HomeMy WebLinkAboutBond Purchase Agreement dated April 13, 2006 between the Authority and Stone & Youngberg LLC, as underwriter
$51,250,000 TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-02 (RORIPAUGH RANCH) 2006 SPECIAL TAX BONDS BOND PURCHASE AGREEMENT April 13, 2006 Temecula Public
Financing Authority 43200 Business Park Drive Temecula, California 92590 Ladies and Gentlemen: Stone & Youngberg LLC (the "Underwriter") offers to enter into this Bond Purchase Agreement
(the "Bond Purchase Agreement") with the Temecula Public Financing Authority (the "Authority") for and on behalf of Temecula Public Financing Authority Community Facilities District
No. 03-02 (Roripaugh Ranch) (the "District") which, upon acceptance, will be binding upon the Authority and upon the Underwriter. This offer is made subject to acceptance of it by the
Authority on the date hereof, and if not accepted will be subject to withdrawal by the Underwriter upon notice delivered to the Authority at any time prior to the acceptance hereof by
the Authority. 1. Purchase. Sale and Delivery of the Bonds (a) Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein,
the Underwriter agrees to purchase from the Authority, and the Authority agrees to sell to the Underwriter, all (but not less than all) of the Temecula Public Financing Authority Community
Facilities District No. 03-02 (Roripaugh Ranch) 2006 Special Tax Bonds (the "2006 Bonds") in the aggregate principal amount of $51,250,000. The 2006 Bonds are dated their date of delivery,
and bear interest at the rates set forth in Exhibit A hereto (payable on each March 1 and September 1 of each year, commencing September 1, 2006) and mature on September 1,2036. The
purchase price for the 2006 Bonds shall be as set forth in Exhibit A hereto. The 2006 Bonds will be subject to demand for and mandatory purchase pursuant to the provisions of the Fiscal
Agent Agreement, by and between the Authority and U.S. Bank National Association, as fiscal agent (the "Fiscal Agent"), dated as of March 1,2006 (the "Fiscal Agent Agreement"). The 2006
Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable and subject to redemption as provided in, the Fiscal
Agent Agreement. The 2006 Bonds and interest thereon will be payable from a special tax (the "Special Tax") levied and collected in accordance with the Fiscal Agent Agreement and Ordinance
No. TPFA 2005-1 (the "Ordinance") adopted by the Board of Directors of the Authority (the "Board") on January 25, 2005, pursuant to the Mello-Roos Community Facilities Act of 1982, as
amended (Sections 53311 et seq. of the Government Code of the State of California) (the "Act"). The proceeds of the 2006 Bonds shall be applied (i) to finance the acquisition and construction
of certain road, water, sewer, storm drain, fire facilities and park and recreation improvements (collectively, the "Improvements") within or in the vicinity of the District, (ii) to
eliminate, in whole, an existing special assessment lien (the "Prior Lien") on parcels in the District, (iii) to pay interest on the 2006 Bonds for a limited period of time, (iv) to
pay certain administrative expenses TEMRR BPAr.wpd/LR/424
of the District, (v) to pay the costs of issuing the 2006 Bonds, and (vi) to establish a Reserve Fund for the 2006 Bonds. (b) Pursuant to the authorization of the Authority, the Underwriter
has distributed copies of the Preliminary Official Statement, dated March 27, 2006, relating to the 2006 Bonds, which, together with the cover page and all appendices thereto, is herein
called the "Preliminary Official Statement" and which, as amended by the Authority with the prior approval of the Underwriter, will be referred to herein as the "Official Statement."
The Authority hereby ratifies the use by the Underwriter of the Preliminary Official Statement and authorizes the Underwriter to use and distribute the Official Statement, the Fiscal
Agent Agreement, the other documents or contracts to which the Authority is a party, including this Bond Purchase Agreement, relating to the 2006 Bonds, and all information contained
therein, and all other documents, certificates and statements furnished by the Authority to the Underwriter in connection with the transactions contemplated by this Bond Purchase Agreement,
in connection with the offer and sale of the 2006 Bonds by the Underwriter. (c) At 8:00 A.M., Los Angeles time, on April 27,2006, or at such other time or on such earlier or later business
day as shall be agreed upon by the Underwriter and the Authority (such time and date being herein referred to as the "Closing Date"), the Authority will deliver to the Underwriter (i)
at the offices of The Depository Trust Company, in New York, New York, the 2006 Bonds in temporary or definitive form, bearing CUSIP® numbers, and duly executed by the officers of the
Authority and authenticated by the Fiscal Agent as provided in the Fiscal Agent Agreement, and (ii) at the offices of Quint & Thimmig LLP in San Francisco, California, the other documents
herein mentioned; and the Underwriter shall accept such delivery and pay the purchase price of the 2006 Bonds as set forth in Section 1 (a) hereof by wire transfer of immediately available
funds. The date of this payment and delivery, together with the delivery of the aforementioned documents, is herein called the "Closing." Notwithstanding the foregoing, the Underwriter
may, in its discretion, accept delivery of the 2006 Bonds in temporary form upon making arrangements with the Authority which are satisfactory to the Underwriter relating to the delivery
of the 2006 Bonds in definitive form. The 2006 Bonds shall be in fully registered form, registered in the name of CEDE & Co., as nominee of The Depository Trust Company. The failure
to print CUSIP® identification numbers on any of the 2006 Bonds or any error with respect thereto shall not constitute cause for a failure or refusal of the Underwriter to accept delivery
of, or pay for, the 2006 Bonds in accordance with the terms of this Bond Purchase Agreement. (d) The Underwriter agrees to offer all the 2006 Bonds to the public initially at the prices
set forth in Exhibit A hereto. Subsequent to the initial public offering of the 2006 Bonds, Bonds, the Underwriter reserves the right to change the public offering prices (or yields)
as it deems necessary in connection with the marketing of the 2006 Bonds. The 2006 Bonds may be offered and sold to certain dealers at prices lower than such initial public offering
prices. 2. Representations. Warranties and Agreements of the Authority. The Authority represents, warrants and covenants to and agrees with the Underwriter that: (a) The District is
duly organized and validly existing as a community facilities district under the laws of the State of California (the "State") and the Authority has, and at the Closing Date will have,
as the case may be, full legal right, power and authority for and on behalf of the District (i) to adopt the Procedural Resolutions (as defined below) and the Ordinance, (ii) to execute
and deliver the 2006 Bonds and the District Documents (as defined below) and to perform its obligations under the 2006 Bonds and the District Documents, (iii) to issue, sell and deliver
the 2006 Bonds to the Underwriter pursuant to the Procedural Resolutions and the Fiscal Agent Agreement as provided herein, and (iv) to carry out, give effect to and consummate the transactions
on its part contemplated by the Procedural Resolutions, the Official TEMRR BPAr.wpd/LR/424
Statement, the 2006 Bonds and the District Documents. For purposes of this Bond Purchase Agreement, Resolution No. TPFA 04-08 adopted by the Board on August 24, 2004 stating the intention
to establish the District, Resolution No. TPFA 04-09 adopted by the Board on August 24,2004 stating the intention to incur bonded indebtedness, Resolution No. TPFA 04-10 adopted by the
Board on September 28, 2004 amending the Resolution No. TPFA 04-08 and TPFA 04-09, Resolution No. TPFA 04-11 adopted by the Board on December 7, 2004 continuing the public hearing to
January 11, 2005, Resolution No. TPFA 05-01 establishing the District and authorizing the levy of the Special Tax within the District, Resolution No. TPFA 05-02 adopted by the Board
on January 11, 2005 declaring the necessity to incur bonded indebtedness, Resolution No. TPFA 05-03 adopted by the Board on January 11, 2005 calling for a special election in the District,
Resolution No. TPFA 05-04 adopted by the Board on January 11,2005 declaring the results of the election, and the Resolution adopted by the Board on January 11,2005 authorizing the issuance
of the 2006 Bonds are referred to as the "Procedural Resolutions" and the Fiscal Agent Agreement, the Bond Purchase Agreement, the District Continuing Disclosure Agreement (the "District
Continuing Disclosure Agreement"), dated as of March 1, 2006, by and between the Authority for and on behalf of the District, and U.S. Bank National Association, as dissemination agent
(the "Dissemination Agent"), the Acquisition Agreement (the "Acquisition Agreement"), dated as of January 1,2005, by and between the Authority and Ashby USA, LLC, a California limited
liability company ("Ashby USA, LLC"), the Joint Community Facilities Agreement -City (the "Joint Community Facilities Agreement -City"), dated as of January 1,2005, by and between the
Temecula Public Financing Authority and the City of Temecula (the "City"), the Joint Community Facilities Agreement -TCSD (the "Joint Community Facilities Agreement -TCSD"), dated as
of January 1,2005, by and between the Temecula Public Financing Authority and the Temecula Community Services District ("TCSD"), the Joint Community Facilities Agreement -EMWD (the "Joint
Community Facilities Agreement -EMWD"), dated as of January 1, 2005, by and among the Temecula Public Financing Authority, Eastern Municipal Water District ("EMWD") and Ashby USA, LLC,
the Joint Community Facilities Agreement (Street Improvements) (the "Joint Community Facilities Agreement -County Transportation"), dated as of November 1, 2004, by and among the County
of Riverside, the City, the Authority and Ashby USA, LLC, and the Joint Community Facilities Agreement (Flood Control Improvements) (the "Joint Community Facilities Agreement -RCFC WCD"),
dated as of November 1,2004, by and among Riverside County Flood Control and Water Conservation District, the County, the Authority, and Ashby USA, LLC are referred to herein as the
"District Documents"); (b) The Authority has complied, and will at the Closing Date be in compliance, in all respects material to issuance and delivery of the 2006 Bonds with the 2006
Bonds, the District Documents and the Act and the Authority will continue to comply with the covenants of the Authority contained in the 2006 Bonds and the District Documents; (c) The
Board for and on behalf of the District has duly and validly: (i) adopted the Procedural Resolutions and the Ordinance, (ii) called, held and conducted in accordance with all requirements
of the Act an election to approve the levy of the Special Tax, (iii) authorized the preparation and delivery of the Preliminary Official Statement and the Official Statement, (iv) authorized
and approved the execution and delivery of the 2006 Bonds and the District Documents; and (v) authorized and approved the performance by the Authority of its obligations contained in,
and the taking of any and all action on its part as may be necessary to carry out, give effect to and consummate the transactions on its part contemplated by, each of said documents
(including, without limitation, the levy and collection of the Special Tax and the use of the proceeds of the 2006 Bonds to acquire public improvements), and at the Closing Date the
2006 Bonds and the District Documents have been, or on or before the Closing Date, will be duly executed and delivered by the Authority and on the Closing Date, the 2006 Bonds and the
District Documents will constitute the valid, legal and binding obligations of the Authority on behalf of the District, and (assuming due authorization, execution and delivery by other
parties thereto, where necessary of the other parties thereto) will be enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, TEMRR BPAr.wpd/LR/424
reorganization, moratorium and other laws affecting the enforcement of creditors' rights in general and to the application of equitable principles if equitable remedies are sought; (d)
The Authority is not in breach of or default under any applicable law or administrative rule or regulation of the State or the United States of America, or of any department, division,
agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, fiscal agent agreement,
contract, agreement or other instrument to which the Authority is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the performance
by the Authority of its obligations under the Procedural Resolutions, the Ordinance, the 2006 Bonds or the District Documents and compliance with the provisions of each thereof, will
not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, or of any department, division, agency or instrumentality
thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, fiscal agent agreement, contract, agreement or other
instrument to which the Authority is a party or is otherwise subject or bound a consequence of which could be to materially and adversely affect the ability of the Authority to perform
its obligations under the 2006 Bonds or any District Documents; (e) The adoption of the Procedural Resolutions and the Ordinance, and the execution and delivery by the Authority of the
2006 Bonds, the Official Statement and the District Documents and compliance by the Authority with the provisions thereof, did not and will not conflict with or constitute a breach of
or default under any applicable law or administrative rule or regulation of the State or the United States of America, or of any department, division, agency or instrumentality of either
thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, fiscal agent agreement, contract, agreement or other
instrument to which the Authority is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the ability of the Authority to perform
its obligations under the 2006 Bonds or any of the District Documents; (f) All approvals, consents, authorizations, elections and orders of or filings or registrations with any State
governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the
ability of the Authority to execute and deliver and perform its obligations under the 2006 Bonds or the District Documents have been or will be obtained and are in full force and effect,
except that the Authority provides no representation regarding compliance with "Blue Sky" or or other securities laws or regulations whatsoever; (g) The 2006 Bonds, the Procedural Resolutions,
the Ordinance and the District Documents conform as to form and tenor to the descriptions thereof contained in the Preliminary Official Statement, and which will be contained in the
Official Statement as of the Closing Date, and when delivered to and paid for by the Underwriter on the Closing Date as provided herein, the 2006 Bonds will be validly issued and outstanding;
(h) The Special Tax constituting the security for the 2006 Bonds has been duly and lawfully authorized and may be levied under the Act and the Constitution and the applicable laws of
the State, and such Special Tax, when levied, will constitute a valid lien on the properties on which it has been levied; (i) Except as described in the Official Statement under the
captions "PROPERTY OWNERSHIP AND DEVELOPMENT -Direct and Overlapping Debt" and " -Overlapping Assessment and Community Facilities Districts," there are no outstanding assessment liens
liens or special tax liens levied by the Authority for itself or on behalf of any community facilities district or assessment district against any of TEMRR BPAr.wpd/LR/424
the properties within the District which are senior to the Special Tax lien referred to in paragraph 1 (a) hereof, and the Authority has no present intention of conducting further proceedings
leading to the levying of additional special taxes or assessments against any of the properties within the District; (j) As of the date thereof, the Preliminary Official Statement (excluding
the information under the captions of "PROPERTY OWNERSHIP AND DEVELOPMENT," as to which the Authority and the District shall not be required to express any view) did not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; the Official Statement (excluding the information under the captions of "PROPERTY OWNERSHIP AND DEVELOPMENT -Ashby USA, LLC," " -Continental
Residential, Inc.," " -Davidson Roripaugh Ranch 122 LLC," " -The Tanamera/Roripaugh Entities," and " -KB Home Coastal" as to which the Authority and the District shall not be required
to express any view) does not and, as of the Closing Date, will not contain any untrue or misleading statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (k) After the Closing Date and until the date which
is twenty-five (25) days after the underwriting period (as defined below) (i) the Authority will not adopt any amendment of or supplement to the Official Statement to which the Underwriter
shall object in writing or which shall be disapproved by counsel for the Underwriter, and (ii) if any event shall occur of which the Authority is aware, as a result of which it is necessary,
in the reasonable opinion of counsel for the Underwriter, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of of the
circumstances existing at the time it is delivered to an initial purchaser of the 2006 Bonds, the Authority will forthwith prepare and furnish to the Underwriter a reasonable number
of copies of an amendment of or supplement to the Official Statement (in form and substance satisfactory to counsel for the Underwriter) which will amend or supplement the Official Statement
so that it will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein,
in the light of the circumstances existing at the time the Official Statement is delivered to an initial purchaser of the 2006 Bonds, not misleading. The costs of preparing any necessary
amendment or supplement to the Official Statement shall be borne by the District. The term "end of the underwriting period" means the later of such time as (i) the Authority delivers
the 2006 Bonds to the Underwriter or (ii) the Underwriter does not retain an unsold balance of the 2006 Bonds for sale to the public. Unless the Underwriter gives notice to the contrary,
the "end of the underwriting period" shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the Authority at or
prior to the Closing Date, and shall specify a date (other than the Closing Date) to be deemed the "end of the underwriting period;" (1) The Fiscal Agent Agreement creates a valid pledge
of the Special Tax Revenues and any other amounts (including proceeds of the sale of the 2006 Bonds) held in the 2006 Bond Fund and the Special Tax Fund established pursuant to the Fiscal
Agent Agreement, subject in all cases to the provisions of the Fiscal Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein;
(m) No action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending against the Authority with
respect to which the Authority has been served with process, or to the knowledge of the Authority threatened, affecting the existence of the Authority or the District or the titles of
its officers to their respective offices (i) which would materially adversely affect the ability of the Authority to perform its obligations under the 2006 Bonds or the District Documents,
or (ii) seeking to restrain or to enjoin the development of the land within the District, the issuance, sale or delivery of the 2006 Bonds, the application of the proceeds thereof in
accordance with TEMRR BPAr.wpd/LR/424
the Fiscal Agent Agreement, or the collection or application of the Special Tax pledged or to be pledged to pay the principal of and interest on the 2006 Bonds, or the pledge thereof,
or in any way contesting or affecting the validity or enforceability of the 2006 Bonds, the District Documents, any other instruments relating to the development of any of the property
within the District, or any action of the Authority contemplated by any of said documents, or (iii) in any way contesting the completeness or accuracy of the Preliminary Official Statement
or the Official Statement or the powers or authority of the Authority with respect to the Procedural Resolutions, the Ordinance, the 2006 Bonds or the District Documents, or any action
of the Authority contemplated by any of said documents; or (iv) which alleges that interest on the 2006 Bonds is not excludable from gross income for federal income tax purposes or is
not exempt from State personal income taxation, nor to the knowledge of the Authority is there any basis therefor; (n) The Authority will furnish such information, execute such instruments
and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order for the Underwriter to qualify the 2006 Bonds for offer and sale under
the "Blue Sky" or other securities laws and regulations of such states and other jurisdictions of the United States of America as the Underwriter may designate; provided, however, the
Authority shall not be required to register as a dealer or a broker of securities nor shall the Authority be required to consent to service of process or jurisdiction or qualify to do
business in any jurisdiction or to expend funds for this purpose; (o) Any certificate signed by any official of the Authority authorized to do so and delivered by the Authority at the
Closing shall be deemed a certification to the Underwriter by the Authority as to the statements made therein; (p) During the period from the date hereof until the Closing Date, the
Authority agrees to furnish the Underwriter with copies of any documents it files with any regulatory authority which are requested by the Underwriter; (q) The Authority is not in default,
nor has the Authority been in default at any time, as to the payment of principal or interest with respect to an obligation issued by the Authority or with respect to an obligation guaranteed
by the Authority as guarantor; (r) The Authority will apply the proceeds from the sale of the 2006 Bonds as set forth in and for the purposes specified in the Fiscal Agent Agreement;
(s) The Authority will undertake, pursuant to the Fiscal Agent Agreement and the District Continuing Disclosure Agreement to provide certain annual financial information and information
about the District, together with notices of the occurrence of certain events, if material. A copy of the District Continuing Disclosure Agreement is set forth in Appendix F of the Preliminary
Official Statement and will also be set forth in the Official Statement, and the specific nature of the information to be contained in the Annual Report (as defined in the District Continuing
Disclosure Agreement) or the notices of material events is set forth in the District Continuing Disclosure Agreement; (t) The Preliminary Official Statement heretofore delivered to the
Underwriter was, and hereby is, expressly deemed final by the Authority as of its date, except for the omission of such information as is permitted to be omitted in accordance with paragraph
(b)(l) of Section 240.15c2-12 in Chapter II of Title 17 of the Code of Federal Regulations ("Rule 15c2-12"). The Authority hereby covenants and agrees that, within seven (7) business
days from the date hereof, or upon reasonable written notice from the Underwriter within sufficient time to accompany any conformation requesting payment from any customers of the Underwriter,
the Authority shall cause a final printed form of the Official Statement to be delivered TEMRR BPAr.wpd/LR/424
to the Underwriter in sufficient quantity specified by the Underwriter to comply with paragraph (b)(4) of Rule 15c2-12 and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities
Rulemaking Board; (u) The District has not failed to comply with any continuing disclosure undertaking previously entered into in connection with the provisions of Rule 15c2-12(b)(5);
and (v) Except as disclosed in the Official Statement, the Authority and the City have not failed to comply with any continuing disclosure undertaking previously entered into for itself
or on behalf of another entity, in connection with the provisions of Rule 15c2-12(b)(5). 3. Conditions to the Obligations of the Underwriter. The obligations of the Underwriter to accept
delivery of and pay for the 2006 Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties
on the part of the Authority contained herein, as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other
officials of the Authority made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the Authority of its obligations to be performed
hereunder at or prior to the Closing Date and to the following additional conditions: (a) At the Closing Date, the Procedural Resolutions, the Ordinance, the 2006 Bonds, the District
Documents, and any other applicable agreements, shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing
by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the 2006 Bonds and with the transactions contemplated thereby and by this Bond Purchase
Agreement, all such actions as, in the opinion of Quint & Thimmig LLP, San Francisco, California ("Bond Counsel"), shall be necessary and appropriate.(b) At the Closing Date, the Official
Statement shall be in form and substance satisfactory to the Underwriter and the Authority and shall not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (c) Between the date hereof and the
Closing Date, the market price or marketability of the 2006 Bonds at the initial offering prices set forth in the Official Statement shall not have been materially adversely affected,
in the reasonable judgment of the Underwriter (evidenced by a written notice to the Authority terminating the obligation of the Underwriter to accept delivery of and pay for the 2006
Bonds), by reason of any of the following: (1) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress
by the President of the United States of America, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either
House of Congress by any committee of such House to which such legislation had been referred for consideration or a decision rendered by a court established under Article III of the
Constitution of the United States of
America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or
on behalf of the Treasury Department or the Internal Revenue Service of the United States of America, with the purpose or effect, directly or indirectly, of imposing federal income taxation
upon the interest as would be received by the owners of the 2006 Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; TEMRR BPAr.wpd/LR/424
(2) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America, or an order, decree or injunction issued by any court of competent jurisdiction,
or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any
other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the 2006 Bonds, or the 2006 Bonds, including any or all
underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Fiscal Agent Agreement is not exempt from
qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the 2006 Bonds,
or of the 2006 Bonds, including any or all underwriting arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities
laws as amended and then in effect; (3) a general suspension of trading in securities on the New York Stock Exchange, or a general banking moratorium declared by federal, State of New
York or State officials authorized to do so; (4) any amendment to the federal or State Constitution or action by any federal or State court, legislative body, regulatory body or other
authority materially adversely affecting the tax status of the Authority or the District, its property, income, securities (or interest thereon) or the validity or enforceability of
the Special Tax; (5) any event occurring, or information becoming known, which, in the reasonable judgment of the Underwriter, makes untrue in any material respect any statement or information
contained in the Official Statement, or results in the Official Statement containing any untrue or misleading statement of a material fact or omitting to state a material fact required
to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (6) the entry of an order by a court of
competent jurisdiction which enjoins or restrains the City from issuing permits, licenses or entitlements within the District, which order, in the reasonable opinion of the Underwriter,
materially and adversely affects proposed developments within the District in particular or the City in general; (7) any legislation, ordinance, rule or regulation shall be introduced
in, or be enacted by any governmental body, department or agency of the State or a decision by any court of competent jurisdiction within the State or any court of the United States
of America shall be rendered which, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the 2006 Bonds; (8) additional material restrictions
not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange which restrictions
materially adversely affect the Underwriter's ability to market the 2006 Bonds; or (9) the United States of America has become engaged in hostilities which have resulted in a declaration
of war or a national emergency or there has occurred any other outbreak or escalation of hostilities or a national or international calamity or crisis, financial or otherwise, the effect
of such outbreak, calamity or crisis on the financial markets of the United States of America, TEMRR BPAr.wpd/LR/424
being such as, in the reasonable opinion of the Underwriter, would affect materially and adversely the ability of the Underwriter to market the 2006 Bonds. (d) On or prior to the Closing
Date, the Underwriter shall have received two counterpart originals or certified copies of each of the following documents (which may be in an electronic form), in each case satisfactory
in form and substance to the Underwriter: (1) The Procedural Resolutions and the Ordinance, together with a certificate dated as of the Closing Date of the Secretary of the Board to
the effect that each is a true, correct and complete copy of the one duly adopted by the Board; (2) An executed copy of the Fiscal Agent Agreement; (3) An executed copy of this Bond
Purchase Agreement; (4) An executed copy of the Official Statement; (5) An executed copy of the District Continuing Disclosure Agreement; (6) An executed copy of the Acquisition Agreement;
(7) Executed copies of the Joint Community Facilities Agreement -City, the Joint Community Facilities Agreement -TCSD, the Joint Community Facilities Agreement -EMWD, the Joint Community
Facilities Agreement -County Transportation, and the Joint Community Facilities Agreement -RCFCWCD; (8) An approving opinion, dated the Closing Date and addressed to the Authority, of
Bond Counsel for the Authority, in the form attached to the Official Statement as Appendix H and a letter, dated the Closing Date and addressed to the Underwriter, to the effect that
such opinion addressed to the Authority may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it; (9) A supplemental opinion, dated the Closing
Date and addressed to the Underwriter of Bond Counsel to the effect that (i) the 2006 Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended
and the Fiscal Agent Agreement is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; (ii) the Bond Purchase Agreement has been duly authorized, executed
and delivered delivered by the Authority, and (assuming the due authorization, execution and delivery by, and validity against, the Underwriter) is a valid and binding agreement of the
Authority enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, moratorium, insolvency or other laws affecting creditor's rights or remedies and
is subject to general principles of equity (regardless of whether such enforceability is considered in equity or at law); (iii) the statements contained in the Official Statement on
the cover page and under the captions "INTRODUCTION -Sources of Payment for the 2006 Bonds," "INTRODUCTION -Tax Exemption," "THE 2006 BONDS," "SECURITY FOR THE 2006 BONDS," "LEGAL MATTERS
-Tax Exemption," APPENDIX E -"Summary of Certain Provisions of the Fiscal Agent Agreement" and APPENDIX H -"Form of Opinion of Bond Counsel" are accurate insofar as such statements expressly
summarize certain provisions of the 2006 Bonds, the Fiscal Agent Agreement and such firm's opinion concerning certain federal tax matters relating to the 2006 Bonds and (iv) the District
is duly formed as a community facilities district under the Act; TEMRR BPAr.wpd/LR/424
(10) An opinion, dated the Closing Date and addressed to the District and the Underwriter of McFarlin & Anderson LLP, Disclosure Counsel, to the effect that without having undertaken
to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement, but on the basis of their participation in conferences with representatives
of the District, Richards, Watson & Gershon ("District Counsel"), Bond Counsel, representatives of the Underwriter, representatives of Ashby USA, LLC, the Merchant Builders (as defined
in the Official Statement), Pillsbury Winthrop Shaw Pittman LLP, as counsel to Ashby USA, LLC and as counsel to the Tanamera/Roripaugh Entities, and others, and their examination of
certain documents, no information has come to their attention which would lead them to believe that the Official Statement as of its date and as of the Closing Date contained any untrue
statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading (except that no opinion or belief need be expressed as to any financial, statistical, economic, engineering, or demographic data or forecasts,
numbers, charts, tables, graphs, maps, estimates, projections, assumptions or expressions of opinion, or any information about feasibility, valuation, appraisals, market absorption,
real estate, archaeological or environmental matters, the Appendices to the Official Statement or any information about debt service requirements, bookentry, The Depository Trust Company,
or tax exemption contained in the Official Statement); (11) An opinion, dated the Closing Date and addressed to the Underwriter, of the City Attorney, as counsel to the Authority and
to the District, to the effect that: (i) The Authority is duly organized and validly existing under the Constitution and laws of the State of California; (ii) The District is duly organized
and validly existing as a community facilities district under the laws of the State, with full legal right, power and authority to issue the 2006 Bonds and to perform all of its obligations
under the 2006 Bonds and the District Documents; (iii) To the best of such counsel's knowledge, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or
by any court, regulatory agency, public board or body is pending or threatened against the Authority or the District affecting the existence of the Authority or the District or the title
of their officers to their respective offices, or which would materially adversely affect the ability of the Authority to perform its obligations under the Bond Purchase Agreement or
under the 2006 Bonds or the District Documents or seeking to restrain or to enjoin the development of property within the District, the issuance, sale, or delivery of the 2006 Bonds
or the exclusion from gross income for federal income tax purposes or State personal income taxes taxes of interest on the 2006 Bonds, or the application of the proceeds thereof in accordance
with the Fiscal Agent Agreement, or the collection or application of the Special Tax to pay the principal of and interest on the 2006 Bonds, or in any way contesting or affecting the
validity or enforceability of the 2006 Bonds or the District Documents or any action of the Authority contemplated by any of said documents or the accuracy or completeness of the Preliminary
Official Statement or the Official Statement; (iv) The Board on behalf of the District has duly and validly adopted the Procedural Resolutions and the Ordinance at meetings of the Board
which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting at the time of adoption, and the Procedural Resolutions
and the Ordinance are now in full force and effect and have not been amended; 10 TEMRRBPAr.wpd/LR/424
(v) To the best of such counsel's knowledge, the Authority and the District are not in breach of or in default under any applicable law or administrative rule or regulation of the State
or the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under
any loan agreement, note, resolution, indenture, fiscal agent agreement, contract, agreement or other instrument to which the Authority or the District is a party or is otherwise subject
or bound, a consequence of which could be to materially and adversely affect the ability of the Authority or the District to perform their obligations under the Procedural Resolutions,
the Ordinance, the 2006 Bonds or any District Documents or which, with the passage of time or the giving of notice or both, would constitute an event of default thereunder; (vi) The
adoption of the Procedural Resolutions and the Ordinance, and the execution and delivery of the 2006 Bonds and the District Documents, and compliance with the provisions of each, did
not and will not conflict with or constitute a breach of or default under any applicable court or administrative decree or order, or under any loan agreement, note, ordinance, resolution,
indenture, fiscal agent agreement, contract, agreement or other instrument to which the Authority or the District is a party or is otherwise subject or bound, a consequence of which
could be to materially and adversely affect the ability of the Authority to perform its obligations under the 2006 Bonds or any District Documents; and (vii) Without having undertaken
to determine independently the accuracy, completeness or fairness of the statements contained in the Official Statement, but on the basis of their participation in conferences with representatives
of the Authority, the District, Bond Counsel, Disclosure Counsel, representatives of the Underwriter, Ashby USA, LLC and others, and their examination of certain documents, no information
information has come to their attention which would lead them to believe that the information with respect to the Authority and the District in the Official Statement, as of its date
and as of the Closing Date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not misleading (except that no opinion or belief need be expressed as to any Appendix to the Official Statement
or any other financial, statistical or economic data or forecasts, numbers, charts, graphs, estimates, proj ections, assumptions or expressions of opinion, or any information about valuation
or appraisals, or any information about Ashby USA, LLC or the Merchant Builders (as such terms are defined in the Official Statement) the book-entry or DTC contained in the Official
Statement); (12) A Certificate, dated the Closing Date and signed by an authorized representative of the Authority, certifying that (i) the representations and warranties of the Authority
contained in this Bond Purchase Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) no event
has occurred since the date of the Official Statement affecting the matters contained therein which should be disclosed in the Official Statement for the purposes for which it is to
be used in order to make the statements and information contained in the Official Statement with respect to the Authority or the District not misleading in any material respect; (iii)
the Authority has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under the 2006 Bonds and the District Documents at or prior
to the Closing Date in order to issue the 2006 Bonds; (13) A certificate of the Authority, in a form acceptable to Bond Counsel, containing the Authority's reasonable expectations in
support of the conclusion that the 2006 Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended; 11 TEMRR BPAr.wpd/LR/424
(14) An opinion of counsel to the Fiscal Agent, dated the Closing Date, addressed to the Underwriter, in form and substance satisfactory to the Underwriter, to the effect that: (i) The
Fiscal Agent is a national banking association, organized and existing under and by virtue of the laws of the United States of America; (ii) The Fiscal Agent has duly authorized the
execution and delivery of the Fiscal Agent Agreement, the District Continuing Disclosure Agreement, the Developer Continuing Disclosure Agreement (Ashby USA, LLC) and the Developer Continuing
Disclosure Agreement (Tanamera/Roripaugh Entities) (collectively, the "Developer Continuing Disclosure Agreements" and together with the District Continuing Disclosure Agreement, the
"Continuing Disclosure Agreements") dated as of March 1, 2006, by and between U.S. Bank National Association, in its capacity as Fiscal Agent and Dissemination Agent, and Ashby USA,
LLC; (iii) The Fiscal Agent Agreement and the Continuing Disclosure Agreements have been duly entered into and delivered by the Fiscal Agent and assuming due, valid and binding authorization,
execution and delivery by the other parties thereto, constitute the legal, valid and binding obligations of the Fiscal Agent enforceable against the Fiscal Agent in accordance with their
terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally, or by
general principles of equity; (iv) Acceptance by the Fiscal Agent of the duties and obligations under the Fiscal Agent Agreement, and the Continuing Disclosure Agreements and compliance
with provisions thereof will not conflict with or constitute a breach of or default under any law or administrative regulation, court decree, resolution, charter, by-laws, agreement,
instrument or commitment to which the Fiscal Agent is subject; (v) All approvals, consents and orders of any governmental authority or agency having jurisdiction in the matter which
would constitute a condition precedent to the performance by the Fiscal Agent of its duties and obligations under the Fiscal Agent Agreement, and the Continuing Disclosure Agreements
have been obtained and are in full force and effect; (vi) To such counsel's knowledge, there is no litigation pending or threatened against or affecting the Fiscal Agent to restrain
or enjoin the Fiscal Agent's participation in, or in any way contesting the powers of the Fiscal Agent with respect to the transactions contemplated by the 2006 Bonds or the Fiscal Agent
Agreement; and (vii) To such counsel's knowledge, there is no litigation pending or threatened against or affecting the Fiscal Agent to restrain or enjoin the Fiscal Agent's participation
in, or in any way contesting the powers of the Fiscal Agent with respect to the transactions contemplated by the 2006 Bonds, or the Fiscal Agent Agreement; (15) A certificate of the
Fiscal Agent, dated the Closing Date, in form and substance acceptable to counsel for the Underwriter, to the following effect: (i) The Fiscal Agent is a national banking association,
and is organized and existing under and by virtue of the laws of the United States of America, and has the full power and authority 12 TEMRR BPAr.wpd/LR/424
to accept and perform its duties under the Fiscal Agent Agreement and the Continuing Disclosure Agreements; (ii) Subject to the provisions of the Fiscal Agent Agreement, the Fiscal Agent
will apply the proceeds from the 2006 Bonds to the purposes specified in the Fiscal Agent Agreement; (iii) The 2006 Bonds have been duly and validly authenticated on behalf of Fiscal
Agent; (iv) To the best knowledge of the Fiscal Agent, no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Fiscal
Agent that has not been obtained is or will be required for the authentication of the 2006 Bonds or the consummation by the Fiscal Agent of the other transactions contemplated to be
performed by the Fiscal Agent in connection with the authentication of the 2006 Bonds and the acceptance and performance of the obligations created by the Fiscal Agent Agreement; (v)
There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body pending or, to the best of its knowledge,
threatened in any way affecting the existence of the Fiscal Agent, or seeking to restrain or to enjoin the execution and delivery of the Fiscal Agent Agreement, or the Continuing Disclosure
Agreements, or the authentication of the 2006 Bonds, by the Fiscal Agent, or in any way contesting or affecting the validity or enforceability, as against the Fiscal Agent, of the Fiscal
Agent Agreement, or the Continuing Disclosure Agreements or any action of the Fiscal Agent contemplated by any of said documents, or in which an adverse outcome would materially and
adversely affect the ability of the Fiscal Agent to perform its obligations under the Fiscal Agent Agreement, or the Continuing Disclosure Agreements; (vi) To the best knowledge of the
Fiscal Agent, the Fiscal Agent is not in breach of or in default under any applicable law or administrative rule or regulation of the State or the United States of America, or of any
department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture,
fiscal agent agreement, contract, agreement or other instrument to which the Fiscal Agent is a party or is otherwise subject or bound, a consequence of which could be to materially and
adversely affect the ability of the Fiscal Agent to perform its obligations under the Fiscal Agent Agreement, or the Continuing Disclosure Agreements; and (vii) To the best knowledge
of the Fiscal Agent, the authentication of the 2006 Bonds, and the execution and delivery of the Fiscal Agent Agreement, and the Continuing Disclosure Agreements by the Fiscal Agent,
and compliance with the provisions of each, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State or
the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any
loan agreement, note, ordinance, resolution, indenture, fiscal agent agreement, contract, agreement or other instrument to which the Fiscal Agent is a party or is otherwise subject or
bound, a consequence of which could be to materially and adversely affect the ability of the Fiscal Agent to perform its obligations under the Fiscal Agent Agreement, or the Continuing
Disclosure Agreements; (16) Certificates dated the date of the Preliminary Official Statement from Ashby USA, LLC and the Merchant Builders, together with bring-down certificates dated
the Closing Date and the certificates dated April 27,2006 relating to Rule 15c2-12, in substantially the forms attached hereto in Exhibit B; 13 TEMKR BPAr.wpd/LR/424
(17) Good standing certificates for Ashby USA, LLC from appropriate officials of the Secretary of State of the State of California and from the Franchise Tax Board of the State of California;
(18) Executed copy of each Developer Continuing Disclosure Agreement; (19) An opinion, dated the Closing Date, addressed to the Authority, the City and the Underwriter of Pillsbury Winthrop
Shaw Pittman LLP, counsel on behalf of Ashby USA, LLC in substantially the form attached hereto as Exhibit C-l and an opinion, dated the Closing Date, addressed to the Authority, the
City and the Underwriter of Pillsbury Winthrop Shaw Pittman LLP, counsel on behalf of the Tanamera/Roripaugh Entities in substantially the form attached hereto as Exhibit C-2; (20) The
certificates dated on or before the Closing Date of the lenders (including Ashby USA, LLC where Ashby USA, LLC has acted as a lender to a Merchant Builder) to Ashby USA, LLC and the
Merchant Builders which have a loan secured by property within the District in substantially the form attached hereto as Exhibit D or other evidence provided by Ashby USA, LLC, the Merchant
Builders or a lender that there is no event of default under the loan agreement(s) at this time and acknowledging the priority position of the lien of Special Taxes relative to such
lender's security for the loan; (21) A certificate from David Taussig & Associates, Inc. to the effect that (i) if the Special Tax is levied in accordance with the terms as set forth
in the Rate and Method of Apportionment of Special Tax of the District and collected, the amount of the levy will be sufficient to make timely payments of debt service and estimated
annual administrative expenses on the 2006 Bonds, provided that acreage and number of units supplied by the District, by Ashby USA, LLC, or by any of their agents, which has been relied
upon by David Taussig & Associates, Inc. is true and correct (no representation need be made as to the actual amounts that will be collected in future years), (ii) the amount of the
maximum Special Taxes that may be levied in each Fiscal Year is at least 110% of the annual debt service for the 2006 Bonds for each such Fiscal Year, assuming that the net taxable acreage
and projected development figures provided to David Taussig & Associates, Inc. by Ashby USA, LLC are true and correct, (iii) the summary of the Rate and Method of Apportionment of the
Special Taxes in the section captioned "SECURITY FOR THE 2006 BONDS -Special Taxes" is true and correct in all material respects and that the description of the Rate and Method in Appendix
B is correctly presented in all material respects and (iv) that, as of the dates of the Preliminary Official Statement and the Official Statement the information that the Special Tax
Consultant provided and included in those portions of the Official Statement entitled "INTRODUCTION -The Community Facilities District," "INTRODUCTION -Sources of Payment for the 2006
Bonds," "SECURITY FOR THE 2006 BONDS -Special Taxes," "SECURITY FOR THE 2006 BONDS -Rate and Method," ""PROPERTY OWNERSHIP AND DEVELOPMENT -Estimated Special Tax Allocation by Property
Ownership," "PROPERTY OWNERSHIP AND DEVELOPMENT -Estimated Value-to-Lien Ratios," "BONDOWNERS' RISKS -Levy and Collection of the Special Tax; Insufficiency of the Special Tax," "BONDOWNERS'
RISKS -Exempt Properties," and in the Tables of the Official Statement captioned "Table 1 Temecula Public Financing Authority Community Facilities District No. 03-02 (Roripaugh Ranch)
Property Ownership and Development Status" and "Table 6 Temecula Public Financing Authority Community Facilities District No. 03-02 (Roripaugh Ranch) Owners of Taxable Property as of
January 15, 2006 and Estimated Allocation of Special Tax Liability Fiscal Year 2006-07," "Table 8 Temecula Public Financing Authority Community Facilities District No. 03-02 (Roripaugh
Ranch) 14 TEMRR BPAr.wpd/LR/424
Estimated Value-to-Lien Analysis Assuming Current Status of Development (As of January 15,2006 Date of Value)," "Table 7 Temecula Public Financing Authority Community Facilities District
No. 03-02 (Roripaugh Ranch) Estimated Value-to-Lien Analysis at Build-Out (Utilizing Appraisal Values)" and "Appendix B" and the other data provided by the Special Tax Consultant and
included in the Official Statement, does not, to my knowledge, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made
therein, in light of the circumstances under which they were made, not misleading; (22) A certificate from Canty Engineering Group, Inc. to the effect that, as of the dates of the Preliminary
Official Statement and the Official Statement the information contained in those portions of the Official Statement entitled "PROPERTY OWNERSHIP AND DEVELOPMENT -Direct and Overlapping
Debt," "PROPERTY OWNERSHIP AND DEVELOPMENT -Estimated Value-to-Lien Ratios," "PROPERTY OWNERSHIP AND DEVELOPMENT -Overlapping Assessment and Community Facilities Districts," and in the
Tables of the Official Statement captioned "Table 5 Temecula Public Financing Authority Community Facilities District No. 03-02 (Roripaugh Ranch) Detailed Direct and Overlapping Debt,"
"Table 6 Temecula Public Financing Authority Community Facilities District No. 03-02 (Roripaugh Ranch) Estimated Value-to-Lien Analysis Assuming Current Status of Development (As of
January 15,2006 Appraisal Date of Value)," "Table 7 Temecula Public Financing Authority Community Facilities District No. 03-02 (Roripaugh Ranch) Estimated Value-to-Lien Analysis at
Build-Out (Utilizing Appraisal Values)" and the other data provided by Canty Engineering Group, Inc.. and included in the Official Statement, do not, to my knowledge, contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements
made therein, in light of the circumstances under which they were made, not misleading; (23) (i) The final appraisal report with a date of value of January 15,2006, (the "Appraisal Report")
of Stephen G. White, MAI (the "Appraiser") setting forth appraised values of land within the District at not less than the appraised values set forth in the Official Statement, and (ii)
a certificate of the Appraiser in substantially the form of Exhibit E hereto, dated the Closing Date and addressed to the Underwriter, the Authority and the District; (24) A certificate
of the Market Absorption Consultant in substantially the form of Exhibit F hereto, dated the Closing Date and addressed to the Underwriter, the Authority and the District; (25) A conformed
or certified copy of the Notice of Special Tax Lien recorded on January 14, 2005 as Document No. 2005-0039138, with the County Recorder and of the First Amendment to Notice of Special
Tax Lien recorded March 10, 2006 as Document No. 2006-0174544; (26) Certified copies of proceedings relating to formation of the District, including a copy of the Procedural Resolutions
and and Ordinance No. TPFA 2005-1, adopted on January 25, 2005 levying the special taxes in accordance with the Rate and Method of Apportionment of Special Taxes; (27) Evidence that
the federal tax information Form 803 8-G has been prepared for filing; (28) Copies of filings with the California Debt and Investment Advisory Commission relating to the issuance of
the 2006 Bonds; 15 TEMRR BPAr.wpd/LR/424
(29) Copies of the Letters of Credit provided on behalf of Ashby USA, LLC and on behalf of the Tanamera/Rorpipaugh Entities; and (30) Such additional legal opinions, certificates, instruments
and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the statements and information
contained in the Preliminary Official Statement and the Official Statement, of the Authority's representations and warranties contained herein and the due performance or satisfaction
by the Authority at or prior to the Closing Date of all agreements then to be performed and all conditions then to be satisfied by the Authority in connection with the transactions contemplated
hereby and by the Procedural Resolutions and the Official Statement. (e) At the time of the Closing, no default shall have occurred or be existing under this Purchase Agreement, the
Fiscal Agent Agreement or the District Documents and the Authority and the District shall shall not be in default in the payment of principal or interest on any of its bonded indebtedness
which default shall adversely impact the ability of the Authority or the District to make payment on the 2006 Bonds. (f) If the Authority shall be unable to satisfy the conditions to
the obligations of the Underwriter to purchase, accept delivery of and pay for the 2006 Bonds contained in this Bond Purchase Agreement, or if the obligations of the Underwriter to purchase,
accept delivery of and pay for the 2006 Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and neither the
Underwriter nor the Authority shall be under any further obligation hereunder, except that the respective obligations of the Authority and the Underwriter set forth in Section 4 hereof
shall continue in full force and effect. 4. Expenses. Whether or not the 2006 Bonds are delivered to the Underwriter as set forth herein: (a) The Underwriter shall be under no obligation
to pay, and the Authority shall pay or cause to be paid (out of any legally available funds of the Authority relating to the District) all expenses incident to the performance of the
Authority's and the District's obligations hereunder, including, but not limited to, the cost of printing and delivering the 2006 Bonds to the Underwriter, the cost of preparation, printing
(and/or word processing and reproduction), distribution and delivery of the Fiscal Agent Agreement, the Procedural Resolutions, the Ordinance, the Preliminary Official Statement, the
Official Statement and all other agreements and documents contemplated hereby (and drafts of any thereof) in such reasonable quantities as requested by the Underwriter; the fees and
expenses in connection with obtaining a delinquency report and statement of direct and overlapping bonded debt from Canty Engineering Group, Inc. the fees and expenses of David Taussig
& Associates, Inc. and the fees and disbursements of the Fiscal Agent for the 2006 Bonds, Bond Counsel, Disclosure Counsel and any market absorption consultants, accountants, financial
advisors, engineers or any other experts or consultants the Authority has retained in connection with the 2006 Bonds and any out-of-pocket disbursements of the Authority to be paid from
the proceeds of the 2006 Bonds; and (b) The Authority shall be under no obligation to pay, and the Underwriter shall pay, the cost of preparation of any "Blue Sky" or legal investment
memoranda; expenses to qualify the 2006 Bonds for sale under any "Blue Sky" or other state securities laws, the fees, if any, payable to the California Debt and Investment Advisory Commission
on account of the 2006 Bonds; CUSIP® Service Bureau fees; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the 16 TEMRR BPAr.wpd/LR/424
2006 Bonds (except those specifically enumerated in paragraph (a) of this section), including any advertising expenses. 5. Notices. Any notice or other communication to be given to the
Authority under this Bond Purchase Agreement may be given by delivering the same in writing to the Temecula Public Financing Authority, 43200 Business Park Drive, Temecula, California
92590 Attention: Director of Finance; and any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing
to Stone & Youngberg LLC, 515 South Figueroa Street, Suite 1060, Los Angeles, California 90071, Attention: Municipal Finance Department; provided, however, that all such notices, requests
or other communications may be made by telephone and promptly confirmed by writing. The Authority and the Underwriter may, by notice given as aforesaid, specify a different address for
any such notices, request or other communications. 6. Parties in Interest. This Bond Purchase Agreement is made solely for the benefit of the Authority and the Underwriter (including
their successors or assigns), and no other person shall acquire or have any right hereunder or by virtue hereof. 7. Survival of Representations and Warranties. The representations and
warranties of the Authority set forth in or made pursuant to this Bond Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason
of the Closing or termination of this Bond Purchase Agreement and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations)
concerning such representations and statements of the Authority and regardless of delivery of and payment for the 2006 Bonds. 8. Effective. This Bond Purchase Agreement shall become
effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the Authority and shall be valid and enforceable as of the time of such acceptance.
acceptance. 9. Applicable Law; Nonassignabilitv. This Bond Purchase Agreement shall be governed by the laws of the State. This Bond Purchase Agreement shall not be assigned by the Authority
or the Underwriter. 10. Execution of Counterparts. This Bond Purchase Agreement may be executed in several counterparts, each of which shall be regarded as an original and all of which
shall constitute one and the same. 11. No Prior Agreements. This Bond Purchase Agreement supersedes and replaces all prior negotiations, agreements and understandings between the parties
hereto in relation to the sale of 2006 Bonds by the Authority and represents the entire agreement of the parties as to the subject matter herein. 12. Partial Unenforceabilitv. Any provision
of this Bond Purchase Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions of this Bond Purchase Agreement or or affecting the validity or enforceability of such provision in any other jurisdiction. [REMAINDER OF
PAGE INTENTIONALLY LEFT BLANK] 17 TEMRR BPAr.wpd/LR/424
13. Capitalized Terms. Terms with initial capital letters not otherwise defined herein shall have the meanings assigned to them in the Fiscal Agent Agreement or the Official Statement.
ACCEPTED: April 13, 2006 Very truly yours, STONE & YOUNGBERG LLC lanagmg Director TEMECULA PUBLIC FINANCING AUTHORITY FOR AND ON BEHALF OF THE TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY
FACILITIES DISTRICT NO. 03-02 (RORIPAUGH RANCH) By: Shawn D. Nelson, Executive Director, Temecula Public Financing Authority, on behalf of the District 18 TEMRR BPAr.wpd/LR/424
13. Capitalized Terms. Terms with initial capital letters not otherwise defined herein shall have the meanings assigned to them in the Fiscal Agent Agreement or the Official Statement.
ACCEPTED: April 13, 2006 Very truly yours, STONE & YOUNGBERG LLC By: Managing Director TEMECULAPUBLIC FINANCING AUTHORITY FOR AND ON BEHALF OF THE TEMECULA PUBLIC FINANCING AUTHORITY
COMMUNITY FACILITIES DISTRICT NO. 03-02 (RORIPAUGH RANCH) _Shawn D. Nelson, Executive Director, Temecula Public Financing Authority, on behalf of the District 18 TEMRR BPAr.wpd/LR/424
EXHIBIT A TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-02 (RORIPAUGH RANCH) 2006 SPECIAL TAX BONDS MATURITY SCHEDULE Maturity Date (September 1) Serial Bonds:
09/01/2007 09/01/2008 09/01/2009 09/01/2010 09/01/2011 09/01/2012 09/01/2013 09/01/2014 09/01/2015 09/01/2016 Term Bonds'. 09/01/2026 09/01/2036 Principal Amount $765,000 795,000 830,000
865,000 905,000 945,000 990,000 1,040,000 1,090,000 1,145,000 15,490,000 26,390,000 Interest Rate 4.0000% 4.2000% 4.3500% 4.5000% 4.6500% 4.7500% 4.9000% 5.0000% 5.0500% 5.1000% 5.4500%
5.5000% Yield 4.0000% 4.2000% 4.3500% 4.5000% 4.6500% 4.7500% 4.9000% 5.0000% 5.0500% 5.1000% 5.4500% 5.5000% Price 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
100.000 100.000 100.000 Total Issue $51,250,000 The purchase price of the 2006 Bonds shall be $50,294,375.00 (which is the principal amount thereof $51,250,000, less the Underwriter's
discount of $955,625.00). In addition, no accrued interest will be paid with respect to the 2006 Bonds because the 2006 Bonds are dated the closing date. A-l TEMRR BPAr.wpd/LR/424
EXHIBIT B ASHBY USA, LLC AND MERCHANT BUILDERS' CERTIFICATES (Including 15c2-12 Certificates, POS Certificates and Closing Certificates) (The Certificates of Ashby USA, LLC are attached
hereto; the Certificates of the Merchant Builders will be substantially the same as the Ashby USA, LLC Certificates with appropriate changes to reflect such Merchant Builders and the
applicable agreements of such Merchant Builders) B-l TEMRR BPAr.wpd/LR/424
TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-02 (RORIPAUGH RANCH) 2006 SPECIAL TAX BONDS 15c2-12 CERTIFICATE -ASHBY USA, LLC March 27, 2006 Stone & Youngberg
LLC 515 South Figueroa Street, Suite 1060 Los Angeles, California 90071 Re: Temecula Public Financing Authority Community Facilities District No. 03-02 (Roripaugh Ranch) 2006 Special
Tax Bonds Ladies and Gentlemen: In connection with the proposed sale to you of Temecula Public Financing Authority (the "Authority") Community Facilities District No. 03-02 (Roripaugh
Ranch) (the "District"") 2006 Special Tax Bonds (the "2006 Bonds""), the District has delivered to you a Preliminary Official Statement, dated March 27, 2006, relating to the 2006 Bonds
(the "Preliminary Official Statement""). Ashby USA, LLC, a California limited liability company ("Ashby USA, LLC"), for purposes of compliance with Rule 15c2-12 of the Securities and
Exchange Commission, deems final as of its date the statements contained in the Preliminary Official Official Statement relating to Ashby USA, LLC, the property owned by Ashby USA, LLC
(the ""Property""), the proposed development of the Property, ownership of the Property, Ashby USA, LLC's development plan, Ashby USA, LLC's financing plan, Ashby USA, LLC's lenders,
if any, and the contractual arrangements of Ashby USA, LLC (but excluding, in all cases, information on Continental Residential, Inc., Davidson Roripaugh Ranch 122, LLC, Tanamera/Roripaugh,
LLC, Tanamera/Roripaugh II, LLC, Traditions at Roripaugh, LLC, KB Home Coastal Inc. and their respective development and financing plans), and under the captions "INTRODUCTION -The Community
Facilities District" (excluding therefrom the first two paragraphs for which no certification is made), "CONTINUING DISCLOSURE -Ashby USA, LLC," "THE COMMUNITY FACILITIES DISTRICT,"
"PROPERTY OWNERSHIP AND DEVELOPMENT" (excluding therefrom information under the subcaptions "-Continental Residential, Inc.," "-Davidson Roripaugh Ranch 122, LLC," "-The Tanamera/Roripaugh
Entities,"" ""KB Home Coastal Inc.,"" ""Direct and Overlapping Debt,"" " -Estimated Value-to-Lien Ratios," " -Overlapping Assessment and Community Facilities Districts," " -Estimated
Assessed Value-to-Lien Ratios," "-Transportation Uniform Mitigation Fee; Multiple Species Habitat Conservation Plan," " -Market Absorption Study" and " -Appraised Property Value"" for
which no certification is made) except for the omission of no more than the following information: the offering prices, interest rates, selling compensation, aggregate principal amount,
principal amount per maturity, dates of mandatory sinking fund payments, delivery dates and any other terms of the 2006 Bonds relating to such matters. All capitalized terms used herein
and not otherwise defined have the meanings ascribed to them in the Certificate (the "Certificate") dated March 27, 2006, delivered on behalf of Ashby USA, LLC in connection with the
delivery of the Preliminary Official Statement.
Very truly yours. ASHBY USA, LLC, a California limited liability company By: Ashby Development Company, Inc., a Califorpifl-corooration, its Managing Member ustin K. AshoyrPresident
By: USA Investment Partners, LLC, a Nevada limited liability company its Member By: USA Commercial Mortgage Company, a Nevada corporation, Its non-Member Manager By: Joseph D. Milanowski,
President
Very truly yours, ASHBY USA, LLC, a California limited liability company By: Ashby Development Company, Inc., a California corporation, its Managing Member By:. Justin K. Ashby, President
By: USA Investment Partners, LLC, a Nevada limited liability company its Member By: USA Commercial Mor a Nevada-corporatipttf Its non^M^mbe^Wanager By: h6(Milkfio\vski, President
TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-02 (RORIPAUGH RANCH) 2006 SPECIAL TAX BONDS CERTIFICATE OF ASHBY USA, LLC March 27, 2006 To: Temecula Public
Financing Authority on behalf of Community Facilities District No. 03-02 (Roripaugh Ranch) Stone & Youngberg LLC Ladies and Gentlemen: Reference is made to Temecula Public Financing
Authority (the "Authority") Community Facilities District No. 03-02 (Roripaugh Ranch) (the "District") 2006 Special Tax Bonds and to the Bond Purchase Agreement to be entered into in
connection therewith (the "Bond Purchase Agreement"). This certificate is delivered pursuant to and in satisfaction of Section 3(d)(16) of the Bond Purchase Agreement. Capitalized terms
used herein and not otherwise defined have the meanings ascribed to them in the Bond Purchase Agreement. The undersigned certify that they are familiar with the facts herein certified,
have authority and are qualified to certify the same as officers of the members of Ashby USA, LLC, a California limited liability company ("Ashby USA, LLC"), and the undersigned, on
behalf of Ashby USA, LLC further certify as follows: 1. Ashby USA, LLC is duly organized and validly existing as a limited liability company under the laws of the State of California,
is in good standing in the State of California and has the limited liability company power and authority (i) to execute and deliver this Certificate, to execute and deliver at Closing
(as defined in the Bond Purchase Agreement) the Developer Continuing Disclosure Agreement (the "Developer Continuing Disclosure Agreement") dated as of March 1, 2006, by and between
Ashby USA, LLC and U.S. Bank National Association, as Dissemination Agent and Fiscal Agent; (ii) to execute and deliver (a) the Acquisition Agreement, dated as of March 1, 2006, executed
by and between the Authority and Ashby USA, LLC, (b) a Joint Community Facilities Agreement (Street Improvements) among the Authority, the County and Ashby USA, LLC, (c) a Joint Community
Facilities Agreement Agreement (Flood Control Improvements) among the Riverside County Flood Control and Water Conservation District, the County, the City, the Authority and Ashby USA,
LLC: and (d) a Joint Community Facilities Agreement among the Authority, Eastern Municipal Water District and Ashby USA, LLC (collectively, the "Developer Agreements"); and (iii) to
undertake all of the transactions on its part described in the Preliminary Official Statement and contemplated by the Developer Continuing Disclosure Agreement and the Developer Agreements.
2. As set forth in the Preliminary Official Statement, certain property within the District is owned by Ashby USA, LLC, and Ashby USA, LLC will develop such property for sale to merchant
builders. The property owned by Ashby USA, LLC as of the date hereof is referred to herein as the "Property." Ashby USA, LLC's current expectation is that Ashby USA, LLC shall remain
the party responsible for land use planning and backbone infrastructure of the property within the District. Ashby USA, LLC has not entered into an agreement for development or management
of the Property by any entity other than as described in the Preliminary Official Statement.
3. Ashby USA, LLC has the authority to execute and deliver at Closing the Developer Continuing Disclosure Agreement and has the authority to perform the obligations on its part to be
performed thereunder. Except as described in the Preliminary Official Statement with regard to previous undertakings relating to Rule 15c2-12 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, to the Actual Knowledge of the Undersigned , neither Ashby USA, LLC nor its Affiliates have materially failed within the past five
years to provide periodic continuing disclosure reports or notices of material events with respect to community facilities districts or assessment districts in California. "Affiliate"
of another Person (as defined below) means (a) a Person directly or indirectly owning, controlling, or holding with power to vote, 15% or more of the outstanding voting securities of
such other Person, (b) any Person 15% or more of whose outstanding voting securities are directly or indirectly owned, controlled or held with power to vote, by such other Person, and
(c) any Person directly or indirectly controlling, controlled by or under common control with such other Person; for purposes hereof, "control" means the power to exercise a controlling
influence over the management or policies of a Person, unless such power is solely the result of an official position with such Person. "Person" means an individual, a corporation, a
partnership, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof. Notwithstanding the foregoing and for purposes
of this certificate, none of the following entities shall be considered an Affiliate of Ashby USA, LLC: Continental Residential, Inc., Davidson Roripaugh Ranch 122, LLC, Tanamera/Roripaugh,
LLC, Tanamera/Roripaugh n, LLC, Traditions at Roripaugh, LLC or KB Home Coastal Inc. 4. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned
(a) Ashby USA, LLC and its Affiliates are not in breach of or in default under any applicable law or administrative regulation of the State of California or the United States of America,
or any agency or instrumentality of either, which breach or default would in any way materially and adversely affect the proposed Developer Continuing Disclosure Agreement, the Developer
Agreements or the ability of Ashby USA, LLC to pay special taxes levied on the Property (the "Special Taxes"), and (b) to the Actual Knowledge of the Undersigned, no event has occurred
and is continuing which with the passage of time or giving of notice, or both, would constitute such a breach or default; and to the Actual Knowledge of the Undersigned, the execution
and delivery at Closing by Ashby USA, LLC of the Developer Continuing Disclosure Agreement and compliance with the provisions thereof will not conflict with or constitute a breach of
or default under any law or administrative regulation applicable to Ashby USA, LLC. 5. Except as disclosed in the Preliminary Official Statement, (a) to the Actual Knowledge of the Undersigned,
Ashby USA, LLC and its Affiliates are not in breach of or in default under any applicable judgment or decree or any loan agreement, option agreement, development agreement, indenture,
fiscal agent agreement, bond, note, resolution, agreement or other instrument to which Ashby USA, LLC or its Affiliates are, or will upon issuance of the 2006 Bonds be, a party or otherwise
subject, which breach or default would in any way materially and adversely affect the Developer Continuing Disclosure Agreement, the Developer Agreements or Ashby USA, LLC's ability
to develop the Property or to pay the Special Taxes, and (b) to the As used in this certificate, the phrase "Actual Knowledge of the Undersigned" shall mean the knowledge that the undersigned
currently have or have obtained from interviews with such officers and responsible employees of Ashby USA, LLC and members of Ashby USA, LLC as the undersigned have determined are likely,
in the ordinary course of their respective duties, to have knowledge of the matters set forth herein. Other than as set forth in the immediately preceding sentence, with your permission,
the undersigned have not conducted any additional inspection or inquiry.
Actual Knowledge of the Undersigned, no event has occurred and is continuing that with the passage of time or giving of notice, or both, would constitute such a breach or default; and
the execution and delivery at Closing by Ashby USA, LLC of the Developer Continuing Disclosure Agreement and compliance with the provisions thereof will not conflict with or, constitute
a breach of or default under any judgment, decree, loan agreement, indenture, fiscal agent agreement, bond, note, resolution, agreement or other instrument to which Ashby USA, LLC or
its Affiliates is a party or otherwise subject which breach or default would in any way materially and adversely affect the Developer Continuing Disclosure Agreement or Ashby USA, LLC's
ability to develop the Property or its ability to pay the Special Taxes. 6. Except as described in the Preliminary Official Statement, there are no material loans outstanding and unpaid
and no material lines of credit of Ashby USA, LLC or its Affiliates that are secured by an interest in the Property. 7. Except as set forth in the Preliminary Official Statement, no
claim, dispute, suit, action, contingent liability or litigation is pending (with service of process to Ashby USA, LLC or any Member of Ashby USA, LLC, having been accomplished) or,
to the Actual Knowledge of the Undersigned, pending with service of process to any parent entity of any Member having been accomplished, or to the Actual Knowledge of the Undersigned
threatened (a) to restrain or enjoin collection of Special Taxes or other sums pledged or to be pledged to pay the principal of and interest on the 2006 Bonds, (b) to restrain or enjoin
the execution of and performance of Ashby USA, LLC's obligations under the proposed Developer Continuing Disclosure Agreement or the performance of Ashby USA, LLC's obligations under
the Developer Agreements, (c) to restrain or enjoin development of the property within the District, (d) in any way contesting or affecting the validity of the Special Taxes, the Developer
Continuing Disclosure Agreement, the Developer Agreements or any other document, license, permit or approval necessary to the performance on Ashby USA, LLC's part under the proposed
Developer Continuing Disclosure Agreement or the Developer Agreements or (e) which would in any way materially and adversely affect Ashby USA, LLC's ability to develop the Property or
to pay Special Taxes. 8. Except as set forth in the Preliminary Official Statement, no litigation is pending with service of process to Ashby USA, LLC having been accomplished, to the
Actual Knowledge of the Undersigned, no litigation is pending with service of process to any Affiliate having been accomplished, and, to the Actual Knowledge of the Undersigned, no litigation
is threatened against Ashby USA, LLC or any Affiliate involving Ashby USA, LLC or any Affiliate, or any of the property or assets under the control of Ashby USA, LLC or any Affiliate
that involves the possibility of any judgment or uninsured liability which may result in any material adverse change in the assets or funds held by Ashby USA, LLC or any Affiliate that
would materially and adversely affect Ashby USA, LLC's ability to develop the Property or to pay Special Taxes. 9. As of the date thereof, but solely with respect to information relating
to Ashby USA, LLC, the Property, the proposed development of the Property, ownership of the Property, Ashby USA, LLC's development plan, Ashby USA, LLC's financing plan, Ashby USA, LLC's
lenders, if any, and the contractual arrangements of Ashby USA, LLC (but excluding, in all cases, information on Continental Residential, Inc., Davidson Roripaugh Ranch 122, LLC, Tanamera/Roripaugh,
LLC, Tanamera/Roripaugh n, LLC, Traditions at Roripaugh, KB Home Coastal Inc. and their respective development and financing plans) and subject to the exclusions set forth below, the
information contained in the Preliminary Official Statement under the captions "INTRODUCTION -The Community Facilities District" (excluding therefrom the first two paragraphs for which
no certification is made), "CONTINUING DISCLOSURE -Ashby USA, LLC," "THE COMMUNITY FACILITIES DISTRICT," and "PROPERTY OWNERSHIP
AND DEVELOPMENT" (excluding therefrom information under the subcaptions "-Continental Residential, Inc.," " -Davidson Roripaugh Ranch 122, LLC," "-The Tanamera/Roripaugh Entities," "
-KB Home Coastal Inc.," " -Direct and Overlapping Debt," " -Estimated Value-to-Lien Ratios," " -Overlapping Assessment and Community Facilities Districts," " -Estimated Assessed Value-to-Lien
Ratios," " -Transportation Uniform Mitigation Fee; Multiple Species Habitat Conservation Plan," " -Market Absorption Study" and " -Appraised Property Value" for which no certification
is made) is true and correct in all material respects and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which they were made, not misleading. 10. Ashby USA, LLC has full limited liability company power and authority
to develop the Property, to own any portion of the Property it acquires and to carry on its business as presently conducted and as described in the Preliminary Official Statement. 11.
Ashby USA, LLC covenants that, while the 2006 Bonds or any refunding obligations related thereto are outstanding, Ashby USA, LLC will not bring any action, suit, proceeding, inquiry
or investigation at law or in equity, before any court, regulatory agency, public board or body, that in any way seeks to challenge or overturn the formation of the District, to challenge
the levy of the Special Taxes within the District, to invalidate the District or any of the 2006 Bonds, or to invalidate the special tax liens imposed under Section 3115.5 of the Streets
and Highways Code based on recordation of the notices of special tax lien relating thereto. The foregoing covenant shall not prevent Ashby USA, LLC in any way from bringing any
other action, suit or proceeding including, without limitation, an action or suit contending that the Special Tax has not been levied in accordance with the methodologies contained in
the District's Rate and Method of Apportionment of Special Taxes pursuant to which the Special Taxes are levied, an action or suit with respect to the application or use of the Special
Taxes levied and collected, or an action or suit to enforce the obligations of the Authority under the Resolution of Issuance, the Fiscal Agent Agreement, the Developer Agreements or
any agreements with the Authority, the City and/or the District or any other party for which Ashby USA, LLC is a party or beneficiary. 12. Except as disclosed in the Preliminary Official
Statement, to the Actual Knowledge of the Undersigned, no other public debt secured by a tax or assessment on the Property exists or is in the process of being authorized and no assessment
districts or community facilities districts have been or are in the process of being formed that include any portion of the Property. 13. Except as disclosed in the Preliminary Official
Statement, to the Actual Knowledge of the Undersigned, Ashby USA, LLC and its Affiliates have not in the last five years defaulted in payment of, and are not currently delinquent on,
any ad valorem, assessment or special tax obligations in California in any material amount. 14. Ashby USA, LLC consents to the issuance of the 2006 Bonds. Ashby USA, LLC acknowledges
and agrees that the proceeds of the 2006 Bonds will be used as described in the Official Statement, provided that nothing in this statement modifies any right or obligation of the parties
under the Developer Agreements, or any other agreement. 15. Ashby USA, LLC intends to comply with the provision of Government Code Section 53341.5 relating to the Notice of Special Tax
in connection with the sale of the Property, or portions thereof, that it takes title to.
16. Ashby USA, LLC acknowledges that interest on the 2006 Bonds is estimated to be capitalized through September 1, 2006 and that the Special Tax levies on Developed Property and Undeveloped
Property will commence in Fiscal Year 2006-07 (commencing with the November 1, 2006 tax installment) in order to pay for principal and interest on the 2006 Bonds and to pay a portion
of the administrative expenses relating to the District. 17. Ashby USA, LLC is solvent and no proceedings are pending or, to the Actual Knowledge of the Undersigned, threatened in which
Ashby USA, LLC may be adjudicated as bankrupt or discharged from any and all of its debts or obligations or granted an extension of time to pay its debts or obligations or a reorganization
or readjustment of its debts. 18. To the Actual Knowledge of the Undersigned, the Members of Ashby USA, LLC and the parent entities of such Members of Ashby USA, LLC are solvent and
no proceedings are pending, or to the Actual Knowledge of the Undersigned, threatened in which the Members of Ashby USA, LLC and the parent entities of such Members of Ashby USA, LLC
may be adjudicated as bankrupt or discharged from any or all of their respective debts or obligations, or granted an extension of time to pay their respective debts or obligations, or
be allowed to reorganize or readjust their respective debts or obligations. 19. To the Actual Knowledge of the Undersigned, Ashby USA, LLC has not filed for, nor are there current proceedings
for the reassessment of, the assessed value of the Property. 20. To the Actual Knowledge of the Undersigned, there are no claims, disputes, suits, actions or contingent liabilities among
Ashby USA, LLC, its Affiliates or any contractors working on the development of the Property which may materially and adversely affect the development of the Property or the payment
of the Special Taxes on the Property. 21. Based upon the current development plans, including, without limitation, the current budget and subject to economic conditions and risks generally
inherent in the development of real property, to the Actual Knowledge of the Undersigned, Ashby USA, LLC anticipates that it will have sufficient funds to carry on its business as presently
conducted and as described in the Preliminary Official Statement and to pay Special Taxes assessed against the Property. However, none of the members of Ashby USA, LLC or its Affiliates
are obligated to make any additional capital contribution or loan to Ashby USA, LLC at any time and Ashby USA, LLC reserves the right to change its plan at any time without notice. 22.
All information submitted in writing by Ashby USA, LLC or its agents to the Authority, the District, the Special Tax Consultant, the Market Absorption Consultant, the Appraiser, Disclosure
Counsel or the Underwriter in connection with the issuance of the 2006 Bonds, was, at the time of submission, to the Actual Knowledge of the Undersigned, true and correct. 23. Except
as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, there are no endangered species, hazardous substances or archaeological resources relating
to the Property which could have a significant impact on Ashby USA, LLC's ability to pay Special Taxes or to sell or develop all or any portion of the Property. 24. As to information
indicated in Section 9 hereof relating to Ashby USA, LLC, the Property, the proposed development of the Property, ownership of the Property, Ashby USA, LLC's development plan, Ashby
USA, LLC's financing plan, Ashby USA, LLC's lenders, if any, and the contractual arrangements of Ashby USA, LLC (but excluding, in all cases, information on Continental Residential,
Inc., Davidson Roripaugh Ranch 122, LLC, Tanamera/Roripaugh,
LLC, Tanamera/Roripaugh II, LLC, Traditions at Roripaugh, LLC, KB Home Coastal Inc. and their respective development and financing plans), and subject to the limitations and exclusions
set forth in Section 9, Ashby USA, LLC agrees to indemnify and hold harmless, to the extent permitted by law, the Authority, the District, and their officials and employees, and each
person, if any, who controls any of the foregoing within the meaning of Section 15 of the Securities Act of 1933, as amended, or of Section 20 of the Securities Exchange Act of 1934,
as amended against any and all losses, claims, damages or liabilities, joint or several, to which such indemnified party may become subject under any statute or at law or in equity or
otherwise, and shall reimburse any such indemnified party for any reasonable legal or other expense incurred by it, in each case in connection with investigating any claims against it
and defending any actions, insofar as such losses, claims, damages, liabilities or actions arise out of, or are based upon, any untrue statement of a material fact or the omission to
state a material fact, in the final Official Statement, as of its date or in any continuing disclosure statement, as of its date, provided or authorized by Ashby USA, LLC, a material
fact necessary to make the statement therein, in light of the circumstances under which it was made not misleading. This indemnity provision shall not be construed as a limitation on
any other liability which Ashby USA, LLC may otherwise have to any indemnified party, provided that in no event shall Ashby USA, LLC be obligated for double indemnification nor for the
negligence or wilful misconduct of another. 25. Ashby USA, LLC has agreed to execute the Developer Continuing Disclosure Agreement in the form included in Appendix G to the Preliminary
Official Statement. 26. If between the date hereof and the date of the Closing, to the Actual Knowledge of the Undersigned, any event relating to or affecting Ashby USA, LLC, its Affiliates
or the development of the Property shall occur which might or would cause the Official Statement, as then supplemented or amended, to contain an untrue statement of a material fact or
to omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading,
Ashby USA, LLC shall notify the Authority, the District and the Underwriter and if in the opinion of counsel to the Authority or the Underwriter such event requires the preparation and
publication of a supplement or amendment to the Official Statement, Ashby USA, LLC shall reasonably cooperate with the Authority in the preparation of an amendment or supplement to the
Official Statement in form and substance satisfactory to counsel to the Authority and to the Underwriter. 27. For the "underwriting period," as defined in the Bond Purchase Agreement,
if any event relating to or affecting Ashby USA, LLC, its Affiliates or the development of the Property shall occur as a result of which it is necessary, in the opinion of the Underwriter
or counsel to the Authority, to amend or supplement the Official Statement in order to make the Official Statement not misleading in the light of the circumstances existing at the time
it is delivered to a purchaser, Ashby USA, LLC shall reasonably cooperate with the Authority and the Underwriter in the preparation of an amendment or supplement to the Official Statement
in form and substance satisfactory to the Underwriter and counsel to the Authority which will amend or supplement the Official Statement so that it will not contain an untrue statement
of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances existing at the time the Official Statement is
delivered to a purchaser, not misleading. 28. Ashby USA, LLC agrees to deliver a Certificate dated the date of issuance of the 2006 Bonds at the time of issuance of the 2006 Bonds in
substantially the form attached as Exhibit A, provided, that, if any event relating to or affecting Ashby USA, LLC or its Affiliates or the development of the Property shall occur as
a result of which it is necessary to modify the Certificate, Ashby USA, LLC agrees to deliver the Certificate revised to reflect such event.
29. On behalf of Ashby USA. LLC. we have reviewed the contents of this Certificate and have met with counsel to Ashby USA, LLC, for the purpose of discussing the meaning of its contents.
Very truly yours, ASHBY USA, LLC, a California limited liability company By: Ashby Development Company, [nc., a California corporation, its Managing Member By: USA Investment Partners,
LLC, a Nevada limited liability company its Member By: USA Commercial Mortgage Company, a Nevada corporation, Its non-Member Manager By: Joseph D. Milanowski, President
29. On behalf of Ashby USA, LLC, we have reviewed the contents of this Certificate and have met with counsel to Ashby USA, LLC, for the purpose of discussing the meaning of its contents.
Very truly yours, ASHBY USA, LLC, a California limited liability company By: Ashby Development Company, Inc., a California corporation, its Managing Member By:. Justin K. Ashby, President
By: USA Investment Partners, LLC, a Nevada limited liability company its Member By: USA Commercial Mort; a Nevada corporate ^ager B
TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-02 (RORIPAUGH RANCH) 2006 SPECIAL TAX BONDS CLOSING CERTIFICATE OF ASHBY USA, LLC April 27, 2006 To: Temecula
Public Financing Authority on behalf of Community Facilities District No. 03-02 (Roripaugh Ranch) Stone & Youngberg LLC Ladies and Gentlemen: Reference is made to Community Facilities
District No. 03-02 (Roripaugh Ranch) of the Temecula Public Financing Authority 2006 Special Tax Bonds and to the Bond Purchase Agreement dated April 13, 2006 (the "Bond Purchase Agreement")
entered into in connection therewith. This certificate is delivered pursuant to the Bond Purchase Agreement. Capitalized terms used herein and not otherwise defined have the meanings
ascribed to them in the Certificate (the "Certificate") dated March 27, 2006 delivered on behalf of Ashby USA, LLC, a California limited liability company ("Ashby USA, LLC"), which is
attached hereto as Exhibit A. The undersigned certify that they are familiar with the facts herein certified, have authority and are qualified to certify the same as officers of the
members of Ashby USA, LLC, and the undersigned, on behalf of Ashby USA, LLC, further certify as follows: 1. Each statement made in the Certificate is affirmed and restated as if made
on the date hereof. 2. To the Actual Knowledge of the Undersigned, no event has occurred since the date of the Preliminary Official Statement which has adversely affected or will materially
and adversely affect the business, properties, operations, prospects or financial condition of Ashby USA, LLC or its Affiliates, which would materially and adversely affect the development
of the Property or their ability to pay Special Taxes for which they are obligated to pay. 3. Ashby USA, LLC has received the Official Statement relating to the 2006 Bonds, and each
statement made in the Certificate referring to the Preliminary Official Statement is affirmed as if it relates to the Official Statement. 4. Each statement made in the Certificate referring
to the proposed Developer Continuing Disclosure Agreement is affirmed as if it relates to the Developer Continuing Disclosure Agreement as executed and delivered. 5. Ashby USA, LLC has
duly executed and delivered the Developer Continuing Disclosure Agreement, has the authority to perform the obligation on its part to be performed thereunder, and the Developer Continuing
Disclosure Agreement constitutes the legal, valid and binding obligations of Ashby USA, LLC. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; EXECUTION PAGE FOLLOWS]
5, Ashby USA. LLC has duly executed and delivered the Developer Continuing Disclosure Agreement, has the authority to perform the obligation on its part to be performed thereunder, and
the Developer Continuing Disclosure Agreement constitutes the legal, valid and binding obligations of Ashby USA, LLC. Very truly yours, ASHBY USA, LLC, a California limited liability
company By: Ashby Development Company, Inc., a California corporation, its Managing-Member By: USA Investment Partners, LLC, a Nevada limited liability company its Member By: USA Commercial
Mortgage Company, a Nevada corporation, Its non-Member Manager By: Joseph D. Milanowski, President
EXHIBIT C-l FORM OF OPINION OF COUNSEL TO ASHBY USA, LLC and EXHIBIT C-2 FORM OF OPINION OF COUNSEL TO TANAMERA/RORIPAUGH ENTITIES (Exhibit C-2 will be substantially similar to Exhibit
C-l with appropriate changes to reflect the Tanamera/Roripaugh Entities and the Agreements applicable to the Tanamera/Roripaugh Entities) TEMRR BPAo.wpd/LR/424
10100 SANTA MONICA BOULEVARD SUITE 2300 LOS ANGELES, CA 90067^008 310.203.1100 F: 310.286.6672 _, 2006 Temecula Public Financing Authority Community Facilities District No. 03-02 Temecula,
California Temecula Public Financing Authority Temecula, California Stone & Youngberg LLC Los Angeles, California Re: $ Temecula Public Financing Authority Community Facilities District
No. 03-02 2006 Special Tax Bonds Ladies and Gentlemen: We have acted as special counsel to Ashby USA, LLC, a California limited liability company ("Ashby USA, LLC"), in connection with
Ashby USA, LLC's participation in the issuance by Temecula Public Financing Authority Community Facilities District No. 03-02 (the "District") of its 2006 Special Tax Bonds (the "Bonds").
This opinion is provided for the benefit of Stone & Youngberg LLC (the "Underwriter"), the Temecula Public Financing Authority (the "Authority") and the District pursuant to Section
3(d)( ) of that certain Bond Purchase Agreement, dated March , 2006 (the "Purchase Agreement"), by and between the Authority, on behalf of the District, and the Underwriter. We advise
you that we are not general counsel to Ashby USA, LLC and do not represent Ashby USA, LLC, on a continuing basis. Rather, we represent Ashby USA, LLC as requested from time to time on
specific matters. In rendering the opinions hereinafter expressed, we have reviewed and examined the following documents:
, 2006 Page 2 A. The Purchase Agreement; B. The final Official Statement dated March , 2006 relating to the Bonds (the "Official Statement"); C. The Developer Continuing Disclosure Agreement,
dated as of March 1, 2006, by and between Ashby USA, LLC and U.S. Bank National Association, as both Dissemination Agent and Fiscal Agent (the "Continuing Disclosure Agreement"); D.
The Acquisition Agreement, dated as of March 1, 2006, by and between the Authority and Ashby USA, LLC (collectively, the "Acquisition Agreement"); E. The Preannexation and Development
Agreement (the "Development Agreement"), as of December 17, 2002, by and between the City and Ashby USA, LLC recorded on January 9, 2003 as Document No. 2003-018567 [DISCUSS]; F. The
First Operating Memorandum to the Recorded Development Agreement Between City of Temecula and Ashby USA, LLC (Roripaugh Ranch Project) (the "First Operating Memorandum"), dated as of
October 21, 2004, by and between Ashby USA, LLC and the City [DISCUSS]; G. The Agreement to Defer Completion of Conditions of Approval Until After Recordation of Final Map for Tract
No. 29353-2 Roripaugh Ranch Specific Plan (the "Deferral Agreement"), between the City of Temecula, and Ashby USA, LLC [DISCUSS]; H. The Joint Community Facilities Agreement -EMWD (the
"Joint Community Facilities Agreement -EMWD"), dated as of [November] 1, 2004, by and among the Temecula Public Financing Authority, Eastern Municipal Water District ("EMWD") and Ashby
USA, LLC, a California limited liability company ("Ashby USA, LLC"); I. The Joint Community Facilities Agreement (Street Improvements) (the "Joint Community Facilities Agreement -County
Transportation"), dated as of November 1, 2004, by and among the County of Riverside, the City, the Authority and Ashby USA, LLC; J. The Joint Community Facilities Agreement (Flood Control
Improvements) (the "Joint Community Facilities Agreement -RCFCWCD"), dated as of November 1, 2004, by and among Riverside County Flood Control and Water Conservation District, the County,
the Authority, and Ashby USA, LLC;
,2006 Page 3 K. The dated as of by and between and Ashby USA, LLC; (the " " and together with the Continuing Disclosure Agreement, the Acquisition Agreement, the Joint Community Facilities
Agreement -EMWD, the Joint Community Facilities Agreement -County Transportation, and the Joint Community Facilities Agreement RCFCWD, are referred to herein as the "Developer Agreements")
L. The Certificate of Ashby USA, LLC set forth in Exhibit "A" attached hereto, dated the date hereof and executed by the duly authorized representative of Ashby USA, LLC (the "Certificates
of Ashby USA, LLC"); M. The Certificate of Good Standing for Ashby USA, LLC, executed by the California Secretary of State on , 2006, and (ii)the letter of good standing for Ashby USA,
LLC, executed by the California Franchise Tax Board on , 2006 (collectively, the "Ashby USA, LLC Good Standing Certificates"); N. The Certificate of Formation of Ashby USA, LLC, filed
, 20_, certified to be true and correct by the California Secretary of State on , 2006, including Articles of Organization, (ii) a copy of the Operating Agreement for Ashby USA, LLC,
effective as of , 20 (the "Operating Agreement") certified to be true and correct by an authorized representative of Ashby USA, LLC, (iii)Form LLC-, certified to be true and correct
by the California Secretary of State on , 2006 (collectively, the "Ashby USA, LLC Organizational Documents"); O. The Closing Certificate of Ashby USA, LLC, delivered by Ashby USA, LLC,
pursuant to Section 3(d) ) of the Purchase Agreement (the "Ashby USA, LLC Closing Certificate"); and P. The certificates of public officials and other persons required under the Purchase
Agreement (the Certificates of Ashby USA, LLC, the Ashby USA, LLC ' Closing Certificate, and the certificates described in this sentence are collectively referred to herein as the "Certificates"),
and such other documents as we deemed relevant for the purposes of this opinion. In conducting our examination, we have assumed, without investigation: (i) the genuineness of all signatures
(other than those of Ashby USA, LLC, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified
or photostatic copies, and the authenticity of the originals from which such copies were made; (ii) the accuracy of the representations and warranties of the factual matters made by
Ashby USA, LLC in the Developer Agreements, the Certificates and any other certificates and opinions delivered by any party in connection
,2006 Page 4 with this transaction; (iii) the legal capacity of all natural persons; (iv) as to documents executed by parties other than Ashby USA, LLC,, such parties" power to enter
into and perform the obligations under such documents, and that such documents have been duly authorized, executed and delivered by, and are binding upon and enforceable against, such
parties; (v) that there are no oral or written terms or conditions (other than as expressed in the Developer Documents) agreed to by Ashby USA, LLC and the other parties to the Developer
Documents (the "Other Parties") or by the Other Parties and any other party, which would expand or modify the respective rights and obligations of Ashby USA, LLC or the Other Parties
set forth in the Developer Documents or which would have an effect on the opinions rendered herein; and (vi) that the Other Parties are not subject to any statute, rule, or regulation,
or to any impediment to which contracting parties are generally not subject, which requires any of them to obtain the consent of, or to make a declaration or filing with, any governmental
authority in connection with the execution and delivery of the Developer Documents. We have performed a computerized litigation search of the records (civil filings only) of the Riverside
County Superior Court, the San Bernardino County Superior Court, the Los Angeles County Superior Court, the Orange County Superior Court, the U.S. Bankruptcy Court, Central District
of California, the Federal District Court, Central District of California, the U.S. Bankruptcy Court (Nevada) and the Federal District Court (Nevada), regarding the existence of pending
litigation with the words "Ashby USA, LLC," "Ashby Development Company, Inc.," "USA Investment Partners, LLC," and in the name of a plaintiff, defendant, or a debtor in such courts,
each search being performed on the dates set forth in Exhibit "F" hereof (collectively, the "Litigation Searches"). We have delivered the Litigation Searches to Ashby USA, LLC, and requested
that Ashby USA, LLC review the appropriate Litigation Searches, and all other pending litigation, if any, which is not listed in the Litigation Searches, and determine the effect or
impact that any matters identified in the Litigation Searches and all other litigation (if any) would have on the obligations of Ashby USA, LLC with respect to its duties and obligations
under the Developer Agreements. After review, Ashby USA, LLC determined that the representations set forth in paragraph 5 of the Certificate of Ashby USA, LLC are fair and accurate.
In rendering our opinion in paragraph 3 below, we have, with your consent, relied on the Litigation Searches and the representations set forth in paragraph 5 of the Certificate of Ashby
USA, LLC, without undertaking any independent investigation. In examining the Developer Documents, we have assumed with your permission, and without investigation, that, upon execution
by the Other Parties, if any, the Developer Documents will be the legally valid and binding agreements of the applicable Other Parties, enforceable against each of such Other Parties
in accordance with their respective terms, and that the Other Parties will seek to enforce their respective rights under the Developer Documents only in good faith, in commercially reasonable
circumstances and in a commercially reasonable manner. Whenever a statement concerning factual matters herein is qualified by the
, 2006 Page 5 phrase "our knowledge," it is intended to indicate that, during the course of our representation of Ashby USA, LLC in connection with this matter, no information that would
give us current actual knowledge of the inaccuracy of such factual statements has come to the attention of the attorneys in our firm who have been involved with our representation of
Ashby USA, LLC in connection with this matter. Please be advised that only Robert M, Haight, Jr. , and have been so involved. Other than our review of the documents listed above, and
our determining the knowledge of the foregoing lawyers who have performed legal services for Ashby USA, LLC, in connection with this transaction, we have not undertaken any factual investigation,
and any limited inquiry undertaken by us during the preparation of this opinion letter should not be regarded as such an investigation. No inference concerning our knowledge of any factual
matters bearing on the accuracy of any such factual statement should be drawn from our limited representation of Ashby USA, LLC. We have not made or undertaken to make any investigation
as to the state of title to the property within the District, and we express no opinion with respect to such title. We have made such examination of California law and the law of the
United States of America as we deem relevant for the purposes of this opinion letter. We have not considered the effect, if any, of the laws of any other jurisdiction upon the matters
covered by this opinion letter. Based on the foregoing and subject to the assumptions and qualifications set forth in this letter, it is our opinion that: (1) Based solely on the Ashby
USA, LLC Good Standing Certificates, Ashby USA, LLC was duly formed as a limited liability company, is in good standing and has legal existence under the law of the State of California
and is in good standing in the State of California. (2) Ashby USA, LLC has the limited liability company power and authority to execute, deliver, and perform its obligations under the
Developer Documents to which it is a party, has duly authorized, executed, and delivered the Developer Documents to which it is a party, and has authorized the performance of its respective
duties and obligations thereunder. (3) Based solely on the Litigation Searches and the Certificate of Ashby USA, LLC, and other than as disclosed in the Official Statement, there is
no litigation pending or threatened against or affecting Ashby USA, LLC or any of its members (a) which affects or seeks to prohibit, restrain or enjoin the development by Ashby USA,
LLC of its property within the District, or (b) in which Ashby USA, LLC or any of its members may be adjudicated as bankrupt or discharged from any or all of its debts or obligations
or granted an extension of time to pay its debts or a reorganization or readjustment of its debts, or (c) which seeks to grant an extension of time to pay Ashby USA, LLC's or its members'
debts, or (d) seeks to effect a reorganization or readjustment of Ashby USA, LLC's or its members' debts.
, 2006 Page 6 (10) We are not passing upon and do not assume any responsibility for the accuracy, completeness, or fairness of any of the statements contained in the Official Statement
and make no representation that we have independently verified the accuracy, completeness, or fairness of any such statements. However, in our capacity as special counsel to Ashby USA,
LLC, we met in conferences with representatives of Ashby USA, LLC, the District and others, during which conferences the contents of the Official Statement and related matters were discussed.
Based solely on our knowledge and the Certificates of Ashby USA, LLC, we advise you that no information came to the attention of the attorneys in our firm rendering services as special
counsel to the Ashby USA, LLC, which caused us to believe that, as of the date hereof, the statements contained in the Official Statement relating to Ashby USA, LLC, or the property
in the District owned by Ashby USA, LLC, (including the proposed development thereof), Ashby USA, LLC's' development plans, Ashby USA, LLC's financing plan and the contractual arrangements
of Ashby USA, LLC, (except that no opinion or belief is expressed as to (i) any financial statements and other financial, statistical or engineering data or forecasts, numbers, charts,
estimates, projections, assumptions or expressions of opinion, or (ii) any information about valuation, appraisals,
absorption, or environmental matters) under the captions "INTRODUCTION -The Community Facilities District," (excluding therefrom the first two paragraphs for which no opinion is made),
"CONTINUING DISCLOSURE -Ashby USA, LLC," "THE COMMUNITY FACILITIES DISTRICT," "PROPERTY OWNERSHIP" (excluding therefrom information under the subcaptions " -Continental Residential,
Inc.," " -Davidson Roripaugh Ranch 122 LLC," " -The Tanamera/Roripaugh Entities," "KB Home Coastal Inc.," "Direct and Overlapping Debt," " -Estimated Value-to-Lien Ratios," " -Overlapping
Assessment and Community Facilities Districts," " -Estimated Assessed Value-to-Lien Ratios," "-Transportation Uniform Mitigation Fee; Multiple Species Habitat Conservation Plan," " -Market
Absorption Study" and " -Appraised Property Value" and for which no opinion is made) contain any untrue statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make such statements, in the light of the circumstances under which they were made, not misleading. (11) Based solely on our knowledge and the Certificates
of Ashby USA, LLC, Ashby USA, LLC is not in violation of any provision of, or in default under, the organizational documents or any other agreement or other instrument, the violation
or default under which would materially and adversely affect the ability of Ashby USA, LLC to complete the proposed development of the property as described in the Official Statement.
With respect to the foregoing opinions, you should be aware of the following: We express no opinion as to the exclusion from gross income for federal income tax purposes of the interest
on the Bonds, or the exemption of the interest on the Bonds from State of California personal income taxes.
,2006 Page? Except to the limited extent set forth in paragraph 10 above, we express no opinion as to the applicability or effect on the subject transaction of the securities laws of
the State of California or of the United States of America, including but not limited to the Securities Act of 1933, as amended. We are licensed to practice law only in the State of
California. Accordingly, the foregoing opinions apply only insofar as the laws of the State of California or the United States of America may be concerned, and we express no opinion
with respect to the laws of any other jurisdiction. This letter, and the legal opinions herein, are rendered as of the date hereof and are furnished solely for your benefit in connection
with the subject transaction, and may not be relied upon for any other purpose or furnished to, used, circulated, quoted or referred to by any other person without our prior written
consent, except as contemplated by the Purchase Agreement. This letter is not intended to, and may not, be be relied upon by any owners of the Bonds. We bring to your attention the fact
that our legal opinions are an expression of professional judgment and are not a guarantee of a result. Our engagement with respect to this matter has terminated as of the date hereof,
and we do not undertake to advise you of any matters that may come to our attention subsequent to the date hereof that may affect our legal opinions expressed herein. This letter is
limited to the matters expressly set forth herein, and no opinion is implied or may be inferred beyond the matters expressly stated herein. Respectfully submitted, PILLSBURY WINTHROP
SHAW PITTMAN LLP RMH/BJG
EXHIBIT "A" TO OPINION OF COUNSEL TO ASHBY USA, LLC
s Temecula Public Financing Authority Community Facilities District No. 03-02 2006 Special Tax Bonds CERTIFICATE OF ASHBY USA, LLC The undersigned, on behalf of Ashby USA, LLC, a California
limited liability company ("Developer"), in connection with the development of certain property (the "Property") located within the boundaries of the Temecula Public Financing Authority
Community Facilities District No. 03-02 (the "District") and in connection with the issuance of the above-captioned Bonds (the "Bonds") in the District, has requested that Pillsbury
Winthrop Shaw Pittman LLP (the "Law Firm") issue a legal opinion to the Temecula Public Financing Authority, the District and Stone & Youngberg LLC in connection with the issuance and
sale of the Bonds. The legal opinion being issued by the Law Firm (the "Opinion") includes certain assumptions as to factual matters of which the Law Firm has no, or limited, knowledge.
Developer is providing the Law Firm with this certificate in order to allow the Law Firm to issue the Opinion. Capitalized terms not defined in this certificate have the respective meanings
given those terms in the Opinion. 1. Developer has reviewed the Opinion, and all factual assumptions which support the opinions rendered in the Opinion are true, correct, complete and
accurate as of the date hereof. 2. The copies of the Ashby USA, LLC Organizational Documents delivered to the Law Firm by or on behalf of the Developer are true and complete copies thereof,
which remain in full force and effect and have not been amended or modified as of the date hereof. 3. The Developer was duly formed as a limited liability company, is in good standing
and has legal existence under the law of the State of California, and is in good standing in the State of California. 4. The Developer has the limited liability company power and authority
to execute, deliver, and perform its obligations under the Developer Documents to which it is a party, has duly authorized, executed, and delivered the Developer Documents to which which
it is a party, and has authorized the performance of its respective duties and obligations thereunder. 5. Other than as disclosed in the Official Statement, there is no litigation pending
or threatened against or affecting the Developer (including, but not limited to, the actions, if any, described in the computerized litigation search of the records of the Riverside
County Superior Court, the San Bernardino County Superior Court, the Los Angeles County Superior Court, the Orange County Superior Court, the U.S. Bankruptcy Court, Central District
of California, the Federal District Court, Central District of California, the U.S. Bankruptcy Court (Nevada) and the Federal District Court (Nevada)) (a) which affects or seeks to prohibit,
restrain or enjoin the development by the Developer proposed to be developed by the Developer within the District, or (b) in which the Developer may be adjudicated as bankrupt or discharged
from any or all of its debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts, or A-l
(c) which seeks to grant an extension of time to pay the Developer's debts, or (d) seeks to effect a reorganization or readjustment of the Developer's debts. 6. As of the date hereof,
the statements contained in the Official Statement relating to Ashby USA, LLC, Ashby Development Company, Inc., USA Investment Partners, LLC or the property in the District owned by
Ashby USA, LLC (including the proposed development thereof), Ashby USA, LLC's development plans, Ashby USA, LLC's financing plan and the contractual arrangements of Ashby USA, LLC and
Ashby Development Company, Inc. (except that no opinion or belief is expressed as to (i) any financial statements and other financial, statistical or engineering data or forecasts, numbers,
charts, estimates, projections, assumptions or expressions of opinion, or (ii) any information about valuation, appraisals, absorption, or environmental matters) under the captions "INTRODUCTION
-The Community Facilities District," (excluding therefrom the first two paragraphs for which no opinion is made), "CONTINUING DISCLOSURE -Ashby USA, LLC," "THE COMMUNITY FACILITIES DISTRICT,"
"PROPERTY OWNERSHIP AND DEVELOPMENT" (excluding therefrom information under the subcaptions "-Continental Residential, Inc.," " -Davidson Roripaugh Ranch 122 LLC," " -The Tanamera/Roripaugh
Entities," "KB Home Coastal Inc," "Direct and Overlapping Debt," " -Estimated Value-to-Lien Ratios," " -Overlapping Assessment and Community Facilities Districts," " -Estimated Assessed
Value-to-Lien Ratios," "-Transportation Uniform Mitigation Fee; Multiple Species Habitat Conservation Plan," " -Market Absorption Study" and " -Appraised Property Value" for which no
opinion is made), do not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make such statements, in the
light of the circumstances under which they were made, not misleading. 7. The Developer is not in violation of any provision of, or in default under, the Developer's organizational documents
or any other agreement or other instrument, the violation or default under which would materially and adversely affect the ability of the Developer to complete the proposed development
of the property as described in the Official Statement. The foregoing certifications are made as representations of fact only and are not meant to constitute legal conclusions. As representations
of fact, the foregoing statements are intended to be relied upon by the Law Firm in issuing the Opinion. Dated: , 2006 ASHBY USA, LLC, a Delaware limited liability company By: ASHBY
DEVELOPMENT COMPANY, INC., a California corporation By: Name: Title: A-2
EXHIBIT D ACKNOWLEDGMENT OF CONSENT TO THE IMPOSITION OF THE SPECIAL TAX FOR TEMECULA PUBLIC FINANCING AUTHORITY COMMUNITY FACILITIES DISTRICT NO. 03-02 (RORIPAUGH RANCH) AND THE ISSUANCE
OF 2006 BONDS The undersigned, , [TITLE], of a and , a (the "Lender"), hereby acknowledges for the benefit of the Temecula Public Financing Authority Community Facilities District No.
03-02 (Roripaugh Ranch) (the "District") as follows: 1. The undersigned has all authority necessary to execute this Acknowledgment on behalf of the Lender for delivery to the Board of
Directors (the "Board") of the Temecula Public Financing Authority (the "Authority") in connection with the imposition by the Board, as the legislative body of the District, of the special
tax of the District on the property located within the District, as more particularly described on the boundary map of the District (the "Property") relative to which the Lender has
loaned money to Ashby USA, LLC, a California limited liability company ("Borrower") pursuant to to various loan documents relating thereto (together, the "Loan Agreement"), and with
respect to which the Lender has acquired or received a beneficial security interest in the Property. 2. The Lender has received from the Borrower and the Borrower has made available
to the Lender the Rate and Method of Apportionment of Special Tax ("Rate and Method") and a draft of the Preliminary Official Statement regarding the issuance of bonds of the District
to be secured by such tax, pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311 et seq. of the Government Code of the State of California) (the "Act").
3. The Lender hereby acknowledges the imposition of the special tax of the District on the Property in the form, at the rates and in the manner set forth in the Notice of Special Tax
Lien. The Lender does not object to the proceedings taken by the Authority to form the District, including the election therefor or the levy of the special tax for any authorized purpose,
including but not limited to, the payment of debt service on bonds of the District, provided that the Lender does not waive its rights to object to any levy for other than an authorized
purpose or otherwise in violation of the voter authorization referred to herein. 4. The Lender acknowledges that if any default occurs in the payment of the special tax of the District
levied against the Property pursuant to the Rate and Method, the District has the right, subject to provisions of the Act, to foreclose upon the Property. 5. The Lender acknowledges
that liens securing the special tax levied against the Property have priority over the Lender's security interest in the Properly. 6. To the Lender's actual knowledge, there is no event
of default under the Loan Agreement and no event which with notice might constitute an event of default under the Loan Agreement. [IF applicable, describe technical defaults under the
loan documents and indicate what will cure the technical defaults, such as the issuance of the CFD bonds and the the ability to issue initial building permits for the development. D-l
Date: By: Name: Title: By: Name: Title: D-2
APPENDIX E CERTIFICATE OF APPRAISER Stone & Youngberg LLC 515 South Figueroa Street, Suite 1060 Los Angeles, California 90071 Temecula Public Financing Authority 43200 Business Park
Drive Temecula, California 92590 Temecula Public Financing Authority Community Facilities District No. 03-02 (Roripaugh Ranch) 43200 Business Park Drive Temecula, California 92590 The
undersigned hereby states and certifies: 1. That he is an authorized principal of Stephen G. White, MAI (the "Appraiser") and as such is familiar with the facts herein certified and
is authorized and qualified to certify the same. 2. That the Appraiser has prepared an appraisal report dated February 10, 2006 (the "Appraisal Report"), on behalf of the Temecula Public
Financing Authority (the "Authority") and in connection with the Official Statement dated April 13, 2006 ("Official Statement"), for Temecula Public Financing Authority Community Facilities
District No. 03-02 (Roripaugh Ranch) 2006 Special Tax Bonds (the "2006 Bonds"). 3. That the Appraiser hereby consents to the reproduction and use of the Appraisal Report appended to
the Preliminary Official Statement and the Official Statement. The Appraiser also consents to the references to the Appraiser and the Appraisal made in the Preliminary Official Statement
and the Official Statement. 4. In the opinion of the Appraiser the assumptions made in the Appraisal Report are reasonable. 5. That the Official Statement has been reviewed on behalf
of the Appraiser and to the best knowledge of the Appraiser the statements concerning the Appraisal Report and the value of the property contained under the captions "INTRODUCTION -Appraisal,"
"INTRODUCTION -Professionals Involved in the Offering," "PROPERTY OWNERSHIP AND DEVELOPMENT -Estimated Development Costs; Plan of Finance," "PROPERTY OWNERSHIP AND DEVELOPMENT -Estimated
Special Tax Allocation by Property Ownership," "PROPERTY OWNERSHIP AND DEVELOPMENT -Estimated Value-to-Lien Ratios," "PROPERTY OWNERSHIP AND DEVELOPMENT-Appraised Property Value," "BONDOWNERS'
RISKS -Failure to Develop Properties," "BONDOWNERS' RISKS -Appraised Values," "BONDOWNERS' RISKS -Hazardous Substances" and "APPENDIX C -Summary Appraisal Report" are true, correct and
complete in all material respects and do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not misleading. 6. Each of the parcels appraised by the Appraiser is encompassed within the Community
Facilities District. 7. That, as of the date of the Official Statement and as of the date hereof, the Appraisal Report appended to the Official Statement, to the best of my knowledge
and belief, and subject to all of the Assumptions and Limiting Conditions set forth in the Appraisal Report, does not contain any untrue statement of a material fact E-l
or omit to state a material fact necessary in order to make the statements contained therein, in the light of the circumstances under which they were made, not misleading, and no events
or occurrences have been ascertained by us or have come to our attention that would substantially change the estimated values stated in the Appraisal Report. However, we have not performed
any procedures since the date of the Appraisal Report to obtain knowledge of such events or occurrences nor are we obligated to do so in the future. 8. The Community Facilities District
and the Underwriter are entitled to rely on the Certificate. Dated: April 13 , 2006 STEPHEN G. WHITE, MAI By: E-2
EXHIBIT F CERTIFICATE OF MARKET ABSORPTION CONSULTANT Stone & Youngberg LLC 515 South Figueroa Street, Suite 1060 Los Angeles, California 90071 Temecula Public Financing Authority 43200
Business Park Drive Temecula, California 92590 Temecula Public Financing Authority Community Facilities District No. 03-02 (Roripaugh Ranch) 43200 Business Park Drive Temecula, California
92590 The undersigned hereby states and certifies: 1. That he is an authorized officer of Empire Economics, Inc. and as such, is familiar with the facts certified and is authorized and
qualified to certify the same. 2. In the opinion of Empire Economics, Inc., the assumptions made in the Market Absorption Study, dated February 1, 2006 (Original Study July 13, 2004)
(the "Market Absorption Study") are reasonable. 3. Empire Economics, Inc. is not aware of any event or act which has occurred since the date of the Market Absorption Study which, in
its opinion, would materially and adversely affect the conclusions of the Market Absorption Study. Study. 4. We hereby consent to the reproduction of the Market Absorption Study as Appendix
D to the Official Statement and to the references to Empire Economics, Inc. and to the Market Absorption Study made in the Official Statement. 5. We hereby certify that as of the date
hereof the Market Absorption Study contained in the Official Statement and the statements in the Official Statement under the captions "PROPERTY OWNERSHIP AND DEVELOPMENT -Market Absorption
Study" and in "APPENDIX D -Market Absorption Study" insofar as such statements purport to summarize the Market Absorption Study, are accurate in all material respects and do not omit
to state a material fact necessary in order to make the statements contained therein, in the light of circumstances under which they are made, not misleading and no events or occurrences
have been ascertained by Empire Economics, Inc. or have come to its attention that would substantially adversely change the opinions set forth in the Market Absorption Study. We note
that that in making the foregoing statements that Empire Economics, Inc. has undertaken no additional research with respect to the project and that the dates of market entry referenced
in the Market Absorption Study may be delayed as a result of the delay in commencement of development of the project and that the dates for absorption may experience a corresponding
delay as well. F-l
The Authority, the District and Stone & Youngberg LLC are entitled to rely on this Certificate. Dated: April 27, 2006 EMPIRE ECONOMICS, INC. By:. F-2