Folsom City Council
April 12, 2022

04/12/2022 Item No.13.

Table 6
City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 1 Appraised Value-to-Lien Ratios
Development Status'!'
Village 2 - Developed/Small Lot Final Map Property
Village 4 - Developed/Small Lot Final Map Property
Village 7 - Developed/Small Lot Final Map Property
Village 8 - Developed/Small Lot Final Map Property
Village 10 - Developed/Small Lot Final Map Property
Village I - Small Lot Final Map Property
Village 3 - Small Lot Final Map Property'?'
Village 5 - Small Lot Final Map Property'?'
Village 6 - Small Lot Final Map Property"
Remaining Lots C and D
Total
Estimated
2022-23
Effective
Tax Rate
Evaluation
Maximum
Planned Facilities
Units Revenuef" - - -
74 $150,294
73 151,929
68 167,517
36 82,637
118 273,214
88 178,234
53 104,713
83 171,887
70 130,397
265 129,882
928 $1,540,704
Estimated
2022-23
Facilities
Special Tax Appraised
Levy(3> Value(4>
-
~132,613 $18,972,239
145,832 28,218,011
166,106 31,621,912
70,645 10,369,541
257,696 41,925,595
154,761 22,176,842
88,556 4,422,226
145,365 12,235,249
110,277 9,281,913
4,096,128
Share of Local
Obligations(SJ*
Share of
2020 IAI
Obligations<5l
$1,379,986 $1,347,663
1,517,543 1,481,998
1,728,514 1,688,027
735,141 717,922
2,681,611 2,618,800
1,610,456 1,572,735
921,518 899,934
1,512,681 1,477,250
1,147,551 1,120,672
$1,271,850 $183,319,655 $13,235,000 $12,925,000
Overlapping
Debt
Appraised
Value To
Lien<W
Appraised
and
Overlapping
Debt Value
to Lien
Ratio<W
$310,723 7.0 6.2
889,232 9.4 7.3
748,647 9.3 7.6
441,550 7.1 5.5
1,188,217 7.9 6.5
401,379 7.0 6.2
209,651 2.4 2.2
341,017 4.1 3.7
254,470 4.1 3.7
327,682 NIA 12.5
$5,112,568 7.0 5.9
* Preliminary, subject to change.
(I) As of March 8, 2022, unless otherwise noted.
(Z) Increases by 2% each Fiscal Year. The 2022-23 Effective Tax Rate Evaluation Minimum Facilities Revenue amount is $1,498,023. (3) Based on estimated debt service requirements for the Bonds plus Priority Administrative Expenses of $20,400. (4) Appraised value amounts provided by the Appraiser. See "- Property Values." (S) Allocated based on the projected Fiscal Year 2022-23 Special Tax levy assuming the final small lot map for Villages 3, 5 and 6 record prior to June 30, 2022. (5) Value to lien ratio is for the Local Obligations. Local Obligations are issued in the same principal amount of the Bonds. <7J Small lot final maps for Villages 3, 5 and 6 are scheduled to record prior to June 30, 2022.

Source: Except as otherwise noted, NBS.
42

04/12/2022 Item No.13.

Table 7
City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 1 Appraised Value-to-Lien Ratios
Development Status'!'
Developed Property
Small Lot Final Map Property-"
Remaining Lots C and D
Total
Estimated
2022-23
Effective
Tax Rate Estimated
Evaluation 2022-23
Maximum Facilities
Planned Facilities Special Tax Appraised
Units Revenue'f Levy<3> Value<4>
220 $510,159 $510,159 $92,996,175
443 900,663 761,691 86,227,352
265
928
129,882
$1,540,704
4,096,128
Share of Local
Obligations<5l*
$5,308,763
7,926,237
Share of
2020 IAl
Obligations<5>
$5,184,417
7,740,583
Overlapping
Debt
$2,144,126
2,640,759
327,682
$1,271,850 $183,319,655 $13,235,000 $12,925,000 $5,112,568 Appraised
Value To
Lien<W

8.9 5.5
Appraised
and
Overlapping
Debt Value
to Lien
Ratio<W

7.4 4.7
NIA 12.5

7.0 5.9
* Preliminary, subject to change.
(ll As of March 8, 2022, unless otherwise noted.
(Z) Increases by 2% each Fiscal Year. The 2022-23 Effective Tax Rate Evaluation Minimum Facilities Revenue amount is $1,498,023. <3l Based on estimated debt service requirements for the Bonds plus Priority Administrative Expenses of$20,400. (4) Appraised value amounts provided by the Appraiser. See "- Property Values." CS) Allocated based on the projected Fiscal Year 2022-23 Special Tax levy assuming the final small lot map for Villages 3, 5 and 6 record prior to June 30, 2022. (6) Value to lien ratio is for the Local Obligations. Local Obligations are issued in the same principal amount of the Bonds. <7> Small lot final maps for Villages 3, 5 and 6 are scheduled to record prior to June 30, 2022.

Source: Except as otherwise noted, NBS.
43

04/12/2022 Item No.13.

Table 8
City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 1 Appraised Value-to-Lien Ratios by Ownership Group
Ownership Group
KB HOME Sacramento
Tri Pointe/CMB
Lennar
Beazer
Signature Homes
Individual Homeowners
Estimated
2022-23
Effective
Tax Rate Estimated
Evaluation 2022-23
Maximum Facilities
Planned Facilities Special Tax Appraised
Units Revenue'!' Levy<2> Value<3l
247 $505,181 $440,450 $50,279,713
162 328,529 287,374 41,149,081
95 219,643 204,125 27,320,595
53 104,713 88,556 4,422,226
40 97,989 96,578 12,581,912
66 154,767 154,767 43,470,000
Share of Local
Obligations<4l'
$4,583,368
2,990,442
2,124,145
921,518
1,005,001
1,610,525
Remaining Lots C and D - ECIC
Total
265
928
129,882
$1,540,704
4,096,128
$1,271,850 $183,319,655 $13,235,000
Share of
2020 IAl
Obligations<4l
$4,476,013
2,920,398
2,074,392
899,934
981,461
1,572,803
$12,925,000
Overlapping
Debt
$1,737,856
712,102
950,590
209,651
446,715
727,972
327,682
$5,112,568
Appraised
and
Overlapping
Appraised Debt Value
Value To to Lien
Lien<5l' Ratio<5l'

5.6 4.7

7.0 6.2

6.5 5.3

2.4 2.2

6.3 5.2

13.7 II.I
NIA 12.5 - - - 7.0 5.9
Preliminary, subject to change.
<1> Increases by 2% each Fiscal Year. The 2022-23 Effective Tax Rate Evaluation Minimum Facilities Revenue amount is $1,498,023. (ZJ Based on estimated debt service requirements for the Bonds plus Priority Administrative Expenses of $20,400. (3) Appraised value amounts provided by the Appraiser. See "- Property Values." (4) Allocated based on the projected Fiscal Year 2022-23 Special Tax levy assuming the final small lot map for Villages 3, 5 and 6 record prior to June 30, 2022. (SJ Value to lien ratio is for the Local Obligations. Local Obligations are issued in the same principal amount of the Bonds.

Source: Except as otherwise noted, NBS.
44

04/12/2022 Item No.13.

Estimated Tax Burden on Single Family Home
The following table sets forth the estimated total tax burden on single-family high density· residential property (SFHD) and multi-family low density residential property (MLD) within the Improvement Area, presented as an estimate of the majority of proposed homes to be constructed in the Improvement Area, based on estimated tax rates for Fiscal Year 2021-22.

Table 9
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 1
Single Family Residential Property Sample Property Tax Bill Estimated Charges for Fiscal Year 2021-22
Assessed Value"
Less: Homeowner Exemption
Net Assessed Value
Ad Valorem'"
General Purpose Ad Valorem Tax (Proposition 13)
Los Rios College General Obligation
Folsom-Cordova Unified School District Improvement Dist. 2 Folsom-Cordova Unified School District Improvement Dist. 3 Total Ad Valorem Taxes
Special/Direct Assessments and Taxes
Folsom Community Facilities District No. 23 (Folsom Ranch) - Pacilitiest" Folsom Community Facilities District No. 23 (Folsom Ranch) - Services'f Folsom Community Facilities District No. 17 (Willow Hill Pipelinej-" Folsom Community Facilities District No. 18 (Folsom Plan Area)<5J Sacramento Area Flood Control'f
Total Special/Direct Assessments and Taxes
Total Estimated Annual Property Taxes
Effective Tax Rate'"

SFHD MLD
$655,000 $635,000
(7,000) (7,000)
$648,000 $628,000
Tax Rate

1.0000% $6,480.00 $6,280.00

0.0249% 161.35 156.37

0.0247% 160.06 155.12

0.3881% 2,514.89 2,437.27

1.4377% $9,316.30 $9,028.76
$1,936.98 $2,240.94
216.62 160.92

75.45 46.78
1,016.80 751.39

1.50 1.50
$3,247.35 $3,201.53
$12,563.65 $12,230.29

1.9181% 1.9260%
(I) Estimated based upon the minimum appraisal value for a sample single-family high density unit and a sample multi-family low density unit, per the Appraisal prepared by the Appraiser.
(Z) Based upon 2021-22 Sacramento County ad valorem property tax rates for TRA 04-035 and 04-036. <3) 2021-22 Effective Tax Rate Evaluation Maximum Annual Facilities Special Tax for a single-family high density unit and a multi-family low density unit with less than 2,000 square feet. The Effective Tax Rate Evaluation Maximum Annual Facilities Special Tax escalates annually at 2%.
<4) 2021-22 Maximum Annual Services Special Tax for a single-family high density unit and a multi-family low density unit with less than 2,000 square feet. The Maximum Annual Services Special Tax escalates annually based upon the annual June CPI Change, for the San Francisco-Oakland-San Jose are, not to exceed 4%.
<5) 2021-22 Maximum Annual Special Tax. The Maximum Annual Special Tax excludes the Willow Hill Pipeline Special Tax, which is currently reflected under Folsom Community Facilities District No. 17 (Willow Hill Pipeline). The Area-Wide Special Tax escalates annually at 2% and the Maintenance Special Tax and TDM Services Special Tax escalate annually based upon the annual June CPI Change, for the San Francisco-Oakland-San Jose are, not to exceed 4%. <6) Approximate assessment for residential lots, based on size. (7) Estimate of annual property taxes does not include any new special financing district fees, assessments, and/or special taxes imposed by the state, county, or local agencies that are yet to be established or any future annexation into existing special financing districts required by conditions for approval of development or any other imposed requirement. Information contained within is based upon records and official documents provided by various governmental agencies and third-party sources. 45

04/12/2022 Item No.13.

Overlapping Debt
Set forth below is an overlapping debt table showing the existing authorized indebtedness payable with respect to property within the Improvement Area. Additional indebtedness could be authorized by other public agencies at any time. Further, a portion of the overlapping debt shown in the table below is based on the assessed value of the underlying property, which can be expected to increase over time as development occurs and the assessed value grows. This table has been prepared by California Municipal Statistics, Inc. as of March 1, 2022, and is included for general information purposes only. Other than with respect to CFO 17, the table below allocates overlapping debt based on the assessed value of property and not on taxes paid. The District and the Authority have not reviewed the data for completeness or accuracy and make no representations in connection therewith.

CFO 17 authorized up to $8,000,000 of bonds. In addition to CFO 17 and the District, the City has formed CFO 18, which the District overlaps, and the City Council of the City has authorized the issuance of $200,000,000 in bonds to be secured by a special tax on property within CFO 18 on parity with the Special Tax in the Improvement Area. The timing of issuance of bonds for CFO 18 is dependent upon market conditions and development within the Folsom Plan Area, and the City currently anticipates that an initial series of CFO 18 bonds will be issued in the second half of 2022 to help finance the required Phase 2 Water Facilities (as defined herein). A portion of any bonds issued for CFO 18 will constitute overlapping debt. Other community facilities districts formed in the Folsom Ranch area will overlap CFO 18 and potentially CFO 17 but are not expected to overlap the District.

Direct assessments and levies payable with respect to property within the Improvement Area could potentially include up to $750 million of general obligation bonds for the School Facilities Improvement District No. 3 of the Folsom Cordova Unified School District ("SFID 3"), approved by voters on March 27, 2007. SFID 3 encompasses approximately 52.6 square miles of land including the District and additional territory outside of the District, including territory in the City of Rancho Cordova and unincorporated Sacramento County. As of February 7, 2022, general obligation bonds in the aggregate principal amount of approximately $195 .6 million had been issued and approximately $ 188.4 million were outstanding for SFID 3. At the time of the election approving the SFID 3 general obligation bonds, the ballot summary indicated the average tax rate per $100,000 assessed valuation would be $73.61. For 2021-22, the actual SFID 3 tax rate per $100,000 was approximately $388.10. The following table sets forth the ad valorem tax rates for SFID 3 over the past five years. The future tax levy per property owner in SFID 3 may vary depending on future bond issuance and/or changes in assessed value.

Table 10
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 1
SFID 3 Ad Valorem Rates
Year Rate'!'
2021-22
2020-21
2019-20
2018-19
2017-18

0.3881%

0.2065%

0.1366%

0.1451%

0.1878%
(I) TRAs 04-035 and 04-036
Source: NBS.
46

04/12/2022 Item No.13.

Table 11
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 1
Overlapping Debt
2021-22 Local Secured Assessed Valuation: $68,922,617 (Land and Improvements) DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:

Los Rios Community College District
Folsom-Cordova Unified School District School Facilities Improvement District No. 2 Folsom-Cordova Unified School District School Facilities Improvement District No. 3 City of Folsom Community Facilities District No. I 7
City of Folsom Community Facilities District No. 23, I.A. 1

TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
OVERLAPPING GENERAL FUND DEBT:

Sacramento County General Fund Obligations
Sacramento County Pension Obligation Bonds
Sacramento County Board of Education Certificates of Participation City of Folsom General Fund Obligations

TOT AL GROSS OVERLAPPING GENERAL FUND DEBT
Less: Sacramento County supported obligations

TOT AL NET OVERLAPPING GENERAL FUND DEBT
% Applicable

0.030%

0.430

2.407

6.315
100.

Debt 3/1/22
$ 148,927
59,974
4,532,976
370,691
12,925,000(l)
$18,037,568

0.036%

0.036

0.036

0.416
$ 46,199
225,165
949
4 160
$276,473
4 947
$271,526
COMBINED TOT AL DEBT $18,314,041 <2>
(I) Excludes Mello-Roos Bonds to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Ratios to 2021-22 Local Secured Assessed Valuation:

Direct Debt ($12,925,000) 18.75%
Total Direct and Overlapping Tax and Assessment Debt... 26.17% Combined Total Debt.. 26.57%
Source: California Municipal Statistics, Inc.

PROPOSED PROPERTY DEVELOPMENT
Development Entitlements
Specific Plan. On June 28, 2011, the City Council approved the Specific Plan for the development of 10,210 residential homes along with commercial, industrial/office park, open space, public schools, parks, infrastructure and other land uses on the 3,513.4 acre site of the Folsom Plan Area.

At build out, projected to occur over a 20-year time frame, the Folsom Plan Area is projected to have a population of approximately 24,362 persons. Along with the 1,455.6 acres of residential development, the adopted Specific Plan called for 511.3 acres of commercial, office/industrial and mixed-use, 309.5 acres of public and quasi-public use (public and private schools, parks and infrastructure); 173.6 acres of major roads and 1,063 acres of open space.

Various property owners have submitted and received approvals of Specific Plan Amendments ("SPA's") since the 2011 City Council adoption. These approved SPA's have resulted in various land use changes compared to the Specific Plan that was originally approved in 2011, including an increase in the total entitled unit count to 11,461 dwelling units and reduction to approximately 2.8 million square feet of commercial, office/industrial and mixed use.
47

04/12/2022 Item No.13.

Through a Minor Administrative Modification for the Improvement Area, the Specific Plan was modified to allow for the adjustment of a common lot line between an elementary school site and seven residential lots in order to accommodate a wider street path that provides improved emergency access.

The minor modification was approved by the City's Community Development Director and confirmed through a letter dated April 20, 2020.

The Specific Plan is designed to guide and regulate the development for the area within the City south of US Route 50.

Tentative and Final Mapping. On February 13, 2018, the City Council approved a large lot vesting tentative map and a small lot vesting tentative map for the subject property known as "Mangini Ranch Phase 2," which corresponds to the Improvement Area. The large lot final map was recorded on July 2, 2019 and consisted of 26 large lot parcels corresponding to the approved land use plan for residential and non-residential parcels, including future City-owned parcels offered for dedication.

Subsequent to the large lot final map recording, the following small lot final maps were recorded: (i) for Village 7 on December 17, 2019, (ii) for Villages 4 and 8 on August 10, 2020, (iii) for Village 10 on January 21, 2021 and (iv) for Villages 1 and 2 on October 28, 2021. Also, in February 2021, a Specific Plan Amendment, Planned Development and Design Review Permit was approved by the City, which completed the required rezoning of Lot C to allow for the eventual development of the 265 multi-family high density units on Lots C and D.

To date, final maps have been approved and recorded for Villages 1, 2, 4, 7, 8 and 10, and tentative maps have been approved for Villages 3, 5 and 6. Final map approval for Villages 3, 5 and 6 is expected prior to June 30, 2022. [KB Home Sacramento (Villages 5 and 6) and Beazer (Village 3) believe that all of the tentative map conditions, other than administrative and immaterial items, have been satisfied for their respective properties in Villages 3, 5 and 6 (which represent the remaining taxable parcels in the Improvement Area, other than Lots C and D).] The original small lot tentative map approval did not include specific design review permits for each of the planned subdivisions, and each of the Merchant Builders are responsible for obtaining design review permits for each of their respective subdivisions. A final small lot map is not required for the development of the 265 multi-family high density units on Lots C and D. However, a boundary line adjustment to remove the existing parcel line between Lots C and D will be required to be reviewed and approved by the City and recorded with the Office of the County Recorder of the County of Sacramento prior to building permit issuance for Lots C and D. The only remaining discretionary entitlements within the Improvement Area are design review approval for Villages 3, 5 and 6, which provides for City review of the home plans, architecture and conformance to certain development standards, and the recordation of small lot final maps for Villages 3, 5 and 6.

Based on the current tentative and final subdivision maps and zoning entitlements, the property within the Improvement Area is entitled to be developed into 441 single-family high density units (in Villages 1 through 6), 222 multi-family low density units (in Villages 7, 8 and 10) and 265 multi-family high density units (in Lots C and D). The single-family high density zoned properties can include 4 to 7 dwelling units per gross acre and can include either single-family dwellings or two-family dwellings. The multi-family low density zoned properties can include 7 to 12 dwelling units per gross acre, and the multi­ family high density zoned property can include 20 to 30 dwelling units per gross acre. ECIC, CMB and the Merchant Builders all anticipate that the portions of the Improvement Area zoned for single-family high density properties and multi-family low density properties will be developed exclusively with single family detached units.

The following table describes the status of final maps for the Villages 1 through 8 and 10 and Lots C and D within the Improvement Area:
48

04/12/2022 Item No.13.

Table 13
City of Folsom
Communities Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 1
Final Map Status
Number Typical
Village Owner Zoning of Units Lot Sizes Status of Maps
1 CMBITri Pointev" SFHD 88 4,000 Recorded
2 CMBITri Pointe'!' SFHD 74 4,050 Recorded
3 Beazer SFHD 53 4,125 Tentative Small Lot
4 KB HOME Sacramento SFHD 73 4,000 Recorded
5 KB HOME Sacramento SFHD 83 4,000 Tentative Small Lot
6 KB HOME Sacramento SFHD 70 4,000 Tentative Small Lot
7 Signature Homes MLD 68 3,075 Recorded
8 KB HOME Sacramento MLD 36 4,000 Recorded
10 Lennar MLD 118 3,150 Recorded
Lots CID ECIC<2l MHD 265 NIA No Final Map Required
TOTAL 928
Expected Date
by June 30, 2022
by June 30, 2022
by June 30, 2022
NIA
(I) Tri Pointe has contracted to purchase the Village I and Village 2 properties through three separate takedowns, the first of which occurred in January 2022 for 54 lots. No assurance can be given that the conveyance of the remaining two takedowns totaling 108 lots will occur as expected. See "PROPOSED PROPERTY DEVELOPMENT- Property Ownership- Tri Pointe Purchase and Sale Agreement."
<2) Spanos has contracted to purchase the Lot C and Lot D properties. See "PROPOSED PROPERTY DEVELOPMENT- Development Entitlements- Tentative and Final Mapping."
Source: ECIC.

Development Conditions/Building Permit Limitations. Certain provisions of the PFFP for the Folsom Plan Area, as implemented through the tentative subdivision map conditions, place limits on the number of building permits that can be issued before certain facilities and/or backbone infrastructure is in place. These provisions/conditions could, but are not expected to, affect build-out of the Improvement Area.

For example, tentative map conditions require a fire station to be operational prior to the occupancy of the i.soo- home in the Folsom Plan Area. See "FOLSOM PLAN AREA- Public Facilities Financing Plan- Public Facilities- the Folsom Plan Area" for details on the City's plans for construction of the fire station. The City is responsible for building and operating this fire station and would expect to waive or modify this condition as it deems necessary to balance development within the Folsom Plan Area and the increasing fire service needs of the Folsom Plan Area as development progresses.

Within the Improvement Area, there are building permit thresholds relating to traffic signal installations. There was a requirement that a traffic signal be installed at the intersection of Alder Creek Parkway and East Bidwell prior to the issuance of the 236th building permit. This traffic signal was installed and operational as of late March 2022. There is also a requirement that a separate traffic signal be installed at the intersection of Savannah Parkway and East Bidwell prior to the issuance of the 496th building permit. ECIC has commenced the design process for this additional traffic signal and anticipates that it will be completed and installed by the second quarter of 2023. ECIC, CMB and the Merchant Builders do not believe that this requirement will materially impede the issuance of building permits or the development of the Improvement Area.

During initial planning of water infrastructure needs, the City estimated that the Phase 1 Water Facilities (as defined herein) would have capacity to serve approximately 2,800 dwelling units in the Folsom Plan Area. The City currently estimates that the Phase 1 Water Facilities have the capacity to 49

04/12/2022 Item No.13.
deliver a sustained maximum day demand of up to 2 million gallons of water and, based on actual water usage within the Folsom Plan Area and a study prepared by Peterson Brustad, Inc. in April 2019, that water usage within the Folsom Plan Area will exceed the Phase 1 Water Facility capacity when approximately 2,800 to 3,300 dwelling units within the Folsom Plan Area have been occupied. The Phase 2 water backbone facilities, which include a water pipeline, booster pump and storage tank (collectively, the "Phase 2 Water Facilities"), are required to be constructed to provide expanded water transmission conveyance capabilities to deliver water from the water treatment plant to the Folsom Plan Area. The City continues to evaluate water usage and needs within the Folsom Plan Area. The City reserves the right to restrict new building permits within the Folsom Plan Area if the City determines that the new construction would cause residential water usage to exceed the capacity of the Phase 1 Water Facilities.

See "- Development Entitlements- Water Supply Infrastructure" below for details on the status of the Phase 2 Water Facilities and the current plan for their construction and financing.

As of March 1, 2022, final maps had been approved and recorded for 2,731 dwelling units. [There are currently 4 additional final maps submitted to the City for review with approximately 274 dwelling units. It is anticipated that all of these final maps will be recorded by April 2022]. Also as of March 1, 2022, 1,964 building permits and 1,222 certificates of occupancy had been issued in the Folsom Plan Area for other projects underway, including the City of Folsom Community Facilities District No. 19 (Mangini Ranch) ("CFO 19"), the City of Folsom Community Facilities District No. 20 (Russell Ranch) ("CFO 20") and the City of Folsom Community Facilities District No. 21 (White Rock Springs Ranch) ("CPD 21"). Collectively, CFO 19, CFO 20, CFO 21 and the Improvement Area are expected to include 3,350 dwelling units, [_ ] of which had been issued building permits and [_] of which had received final map approval as of March 1, 2022. [ As of that same date, no building permits had been issued and no final maps had been approved for the expected dwelling units in the City of Folsom Community Facilities District No. 22 (Folsom Heights) ("CFO 22").] ECIC, CMB, the Merchant Builders and the District do not believe that these conditions will materially impede development of the Improvement Area. However, multiple other development projects are underway in the Folsom Plan Area, and if there were an unforeseen and significant delay in construction in the Improvement Area it is possible that other development within the Folsom Plan Area will overtake development of the Improvement Area, resulting in the need for construction of the fire station and Phase 2 Water Facilities before all building permits could be issued for the Improvement Area.

External access to the project site will be provided via East Bidwell Road to the west, Alder Creek Parkway to the north and Placerville Road to the east. Internal vehicular circulation is accessed from Westwood Drive and Old Ranch Way. Pedestrian circulation is provided by a combination of street separated sidewalks, open space trails, park trails and pathway connections. Proposed on-site improvements include: underground utilities, drainage improvements, retaining walls, driveways, on­ street parking, curbs/gutters, sidewalks, pathways, trails, fencing, site lighting, site landscaping, and park enhancements.

The Folsom Ranch Central District Design Guidelines (of which the Improvement Area is a part) were approved by the City concurrent with the Tentative Map approvals on June 23, 2015. The design guidelines provide for the orderly development of the proposed single family residential subdivision. The primary purpose of these design guidelines is to articulate the general architectural and design expectations for the proposed residential neighborhood, the landscapes, hardscapes, open spaces, fencing, entry features and site lighting. The goal of the design guidelines is to establish a regulatory framework for the design of individual homes on the residential lots. The final design details of the homes are subject to review and approval by the City's Planning Commission as part of a future Design Review application.
50

04/12/2022 Item No.13.

Army Corps of Engineers Wetland Permitting, Biological Opinion, Streambed Alteration Agreements and Section 106 Compliance. On May 22, 2014, the U.S. Army Corps of Engineers (the "USACOE") issued a Record of Decision ("ROD") for the Folsom South of U.S. Highway 50 Specific Plan Project - City of Folsom Backbone Infrastructure. This wetland permit covered the wetland permitting requirements for the entire backbone infrastructure necessary to serve the Folsom Plan Area.

To the extent backbone infrastructure was required within a property owner's land, the backbone wetland permit authorized the filling of waters of the U.S. necessary for such construction. Each landowner thereafter is required to obtain their own wetland permit for the fill of jurisdictional wetlands not included in the footprint of the backbone wetland permit. As discussed in greater detail below, the Folsom Plan Area has received all required environmental permits.

Development Agreement. Through City Ordinance No. 1149, the City approved a Tier 1 Development Agreement between the City and the property owners within the Folsom Plan Area on July 12, 2011. The effective date of the ordinance was August 11, 2011. The Tier 1 Development Agreement vests certain rights of the property owners and of the City, commits each party to the agreements to subsequent actions before development may proceed within the Folsom Plan Area.

Separate First Amended and Restated Tier 1 Development Agreements (the "ARDAs") were entered into among certain property owners and the City for their applicable properties, as approved by the City through City Ordinance No. 1211. The ARDAs for the property owners comprising the property within the Improvement Area were recorded in the official records of the County of Sacramento in July 2014.

The City entered into Amendment No. 1 to the ARDA with Carpenter East, which was recorded in the official records of the County of Sacramento in January 2016. The City also entered into Amendment Nos. 1 and 2 to the ARDA with Folsom Real Estate South, which were each recorded in the official records of the County of Sacramento in January 2016. See "- Property Ownership." Article 2.5 (commencing with Section 65864), of Chapter 4, Division 1, Title 7 of the State Government Code, pertaining to development agreements, has the general effect of authorizing development to continue in accordance with then existing General Plan, Specific Plan, zoning and subdivision regulations notwithstanding any subsequently enacted conflicting regulations, except for regulations the failure of which to enact would place the residents in a condition which is dangerous to their health or safety or both.

Environmental Permits and Approvals. The California Environmental Quality Act ("CEQA"), constituting Division 13 of the State Public Resources Code ( commencing with Section 21000) requires that an Environmental Impact Report (an "EIR"), detailing the significant environmental effects of the project and proposed mitigation measures, be prepared, considered and certified as complete by a public agency prior to its taking discretionary action on any project which may have a significant effect on the environment.

In June 2011, after statutorily required public notice, hearing and comment, the City Council certified as adequate and complete a final EIR/EIS for the Specific Plan for the development of the Folsom Plan Area. The EIR/EIS satisfied both CEQA and the National Environmental Policy Act for the entirety of the Folsom Plan Area. In February 2015, the City Council adopted the South of Highway 50 Backbone Infrastructure Project Initial Study/Mitigated Negative Declaration (Backbone Infrastructure MND), dated December 9, 2014. This CEQA project level document satisfied the required environmental review for the construction of backbone infrastructure for the entire Folsom Plan Area, including the Improvement Area.

The Folsom Plan Area has received all required environmental permits, including a Section 404 Permit for the entire Folsom Plan Area pursuant to Section 404 of the federal Clean Water Act. This permit allows for any necessary fill of jurisdictional wetlands and streambed alterations for the 51

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construction of backbone infrastructure to serve the entire Folsom Plan Area at build-out. In addition, a Biological Opinion has been obtained from the US Fish and Wildlife Service for the entire Folsom Plan Area, together with a California Department of Fish and Wildlife Master Streambed Alteration Permit with conditions for the whole of the Folsom Plan Area. All of the property in the Improvement Area subject to the Special Tax has received its Section 404 Permit and a subnotification approval from the California Department of Fish and Wildlife.

Water Supply. The City entered into an agreement (the "Water Supply Agreement") with the property owners in the Folsom Plan Area providing for a water supply for new development south of US Route 50. The Water Supply Agreement was supported by an addendum to the EIR. The Water Supply Agreement provides adequate water supply for full build out of the Improvement Area and the rest of the Folsom Plan Area (except the portion of the Folsom Plan Area serviced by the El Dorado Irrigation District). The amount of water provided in the Water Supply Agreement to meet the build-out demands of the Folsom Plan Area project is projected to be 5,600 acre-feet annually.

Water Supply in Folsom Generally. The primary water supply source for the City of Folsom is Folsom Reservoir, which provides the water supply for all of the City south of the American River. The City has water rights and contracts for up to 34,000 acre-feet annually ("afa") through three different contracts with the United States Bureau of Reclamation ("Reclamation"). The surface water supplies were developed through different circumstances and, as such, are subject to unique conditions and limitations. These attributes and issues affect the volume of water available under certain conditions.

Surface water supply for the portions of the City north of the American River is obtained through a contract with the San Juan Water District, and therefore is not a directly owned City supply. The surface water supplies for the City's water service area are listed below. • A pre-1914 appropriative water right for 22,000 acre-feet per year (Agreement with Reclamation)
• A pre-1914 appropriative water right for 5,000 acre-feet per year (Co-Tenancy agreement with Golden State Water Company)
• A Central Valley Project ("CVP") water service contract for 7,000 acre-feet per year (Partial Assignment from Sacramento County Water Agency to the City of Folsom and used in the City's East Area)
The City's 22,000 acre-foot entitlement is based on a pre-1914 appropriative right from the South Fork of the American River established by the Natoma Water Company ("Natoma") in 1851. Natoma's original pre-1914 water right established a maximum diversion rate "to fill a Canal Eight feet wide and Four feet deep with a current running Ten miles per hour." This correlates to a diversion rate of 60 cubic feet per second and a maximum allocation of 32,000 afa. This right is held with Golden State Water Company pursuant to a co-tenancy agreement. The City's 5,000 acre-foot entitlement is also based on Natoma's pre-1914 appropriative right from the South Fork of the American River. In November 1994, the City executed a contract with Southern California Water Company-Folsom Division ("SCWC") under which the City acquired the right to lease 5,000 afa (of SCWC's remaining 10,000 afa under the original Natoma purchase) for an indefinite period. This right is held with Golden State Water Company pursuant to a co-tenancy agreement. This water right was also formally recognized in the settlement agreement between Reclamation and the City. As authorized by Public Law No. 101-514, the City was a subcontractor under Sacramento County Water Agency's (SCWA) CVP water-service contract for 7,000 afa. In 2016, the United States, the City and SCW A completed an assignment of this portion of SCW A's CVP water-service contract from SCWA to the City.
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Under the agreements with Reclamation for 22,000 afa and 5,000 afa, Reclamation delivers this entire water supply without reduction on a permanent basis. Under the agreement with Reclamation for 7,000 afa of CVP water, this water supply faces possible reductions pursuant to Reclamation's Municipal and Industrial Water Shortage Policy. In 1994, the City entered into an agreement with Golden State Water Company (f/k/a Southern California Water Company, herein "GSWC") to acquire the right to divert up to 5,000 acre feet of pre-1914 water rights annually (the "GSWC Agreement"), subject to the terms and conditions of that agreement. Under the GSWC Agreement, the City is required to pay for the entire 5,000 acre-feet annual water supply regardless of whether the City is able to divert and use that quantity of water. The City has been using the supplies provided in the GSWC Agreement to serve the existing portion of the City known as the "East Area." The cost of water under the GSWC Agreement has, in the past, been paid for by East Area landowners and water customers.

Source of Water for the Folsom Plan Area. The City has determined that its Water Systems Optimization Review Program and implementation of metered rates will provide additional water supplies in an estimated amount of 6,450 acre-feet per year, which is in addition to the present and forecasted demands of the City's existing water users. The City intends to use a portion of this 6,450 acre-feet per year of available water to meet present and future water demand in the East Area in order to make the 5,000 acre-feet per year of GSWC Agreement water supply available for use in the Folsom Plan Area, on the terms and conditions of that Agreement. To meet this intent, the City has converted the East Area water supply from the GSWC Agreement to the less expensive CVP water service contract. The City would meet the additional build-out water demand of the Folsom Plan Area with approximately 600 acre­ feet per year of water produced by the Water Systems Optimization Review Program that is in excess of the water demand in the East Area. The water made available under the GSWC Agreement and Water Systems Optimization Review Program will be sufficient to supply the projected water demand in the Folsom Plan Area. Pursuant to the provisions of Sections 860 et seq. of the State Code of Civil Procedure and Government Code Sections 53511 and 53589.5, the City filed a complaint in the Superior Court of the State for the County of Sacramento to validate the agreement. The Superior Court determined that the agreement: (a) is lawful, valid, enforceable and in the best interests of the City and all persons in any way interested therein and (b) is consistent with all applicable laws and obligations, including the Measure W water supply requirement.

The City's Community Facilities District No. 2013-1 (Water Facilities and Supply) (the "Water CFD"), was formed by the City in 2014. The cost of the GSWC Agreement water will initially be paid for by the Folsom Plan Area through special taxes collected for the Water CFD on certain property in the Folsom Plan Area, including the Improvement Area. When a building permit has been issued and a customer billing account has been established, the developed parcel is no longer subject to the levy of the special tax for the Water CFD and thereafter pays for water through water rates.

Water Conservation. The City adopted Ordinance 1118, Chapter 13 .26 of the Folsom Municipal Code ("FMC"), Water Conservation. Chapter 13.26 establishes a five stage water conservation program with conservation goals and water use restrictions. The City Manager is authorized to implement and enforce whatever conservation measures are deemed necessary to achieve the water reduction requirements of the declared conservation stage.

Water Supply Infrastructure. Existing water infrastructure and pipelines run to the north side of US Route 50. For the first phase of infrastructure, the developers of the Folsom Plan Area constructed improvements to connect this water supply and extend water infrastructure pipelines to serve the initial phases of development in the Folsom Plan Area (the "Phase 1 Water Facilities"). In the next phase, the Folsom Plan Area developers will be required to construct improvements at the existing City water treatment plant to include a water booster pump station and construct a new water pipeline transmission main from the water treatment plant site into the Folsom Plan Area along with two storage tanks and a 53

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pump station improvement to serve the area-wide development with potable water. In order for each individual parcel to access that water supply, the developers of those parcels will need to extend infrastructure to their sites.

The Phase 1 Water Facilities were completed in August 2018. The City estimates that the Phase Water Facilities have the capacity to deliver a sustained maximum day demand of up to 2 million gallons of water. The Phase 2 Water Facilities (which include the new water pipeline transmission main, a booster pump station and a storage tank) are required to be constructed to provide expanded water transmission conveyance capabilities to deliver water from the water treatment plant to the Folsom Plan Area.

During initial planning of water infrastructure needs, the City estimated that the Phase 1 Water Facilities would have capacity to serve approximately 2,800 dwelling units in the Folsom Plan Area.

Based on actual water usage within the Folsom Plan Area and a study prepared by Peterson Brustad, Inc. in April 2019, the City currently estimates that water usage within the Folsom Plan Area will exceed the Phase 1 Water Facility capacity when approximately 2,800 to 3,300 dwelling units within the Folsom Plan Area have been occupied. The City continues to evaluate water usage and needs within the Folsom Plan Area. The City reserves the right to restrict new building permits within the Folsom Plan Area if the City determines that the new construction would cause residential water usage to exceed the capacity of the Phase 1 Water Facilities.

As of March 1, 2022, for the Folsom Plan Area, final maps had been approved and recorded for approximately 2,731 dwelling units, 1,964 building permits had been issued, and 1,222 certificates of occupancy had been issued. [There are currently 4 additional final maps submitted to the City for review with approximately 274 dwelling units. It is anticipated that all of these final maps will be recorded by April 2022]. During summer 2021 as a result of high levels of construction activity, the maximum day water demand exceeded 2 million gallons for several days with no service interruption to the water system. Developers within the Folsom Plan Area have made various arrangements for alternative water sources during the next two years to alleviate usage of the Phase 1 Water Facilities and in response to drought concerns. See "PROPOSED PROPERTY DEVELOPMENT - Development Entitlements - Drought Conditions and Construction Water Usage" for more information. Based on current development plans and discussions with the developers within the Folsom Plan Area, and subject to variations due to water usage for construction within the Folsom Plan Area, the City estimates that the Phase 1 Water Facilities will reach their maximum day capacity in the summer of 2024. An increase in residential water demand, an event impacting the capacity of the Phase 1 Water Facilities, or other factors that increase water demand or decrease capacity could cause the City to reevaluate this estimated date and could adversely impact the ability of the City to issue building permits if the City expects demand to exceed capacity before the Phase 2 Water Facilities are complete.

In February 2018, the first round of developers within the Folsom Plan Area began conducting alignment studies for the Phase 2 Water Facilities and, as of December 13, 2018, developers within the Folsom Plan Area engaged Hydroscience Engineers for the design of the Phase 2 Water Facilities. The City has commenced review of the construction documents for the Phase 2 Water Facilities and anticipates completing its review in summer 2022. ECIC anticipates the bidding for the construction work of the Phase 2 Water Facilities to begin in summer 2022, with the construction expected to start by fall 2022. Once commenced, ECIC anticipates that construction of the Phase 2 Water Facilities will last about 18 months and be completed by summer 2024, in time to meet the demands for projected growth within the Folsom Plan Area. ECIC expects that if the Phase 2 Water Facilities are completed by summer 2024 that the projected timing of development described in this Official Statement will not be affected.

However, delays in the construction of the Phase 2 Water Facilities, increased residential or construction water usage amounts or a reduction in the capacity of the current water facilities could cause the City to 54

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restrict the continued development of the Folsom Plan Area, including within the Improvement Area. See "CERTAIN RISKS TO BONDHOLDERS - Failure to Develop."
Based on a preliminary analysis prepared by ECIC and its consultants, the Phase 2 Water Facilities are projected to cost approximately $29 million but may cost more depending on the cost of supplies, the cost of labor and other factors at the time construction commences. ECIC anticipates the Phase 2 Water Facilities to be funded through bonds issued for CFD 18 and certain pay-go proceeds from CFD 17 and CFD 18 special taxes. Based on current cost projections, ECIC expects the sources of revenues from CFD 17 and CFD 18 to be sufficient to fund the Phase 2 Water Facilities costs.

In addition to the Phase 2 Water Facilities, the City anticipates that an additional water tank and pump station improvement will be needed to accommodate the increased development once there are approximately 1,600 occupied dwelling units in zones 4, 5 and 6 of the Folsom Plan Area (the "Zone 4 Water Facilities"). These zones are east of Placerville Road (and east of the District) and generally constitute the areas covered by CFD 20, CFD 21 and CFD 22. The Zone 4 Water Facilities and the Phase 2 Water Facilities are separate water improvements, and, if needed, the Phase 2 Water Facilities can be constructed and completed separately from the Zone 4 Water Facilities, thereby allowing development to continue in the Folsom Plan Area generally, including within the Improvement Area. The Zone 4 Water Facilities are projected to cost approximately $10 million but may cost more depending on the cost of supplies, the cost of labor and other factors at the time construction commences. To the extent CFD 18 bond proceeds are available, the developers within the Folsom Plan Area anticipate using proceeds from CFD 18 bonds to finance the Zone 4 Water Facilities. Neither the City nor the Merchant Builders expect that the need for a Zone 4 Water Facilities will adversely impact the timeline or cost estimates for development of the Improvement Area otherwise described in this Official Statement.

Wastewater Treatment. The Sacramento Regional County Sanitation District has an existing wastewater treatment plant with its ongoing and permitted improvement projects projected to accommodate all wastewater from development in the Folsom Plan Area. Existing sewer transmission mains are capable of conveying wastewater from the Folsom Plan Area and initial development sites (including the Improvement Area) to the existing treatment plant.

Flood Zones. According to the Federal Emergency Management Agency flood map, the Improvement Area is in Zone X, which consists of areas determined to be outside of the 500-year flood plain.

Fire Zones. The Improvement Area is located within an area identified as a moderate fire hazard severity zone. More information regarding Fire Hazard Severity Zones can be found at the California Department of Forestry and Fire Protection website at https://frap.fire.ca.gov, though such website is not incorporated herein by reference. The development within the Improvement Area is subject to mitigation measures set forth in a fuel modification plan approved by the City Fire Department. The mitigation measures include, among others, limitations on the type of vegetation that may be planted within fuel modification zones established in open space areas along certain portions of the perimeter of the Improvement Area, minimum setback of structures and irrigation requirements of the fuel modification zones. Maintenance of such zones is expected to initially be the responsibility of the property owners but upon build-out of the Improvement Area and dedication of the open space to the City will be maintained by the City from funds provided through CFD 18. Homeowner's insurance is expected to be available to property owners within the Improvement Area, and the coverage provided by such insurance typically insures against fire damage, although there is no assurance that homeowners within the Improvement Area will purchase or maintain such insurance.
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Drought Conditions and Construction Water Usage. In response to drought conditions in 2021, the City imposed a mandatory 20% reduction in water use on its water customers. In addition, use of City water for construction purposes required City approval. At the time, the City allowed construction within the Folsom Plan Area to proceed, including the use of City water. However, prolonged drought conditions in 2022 could result in mandatory reductions in water usage that may adversely impact the ability of the developers within the Improvement Area to develop the Improvement Area in the timeline described in this Official Statement.

To help alleviate the demand on the current water facilities, certain developers within the Folsom Plan Area have made arrangements to obtain construction water from the El Dorado Irrigation District ("EID"), an alternative water provider that has existing facilities adjacent to the Folsom Plan Area. For instance, Lennar has previously received construction water from EID for its Russell Ranch project in CFD 20. Such arrangements augment, but do not replace, the need for and the use of City water, which is currently provided through the Phase 1 Water Facilities. Due to such alternative arrangements for construction water and the amount of development that has already occurred in the Folsom Plan Area, the City anticipates that the demand for construction water will likely be lower in summer 2022 than it has been in some of the recent past years.

Affordable Housing. The City and ECIC entered into an Inclusionary Housing Agreement for the single-family high density and multi-family low density properties in the Improvement Area, which is recorded in the official records of the County of Sacramento and provides for ECIC's compliance with the City's inclusionary housing requirement by payment of an in-lieu fee to the City. Any inclusionary housing plan for Lots C and D would be a separate entitlement and would be conditioned for that project specifically, ifr equired. ECIC is not aware of any proposed inclusionary housing for Lots C and D.

Utilities. All typical urban utility services for finished lots will be extended to the lots. These utilities include electric power, natural gas, telephone, cable television, water, refuse, and sanitary sewer and storm water facilities. The City provides water, sewer, refuse and storm water facilities, and police and fire services. Pacific Gas & Electric provides natural gas and the Sacramento Municipal Utility District (SMUD) provides electric service. Comcast provides cable service.

Property Ownership
The information in this section has been provided by ECIC, CMB and the Merchant Builders. The District and the Underwriter believe this information to be reliable, but can give no assurances that it is accurate or complete. There may be material adverse changes in this information after the date of this Official Statement.

Information in this section is included because it may be considered relevant to some investors to an informed evaluation and analysis of the taxable property within the Improvement Area and any existing or future improvements thereon as security for the Bonds. The information contained in this section does not guarantee that property ownership will not change or that the current or any subsequent property owners will pay the Special Tax when due. In fact, as described herein, ownership of much of the taxable property in the Improvement Area will change prior to development thereof. The Special Tax will constitute a lien on parcels subject to taxation within the Improvement Area and not a personal indebtedness of the owners of property within the Improvement Area. There is no assurance that the present property owners or any subsequent owners will have the ability to pay the Special Taxes or that, even if they have the ability, they will choose to pay the Special Taxes. An owner may elect to not pay the Special Taxes when due and cannot be legally compelled to do so. Neither the District nor any Bond Owner will have the ability at any time to seek payment directly from the owners of property within the Improvement Area of 56

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the Special Tax or the principal or interest on the Local Obligations, or the ability to control who becomes a subsequent owner of any property within the Improvement Area.

The proposed development plan within the District is known as "Improvement Area No. l ," which is ultimately expected to be developed into 928 residential units. ECIC and CMB, the master developers responsible for the initial improvement of the lots, are in the process of selling their remaining portions of the taxable property in the Improvement Area to merchant builders. The Merchant Builders currently own a majority of the taxable property in the Improvement Area. Since September 2019, ECIC has sold to KB HOME Sacramento the following taxable properties in the Improvement Area (i) the 73 single-family high density lots in Village 4, (ii) the 36 multi-family low density lots in Village 8, (iii) the 83 undeveloped, single-family high density lots in Village 5 and (iv) the 70 undeveloped, single-family high density lots in Village 6. In February 2020, ECIC sold 68 multi-family low density lots to Signature Homes, representing the properties in Village 7; in January 2021, ECIC sold 118 multi-family low density lots to Lennar, representing the properties in Village 1 O; and in November 2021, ECIC sold 53 undeveloped, single-family high density lots to Beazer, representing the properties in Village 3. For Villages 5 and 6 (KB HOME Sacramento) and Village 3 (Beazer), ECIC has entered into construction and license agreements in connection with these sales, pursuant to which it has been contracted to complete the initial development to finished lot status. KB HOME Sacramento and Beazer will be responsible for the costs to develop Villages 5 and 6 and Village 3, respectively, to finished lot status, up to a maximum cost of $14 million for Villages 5 and 6, collectively, and $6 million for Village 3. Any costs beyond these amounts required to develop the parcels to finished lot status will be ECIC's responsibility.

ECIC is under contract with Spanos to sell Lots C and D as a finished building pad with all utilities stubbed to the site for the eventual development of 265 multi-family high density housing units.

Spanos will be responsible for the on-site utilities to serve Lots C and D. ECIC expects to close its sale of Lots C and D to Spanos in the second quarter of 2022. Also, CMB is under contract with Tri Pointe for the sale of 162 finished lots comprising Villages 1 and 2 (the "Tri Pointe Purchase and Sale Agreement").

Tri Pointe Purchase and Sale Agreement. CMB and Tri Pointe entered into the Tri Pointe Purchase and Sale Agreement, dated November 4, 2020, in connection with the sale of the 88 lots in Village 1 and the 74 lots in Village 2. These lots will be sold to Tri Pointe in finished lot condition for a total amount of $28.6 million, and the transfers from CMB to Tri Pointe are expected to occur through three takedowns of 54, 48 and 60 lots, respectively. The first takedown and transfer of the first 54 lots occurred in January 2022, and the remaining takedowns are expected to occur in April 2022 and July 2022. No assurance can be given that the conveyance of the remaining two takedowns totaling 108 lots will occur as expected. Under the Tri Pointe Purchase and Sale Agreement, CMB is responsible for the construction of all infrastructure necessary to develop the Village 1 and 2 properties into finished lots, and the final takedown of 60 lots is conditioned on CMB's completion of certain landscaping improvements for Villages 1 and 2. CMB has commenced work on the required landscaping improvements and expects to have them completed in the second quarter of 2022.

ECJC. The initial main developer of the property in the Improvement Area was ECIC, a California limited liability company formed in August 2019. ECIC is comprised of three partnership interests: Class A, Class B and Class C. The Class A participants are comprised of seven different individuals with varying participating membership interests. The Class B member, also the managing member, is HBT ECIC, LLC ("HBT ECIC"). The Class C member is Cargini Investors, which was the land seller and held a promissory note. The members of HBT ECIC include GTFG Mangini, LLC (an affiliate of Goodfellow Bros. California, LLC), William Bunce, John Hagenbuch and John Telischak whom are also principals in projects adjacent to the Improvement Area where they have significant land holdings and control more than 1,800 acres with the potential for more than 5,500 residential units and 57

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non-residential land uses. As of March 2022, WestLand (as defined herein) and its affiliates have completed transactions on approximately 600 acres and 2,800 residential units with an additional 95 acres (approximately 900 units) and a I 0.0-acre commercial parcel in escrow.

All decisions of ECIC are made by the appointed officers who are Messers. Bunce (President), Hagenbuch (Vice President) and Telischak (Vice President). Messers. Bunce, Hagenbuch and Telischak also serve as the president, Chairman and Managing Director of WestLand Capital Partners, L.P. ("WestLand"), respectively. The three managers are supported by other staff and consultants of WestLand including Project Managers Rob Aragon and Rick Jordan and CFO Kim Harms. In addition, ECIC retained Development Consulting Services, Inc., a professional construction management company, to oversee the project on a full-time basis. Mr. Bunce, as President, is responsible for all operating decisions but consults regularly with the other officers on most operating decisions and all strategic decisions.

As of March I, 2022, ECIC had sold all of its taxable property within the Improvement Area, except for Lots C and D, which are under contract with Spanos.

CME: CMB, a California limited liability company, is the other initial master developer of the taxable property in the Improvement Area. CMB currently owns a portion of Villages 1 and 2, which are under contract to Tri Pointe. CMB is comprised of two partnership interests; Class A and Class B. The Class A member, also the managing member, is HBT CMB, LLC ("HBT CMB"). The Class B member is South Savannah Investors, LLC. The members of HBT CMB include GFTG Mangini, LLC (an affiliate of Goodfellow Bros. California, LLC), William Bunce, John Hagenbuch and John Telischak, who also manage ECIC and are described in the description of ECIC above.

All decisions of CMB are made by the appointed officers who are Messers. Bunce (President), Hagenbuch (Vice President) and Telischak (Vice President). Messers. Bunce, Hagenbuch and Telischak also serve as the president, Chairman and Managing Director of WestLand, respectively. The three managers are supported by other staff and consultants of WestLand including Project Managers Rob Aragon and Rick Jordan and CFO Kim Harms. In addition, CMB retained Development Consulting Services, Inc., a professional construction management company owned by Duane Cobb, to oversee the project on a full-time basis. Mr. Bunce, as President, is responsible for all operating decisions but consults regularly with the other officers on most operating decisions and all strategic decisions.

KB HOME Sacramento: KB HOME Sacramento Inc., a California corporation (previously defined herein as "KB HOME Sacramento") is a wholly-owned subsidiary of KB Home, a Delaware corporation ("KB Home"), whose principal executive offices are located in Los Angeles, California. KB Home is a publicly traded company listed on the New York Stock Exchange under the ticker symbol "KBH."
Founded in 1957, KB Home constructs and sells homes through its operating divisions under the name KB Home. KB Home's ongoing principal operations are in nine states, including California, Arizona, Nevada, Colorado, Texas, Florida, North Carolina, Idaho and Washington within 45 major markets. KB Home first developed homes in California in 1963. KB Home's homebuilding operations offer a variety of homes designed primarily for first-time, move-up and active adult homebuyers, including attached and detached single-family homes, townhomes and condominiums.

KB Home is subject to the informational reporting requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith is obligated to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC"). Such filings set forth, among other things, certain data relative to the 58

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consolidated results of operations and financial position of KB Home and its subsidiaries. KB Home's SEC filings are available to the public over the Internet at the SEC's website at www.sec.gov, and at KB Home's website at www.kbhome.com.

The foregoing website addresses and references to .filings with the SEC are given for reference and convenience only, and the information on such websites and on file with the SEC does not form a part of this Official Statement and is not incorporated by reference herein. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such websites. KB HOME Sacramento and KB Home are not obligated to advance funds for construction or development or to pay ad valorem property taxes or the Special Taxes and investors should not rely on the information and.financial statements contained on such websites in evaluating whether to buy, hold or sell the Bonds.

The information contained on such websites may be incomplete or inaccurate and has not been reviewed by the City, the District or the Underwriter.

Signature Homes: FR 68 Lots is a California limited liability company and the owner of the parcels in Village 7 of the Improvement Area. FR 68 Lots is managed by Signature Homes, Inc., a California corporation, and is owned by three separate members, each of which is affiliated with a member of the executive team of Signature Homes, Inc. Due to their affiliation, FR 68 Lots and Signature Homes, Inc. are referred to herein collectively as "Signature Homes." Signature Homes, Inc. is responsible for making the decisions relating to the development of Village 7. Signature Homes, Inc. is based in Pleasanton, California, has been constructing homes in northern California since 1983 and, as of March 1, 2022, has successfully delivered 15,500 homes. Key decisions for Signature Homes, Inc. are principally made by its executive team, which consists of Jim Ghielmetti, Chairman of the Board and Chief Executive Officer; Gary Galindo, President; Steve Miller, Executive Vice President of Land Acquisition & Forward Planning; Juliann Cretsinger, Vice President of Sales and Marketing; and Ron Buck, Vice President of Operations. Additional information on Signature Homes Inc., including certain biographical information for the executive team, can be found on the "our culture" tab of www.sighomes.com. This internet address is included for reference only and the information on the internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on the internet site.

Beazer: Beazer is a subsidiary of Beazer Homes USA, Inc. ("Beazer Homes"), a public company whose common stock is traded on the New York Stock Exchange under the symbol "BZH." Founded in 1985 and headquartered in Atlanta, Georgia, Beazer Homes constructs and sells homes through its operating divisions in 13 states. For the years ended September 30, 2021 and 2022, Beazer Homes closed 5,287 and 5,492 homes, respectively. Copies of Beazer Homes' Annual Report and each of its other quarterly and current reports, including any amendments, are available from Beazer's website at http://ir.beazer.com/. This internet address is included for reference only and the information on the internet site is not a part of this Official Statement and is not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on the internet site.

Lennar: On February 1, 2022, Lennar Homes of California, Inc., a California corporation, was converted to a California limited liability company and is now known as Lennar Homes of California, LLC, a California limited liability company (as previously defined herein, "Lennar"). All references herein to Lennar prior to February I, 2022 shall mean Lennar Homes of California, Inc., a California corporation, and all references herein to Lennar on and after February 1, 2022 shall mean Lennar Homes of California, LLC, a California limited liability company. 59

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Lennar is based in Irvine, California. Lennar has been in the business of developing residential real estate communities in California since 1996. Lennar is wholly-owned by U.S. Home Corporation, a Delaware corporation ("U.S. Home"). U.S. Home is wholly-owned by Lennar Corporation, which is based in Miami, Florida. Founded in 1954, Lennar Corporation completed its initial public offering in 1971 and listed its common stock on the New York Stock Exchange in 1972. Lennar Corporation's Class A and Class B common stock are listed on the New York Stock Exchange under the symbols "LEN" and "LEN.B." respectively. Lennar Corporation is one of the largest homebuilders in the United States based on home sales revenues and net earnings, and operates under a number of brand names, including Lennar and U.S. Home. Lennar primarily develops residential communities both within the Lennar family of builders and through consolidated and unconsolidated partnerships in which Lennar maintains an interest.

Lennar Corporation is subject to the informational requirements of the Exchange Act, and in accordance therewith files reports, proxy statements and other information with the SEC. Such filings, particularly the Annual Report on Form 10-K and its most recent Quarterly Report on Form 10-Q, set forth, among other things, certain data relative to the consolidated results of operations and financial position of Lennar Corporation and its consolidated subsidiaries, including Lennar, as of such dates.

The SEC maintains a website that contains reports, proxy and other information statements and other information regarding registrants that file electronically with the SEC, including Lennar Corporation. The address of such website is www.sec.gov. All documents filed by Lennar Corporation pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes.

Copies of Lennar Corporation's Annual Report and related financial statements, prepared in accordance with generally accepted accounting standards, are available from Lennar Corporation's website at www.lennar.com. On October 30, 2017 Lennar Corporation announced that it would acquire CalAtlantic Group Inc. (now known as CalAtlantic Group, LLC, "CalAtlantic") for $5. 7 billion in a combination of cash and stock, creating the largest home builder in the United States by revenue. The transaction closed in February 2018. Both Lennar Corporation's (stock symbol "LEN") and CalAtlantic's (stock symbol "CAA") public filings with the SEC are accessible over the internet at the SEC's website.

The acquisition of CalAtlantic by Lennar Corporation will not affect Lennar's developments in the Improvement Area as described herein.

The internet addresses referenced in the paragraphs above are included for reference purposes only and the information on these internet sites are not a part of this Official Statement and are not incorporated by reference into this Official Statement. No representation is made in this Official Statement as to the accuracy or adequacy of the iriformation contained on these internet sites.

Tri Pointe: "Tri Pointe" is Tri Pointe Homes Holdings, Inc., a Delaware corporation, which is an indirect, wholly-owned subsidiary of Tri Pointe Homes, Inc., a Delaware corporation ("Tri Pointe Homes"), a publicly traded company whose common stock is listed on the New York Stock Exchange under the ticker symbol "TPH". Tri Pointe Homes is engaged in the design, construction and sale of innovative single-family attached and detached homes in 15 markets across ten states and the District of Columbia. Effective January 15, 2021, Tri Pointe Homes changed its corporate name from "TRI Pointe Group, Inc." to "Tri Pointe Homes, Inc." and consolidated its six regional homebuilding brands into one unified name- Tri Pointe Homes.

Tri Pointe Homes is subject to the informational requirements of the Exchange Act and, in accordance therewith, files reports, proxy statements, and other information, including financial statements, with the SEC. Such filings, particularly Tri Pointe Homes' Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the SEC on February 18, 2022, set forth, among 60

04/12/2022 Item No.13.
other things, certain data relative to the consolidated results of operations and financial position of Tri Pointe Homes and its consolidated subsidiaries, including Tri Pointe, as of such dates.

The SEC maintains an Internet web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including Tri Pointe Homes. The address of such Internet web site is www.sec.gov. All documents filed by Tri Pointe Homes pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes.

Copies of Tri Pointe Homes' most recent Annual Report on Form 10-K and each of its other quarterly and current reports, including any amendments, are available in the "investors" portion of its website at www.tripointehomes.com.

The foregoing website addresses and references to filings with the SEC are given for reference and convenience only, and the information on such websites and on file with the SEC does not form a part of this Official Statement and is not incorporated by reference herein. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such websites. Tri Pointe Homes and Tri Pointe are not obligated to advance funds for construction or development or to pay ad valorem property taxes or the Special Taxes and investors should not rely on the information and financial statements contained on such websites in evaluating whether to buy, hold or sell the Bonds. The information contained on such websites may be incomplete or inaccurate and has not been reviewed by the City, the District or the Underwriter.

Development Plan and Status of Development
Unless otherwise indicated, the information provided in this section has been provided by ECIC, CMB and the Merchant Builders and has been included because it may be considered relevant to an informed evaluation and analysis of the Bonds and the Improvement Area. No assurance can be given, however, that the proposed development of the property within the Improvement Area will occur in a timely manner or in the configuration or to the density described herein, or that ECIC, CMB, the Merchant Builders, any owners or affiliates thereof, or any other current or subsequent property owners, will or will not retain ownership of its respective property within the Improvement Area. The City, the District and the Underwriter can provide no assurances as to the accuracy of the information in this section. There may be material adverse changes in this information after the date of this Official Statement.

Development Plan:

ECIC, CMB and the Merchant Builders have collectively secured entitlements for the eventual development of up to 928 residential units in the Improvement Area. At the time of full development, it is anticipated that the Improvement Area will include 441 single-family high density units, 222 multi­ family low density units and 265 multi-family high density units. The Improvement Area is also planned to include an elementary school, a police substation, a fire station, parks and trails. The development plans take advantage of the site's topography with single-loaded streets through much of the site to maximize scenic vistas of the valley to the west, and open space areas on the property.

The Improvement Area is comprised of eight sequentially numbered "Villages" and three additional lots referred to as "Village 1 O," "Lot C" and "Lot D," respectively. Property within the Improvement Area is in varying stages of development, including partially-improved lots, improved lots, homes under construction and completed homes, and it is anticipated that development will be completed in three main phases: Phase 2A, Phase 2B and Phase 2C. Phase 2A of development within the 61

04/12/2022 Item No.13.

Improvement Area includes Villages 4, 7, 8 and 10 and Lots C and D and is entitled for a total of 560 units at the time of full build-out, comprised of 73 single-family high density units, 222 multi-family low density units and 265 multi-family high density units. Phase 2B of development includes Villages 1 and 2 and is entitled for a total of 162 single-family high density units at the time of full build-out. Phase 2C of development includes Villages 3, 5 and 6 and is entitled for a total of 206 single-family high density units at the time of full build-out. Below is a summary of product types by project phase.

Table 14
City of Folsom
Communities Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 1
Summary of Product Types by Project Phase
Phase Builder
Phase 2A
Village 4
Village 7
Village 8
Village 10
Lots C and D
Phase 2B
Village I
Village 2
Phase 2C
Village 3
Village 5
Village 6
KB HOME Sacramento
Signature Homes
KB HOME Sacramento
Lennar
Spanos'!'
Tri Pointe<2l
Tri Pointe<2l
Beazer
KB HOME Sacramento
KB HOME Sacramento
Typical Lot
Size/Density
4,000 square feet
3,075 square feet
4,000 square feet
3, I 50 square feet
26 units/acre
4,000 square feet
4,050 square feet
4,125 square feet
4,000 square feet
4,000 square feet
Home Size
(Estimated Average)
2,256 square feet
2, I 78 square feet
2,000 square feet
I ,857 square feet
I ,000 square feet
Phase 2A Subtotal
2,683 square feet
2,044 square feet
Phase 2B Subtotal
2,044 square feet
2,256 square feet
2,256 square feet
Phase 2C Subtotal
Total
Units
73 68
36 118
265
560
88 74
162
53 83
70 206
Total 928
(I)
(2)
Spanos has contracted to purchase the Lot C and Lot D properties. See "PROPOSED PROPERTY DEVELOPMENT­ Development Entitlements- Tentative and Final Mapping." Tri Pointe has contracted to purchase the Village I and Village 2 properties from CMB through three separate takedowns, the first of which occurred in January 2022 for 54 lots. No assurance can be given that the conveyance of the remaining two takedowns totaling 108 lots will occur as expected. See "PROPOSED PROPERTY DEVELOPMENT- Property Ownership- Tri Pointe Purchase and Sale Agreement."
Source: ECIC, CMB and the Merchant Builders.

ECIC and CMB have made significant progress in the initial grading and improvement of the taxable properties in the Improvement Area. ECIC completed the mass grading and backbone infrastructure for Phase 2A (consisting of Villages 4, 7, 8 and 10 and Lots C and D) in 2020 along with the development of the initial subdivisions for the 295 single-family residential lots and the 10-acre multifamily site (Lots C and D) planned for 265 multi-family high density units. CMB commenced development of Phase 2B (Villages 1 and 2) in October 2020 with grading and backbone roadway improvements for Westwood Drive and Savannah Parkway. The Phase 2B subdivision improvements commenced in April 2021 and were significantly completed in December 2021, and the landscaping, fencing and punch-list related work is underway and scheduled for completion in April 2022. ECIC's initial grading and improvement work for Phase 2C (Villages 3, 5 and 6) is scheduled to occur in two phases. The grading and backbone work for Village 3 began in February 2022 and is expected to be completed by the fourth quarter of 2022. The grading and backbone work for Villages 5 and 6 1s expected to begin in April 2022 and is expected to be completed by the fourth quarter of 2022. 62

04/12/2022 Item No.13.

Public project amenities include a future 5.6-acre neighborhood park, a 26-acre community park, an elementary school, a fire station, a police substation and additional acreage for open space. The community will also feature a network of several miles of on- and off-street bicycle and pedestrian trails.

While the open space, trails and common area landscaping will be developed by ECIC, the park, fire station, police substation and school sites will be transferred to the City and the Folsom-Cordova Unified School District, respectively, for future development. Additionally, undisturbed natural preserve areas have been set aside to protect sensitive biological habitat and provide passive open spaces throughout the community.

The map below reflects the lot mix and the zoning of development within the Improvement Area reflecting planned development of 928 total units.

City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 1
Master Plan
----"'· •- i...,._...,.
"'?.~- ~ :--~--:-~-~-=--==-=-=.~-.- --'-""• .... ,.. __ -·- - -- .. - ... .- -- -- ··· - ---- -- -- -·· ...... .._ -- ...--- •·· - ·~ -·-- .. ·- - ,.,_._ - ... -- ........ ... ....,.. ----· - - - ◄

ILLUSTRATIVE MASTER PLAN EXHIBIT
Mangini Ranch PH A SE fl
IA'l('..q.:drih1r•""-~•- 1( 'a..l l C
Sa k t·- :,,.. fo~ d·. f'«li(Jtur
63

04/12/2022 Item No.13.

Status of Development:

To date, final maps have been approved and recorded for Villages 1, 2, 4, 7, 8 and 10, and tentative maps have been approved for Villages 3, 5 and 6. Final maps for Villages 3, 5 and 6 are expected to be approved and recorded by June 30, 2022. ECIC is not aware of any requirements for a final map to be approved for the 265 multi-family high density units on Lots C and D and is not aware of any plans by Spanos to propose a final map for these properties. However, a boundary line adjustment to remove the existing parcel line between Lots C and D will be required to be reviewed and approved by the City of Folsom and recorded with the Office of the County Recorder of the County of Sacramento prior to building permit issuance for Lots C and D. The only remaining discretionary entitlements within the Improvement Area are design review approval and the recordation of small lot final maps for Villages 3, 5 and 6.

The following table summarizes, as of March 8, 2022, the current or anticipated merchant builders; the phase for development (2A, 2B or 2C); the zoning designation (single-family high density "SFHD," multi-family low density "MLD" or multi-family high density "MHD") for the lots; the number of homes under construction; the number of completed homes not yet sold; the number of homes under contract to be sold to individual home buyers; the number of homes closed; the number of building permits issued; the number of finished lots (without vertical home construction); the number of partially improved lots (including those that have only been initially graded for further development); the number of undeveloped lots; and the number of units expected at full build-out. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
64

04/12/2022 Item No.13.

Table 15
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 1
Development Status as of March 8, 2022
Finished Lots
Homes (Without
Homes Completed Homes Building Vertical Partially Total Development Under But Not Under Homes Permits Home Improved Undeveloped Proposed Property Merchant Builder Phase Zoning Construction Closed Contract Closed Issued Construction) Lots Lots Units<3> - - - - -
Village 1 Tri Pointe'!' 2B SFHD J2(4) 0 0 0 12 76 0 0 88 Village 2 Tri Pointei'! 2B SFHD 16(5) 0 0 0 16 58 0 0 74 Village 3 Beazer 2C SFHD 0 0 0 0 0 0 53 0 53
Village 4 KB HOME Sacramento 2A SFHD 50 2(6) 50 19 71 2 0 0 73 Village 5 KB HOME Sacramento 2C SFHD 0 0 0 0 0 0 83 0 83 Village 6 KB HOME Sacramento 2C SFHD 0 0 0 0 0 0 70 0 70 Village 7 Signature Homes 2A MLD 31 3(6) 21 31 65 3 0 0 68 Village 8 KB HOME Sacramento 2A SFHD 4 0 4 0 34 32 0 0 36 Village IO Lennar 2A SFHD 40 4(6) 63 26 70 48 0 0 118
Lots C and D Spanos-" 2A MHD Q Q Q Q Q Q 265 Q 265
TOTAL 153 9 138 76 268 219 471 0 928
<1> Tri Pointe has contracted to purchase the Village I and Village 2 properties through three separate takedowns, the first of which occurred in January 2022 for 54 lots. No assurance can be given that the conveyance of the remaining two takedowns totaling 108 lots will occur as expected. See "PROPOSED PROPERTY DEVELOPMENT- Property Ownership- Tri Pointe Purchase and Sale Agreement."
<2> Spanos has contracted to purchase the Lot C and Lot D properties. See "PROPOSED PROPERTY DEVELOPMENT- Development Entitlements- Tentative and Final Mapping." <3l Amounts equal to the total from the following columns: (i) "Homes Under Construction," (ii) "Homes Completed But Not Closed," (iii) "Homes Closed," (iv) "Finished Lots (Without Vertical Home Construction)," (v) "Partially Improved Lots" and (vi) "Undeveloped Lots." <4> Includes 12 Lonestar production homes. The two Lonestar model homes are being constructed in Village 2, where the Eastwood homes are being constructed. (5) Includes four model homes (two for the Eastwood product and two for the Lonestar product) and 12 Eastwood production homes. (6) Represents model homes.

Source: ECIC and the Merchant Builders
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04/12/2022 Item No.13.

KB HOME Sacramento: Construction of homes on the 262 residential lots within Villages 4, 5, 6 and 8 is anticipated to be completed by KB HOME Sacramento as homebuilder in two product lines known as "Soleil at Folsom Ranch," anticipated to contain 109 single-family detached homes at completion within Village 4 (73 lots) and Village 8 (36 lots), and "Esquire at Folsom Ranch," anticipated to contain 153 single-family detached homes at completion within Village 5 (83 lots) and Village 6 (70 lots).

Soleil. The anticipated product mix of the 109 homes proposed to be constructed within Village 4 (73 lots) and Village 8 (36 lots) consists of two one-story and two two-story floorplans ranging in square footage from approximately 1,429 square feet to approximately 2,689 square feet and with estimated base home prices as of March 8, 2022 ranging from approximately $668,990 to approximately $816,515. Base home prices are subject to change and are exclusive of lot premiums, options and extras and any incentives or price reductions that may be offered.

Home construction and sales are underway within Soleil. KB HOME Sacramento commenced vertical construction of the models and first phase of production homes in Soleil in December 2020 and opened the models in April 2021. As of March 8, 2022, within the Soleil neighborhood, KB HOME Sacramento had completed and conveyed 19 homes to individual homeowners, owned two completed models, had 56 homes under construction, and had 32 finished lots without any vertical home construction thereon (none with building permits issued). As of March 8, 2022, within the Soleil neighborhood, 56 homes were under contract for sale to individual homeowners but had not closed escrow. Homes under contract may not result in closed escrows as sales contracts are subject to cancellation by the homebuyers. KB HOME Sacramento conveyed its first homes within Soleil in November 2021 and expects to complete construction of all 109 homes within the Soleil neighborhood and convey such homes to individual homeowners by the end of the third quarter of 2023.

Esquire. The anticipated product mix of the 153 homes proposed to be constructed within constructed within Village 5 (83 lots) and Village 6 (70 lots) consists of four floorplans ranging in square footage from approximately 1,409 square feet to approximately 2,674 square feet. Initial base sales prices of the homes have yet to be finalized.

KB HOME Sacramento anticipates that the final small lot maps for Villages 5 and 6 will be recorded by June 30, 2022, and that ECIC will develop the parcels in Village 5 and 6 to finished lot status by December 2022. ECIC's grading and backbone development of Villages 5 and 6 is expected to begin in April 2022, with completion anticipated for the fourth quarter of 2022. Vertical home construction within Esquire is expected to commence in December 2022, following ECIC's development of the 153 lots to finished lot status. KB HOME Sacramento anticipates holding the grand opening and releasing the first homes to the general public in [ ], 2023.

Signature Homes: Construction of homes on the 68 residential lots within Village 7 is anticipated to be completed by Signature Homes as homebuilder. Signature Homes anticipates that the 68 homes in Village 7 will range in size from 1,940 to 2,408 square feet and will be priced from $679,900 to $739,900. Signature Homes' design review package for the 68 proposed homes was approved by the City on June 17, 2020. Signature Homes submitted its model home architectural plans to the City in July 2020 and expects to obtain building permits and begin construction for the model homes in October 2020 and begin delivering completed homes in May 2021.

As of March 8, 2022, for Village 7, Signature Homes had obtained 65 building permits, had completed construction on 3 model homes, had 31 production homes under construction, had 21 homes under contract with homebuyers, had closed 31 homes to homebuyers and had 3 finished lots that had not yet commenced vertical home construction.
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04/12/2022 Item No.13.

Beazer: Construction of homes on the 53 residential lots within Village 3 is anticipated to be completed by Beazer as homebuilder. Beazer anticipates that the 53 homes in Village 3 will range in size from 1,662 to 2,369 square feet and will have base prices from $655,990 to $719,990. Beazer anticipates that the final small lot map for Village 3 will be recorded by June 30, 2022, and that ECIC will develop the parcels in Village 3 to finished lot status by October 2022. Beazer further expects to commence construction in Village 3 by October 2022, begin home sales in January 2023 and close on the first Village 3 homes by April 2023. As of March 8, 2022, ECIC had commenced the grading and backbone development of Village 3, with completion anticipated for the fourth quarter of 2022.

Lennar: Construction of homes on the 118 residential lots within Village 10 is anticipated to be completed by Lennar as homebuilder. Lennar anticipates that the 118 homes in Village 10 will range in size from 1,638 to 2,018 square feet and will be priced from $638,990 to $731,990. Lennar's design review package for the 118 proposed homes was approved by the City in August 2020. Lennar commenced its home construction in Village IO in December 2020 and is currently constructing and selling homes to individual homebuyers.

As of March 8, 2022, for Village 10, Lennar had obtained 70 building permits, had 40 homes under construction, had completed construction on 4 model homes, had 63 homes under contract with homebuyers, had closed 26 homes to homebuyers and had 48 finished lots that had not yet commenced vertical home construction.

Tri Pointe: Construction of homes on the 162 residential lots within Villages 1 and 2 is anticipated to be completed by Tri Pointe as homebuilder in two product lines known as "Lonestar at Folsom Ranch," anticipated to contain 90 single-family detached homes at completion, and "Eastwood at Folsom Ranch," anticipated to contain 72 single-family detached homes at completion. Pursuant to the Tri Pointe Purchase and Sale Agreement, dated November 4, 2020, entered into between CMB and Tri Pointe, Tri Pointe expects to acquire the 162 lots within Villages 1 and 2 in three takedowns, following CMB' s development of the lots to finished lot condition. The first takedown of the first 54 lots occurred in January 2022, and the remaining two takedowns of 48 and 60 lots are expected to occur in April 2022 and July 2022, respectively. No assurance can be given that the conveyance of the remaining two takedowns totaling I 08 lots will occur as expected.

As of March 8, 2022, CMB had substantially completed the backbone infrastructure and subdivision improvements within Villages 1 and 2. The remaining landscaping, fencing and punch-list related work is underway and scheduled for completion in April 2022.

Lonestar. The anticipated product mix of the 90 homes proposed to be constructed within the Lonestar neighborhood consists of three two-story floorplans ranging in square footage from approximately 2,444 square feet to approximately 2,995 square feet. Initial base sales prices of the homes have yet to be finalized. Tri Pointe anticipates holding the grand opening and releasing the first homes to the general public in April 2022.

Home construction is underway. Tri Pointe commenced vertical construction of the models in November 2021 and first phase of production homes in February 2022, and expects to open the models in April 2022. As of March 8, 2022, within the Lonestar neighborhood, Tri Pointe owned 14 homes under construction (including two models) and 13 finished lots without any vertical home construction thereon (none with building permits issued), and the 63 remaining lots were owned by CMB. Assuming Tri Pointe acquires the remaining lots as planned, Tri Pointe expects to complete construction of all 90 homes within the Lonestar neighborhood and convey such homes to individual homeowners by the second quarter of 2024.
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Eastwood. The anticipated product mix of the 72 homes proposed to be constructed within the Eastwood neighborhood consists of one one-story and two two-story floorplans ranging in square footage from approximately 1,500 square feet to approximately 2,404 square feet. Initial base sales prices of the homes have yet to be finalized. Tri Pointe anticipates holding the grand opening and releasing the first homes to the general public in April 2022.

Home construction is underway. Tri Pointe commenced vertical construction of the models in November 2021 and first phase of production homes in February 2022, and expects to open the models in April 2022. As of March 8, 2022, within the Eastwood neighborhood, Tri Pointe owned 14 homes under construction (including two models) and 13 finished lots without any vertical home construction thereon (none with building permits issued), and the 45 remaining lots were owned by CMB. Assuming Tri Pointe acquires the remaining lots as planned, Tri Pointe expects to complete construction of all 74 homes within the Eastwood neighborhood and convey such homes to individual homeowners by fourth quarter of 2023.

COVID-19 Impact
The planned development within the Improvement Area is subject to disruption due to the COVID-19 pandemic and related public health and governmental authorities' orders and actions, which could have a material adverse effect on ECIC's, CMB's and the Merchant Builders' ability to complete their proposed development within the Improvement Area and sell completed lot or homes in the time frames and budgets, and at the sales prices, described in this Official Statement. ECIC, CMB and the Merchant Builders have largely continued, with certain modifications, their development, home construction and sales activities in the Improvement Area to date, including taking steps at the model home sites, sales offices and jobsites, as applicable, to limit the spread of the COVID-19 outbreak and implementing certain changes to the home sales process in an effort to mitigate the spread of COVID-19.

The Merchant Builders have provided, or expect to provide, the option of touring homes virtually online, by appointment, or currently, in person. However, in the event that ECIC, CMB and/or the Merchant Builders believe it is advisable to, or are required to, implement additional measures in response to a resurgence of COVID-19 or other public health risks, they may experience further negative impacts on their businesses and operations.

ECIC, CMB and the Merchant Builders have experienced increases in certain construction costs, supply chain delays, labor shortages, and increased cycle time for construction projects generally.

However, the builders have not experienced any significant development delays resulting from work stoppages, reduced attendance of workers, or the ability to obtain necessary inspections and approvals for homes, which may be attributed, directly or indirectly, to the COVID-19 pandemic. While the cost increases and delays may have been and may continue to be intermittently affected by COVID-19, the majority of cost increases and delays can be attributable to production backlogs due to prior shutdowns or shelter in place orders, the strength of the housing market and the result of vendors not anticipating the scale of the demand for housing materials.

The COVID-19 outbreak is ongoing and, among other things, the ultimate geographic spread of the virus, the emergence and spread of new strains or variants of COVID-19, the duration and severity of the outbreak, the availability and acceptance of effective vaccines, adequate testing and treatments and the prevalence of widespread immunity to COVID-19, and the economic and other actions that may be taken by governmental authorities to contain the outbreak or to address its impact remain uncertain. The ultimate effects of COVID-19 on the Improvement Area, ECIC's, CMB's and the Merchant Builders' operations and financial condition, homebuyers' willingness and ability to pay the Special Tax when due, and the real estate market and United States economy in general are unknown. Such effects, if and as they arise, could have a material adverse effect on the ability to complete the development within the 68

04/12/2022 Item No.13.

Improvement Area and/or sell homes or lots as planned, and no assurance can be provided that the Merchant Builders will be able to (a) complete in whole or in any part, or within any particular time, their construction of homes within the Improvement Area; (b) avoid additional material increases in development costs or delays resulting from work stoppages, reduced attendance of workers, shortages or delays in the delivery of building materials, and/or delays in obtaining necessary inspections and approvals; or ( c) sell homes, and close home sales or not experience purchase contract cancellations, due in each case to public health or governmental restrictions, further spread of COVID-19, an economic downturn driven by the pandemic, or otherwise. See "CERTAIN RISKS TO BONDHOLDERS­ Potential Impact of Health Crises or Concerns" herein.

Development Plans of Finance
ECIC Plan of Finance. ECIC's remaining infrastructure and development of the Improvement Area will be funded through a combination of the following sources:
(1) ECIC equity
(2) Proceeds from sale of bonds, including the possible sale of Additional Local Obligations for the Improvement Area
(3) Proceeds from sales of lots to homebuilders
( 4) Proceeds from school site sale
(5) Reimbursement of eligible SPIF facilities from the City of Folsom In addition to residential lot sales, ECIC will receive proceeds from the sale of an approximately 10-acre elementary school site. The Folsom Cordova Unified School District (FCUSD) intends to purchase the 10-acre elementary school site at a time to be determined by the FCUSD. There are no agreements in place with respect to the FCUSD's acquisition of the school site at this time.

Another source of funds will come from reimbursement of eligible SPIF improvements or fee credits. ECIC will provide fee credits to future builders within the Improvement Area. However, it is anticipated that ECIC will have outstanding reimbursements of approximately $2.3 million after all available fee credits have been applied to builders within the Improvement Area. ECIC would receive reimbursement from the City on a priority based upon when the eligible improvements were constructed.

Additionally, ECIC intends to sell fee credits to other builders within the Folsom Plan Area as provided in the Development Agreement.

As of March 1, 2022, ECIC had incurred total development costs of $45.5 million for the Phase 2A work. As of that same date, ECIC's remaining development costs for Phase 2C were estimated at $34.8 million. The remaining Phase 2C development work is expected to occur in two phases, with the grading and backbone work for Village 3 beginning in February 2022 with an anticipated completion by the fourth quarter of 2022, and the grading and backbone work for Villages 5 and 6 is expected to begin in April 2022 with an anticipated completion by the fourth quarter of 2022. ECIC estimates its development improvement costs for Village 3 at 15.5 million and for Villages 5 and 6 at 19.3 million.

The following tables describe ECIC's plan of finance, including its estimated sources and uses of funds for Phase 2C (Table 16), and the estimated grading, backbone and subdivision improvements for Phase 2C, including both hard costs and soft costs (Tables 17 and 18). 69

04/12/2022 Item No.13.

Table 16
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 1- Phase 2C (Villages 3, 5 and 6)
ECIC Plan of Finance- Sources and Uses of Funds
(amounts in thousands)
Cash Sources 2019 2020 2021 2022 2023 Total
Partnership Interest Contribution $3,571 $3,571
Lot Sale Revenue 10,955 $7,822 $36,434 $13,522 68,733
Construction Progress Payrnents'!' 1,851 9,708 2,994 17,096 31,649 CFO #23 Proceeds (Gross) 7,672 3,526 9,302 3,000 23,500 School Site Sale 6,000 6,000
Fee Credits (354) (258) 8,745 8,133
Construction Loan 9,867 25,559 5,454 40,880
Total cash sources $26,244 $50,761 $48,054 $45,662 $11,745 $182,466 Cash Uses
Land Acquisition $5,000 $13,000 $18,000
Interest On Seller Financing 94 $332 1,086 1,512
Construction Costs 10,598 26,761 4,330 $31,577 73,266
Interest on Construction Loan 142 580 12 734
Repayment of Construction Loan 1,709 23,477 15,694 40,880 Sales Commissions 82 80 362 297 821
Lot Closing Costs 39 16 75 116 246
Soft/Miscellaneous Costs 2,049 3,561 3,078 8,537 $1,457 18,682 Total cash uses $19,713 $54,807 $37,637 $40,527 $1,457 $154,141 Increase (Decrease) for period 6,531 (4,046) 10,417 5,135 10,288 28,325 Cash at beginning of year 6,531 2,485 12,902 18,037
Cash available for Partnership $6,531 $2,485 $12,902 $18,037 $28,325 $28,325 Interest Distributions (I) Refers to the payments made by KB HOME Sacramento, Signature Homes and Beazer to ECIC under the respective purchase and sale agreements and post-closing license agreements in connection with the delivery of finished lots.

Source: ECIC.
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04/12/2022 Item No.13.

Table 17
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 1 - Phase 2C (Village 3)
ECIC Plan of Finance - Grading and Backbone and Subdivision Improvement Costs Phase 2C (Village 3}
Grading Est. Cost
Earthwork & SWPPP $ 1,751,230
Blasting $ 396,688
Comm. Park East Grading $ 800,000
Storm Drain $ 150,000
Erosion Control/SWPPP $ 250,000
General Conditions $ 235,000
Overhead & Markup $ 315,000
Backbone lmQrovements
Savanna Parkway $ 3,500,000
Storm Drain $ 150,000
Soundwalls $ 50,000
Landscaping and Fencing $ 1,200,000
Subdivision lmQrovements
Village 3 $ 2,800,000
Blasting for Utilities $ 300,000
Retaining Walls $ 350,000
Landscape $ 500,000
General Conditions $ 650,000
Overhead and Marku2 $ 900,000
Total Development Costs $ 14,297,918
Soft Costs
Environmental Mitigation $ 227,000
Backbone Soft Costs $ 1,419,688
Subdivision Soft Costs $ 1,042,500
Total Soft Costs $ 2,689,188
Total Costs $ 16,987,105
Source: ECIC.
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71

04/12/2022 Item No.13.

Table 18
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 1 - Phase 2C (Villages 5 and 6)
ECIC Plan of Finance- Grading and Backbone and Subdivision Improvement Costs Phase 2C (Villages 5 and 6 )
Grading
Finish pads and undercut streets
Backbone Improvements
Alder Creek Parkway frontage
Westwood Drive (sidewalk)
Landscape (Westwood)
Landscape (Alder Creek Parkway)
HMB 8 (pro-rata share)
$
Est. Cost
1,500,000
$
$
$
$
$
321,150
43,000
250,000
350,000
1,900,000
Subdivision Improvements
Villages 5 and 6
Retaining Walls
Soundwalls
Landscape
General Conditions
Overhead and Markup
$
$
$
$
$
$
9,180,000
650,000
850,000
250,000
750,000
950,000
Total Development Costs
Soft Costs
Environmental Mitigation
Backbone Soft Costs
Subdivision Soft Costs
$ 16,994,150
$
$
$
654,623
1,602,000
Total Soft Costs
Total Costs
$
$
2,256,623
19,250,773
Source: ECIC.
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04/12/2022 Item No.13.

CME Plan of Finance. CMB's remaining infrastructure and development of the Improvement Area will be funded through a combination of the following sources:
(1) CMB equity
(2) Proceeds from sale of bonds, including the possible sale of Additional Local Obligations for the Improvement Area
(3) Proceeds from sales of lots to homebuilders
Another source of funds will come from a cost sharing agreement with ECIC for common infrastructure constructed by CMB. Under the terms of this agreement, ECIC is expected to reimburse CMB for approximately $3.0 million of its share of the common infrastructure improvements. A portion of the $3.0 million is also eligible for SPIF Fee reimbursement, and an allocable share is expected to be assigned to ECIC upon completion of the work. Under the cost sharing agreement with ECIC, CMB forecasts $8.5 million of eligible SPIF fee reimbursements from its construction costs in Phase 2B. CMB estimates $2.4 million of the $8.5 million SPIF reimbursement will be assigned to ECIC in conjunction with its allocable share reimbursement of the common infrastructure. In summary, CMB's total SPIF reimbursement earned from the construction is projected at $8.5 million, with $5.6 million reserved for credits assigned to Tri Pointe in Villages 1 and 2. CMB expects to transfer $2.4 million of credits under its cost sharing agreement with ECIC, resulting in a projected SPIF reimbursement balance of $0.5 million due to CMB from third parties in future development phases.

Also, CMB has obtained financing from Goodfellow Bros. California, LLC ("Goodfellow").

CMB and Goodfellow entered into a $7.3 million loan at the end of 2021. This loan was secured and subordinated to the existing Deposit Deeds of Trust benefitting Tri Pointe. The Goodfellow loan financed the remaining improvements for Villages 1 and 2 and the projected improvement costs forecasted as of December 31, 2021 . Repayment of the loan is expected to occur through lot sale proceeds at the time of Tri Pointe's lot purchases. Tri Pointe's first takedown in January 2022 included a $1.8 million repayment toward the $7.3 million loan. As of March 1, 2022, the loan balance was $3.7 million, which is expected to be paid with proceeds from the remaining Tri Pointe lot takedowns or with proceeds of the Bonds, whichever occurs first.

CMB's development of Phase 2B commenced in October 2020 with grading and backbone roadway improvements for Westwood Drive and Savannah Parkway. Subdivision improvements commenced in April 2021 and were significantly completed in December 2021. Landscaping, fencing and punch-list related work is currently underway and scheduled for completion in April 2022. CMB estimates total development costs for Phase 2B at approximately $25.0 million, with $3.0 million of cost allocated to ECIC (Phase 2A) for its share of the common infrastructure, resulting in a net overall cost of $22.0 million for Phase 2B.

The following tables describe CMB 's plan of finance, including its estimated sources and uses of funds for Phase 2B (Table 19), and the estimated grading, backbone and subdivision improvements for Phase 2B, including both hard costs and soft costs, and the costs incurred to March 1, 2022 (Table 20). [REMAINDER OF PAGE JNTENTIONALL Y LEFT BLANK]
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04/12/2022 Item No.13.

Table 19
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 1- Phase 2B (Villages 1 and 2)
CMB Plan of Finance- Sources and Uses of Funds
Cash Sources
Partnership Interest Contribution
Lot Sale Revenue
CFO #23 Proceeds (Gross)
Total cash sources
Cash Uses
Land Acquisition
Construction Costs
Construction Cost Payable
Sales Commissions
Lot Closing Costs
Soft/Miscellaneous Costs
Total cash uses
Increase (Decrease) for period
Cash at beginning of year
Cash available for Partnership
Interest Distributions
(amounts in thousands)
2020 2021 2022 2023 Total
$248 $248
8,352 $9,610 $10,114 $250 28,326
6,200 1,000 7,200
$8,600 $9,610 $16,314 $1,250 $35,774
$2,865
1,879 $14,867 $2,678
(757) (6,627) 7,384
226
138
649 1,161 1,446
$4,636 $9,401 $11,872
3,964 209 4,442
3,964 4,173
$3,964 $4,173 $8,615
$518
741
$2,865
19,942
226
138
3,997
$1,259 $27,168
(9)
8,615
8,606
$8,606 $8,606
Source: CMB.
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04/12/2022 Item No.13.

Table 20
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 1 - Phase 2B (Villages 1 and 2)
CMB Plan of Finance - Grading and Backbone and Subdivision Improvement Costs Phase 2B (Villages 1 and 2)
Grading
Earthwork & SWPPP
Blasting
Retaining Walls
Storm Drain
Erosion Control/SWPPP
General Conditions
Overhead & Markup
Backbone Improvements
Westwood Drive (North)
Westwood Drive (South)
Savannah Parkway
Soundwalls
Landscaping and Fencing
Traffic Signal (EBW & Savannah)
Aggregate Operations
ECIC Cost Share'U
$
$
$
$
$
$
$
Est. Cost
1,948,000 $
880,375 $
7,531 $
124,067 $
235,158 $
438,115 $
405,165 $
Subdivision Improvements
Village I
Village 2
Blasting
Retaining Walls
General Conditions
Overhead and Markup
Contingency
Subcontractor Retention
Total Development Costs
Soft Costs
Environmental Mitigation
Backbone Soft Costs
Subdivision Soft Costs
Total Soft Costs
Total Costs
$ 893,965 $
$ 699,277 $
$ 2,151,681 $
$ 302,000 $
$ 1,500,000 $
$ 500,000 $
$ 230,926 $
$ (3,000,000) $
$ 4,676,138 $
$ 3,564,213 $
$ - $
$ 1,132,000 $
$ 1,115,000 $
$ 1,439,565 $
$ 700,000 $
$ - $
$ 19,943,176 $
$ 229,000 $
$ 834,000 $
$ 991,000 $
$ 2,054,000 $
$ 21,997,176 $
Costs Through
March t, 2022
1,948,000
880,375
7,531
124,067
235,158
438,115
405,165
780,939
645,612
2,123,433
302,000
223,434
(2,084,000)
4,495,823
3,398,370
940,665
858,572
1,158,150
16,881,409
229,000
834,000
991,000
2,054,000
18,935,409
CI) CMB and ECIC entered into a cost sharing agreement for improvements that CMB constructed that benefitted ECIC's property. The ECIC costs are estimated to be $3.0 million of the total shown above and, under the terms of that agreement, will be paid to CMB based on a "true-up" analysis at the completion of construction.

Source: CMB.
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04/12/2022 Item No.13.

KB HOME Sacramento Plan of Finance. KB HOME Sacramento expects to use internal funding (which may include homes sales revenue and funding from its parent company) to complete its home construction of its property within the Improvement Area. KB HOME Sacramento estimates that its remaining construction costs to complete the development of the 262 proposed homes to be constructed by KB HOME Sacramento in the Improvement Area, including approximately $17 million in remaining land acquisition costs to be paid to ECIC upon its completion (and KB HOME Sacramento's acceptance) of the work needed to create finished lots and complete all other requisite entitlement and offsite work, will be approximately$[_ ] million.

Although KB HOME Sacramento expects to have sufficient funds available to complete its planned development in the Improvement Area as described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining land acquisition, development and home construction costs will be available from KB HOME Sacramento or any other source when needed.

While KB HOME Sacramento has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither KB HOME Sacramento, nor any of its related entities are under any legal obligation of any kind to expend funds or obtain loans for land acquisition or the development of and construction of homes on its property in the Improvement Area. Any contributions by KB HOME Sacramento to fund the costs of such land acquisition or development are entirely voluntary.

If and to the extent that internal funding, including but not limited to home sales revenues, are inadequate to pay the costs to complete the planned development by KB HOME Sacramento within the Improvement Area and other financing by KB HOME Sacramento is not put into place, there could be a shortfall in the funds required to complete the planned development by KB HOME Sacramento of its property in the Improvement Area.

Signature Homes Plan o[Finance. Signature Homes expects to use internally generated funds to complete its site development and home construction of its property within the Improvement Area.

Signature Homes has also secured a loan from Housing Capital Company sufficient to fund the land acquisition and development costs of its property in the Improvement Area. It also obtained a revolving loan to finance additional home construction costs. Signature Homes estimates that its site development and construction costs to complete the development of the 68 proposed homes to be constructed by Signature Homes in the Improvement Area will be approximately $40 million.

Although Signature Homes expects to have sufficient funds available to complete its planned development in the Improvement Area as described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining land acquisition, development and home construction costs will be available from Signature Homes or any other source when needed. While Signature Homes has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Signature Homes, nor any of its related entities are under any legal obligation of any kind to expend funds or obtain loans for land acquisition or the development of and construction of homes on its property in the Improvement Area. Any contributions by Signature Homes to fund the costs of such land acquisition or development are entirely voluntary.

If and to the extent that internal funding, including but not limited to home sales revenues, are inadequate to pay the costs to complete the planned development by Signature Homes within the Improvement Area and other financing by Signature Homes is not put into place, there could be a shortfall in the funds required to complete the planned development by Signature Homes of its property in the Improvement Area.

Beazer Plan of Finance. Beazer expects to use home sales revenue and internally generated 76

04/12/2022 Item No.13.
funds to complete its site development and home construction of its property within the Improvement Area. Beazer estimates that its site development and construction costs to complete the development of the 53 proposed homes to be constructed by Beazer in the Improvement Area, including the amounts to be paid to ECIC to develop the properties to finished lot status, will be approximately $6.25 million.

Although Beazer expects to have sufficient funds available to complete its planned development in the Improvement Area as described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining land acquisition, development and home construction costs will be available from Beazer or any other source when needed. While Beazer has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Beazer, nor any of its related entities are under any legal obligation of any kind to expend funds or obtain loans for land acquisition or the development of and construction of homes on its property in the Improvement Area. Any contributions by Beazer to fund the costs of such land acquisition or development are entirely voluntary.

If and to the extent that internal funding, including but not limited to home sales revenues, are inadequate to pay the costs to complete the planned development by Beazer within the Improvement Area and other financing by Beazer is not put into place, there could be a shortfall in the funds required to complete the planned development by Beazer of its property in the Improvement Area.

Lennar Plan of Finance. Lennar expects to use home sales revenue and internally generated funds to complete its site development and home construction of its property within the Improvement Area.

Although Lennar expects to have sufficient funds available to complete its planned development in the Improvement Area as described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining land acquisition, development and home construction costs will be available from Lennar or any other source when needed. While Lennar has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Lennar, nor any of its related entities are under any legal obligation of any kind to expend funds or obtain loans for land acquisition or the development of and construction of homes on its property in the Improvement Area. Any contributions by Lennar to fund the costs of such land acquisition or development are entirely voluntary.

If and to the extent that internal funding, including but not limited to home sales revenues, are inadequate to pay the costs to complete the planned development by Lennar within the Improvement Area and other financing by Lennar is not put into place, there could be a shortfall in the funds required to complete the planned development by Lennar of its property in the Improvement Area.

Tri Pointe Plan o(Finance. Tri Pointe expects to use internal funding (which may include homes sales revenue and funding from its parent company) to complete its land acquisition and home construction of its property within the Improvement Area. Tri Pointe estimates that its remaining land acquisition and construction costs to complete the development of the 162 proposed homes to be constructed by Tri Pointe in the Improvement Area will be approximately $74 million.

Although Tri Pointe expects to have sufficient funds available to complete its planned development in the Improvement Area as described in this Official Statement, there can be no assurance that amounts necessary to finance the remaining land acquisition, development and home construction costs will be available from Tri Pointe or any other source when needed. While Tri Pointe has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither Tri Pointe, nor any of its related entities are under any legal obligation of 77

04/12/2022 Item No.13.
any kind to expend f unds or obtain loans f or land acquisition or the development of and construction of homes on its property in the Improvement Area. Any contributions by Tri Pointe to f und the costs of such land acquisition or development are entirely voluntary.

If and to the extent that internal funding, including but not limited to home sales revenues, are inadequate to pay the costs to complete the planned development by Tri Pointe within the Improvement Area and other financing by Tri Pointe is not put into place, there could be a shortfall in the funds required to complete the planned development by Tri Pointe of its property in the Improvement Area.

Backbone and Common Infrastructure. As described above, ECIC has completed the onsite grading and backbone and common infrastructure for development of Phase 2A and is in the early stages that development for Phase 2C. As of March 1, 2022, ECIC estimates that it had incurred total grading and backbone and common infrastructure development costs of approximately $24.4 million for the Phase 2A work. As of that same date, ECIC's remaining grading and backbone and common infrastructure for development costs for Phase 2C were estimated at approximately $13.2 million.

CMB is underway on completing the onsite backbone and common infrastructure for development of Phase 2B. As of March 1, 2022, CMB estimates that it had spent a total of approximately $6.0 million on these improvements and anticipates spending approximately an additional $5.8 million before the end of the year to finalize the development of the Phase 2B properties. See "- Development Plan and Status of Development."
Subdivision Improvements. The subdivision improvements for Phase 2A have been completed by ECIC. Remaining infrastructure for development of the Improvement Area includes, among other things, intract infrastructure such as underground utilities, subdivision roadways, street lighting, soundwalls and landscaping improvements. Such subdivision improvements are being constructed by ECIC for Phase 2C and by CMB for Phase 2B.

As of March 1, 2022, the total remaining subdivision improvements in the Improvement Area are estimated at approximately $19.9 million, including all design, construction staking, plan check, inspection, habitat mitigation and other project related soft costs.

Specific Plan Infrastructure Fee Credits and Improvements. The SPIF is administered by the City for the purposes of collecting impact fees for plan area wide improvements for the construction of roadways, water, sewer, drainage, dry utilities, recycled water and habitat mitigation in the Folsom Plan Area. The purpose of the SPIF is to require each landowner to pay its fair share of Folsom Plan Area area-wide improvements and to be reimbursed for any amount expended in excess of a landowner's fair share requirement. Under the terms of the SPIF Ordinance adopted by the City, property owners in the Folsom Plan Area will be eligible to enter into an agreement with the City and receive future reimbursements (that are convertible to fee credits for use within the owner's property) in exchange for the construction of eligible SPIF improvements. Based on the amount of improvements eligible for SPIF reimbursement, all of the properties within the Improvement Area are anticipated to fully cover their SPIF obligations through the conversion of these SPIF reimbursements to SPIF fee credits. After applying the SPIF reimbursements as SPIF fee credits to all properties in the Improvement Area, all amounts expended in excess of the project's SPIF obligation are expected to be reimbursed from the City as other SPIF fees are collected in the Folsom Plan Area.

Within the Folsom Plan Area, initial development will be required to pay a "SPIF Set-Aside" component to address initial water and sewer facility costs. This is a loan of SPIF collections to help the cash flow for the initial water and sewer costs. It will be repaid or equalized to all properties through the SPIF program as well as through CPD 18. The SPIF Set-Aside will apply to the first 2,500 Folsom Plan 78

04/12/2022 Item No.13.

Area dwelling units that would be subject to the SPIF. A portion of the SPIF will be required to be paid regardless of whether a developer/property owner has advance-funded eligible SPIF infrastructure and has executed a Fee Reimbursement Agreement through the City. An exception to this rule is that a property owner who constructs certain water or sewer infrastructure for which the SPIF Set-Aside is being collected may take a credit against the SPIF Set-Aside. This is applicable to ECIC in relationship to prior entities controlled by WestLand having advance-funded Phase 1 water and sewer costs for which the SPIF Set-Aside was created to partially fund.

ECIC has purchased SPIF Set-Aside credits from Mangini Improvement Company ("MIC"), which retains the rights to the SPIF Set-Aside reimbursements from facilities that were constructed in CFO 19. The transfer or sale of the SPIF Set-Aside credits is allowed under the terms of the Development Agreement(s) affecting the Improvement Area. MIC and ECIC have entered into a separate agreement to sell SPIF Set-Aside credits to ECIC, which in turn, will transfer the SPIF Set-Aside credit to its homebuilders.

In addition, in August 2020, the City approved an ordinance amending certain provisions of the SPIF ordinance to include a new SPIF - Offsite Water Set-Aside. This new SPIF - Offsite Water Set­ Aside will be payable at the building permit stage and will not be eligible to be offset by fee credits.

CERTAIN RISKS TO BONDHOLDERS
This section provides a general overview of certain risk factors which should be considered, in addition to the other matters set forth in this Official Statement, in evaluating an investment in the Bonds.

This section is not meant to be a comprehensive or definitive discussion of the risks associated with an investment in the Bonds, and the order in which this information is presented does not necessarily reflect the relative importance of various risks. Potential investors in the Bonds are advised to consider the following factors, among others, and to review this entire Official Statement to obtain information essential to the making of an informed investment decision. Any one or more of the risk factors discussed below, among others, could lead to a decrease in the market value and/or in the marketability of the Bonds. There can be no assurance that other risk factors not discussed herein will not become material in the future.

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

No assurance can be given that ECIC, CMB, any of the Merchant Builders, any of the other property owners or any future homeowners within the Improvement Area will pay the Special Tax in the future or that they will be able to pay such Special Tax on a timely basis. See"- Bankruptcy" below, for a discussion of certain limitations on the District's ability to pursue judicial proceedings with respect to delinquent parcels. Further, many homes within the Improvement Area will have a higher-than-average price point as compared to other homes in the region, which may impact the absorption of the residential units within the Improvement Area.
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04/12/2022 Item No.13.

Levy of the Special Tax
The principal source of payment of debt service on the Local Obligations, from which funds for the payment of the Bonds are derived, is the proceeds of the annual levy and collection of the Special Tax against property in the Improvement Area. The annual levy of the Special Tax is subject to the Maximum Special Tax rates authorized within the Improvement Area. The levies cannot be made at higher rates even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available moneys, will not be sufficient to pay debt service on the Local Obligations. Other funds which might be available include funds derived from the payment of delinquent Special Tax and funds derived from the tax sale or foreclosure and sale of related Taxable Property on which levies of the Special Tax are delinquent.

The levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular Taxable Property and the amount of the levy of the Special Tax against such parcels. Thus, there will rarely, if ever, be a uniform relationship between the value of such parcels and the proportionate share of debt service on the Local Obligations, and certainly not a direct relationship.

The Special Tax levied in any particular tax year on a Taxable Property is based upon the revenue needs and application of the Rate and Method of Apportionment. Application of the Rate and Method of Apportionment will, in turn, be dependent upon certain development factors with respect to each Taxable Property by comparison with similar development factors with respect to the other Taxable Property in the Improvement Area. Thus, in addition to annual variations of the revenue needs from the Special Tax, the following are some of the factors which might cause the levy of the Special Tax on any particular Taxable Property to vary from the Special Tax that might otherwise be expected:
• Reduction in the number of Taxable Property for such reasons as acquisition of Taxable Property by the federal government or an agency thereof, asserting immunity (however, see "Exempt Properties" below) from taxation, thereby resulting in an increased tax burden on the remaining Taxable Property.
• Failure of the related owners of Taxable Property to pay the Special Tax and delays in the collection of or inability to collect the Special Tax by tax sale or foreclosure and sale of the delinquent parcels, thereby resulting in an increased tax burden on the remaining parcels, subject to the related Maximum Special Tax.

Collection of Special Tax
In order for the District to pay debt service on the Local Obligations, from which funds for the payment of the Bonds are derived, it is necessary that the Special Tax levied against land in the Improvement Area be paid in a timely manner. The District has established the Local Obligations Reserve Account under the Local Obligations Indenture in the amount of the Required Bond Reserve to pay debt service on the Local Obligations, in the event that a portion of the Special Taxes for the Local Obligations are not paid on time.

The Local Obligations Indenture provides that the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described below and in the Mello-Roos Act, is to be subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ad valorem property taxes. Pursuant to these procedures, if taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the County. 80

04/12/2022 Item No.13.

Pursuant to the Mello-Roos Act, in the event of any delinquency in the payment of the Special Tax, the District may order the institution of a Superior Court action to foreclose the lien therefor within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at judicial foreclosure sale. Such judicial foreclosure action is not mandatory. However, the District has covenanted that it will annually on or before September 1 of each year review the public records of the County of Sacramento relating to the collection of the Special Tax in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and if it determines on the basis of such review that the amount so collected is deficient by more than 5% of the total amount of the Special Tax levied in such Fiscal Year, it will within 60 days thereafter institute foreclosure proceedings as authorized by the Mello­ Roos Act in order to enforce the lien of the delinquent installments of the Special Tax against each lot or parcel of land in the Improvement Area, and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale; provided, that irrespective of the foregoing if the District determines on the basis of such review that property owned by any single property owner in the Improvement Area is delinquent by more than $4,000 with respect to the Special Tax due and payable by such property owner by such delinquency date, then the District will institute, prosecute and pursue such foreclosure proceedings in the time and manner provided herein against such property owner; provided further, that any actions taken to enforce delinquent Special Tax liens shall be taken only consistent with Sections 53356.1 through 53356.7, both inclusive, of the Mello-Roos Act; and provided further that the District is not obligated under the Local Obligations Indenture to enforce the lien of any delinquent installment of the Special Tax for any Fiscal Year in which the District has received one hundred percent (100%) of the amount of such installment from the County pursuant to the Teeter Plan.

In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Owners of the Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the District of the proceeds of sale if the Local Obligations Reserve Account with respect to the Local Obligations is depleted. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS­ Covenant for Foreclosure."
The District may be unable to make full or timely payment of debt service on the Local Obligations if property owners in the Improvement Area fail to pay installments of the Special Tax when due, if the Local Obligations Reserve Account is depleted, or if the District is unable to sell related foreclosed parcels for amounts sufficient to cover the delinquent installments of the Special Tax.

Shapiro v. San Diego
On August 1, 2014, the California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in Shapiro v. San Diego City Council, 117 Cal. Rptr. 2d 631, 96 Cal. App. 4th 904 (2002). The case involved a Convention Center Facilities District (the "CCFD") established by the City of San Diego, much like a community facilities district established under the provisions of the Mello­ Roos Act. The CCFD is comprised of all of the real property in all of the City of San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties.

At the election to authorize such special tax, the electorate was limited to owners of hotel properties and lessees of certain of such hotel properties. Thus, the election was a landowner election limited to owners and lessees of properties on which the special tax would be levied, and not a registered voter election. Such approach to determining who would constitute the qualified electors of the CCFD was based on Section 53326(c) of the Mello-Roos Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the special tax.

The Court held that the CCFD special tax election was invalid under the California Constitution because 81

04/12/2022 Item No.13.

Article XIII A, Section 4 thereof and Article XIII C, Section 2 thereof require that the electors in such an election be the registered voters within the district.

In the case of the CCFD, at the time of the election there were many, many registered voters within the CCFD (viz., all of the registered voters in the City of San Diego). There were no registered voters within the Improvement Area at the time of the election to authorize the Special Tax. In City of San Diego, the Court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Mello-Roos Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the Court's holding does not apply to the Special Tax election in the Improvement Area. Moreover, Section 53341 of the Mello-Roos Act provides that any "action or proceeding to attack, review, set aside, void or annul the levy of a special tax ... shall be commenced within 30 days after the special tax is approved by the voters." The Special Tax with respect to the Improvement Area was approved by the voters on May 26, 2020. Based on Section 53341 of the Mello­ Roos Act and its analysis of existing laws, regulations, rulings and court decisions, the District does not believe that a challenge to the Special Tax may now be brought.

Concentration of Ownership
Currently, a significant portion of the Taxable Property in the Improvement Area is owned by the Merchant Builders, and consequently, a large portion of the Special Tax within the Improvement Area will be paid by the Merchant Builders until the land is developed and sold. Additional land within the Improvement Area is owned by ECIC and CMB, both of which are managed by the same three individuals. See "PROPOSED PROPERTY DEVELOPMENT- Property Ownership." ECIC and CMB have entered into purchase and sale agreements to sell their remaining taxable portions of the Improvement Area to merchant builders. No assurance can be given that the property sales will close when anticipated. See "PROPOSED PROPERTY DEVELOPMENT- Property Ownership." Generally, the risk of delinquency or nonpayment of Special Taxes at levels which do not permit the timely payment of principal of and interest on the Bonds is inversely correlated to the diversity of ownership of Taxable Property within the Improvement Area. The fact that a substantial portion of the property providing the ultimate security for the payment of Local Obligations is controlled by a few owners means that timely payment of the respective Special Tax and, therefore, the Bonds, will depend initially upon the willingness and ability of these owners to pay the Special Tax when due. The only assets of ECIC, CMB or the Merchant Builders that constitute security for the Local Obligations are their real property holdings located within the Improvement Area.

There can be no assurance that the undeveloped property will be fully developed and that property ownership will be further diversified as a result. See "CERTAIN RISKS TO BONDHOLDERS- Failure to Develop."
Payment of the Special Tax is Not a Personal Obligation of a Property Owner A PROPERTY OWNER IS NOT PERSONALLY OBLIGATED TO PAY THE SPECIAL TAX.

RATHER, THE SPECIAL TAXES ARE OBLIGATIONS ONLY AGAINST THE PROPERTY. IF THE

VALUE OF THE PARCELS OF PROPERTY IS NOT SUFFICIENT, TAKING INTO ACCOUNT

OTHER OBLIGATIONS ALSO PAYABLE THEREBY, TO FULLY DISCHARGE THE SPECIAL TAX, THE DISTRICT WILL HA VE NO RECOURSE AGAINST THE PROPERTY OWNER. 82

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Potential Early Redemption of Bonds from Prepaid Special Taxes Property owners within the Improvement Area are permitted to prepay their Special Taxes at any time. Such prepayments could also be made from the proceeds of bonds issued by or on behalf of an overlapping special assessment district or community facilities district. Such payments will result in a redemption of the Bonds on the Interest Payment Date for which timely notice may be given under the Trust Agreement following the receipt of the prepayment. The resulting redemption of Bonds purchased at a price greater than par could reduce the otherwise expected yield on such Bonds. See "THE BONDS- Redemption Provisions- Extraordinary redemption from Prepayment of Special Taxes." Special Tax Delinquencies
The Special Taxes are billed to the properties within the Improvement Area on the ad valorem property tax bills sent to owners of such properties. Such Special Tax installments are due and payable, and bear the same penalties and interest for non-payment, as do ad valorem property tax installments. In each year the County includes the Improvement Area in the Teeter Plan, the County will be obligated to pay the District I 00% of the amount of the Special Taxes actually levied in the Improvement Area, regardless of any delinquencies. However, the County is required to terminate the Teeter Plan if two­ thirds of the participants so petition the Board of Supervisors and may discontinue the Teeter Plan as to the Improvement Area if the delinquency rate in the Improvement Area exceeds 3%. Moreover, the County determines annually whether to include a particular district in the Teeter Plan. See "- Teeter Plan Termination" and "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS- The Teeter Plan." Significant delinquencies in the payment of annual Special Tax installments, or delays in the prosecution of foreclosure proceedings to collect such Special Taxes, could result in a default in the payment of the debt service on the Bonds. See "- Bankruptcy" and "- FDIC/Federal Government Interests in Properties" below, for a discussion of the limitations on the District's ability to foreclose on the lien of the Special Taxes in certain circumstances and the policy of the Federal Deposit Insurance Corporation regarding the payment of special taxes.

Teeter Plan Termination
The County has implemented its Teeter Plan as an alternate procedure for the distribution of certain property tax and assessment levies on the secured roll. The County determines annually which special taxes and assessment levies to include in the Teeter Plan. Pursuant to its Teeter Plan, once the County determines to include special taxes and assessment levies in the Teeter Plan, the County provides the local agency and taxing area with full tax and assessment levies instead of actual tax and assessment collections. In return, the County is entitled to retain all delinquent tax and assessment payments, penalties and interest. Thus, the County's Teeter Plan may help protect Owners from the risk of delinquencies in the payment of Special Taxes. However, the County is entitled, and under certain circumstances could be required, to terminate its Teeter Plan with respect to all or part of the local agencies and taxing areas covered thereby. In addition, the County may decide not to include certain special taxes and assessment levies, including the Improvement Area, in the Teeter Plan in any fiscal year. Any termination of the Teeter Plan with respect to the Improvement Area would eliminate such protection from delinquent Special Taxes. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS- The Teeter Plan."
Land Values
If a property owner defaults in the payment of the Special Tax, from which funds for the payment of the Bonds are derived, the District's only remedy is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delinquent Special Tax. The value of taxable property in 83

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the Improvement Area is therefore an important consideration in evaluating the security for the Bonds.

Land values could be adversely affected by economic factors beyond the District's control, such as relocation of employers out of the area, stricter land use regulations, the absence of water, or destruction of property caused by, among other eventualities, earthquake, flood or other natural disaster, or by environmental pollution or contamination.

Appraisal Risks
The Appraiser has estimated the market value of the property in the Improvement Area on the basis of certain assumptions which the Appraiser believes to be reasonable under the circumstances. See the Appraisal included in APPENDIX G hereto. However, certain of the assumptions made by the Appraiser may prove to be untrue.

Although the District believes that the Appraiser's methodology and assumptions are reasonable under the circumstances, the Appraiser's aggregate value conclusions are expressions of professional opinion only. No assurance can be given that the aggregate values of property in the Improvement Area are equal to or greater than the Appraiser's estimated values, nor can any assurance be given that such aggregate values will not decline during the period of time the Bonds are Outstanding. The values of the property in the Improvement Area can be adversely affected by a variety of factors, including, but not limited to, the occurrence of one or more of the special risk events discussed herein. A decline in the value of a parcel in the Improvement Area could lower the ability or willingness of the owner of such parcel to pay Special Taxes when due and would decrease the amount recoverable at a foreclosure sale of such parcel.

See "THE IMPROVEMENT AREA- Property Values" for a further discussion of estimated property values in the Improvement Area.

Zoning and Land Use Decisions
The Special Taxes, from which funds for the payment of the Bonds are derived, are to be levied annually based upon the land use categories in effect for the property. Decisions made by the City Council, which has control over zoning and land use decisions for property in the City, will affect the prospective use of the property and, therefore, the tax base for the Special Tax. The Rate and Method does not permit land use changes to reduce the tax base to below the Special Tax Requirement.

Exempt Properties
Certain properties within the Improvement Area are or may become exempt from the Special Tax in accordance with the Rate and Method of Apportionment. In addition, the Mello-Roos Act provides that properties or entities of the state, federal or local government are exempt from Special Tax; provided, however, that property acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. In addition, the Mello-Roos Act provides that if property subject to Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay Special Tax with respect to that property is to be treated as if it were a special assessment. Further, properties receiving a welfare exemption under subsection (g) of Section 214 of the California Revenue and Taxation Code are exempt from the Special Tax unless debt is outstanding and the property was subject to the Special Tax prior to receiving the exemption. Neither the District, ECIC or CMB are aware of any property within the Improvement Area currently receiving a welfare exemption. The constitutionality and operation of these provisions of the Mello-Roos Act have not been tested.
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In particular, insofar as the Mello-Roos Act requires payment of a special tax by a federal entity acquiring property within the community facilities district, it may be unconstitutional. If for any reason property within the Improvement Area becomes exempt from taxation, then, subject to the Rate and Method of Apportionment, including the limitation on the maximum special tax rates set out in the Rate and Method of Apportionment, the special tax will be reallocated to the remaining taxable properties within the Improvement Area. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon the timely payment of the Special Tax.

Moreover, if a substantial portion of land within the Improvement Area becomes exempt from the Special Tax because of public ownership, or otherwise, the maximum rate that could be levied upon the remaining property might not be sufficient to pay principal of and interest on the related Local Obligations and could adversely affect the ability of the District to pay principal of and interest on the Bonds when due.

Maximum Special Tax
Within the limits of the Special Tax, the District may adjust the Special Tax on all property in the Improvement Area to provide an amount required to pay interest on, principal of, Minimum Sinking Fund Payments for and redemption premiums, if any, on the Local Obligations, and the amount, if any, necessary to cure delinquencies and replenish the Local Obligations Reserve Account to an amount equal to the Required Bond Reserve, and to pay all current Expenses.

Although the Maximum Special Tax is designed to provide Special Tax revenues on an annual basis, there is no assurance that the Maximum Special Tax on the property in the Improvement Area will be sufficient to pay the amounts required to be paid by the Local Obligations Indenture at all times, from which funds for the payment of the Bonds are derived. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS- Special Tax Authorization" and APPENDIX A- "RA TE, METHOD OF APPORTIONMENT AND MANNER OF COLLECTION OF SPECIAL TAX." Pursuant to Section 53321 of the Mello-Roos Act as applied to the Improvement Area, under no circumstances will the special tax levied in any fiscal year against any parcel used for private residential purposes be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within the Improvement Area by more than I 0% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. Under the Rate and Method of Apportionment, property is considered "Residential Property" and is subject to the aforementioned limitation once a building permit could be issued for the purposes of constructing one or more residential units.

Ballot Initiatives and Measures
From time to time constitutional initiatives or other initiative measures may be adopted by State voters or voters of the City. For example, Measure W, adopted by City residents in November 2004, required, among other things, that residents north of State Highway 50 not bear the cost for infrastructure and public facilities serving the Folsom Plan Area. The adoption of any such initiative in the future might place limitations on the ability of the State or any political subdivisions thereof, including the Authority or the City, to increase revenues or to increase appropriations, the ability of the landowners to complete their developments, or the ability of the District to collect the Special Tax.

Recent Changes to Federal Income Tax Law
H.R. I of the I 15th U.S. Congress was enacted into law on December 22, 2017 (the "Tax Act").

The Tax Act makes significant changes to many aspects of the Code. The District, the City, the 85

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Authority, ECIC, CMB and the other property owners within the Improvement Area cannot predict the effect that the Tax Act may have on the cost of home ownership, the price of homes in the Improvement Area, the rate at which homes in the Improvement Area are sold to individual homeowners by ECIC or merchant builders, the ability or willingness of homeowners to pay Special Tax or property taxes on Taxable Property within the Improvement Area, or the values contained in this Official Statement or in the Appraisal.

Disclosures to Future Purchasers
The District has recorded notice of the Special Tax Lien in the Office of the County Recorder of the County of Sacramento. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such Special Tax obligation in the purchase of a parcel of land, a home or a commercial or industrial facility in the Improvement Area or the lending of money thereon. The Mello-Roos Act requires the subdivider ( or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello-Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. State Civil Code Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with the above requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax, from which funds for the payment of the Bonds are derived, when due.

Parity Taxes and Special Assessments
The ability or willingness of a property owner in the Improvement Area to pay the Special Tax, from which funds for the payment of the Bonds are derived, could be affected by the existence of other taxes and assessments imposed upon the property either currently existing or imposed in the future. The assessments and any penalties thereon constitute a lien against the lots and parcels of land on which they have been levied until they are paid. Such lien is on parity with all special taxes and special assessments levied by other agencies and is co-equal to and independent of the lien for general property taxes and other special assessments regardless of when they are imposed upon the same property. The Special Tax has priority over all existing and future private liens imposed on the property. In addition, other public agencies whose boundaries overlap those of the Improvement Area could, with or in some circumstances without the consent of the owners of the land in the Improvement Area, impose additional taxes or assessment liens on the property in the Improvement Area in order to finance public improvements to be located inside or outside of the Improvement Area.

Although the District has covenanted not to impose additional special taxes or assessments on property within the Improvement Area except in accordance with the Local Obligations Indenture, the Authority and the District have no control over the ability of other entities and districts to issue indebtedness secured by special taxes or assessments payable from all or a portion of the property in the Improvement Area. The imposition of additional liens on parity with the assessments could reduce the ability or willingness of the owners of parcels in the Improvement Area to pay the Special Tax and increases the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Taxes or the principal of and interest on the Local Obligations when due. As described under "FOLSOM PLAN AREA- Public Facilities Financing Plan," and "THE IMPROVEMENT AREA- Overlapping Debt" the City plans to issue additional obligations secured by special taxes from time to time to finance backbone infrastructure and public improvements within the Folsom Plan Area and the boundaries of the Improvement Area. For example, CFO 18 authorized the issuance of up to $200,000,000 in obligations. 86

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The special taxes securing such additional obligations would be payable on parity with the Special Taxes.

In addition, property owners may choose to participate in a residential PACE program (a mechanism for financing energy efficiency and renewable energy improvements on private property), consenting to assessments on their parcels that would be on a parity with the Special Taxes. The District does not currently have a timeline as to when any such obligations would be issued.

Bankruptcy
The payment of the Special Tax and the ability of the District to foreclose the lien of a delinquent unpaid tax, as discussed in "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS," may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws of the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure action could be delayed due to crowded local court calendars or delays in the legal process. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.

Although bankruptcy proceedings would not cause the lien of the Special Tax to become extinguished, bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings. The federal bankruptcy laws provide for an automatic stay of foreclosure and sale of tax sale proceedings, thereby delaying such proceedings perhaps for an extended period. Any such delays would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent tax installments not being paid in full. To the extent that property in the Improvement Area continues to be owned by a limited number of property owners, the chances are increased that the Local Obligations Reserve Fund could be fully depleted during any such delay in obtaining payment of delinquent Special Taxes. As a result, sufficient moneys would not be available in the Local Obligations Reserve Account to make up shortfalls resulting from delinquent payments of the Special Tax and thereby to pay principal of and interest on the Local Obligations on a timely basis. The payment of the Special Tax and the ability of the District to foreclose the lien of a delinquent unpaid tax could be delayed by bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting rights of creditors generally or by the laws of the State relating to judicial foreclosure. Further, should remedies be exercised under the federal bankruptcy laws against parcels in the Improvement Area, payment of the Special Tax may be subordinated to bankruptcy law priorities.

Thus, certain claims may have priority over the Special Tax in a bankruptcy proceeding even though they would not outside of a bankruptcy proceeding.

Geologic, Topographic and Climatic Conditions
The value of the property in the Improvement Area in the future can be adversely affected by a variety of additional factors, particularly those which may affect infrastructure and other public improvements and private improvements on property and the continued habitability and enjoyment of such private improvements. Such additional factors include, without limitation, geologic conditions such as earthquakes, topographic conditions such as earth movements, landslides and floods and climatic conditions such as droughts and wildfire.

The occurrence of seismic activity in the Improvement Area could result in substantial damage to properties in the Improvement Area which, in turn, could substantially reduce the value of such properties and could affect the ability or willingness of the property owners to pay the Special Tax on their property.

The Improvement Area is not located in any existing special study zone delineated by the Chief of the Division of Mines and Geology of the State of California as an area of known active faults and is not 87

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otherwise known to be located within an area of any significant seismic activity. However, it may be expected that one or more of such conditions may occur and may result in damage to improvements of varying seriousness, that the damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances, the value of the property may decline.

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

The Improvement Area is located within an area identified as a moderate fire hazard severity zone. More information regarding Fire Hazard Severity Zones can be found at the California Department of Forestry and Fire Protection website at https://frap.fire.ca.gov, though such website is not incorporated herein by reference. The development within the Improvement Area is subject to mitigation measures set forth in a fuel modification plan approved by the City Fire Department. The mitigation measures include, among others, limitations on the type of vegetation that may be planted within fuel modification zones established in open space areas along certain portions of the perimeter of the Improvement Area, minimum setback of structures and irrigation requirements of the fuel modification zones. Maintenance of such zones is expected to initially be the responsibility of the property owners but upon build-out of the Improvement Area and dedication of the open space to the City will be maintained by the City from funds provided through CFD 18. Homeowner's insurance is expected to be available to property owners within the Improvement Area, and the coverage provided by such insurance typically insures against fire damage, although there is no assurance that homeowners within the Improvement Area will purchase or maintain such insurance.

In the event of a wildfire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the Improvement Area. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Special Taxes when due. In addition, the value of land in the Improvement Area could be diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes.

Folsom Dam, located on the American River within the jurisdictional boundaries of the City, was built in 1955 by the United States Army Corps of Engineers and is owned by the United States Bureau of Reclamation. An auxiliary spillway to enable the dam to more easily release water as it nears capacity was completed by the Army Corps of Engineers in October 2017. The City, together with the County and other local agencies, have established a hazard mitigation plan in the event of a dam failure. Geologic, topographic and climatic conditions, if severe, could result in damage to the dam which could further cause damage to the surrounding region and may limit water supply for the City and the Improvement Area.

Potential Impact of Global Health Crises or Concerns
The ability or willingness of property owners to develop property in the Improvement Area, the speed at which property owners develop property in the Improvement Area, the ability or willingness of property owners to sell property in the Improvement Area, the speed at which property owners are able sell property in the Improvement Area, the ability or willingness of property owners to pay the Special 88

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Tax on property in the Improvement Area when due, the value of the property in the Improvement Area, or the ability of the District to collect delinquent Special Taxes through judicial foreclosure could be adversely affected by a global, national or localized outbreak of an infectious disease, such as COVID-19, a new strain of coronavirus, or by the fear of such an outbreak. The construction industry in the United States relies heavily on international trade for myriad construction materials. A global, national or localized outbreak could impact the availability of workers in countries producing construction materials, potentially resulting in supply chain shutdowns, which may result in substantial construction delays and project cost overruns.

The spread of COVID-19 and the response to its spread has altered the behavior of businesses and people in a manner that has had and is continuing to have a negative impact on global and local economies, and which has resulted in a volatile stock market response and a general disruption of financial markets in the United States and globally. In response to COVID-19, California instituted a statewide stay-at-home order and many California counties issued similar orders. While many COVID 19 restrictions in California and its various counties have ceased or been eased, the same or additional restrictions could be reinstituted if the outbreak again worsens, due to the currently increasing spread of any variant of COVID-19, or otherwise, or another similar event occurs. Essential services, including housing construction, were generally exempt from the orders and continued during the pandemic.

However, the economic and financial impacts of the stay-at-home orders and the economic downturn related to COVID-19 are predicted to last for multiple years. Executive and legislative efforts have also been made during the COVID-19 pandemic and may be made again in the future that either require or allow county tax collectors to cancel or waive penalties, costs and other charges associated with the delinquent payment of property taxes and the Special Tax upon a showing of property owner hardship caused by the COVID-19 pandemic or related or similar stay-at-home orders. These efforts may affect a property owner's willingness to pay the Special Taxes before they are delinquent.

These events and other factors resulting from such an outbreak, particularly if prolonged, could result in, or increase the likelihood of, the occurrence of certain of the other potential adverse effects described in this Official Statement, including those relating to declines in the value of property, the failure to complete the development of property, the inability to sell, lease and/or operate property, the inability or unwillingness to pay the Special Tax, and delays in (or insufficient funds received from) the collection of delinquent Special Taxes through judicial foreclosure. A future outbreak of COVID-19 or another infectious disease or the threat of any such outbreak could have similar or additional adverse effects. The Authority cannot predict the ultimate effects of the COVID-19 outbreak or any future outbreak or potential future outbreak of an infectious disease, or whether any such effects would have a material adverse effect on the ability to develop the Improvement Area as planned, the ability or willingness of property owners to pay Special Taxes when due, or the ability of the Authority to pay debt service on the Bonds when due.

Failure to Develop
Land development operations are subject to comprehensive federal, State and local regulations.

Approval is required from various agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. It is possible that the approvals necessary to complete development of all taxable property within the Improvement Area are not obtained on a timely basis or that litigation could be filed regarding approvals. Failure to obtain any such agency approval or satisfy any such government requirement or any litigation concerning such agency approval or government requirement could adversely affect land development operations. In addition, current and future governmental restrictions, including, but not limited to, governmental policies restricting or controlling development within the Improvement Area, could be enacted, and future land use initiatives approved by 89

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the voters in the City could add more restrictions and requirements on development within the Improvement Area, which restrictions may increase the cost to develop the Improvement Area. One such governmental restriction is the requirement to install rooftop photovoltaic solar systems for residential buildings under three stories constructed starting in 2020. Costs associated with the installation of solar to the homebuilders may reduce the willingness of homebuilders to construct homes and increased costs of those homes may decrease the willingness of homeowners to buy such homes.

Moreover, there can be no assurance that the means and incentive to conduct land development operations within the Improvement Area will not be adversely affected by a deterioration of the real estate market or economic conditions generally, future local, State and federal governmental policies relating to real estate development, the income tax treatment of real property ownership, acts of war or terrorism, or other factors.

A portion of the Taxable Property in the Improvement Area is presently undeveloped.

Undeveloped property is less valuable per acre than developed property, especially if there are no plans to develop such property or if there are severe restrictions on the development of such property, and therefore provides less security to the owners of the Bonds should it be necessary for the District to foreclose due to the nonpayment of the Special Taxes. Delays in any property owner's ability to obtain discretionary approvals (including any delays caused by litigation) would in turn delay the construction of improvements and development of the Taxable Property within the Improvement Area. Furthermore, an inability to develop the land within the Improvement Area as currently proposed would result in slower rates of diversification of property ownership within the Improvement Area. Concentration of ownership increases the risk of a failure to collect sufficient Special Taxes to pay debt service on the Bonds, all other things being equal. The timely payment of Special Taxes levied on undeveloped property depends primarily upon the ability and willingness of owners of such property to pay such taxes when due.

Certain infrastructure improvements are required before development in the Improvement Area can progress intract. The Phase 2 water infrastructure described under the heading "PROPOSED PROPERTY DEVELOPMENT- Development Entitlements- Water Supply" is anticipated to be needed before approximately 2,500 to 3,300 homes are occupied in the Folsom Plan Area. A slowdown in or cessation of the development of land within the Improvement Area could reduce the ability and willingness of such owners to make Special Tax payments, and could greatly reduce the value of such property in the event it has to be foreclosed upon to collect delinquent special taxes. See "- Bankruptcy" above for a discussion of certain limitations on the ability of the District to pursue judicial foreclosure proceedings with respect to taxpayers with delinquent Special Taxes.

Future Private Indebtedness
At the present time, the Improvement Area included properties that are undeveloped, undergoing development or are developed. In order to develop any improvements on that undeveloped land, the property owners will need to construct private improvements, the cost of which may increase the private debt for which the land in the Improvement Area or other land or collateral owned by the property owners is security over that contemplated by the Local Obligations, and such increased debt could reduce the ability or desire of the property owners to pay the Special Tax secured by the land in the Improvement Area. It should be noted however, that the lien of any private financing secured by the land within the Improvement Area would be subordinate to the lien of the Special Tax.

No Independent Review of Valuation or Viability of Completed Projects Property within the Improvement Area is comprised of separate and distinct projects as described above. Payment of Special Taxes are inherently dependent upon the development within the Improvement Area, and, with respect to residential properties, the ability of the buyers of completed 90

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homes to pay. The Authority, the District, and the Underwriter have not reviewed any business plan for continued ownership, development and/or operation of the property within the Improvement Area.

Similarly, the Authority, the District and the Underwriter have not conducted any independent evaluation of the existing or projected economic viability or profitability of any of the plans for development, including review and/or evaluation of financial statements of any owner or developer of any parcel subject to the Special Tax. The information contained herein regarding the proposed development and the owners of the parcels within the Improvement Area has been supplied by such owners and the Underwriter has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of such information.

In the event an owner or developer experiences financial difficulties, including difficulties resulting from construction or operation of the development within the Improvement Area, the value of the affected parcel within the Improvement Area may decline and/or such owner or developer may elect to refrain from payment of future Special Taxes for such parcel. See also "- Failure to Develop." Endangered Species
During recent years, there has been an increase in activity at the State of California and federal level related to the possible listing of certain plant and animal species found in California as endangered species. An increase in the number of endangered species is expected to curtail development in a number of areas. The property within the Improvement Area contains protected habitat and species, including but not limited to Swainson's hawk and tri-colored blackbird foraging habitats and wetlands regulated by state and federal agencies. Foraging habitat mitigation credits have been satisfied by ECIC or Folsom Real Estate South (a prior owner of the property in the Improvement Area that was acquired by CMB) for all backbone projects and all Improvement Area No. 1 project phases. At present, the property within the Improvement Area is not known to be inhabited by any other plant or animal species listed as threatened or endangered under either the State or federal endangered species acts or which either the California Fish and Game Commission or the United States Fish and Wildlife Service has proposed for addition to the respective endangered species list. Notwithstanding this fact, new species are proposed to be added to the State and federal protected lists on a regular basis. Any action by the State or federal governments to protect species located on or adjacent to undeveloped property could negatively affect the developer's ability to complete development as planned. This, in turn, could reduce the likelihood of timely payment of the Special Tax, from which funds for the payment of the Bonds is derived, and would likely reduce the value of the land and the potential revenues available at a foreclosure sale for delinquent Special Taxes. See "CERTAIN.RISKS TO BONDHOLDERS- Land Values." Hazardous Substances
While governmental taxes, assessments, and charges are a common claim against the value of a parcel, other less common claims may be relevant. One of the most serious in terms of the potential reduction in the value of a parcel in the Improvement Area is a claim with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Superfund Act," is the most well-known and widely applicable of these laws, but laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner ( or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner ( or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the parcels in the Improvement Area be affected by a hazardous substance is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller. 91

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Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the financial and legal liability of a property owner to develop the affected parcel or other parcels, as well as the value of the property that is realizable upon a delinquency and foreclosure.

The appraised value of property in the Improvement Area does not take into account the possible reduction in marketability and value of any of the parcels by reason of the possible liability of the owner ( or operator) for the remedy of a hazardous substance condition of the parcel. While the District is not aware that the owner ( or operator) of any of parcels has such a current liability with respect to any of the parcels, it is possible that such liabilities do currently exist and that the District is not aware of them.

Further, it is possible that liabilities may arise in the future with respect to any of the parcels resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of a parcel within the Improvement Area that is realizable upon a delinquency.

Naturally Occurring Asbestos
California Air Resource Board ("CARB") adopted the Airborne Toxic Control Measure ("A TCM") for Construction, Grading, Quarrying and Surface Mining Operations. This statewide regulation is applicable to grading or any other projects disturbing soil in areas of California where asbestos may exist, as determined by the California Geological Survey ("CGS"). The ATCM applies to any size construction project although there are additional notification requirements for projects that exceed one acre. Areas and parcels moderately likely to contain naturally occurring asbestos are located in the eastern parts of Sacramento County, including in the City.

Natural weathering or human disturbance can break the asbestiform minerals down to microscopic fibers, which are easily suspended in air. There is no health threat if asbestos fibers in soil remain undisturbed and do not become airborne. When inhaled, these thin fibers irritate tissues and resist the body's natural defenses. Asbestos causes cancers of the lung (such as mesothelioma) and the lining of internal organs, asbestosis, and other diseases that inhibit lung function. Scientists consider certain types of asbestos fibers (i.e., tremolite fibers and similarly structured amphibole asbestos particles) that are frequently identified in the City to be more potent than other types in causing mesothelioma.

The EIR for the Folsom Plan Area required all new development to undertake a site investigation to determine the presence of naturally occurring asbestos and, if necessary, prepare and implement an asbestos dust control plan. ECIC has undertaken an asbestos dust control plan with respect to development within the Improvement Area and the costs of development in this Official Statement reflect the costs associated with asbestos mitigation.

The health concerns associated with the presence of naturally occurring asbestos m the Improvement Area may adversely affect the marketability of property in the area.

Naturally Occurring Arsenic
Arsenic is a naturally occurring element that is commonly found in soil, among other locations, and 1s considered to be cancer-causing. Arsenic traces, in elevated concentrations as compared to 92

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naturally occurring background levels, were identified in open space areas adjacent to Village 1. No grading has occurred, nor is any planned in this portion of the Improvement Area. Additionally, ECIC has implemented monitoring protocols and identified mitigation measures should naturally occurring arsenic be found during any grading activities nearby.

The health concerns associated with the presence of naturally occurring arsenic m the Improvement Area may adversely affect the marketability of property in the area.

FDIC/Federal Government Interests in Properties
The ability of the District to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the "FDIC"), the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.

Under the Supremacy Clause of the United States Constitution, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes within the Improvement Area but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments. Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on parity with the Special Taxes and preserve the federal government's mortgage interest. In Rust v. Johnson, 597 F.2d 174 (1979), the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association ("FNMA") is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.

Neither the Authority nor the District have undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) in any of the parcels subject to the Special Taxes within the Improvement Area, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Bonds are outstanding.

In the event that any financial institution making any loan which is secured by real property within the Improvement Area is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, then the ability of the Authority to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited.

The FDIC's policy statement regarding the payment of state and local real property taxes (the "Policy Statement") provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property's value, and that the FDIC is immune from real property taxes assessed on any basis other than property value. According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is consistent with sound business practice and the orderly administration of the institution's affairs, unless abandonment of the FDIC's interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts.

If any property taxes (including interest) on FDIC-owned property are secured by a valid lien (in effect 93

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before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC' s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC's consent.

The Policy Statement states that the FDIC generally will not pay non-ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. Special taxes imposed under the Mello­ Roos Act and a special tax formula which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefore covered by the FDIC's federal immunity. The Ninth Circuit has issued a ruling on August 28, 2001, in which it determined that the FDIC, as a federal agency, is exempt from Mello-Roos special taxes. According to information available from the Sacramento County assessment roll, the FDIC does not currently own any of the property in the Improvement Area.

The Authority and the District are unable to predict what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the Improvement Area in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at foreclosure sale. Such an outcome could cause a draw on the reserve account for the Local Obligations and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the Local Obligations and the Bonds.

No Acceleration Provision
The Local Obligations Indenture does not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms thereof.

Loss of Tax Exemption
As discussed under "TAX MATTERS," interest on the Bonds could become includable in gross income for purposes of federal income taxation retroactive to the date of issuance, as a result of acts or omissions of the District subsequent to the issuance of the Bonds in violation of the District's covenants with respect to the Bonds. Should interest become includable in gross income, the Bonds are not subject to redemption by reason thereof and will remain outstanding until maturity or unless earlier redeemed pursuant to optional or mandatory redemption.

LEGAL MATTERS
The validity of the Bonds, the Local Obligations and certain other legal matters are subject to the approving legal opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority ("Bond Counsel"). Bond Counsel has not undertaken any responsibility for the accuracy, completeness or fairness of this Official Statement and expresses no opinion as to the matters set forth herein. Certain legal matters will be passed upon for the District and the Authority by the City Attorney. Certain legal matters relating to the Local Obligations will be passed upon by Orrick, Herrington & Sutcliffe LLP, as bond counsel to the District. The fees of Bond Counsel and Disclosure Counsel are contingent upon the issuance of the Bonds.
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TAX MATTERS
In the opinion of Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. A complete copy of the proposed form of opinion of Bond Counsel is set forth as APPENDIX E hereto.

To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers).

The original issue discount with respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight­ line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of such Bonds. Beneficial Owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of Beneficial Owners who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public.

Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.

The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The Authority, the City and the District have made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine ( or to inform any person) whether any actions taken ( or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel's attention after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds.

Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.
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Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Bonds may otherwise affect a Beneficial Owner's federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences.

Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel is expected to express no opinion.

The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service ("IRS") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Authority, the City or the District, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Authority, the City and the District have covenanted, however, to comply with the requirements of the Code.

Bond Counsel's engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Authority, the City, the District or the Beneficial Owners regarding the tax-exempt status of the Bonds in the event of an audit examination by the IRS. Under current procedures, Beneficial Owners would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the Authority, the City or the District legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the Authority, the City, the District or the Beneficial Owners to incur significant expense.

Payments on the Bonds generally will be subject to U.S. information reporting and possibly to "backup withholding." Under Section 3406 of the Code and applicable U.S. Treasury Regulations issued thereunder, a non-corporate Beneficial Owner of Bonds may be subject to backup withholding with respect to "reportable payments," which include interest paid on the Bonds and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the Bonds. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. taxpayer identification number ("TIN") to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a "notified payee underreporting" described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(l )(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against a Beneficial Owner's federal income tax liability, if any, provided that the required information is timely furnished to the IRS. Certain Beneficial Owners 96

04/12/2022 Item No.13.
(including among others, corporations and certain tax-exempt organizations) are not subject to backup withholding. The failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS.

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

NO RATING
The Authority has not made, and does not contemplate making, application to any rating agency for the assignment of a rating to the Bonds. The absence of a rating may significantly adversely affect the ability of the owner of Bonds to sell such Bonds.

MUNICIPAL ADVISOR
The District has retained Fieldman, Rolapp & Associates, Inc. as municipal advisor (the "Municipal Advisor") with respect to the issuance of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement.

Compensation of the Municipal Advisor relating to the issuance of the Bonds is contingent upon the issuance of the Bonds.

UNDERWRITING
The Bonds are being purchased by Piper Sandler & Co. (the "Underwriter") pursuant to a Bond Purchase Contract (the "Purchase Contract"), by and among the Authority, the District and the Underwriter. Pursuant to the Purchase Contract, the Underwriter has agreed to purchase all of the Bonds from the Authority at a purchase price of $ , being the aggregate principal amount of the Bonds of $ , [plus/less] [an/ a net] original issue [premium/discount] of $ and less an Underwriter's discount of $ . The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the inside front cover page hereof.
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CONTINUING DISCLOSURE
The District
The District has covenanted for the benefit of the Owners to provide certain financial information and operating data relating to the Bonds by not later than nine months following the end of the District's fiscal year (which fiscal year currently ends June 30) commencing with the report for the 2021-22 Fiscal Year (the "Annual Report"), which is due April 1, 2023, and to provide notices of the occurrence of certain enumerated events. The Annual Report and the notices of enumerated events will be filed with EMMA, and the first Annual Report may include the filing of or reference to this Official Statement. The specific nature of the information to be contained in the Annual Report or the notices of enumerated events is contained within APPENDIX D- "FORMS OF CONTINUING DISCLOSURE UNDERTAKINGS." These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5).

The District is committed to complete and accurate continuing disclosure in accordance with its continuing disclosure obligations under the federal securities laws, including rules and regulations promulgated by the SEC and the MSRB, as those rules may be amended from time to time. [However, during the past five years, there were specific instances where complete and accurate disclosure was not achieved by the City or its related agencies, including, (I) the City failed to include revenue fund balances for certain of the Folsom Public Financing Authority's revenue bonds issued in 2007 in the annual reports for Fiscal Years 2015 through 201 7, and (2) a notice of listed event for a ratings upgrade on October 12, 2018, was not timely filed for certain of the Folsom Public Financing Authority's water revenue bonds.

The description of these instances of non-compliance in this Official Statement is not an acknowledgement that any such non-compliance was material. Further, the City has made remedial filings to address these instances of non-compliance for those issues that are still outstanding and has policies and procedures in place in order to achieve compliance with its continuing disclosure undertakings.]
KB HOME Sacramento and Tri Pointe
Pursuant to separate certificates, KB HOME Sacramento and Tri Pointe have each covenanted for the benefit of the Bondholders to provide certain information relating to it, its development plan and its financing plan (the "Disclosure Reports"), and to provide notices of the occurrence of certain enumerated events until the obligation to so provide such information, data and notices is otherwise terminated in accordance with the provisions of such certificate. A form of the Continuing Disclosure Certificate for KB HOME Sacramento and Tri Pointe is included in APPENDIX D- "FORMS OF CONTINUING DISCLOSURE UNDERTAKINGS." Such information is to be provided semiannually not later than March 31 and September 30 of each year, commencing with the Disclosure Report due September 30, 2022. The Disclosure Reports are to be filed with EMMA.

The Authority and the District have not considered, or reached any conclusion as to, whether or not KB HOME Sacramento or Tri Pointe are an obligated person under the Rule. The Authority takes no responsibility for the form or content or for the adequacy of the respective Continuing Disclosure Certificates for KB HOME Sacramento or Tri Pointe for their intended purpose.

The obligations of KB HOME Sacramento and Tri Pointe under the respective Continuing Disclosure Certificate will terminate when the property within the Improvement Area owned by KB HOME Sacramento and Tri Pointe, respectively, is no longer obligated to pay 20% or more of the Special Taxes within the Improvement Area.
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KB HOME Sacramento Prior Continuing Disclosure Compliance: KB HOME Sacramento's Sacramento Division will be responsible for compliance with KB HOME Sacramento's obligations under its Continuing Disclosure Certificate. KB HOME Sacramento represents that, based on a review of prior continuing disclosure compliance obligations in northern California, except as described in the following paragraph, the Sacramento Division of KB HOME Sacramento has not failed to comply in any material respect with any previous undertaking by it to provide periodic continuing disclosure reports or notices of listed events with respect to community facilities districts in northern California within the past five years.

However, in connection with the phased acquisition of lots from the master developer of property within California Statewide Communities Development Authority Community Facilities District No. 2015-01, Improvement Area No. 2 (University District) ("CSCDA CFD No. 2015-01, IA No. 2"), KB HOME South Bay Inc. ("KB South Bay") executed a Continuing Disclosure Certificate - Developer, dated December 18, 2017, with respect to the initial acquisition of 30 lots within CSCDA CFD No. 2015-01, IA No. 2, a Continuing Disclosure Certificate - Developer, dated June 14, 2018, with respect to a second acquisition of 30 additional lots within CSCDA CFD No. 2015-01, IA No. 2, a Continuing Disclosure Certificate - Developer, dated October 16, 2018, with respect to a third acquisition of 4 7 additional lots within CSCDA CFD No. 2015-01, IA No. 2 and a Continuing Disclosure Certificate - Developer, dated December 21, 2018, with respect to a fourth acquisition of 57 additional lots within CSCDA CFD No. 2015-01, IA No. 2 (each, a "CDC" and, collectively, the "CDCs"). Each CDC required the filing of an Annual Report by December 15 of each year with respect to the property referenced in the applicable CDC unless the obligation had previously terminated. KB South Bay believed that its reporting obligation pursuant to each of the first three CDCs terminated prior to the December 15, 2018 Annual Report date because the property referenced in each such CDC was not responsible for 20% or more of the special taxes within CSCDA CFD No. 2015-01, IA No. 2.

Consequently, KB South Bay did not file such Annual Report. KB South Bay filed a Notice of Termination of its obligations under all of the CDCs on EMMA on November 13, 2019. [KB HOME TO CONFIRM its April l51 report for West Patterson Financing Authority CFD 2018-1 (Villages of Patterson) Special Tax Bonds Series 2021 and March 3 l51 report for County of Placer CFD 2017-1 (Riolo Vineyard Specific Plan) IA 1 are timely filed.]
Tri Pointe Prior Continuing Disclosure Compliance: Tri Pointe's Sacramento Division will be responsible for compliance with Tri Pointe's obligations under its Continuing Disclosure Certificate. Tri Pointe represents that, based on a review of prior continuing disclosure compliance obligations in northern California, the Sacramento Division of Tri Pointe has not failed to comply in any material respect with any previous undertaking by it to provide periodic continuing disclosure reports or notices of listed events with respect to community facilities districts in northern California within the past five years.

MISCELLANEOUS
This Official Statement is not to be construed as a contract or agreement among the Authority, the District and the purchasers of the Bonds. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. The information and expressions of opinion herein are subject to change without notice and neither the delivery of the Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority, the City or the District since the date hereof.

References are made herein to certain documents and reports which are brief summaries thereof which do not purport to be complete or definitive and reference is made to such documents and reports for full and complete statements of the contents thereof. Copies of such documents and reports are available 99

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for inspection at the office of the Finance Director, City of Folsom, City Hall, 50 Natoma Street, Folsom, California 95630.
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The execution and delivery of the Official Statement by the Authority and the District has been duly authorized by the Board of Directors of the Authority and the City Council, respectively.

FOLSOM RANCH FINANCING AUTHORITY
By: _
Treasurer

CITY OF FOLSOM COMMUNITY FACILITIES
DISTRICT NO. 23 (FOLSOM RANCH)
By: _
City of Folsom Finance Director
Signature Page to Official Statement

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APPENDIX A

RATE, METHOD OF APPORTIONMENT AND MANNER OF

COLLECTION OF SPECIAL TAX
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APPENDIXB

ECONOMIC AND DEMOGRAPHIC INFORMATION RELATING TO THE CITY OF FOLSOM This Appendix contains certain economic and demographic information relating to the City.

Neither the faith and credit nor the taxing power of the City, the Authority, the State of California or any political subdivision thereof is pledged to the payment of the Bonds. Except for the Trust Estate, no other revenues or taxes are pledged to the payment of the Bonds. The Bonds are not general obligations of the Authority, the District or the City but are limited obligations of the Authority payable solely from the Trust Estate, derived primarily from payments on the Local Obligations from the payment of the Special Taxes levied within the District, as more fully described in the Official Statement to which this Appendix is appended. The information set forth herein that has been obtained from sources other than the City is believed to be reliable, but such information is not guaranteed as to accuracy or completeness.

Statements contained herein that involve estimates, forecasts, or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of f acts. Information contained in this Appendix B is presented as general background data. The taxing power of the City, the State of California, or any political subdivision thereof is not pledged to the payment of the Bonds.

General
The City is located in the eastern portion of Sacramento County (the "County"), approximately 110 miles northeast of San Francisco and 20 miles east of Sacramento. The City is located along the eastern end of the Highway 50 corridor in an area of the Sacramento Valley that has experienced considerable growth over the past 30 years.

City Government
The City was incorporated in 1946 and chartered in 1990. The City's primary governing body is the City Council, composed of five members who are elected at large and who serve four-year terms. The council members choose a mayor and vice mayor from among their members. Current City Council members are:

Member
Kerri Howell (Mayor)
Rosario Rodriguez (Vice Mayor)
Sarah Aquino
YK Chalamcherla
Mike Kozlowski
Term Expires
11/2022
11/2024
11/2022
11/2024
11/2022
The City operates under a Council-Manager form of government. The City Manager is responsible for daily administration of City affairs. Elaine Andersen has served as City Manager since 2018. The City Manager is appointed by and serves at the will of the City Council. The City Manager is responsible for implementation of City Council policy, enforcement of City laws and ordinances, appointment and discipline of City officers and employees, oversight of City departments, preparation and submission of the City budget to the City Council, and other related functions.

City Budget Process
The City's annual budget is adopted by the City Council on or before the last working day of June. If the City Council fails to adopt a budget by such date, the budget proposed by the City Manager B-1

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shall be deemed adopted. The City Manager may transfer moneys between departments and divisions, and programs and accounts within departments and divisions, but only the City Council may by resolution transfer moneys between funds and from un-appropriated balances or fund balances to any fund or appropriation account. The City Council adopted the Fiscal Year 2021-22 budget on May 11, 2021.

Budget information is adopted on an annual basis for the General Fund, special revenue funds and debt service funds. The budget is adopted on a project length basis for capital projects funds. The following procedures are followed in establishing the budgetary data reflected in the financial statements:

A. Department heads prepare a budget request based upon the previous year's expenditures.

B. Meetings are held between the department heads, the Chief Financial Officer and City Manager for the purpose of reviewing and prioritizing budget requests.

C. The City Manager submits the proposed city budget to the City Council, who makes decisions regarding department budgets.

D. Transfers between funds and changes in the total budget must be approved by the City Council.

Budget information is presented for the General Fund, Successor to the Redevelopment Agency, Special Revenue Funds, Capital Projects Funds, Proprietary Funds and Internal Service Fund as required supplementary information. The budget information is presented on a basis consistent with generally accepted accounting principles. Appropriations, except open project appropriations and unexpended grant appropriations, lapse at the end of each fiscal year.

Revenues and expenditures relating to the City's general governmental operations are budgeted and accounted for in the City's General Fund, including public safety, highways and streets, health and welfare and culture and recreation. General taxes and fees support most of these activities. The City's Fiscal Year 2021-22 adopted budget includes over $220.2 million in expenditures across all funds. Of this amount, approximately $92.5 million was allocated to the General Fund of the City. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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Population
The historic population of the City, the County and the State is shown in the following table.

City of Folsom, Sacramento County and State of California Population Estimates
(As of January 1)
Year CitJ!. o[.Folsom Sacramento CountJ!. State o[. Cali(prnia 1990 (I) 29,798 1,066,789 29,811,427
2000<1> 51,884 1,223,499 33,871,648
2010 (I) 72,203 1,418,788 37,253,956
2016 76,260 1,495,620 39,103,587
2017 77,050 1,511,390 39,352,398
2018 77,598 1,525,099 39,519,535
2019 78,666 1,538,054 39,605,361
2020 81, I 06 1,553,157 39,648,938
2021 82,303 1,561,014 39,466,855
<1> Based on United States Census Bureau data as of April I in such year.

Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties and the State, 201 1-2021, with 2010 Census Benchmark, Sacramento, California, May 2021.

Building Activity
Residential building activity for the past five calendar years for the City is shown in the following table.

BUILDING PERMITS AND VALUATIONS
City of Folsom
2017-2021
Permit Valuation
New Single-Family $49,876,243 $133,853,629 $168,004,023 $181,531,127 $351,482,252 New Multi-Family 44,567,106 18,535,990 15,533,653 11,039,625 6,621,585 Res. Alterations/Additions 9,213,460 8,634,352 10,055,289 11,214,031 13,200,936 Res. Other 21,854,701 24,467,871 26,537,274 34,630,673 43,832,114 Total Residential <1> $125,511,510 $185,491,842 $220,130,239 $238,415,456 $415,136,887 New Commercial $1,440,277 $735,936 $1,384,871 $230,698 $570,954 New Industrial 3,374,395
Comm./Ind. 21,432,333 19,013,485 26,361,400 10,117,261 I 1,622,910 Alterations/ Additions
Other Comm.find. 14,023,780 9,171,404 14,185,636 2,011,887 9,611,894 Total Non-Residential <1> $40,270,785 $28,920,825 $41,93 I ,907 $12,359,846 $21,805,758 <1> Totals may not add to sum because of rounding.

Source: City of Folsom.

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Employment
The table below reflects recent employment information for the City's largest employers for the fiscal year ended June 30, 2021.

PRINCIPAL EMPLOYERS
City of Folsom
Fiscal Year 2020-21
Business Name
Intel Corporation
California State Prison
Folsom Cordova Unified School District <1)
Folsom State Prison
Mercy Hospital of Folsom
California Independent System Operator
City of Folsom
SAFE Credit Union <2l
Micron Technology, Inc.

Costco Wholesale
Total Top Employers
Total Labor Force <3)
Number of Employees
5,992
1,547
1,198
1,002
732
639
452
378
372
350
12,662
37,200
Percent of Total
Employment

16.11%

4.16 3.22

2.69 1.97

1.72 1.22

1.02 1.00

0.94 34.04%
100.00%
(IJ Includes both certified and classified employees in Folsom only. <2J Includes both the corporate and Folsom branch.
<3J Total Folsom labor force provided by EDD Labor Force Data.

Source: MuniServices, LLC/ Avenu Insights & Analytics
The unemployment rate in the Sacramento- Roseville- Arden-Arcade, CA Metropolitan Statistical Area ("Sacramento MSA"), which includes Sacramento, Placer, El Dorado, and Yolo Counties, was approximately 6.2% in 2021, down from the 2020 estimate of approximately 8.7%. This compares with an unadjusted unemployment rate of 7.3% for California and 5.3% for the nation during the same period. The unemployment rate was 5.7% in El Dorado County, 5.0% in Placer County, 7.0% in Sacramento County and 5 .8% in Yolo County for 2021.
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The table below provides information about employment rates and employment by industry type for the Sacramento MSA for calendar years 2017 through 2021.

Sacramento- Roseville- Arden-Arcade, CA Metropolitan Statistical Area Labor Force, Employment and Unemployment Yearly Average'!' 2017 2018 2019 2020 2021
Civilian Labor Force <2> 1,074,000 1,088,300 1,100,800 1,091,700 1,099,300 Employment 1,024,800 1,046,900 1,060,300 994,000 1,028,800 Unemployment 49,200 41,500 40,500 97,700 70,500
Unemployment Rate 4.6% 3.8% 3.7% 9.0% 6.4%
Wage and Salary EmQloyment <3)
Total Farm 9,800 9,100 8,700 8,300 9,000
Mining and Logging 400 500 500 600 700
Construction 58,700 64,500 69,400 70,200 74,100
Manufacturing 35,700 36,000 36,800 36,100 37,500
Wholesale Trade 26,500 28,400 28,600 26,500 26,400
Retail Trade 101,400 102,000 100,500 95,200 101,100
Transportation, Warehousing and Utilities 27,400 29,500 32,200 34,300 37,100 Information 12,600 12,400 11,900 10,200 10,000
Finance and Insurance 37,400 36,700 35,200 34,800 34,300 Real Estate and Rental and Leasing 15,200 16,800 17,300 16,900 17,400 Professional and Business Services 132,400 136,000 137,200 132,500 136,700 Educational and Health Services 153,600 159,800 166,600 164,000 168,400 Leisure and Hospitality 103,300 106,200 109,600 83,900 92,800 Other Services 33,000 34,200 35,400 31,000 32,600
Federal Government 14,200 14,100 14,200 14,800 14,500
State Government 118,400 120,400 121,900 121,700 126,800 Local Government 102,600 103,500 105,300 98,900 98,000
Total, All Industries <4l 982,500 1,009,900 1,031,300 979,700 1,017,200 (!) Data not adjusted for seasonality.
(2) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(3) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(4) Data may not add due to rounding.

Source: State of California Employment Development Department.

Retirement Programs
General. The City contributes to two plans in the California Public Employees' Retirement System ("CalPERS"). The safety plan covers all of the City's full-time sworn uniformed fire employees, sworn uniformed police employees, and all chiefs in both departments. The miscellaneous plan covers all remaining eligible employees.

As of June 30, 2020, the date of the most recent actuarial study report, the safety plan and the miscellaneous plan were 61.9% funded and 64.1 % funded, respectively. For the safety plan, the actuarial accrued liability was $224. 7 million and the market value of assets was $ 139 .1 million, resulting in an unfunded actuarial accrued liability ("UAAL") of $85.6 million. For the miscellaneous plan, the actuarial accrued liability was $252.2 million and the market value of assets was $161. 7 million, resulting in a UAAL of $90.5 million.

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For the year ended June 30, 2021, the City's annual pension cost of $8,506,647 for the safety plan and $9,775,127 for the miscellaneous plan were equal to the City's required contributions. Based on the City's Comprehensive Annual Financial Report for the fiscal year ended June 30, 2021 (the "Fiscal Year 2021 CAFR"), the three-year trend information for the safety and miscellaneous plans combined is as follows:

Annual Percentage Net
Fiscal Year Pension ofAPC Pension
Ended Cost ("APC") Contributed Obligation
6/30/2019 $14,319,476 100%
6/30/2020 17,445,069 100%
6/30/2021 18,281,774 100%
Other Post-Employment Benefits. In 2004, the Government Accounting Standards Board ("GASB") issued Statement No. 45, Accounting and Financial Reporting by Employers for Post­ Employment Benefits Other Than Pensions ("GASB 45"). GASB 45 requires governmental agencies to change their accounting for Other Post-Employment Benefits ("OPEB") from a pay-as-you-go to an accrual basis. The City has implemented the requirements of GASB 45, including financial statement reporting and disclosure requirements. Among other things, employers that participate in single-employer or agent multiple-employer defined benefit OPEB plans are required to measure and disclose an amount for annual OPEB cost on the accrual basis of accounting. Annual OPEB cost is equal to the employer's annual required contribution to the plan, with certain adjustments. The annual required contribution represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years.

An employer's net OPEB obligation is defined as the cumulative difference between annual OPEB cost and the employer's contributions to a plan.

The City sponsors and administers a single-employer defined benefit post-employment healthcare plan (the "Healthcare Plan") to provide healthcare insurance benefits to eligible retired employees and their dependents. The City pre-funds the Healthcare Plan though a Futuris Public Entity Investment Trust and a Retirement Board of Authority made up of the Mayor, one at large City Council member, the City Manager, the Finance Director, and the Human Resources Director. The Retirement Board of Authority delegated authority of the trust to the Benefit Trust Company. The required contribution is based on projected pay-as-you-go financing requirements, with an additional amount to prefund benefits as determined annually by the City Council. For Fiscal Year 2022, the City contributed $500,000 to the plan for current premiums.

For more information regarding the City's OPEB liabilities, see note 12 to the City's Fiscal Year 2021 CAFR.

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Capital Improvement Program
The City's Capital Improvement Program ("CIP") is a multi-year plan that forecasts spending for all anticipated capital projects and is considered to be the link between the City's development and financing planning process. CIP funding comes mainly from impact fees and a number of other special revenue funds, as well as grants and loans. Within each program category, the City identifies resources that it will commit to priority capital projects. CIP costs include both one-time expenses and recurring expenses related to capital rehabilitation. The City's CIP for Fiscal Year 2022 is approved at $72.8 million, which is approximately 76.7% more than the City's approved CIP for Fiscal Year 2021 of $41.2 million.

Investment Policy
The City's Investment Policy is codified in Section 3.30.030 of the City of Folsom Municipal Code and is set forth below:

It is the primary duty of the city officers having responsibility for investing city moneys to protect, preserve and maintain cash and investments placed in their trust on behalf of the citizens of the city. To that end, those investment officers shall comply with the following guidelines and procedures:

A. Interest yield on investments shall be secondary to the basic requirements of safety and liquidity of moneys.

B. The city investment portfolio shall be designed to equal or exceed the rate of return of the state's local agency investment fund (LAIF) throughout budgetary and economic cycles, taking into account the city's risk constraints, cash flow characteristics of the investment portfolio, this chapter, this code and state law.

C. The city investment portfolio shall be diversified to minimize risks regarding specific security types or individual financial institutions.

D. All city investment officers shall adhere to the guidance provided by the "prudent investor standard" as set out in the California Government Code Section 53600.3.

E. All participants in the investment process shall act as custodians of the public trust.

Investment officers shall recognize that the investment portfolio is subject to public review and evaluation.

F. The city's chief investment officer shall quarterly submit an investment report to the city council, which report shall include all required elements as prescribed by California Government Code Section 53646. The city's chief investment officer shall monthly submit a report of transactions to the city council as prescribed in California Government Code Section 53607. In both instances the city chief investment officer may include such other information as deemed appropriate.

G. The finance director shall develop a system of internal controls over investments, which control system shall be documented in writing according to California Debt and Investment Advisory Commission guidelines. The system shall be designed to prevent losses of public moneys arising from fraud, employee error, misrepresentation by third parties, unanticipated changes in financial markets, or imprudent actions by city employees or officers.

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H. Financial institutions in which the city has investments shall be monitored as to financial condition throughout the period in which the city has moneys deposited or invested, to assure that the condition of the institution does not materially deteriorate so as to risk the city's investments.

I. A statement of investment policy shall be developed, and changes to the policy submitted to the city council as needed.

J. Security purchases and holdings shall be maintained within the limits permitted by the City Charter, this chapter and the California Government Code, whichever is the most restrictive both as to percentages of the total investment portfolio which might be invested in the various types of securities and as to the maximum length of maturity.

The following table shows the type of investments and other information on the portfolio as of June 30, 2021.

CITY OF FOLSOM

PORTFOLIO SUMMARY
As of June 30, 2021
Investments by Fair Value Level
City Pooled Investments
Certificate of Deposit
Corporate Notes
Municipal Obligations (City)
Municipal Obligations (FRFA)
Municipal Obligations (FPF A)
Federal Home Loan Bank
Balance
$8,138,000
13,547,590
38,737,190
133,397,944
48,061,731
2,000,000
Investments Not Measured at Fair Value or Subject
to Fair Value Hierarchy
Local Agency Investment Funds
Money Market Mutual Funds
Total Investments Not Measured at Fair Value or
Subject to Fair Value Hierarchy
Total City's Pooled Investments
Investments Held with Fiscal Agent Not Measured at
Fair Value

JPA (CAMP)
Money Market Mutual Funds
Investments Held with Fiscal Agent by Fair Value Level
OPEB Plan Investments - Mutual Funds
Total Investments Held with Fiscal Agents
Total Investments
114,965,257
3,345,638
118,310,895
362,193,350
203,279
19,602,104
9,116,721
28,922,104
$391,115,454
Source: City of Folsom.

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Insurance, Risk Pooling and Joint Powers Arrangements
The City participates in pooled insurance programs offered by the Northern California Cities Self Insurance Fund ("NCCSIF"), a joint powers agency that provides the City with a shared risk layer of coverage above its self-insured $100,000 retention for liability and workers' compensation. NCCSIF also provides claims servicing to the City for its banking layer, which represents the City's self-insurance.

NCCSIF consists of 18 member cities, all located within California, and is governed by a board of directors appointed by the member cities. It provides pooled claims processing administrative services, risk management services, and actuarial studies. The City's deposit for the fiscal year ended June 30, 2021, was $2,852,642, and for the fiscal year ended June 30, 2020, was $3,978,049. For the Fiscal Year ended June 30, 2021, NCCSIF had net assets of $23,979,056 and a net loss of $566,837.

Sales Taxes
The following table shows taxable transactions in the City during calendar years 2016 through 2020 and through the third quarter of 2021.

TAXABLE SALES
City of Folsom
2016-2021 (I)
(in Thousands)
Retail and Food Total Outlets
Retail Taxable Taxable
Year Permits Transactions Total Permits Transactions
2016 1,588 $1,595,641 2,404 $1,828,059
2017 1,614 1,663,432 2,459 1,944,041
2018 1,593 1,721,452 2,501 1,983,797
2019 1,616 1,741,755 2,602 2,093,411
2020 1,652 1,579,786 2,741 1,795,390
2021 (I) 1,598 1,380,939 2,637 1,538,688
<1l Through the third quarter of 2021.

Source: City of Folsom.

Community Facilities
The four-county Sacramento Metropolitan Area offers multiple parks, playgrounds, theaters and golf courses. Recreational activities offered along the American and Sacramento Rivers include fishing, swimming, boating, biking, horseback riding and hiking. Varied cultural opportunities include art galleries and museums, two major symphonies, three ballet companies, scores of movie theaters showing first run films and many theater groups offering live stage plays. In February 2011, the $50 million performing arts complex Harris Center - Three Stages at Folsom Lake College opened. The state of the art facility is one of the largest college performing arts centers in the state and hosts theatre, symphonies, and ballets.

Media outlets in the four-county area consist of more than 30 newspapers, nine television stations (four network, four independent, one public) and 30 radio stations.

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Education
The Folsom-Cordova Unified School District operates schools both in the City and in the Sacramento suburb of Rancho Cordova, which borders the City to the west. In the City, the school district now has three high schools, two middle schools, and ten elementary schools.

Institutions of higher learning situated in the Sacramento area include California State University, Sacramento, and the University of California at Davis, which includes a medical school and law school.

Private universities, such as William Jessup University, the University of Sacramento, and National University also have campuses in the Sacramento region. Other institutions include the McGeorge School of Law (University of the Pacific), and extensions and satellites of schools such as the University of Southern California, University of San Francisco, Golden Gate University, and Drexel University among others. There are a number of Community Colleges in the region, including Folsom Lake College.

In addition to the main campus located within the City, the Folsom Lake College operates the El Dorado and Rancho Cordova centers and enrolls more than 8,000 students.

Utilities
The City's water treatment plant produces and delivers high-quality drinking water, supplying water to the portion of the City south of the American River. The Water Division of the City's Environmental and Water Resources Department inspects and maintains, as of December 31, 2021, the 376 miles of water mains, 23, I 86 service connections and 3,800 fire hydrants. The City also provides sewage collection services for the entire City. The Sewer Division of the City's Environmental and Water Resources Department inspects and maintains, as of December 31, 2021, the 274 miles of pipeline, 109 miles of sewer laterals, 17 pump stations, and 24,270 service connections. Sewage treatment is provided by the Sacramento Regional County Sanitation District.

The City also provides solid waste collection services. The Solid Waste Division of the City's Public Works Department operates a fleet of solid waste vehicles for collection, as well as providing recycling, household hazardous waste pickup and disposal, and neighborhood clean-up services for the entire City.

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APPENDIX C

SUMMARY OF PRINCIPAL DOCUMENTS
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APPENDIX D

FORMS OF CONTINUING DISCLOSURE UNDERTAKINGS

DISTRICT CONTINUING DISCLOSURE CERTIFICATE
THIS DISTRICT CONTINUING DISCLOSURE CERTIFICATE (this "Disclosure Certificate"), dated as of , 2022, is executed and delivered by the City of Folsom Community Facilities District No. 23 (Folsom Ranch) (the "District") relative to the Folsom Ranch Financing Authority (the "Authority") in connection with the issuance by the Authority of the Folsom Ranch Financing Authority City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 1 Special Tax Revenue Bonds, Series 2022 (the "Bonds"). The Bonds are being issued pursuant to a Trust Agreement (the "Trust Agreement"), among the District, the Authority and U.S. Bank Trust Company, National Association (the "Trustee"). The District covenants and agrees as follows.

SECTION 1. Purpose of the Disclosure Certificate. The Disclosure Certificate is being executed and delivered by the District for the benefit of the Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5).

SECTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
"Annual Report" means any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 hereof.
"Annual Report Date" means the date in each year that is nine months after the end of the District's fiscal year, which date, as of the date of this Disclosure Certificate, is April 1. "Dissemination Agent" shall mean NBS, or any successor Dissemination Agent designated in writing by the District and which has filed with the District a written acceptance of such designation. "EMMA System" means the MSRB's Electronic Municipal Market Access system, or such other electronic system designated by the MSRB.
"Financial Obligation" means, for purposes of the Listed Events set out in Section S(a)(I 0) and Section 5(b)(7), a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term "Financial Obligation" shall not include Municipal Securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule.
"Listed Events" means any of the events listed in subsection (a) of Section 5 hereof. "MSRB" means the Municipal Securities Rulemaking Board, or any successor thereto. "Official Statement" means the Official Statement, dated , 2022, relating to the Bonds.
"Participating Underwriter" means the original underwriter of the Bonds required to comply with the Rule in connection with the offering of the Bonds.

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"Rule" means Rule l 5c2-12(b )(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

SECTION 3. Provision of Annual Reports.
(a) The District shall, or shall cause the Dissemination Agent to, provide to the MSRB through the EMMA System, in an electronic format and accompanied by identifying information all as prescribed by the MSRB, an Annual Report which is consistent with the requirements of Section 4 hereof, not later than the Annual Report Date, commencing with the report for the 2021-22 Fiscal Year. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 hereof; provided, however, that the audited financial statements of the District may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the District's fiscal year changes, it shall, or shall instruct the Dissemination Agent to, give notice of such change in the same manner as for a Listed Event under subsection ( e) of Section 5 hereof. The first Annual Report may include the filing of or reference to the Official Statement. The first Annual Report may include the filing of or reference to the Official Statement. (b) Not later than 15 business days prior to the date specified in subsection (a) of this Section for the providing of the Annual Report to the MSRB, the District shall provide the Annual Report to the Dissemination Agent.
(c) If the Dissemination Agent is other than the District, then not later than fifteen (15) Business Days prior to said date, the District shall provide the Annual Report to the Dissemination Agent.

If the District is unable to provide the Annual Report to the MSRB by the Annual Report Date, the District shall send a notice to the MSRB in substantially the form attached as Exhibit A to the Disclosure Certificate.
(d) The Dissemination Agent shall:
(i) provide any Annual Report received by it to the MSRB, as provided herein; and (ii) file a report with the District certifying that the Annual Report has been provided pursuant to this Disclosure Certificate and stating the date it was so provided.

SECTION 4. Content of Annual Reports. The District's Annual Report shall contain or incorporate by reference the following:
(a) The District's audited financial statements, if any, prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the District's audited financial statements, if any, are not available by the time the Annual Report is required to be filed pursuant to subsection (a) of Section 3 hereof, the Annual Report shall contain unaudited financial statements, and the audited financial statements, if any, shall be filed in the same manner as the Annual Report when they become available. If the District's financial statement is included or consolidated with the financial statement for the City of Folsom (the "City"), then the District shall file the City's audited financial statements as its own. (b) The following information:
(i) The principal amount of Bonds and any bonds secured by Additional Local Obligations (as defined in the Official Statement) Outstanding as of the December 31 next D-2

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preceding the Annual Report Date along with debt service schedules for the Bonds and any bonds secured by Additional Local Obligations (as defined in the Official Statement) Outstanding as of such date;
(ii) The balance in each reserve account for the Local Obligations, and a statement of the required bond reserve amount, as of the December 31 next preceding the Annual Report Date; (iii) The total assessed value of all parcels within the Improvement Area on which the Special Taxes are levied, as shown on the assessment roll of the Sacramento County Assessor last equalized prior to the December 31 next preceding the Annual Report Date, and a statement of assessed value-to-lien ratios therefor based on special tax and assessment debt, either by individual parcel or by categories (e.g., "below 3:1," "3:1 to 4:1" etc.); (iv) The Special Tax delinquency rate for the Improvement Area as of the December 31 next preceding the Annual Report Date; the number of parcels within the Improvement Area delinquent in payment of special taxes as of the December 31 next preceding the Annual Report Date; the amount of each delinquency; the length of time delinquent and the date on which foreclosure was commenced, or similar information pertaining to delinquencies deemed appropriate by the District; provided, however, that parcels with aggregate delinquencies of $1,000 or less ( excluding penalties and interest) may be grouped together and such information may be provided by category;
(v) The status of foreclosure proceedings and a summary of the results of any foreclosure sales in the Improvement Area as of the December 31 next preceding the Annual Report Date;
(vi) The identity of any property owner, representing more than 5% of the Special Tax levy, delinquent in payment of special taxes as of the December 31 next preceding the Annual Report Date;
(vii) All tentative and final maps approved and/or recorded within the Improvement Area, describing the gross acres, the planned commercial acres and the number and type of planned residential dwelling units;
(viii) The number of new building permits issued and a description of the purpose of such permits (e.g., new single-family, new multi-family, new commercial, new industrial); (ix) A land ownership summary listing the top ten Special Tax payers for the Improvement Area, as shown on the assessment roll of the Sacramento County Assessor last equalized prior to the December 31 next preceding the Annual Report Date; and (x) For the current Fiscal Year, the amount of the Effective Tax Rate Evaluation Maximum Facilities Special Tax, the Maximum Special Tax, the actual Facilities Special Tax levied within the Improvement Area and the actual Special Tax levied within the Improvement Area, with such amounts reported separately for Developed Property, Small Lot Final Map Property and Large Lot Property; provided, however, that once all Taxable Property within the Improvement Area is Developed Property, the Maximum Special Tax and the actual Facilities Special Tax and the actual Special Tax levied may each be shown on an aggregate basis in the Annual Report. For the purposes of this subparagraph (x), all capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Rate and Method of Apportionment for the Improvement Area.

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In addition to any of the information expressly required to be provided under this Section, as set forth above, the District shall provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.

Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the District or related public entities, which have been submitted to the MSRB through the EMMA System. The District shall clearly identify each such other document so included by reference.

SECTION 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section, the District shall give notice, or cause notice to be given, not less than ten Business Days after the occurrence of any of the following events with respect to the Bonds:
(i) Principal and interest payment delinquencies.
(ii) Unscheduled draws on debt service reserves reflecting financial difficulties. (iii) Unscheduled draws on credit enhancements reflecting financial difficulties. (iv) Substitution of credit or liquidity providers, or their failure to perform. (v) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue IRS Form 5701 TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax-exempt status of the security. (vi) Defeasances.
(vii) Tender offers.
(viii) Bankruptcy, insolvency, receivership or similar event of the obligated person.

Note: For the purposes of the event identified in subparagraph (ix), the event is considered to occur when any of the following occur: the appointment of a receiver, trustee or similar officer for an obligated person in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the obligated person.
(ix) Rating changes.

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(x) Default, event of acceleration, termination event, modification of terms or other similar events under the terms of a financial Obligation of the District, any of which reflect financial difficulties.
(b) The District shall give notice, or cause notice to be given, not less than ten Business Days after the occurrence of any of the following events with respect to the Bonds, if material:
(i) Modifications to rights of Bond holders.
(ii) Bond calls.
(iii) Release, substitution or sale of property securing repayment of the Bonds. (iv) Non-payment related defaults.
(v) The consummation of a merger, consolidation, or acqursrtion involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms.
(vi) Appointment of a successor or additional trustee or the change of name of a trustee.
(vii) lncurrence of a Financial Obligation of the District, or agreement to covenants, events of default, remedies, priority rights, or similar terms of a Financial Obligation of the District, any of which affect Bondholders.
( c) Whenever the District obtains knowledge of the occurrence of a Listed Event described in subsection (b) above, the District shall determine if such event would be material under applicable federal securities laws.
(d) If the District learns of the occurrence of a Listed Event described in subsection (a) of this Section, or determines that knowledge of a Listed Event described in subsection (b) of this Section would be material under applicable federal securities laws, the District shall notify the Dissemination Agent thereof in writing and instruct the Dissemination Agent to report the occurrence pursuant to subsection (e) of this Section. If in response to a request under subsection (b) of this Section, the District determines that the Listed Event would not be material under applicable Federal securities law, the District shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not to report the occurrence pursuant to subsection (e) of this Section. ( e) If the Dissemination Agent has been instructed by the District to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the MSRB through the EMMA System. Notwithstanding the foregoing, notice of Listed Events described in paragraph (vii) of subsection (a) of this Section and paragraph (ii) of subsection (b) of this Section need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds pursuant to the Trust Agreement.

SECTION 6. Termination of Reporting Obligation. The District's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give D-5

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notice of such termination in the same manner as for a Listed Event under subsection (e) of Section 5 hereof.

SECTION 7. Dissemination Agent. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent.

The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the District pursuant to the Disclosure Certificate.

SECTION 8. Amendment; Waiver. Notwithstanding any other provrsion of this Disclosure Certificate, the District may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of subsection (a) of Section 3 hereof, Section 4 hereof or subsections (a) and (b) of Section 5 hereof, it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of an obligated person with respect to the Bonds, or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
( c) the proposed amendment or waiver (i) is approved by Owners of the Bonds in the manner provided in the Trust Agreement for amendments to the Trust Agreement with the consent of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of Owners or Beneficial Owners of the Bonds.

If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the annual financial information containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial statements or information, in order to provide information to investors to enable them to evaluate the ability of the District to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be given in the same manner as for a Listed Event under subsection ( e) of Section 5 hereof.

SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the District chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure D-6

04/12/2022 Item No.13.

Certificate, the District shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

SECTION 10. Default. In the event of a failure of the District or the Dissemination Agent to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of outstanding Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District to comply with its obligations under the Disclosure Certificate. A default under the Disclosure Certificate shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under the Disclosure Certificate in the event of any failure of the District to comply with the Disclosure Certificate shall be an action to compel performance.

SECTION 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall be entitled to the protections and limitations from liability afforded to the Trustee under the Trust Agreement. The Dissemination Agent shall not be responsible for the form or content of any Annual Report or notice of Listed Event. The Dissemination Agent shall receive reasonable compensation for its services provided under this Disclosure Certificate. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the District agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys' fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's negligence or willful misconduct. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

SECTION 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Dissemination Agent, the Participating Underwriter and Owners and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.

SECTION 13. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the District has executed this Disclosure Certificate as of the date first above written.

CITY OF FOLSOM COMMUNITY
FACILITIES DISTRICT NO. 23
(FOLSOM RANCH)
By: _
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04/12/2022 Item No.13.

EXHIBIT A

NOTICE OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer:

Name ofl ssue:

Folsom Ranch Financing Authority
Folsom Ranch Financing Authority City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 1 Special Tax Revenue Bonds, Series 2022
Date of Issuance: _ _ _ _ ,2022
NOTICE IS HEREBY GIVEN that the City of Folsom Community Facilities District No. 23 (Folsom Ranch) (the "District") has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Certificate, dated , 2022, executed by the District for the benefit of the Holders and Beneficial Owners of the above-referenced bonds. [The District anticipates that the Annual Report will be filed by .] Dated: - - - - - - - -

CITY OF FOLSOM COMMUNITY
FACILITIES DISTRICT NO. 23
(FOLSOM RANCH)
By: _
Finance Director of the City of Folsom
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04/12/2022 Item No.13.

CONTINUING DISCLOSURE CERTIFICATE - HOME BUILDER
This Continuing Disclosure Certificate - Home Builder (the "Disclosure Certificate") dated as of , 2022, is executed and delivered by [KB HOME Sacramento Inc./Tri Pointe Homes - - - - - Holdings, Inc.] (the "Developer") in connection with the issuance of $ aggregate principal amount of Folsom Ranch Financing Authority City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 1 Special Tax Revenue Bonds, Series 2022 (the "Bonds"). The Bonds are being issued pursuant to a Trust Agreement, dated as of May 1, 2022 (the "Trust Agreement"), among the Folsom Ranch Financing Authority (the "Issuer"), the City of Folsom Community Facilities District No. 23 (Folsom Ranch) (the "District") and U.S. Bank Trust Company, National Association, as trustee (the "Trustee").

SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Developer for the benefit of the holders and beneficial owners of the Bonds. The Developer acknowledges that the Issuer and the District have undertaken no responsibility with respect to any reports, notices or disclosures provided or required under this Disclosure Certificate, and has no liability to any person, including any holder or beneficial owner of the Bonds, with respect to this Disclosure Certificate.

SECTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined herein, the following capitalized terms shall have the following meanings:
"Affiliate" of another Person means (a) any Person directly or indirectly owning, controlling, or holding with power to vote, 50% or more of the outstanding voting securities of such other Person, (b) any Person 50% 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. "Assumption Agreement" means an agreement containing terms substantially similar to this Disclosure Certificate, whereby a Major Developer agrees to provide Semi-Annual Reports and notices of significant events with respect to the portion of the Property owned by such Major Developer and its Affiliates, and with respect to the improvements or payments necessary to cause the Planned Development Stage to be reached that such Major Developer, or an Affiliate thereof, intends or is obligated (contractually or otherwise) to make or cause to be made. "Bonds" means the$ Folsom Ranch Financing Authority City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 1 Special Tax Revenue Bonds, Series 2022.
"Developer" means [KB HOME Sacramento Inc./Tri Pointe Homes Holdings, Inc.]. "Development Plan" means with respect to a Major Developer, the specific improvements such Major Developer intends to make, or cause to be made, in order for the Planned Development Stage to be reached, and the time frame in which such improvements are intended to be made; the Developer's Development Plan, as of the date hereof, is described in the Official Statement under the caption [KB Home Sacramento: "PROPOSED PROPERTY DEVELOPMENT- Development Plan and Status of Development- KB HOME Sacramento"/Tri Pointe: "PROPOSED PROPERTY DEVELOPMENT­ Development Plan and Status of Development- Tri Pointe."] D-9

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"Disclosure Certificate" means this Disclosure Certificate as the same may be amended from time to time.
"Dissemination Agent" means initially, the Developer, and any successor Dissemination Agent designated in writing by the Developer and which has filed with the District a written acceptance of such designation.
"District" means City of Folsom Community Facilities District No. 23 (Folsom Ranch), as the same may be modified by the City Council of the City from time to time. "Event of Bankruptcy" means, with respect to a Person, that such Person files a petition or institutes a proceeding under any act or acts, state or federal, dealing with or relating to the subject or subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or whereby such Person asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of such Person's debts or obligations, or offers to such Person's creditors to effect a composition or extension of time to pay such Person's debts or asks, seeks or prays for reorganization or to effect a plan of reorganization, or for a readjustment of such Person's debts, or for any other similar relief, or if any such petition or any such proceedings of the same or similar kind or character is filed or instituted or taken against such Person, or if a receiver of the business or of the property or assets of such Person is appointed by any court, or if such Person makes a general assignment for the benefit of such Person's creditors. "Financing Plan" means, with respect to a Major Developer, the method by which such Major Developer intends to finance its Development Plan, including specific sources of funding for such Development Plan; the Developer's Financing Plan, as of the date hereof, is described in the Official Statement under the caption [KB HOME Sacramento: "PROPOSED PROPERTY DEVELOPMENT - Development Plans of Finance - KB HOME Sacramento Plan of Finance"!Tri Pointe: "PROPOSED PROPERTY DEVELOPMENT- Development Plans of Finance - Tri Pointe Plan of Finance."] "Improvement Area" means Improvement Area No. 1 of the District. "Listed Event" means any of the events listed in Section 5 hereof. "Major Developer" means any property owner, which owns (itself or through Affiliates) Taxable Property that is responsible in the aggregate for 20% or more of the Special Taxes levied on all of the Taxable Property for the then current Fiscal Year.
"MSRB" shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission as a repository of disclosure information.

Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.
"Official Statement" means the final, executed Official Statement relating to the Bonds. "Participating Underwriter" shall mean Piper Sandler & Co., the original underwriter of the Bonds.
"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.

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"Planned Development Stage" means, with respect to any portion of the Property, the stage of development at which such portion of the Property is ready to be presented to the marketplace as a finished residential unit.
"Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. "Semiannual Report" shall mean any Semiannual Report provided by the Developer on or prior to March 31 and September 30 of each year, commencing with the Semiannual Report due March 31, 2021, pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Special Taxes" means the special taxes levied on the Taxable Property within the Improvement Area.
"State" shall mean the State of California.
"Taxable Property" means the real property within the boundaries of the Improvement Area that is not exempt from the Special Taxes authorized to be levied in the Improvement Area. "Trust Agreement" means the Trust Agreement, dated as of May 1, 2022, among the Issuer, the District and the Trustee, and as further amended and supplemented from time to time. "Trustee" means U.S. Bank Trust Company, National Association, as trustee under the Trust Agreement, or any successor as trustee.

SECTION 3. Provision of Semiannual Reports. So long as the Developer's obligations hereunder have not been terminated pursuant to Section 7, the Developer shall provide to the MSRB and the District a Semiannual Report which is consistent with the requirements of Section 4, not later than March 31 and September 30 of each year, commencing September 30, 2022. If, in any year, March 31 or September 30 falls on a Saturday, Sunday or holiday, such deadline shall be extended to the next following business day. The Semiannual Report must be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB, and may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Sections 4 or 5 hereof.

SECTION 4. Content of Semiannual Reports. The Developer's Semiannual Report shall contain or incorporate by reference the following information:
(a) If information regarding such Major Developer has not previously been included in a Semiannual Report or in the Official Statement, the Development Plan and Financing Plan of such Major Developer or, if information regarding such Major Developer has previously been included in a Semiannual Report or in the Official Statement, a description of the progress made in the Development Plan of such Major Developer since the date of such information and a description of any significant changes in such Development Plan and the Financing Plan and the causes or rationale for such changes. (b) Identification of the conveyance by the Developer of any portion of its Taxable Property that is responsible in the aggregate for 20% or more of the Special Taxes levied on all of the Taxable Property within the Improvement Area to an entity that is not an Affiliate since the Official Statement or a more recent Semiannual Report.

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(c) The number of building permits issued with respect to such Major Developer's Taxable Property during the six-month period ending on December 31 and June 30 for the respective Semiannual Report date.
(d) The number of lots that have not reached the Planned Development Stage sold within the Taxable Property owned by the Developer since the date of the Official Statement or a more recent Semiannual Report, and, if any such lots were sold to a Major Developer, the identity of the Major Developer.
(e) The number of finished homes sold and conveyed to individual homeowners by the Developer in the Improvement Area during the six-month period ending on December 31 and June 30 for the respective Semiannual Report date.
(f) Any material amendments to land use entitlements for Taxable Property of the Developer, if such amendments would prevent or significantly delay the implementation of the Developer's Development Plan as described in the Official Statement or in any previous Semiannual Report.

The Developer's Semiannual Reports required to be provided under Section 4 hereof must be filed in accordance with Section 3.

SECTION 5. Reporting of Significant Events. Pursuant to the provisions of this Section 5, the Developer shall promptly give, or cause to be given, notice of the occurrence of any of the following events with respect to the Developer:
(a) Any failure of the Developer, or any Affiliate of the Developer, to pay by the date due general property taxes or assessments due with respect to its Taxable Property, to the extent such failure is not promptly cured by the Developer upon discovery thereof. (b) Any denial or termination of credit, any denial or termination of, or default under, any line of credit or loan or any other loss of a source of funds that could have a material adverse effect on the Developer's most recently disclosed Financing Plan or Development Plan or on the ability of the Developer, or any Affiliate of the Developer owning any Taxable Property, to pay any Special Taxes with respect to its Taxable Property when due.
( c) The occurrence of an Event of Bankruptcy with respect to the Developer, or any Affiliate, that could have a material adverse effect on the Developer's most recently disclosed Financing Plan or Development Plan or on the ability of the Developer, or any Affiliate of the Developer owning any Taxable Property, to pay Special Taxes with respect to its Taxable Property when due. (d) Any previously undisclosed governmentally-imposed preconditions to commencement or continuation of development on the Developer's Taxable Property, if such preconditions would prevent or significantly delay the Developer's Development Plan as described in the Official Statement or in any previous Semiannual Report.
(e) Any previously undisclosed legislative, administrative or judicial challenges to development on the Developer's Taxable Property, if such challenges would prevent or significantly delay the Developer's Development Plan as described in the Official Statement or in any previous Semiannual Report.

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Whenever the Developer obtains knowledge of the occurrence of a Listed Event, the Developer shall promptly report the occurrence of the Listed Event by filing a notice of such occurrence with the MSRB in electronic format, accompanied by such identifying information as is prescribed by the MSRB.

SECTION 6. Assumption of Obligations. If any portion of the Taxable Property owned by the Developer, or any Affiliate of the Developer, is conveyed such that, upon such conveyance, such new owner will be a Major Developer, the obligations of the Developer under this Disclosure Certificate with respect to the Taxable Property transferred by the Developer shall be assumed by such Major Developer pursuant to an Assumption Agreement.

SECTION 7. Termination of Reporting Obligation. All of the Developer's obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all the Bonds. The Developer's obligations under this Disclosure Certificate shall terminate upon the earliest to occur of (a) the date on which the Developer is no longer a Major Developer, as defined herein, or (b) the date on which all of the Developer's obligations are assumed under one or more Assumption Agreements entered into pursuant to Section 6 hereof, or ( c) the date on which all Special Taxes levied on the Taxable Property owned by the Developer and its Affiliates are paid or prepaid in full. Upon the occurrence of any such termination prior to the final maturity of the Bonds, the Developer shall give notice of such termination in the same manner as for a Listed Event under Section 5 hereof.

SECTION 8. Amendment; Waiver. Notwithstanding any other provision hereof, the Developer may amend provisions of this Disclosure Certificate and any provision hereof may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3, 4 or 5 hereof, it may be made in connection with a change in circumstances that arises from a change in legal requirements, change in law; and
(b) The proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Trust Agreement for amendments to the Trust Agreement with the consent of holders, or (ii) does not, in the opinion of bond counsel approved by the District, materially impair the interests of the holders or beneficial owners of the Bonds.

SECTION 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Developer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Semiannual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Developer chooses to include any information in any Semiannual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Developer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Semiannual Report or notice of occurrence of a Listed Event.

SECTION I 0. Dissemination Agent. The Developer may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign by providing 30 days' written notice to the Developer. The Developer shall be responsible for paying the fees and expenses of the Dissemination Agent.

SECTION 11. Default. In the event of a failure of the Developer to comply with any provision of this Disclosure Certificate, any holder or beneficial owner of the Bonds may take such actions as may D-13

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be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developer to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the Developer to comply with this Disclosure Certificate shall be an action to compel performance.

SECTION 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Developer, the Participating Underwriter, the District and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other Person.

SECTION 13. Notices. Any notices or communications to the Developer and the other parties described herein may be given as set forth in Exhibit A hereto or such other address that shall be specified by the Developer or the other parties described herein from time to time.

SECTION 14. Governing Law. This Disclosure Certificate and any dispute arising hereunder shall be governed by and interpreted in accordance with the laws of the State of California.

IN WITNESS WHEREOF, the undersigned has executed this Disclosure Certificate as of the day and year written above.
[KB HOME Sacramento Inc./Tri Pointe Homes Holdings,
Inc.]
By:- - - - - - - - - - - - - - - -
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EXHIBIT A TO CONTINUING DISCLOSURE CERTIFICATE - HOME BUILDER Any notices or communications to the Developer or the other parties described in the Continuing Disclosure Certificate - Home Builder may be given as follows:

To the Developer:

To the Issuer:

To the Dissemination
Agent:

To the Participating
Underwriter:
[KB HOME Sacramento Inc./Tri Pointe Homes Holdings, Inc.] Attention: - - - - - -
Email: - - - - - - -
Phone: - - - - - -
Attention: - - - - - -
Email: - - - - - - -
Phone: - - - - - '-
Attention: - - - - - -
Email: - - - - - - -
Phone: - - - - - -
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APPENDIXE

PROPOSED FORM OF OPINION OF BOND COUNSEL
Folsom Ranch Financing Authority
Folsom, California
Folsom Ranch Financing Authority
City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 1
Special Tax Revenue Bonds, Series 2022
(Final Opinion)
Ladies and Gentlemen:

We have acted as bond counsel to the Folsom Ranch Financing Authority (the "Issuer") in connection with the issuance of $ aggregate principal amount of Folsom Ranch Financing Authority City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 1 Special Tax Revenue Bonds, Series 2022 (the "Bonds"), issued pursuant to the provisions of the Marks­ Roos Local Bond Pooling Act of 1985 ( constituting Article 4, Chapter 5, Division 7, Title 1 of the California Government Code) and a trust agreement, dated as of May 1, 2022 (the "Trust Agreement"), among the Issuer, the City of Folsom Community Facilities District No. 23 (Folsom Ranch) (the "Community Facilities District") and U.S. Bank Trust Company, National Association, as trustee (the "Trustee"). The Trust Agreement provides that the Bonds are issued for the stated purpose of enabling the Issuer to acquire certain local obligations to be issued by the Community Facilities District.

Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Trust Agreement.

In such connection, we have reviewed the Trust Agreement; the Tax Certificate, dated the date hereof (the "Tax Certificate"), executed and delivered by the Issuer, the Community Facilities District and the City of Folsom; opinions of counsel to the Issuer, the Community Facilities District and the Trustee; certificates of the Issuer, the Community Facilities District, the Trustee and others; and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein.

The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after original delivery of the Bonds on the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after original delivery of the Bonds on the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or matters. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures provided to us and the due and legal execution and delivery thereof by, and validity against, any parties other than the Issuer. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Trust Agreement and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or E-1

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events will not cause interest on the Bonds to be included in gross mcome for federal income tax purposes.

We call attention to the fact that the rights and obligations under the Bonds, the Trust Agreement and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against joint powers authorities and community facilities districts in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute or having the effect of a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any of the assets described in or as subject to the lien of the Trust Agreement or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets. Our services did not include financial or other non-legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement, dated , 2022, or other offering material relating to the Bonds and express no opinion with respect thereto.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:

1. The Bonds constitute the valid and binding limited obligations of the Issuer.

2. The Trust Agreement has been duly executed and delivered by, and constitutes the valid and binding obligation of, the Issuer. The Trust Agreement creates a valid pledge, to secure the payment of the principal of and interest on the Bonds, of the Trust Estate, including the Revenues and any other amounts (including proceeds of the sale of the Bonds) held by the Trustee in the Funds established pursuant to the Trust Agreement (except the Rebate Fund), subject to the provisions of the Trust Agreement permitting the application thereof for the purposes and on the terms and conditions set forth in the Trust Agreement.

3. Interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Interest on the Bonds is not a specific preference item for purposes of the federal alternative minimum tax. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds.

Faithfully yours,

ORRICK, HERRINGTON & SUTCLIFFE LLP
per
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APPENDIXF

DTC AND THE BOOK-ENTRY ONLY SYSTEM
The description that follows of the procedures and recordkeeping with respect to beneficial ownership interests in the Bonds, payment of principal of, premium, if any, and interest on the Bonds to Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in the Bonds, and other related transactions by and between DTC, Participants and Beneficial Owners, is based on information furnished by DTC which the Authority believes to be reliable, but the Authority does not take responsibility for the completeness or accuracy thereof The Authority cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners either (a) payments of principal, premium, if any, and interest with respect to the Bonds or (b) certificates representing ownership interests in or other confirmation of ownership interests in the Bonds, or that they will so do on a timely basis or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Official Statement. The current "Rules" applicable to DTC are on file with the Securities and Exchange Commission and the current "Procedures" of DTC to be followed in dealing with DTC Participants are on file with DTC.

The Depository Company ("DTC"), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered bond certificate will be issued for each maturity of the Bonds in the aggregate principal amount of such maturity, and will be deposited with DTC. If, however, the aggregate principal amount of any maturity exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such maturity.

DTC, the world's largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over

3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor's rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.

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