interest thereon as provided and solely from the sources stated in the Indenture and the Bonds; and

(2) They will accordingly pay to the Bond Insurer the amount of such principal and interest (including principal and interest recovered under subparagraph (ii) of the first paragraph of the Municipal Bond Insurance Policy, which principal and interest will be deemed past due and not to have been paid), with interest thereon as provided in the Indenture and the Bonds, but only from the sources and in the manner provided herein for the payment of principal of and interest on the Bonds to Owners, and will otherwise treat the Bond Insurer as the owner of such rights to the amount of such principal and interest.

D-25 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX E

FORM OF BOND COUNSEL’S OPINION (Date of Delivery)

Community Facilities District No. 89-1 of the County of Riverside Riverside, California

Re: $10,435,000 Community Facilities District No. 89-1 of the County of Riverside Special Tax Refunding Bonds, Series 2006

Ladies and Gentlemen:

We have examined the Constitution and the laws of the State of California, a certified record of the proceedings of the County of Riverside taken in connection with the formation of Community Facilities District No. 89-1 of the County of Riverside (the “District”) and the authorization and issuance of the District’s Special Tax Refunding Bonds, Series 2006 in the aggregate principal amount of $10,435,000 (the “Bonds”) and such other information, certificates, opinions and documents as we consider necessary to render this opinion. We have assumed the genuineness of all documents and signatures presented to us, the authenticity of documents submitted to us as originals and the conformity to originals of documents submitted as copies. In rendering this opinion, we have relied upon certain representations of fact and certifications made by the District, the initial purchasers of the Bonds and others. We have not undertaken to verify through independent investigation the accuracy of the representations and certifications relied upon by us.

The Bonds have been issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (comprising Chapter 2.5 of Part 1 of Division 2 of Title 5 of the Government Code of the State of California), and a Bond Indenture dated as of September 1, 2006 (the “Indenture”) between the District and The Bank of New York Trust Company, N.A., as Trustee (the “Trustee”). All capitalized terms not defined herein shall have the meaning set forth in the Indenture.

The Bonds are dated their date of delivery and mature on the dates and in the amounts set forth in the Indenture. The Bonds bear interest payable semiannually on each March 1 and September 1, commencing on March 1, 2007, at the rates per annum set forth in the Indenture. The Bonds are registered Bonds in the form set forth in the Indenture, redeemable in the amounts, at the times and in the manner provided for in the Indenture.

Based upon our examination of the foregoing, and in reliance thereon and on all matters of fact as we deem relevant under the circumstances, and upon consideration of applicable laws, we are of the opinion that:

(1) The Bonds have been duly and validly authorized by the District and are legal, valid and binding limited obligations of the District, enforceable in accordance with their terms and the terms of the Indenture, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights generally, by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by the limitations on legal remedies against public agencies in the State of California. The Bonds are limited obligations of the District but are not a debt of the County of Riverside, the State of California or any other political subdivision thereof within the meaning of any constitutional or statutory limitation, and, except for the Special Taxes pledged by the District, neither the faith and credit nor the taxing power of the County of Riverside, the State of California, or any of its political subdivisions is pledged for the payment thereof.

(2) The execution and delivery of the Indenture has been duly authorized by the District, and the Indenture is valid and binding upon the District and is enforceable in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent E-1 conveyance or transfer or other similar laws affecting creditors’ rights generally, by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by the limitations on legal remedies against public agencies in the State of California; provided, however, we express no opinion as to the enforceability of the covenant of the District contained in the Indenture to levy Special Taxes for the payment of Administrative Expenses or as to any indemnification, contribution, choice of law, choice of forum, penalty or waiver provisions contained therein.

(3) The Indenture creates a valid pledge of that which the Indenture purports to pledge, subject to the provisions of the Indenture, except to the extent that enforceability of the Indenture may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights generally, by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by the limitations on legal remedies against public agencies in the State of California.

(4) Under existing statutes, regulations, rulings and judicial decisions, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however, it should be noted that, with respect to corporations, such interest (and original issue discount) will be included as an adjustment in the calculation of alternative minimum taxable income, which may affect the alternative minimum tax liability of corporations.

(5) Interest (and original issue discount) on the Bonds is exempt from State of California personal income tax.

(6) The difference between the issue price of a Bond (the first price at which a substantial amount of the Bonds of a maturity are to be sold to the public) and the stated redemption price at maturity with respect to such Bond constitutes original issue discount. Original issue discount accrues under a constant yield method, and original issue discount will accrue to a Bond owner before receipt of cash attributable to such excludable income. The amount of original issue discount deemed received by a Bond owner will increase the Bond owner’s basis in the applicable Bond. Original issue discount that accrues for the Bond owner is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals or corporations (as described in paragraph 4 above) and is exempt from State of California personal income tax.

(7) The amount by which a Bond owner’s original basis for determining loss on sale or exchange in the applicable Bond (generally the purchase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium which must be amortized under Section 171 of the Code; such amortizable Bond premium reduces the Bond owner’s basis in the applicable Bond (and the amount of tax- exempt interest received), and is not deductible for federal income tax purposes. The basis reduction as a result of the amortization of Bond premium may result in a Bond owner realizing a taxable gain when a Bond is sold by the owner for an amount equal to or less (under certain circumstances) than the original cost of the Bond to the owner.

The opinions expressed in paragraphs (4) and (6) above as to the exclusion from gross income for federal income tax purposes of interest (and original issue discount) on the Bonds are subject to the condition that the District complies with all requirements of the Internal Revenue Code of 1986, as amended (the “Code”), that must be satisfied subsequent to the issuance of the Bonds to assure that such interest (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The District has covenanted to comply with all such requirements. Except as set forth in paragraphs (4), (5), (6) and (7) above, we express no opinion as to any tax consequences related to the Bonds.

Certain agreements, requirements and procedures contained or referred to in the Indenture and the Tax Certificate executed by the District with respect to the Bonds may be changed and certain actions may be taken E-2 or omitted, under the circumstances and subject to the terms and conditions set forth in such documents. We express no opinion as to the exclusion of interest (and original issue discount) on the Bonds from gross income for federal income tax purposes on and after the date on which any such change occurs or action is taken or omitted upon the advice or approval of counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation.

We are admitted to the practice of law only in the State of California and our opinion is limited to matters governed by the laws of the State of California and federal law. We assume no responsibility with respect to the applicability or the effect of the laws of any other jurisdiction.

The opinions expressed herein are based upon an analysis of existing statutes, regulations, rulings and judicial decisions and cover certain matters not directly addressed by such authorities. We call attention to the fact that the foregoing opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date hereof. We have not undertaken to determine, or to inform any person, whether such actions or events are taken (or not taken) or do occur (or do not occur). Our engagement with respect to the Bonds terminates upon their issuance, and we disclaim any obligation to update the matters set forth herein.

We express no opinion herein as to the accuracy, completeness or sufficiency of the Official Statement or other offering material, if any, relating to the Bonds and expressly disclaim any duty to advise the owners of the Bonds with respect to the matters contained in the Official Statement or other offering material, if any.

Respectfully submitted,

E-3 [THIS PAGE INTENTIONALLY LEFT BLANK] APPENDIX F

CONTINUING DISCLOSURE AGREEMENT

THIS CONTINUING DISCLOSURE AGREEMENT (the “Disclosure Agreement”) is executed and delivered by Community Facilities District No. 89-1 of the County of Riverside (the “Issuer”), and The Bank of New York Trust Company, N.A., a national banking association duly organized and existing under the laws of the United States of America (the “Dissemination Agent”) in connection with the issuance of the $10,435,000 Community Facilities District No. 89-1 of the County of Riverside Special Tax Refunding Bonds, Series 2006 (the “Bonds”). The Bonds are being issued pursuant to a Bond Indenture dated as of September 1, 2006 (the “Indenture”) between the Issuer and The Bank of New York Trust Company, N.A., as trustee (the “Trustee”). The Issuer and the Dissemination Agent covenant and agree as follows:

Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the Issuer for the benefit of the Owners of the Bonds and in order to assist the Participating Underwriter (as defined herein) in complying with S.E.C. Rule 15c2-12(b)(5).

Section 2. Definitions. In addition to the definitions set forth in the Indenture, 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 any Annual Reports provided by the Issuer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Agreement.

“Annual Report Date” means April 1 of each year commencing on April 1, 2007.

“Assessment Roll” means assessment roll of the Riverside County Assessor last equalized prior to the September 30 next preceding each Annual Report Date.

“Beneficial Owner” shall mean any person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries) or (b) is treated as the owner of any Bonds for federal income tax purposes.

“District” shall mean Community Facilities District No. 89-1 of the County of Riverside.

“Disclosure Representative” shall mean the County Executive Officer or his or her designee, or such other officer or employee as the Issuer shall designate in writing to the Dissemination Agent from time to time.

“Dissemination Agent” shall mean The Bank of New York Trust Company, N.A., acting in its capacity as Dissemination Agent, or any successor Dissemination Agent designated in writing by the Issuer and which has filed with the Issuer a written acceptance of such designation.

“Fiscal Year” shall mean the twelve month period beginning on July 1 of each year and ending on June 30 of the following year.

“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Agreement.

“National Repository” shall mean any Nationally Recognized Municipal Securities Repository for purposes of the Rule. Currently, the following are National Repositories:

F-1 Bloomberg Municipal Repositories P. O. Box 840 Princeton, NJ 08542-0840 (609) 279-3225 FAX (609) 279-5962 Internet address: [email protected]

Standard & Poor’s J.J. Kenny Repository 55 Water Street, 45th Floor New York, NY 10041 (212) 438-4595 FAX (212) 438-3975 Internet address: [email protected]

DPC Data Inc. NRMSIR One Executive Drive Fort Lee, NJ 07024 (201) 346-0701 FAX (201) 947-0107 Internet address: [email protected]

Interactive Data Attn: NRMSIR 100 William Street New York, NY 10038 (212) 771-6999 FAX (212) 771-7390 Internet address: [email protected]

“Participating Underwriters” shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with the offering of the Bonds. The Participating Underwriter is E. J. De La Rosa & Co., Inc., 10866 Wilshire Boulevard, Suite 1650, Los Angeles, California 90024.

“Repository” shall mean each National Repository and each State Repository.

“Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

“State Repository” shall mean any public or private repository or entity designated by the State of California as a state repository for the purpose of the Rule. As of the date of this Disclosure Agreement, there is no State Repository.

“Tax-exempt” shall mean that interest on the Bonds is excluded from gross income for federal income tax purposes, whether or not such interest is includable as an item of tax preference or otherwise includable directly or indirectly for purposes of calculating any other tax liability, including any alternative minimum tax or environmental tax.

Section 3. Provision of Annual Reports.

(a) The Issuer shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, provide to each Repository an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement. Not later than fifteen (15) Business Days prior to the Annual Report Date, the Issuer shall provide the Annual Report to the Dissemination Agent. In each case, the Annual Report may be submitted F-2 as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Disclosure Agreement. The information contained or incorporated in each Annual Report shall be for the Fiscal Year which ended on the preceding June 30. The Issuer shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certifications of the Issuer and shall have no duty or obligation to review any such Annual Report.

(b) If the Dissemination Agent is unable to verify that an Annual Report has been provided to the Repositories by the date specified in subsection (a), the Dissemination Agent shall send a notice to each Repository in substantially the form attached as Attachment A.

(c) The Dissemination Agent shall:

(i) determine each year prior to the date for providing the Annual Report the name and address of each National Repository and each State Repository, if any; and

(ii) to the extent it can confirm such filing of the Annual Report, file a report with the Issuer certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories to which it was provided.

(iii) if the Issuer has provided the Dissemination Agent with the appropriate form in electronic format, provide the Annual Report in electronic format to the Repositories through the services of a “central post office” approved by the Securities and Exchange Commission.

(iv) promptly after receipt of the Annual Report, file a report with the Issuer and (if the Dissemination Agent is not the Fiscal Agent) the Fiscal Agent certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing all the Repositories and other parties to which it was provided.

(d) The Issuer shall, or if received by the Dissemination Agent, the Dissemination Agent shall, deliver a copy of each Annual Report to the Participating Underwriters at the time the Annual Report is provided to the Repositories in accordance with this section.

Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following:

(a) The District’s audited financial statements, if any, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District’s audited financial statements, if any, are not available by any Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to that used for the District’s audited financial statements, and the audited financial statements, if any, shall be filed in the same manner as the Annual Report when they become available.

(b) The following information:

(1) The principal amount of the Bonds outstanding as of September 30 next preceding the Annual Report Date.

(2) The balance in the Reserve Account and the amount of the Reserve Requirement, as of September 30 next preceding the Annual Report Date.

(3) The total assessed value of all parcels within the District on which the Special Taxes are levied, as shown on the Assessment Roll, and the assessed value-to-lien ratios for such parcels, either by individual parcel or by categories (e.g., “below 3:1,” “3:1 to 4:1,” etc.). F-3 (4) The Special Tax delinquency rate for all parcels within the District on which the Special Taxes are levied, the number of parcels within the District on which the Special Taxes are levied and which are delinquent in payment of Special Taxes, the amount of each delinquency, the duration of the delinquency and the date on which foreclosure was commenced, or similar information pertaining to delinquencies deemed appropriate by the District; provided, however, that parcels with aggregate delinquencies of $2,000 or less (excluding penalties and interest) may be grouped and such information may be provided by category.

(5) The status of foreclosure proceedings for any parcels within the District with delinquent Special Taxes and a summary of the results of any foreclosure sales with respect to any such parcels as of September 30 next preceding the Annual Report Date.

(6) The name of any person or entity owning property in the District, as shown on the Assessment Roll, which is responsible for more than 5% of the annual Special Tax levy who is delinquent in payment of Special Taxes levied on such parcel.

(7) A landownership summary identifying owners of property in the District, as shown on the Assessment Roll, which are responsible for more than 5% of the annual Special Tax levy.

(c) In addition to any of the information expressly required to be provided by subsections (a) and (b) of this Section, the District shall provide such further information, if any, which it determines is necessary to prevent the expressly required information from being misleading, in the light of the circumstances under which it is provided.

Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to each of the Repositories or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The Issuer shall clearly identify each such other document so incorporated by reference.

Section 5. Reporting of Significant Events.

(a) Pursuant to the provisions of this Section 5, the Issuer shall give or cause to be given, notice of the occurrence of any of the following event:

1. Delinquency in payment when due of any principal of or interest on the Bonds.

2. Occurrence of any default under the Indenture (other than as described in clause (1) above).

3. Amendment to or modification of the Indenture or this Disclosure Agreement modifying the rights of the Owners of the Bonds.

4. Giving of a notice of optional or unscheduled redemption of any of the Bonds.

5. Defeasance of the Bonds or any portion thereof.

6. Any change in any rating on the Bonds.

7. Adverse tax opinions or events affecting the Tax-exempt status of the Bonds.

8. Any unscheduled draw on the Reserve Account reflecting financial difficulties.

9. Unscheduled draws on credit enhancements reflecting financial difficulties.

F-4 10. Substitution of credit or liquidity providers, or their failure to perform.

11. The release, substitution or sale of property securing repayment of the Bonds (including property leased, mortgaged or pledged as such security).

(b) The Dissemination Agent shall, within one (1) Business Day of obtaining actual knowledge of the occurrence of any of the Listed Events (except events listed in clauses (a)(1), (4) or (5)), or as soon as is reasonably possible, with no obligation to determine the materiality thereof, contact the Disclosure Representative, inform such person of the event, and request that the Issuer promptly notify the Dissemination Agent in writing whether or not to report the event pursuant to subsection (f). For the purpose of this Disclosure Agreement “actual knowledge” means actual knowledge at the corporate trust office of the Dissemination Agent by an officer of the Dissemination Agent with responsibility for matters related to the administration of the Indenture.

(c) Whenever the Issuer obtains knowledge of the occurrence of a Listed Event, whether because of a notice from the Dissemination Agent pursuant to subsection (b) or otherwise, the Issuer shall as soon as possible determine if such event would constitute material information for Owners of the Bonds under applicable Federal securities law, provided that any event under subsection (a) (6) will always be deemed to be material.

(d) If the Issuer has determined that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Issuer shall promptly notify the Dissemination Agent in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (f).

(e) If in response to a request under subsection (b), the Issuer determines that the Listed Event would not be material, the Issuer shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (f).

(f) If the Dissemination Agent has been instructed by the Issuer to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the Municipal Securities Rulemaking Board and each State Repository. Notwithstanding the foregoing:

(i) Notice of the occurrence of a Listed Event described in subsections (a)(1), (4) or (5) shall be given by the Dissemination Agent unless the Issuer gives the Dissemination Agent affirmative instructions not to disclose such occurrence; and

(ii) Notice of Listed Events described in subsections (a)(4) and (5) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Owners of the affected Bonds pursuant to the Indenture.

Section 6. Termination of Reporting Obligation. The Issuer’s obligations under this Disclosure Agreement shall terminate upon the defeasance, prior redemption or payment in full of all of the Bonds.

Section 7. Dissemination Agent. The Issuer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be The Bank of New York Trust Company, N.A. The Dissemination Agent may resign by providing thirty (30) days written notice to the Issuer and the Trustee. If at any time there is no designated Dissemination Agent appointed by the Issuer, or if the Dissemination Agent so appointed is unwilling or unable to perform the duties of the Dissemination Agent hereunder, the Issuer shall be the Dissemination Agent and undertake or assume its obligations hereunder.

Section 8. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Issuer may amend this Disclosure Agreement (and the Dissemination Agent shall agree to any F-5 amendment requested by the Issuer, provided the Dissemination Agent shall not be obligated to enter into any amendment increasing or affecting its duties or obligations), and any provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in Federal securities law, acceptable to both the Issuer and the Dissemination Agent, to the effect that such amendment or waiver would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule.

Section 9. Additional Information. Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer 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 Issuer chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Agreement, the Issuer 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.

Section 10. Default. In the event of a failure of the Issuer to comply with any 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 Issuer to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an event of default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the Issuer or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance.

Section 11. Duties, Immunities and Liabilities of the Dissemination Agent. Article VII of the Indenture is hereby made applicable to this Disclosure Agreement as if this Disclosure Agreement were (solely for this purpose) contained in the Indenture. The Dissemination Agent shall be entitled to the protections and limitations afforded to the Trustee under said Article VII. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the Issuer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s, its officers’, directors, employees’ and agents’ negligence or willful misconduct. The Dissemination Agent shall be paid compensation by the Issuer for its services provided hereunder in accordance with its schedule of fees as amended from time to time and shall be reimbursed by the Issuer all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder but solely from amounts in the Administrative Expense Fund established under the Indenture. Neither the Dissemination Agent nor the Trustee shall have any duty or obligation to review any information provided to it hereunder or shall be deemed to be acting in any fiduciary capacity for the Issuer, the owners of the Bonds or any other party. The obligations of the Issuer under this section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Any company succeeding to all or substantially all of the Dissemination Agent’s corporate trust business shall be the successor to the Dissemination Agent hereunder without the execution or filing of any document or any further act.

Section 12. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Dissemination Agent, the Participating Underwriters and the Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

F-6 Section 13. Counterparts. This Disclosure Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

Dated: September 1, 2006 COMMUNITY FACILITIES DISTRICT NO. 89-1 OF THE COUNTY OF RIVERSIDE

By: ______County Executive Officer

THE. BANK OF NEW YORK TRUST COMPANY, N.A., as Dissemination Agent

By: ______Authorized Signatory

F-7 ATTACHMENT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: COMMUNITY FACILITIES DISTRICT NO. 89-1 OF THE COUNTY OF RIVERSIDE

Name of Bond Issue: COMMUNITY FACILITIES DISTRICT NO. 89-1 OF THE COUNTY OF RIVERSIDE SPECIAL TAX REFUNDING BONDS, SERIES 2006

Date of Issuance: September 26, 2006

NOTICE IS HEREBY GIVEN that the Issuer of has not provided an Annual Report with respect to the above-referenced Bonds as required by the Continuing Disclosure Agreement dated as of September 1, 2006 between the Issuer and The Bank of New York Trust Company, N.A., as Trustee. The Issuer anticipates that the Annual Report will be filed by ______.

Dated: ______

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Dissemination Agent on Behalf of the Issuer

By: ______Authorized Officer

F-8 COMMUNITY FACILITIES DISTRICT NO. 89-1 OF THE COUNTY OF RIVERSIDE • Special Tax Refunding Bonds, Series 2006 Recycled Paper - Printed by Recycled Paper IMAGEMASTER 800.452.5152 IMAGEMASTER