City of Norco Community Facilities District No (Norco Hills) 2005 Special Tax Refunding Bonds $7,625,000

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1 City of Norco Community Facilities District No (Norco Hills) 2005 Special Tax Refunding Bonds $7,625,000 Riverside County, California Dated: November 21, 2005 Base CUSIP + : /2015 ANNUAL CONTINUING DISCLOSURE INFORMATION STATEMENT AS OF JANUARY 21, Via Industria Suite 200 Temecula, CA T F Copyright, American Bankers Association. CUSIP data is provided by Standard and 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 service. The issuer takes no responsibility for the accuracy of such number.

2 City of Norco List of Participants AGENCY Gina Schuchard Finance Officer 2870 Clark Avenue Norco, California BOND COUNSEL John Harper Harper & Burns, LLP 453 S. Glassell Street Orange, CA (714) DISTRICT ADMINISTRATOR DISCLOSURE CONSULTANT & DISSEMINATION AGENT Willdan Financial Services* Temecula, California (951) FISCAL AGENT Linda Verstuyft U.S. Bank Trust, N.A. 633 W. 5 th Street, 24 th Floor Los Angeles, California UNDERWRITER Wedbush Morgan Securities Solana Beach, California * In its role as Disclosure Consultant, Willdan Financial Services has not passed upon the accuracy, completeness or fairness of the statements contained herein.

3 I. INTRODUCTION Pursuant to an Official Statement dated November 10, 2005, the City of Norco, California (the City ) issued $7,625,000 Community Facilities District No (Norco Hills), 2005 Special Tax Refunding Bonds (the Bonds ) for the purpose of refunding the City s Community Facilities District No Special Tax Bonds (the Prior Bonds ), to fund a reserve fund, and to pay the costs of issuing the Bonds. The Prior Bonds were previously issued to finance the acquisition of certain public facilities and payment of certain environmental fees (the CFD Improvements ) within Community Facilities District No (the District ). The City of Norco encompasses an area of approximately 15 square miles and is 51 miles east of the City of Los Angeles and 125 miles north of San Diego and is located in Riverside County. The District is located approximately one half mile east of interstate 15 at the intersection of Norco Hills Road and Hidden Valley Parkway in the southeast portion of the City and consists of approximately 235 acres. The District has been developed into 217 residential lots. The Bonds are secured by the pledge of revenues derived from Special Taxes ( Special Taxes ) levied on the properties in the District and collected by the City. The Bonds are not a debt of the City, the District, the State of California, or any of its political subdivisions and neither the District, the State of California, nor any of its political subdivisions is liable. The Bonds do not constitute indebtedness within the meaning of any constitutional or statutory debt limit or restriction. This Annual Continuing Disclosure Information Statement is being provided pursuant to a covenant made by the City for the benefit of the holders of the Bonds and includes the information specified in a Continuing Disclosure Certificate. For further information and a more complete description of the City, the District and the Bonds, reference is made to the Official Statement. The information set forth herein has been furnished by the City and by sources, which are believed to be accurate and reliable but is not guaranteed as to accuracy or completeness. Statements contained in this Annual Continuing Disclosure Information Statement which involve estimates, forecasts, or other matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact. Further, the information and expressions of opinion contained herein are subject to change without notice and the delivery of this Annual Continuing Disclosure Information Statement will not, under any circumstances, create any implication that there has been no change in the affairs of the City, the District or any other parties described herein. 2014/2015 City of Norco, CFD 97-1 Page 1 of 7

4 THIS REPORT IS OF A FACTUAL NATURE WITHOUT SUBJECTIVE ASSUMPTIONS, OPINIONS, OR VIEWS AND MAY NOT BE RELIED UPON AS ADVICE OR RECOMMENDATION TO PURCHASE OR SELL ANY PRODUCT OR UTILIZE ANY PARTICULAR STRATEGY RELATING TO THE ISSUANCE OF MUNICIPAL SECURITIES OR PURCHASE OF FINANCIAL PRODUCTS. WILLDAN FINANCIAL SERVICES AND ITS EMPLOYEES (COLLECTIVELY "WILLDAN") DO NOT RECOMMEND ANY ACTIONS AND ARE NOT ACTING AS AN ADVISOR TO ANY MUNICIPAL ENTITY, BOARD, OFFICER, AGENT, EMPLOYEE OR OBLIGATED PERSON PURSUANT TO SECTION 15B OF THE EXCHANGE ACT. PRIOR TO ACTING ON ANY INFORMATION OR MATERIAL CONTAINED IN THIS COMMUNICATION, YOU SHOULD DISCUSS IT WITH APPROPRIATE INTERNAL OR EXTERNAL ADVISORS AND EXPERTS AND ONLY RELY UPON THEIR ADVICE. 2014/2015 City of Norco, CFD 97-1 Page 2 of 7

5 II. BOND INFORMATION A. PRINCIPAL OUTSTANDING Bond Issue As of October 2, 2015 Community Facilities District No Special Tax Refunding Bonds $5,455,000 B. DEBT SERVICE SCHEDULE Maturity Date Principal Interest Annual Debt Service October 1, 2016 $260, $259, $519, October 1, , , , October 1, , , , October 1, , , , October 1, , , , October 1, , , , October 1, , , , October 1, , , , October 1, , , , October 1, , , , October 1, , , , October 1, , , , October 1, , , , October 1, , , , October 1, , , , Total $5,455, $2,334, $7,789, C. FUND BALANCES Fund Balances As of December 31, 2015 Reserve Fund $523,465 Reserve Requirement $522,496 Bond Fund $604 Special Tax Fund $0 Special Tax Prepayment Fund Cost of Issuance Fund CLOSED CLOSED 2014/2015 City of Norco, CFD 97-1 Page 3 of 7

6 III. FINANCIAL INFORMATION THE CITY S ANNUAL FINANCIAL STATEMENTS ARE PROVIDED SOLELY TO COMPLY WITH THE SECURITIES EXCHANGE COMMISSION STAFF S INTERPRETATION OF RULE 15C2-12. NO FUNDS OR ASSETS OF THE DISTRICT OR THE CITY ARE REQUIRED TO BE USED TO PAY DEBT SERVICE ON THE BONDS, AND NEITHER THE DISTRICT NOR THE CITY IS OBLIGATED TO ADVANCE AVAILABLE FUNDS TO COVER ANY DELINQUENCIES. INVESTORS SHOULD NOT RELY ON THE FINANCIAL CONDITION OF THE DISTRICT OR THE CITY IN EVALUATING WHETHER TO BUY, HOLD OR SELL THE BONDS. The audited financial statements for the City for the Fiscal Year Ended June 30, 2015 will be separately filed with the MSRB s Electronic Municipal Market Access System ( EMMA ) and are hereby incorporated by reference into this Annual Continuing Disclosure Information Statement. IV. OPERATING INFORMATION A. DELINQUENCY SUMMARY The following table sets forth a summary of all delinquencies greater than 60 days in the District by fiscal year. There are no delinquencies prior to 2012/2013. Willdan Financial Services and the City will continue to monitor delinquencies. Fiscal Year Annual Special Tax Levied Number of Parcels Levied Amount Delinquent (1,2) Amount Collected Number of Parcels Delinquent Percent of Special Tax Delinquent 2012/2013 $559, $2,580 $556, % 2014/2015 $559, $4,755 (3) $555, % 2014/2015 $556, $4,854 (4) $552, % (1) Amount delinquent as of September 10, 2015 (2) Please note pursuant to a Purchase and Sale Agreement dated August 1, 2014, the District has entered into agreement with the California Statewide Communities Development Authority regarding Tax Receivables for the Fiscal Year ending June 30, (3) Please note pursuant to a Purchase and Sale Agreement dated November 1, 2014, the District has entered into agreement with the California Statewide Communities Development Authority regarding Tax Receivables for the Fiscal Year ending June 30, (4) Please note pursuant to a Purchase and Sale Agreement dated December 1, 2015, the District has entered into agreement with the California Statewide Communities Development Authority regarding Tax Receivables for the Fiscal Year ending June 30, Source: Riverside County Tax Collector s Office as compiled by Willdan Financial Services. 2014/2015 City of Norco, CFD 97-1 Page 4 of 7

7 B. DELINQUENT PROPERTY OWNERS/FORECLOSURE PROCEEDINGS The City covenants in the Fiscal Agent Agreement with and for the benefit of the Bond owners that it will order, and cause to be commenced as hereinafter provided, and thereafter diligently prosecute to judgment (unless such delinquency is theretofore brought current), an action in the superior court to foreclose the lien of any Special Tax or installment thereof not paid when due as provided in the following two paragraphs. The City shall notify the City Attorney of any such delinquency of which it is aware, and the City Attorney shall commence, or cause to be commenced, such proceedings. On or about July 1st of each Fiscal Year, the City shall compare the amount of Special Taxes theretofore levied in the District to the amount of Special Tax Revenues theretofore received by the City. Notwithstanding, the District may elect to defer foreclosure proceedings against any parcel if the District has received funds equal to the delinquent Special Tax relating to that parcel from any other source (other than draws on the Reserve Fund), including without limitation the proceeds of any sale of Special Tax Receivables, (defined as the delinquent installments of the Special Tax that have been sold and assigned to a third party, provided that such sale and assignment was accompanied by the opinion of a nationally recognized bond counsel that the sale and assignment does not have a materially adverse effect on the interests of the Bond holders) and those funds are available to contribute toward payment of the principal and interest on the Bonds when due. Individual Delinquencies: If the City determines that any single parcel subject to the Special Tax in the District is delinquent in the payment of Special Taxes in the aggregate amount of $5,000 or more, then the City shall send or cause to be sent a notice of delinquency (and a demand for immediate payment thereof) to the property owner within 45 days of such determination, and (if the delinquency remains uncured) foreclosure proceedings shall be commenced by the City within 90 days of such determination. Aggregate Delinquencies: If the City determines that (i) the total amount of delinquent Special Tax for the prior Fiscal Year for the entire District, exceeds five (5%) percent of the total Special Tax due and payable for the prior Fiscal Year, or (ii) there are ten (10) or fewer owners of real property within the District, determined by reference to the latest available secured property tax roll of the County, the City shall notify or cause to be notified property owners who are then delinquent in the payment of Special Taxes (and demand immediate payment of the delinquency) within 45 days of such determination, and shall commence foreclosure proceedings within 90 days of such determination against each parcel of land in the District with a Special Tax delinquency. The City may waive delinquency penalties and redemption penalties if it determines that (i) the waivers shall apply only to parcels delinquent at the time of the determination, (ii) the waivers shall only be available with respect to parcels for which all past due and currently due Special Taxes and all other costs are paid in full within a limited period of time specified in the determination, (iii) the waivers shall be available only with respect to parcels sold or otherwise transferred to new 2014/2015 City of Norco, CFD 97-1 Page 5 of 7

8 owners unrelated to the owner responsible for the delinquency, and (iv) the waivers are in the best interest of the Bond owners. Pursuant to a Purchase and Sale Agreement dated August 1, 2014, November 1, 2014, and December 1, 2015 the City of Norco has entered into agreement with the California Statewide Communities Development Authority, for the sale of all outstanding delinquencies for of Fiscal Year s ending June 30, 2013, June 30, 2014 and June 30, The Purchase and Sale Agreement allows the California Statewide Communities Development Authority, to finance special tax receipts for the District by issuing a Certificate of Participation to advance cash to the District in an amount equal to the outstanding special tax delinquencies. In exchange, the Certificate Owner will receive the right to the special tax receivables, including the penalties and interest when collected. As of September 10, 2015, there were no delinquencies in any year exceeding five percent (5%) or more. The following table lists individual delinquencies greater than $5,000 or more. Assessor s Parcel Number (APN) Owner Number of Parcels Fiscal Year's Delinquent Total Amount Delinquent (1)(2) Mayorga, Ircy /2013 through 2014/2015 $6,445 (1) Delinquent amount as of September 10, 2015 not including penalties, interest, administration and legal fees. (2) Please note pursuant to a Purchase and Sale Agreement dated August 1, 2014 the District has entered into agreement with the California Statewide Communities Development Authority regarding Tax Receivables for the Fiscal Year ending June 30, Please note pursuant to a Purchase and Sale Agreement dated November 1, 2014, the District has entered into agreement with the California Statewide Communities Development Authority regarding Tax Receivables for the Fiscal Year ending June 30, Please note pursuant to a Purchase and Sale Agreement dated December 1, 2015, the District has entered into agreement with the California Statewide Communities Development Authority regarding Tax Receivables for the Fiscal Year ending June 30, C. ADMINISTRATIVE COSTS The following table list the Administrative Costs incurred for the Fiscal Year 2015/2016: Fiscal Year Agency Administration Cost Agency Auditor Fees County Fees Trustee Fees Consulting Services Fee 2015/2016 $29,100 $500 $263 $1,820 $7, /2015 City of Norco, CFD 97-1 Page 6 of 7

9 D. PROPERTY OWNERS AND ASSESSED VALUES The following table lists the current property owners responsible for the Fiscal Year 2015/2016 Special Tax within the District and the current Fiscal Year 2015/2016 Value to Bonded Debt. There are no property owners that are responsible for ten (10%) percent or more of the Special Tax Levy. Fiscal Year 2015/2016 Assessed Values 2015/2016 Property Owners Number of Parcels Land Structure Total Bonded Debt (1) Value to Bonded Debt (2) 2015/2016 Special Tax Percent of 2015/2016 Special Tax Maximum Special Tax Individual Property Owners 217 $28,098,397 $85,554,009 $113,652,406 $5,455, $558, % $611,429 Exempt Properties (2) 5 2,710,902 8,001,170 10,712,072 0 N/A % 0 $30,809,299 $93,555,179 $124,364,478 $5,455, $558, % $611,429 (1) Bonded Debt is allocated to each parcel based on the pro rata share of the parcel s Special Tax times the principal amount of Bonds outstanding. (2) Three out of five of these properties at the time of formation have been dedicated to the City, for a possible fire station, establishing a wetland mitigation area and an equestrian park. The fourth and fifth properties are zoned for commercial uses as the main entrance into the community off of Hidden Valley Parkway. These parcels are currently exempt from the levy of Special Taxes. In accordance with the Rate and Method of Apportionment, if additional moneys are needed to satisfy the Special Tax Requirement after the developed and undeveloped properties are taxed at the Maximum Special rate, then the Special Tax shall be levied proportionately on each Assessor's Parcel of Taxable Public Property and Taxable Association Property at up to 100% of the Maximum Special Tax rate. The Value to Bonded Debt ratio does not include these parcels Assessed Valuation or Bonded Debt Source: 2015/2016 Riverside County Secured Property Tax Roll as compiled by Willdan Financial Services. 2014/2015 City of Norco, CFD 97-1 Page 7 of 7