09/24/2024 Item No.13.
$[PARI.
FOLSOM RANCH FINANCING AUTHORITY
CITY OF'FOLSOM COMMUNITY FACILITIES DISTRICT NO. 18
(FOLSOM PLAN AREA - ARI,A-WrDE TMPROVEMENTS AND SERVTCES) SPECIAL TAX REVENUE BOI\DS
SERIES 2024
MATURITY SCHEDULE, INTEREST RATES, PRICES AND CUSPS
Maturity
(September l)
Principal
Amount
Interest
Rate
CUSIPNo.t
(344414)Price
%
S-
-%
Term Bond mafuring 1,20-Price
-Yo
(cusP No.l 344414J
S-
-x
rerm Bond maturing 1,20-Price-Yo (cusP No.r 344414-;
Preliminary, subject to change.
CUS1p@ is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. CopyrighrO 2024 CUSIP Global Services. All rights reserved. CUSIP@ data herein is provided by CUSP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP numbers are provided for convenience of reference only.
The Authority, the District, the Underwriter, and the City take no responsibility for the accuracy of such numbers. $
t
09/24/2024 Item No.13.
No dealer, broker, salesperson or other person has been authorized by the Authority, the Dishict or the Underwriter to give any information or to make any representations other than as contained in this Official Statement, and if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by any person, in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact.
The information set forth herein has been obtained from sources which are believed to be reliable, but such information is neither guaranteed as to accuracy or completeness, nor is it to be construed as a representation ofsuch by the Authority, the District or the Underwriter. The information and expressions of opinion stated herein are subject to change without notice; and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authorrty, the District or the property owners in the District, or in the condition of the property in the District, since the date hereof.
The summaries and references to the Trust Agreement, the Mello-Roos Act, the Local Obligations Indenture and to other statutes and documents referred to herein do not purport to be comprehensive or definitive and are qualified in their entireties by reference to each such statute and document. This Official Statement including any amendment or supplement hereto is intended to be deposited with one or more depositories.
The Underwriter has provided the following sentence for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET, SUCH STABILIZING,IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITER MAY OFFER AND SELL
THE BONDS TO CERTAIN DEALERS AND OTHERS AT PRICES LOWER THAN THE PUBLIC OFFERING
PRICES SET FORTH ON THE INSIDE FRONT COVER PAGE HEREOF AND SUCH PUBLIC OFFERING PRICES MAY BE CHANGED FROM TIME TO TIME BY THE LINDERWRITER.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED LINDER THE SECURITIES LAWS OF ANY STATE.
Certain statements included or incorporated by reference in this Official Statement constitute forward- looking statements. Such statements are generally identifiable by the terminology used such as "plan," "expect," "estimate," "budgef' or similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different fiom any future results, performance or achievements expressed or implied by such forward-looking statements.
09/24/2024 Item No.13.
UNSERT REGIONAL AND CITY CONTEXT MAPS]
09/24/2024 Item No.13.
CITY OF FOLSOM
COMMT]NITY FACILITIES DISTRICT NO. 18
(FOLSOM PLAI\ AREA - AREA-WrDE TMPROVEMENTS AI\D SERVTCES) fPhotos to be inserted]
202). The approximate boundaries of the District haveProgress photos taken as of been outlined.
09/24/2024 Item No.13.
AUTHORITY GOVERNING BOARD/CITY COUNCIL
Mike Kozlowski,Chair / Mayor
Sarah Aquino, Vice Chair / Vice Mayor
YK Chalamcherla, Member / Councilmember
Rosario Rodriguez, Member / Councilmember
Anna Rohrbough, Member / Councilmember
AUTHORITY/CITY STAFF
Elaine Andersen, Executive Director / City Manager*
Stacey Tamagni, Treasurer / Finance Director
Steven Wang, Esq., General Counsel / City Attorney
Christa Freemantle, Secretary / City Clerk
SPECIAL SERVICES
BOI\D AND DISCLOSURE COINSEL MT]NICIPAL ADVISOR
Orrick, Herrington & Sutcliffe LLP Fieldman, Rolapp & Associates, Inc.
TRUSTEE SPECIAL TAX CONSULTAI\T
U.S. Bank Trust Company, National Association NBS
APPRAISER
Integra Realty Resources
* Current Executive Director of the Authority and City Manager of the City, Elaine Andersen, is retiring in late December,2024.
The City is coordinating recruitment process for the next City Manager.
09/24/2024 Item No.13.
INTRODUCTION....
Purpose......
Authority for Issuance
Description of the Bonds.......................
Security for the Bonds and Series
2024Local Obligations
The Community Facilities District........
Development Status and Property
Ownership
Properly Values and Value to Lien .......
Bondholders Risks....
Continuing Disclosure.......
Summaries Not Definitive.............
PLAN OF FINANCE.........................
Facilities to be Financed......................
Phase 2 Water Transmission
Facilities
Estimated Sources and Uses of Funds.
THE BONDS ................
General Provisions
Redemption Provisions
Book-Entry Only System
DEBT SERVICE SCHEDULES AND
covERAGE ................
SECURITY FOR THE BONDS
General
Flow of Funds ...............
No Additional Bonds.....
SECURITY FOR THE SERIES 2024
LOCAL O8LIGATIONS.................
Terms, Payment and Redemption ......
Flow of Funds ...............
The Special Tax.............
Local Obligations Reserve Fund ........
Covenant for Foreclosure ...................
Issuance of Additional Local
Obligations
No Required Advances from
Available Surplus Funds ......
The Teeter Plan ..................
THE AUTHORITY.......
THE CITY.
THE COMMLTNITY FACILITIES
DISTRICT.
Formation Proceedings.
Authorized Facilities ....
TABLE OF CONTENTS
Page
20 General Description and Location .............
Folsom Plan Area...
Public Facilities Financing Plan.................
Rate and Method of Apportionment
Historical Special Tax Levy....
Special Tax Calculation ............
DEVELOPMENT STATUS,
PROPERTY VALUES AND
OWNERSHIP WITHIN THE
DISTRICT
Development Entitlements........
Water Supply; Utilities
HazardZones
Development Status Summary...
Property Ownership Summary...
Toll Brothers Development...
Lennar Homes Development
Property Values........
Value-to-Lien Analysis........
Estimated Tax Burden on Single
Family Home
Overlapping Debt...........
CERTAIN RISKS TO
BONDHOLDERS........
Levy of the Special Tax............
Collection of Special Tax.............
Payment of the Special Tax is Not a
Personal Obligation of a Property
Owner......
Potential Early Redemption of Bonds
from Prepaid Special Taxes
Special Tax Delinquencies.........
Teeter Plan Termination ..........
Land Values
Appraisal Risks...
Page
2 2
2 J
J
4 5
6 6
6 6
7 7
7 8
I
z5
23 24
25 29
30 31
.47
.48
51 ..........52
..........53
..........53
..........54
36 36
38 39
4l
43 55
43 21
2I
22 .49
.49
.50
54 54
55 55
Exempt Properties..
Maximum Special Tax....................
No Acceleration Provision..............
Loss of Tax Exemption.
Parity Taxes and Special
Assessments .................
Future Private Indebtedness............
Disclosures to Future Purchasers....
.51
.51
.51
.52
.52
...56
...57
...57
...57
22 Bankruptcy
..23
FDIC/Federal Government Interests
in Properties .................
Zoningand Land Use Decisions ..............
Ballot Initiatives and Measures................
Shapiro v. San Diego23
09/24/2024 Item No.13.
Risks of Real Estate Secured
Investments Generally...
Current Challenges to the
Homebuilding Industry
Increasing Mortgage Interest Rates
and Banking Uncertainty................
Failure to Develop.
No Independent Review of Valuation
or Viability of Completed Projects...
Potential Impact of Global Health
Crises or Concerns
Cybersecunty ......... . .
Geologic, Topographic and Climatic
Conditions
Endangered Species.......
TABLE OF CONTENTS
(continued)
Page
58 58
60 Hazardous Substances.
Naturally Occurring Asbestos .....
LEGAL MATTERS
TAX MATTERS............
NO LITIGATION.........
NO RATrNG................
MT]NICIPAL ADVISOR .............
TINDERWRITING
CONTINUING DISCLOSURE....
MISCELLANEOUS
Page
,.,,'.''....62
............63
............63
64 66
66 66
67 67
67 59
59 60
60 ..61
..62
APPENDIX A -APPENDIX B
-
APPENDIX C
-APPENDIX D
-APPENDIX E
-APPENDIX F
-APPENDIX G
-
RATE AND METHOD
ECONOMIC AND DEMOGRAPHIC INFORMATION RELATING TO THE CITY
OF FOLSOM
SUMMARY OF PRINCIPAL DOCUMENTS
FORM OF CONTINUING DISCLOSURE TINDERTAKING
PROPOSED FORM OF OPINION OF BOND COUNSEL
DTC AND THE BOOK-ENTRY ONLY SYSTEM
APPRAISAL
il
09/24/2024 Item No.13.
$IPARI.
. FOLSOM RANCH FINAI[CING AUTHORITY
CITY OF'FOLSOM COMMUNITY FACILITIES DISTRICT NO. T8
(FOLSOM PLAI\ AREA - AREA-WrDE IMPROVEMENTS AND SERVTCES)
SPECIAL TAX REVENUE BONDS
SERIES 2024
INTRODUCTION
This Official Statement, including the cover page, the inside cover page and the Appendices hereto, is provided to furnish certain information in connection with the issuance and sale by the Folsom Ranch Financing Authority (the "Authority") of $[PAR]' aggregate principal amount of Folsom Ranch Financing Authority City of Folsom Community Facilities District No. 18 (Folsom'Plan Area - Area-Wide Improvements and Services) Special Tax Revenue Bonds, Series 2024 (the "Bonds").
This Introduction is not a summary of the Official Statement. It is only a general description of and guide to, and is qualified by more complete and detailed information contained in, the entire Official Statement and the documents described herein. The description and summaries of various documents hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each document for the complete details of all terms and conditions. All statements herein are qualified in their entirety by reference to each document.
Purpose
The Bonds are being issued to finance the purchase of the limited obligation special tax bonds (the "series 2024Local Obligations"), issued by the City of Folsom Community Facilities DistrictNo. 18 (Folsom Plan Area - Area-Wide Improvements and Services) (the "District"). The net proceeds of the Series 2024 Local Obligations will be used to finance the construction of certain public facilities, fund a deposit to a debt service reserve account, and pay certain costs of issuance of the Series 2024 Local Obligations and the Bonds. See "PLAN OF FINANCE."
Authority for Issuance
The Bonds will be issued pursuant to the provisions of the Trust Agreement (the "Trust Agreement") among the Authority, the District, and U.S. Bank Trust Company, National Association, as trustee (the "Trustee"), as authorized pursuant to a resolution of the Authority. The Bonds will be issued pursuant to the Marks-Roos Local Bond Pooling Act of 1985, as amended, constituting Article 4 of Chapter 5, Division T,Title 1 of the Government Code of the State of California.
The Series 2024 Local Obligations will be issued pursuant to the provisions of an Indenture (the "Local Obligations Indenture") between the District and U.S. Bank Trust Company, National Association, as trustee (the "Local Obligations Trustee"), as authorized pursuant to a resolution of the City Council (the "City Council") of the City Folsom (the "City"). The Series 2024LocalObligations will be issued pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, constituting Section 5331 l, et seq. of the California Government Code (the "Mello-Roos Act"). 2 * Preliminary, subject to change.
09/24/2024 Item No.13.
Description of the Bonds
The Bonds will be issued as fully registered bonds in book-entry form, in denominations of $5,000 each or any integral multiple thereof and will be dated the date of delivery thereof and bear interest at the rates set forth on the inside front cover page hereof. Interest on the Bonds is payable semiannually on March I and September 1 of each year, commencing March 7,2025. See "THE BoNDs-Description of the Bonds."
The Bonds are subject to redemption prior to their maturity. See "TFIE BoNDs-Redemption Provisions."
The Bonds will be issued as fully registered bonds, in book-entry only form and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC") and will be payable to the actual purchasers of the Bonds (the "Beneficial Owners") only through the book- entry system maintained by DTC. See "TIIE BONDS-Book-Entry Only System" and APPENDIX F- ..DTC AND THE BOOK-ENTRY ONLY SYSTEM."
Security for the Bonds and Series 2024Local Obligations GeneraL The Bonds are special, limited obligations of the Authority, payable from and secured by the Trust Estate (defined herein) pledged under the Trust Agreement, consisting primarily of payments received from the District as debt service payments on the Series 2024Local Obligations. See "SECURITY FOR TI{E BONDS-Flow of Funds."
The Series 2024 Local Obligations are sized for payments to equal the principal of, premium, if any, and interest on the Bonds when due. Under the Local Obligations Indenture, the Series 2024 Local Obligations are secured by the Net Pledged Special Taxes collected on taxable parcels (the "Taxable Property") in the District as a result of the levy of the Pledged Special Taxes. "Net Pledged Special Taxes" equal the Pledged Special Taxes less the Priority Administrative Expenses. "Pledged Special Taxes" comprise the Area-Wide Facilities Special Tax (the "Facilities Special Tax"), the Maintenance Special Tax (the "Maintenance Special Tax") and the TDM Services Special Tax (the "TDM Special Tax" and, together with the Maintenance Special Tax, the "services Special Tax"), each as defined in the Rate and Method for the District. Taxable Property for purposes of the Facilities Special Tax and the Services Special Tax include Developed Property, Single Family Final Map Property, and Permit Ready Multi FamilyA'{on- Residential Property, each as defined in the Rate and Method. Undeveloped property is not levied the Pledged Special Tax. See APPENDIX A-"RATE AND METHOD." "Priority Administrative Expenses" is defined in the Indenture to mean an amount for the payment of administrative expenses equal to $30,000 for Fiscal Year 2024-25, escalating annually by 2%.
Collection of Special Tasces. The Pledged Special Taxes are included on the regular property tax bill sent to the record owners of Taxable Properly within the District. The District has covenanted in the Local Obligations Indenture to commence judicial foreclosure proceedings against (1) each delinquent lot or parcel of land in the District, regardless of amount of delinquency, if the Special Tax collected for such Fiscal Year is deficient by more than five percent (5%) of the total amount of the Special Tax levied in such Fiscal Year, (2) each lot or parcel in the District that is then delinquent on four or more installments of the Special Tax or delinquent in the payment of the Special Tax in an amount of $45,000 or more, and (3) any delinquent lot or parcel of land in the District for which another community facilities district governed by the City Council has commenced foreclosure proceedings for an overlapping special tax; provided, however, that the District is not obligated under the Local Obligations Indenture to commence such judicial foreclosure proceedings on any delinquent installment of the Pledged Special Tax for any Fiscal Year in which the District has received one hundred percent (100%) of the amount of such installment from the J
09/24/2024 Item No.13.
County of Sacramento (the "County") pursuant to the Teeter Plan (described below). See "SECURITY FOR THE SERIES 2024 LOCAL OBLIGATIONS-Terms, Payment and Redemption," ('-ffts Special Tax," "-{ovenant for Foreclosure" and c6-The Teeter Plan." Local Obligations Reserve Fund. A reserve fund and a separate account therein for the Series 2024 Local Obligations (the "series 2024Local Obligations Reserve Account") is established under the Local Obligations Indenture and required to be maintained in an amount equal to the Reserve Requirement. The initial Reserve Requirement upon issuance of the Series 2024 Local Obligations is $-. The Series 2024Local Obligations Reserve Account will be used and withdrawn solely for the purpose of paying the interest on and principal of the Series 2024 Local Obligations in the event there is insufficient money available for the purpose; provided, that if as a result of any of the valuation of the Reserve Requirement or as a result of any property owner prepayment it is determined that the amount of money in the Series 2024 Local Obligations Reserve Account exceeds the Reserve Requirement, the Local Obligations Trustee will withdraw the amount of money representing such excess from such account and shall deposit such amount of money in the Redemption Account. See "SECURITY FOR THE SERIES 2024 LOCAL OBLIGATIONS-LooaI Obligations Reserve Fund."
The Pledged Special Taxes secure only the Series 2024Local Obligations, not the Bonds. For this reason, a delinquency or default in the payment of Pledged Special Taxes could cause a default in the payments of principal and interest on the Bonds if moneys in the Series 2024 Local Obligations Reserve Account are insufficient to make up the deficit in debt service for the Series 2024Local Obligations caused by such delinquency or nonpayment.
Additionol Local Obligations. Under the terms of the Local Obligations Indenture, the District may issue additional obligations (the "Additional Local Obligations" and, together with the Series 2024 Local Obligations, the "Local Obligations") secured by Net Pledged Special Taxes on parity with the Series 2024 Local Obligations to finance additional public capital improvements or to refund outstanding Series 2024 Local Obligations if certain conditions are met. See "SECURITY. FOR THE SERIES 2024 LOCAL OBLIGATIONS-Issuance of Additional Local Obligations."
Limited Liabitity. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE DISTRICT, THE AUTHORITY, THE STATE OF CALIFORNIA (THE "STATE") OR ANY OTI{ER POLITICAL SUBDIVISION THEREOF IS PLEDGED TO TI{E PAYMENT OF THE BONDS. THE AUTHORITY HAS NO TAXING POWER. 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, TI{E DISTRICT OR THE
CITY, BUT ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM THE
TRUST ESTATE, DERIVED PRIMARILY FROM DEBT SERVICE PAYMENTS ON THE SERIES 2O}4LOCAL OBLIGATIONS FROM THE PAYMENT OF THE PLEDGED SPECIAL TAXES LEVIED WITHIN THE DISTRICT AS MORE FULLY DESCRIBED I{EREIN.
The Community F''acilities District
General. The District is located in the southern portion of the City, bounded by Highway 50, White Rock Road, Prairie City Road, and the El Dorado County Line. The boundaries of the District are coterminous with the Specific Plan described herein. The gross area of the District is approximately 3,520 gross acres. Presently, the District includes undeveloped properties as well as properties in varying stages of development, including entitled lots, finished lots, homes and commercial sites under construction, and completed homes and commercial sites.
4
09/24/2024 Item No.13.
Formation Proceedings. The District was formed by the City pursuant to the Mello-Roos Act.
The Mello-Roos Act was enacted by the California legislature to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. Any local agency (as defined in the Mello-Roos Act) may establish a community facilities district to provide for and finance the cost of eligible public facilities, development-related fees, and services. Subject to approval by two- thirds of the votes cast at an election and compliance with the other provisions of the Mello-Roos Act, a legislative body of a local agency may issue bonds for a community facilities district and may levy and collect a special tax within such district to repay such indebtedness.
Pursuant to the Mello-Roos Act, the City Council undertook proceedings to form the District and called an election to authorize the incurring ofbonded indebtedness and authorize the levy ofspecial taxes within the District. On December 8, 2015, an election was held within the District at which the eligible voters within the District approved the lely of special taxes in accordance with the rate and method of apportionment approved by the City Council. In addition, the eligible voters in the District authorized the issuance of bonds in an amount not to exceed $200,000,000. In November 2018, the City approved an amendment to the Rate and Method for City of Folsom Community Facilities DistrictNo. 18 (Folsom Plan Area - Area-Wide Improvements and Services) (as so amended, the "Rate and Method"), which was further approved on such date by the eligible voters within the District, to adjust the special taxes for services. The Rate and Method is included as APPENDIX A hereto and summarized herein under "THE COMMLINITY FACILITIES DISTzuCT - Rate and Method of Apportionment." Development Status and Property Ownership
The property within the District is in various stages of development, ranging from undeveloped land to completed homes and commercial properties. Based on applicable entitlements, the District is currently expected to include 13,343 dwelling units and 2.5 million square feet of commercial, office/industrial and mixed use. Within the boundaries of the District, there are also expectedtobe2T5.T acres of public and quasi-public use (public and private schools, parks and infrastructure), 182 acres of major roads and l,ll4.5 acres of open space.
As of June 30, 2024,fina|maps had been approved and recorded for 4,603 dwelling units. In addition as of June 30,2lz4,building permits for 3,871 residential units and 3,266 certificates of occupancy had been issued in the Folsom Plan Area for projects underway. Based on ownership data as of such date, 3,1 l0 homes had been conveyed to individual homeowners. Developers actively constructing single-family homes in the District include Toll Brothers, Lennar Homes, Tri Pointe Homes, Taylor Morrison, KB HOME Sacramento, Beazer Homes, Woodside Homes and Richmond American (collectively, the "Homebuilders"). As of June 30,2024,two mixed use/high density multifamily sites had been completed:
Mangini Place Apartments with 152 units and the Van Daele Apartments (also known as Atwell at Folsom Ranch) with278 units. Several additional mixed use and multi-family sites are in the development approval process. Commercial development is partially complete in a retail shopping center planned for 56,628 square feet of retail space on L3 acres, with several shops and restaurants open. Approximately 70 acres of land is being developed into hospital and medical campus facilities, UC Davis Health Campus and Dignity Health (formerly Mercy Hospital of Folsom). The UC Davis Health Campus will consist of a medical office building, micro-hospital, ambulatory surgery center, and a 100-key hotel with the total development being approximately 400,000 square feet on 36.04 acres.
Based on the development status and ownership as of June 30, 2024, Toll Brothers and Lennar Homes, individually or with affiliates and through landbanking anangements, are the only taxpayers individually responsible for 5Yo or more of the maximum Facilities Special Tax (as defined herein).
Collectively, individual homeowners are responsible for 72.6% of the Facilities Special Tax levy for Fiscal Year 2024-25. As property develops, final maps are recorded and homes are conveyed to individual 5
09/24/2024 Item No.13.
homeowners, the proportion of responsibility for payment of the Special Taxes will vary, sometimes greatly. See "THE COMMUNITY FACILITIES DISTRICT-Special Tax Calculation." Additional information regarding the development status and ownership within the District is included under the heading "DEVELOPMENT PLANS AND OWNERSHIP." Property Values and Value to Lien
An appraisal (the "Appraisal?') of a portion of the property (the "Appraised Property") within the District was prepared by Integra Realty Resources, Sacramento, California (the "Appraiser"). The purpose of the appraisal was to estimate the market value, subject to the special tax and based upon a hypothetical condition, for such portion of the Taxable Property. Subject,to the assumptions, hypothetical condition and limiting conditions contained in the Appraisal, the Appraiser estimated that the Appraised Property within the District had an estimated not-less-than aggregate market value of 5432,321,000 as of July 29,2024.
The remaining Taxable Properly within the District had aggregate assessed land and improvements value of $2,511,251,291as of July 1,2024. See "THE COMMTINITY FACILITIES DISTRICT-Propefty Values."
Based on a principal amount of $[PAR]- for the Series 2024Local Obligations (and the Bonds) and the aggregate appraised and assessed values for Taxable Property within the District, the value-to-lien ratio for the District is [98.1-:1.0]. The overall value to overlapping debt ratio, including certain overlapping general obligation tax and assessment debt and various special tax debt, is [11.5-:1.0]. Additional overlapping debt is expected to be issued for individual subdivisions and neighborhoods from time to time.
See "THE COMMLTNITY FACILITIES DISTRICT-Value-to-Lien Analysis" and "TFIE COMMLINITY FACILITIES DISTRICT-Overlapping Debt."
Bondholders Risks
Investment in the Bonds involves a substantial degree of risk that may not be appropriate for some investors. For a discussion of certain considerations relevant to an investment in the Bonds, in addition to the other matters set forth herein, see "CERTAIN RISKS TO BONDHOLDERS." Investors should read the entire Official Statement to obtain information essential to the making of an informed investment decision.
Continuing Disclosure
The District will agree to provide certain annual financial information and operating data by not later than April 1 in each year, commencing April l, 2025 (the "Annual Report"), and to provide notices of the occurrence of certain enumerated events. The Annual Report and notices will be filed with the Municipal Securities Rulemaking Board's Electronic Municipal Market Access database ("EMMA"). The specific nature of the information to be contained in the Annual Report or the notices of enumerated events is set forth in APPENDIX D-"FORM OF CONTINUING DISCLOSURE UNDERTAKING." These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule 15c2-12.
Summaries Not Definitive
Brief descriptions of the Bonds, the Series 2024Local Obligations, the security for the Bonds and Series 2024 Local Obligations, the City, the District, and the status of development within the District are included in this Official Statement together with summaries of certain provisions of the Bonds, the Trust 6 * Preliminary, subject to change.
09/24/2024 Item No.13.
Agreement, and the Local Obligations Indenture. Such descriptions do not purport to be comprehensive or definitive. All references herein to the Trust Agreement and the Local Obligations Indenture are qualified in their entirety by reference to such documents, copies of which are available for inspection at the office of Trustee. Capitalized terms used in this Official Statement but not otherwise defined are defined in APPENDIX C-"SUMMARY OF PRTNCIPAL DOCUMENTS."
PLAN OF FINANCE
Facilities to be Financed
The Bonds are issued for the purpose of providing funds to purchase the Series 2024 Local Obligations. The Series 2024 Local Obligations are being issued to finance the construction of certain public capital improvements servicing the Folsom Plan Area. The improvements consist primarily of 19,600 linear feet of 24-inch water transmission pipeline to provide expanded water transmission conveyance capabilities to deliver water from the water treatment plant to the District (the "Phase 2 Water Transmission Faiilities"). Construction of the Phase 2 Water Transmission Facilities is required to mitigate increased demand as a result of development within the District. In addition, a portion of the proceeds of the Series 2024 Local Obligations will be used to reimburse certain developers within the Folsom Plan Area for the first phase of public water infrastructure. Proceeds of the Series2024 Local Obligations may also be used to construct other facilities authorized to be financed by the District. See "THE COMMTINITY FACILITIES DISTRICT - Authorized Facilities."
Phase 2 Water Transmission Facilities
The City solicited bids for the construction of the Phase 2Water Transmission Facilities in August 2024 and expects to enter into a construction contract with the contractor(s) submitting the lowest responsive responsible bid based upon a guaranteed maximum price procurement approach in October 2024. The City expects construction to commence in the first quarter of 2025 and for construction to last approximately I 8 months.
Projects undertaken by the City, including the Phase 2Water Transmission Facilities, are generally subject to the California Environmental Quality Act, as amended (Division 13 of the California Public Resources Code) ("CEQA"). Under CEQA, a public agency is required, following preparation of an initial study, to determine whether an environmental impact .report (an "EIR"), a negative declaration or a mitigated negative declaration is required for a project. If there is substantial evidence that significant environmental effects may occur, an EIR is required to be prepared. The City has undertaken all necessary environmental actions and obtained all necessary environmental approvals for development of the infrastructure benefiting property within the District, including the Phase 2 Water Transmission Facilities, as more particularly described under "THE COMMTINITY FACILITIES DISTRICT-WaIer Supply; utilities."
7 Page 286
09/24/2024 Item No.13.
Estimated Sources and Uses of Funds
The following table sets forth the sources and uses of the funds as allocated to the Bonds:
Sources ofFunds
Principal Amount
[P lus/Le s s]: [Net] Original Issue [Premium/Discount] Total Sources:
$
$
Uses of Funds
Construction Fund
Underwriter's Discount
Deposit to Series 2024 Local Obligations Reserve Account(r) Deposit to Costs of Issuance Fund(2)
Total Uses:
(1) A portion of the purchase price of the Series 2024 Local Obligations will be deposited into the Series 2024 Local Obligations Reserve Account. See "SECURITY FOR THE BONDS." (2) A portion ofthe purchase price ofthe Series 2024 Local Obligations will be used to pay costs ofissuance including fees of Bond Counsel and the Municipal Advisor, the initial fees of the Trustee, noncontingent fees of the Appraiser, printing costs and other miscellaneous expenses.
THE BONDS
General Provisions
The Bonds will be dated their date of delivery and mature on September 1, as set forth on the inside front cover page hereof (each, a "Principal Payment Date"). Interest is payable semiannually on March 1 and September 1 of each year, commencing March 1,2025 (each, an "Interest Payment Date"). The Bonds will be issued as fully registered bonds, without coupons, in denominations of $5,000, or any integral multiple thereof.
Principal of, and redemption premium, if any, on the Bonds is payable at the corporate trust office of the Trustee. Interest on the Bonds will be paid only to the registered owners as shown on the Trustee's books as of the fifteenth day of the calendar month next preceding each Interest Payment Date (the "Record Date"), except that in the case of an owner of $ 1,000,000 or more in aggregate principal amount of Bonds outstanding, payment will be made at the owner's option by wire transfer of immediately available funds to an account in a bank or trust company or savings bank that is a member of the Federal Reserve System and that is located in the continental United States of America according to instructions provided by such owner to the Trustee and received no later than the Record Date for such Interest Payment Date. The Bonds will be issued in book,entry only form and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. So long as the Bonds are in book-entry only form, principal of and redemption premium, if any, on the Bonds will be payable to DTC or its nominee, who will in turn remit such payments to DTC Participants for subsequent disbursement to the Beneficial Owners.
See"-Book-Entry Only System" and APPENDIX F-"DTC AND THE BOOK-ENTRY ONLY SYSTEM."
$
$
8 Page 287
09/24/2024 Item No.13.
The Bonds are special, limited obligations of the Authority. The Bonds are payable solely from and secured by the Trust Estate of the Authority pledged under the Trust Agreement, consisting primarily of payments received by the Authority from the District under the Series 2024 Local Obligations, which payments are secured by a lien of the Net Pledged Special Taxes, as more fully described herein. See "SECURITY FOR THE BONDS" and "SECURITY FOR THE LOCAL OBLIGATIONS." Redemption Provisions.
Optionat Redemption. The Bonds are subject to optional redemption by the Authority prior to their 20_, from any source
prices (computed upon
respective maturity dates as a whole or in part on any date on or after of available funds other than Special Tax Prepayments, at the following redemption the principal amount of the Bonds or portions thereof called for redemption) together with accrued interest thereon to the date fixed for redemption:
103% if redeemed on any date on or after 20
through 20-;
l02V;oif rcdeemed on any date from 20_ through
20_ through101% if redeemed on any date from
20-; and
100% if redeemed on 20_and any date thereafter
Extraordinary Redemption from Prepayment of Special Tasces. The Bonds are subject to extraordinary redemption by the Authority prior to their respective maturity dates, as a whole or in part on any Interest Payment Date on or after 20_, solely from funds derived from the extraordinary redemption of Series 2024Local Obligations from Special Tax Prepayments, at the following redemption prices (computed upon the principal amount of the Bonds or portions thereof called for redemption) together with accrued interest thereon to the date fixed for redemption 103%ifredeemedonanyInterestPaymentDateonorafter-'
20_ through
-,20-;
|02%oifredeemedonanInterestPaymentDateon-,20-
and _,20-;
101% if redeemed on an Interest Payment Date on
and 20-; and
100% if redeemed on 20 and any Interest Payment Date
thereafter.
Special Taxes Prepayments could be made by any of the owners of any of the property within the District, any developers or homebuilders owning Taxable Property in the District or any individual owner; and they could also be made from the proceeds of bonds issued by or on behalf of an overlapping special assessment district or community facilities district. The resulting redemption of Bonds that were purchased at a price gleater than the applicable redemption price could reduce the otherwise expected yield on such Bonds. Sie "CERTAIN RISKS TO BONDHOLDERS-Potential Early Redemption of Bonds from Prepaid Special Taxes."
Mandatory Sinking Fund Redemption of Bonds. The Bonds maturing on Septembet 7,20-arc subject to mandatory redemption in part on September 1 of each year commencing Septembet 1,20-, at 20-;
20-
9 * Preliminary, subject to change.
09/24/2024 Item No.13.
a redemption price equal to one hundred percent (100%) of the principal amount thereof called for redemption together with accrued interest thereon to the date fixed for redemption in the aggregate respective principal amounts in the respective years as follows:
Sinking Fund
Redemption Date
(September 1) Principal Amount to be Redeemed
$
t Maturity.
The Bonds maturing on September 1,20- are subject to mandatory redemption in part on September I of each year commencing September l, 20 , at a redemption price equal to one hundred percent (100%) of the principal amount thereof called for redemption together with accrued interest thereon to the date fixed for redemption in the aggregate respective principal amounts in the respective years as follows:
Sinking Fund
Redemption Date
(September Principal Amount to be Redeemed
t
l)
$
t Maturity.
If the Bonds subject to mandatory redemption are redeemed in part prior to their stated maturity date, the mandatory sinking fund redemption payments for such Bonds shall be reduced proportionately by the principal amount of such Bonds so redeemed.
Redemption Instructionr. Upon any prepayment of a Local Obligation, the Authority shall deliver to the Trustee a Written Order of the Authority designating the amounts and maturities of the Bonds to be redeemed, which shall be in the manner necessary to enable the Authority to deliver a Cash Flow Certificate satisffing the requirements described below. In the event only a portion of the Outstanding Bonds of any maturity are to be redeemed at any one time, the Trustee shall select the particular Bonds of each maturity date to be redeemed in accordance with DTC procedures (which, at the time of the issuance of the Bonds, would be a redemption by lot) or, if the Bonds are not then in book-entry, in a manner that it deems appropriate and fair. The Trustee shall redeem Bonds in Authorized Denominations.
Upon any redemption of a portion but not all of the Outstanding Bonds, the Authority shall deliver to the Trustee a Cash Flow Certificate to the effect that, assuming all payments are made with respect to the Series 2024Local Obligations, (i) the Revenues, together with moneys on deposit in other funds and accounts held under the Trust Agreement, will be sufficient to pay all Principal Installments and interest payments on the Bonds when due; and (ii) the redemption premiums, if any, on the Series 2024 Local Obligations, together with other Revenues available to the Trustee for such purpose, are sufficient to offset t
10 Page 289
09/24/2024 Item No.13.
any difference between the interest to accrue on the Bonds to be paid or redeemed with the proceeds of prepayment of such Series 2024LocalObligations (plus any redemption premium payable upon redemption of such Bonds) and the income to be earned on any investment of such proceeds (assured as of the date of payment thereof), in each case until the date of payment or redemption of Bonds, such that in no event will the prepayment of Series 2024 Local Obligations cause the Trustee to have insufficient funds to pay debt service on the Bonds when due.
In no event shall Bonds be redeemed if upon such redemption the principal amount of the Series 2024 Local Obligations remaining outstanding will be less than the total principal amount of Outstanding Bonds. Such Written Order of the Authority may specifu that optional redemption of the Bonds will be conditioned upon receipt offunds or other events.
Notice of Redemption. Subject to receipt of the Written Order of the Authority described under '<-Redemption Instructions," the Trustee shall give notice of redemption; provided, that Bonds, identified by CUSP numbers, serial numbers and maturity date, have been called for redemption and, in the case of Bonds to be redeemed in part only, the portion of the principal amount thereof that has been called for redemption (or if all the Outstanding Bonds are to be redeemed, so stating, in which event such serial numbers may be omitted), that they will be due and payable on the date fixed for redemption (specifuing such date) upon surrender thereof to the Trustee at its Corporate Trust Office, subject to any conditions to such redemption specified in the Written Order of the Authority, at the redemption price (specif ing such price), together with any accrued interest to such date, and that all interest on the Bonds (or portions thereof) so to be redeemed will cease to accrue on and after such date and that from and after such date such Bond (or such portion thereof) shall no longer be entitled to any lien, benefit or security under the Trust Agreement, and the Owner thereof shall have no rights in respect of such redeemed Bond or such portion except to receive payment flom such money of such redemption price plus accrued interest to the date fixed for redemption. If sufficient monies for the payment of the redemption price of all Bonds to be redeemed are not then on deposit with the Trustee, such notice shall also state that redemption is conditioned upon the timely deposit of sufficient funds therefor with the Trustee' Such notice shall be mailed by first class mail, in a sealed envelope, postage prepaid, at least thirty (30) but not more than sixty (60) days before the date fixed for redemption, to the Owners of such Bonds (or portions thereof) so called for redemption, at their respective addresses as the same shall last appear on the Bond Register; provided, that neither the failure of an Owner to receive notice of redemption of Bonds nor any error in such notice shall affect the validity of the proceedings for the redemption of Bonds.
Any notice of optional redemption may be rescinded by written notice given by the Authority to the Trustee no later than three Business Days prior to the date specified for redemption. The Trustee shall give notice of rescission of the notice of optional redemption or non-satisfaction of any conditions specified in the notice of optional redemption as soon as practicable to the same parties and in the same manner as the notice of redemption was given.
So long as the Bonds are in book-entry only form, notices of redemption will be given directly by the Trustee to DTC and not to the Beneficial Owners of the Bonds. See APPENDIX F-"DTC AND THE BOOK-ENTRY ONLY SYSTEM."
Purchase in Lieu of Redemption. In lieu of redemption of any Bond, amounts on deposit in the Proceeds Fund, the Principal Fund or in the Redemption Fund may be used and withdrawn by the Trustee at any time prior to a notice of redemption having been delivered, upon a Written Order for the purchase of such Bonds at public or private sale as and when and at such prices as the Authority may in its discretion determine, but not in excess of the lower of the highest or then current redemption price thereof plus accrued interest to the purchase date; and all Bonds so purchased shall be delivered to the Trustee for cancellation. l1 Page 290
09/24/2024 Item No.13.
Payment of Redeemed Bonds. If notice of redemption has been given and not rescinded and if the conditions to such redemption specified therein, if any, have been satisfied, each as provided in the Trust Agreement, the Bonds or portions thereof called for redemption will become irrevocably due and payable on the date fixed for redemption at the redemption price thereof, together with accrued interest to the date fixed for redemption, upon presentation and surrender of the Bonds to be redeemed at the Corporate Trust Office of the Trustee specified in the notice of redemption. If less than the full principal amount of a Bond is called for redemption, the Authority is required to execute and deliver and the Trustee is required to authenticate, upon surrender of such Bond, and without charge to the Owner thereof, Bonds of like interest rate and maturity in an aggregate principal amount equal to the unredeemed portion of the principal amount of the Bonds so surrendered in such Authorized Denominations as specified by the Owner' If any Bond or any portion thereof has been duly called for redemption and payment of the redemption price, together with unpaid interest accrued to the date fixed for redemption, has been made or provided foi Uy the Authority, then interest on such Bond or such portion will cease to accrue from such iate, and from and after such date such Bond or such portion will no longer be entitled to any lien, benefit or security under the Trust Agreement, and the Owner thereof will have no rights in respect of such Bond or such portion except to receive payment of such redemption price, and unpaid interest accrued to the date fixed for redemption.
Book-Entry Only System
The Bonds will be issued in book-entry only form and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities depository for the Bonds. Purchases of the Bonds may be made in book-entry form only, through brokers and dealers who are, or who act through, DTC Participants. So long as the Bonds are in book-entry only form, principal of and interest on the Bonds will be payable by the Trustee to DTC, which will in turn remit such paymints to the DTC Participants, which will in turn remit such payments to the Beneficial Owners of the applicable Bonds. In addition, so long as Cede & Co. is the registered owner of the Bonds, the selection of Bonds held by Beneficial Owners in book-entry form for redemption will be made pursuant to the procedures of DTC. See APPENDIX F-"DTC AND THE BOOK-ENTRY ONLY SYSTEM."
DEBT SERVICE SCHEDULES AND COVERAGE
The annual scheduled debt service for the Bonds, assuming no early redemption other than from mandatory sinking fund installments, is set forth in Table I below. The Series 2024Local Obligations are sized to provide 100% of the debt service on the Bonds when due and have the same interest rates and l2 Page 291
09/24/2024 Item No.13.
principal amortization as the Bonds.
Period Ending
Table 1
Bonds Debt Service Schedule(r)
Total Debt
Service(September l) Principal Interest
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
ToTAL
(r) Amounts rounded to the nearest dollar
Source: Piper Sandler & Co.
The following table shows the expected debt service coverage for the Series 2024Local Obligations for the portion of the calendar year 2025, based on the maximum Fiscal Year 2024-25 revenues from the Facilities Special Tax, based on development status as of June 30,2024, assuming no delinquencies. See $$$
13 Page 292
09/24/2024 Item No.13.
"TI{E COMMLTNITY FACILITIES DISTRICT-Rate and Method of Apportionment" and "-Special Tax Calculation" for information about calculation of the annual Pledged Special Tax levy.
Table 2
Fiscal Year 2024-25
Debt Service Coverage - Series 2024Local Obligations
Fiscal
Year
Maximum
Facilities Specia
1"a(tXz)
Priority Net Maximum
I Administrative FacilitiesSpecial
Expense(l) Tax Revenue
Local
Obligations
Debt
Service.
CFD Debt
Service
Coverage.
2024-25 $2,636,823
Preliminary, subject to change.
(r) Escalates annually at2%o.
@ Based on development status as ofJune 30,2024'
Source: Piper Sandler & Co.
SECURITY F'OR THE BOI\DS
General
The Bonds are secured by a first lien on and pledge of the Trust Estate and are payable primarily from Revenues, consisting of payments received by the Authority from the District under the Series 2024 Local Obligations.
Neither the faith and credit nor the general taxing power of the City' the District, the Authorityo the State or any other political subdivision thereof is pledged to the payment of the Bonds.
The Authority has no taxing power. 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 City, but are timited obligations of the Authority payable solely from the Trust Estate' derived primarily from payments on the series 2024Local obligations.
The Trust Estate consists of the Revenues, the amounts in certain of the funds established and held under the Trust Agreement, and the Series 2024 Local Obligations. The Revenues consist of amounts received by the Trustee as the payment of interest on, or the equivalent thereof, and the payment or return of principal of, or redemption premiums, if any, on, or the equivalent thereof, the Series 2024 Local Obligations, whether as a result of scheduled payments, or redemption premiums, Special Tax Prepayments or remedial proceedings taken in the event of a default thereon, and all investment earnings on any money held in the Funds held under the Trust Agreement (except the Rebate Fund). See "SECURITY FOR THE SERIES 2024 LOC AL OBLIGATIONS.''
Flow of X'unds
Receipt and Deposit of Revenues. As noted above, Revenues consist of amounts received by the Trustee as the payment of interest on, or the equivalent thereof, and the payment or return of principal of, or redemption premiums, if any, on, or the equivalent thereof, all Series 2024 Local Obligations, whether as a resplt of scheduled payments, or redemption premiums, Special Tax Prepayments or remedial proceedings taken in the event of a default thereon, and all investment earnings on any money held under ihe Trust Agreement (except the Rebate Fund). All Revenues, other than Revenues derived from the early redemption of Series 2024 Local Obligations from Special Tax Prepayments received by the Trustee from the Authority, will be deposited into the Revenue Fund. On each Interest Payment Date and each Principal t4 Page 293
09/24/2024 Item No.13.
Payment Date, the Trustee will transfer Revenues from the Revenue Fund, in the amounts required in the order of priority as set forth below, with the requirements of each fund being fully satisfied, leaving no deficiencies therein, prior to any deposit into any fund later in priority:
First: To the Interest Fund, an amount of Revenues which together with amounts on deposit therein, is equal to the interest due and payable on the Bonds due on such Interest Payment Date;
Second: To the Principal Fund (i) on each Principal Payment Date from the Revenue Fund an amount of Revenues which, together with any amounts then on deposit in the Principal Fund (other than amounts previously deposited on account of any Bonds which have matured but which have not been presented for payment) is sufficient to pay the Principal Installments on the Bonds due on such Principal Payment Date.
Following such deposits, any remaining money in the Revenue Fund is required to be transferred to the Local Obligations Trustee for application under the Local Obligations Indenture. For additional information regarding the flow, see "SECURITY FOR THE SERIES 2024 LOCAL OBLIGATIONS- Flow of Funds."
Revenues Derivedfrom Special Tax Prepayments. All Revenues derived from early redemption of Series 2024 Local Obligations from Special Tax Prepayments received by the Trustee will be immediately deposited into the Redemption Fund to be applied to the extraordinary redemption of Bonds.
See "TFIE BoNDs-Redemption Provisions-Extraordinary Redemption from Prepayment of Special Taxes."
No Additional Authority Bonds
The Trust Agreement does not permit the Authority to issue any additional bonds on parity with the Bonds. However, subject to certain conditions contained in the Local Obligations Indenture, the District may at any time issue bonds (the "Additional Local Obligations") payable from the Net Pledged Special Tax on parity with the Series 2024Local Obligations. See "SECURITY FOR THE SERIES 2024LOCAL OBLIGATIONS-Issuance of Additional Local Obligations."
SECURITY FOR THE SERIES 2O}4LOCAL OBLIGATIONS
Termso Payment and Redemption
General. The Series 2024 Local Obligations will be dated their date of delivery and mature on September 1 in each year in the same amounts and atthe same times as the Bonds. The Series 2024 Local Obligations will bear interest at the same rates as the Bonds as set forth on the inside front cover page hereof. Interest on the Series 2024 Local Obligations is payable semiannually on March 1 and September 1 of each year, commencing March 1,2025.
Payment of the Series 2024 Local Obligations. The Series 2024 Local Obligations constitute the limited obligations of the District payable as to both principal and interest from the Net Pledged Special Tax levied by the District on Taxable Property within the District, including proceeds from the sale of property within the District collected as a result of foreclosure of the lien on the Pledged Special Taxes and certain funds and accounts held under the Local Obligations Indenture. The District's sole recourse in the event of a delinquency or failure to pay Pledged Special Taxes on a particular parcel is to institute foreclosure proceedings with respect to that parcel'
15 Page 294
09/24/2024 Item No.13.
The components of the Pledged Special Tax are levied and collected according to the Rate and Method. See "THE COMMLINITY FACILITIES DISTRICT - Rate and Method of Apportionment" and APPENDIX A-"RATE AND METHOD.''
The Series 2024 Local Obligations are special tax obligations of the District, and the interest on and principal of and redemption premiums, if anyo on the Series 2024 Local Obligations are payable solely from the Net Pledged Special Tax and amounts in certain funds and accounts established in the Local Obligations Indenture, and the District is not obligated to pay the Series 2024 Local Obligations except from such funds. The General Fund of the City and the funds of the District are not liable, and neither the full faith and credit of the District nor the City are pledged for the payment of the interest on or principal of or redemption premiums, if anyo on the Series 2024 Local Obtigations. No tax or assessment other than the Pledged Special Taxes shall ever be levied or collected to pay the interest on or principat of or redemption premiums, if any' on the Series 2024 Local Obligations. The Series 2024Local Obligations are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the District or any of its income or receipts except Net Pledged Special Taxes and amounts in certain funds and accounts established in the Local Obligations Indenture, and neither the payment of the interest on or principal of or redemption premiums, if anyo on the Series 2024Local Obligations is a general debt,liability or obligation of the City or the District.
Redemption of the Series 2024 Local Obligations. The Series 2024Local Obligations are subject to extraordinary redemption by the District from funds derived by the District from prepayments of the Pledged Special Tax. The Series 2024 Local Obligations are also subject to optional and mandatory redemption by the District. A description of the redemption prices and terms of the Series 2024 Local Obligations is set forth under APPENDIX C-"SUMMARY OF PRINCIPAL DOCUMENTS- SUMMARY OF THE LOCAL OBLIGATIONS INDENTURE-Redemption of Bonds." Flow of Funds
Application of Special Tax Fund. Pursuant to the Local Obligations Indenture, the District agrees and covenants that it will deposit the Pledged Special Tax proceeds in the District Community Facilities Fund, which fund is established in the treasury of the City. All money in the Community Facilities Fund shall be used and withdrawn by the District solely for the benefit of the District in accordance with the Mello-Roos Act, including payment of Expenses. Pursuant to the Local Obligations Indenture, the District further agrees and covenants that, after payment of Priority Administrative Expenses, it will transfer to the Local Obligations Trustee from the Community Facilities Fund amounts sufficient and in sufficient time for the Local Obligations Trustee to make the transfers required by the Local Obligations Indenture, and the Local Obligations Trustee shall deposit such proceeds as and when received in the Special Tax Fund.
All money in the Special Tax Fund is required to be set aside by the Local Obligations Trustee in the following respective special account and fund within the Special Tax Fund in the following order of priority, and all money in each such account and fund shall be applied, used and withdrawn only for the purposes specified in the Local Obligations Indenture:
(l) Redemption Account; and
(2) Series 2024Local Obligations Reserve Account'
Redemption Account. On or before March I and September 1 in each year, the Local Obligations Trustee shall, from the money in the Special Tax Fund, transfer to and deposit in the Redemption Account an amount of money equal to the aggregate amount of interest becoming due and payable on all Outstanding Series 2024Local Obligations and any Additional Local Obligations on such March 1 or September 1, as 16 Page 295
09/24/2024 Item No.13.
the case may be, and on or before September I in each year, the Local Obligations Trustee shall, from the then remaining money in the Special Tax Fund, transfer to and deposit in the Redemption Account an amount of money equal to the aggregate amount of principal becoming due and payable on all Outstanding serial Series 2024 Local Obligations and any Additional Local Obligations on such September I plus all amounts required to be redeemed by mandatory sinking fund redemption on such September l; provided, that all of tlie aforesaid payments shall be made without priority of any payment over any other payment, and in the event that money in the Special Tax Fund on any March 1 or September I is not equal to the amount of interest becoming due on all Series 2024LocalObligations and any Additional Local Obligations on such date, or in the event that the money in the Special Tax Fund on any September I is not equal to the amount of principal of the Series2024 Local Obligations and Additional Local Obligations becoming due on such date, as-the case may be, then such money shall be applied pro rata in such proportion as such interest and principal and mandatory sinking fund account payments bear to each other.
No deposit need be made into the Redemption Account if the amount of money contained therein is at least.quul to the amount required by the terms of the preceding paragraph to be deposited therein at the times and in the amounts provided in the Local Obligations Indenture.
All money in the Redemption Account shall be used and withdrawn by the Local Obligations Trustee to pay the interest on the Series 2024Local Obligations and any Additional Local Obligations as it shall become due and payable (including accrued interest on any Series 2024 Local Obligations or any Additional Local Obligations purchased or redeemed prior to maturity) plus the principal of and redemption premiums, if any, on the Series 2024Local Obligations and any Additional Local Obligations as they shall mature or upon the prior redemption thereof.
Locul Obligations Reserve Fund. On or before March 1 and September I in each year, the Local Obligations Trustee shall, from the then remaining money in the Special Tax Fund, transfer to and deposit in each Series 2024Local Obligations Reserve Account within the Local Obligations Reserve Fund such amount of money as shall be required to restore each such Series 2024Local Obligations Reserve Account to a sum equal to the respective Reserve Requirement (as defined herein) for the applicable series of Series 2024Locai Obligations or Additional Local Obligations, pro rata, to the extent that amounts are available in the Special Tax Fund for such purpose; and for this purpose all investments in each Series 2024 Local Obligati,ons Reserve Account shall be valued on March 1 and September 1 of each yeat at the face value thereof if such investments mature within twelve (12) months from the date of valuation, or if such investments mature more than twelve (12) months after the date of valuation, at the price at which such investments are redeemable by the holder at his option, if so redeemable, or if not so redeemable, at the lesser of (i) the cost of such investments plus the amortization of any premium or minus the amortization of any disCount, or (ii) the market value of such investments. For purposes of allocating remaining money in the Special Tax Fund between more than one Series 2024Local Obligations Reserve Account, any such transfers to and deposits in each Series 2024LocalObligations Reserve Account shall be made equally and ratably in proportion to the Reserve Requirement for each series of Series 2024 Local Obligations.
No deposit need be made into a Series 2024Local Obligations Reserve Account if the value of the investments contained therein is at least equal to the Reserve Requirement for the applicable series of Series 2024 Local Obligations or Additional Local Obligations.
All money in each Series 2024 Local Obligations Reserve Account shall be used and withdrawn by the Local Obligations Trustee solely for the purpose of paying the interest on or principal of the conesponding seriei of Series 2024Local Obligations or Additional Local Obligations in the event there is insufficient -on"y in the Redemption Account available for this purpose; pIAyj,idgd, that if as a result of any of the foregoing valuations or due to redemption as a result of property owner prepayments it is deiermined that the amount of money in a Series 2024Local Obligations Reserve Account exceeds or will l7 Page 296
09/24/2024 Item No.13.
exceed the Reserve Requirement for the applicable series of Series 2024 Local Obligations or Additional Local Obligations, the Local Obligations Trustee shall withdraw the amount of money representing such excess from such fund and shall deposit such amount of money in the Redemption Account. For the avoidance of doubt, amounts in a Series 2024Local Obligations Reserve Account are not available to make up a deficiency for the payment of principal and interest on any series of Series 2024Local Obligations or Additional Local Obligations, other than the specific series of Series 2024 Local Obligations or Additional Local Obligations to which that Series 2024 Local Obligations Reserve Account relates.
Sarplus Amounts. On or before March 1 and September 1 in each year, the Local Obligations Trustee shall, from the then remaining money in the Special Tax Fund, transfer all amounts remaining in the Special Tax Fund after the transfers specified in the immediately preceding paragraphs to the City for deposit in the Community Facilities Fund.
The Special Tax
The Pledged Special Tax is to be levied and collected against all Taxable Property within the District in accordance with the Rate and Method. The "Pledged Special Tax" is made up of three separate components of special tax identified in the Rate and Method as the Area-Wide Facilities Special Tax (the "Facilities Special Tax"), the Maintenance Special Tax (the "Maintenance Special Tax") and the TDM Services Special Tax (the "TDM Special Tax" and, together with the Maintenance Special Tax, the "Seryices Special Tax"). See APPENDIX A-"RATE AND METHOD." The Pledged Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected, and, except as otherwise provided in the covenant for foreclosure 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 advalorem property taxes. See "SECURITY FOR THE BONDS-Covenant for Foreclosure" and "CERTAIN RISKS TO BONDHOLDERS-Collection of Special Tax."
Taxable Property for purposes of the Facilities Special Tax and the Services Special Tax include Developed Property, Single Family Final Map Property, and Permit Ready Multi FamilyA',lon-Residential Property, each as defined in the Rate and Method. Undeveloped property is not levied the Pledged Special Tax.
The Rate and Method, subject to the maximum rates set forth therein, apportions the total debt service requirement (principal, interest, and mandatory sinking fund payments), restoration of the Reserve Requirement, current annual expenses, pay as you go improvement costs and other costs each year among the Taxable Property in the District. See APPENDIX A-"RATE AND METHOD." Pursuant to the Local Obligations Indenture, so long as any Series 2024 Local Obligations or Additional Local Obligations are Outstanding, the District is required annually to levy the Pledged Special Tax against all Taxable Properly in the District and make provision for the collection of such Pledged Special Tax in amounts which will be sufficient, after making reasonable allowances for contingencies and errors in the estimates, to yield proceeds equal to the amounts required for compliance with the agreements, conditions, covenants and terms contained in the Local Obligations Indenture, and which in any event will be sufficient to pay the interest on and principal of and Minimum Sinking Fund Account Payments for and redemption premiums, if any, on the Series 2024Local Obligations and any Additional Local Obligations as they become due and payable, to replenish each reserve account within the Local Obligations Reserve Fund to the Reserve Requirement and to pay all current Expenses as they become due and payable.
Under the Rate and Method, the Pledged Special Tax levied in any fiscal year against any Assessor's Parcel of Residential Property (as defined in the Rate and Method), meaning parcels for which a building permit had been issued for the purpose of constructing one or more residential dwelling units, l8 Page 297
09/24/2024 Item No.13.
may not be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within the District by more than l\Yo above the amount that would have been levied against such Assessor's Parcel in that fiscal year had there never been any such delinquencies or defaults. See "CERTAIN RISKS TO BONDHOLDERS-Maximum Special Tax."
Local Obligations Reserve Fund
The Local Obligations Indenture establishes a Series 2024 Local Obligations Reserve Account within the Local Obligations Reserve Fund to be held by the Local Obligations Trustee. The Local Obligations Indenture requires maintaining in the Series 2024 Local Obligations Reserve Account an amount equal to the Reserve Requirement. "Reserve Requirement" is defined to mean, for the Series 2024 Local Obligations specifically, as of any date of calculation, the least of: (a) the Maximum Annual Debt Service, (b) one hundred twenty-five percent (125%) of the Average Annual Debt Service or (c) ten (10%) percent of the original proceeds of the Series 2024 Local Obligations; provided that the Reserve Requirement shall be calculated on the date of issuance of the Series 2024Local Obligations issued under the Local Obligations Indenture and shall not increase thereafter; and provided further that such requirement (or any portion thereof) may be satisfied by the provision of one or more policies of municipal bond insurance or surety bonds issued by a municipal bond insurer or by a letter of credit issued by a bank, the obligations insured by which insurer or issued by which bank, as the case may be, have ratings at the time of issuance of such policy or surety bond or letter of credit equal to "AA" or higher (without regard to qualifier) assigned by Fitch or "Aa" or higher (without regard to qualifier) assigned by Moody's or "AA" or higher (without regard to qualifier) assigned by S&P.
The Series 2024Local Obligations Reserve Account is established specifically for the Series 2024 Local Obligations and amounts in the Series 2024Local Obligations Reserve Account are not available to make up a deficiency for the payment of principal and interest on any Additional Local Obligations.
Pursuant to the Local Obligations Indenture, each reserve account within the Series 2024Local Obligations Reserve Account is only available for paying the interest on or principal of the corresponding series of Series 2024Local Obligations or any Additional Local Obligations for which it was created.
The Reserve Requirement with respect to the Series 2024 Local Obligations upon their date of issuance will be $
All money in the Series2024 Local Obligations Reserve Account will be used and withdrawn by the Local Obligations Trustee solely for the purpose of paying the interest on and principal of the respective Series 2024Local Obligations in the event there is insufficient money available for the purpose; provided, that if as a result of any of the valuation of a Reserve Requirement or as a result of any property owner prepayment it is determined that the amount of money in any Series 2024 Local Obligations Reserve Account exceeds the Reserve Requirement, the Local Obligations Trustee shall withdraw the amount of money representing such excess from such fund and shall deposit such amount of money in the Redemption Account. Amounts on deposit in the Local Obligations Reserve Fund are not available to cure a deficiency in Revenues available to pay debt service on the Bonds.
Covenant for X'oreclosure
Pursuant to Section 53356.1of the Mello-Roos Act, in the event of any delinquency in the payment of the Pledged 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 properly subject to the unpaid amount may be sold at a judicial foreclosure sale. Such judicial foreclosure action is not mandatory. However, the District has covenanted in the Local Obligations Indenture that it will annually on or before September 1 of each year review the public records of the County relating to the collection of the Pledged Special Tax t9 Page 298
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collected in the prior fiscal year. Within sixty (60) days thereafter, the District will institute foreclosure proceedings as authorized by the Mello-Roos Act to enforce the Special Tax lien against (1) each delinquent lot or parcel of land in the District, regardless of amount of delinquency, if the Special Tax collected for such Fiscal Year is deficient by more than five percent (5%) of the total amount of the Special Tax levied in such Fiscal Year, and (2) each lot or parcel in the Dishict that is then delinquent on four or more installments of the Special Tax or delinquent in the payment of the Special Tax in an amount of $45,000 or more. In addition, the District will institute foreclosure proceedings against any delinquent lot or parcel of land in the District for which another community facilities district governed by the City Council has commenced foreclosure proceedings for an overlapping special tax. The District will diligently prosecute and pursue such foreclosure proceedings to judgment and sale. Notwithstanding the foregoing, the District is not obligated to enforce the lien of any delinquent installment of the Pledged 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 (described herein). Any actions taken to enforce delinquent Pledged Special Tax liens shall be taken only consistent with Sections 53356.1 through 53356.7, both inclusive, of the Government Code of the State.
In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Owners of the Bonds (if the Series 2024Local Obligations Reserve Account has been depleted) pending such sales or the prosecution ofsuch foreclosure proceedings and receipt by the District ofthe proceeds of sale. However, within the limits of the Pledged Special Tax, the District may adjust the Pledged Special Tax levied on Taxable Property in the District (subject to the maximum amounts specified in the Rate and Method), to provide an amount required to pay interest on and principal of the Series 2024 Local Obligations and any additional obligations payable from the Pledged Special Tax, and the amount, if any, necessary to replenish each subaccount of the Local Obligations Reserve Fund to an amount equal to the Reserve Requirement and to pay all current Expenses for the District. There is, however, no assurance that the total amount of the Special Tax that could be levied and collected against Taxable Property (as defined in the Rate and Method) in the District will be at all times sufficient to pay the amounts required to be paid by the Local Obligations Indenture, even if the Pledged Special Tax is levied at the maximum rates. See "CERTAIN RISKS TO BONDHOLDERS-Maximum Special Tax."
No assurance can be given that the real property subject to sale or foreclosure will be sold, or if sold, that the proceeds of sale will be sufficient to pay any delinquent installments of the Pledged Special Tax. The Mello-Roos Act does not require the District to purchase or otherwise acquire any lot or parcel of property to be sold if there is no other purchaser at such sale. The Mello-Roos Act and the Local Obligations Indenture do specif, that the Special Tax will have the same lien priority as for ad valorem property taxes in the case of delinquency. Section 53356.6 of the Mello-Roos Act requires that property within the District that is sold pursuant to foreclosure under the Mello-Roos Act be sold for not less than the amount ofjudgment in the foreclosure action, plus post judgment interest and authorized costs, unless the consent of the owners of at least 7 5Yo of the Series 2024 Local Obligations and any Additional Local Obligations issued under the Local Obligations Indenture is obtained.
Issuance of Additional Local Obligations
The District may atany time, by a supplement to the Local Obligations Indenture, issue Additional Local Obligations that are payable from the proceeds of the Net Pledged Special Tax on parity with the Series 2024 Local Obligations, subject to the following conditions, which conditions are precedent to the issuance of such Additional Local Obligations:
(i) The District shall be in compliance with all agreements, conditions, covenants and terms contained in the Local Obligations Indenture and in all Supplemental Indentures required to be observed or 20 Page 299
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performed by it, and no Event of Default under the Local Obligations Indenture or under any Supplemental Indenture shall have occurred and shall be then continuing; (iD The District shall establish a separate subaccount of the Local Obligations Reserve Fund for the payment of such Additional Local Obligations in an amount equal to the Reserve Requirement; and (iii) Either:
(a) In each year until the maturity date for the Additional Local Obligations, the Maximum Facilities Special Tax less Priority Administrative Expenses is estimated to cover at least one hundred ten percent (110%) of the sum of the Annual Debt Service for each year on the Series 2024 Local Obligations and all Additional Local Obligations, including such Additional Local Obligations to be issued, and (b) the Value of all Taxable Property, in aggregate, is at least three (3) times the aggregate Lien on such Taxable Property. For the purposes of such test, the "Taxable Property" in future fiscal years may be based on the status of development as of the time of calculation.
Or:
(x) none of the Series 2024Local Obligations and Additional Local Obligations theretofore issued under the Local Obligations Indenture will be Outstanding or (y) the Debt Service in each Bond Year that begins after the issuance of Refunding Local Obligations is not increased by reason of the issuance of such Refunding Local Obligations.
"Maximum Facilities Special Tax" is defined in the Local Obligations Indenture to mean the Maximum Area-Wide Facilities Special Tax authorized to be levied for the District in accordance with the provisions of the Rate and Method.
"Value" is defined as the current assessed valuation of the Taxable Property and/or the appraised value of the Taxable Property determined by a MAI appraiser. "Lien" is defined in the Local Obligations Indenture as the aggregate principal amount of all overlapping debt and bonds (including the Series 2024 Local Obligations and any Additional Local Obligations) outstanding that are secured by a special tax levied pursuant to the Mello-Roos Act or a special assessment levied on property within the District, including any overlapping debt or bonds for community facilities districts or special assessment districts that is reasonably allocated to property within the District.
No Required Advances from Available Surplus Funds
Neither the City nor the District is obligated to advance available surplus funds available from the City treasury to pay debt service on the Series 2024Local Obligations or to replenish the Local Obligations Reserve Fund; provided, that nothing shall affect the right of the District under the Mello-Roos Act to make advances to cure any deficiencies.
The Teeter Plan
In July 7993, the Board of Supervisors of the County approved the implementation of the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the 'oTeeter Plan"), as provided for in Section 4701et seq. of the California Revenue and Taxation Code. Under the Teeter Plan, the County apportions secured property taxes on an accrual basis (inespective of actual collections) to local political subdivisions for which the County acts as the tax-levying or tax-collecting agency.
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Under the Teeter Plan, the County dishibutes tax collections on a cash basis to taxing entities during the fiscal year and shortly after year-end, and also distributes I 00% of any taxes delinquent as of June 3 Oth to the taxing entities and those special assessment districts and community facilities districts (and individual parcels within each district) that the County determines are eligible to participate in the Teeter Plan by the end of the calendar year. The County may make eligibility determinations on an annual basis and may exclude a district or an individual parcel that had previously been included in the plan. The County has the discretion to determine which delinquent special taxes will be paid through the Teeter Plan on a case-by- case basis.
The County's policy includes the following criteria for delinquent parcels to be excluded from the County's Teeter Plan: (1) tax bills belonging to a governmental/public agency; (2) common area parcels; (3) tax bills on the unitary assessed values or pipeline assessed values; (4) special assessments (subject to judiciary foreclosure) to be stripped from the tax bill; (5) bankruptcy; (6) demolition of the property; (7) vacant buildings (due to a risk of possible demolition); (8) contamination of the property; (9) property that is subjected to the "sealed bid"; (10) the delinquent amount is greater than or equal to assessed value ofthe property; (11) property that is de-enrolled from the Teeter Plan in previous years under the same owner and (tZ) tte amount of code enforcement liens, other delinquent abatement liens, and delinquent utilities abatement liens, and delinquent utilities levied on the property is equal to or greater than 5o/o of the assessed value of the property. Such policy may be amended by the County at any time and could impact the inclusion of certain delinquent parcels in the Teeter Plan in future years.
The County's policy is that any new taxing entity or special assessment district that includes its levy on the County tax roll is qualified to be under the County's Teeter Plan. The District is included in the County's Teeter Plan. See, however "CERTAIN RISKS TO BONDHOLDERS-TeeIer Plan Termination." The District can provide no assurance that the County will continue to include the District in the Teeter Plan.
THE AUTHORITY
The Authority was created by a Joint Exercise of Powers Agreement, effective April 20' 2015 (the "JPA Agreement"), between the City and the City of Folsom South of 50 Parking Authority. The JPA Agreement was entered into pursuant to the Joint Exercise of Powers Act, Chapter 5 of Division 7 of Title t of *re Government Code of the State. The Authority was created for the purpose of facilitating financing of public improvement facilities within the City south of US Route 50.
THE CITY
The District is located in the City, which is located in the easterly section of the Sacramento metropolitan area approximately 22m1les east of the central business district of the City of Sacramento.
Certain economic and demographic information with respect to the City is contained in APPENDIX B. This information is presented solely as background information. The Series 2024Local Obligations are not general obligations of the City but, rather, are special tax obligations of the District secured solely by the Pledged Special Taxes to be paid by the owners of property in the District and funds held pursuant to the Local Obligations Indenture.
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THE COMMUNITY FACILITIES DISTRICT
Formation Proceedings
The District is a community facilities district organized by the City Council as the legislative body of the District under the Mello-Roos Act for the purpose of providing for the acquisition and construction of certain public improvements and the financing of certain services to serve property within the District.
The City established the District on December 8, 2015. On the same date, elections were held within the District at which the eligible voters approved the levy of special taxes in accordance with the rate and method of apportionment prepared for the District. In addition, the eligible voters authorized the issuance of bonds in an amount not to exceed $200,000,000. In November 2018, change proceedings were held, whereby the eligible voters approved the Rate and Method. Pursuant to the Mello-Roos Act, the qualified electors were the landowners of Taxable Property within the District. In connection with the landowner election, all electors delivered customary waivers to certain matters relating to the conduct of the election.
Authorized Facilities
The Special Tax collected within the District and the proceeds of bonds issued by the District, including the Series 2024 Local Obligations, are authorized to fund the acquisition, construction and improvement of public facilities authorized under the Mello-Roos Act, including, certain water facilities, sanitary sewer facilities, an aquatic center, quarry road improvements, certain trails, interchanges and roadway widenings, and other backbone infrastructure needed to serve the Folsom Plan Area.
General Description and Location
The District is located in the southern portion of the City, bounded by Highway 50, White Rock Road, Prairie City Road, and the El Dorado County Line. The boundaries of the District are coterminous with the Folsom Plan Area, as specified in the Specific Plan, described herein. The gross area ofthe District is approxim ately 3,520 gross acres. The maps appearing on the inside cover pages show the general location of the District.
Presently, the District includes undeveloped land and properties in varying stages of development, including finished lots, homes and commercial sites under construction, and completed commercial sites and homes. Undeveloped property in the District is not subject to the Pledged Special Tax. Once a final map is recorded for such properfy, or, if such property is non-residential, it is classified as permit ready, such property will no longer classiff as undeveloped property and will be subject to the Pledged Special Tax. The Folsom Plan Area Specific Plan adopted by the City on June 28, 2011, as amended from time to time, and as most recently amended on August 27,2024 (the "Specific Plan") provides certain entitlements for 13,343 dwelling units and 2.5 million square feet of commercial, office/industrial and mixed use. Within the boundaries of the District, there are also expected to be 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. geg 6(-pelsom Plan Area" for information concerning general plans for development, "-Public Facilities Financing Plan" for information concerning necessary infrastructure and financing plans, and('- Development Entitlements" and 66-Folsom Plan Area Development Status" for information concerning the current status of development of the property within the District' Folsom Plan Area
In 2001 , the City commenced plans to expand its sphere of influence area to include an area south of US Route 50. The area, known as the Folsom Plan Area is bordered to the west by Prairie City Road, the east by the Sacramento/El Dorado County boundary line, the north by US Route 50, and the south by White Rock Road. In November 2004,the citizens of the City adopted Measure W ("Measurt W"), which 23 Page 302
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specified certain requirements for annexing the Folsom Plan Area into the City. On June 28, 2011, the City adopted its Specific Plan. The Local Agency Formation Commission approved the City's plan to annex the Folsom Plan Area on January 18,2012. The Specific Plan has been subject to a number of amendments since 201 1 , including the most recent amendment to increase housing capacity in key target areas on August 27,2024.
The Folsom Plan Area is an area of approxim ately 3,520 acres in the southern portion of the City that has been approved for development of approximately 73,343 units of residential development, plus 274.5 acres (equating to 2.5 million square feet) of commercial/industrial development (including mixed use development). Over the build out of the property, the City has used and anticipates continuing to use community facilities districts under the Mello-Roos Act to finance a large portion of the public infrastructure required for the development, plus certain maintenance obligations of public improvements and facilities.
Public Facilities Financing Plan
Measure W, adopted by City residents in November 2004, required, among other things, that residents north of US Route 50 not bear the cost for infrastructure and public facilities serving the Folsom Plan Area. The City adopted a Public Facilities Financing Plan ("PFFP") for the Folsom Plan Area on January 14,2014. The PFFP provides an overview of how the infrastructure required for the development of the Folsom Plan Area will be financed and constructed and how various public facilities will be financed and maintained to ensure that public facilities and infrastructure will be available for the orderly development of the Folsom Plan Area without cost to the residents of the City north of US Route 50 and without an adverse impact on the service levels provided to future residents of the Folsom Plan Area.
The PFFP contemplates that the primary sources of funding for the construction of the public infrastructure and facilities in the Folsom Plan Area are community facilities districts, development impact fees collected upon permit issuance (including development impact fees of the Folsom Cordova Unified School District), direct developer financing, and matching state school grants and other school funding (including the school facilities improvement district described under "TFIE COMMLTNITY FACILITIES DISTRICT-Overlapping Debt'). Subdivision improvements are not included as part of the PFFP.
On September 8, 2015, the City implemented its Specific Plan Infrastructure Fees (the "SPIF") to be collected for the Specific Plan. The SPIF has been updated from time to time and new nexus studies performed periodically to evaluate the costs of improvements and the appropriate fee rates.
As of the date of the Nexus Study Fiscal Year 2020-21Update, the estimated remaining cost of the backbone infrastructure and public facilities for the Folsom Plan Area at build-out was $403,482,461. This estimate is subject to a variety of construction and market risks. The City and the District can provide no assurances that the overall costs will not increase, even significantly, in the future. The City has used, and intends to continue to use, multiple funding sources for the Folsom Plan Area infrastructure as development progresses and has continued to progress, including SPIF and the issuance of bonds for the District and other community facilities districts within the Folsom Plan Area.
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 an Ordinance for the SPIF adopted by the City (the "SPIF Ordinance"), properly 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 24 Page 303
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within the owner's property) in exchange for the construction of eligible SPIF improvements. Based on the amount of improvements eligible for SPIF reimbursement, a number of properties within the District 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 District, amounts expended by landowners in excess of a 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 cashflow for the initial water and sewer costs. It will be repaid or equalized to all properties through the SPIF program as well as through the District. The SPIF Set-Aside will apply to the first 2,500 Folsom Plan Area dwetting 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.
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.
In connection with the Specific Plan amendments adopted in August 2024, the City will conduct an update to the Public Facilities Financing Plan.
Phasing of Development. For purposes of setting the PFFP costs, the City projected single family units would be sold and occupied within 13 years, multi-family low density units within 15 years, and multi- family medium and high density units within 18 years.
Backbone Infrastructure, The PFFP provides for the financing or collection of impact fees for and the construction of the backbone infrastructure required before construction in the Folsom Plan Area can proceed. Specifically, the PFFP recognizes the need for roadway improvements, on-site water system i1nprou"*"nts, off-site water system improvements, recycled water system improvements, sanitary sewer system improvements, storm drainage system improvements, habitat mitigation, and construction of two freeway interchanges and improvements to an existing freeway interchange.
Public Facilities - the Folsom Plan Area. The PFFP describes plans for the financing of public schools, parks, transit services, trails, police and fire facilities and equipment, municipal service center, a corporation yard, solid waste facilities, a library, general capital improvements, transportation, and a community and aquatic center. The PFFP anticipates that the land for the public facilities will be dedicated to the City without cost to the City.
The Folsom Plan Area is currently being served by the existing fire resources of the City as well as other County, El Dorado County and Placer County fire agencies through mutual aid agreements with the City. As noted in the PFFP, the City's goal is to maintain a level of service that represents a rate of I station p"i t2,000 population. The City has completed construction of its first fire station within the Folsom Plan Area in the third quarter of 2024 and expects it to be operational by the end of Septembet 2024.
Rate and Method of Apportionment
The following is a synopsis of the provisions of the Rate and Method, which should be read in conjunction with the complete text of the Rate and Method which is attached as APPENDIX A. The 25 Page 304
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definitions of the capitalized terms used under this caption and under the caption "-Special Tax Calculation" are as set forth in APPENDIX A. This section provides only a summary of the Rate and Method, and is qualified by more complete and detailed information contained in the entire Rate and Method affached as APPENDIX A.
The Special Tax is to be levied and collected against all Taxable Property within the District in accordance with the Rate and Method approved by the landowner electors of the District. The total annual levy of the Special Tax is calculated to satisfr the annual debt service during the ensuing Fiscal Year, to replenish the reserve fund for the Series 2024Local Obligations, the allocable portion of administrative "*p"nr"r,
the amount necessary to cure any delinquencies or to fund any deficiency of the amount to be available for the payment of principal or interest on bonds which are expected to occur in the ensuing Fiscal Year, to fund authorized facilities funded on a pay-as-you-go basis, to fund authorized services expenses and to pay amounts required to establish or replenish certain funds related to authorized services, less any available capitalizedinterest and earnings on the funds that may be used to fund the aforementioned costs.
Included below are additional relevant defined terms used in the Rate and Method. "Developed Property" means, for each Fiscal Year, all Taxable Property for which a building permit for new construction was issued prior to June 30 of the previous Fiscal Year. "Final Small Lot Single Family Residential Subdivision Map" means a subdivision of propeffy created by recordation of a final subdivision map, parcel map or lot line adjustment, approved by the City pursuant to the Subdivision Map Act (California Government Code Section 66410 et seq.) that creates individual residential lots for which building permits may be issued without further subdivision of such property for the construction of single family residential units within an Assessor's Parcel planned for single family use.
"Folsom Heights Parcels" means at the time of the formation of the District, the Assessor's Parcels identified in the Rate and Method by Assessor's Parcel Number. Folsom Heights Parcels will also include any successor parcels created as a result of subdivision or merger of the three original Folsom Heights Parcels.
"Permit Ready Multi FamilyA.{on-Residential Property" means an Assessor's Parcel of Taxable Property zoned for multifamily or non-residential use for which all discretionary entitlements have been obtained, including without limitation, development plan review and improvement plan approval, such that building permits may be issued without further approvals for the construction of multifamily residential units oinon-residential buildings within such Assessor's Parcel. Under the Rate and Method, the City has sole discretion, based upon available development information, to classif' an Assessor's Parcels as Permit Ready Multi Fam i lyA'{on-Res idential Property.
"Residential Property" means all Assessor's Parcels of Taxable Property for which a building permit has been issued for purposes of constructing one or more residential dwelling units. "single Family Final Map Propedy" means, for each Fiscal Year, all Taxable Properly for which a Final Small Lot Single Family Residential Subdivision Map was recorded prior to June 30 of the previous Fiscal Year.
"Undeveloped Property" means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Permit Ready Multi FamilyA.,lon-Residential Property, or Single Family Final Map Property.
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"Area-Wide Facilities" means the public improvements authorized to be funded by CFD No. 18, excluding the Willow Hill Pipeline Improvements.
"Area-Wide Facilities Equivalent Dwelling Units-A" orooArea-Wide Facilities EDU-A" means a measure of anticipated public facilities demand for an Assessor's Parcel at build-out. One Area-Wide Facilities EDU-A is equivalent to the annual water use of a high density single family residence, which is identified inthe Specific Plan dated June 28,2011 withthe zoning designation SP-SFHD. Area-Wide Facilities EDU-A's are assigned to land use categories as shown in Attachment C of the Rate and Method.
Assessor's Parcels classified as Folsom Heights Parcels are assigned Area-Wide Facilities EDU-A's according to the land use categories as shown in Attachment D of Rate and Method, as adjusted to reflect changes necessary as a result of Specific Plan amendments approved by the City Council prior to June 30, 2016.
"Area-Wide Facilities Equivalent Dwelling Units-B" or "Area-Wide Facilities EDU-B" means a measure of anticipated public facilities demand for an Assessor's Parcel at build-out. One Area-Wide Facilities EDU-B is equivalent to the number of persons served for a single family residence. Area-Wide Facilities EDU-B's are assigned to land use categories as shown in Attachment C of the Rate and Method.
Assessor's Parcels classified as Folsom Heights Parcels are assigned Area-Wide Facilities EDU-B's according to the land use categories as shown in Attachment D of Rate and Method, as adjusted to reflect changes necessary as a result of Specific Plan amendments approved by the City Council prior to June 30, 2016.
"Area-Wide Facilities Special Tax Requirement" means that amount of Area-Wide Facilities Special Tax revenue required in any Fiscal Year to: (i) Pay that proportional amount of Administrative Expenses allocated to the Area-Wide Facilities Special Tax per the allocation method as set forth in the Administrative Expenses definition in Section A of the Rate and Method; (ii) pay annual debt service on all Area-Wide Facilities Outstanding Bonds due in the Bond Year beginning in such Fiscal Year; (iii) pay other periodic costs on Area-Wide Facilities Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on Area-Wide Facilities Outstanding Bonds; (iv) pay any amounts required to establish or replenish any reserve funds for all Area-Wide Facilities Outstanding Bonds in accordance with the Local Obligations Indenture; (v) pay for reasonably anticipated delinquent Area-Wide Facilities Special Taxes based on the delinquency rate for Area-Wide Facilities Special Taxes levied in the previous Fiscal Year; and (vi) pay directly for the acquisition andlor construction of Area-Wide Facilities; less (vii) a credit for funds available to reduce the annual Area-Wide Facilities Special Tax levy as determined by the CFD Administrator pursuant to the Local Obligations Indenture. o'Maximum Area-Wide Facilities Special Tax" means the sum of the Maximum Area-Wide Facilities Special Tax-A and the Maximum Area-Wide Facilities Special Tax-B. "Maximum Area-Wide Facilities Special Tax-A" means that portion of the maximum annual Area- Wide Facilities Special Tax based upon the number of Area-Wide Facilities EDU-As, determined in accordance with the Rate and Method, which may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property.
"Maximum Area-Wide Facilities Special Tax-B" means that portion of the maximum annual Area- Wide Facilities Special Tax based upon the number of Area-Wide Facilities EDU-B's, determined in accordance with the Rate and Method, which may be levied in any Fiscal Year on any Assessor's Parcel of Taxable Property.
"Original Area-Wide Facilities Parcel" means the specified Assessor's Parcels in the Rate and Method.
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"successor Area-Wide Facilities Parcel" means an Assessor's Parcel created by the subdivision or lot line adjustment from an Original Area-Wide Facilities Parcel. Once created, the Successor Area-Wide Facilities Parcel will be treated in the same manner as an Original Area-Wide Facilities Parcel in the creation of any additional Successor Area-Wide Facilities Parcels from such Successor Area-Wide Facilities Parcel.
Maximum Area-Wide Facilities Special Tax.
Original Area-Wide Facilities Parcels. The Maximum Area-Wide Facilities Special Tax-A rate per Area-Wide Facilities EDU-A for each Original Area-Wide Facilities Parcel for Fiscal Year 2024-25 is $3s 1.s0.
The Maximum Area-Wide Facilities Special Tax-B rate per Area-Wide Facilities EDU-B for each Original Area-Wide Facilities Parcel for Fiscal Year 2024-25 is $205.04.
The total Maximum Area-Wide Facilities Special Tax for each Original Area-Wide Facilities Parcel is the sum of the Maximum Area-Wide Facilities Special Tax-A and the Maximum Area-Wide Facilities Special Tax-B.
Successor Area-Wide Facilities Parcels. When an Original Area-Wide Facilities Parcel(s) changes or subdivides, the Maximum Area-Wide Facilities Special Tax-A, Maximum Area-Wide Facilities Special Tax-B, and total Maximum Area-Wide Facilities Special Tax shall be apportioned to each Successor Area- Wide Facilities Parcel so that there is no net loss in Maximum Area-Wide Facilities Special Tax-A, Maximum Area-Wide Facilities Special Tax-B, and total Maximum Area-Wide Facilities Special Tax revenue. The process for apportioning the Maximum Area-Wide Facilities Special Tax-A, Maximum Area- Wide Facilities Special Tax-B, and total Maximum Area-Wide Facilities Special Tax of the Original Area- Wide Facilities Parcel(s) to the Successor Area-Wide Facilities Parcel(s) is specified in the Rate and Method.
Once created, if a Successor Area-Wide Facilities Parcel further changes or subdivides, the above steps shall be repeated to determine the Maximum Area-Wide Facilities Special Tax-A, Maximum Area- Wide Facilities Special Tax-B, and total Maximum Area-Wide Facilities Special Tax for each additional Successor Area-Wide Facilities Parcel created from the change or subdivision. tnsrease in the Maximum Area-Wide Facilities Special Tax-A. Maximum Area-Wide Facilities s-^^:^l'r^- D and the l\rfavimrrm A-^^ \r/:,{^ E^^iIi+i^. e^^^;.1 '|-.- On each July l, the Maximum Area-Wide Facilities Special Tax-A and the Maximum Area-Wide Facilities Special Tax-B shall be increased by an amount equal to two percent (2%) of the Maximum Area- Wide Facilities Special Tax-A and the Maximum Area-Wide Facilities Special Tax-B amount in effect for the previous Fiscal Year.
Method of Apportionment of the Area-\I/ide Facilities Special Tax.
For each Fiscal Year, the CFD Administrator shall determine the Area-Wide Facilities Special Tax Requirement and levy the Area-Wide Facilities Special Tax until the amount of Area-Wide Facilities Special Taxes equals the Area-Wide Facilities Special Tax Requirement. The Area-Wide Facilities Special Tax shall be levied each Fiscal Year as follows:
First: The Area-Wide Facilities Special Tax shall be levied on each Assessor's Parcel of Developed Property at 100o/o of the applicable Maximum Area-Wide Facilities Special Tax. If all 28 Page 307
09/24/2024 Item No.13.
Area-Wide Facilities have been funded through the sale of Area-Wide Facilities Bonds or through the collection of Area-Wide Special Tax revenues, as determined by the City Council, the Area- Wide Facilities Special Tax shall be levied Proportionately on all Developed Property at a rate up to 100% of the Maximum Area-Wide Facilities Special Tax.
Second: If additional monies are needed to satisfu the Area-Wide Facilities Special Tax Requirement after the first step has been completed, the Area-Wide Facilities Special Tax shall be levied Proportionately on all Single Family Final Map Property at a rate up to 100% of the Maximum Area-Wide Facilities Special Tax. The Area-Wide Facilities Special Tax shall be levied on Single Family Final Map Property only for that portion of the Area-Wide Facilities Special Tax Requirement that is related to existing debt service and Administrative Expenses. The Area-Wide Facilities Special Tax shall not be levied on Single Family Final Map Property for that portion of the Area-Wide Facilities Special Tax Requirement attributable to the direct payment for the acquisition and/or construction of Area-Wide Facilities.
Third: If additional monies are needed to satisfu the Area-Wide Facilities Special Tax Requirement after the first two steps have been completed, the Area-Wide Facilities Special Tax shall be levied Proportionately on all Permit Ready Multi FamilyA'{on-Residential Propefi at a rate up to l00o/o of the Maximum Area-Wide Facilities Special Tax. The Area-Wide Facilities Special Tax shall be levied on Permit Ready Multi FamilyA.{on-Residential Property only for that portion of the Area-Wide Facilities Special Tax Requirement that is related to existing debt service and Administrative Expenses. The Area-Wide Facilities Special Tax shall not be levied on Permit Ready Multi FamilyA.{on-Residential Property for that portion of the Area-Wide Facilities Special Tax Requirement attributable to the direct payment for the acquisition and/or construction of Area- Wide Facilities.
In accordance with the flow of Special Tax proceeds under the Local Obligations Indenture, in the event of a shortfall in the Facilities Special Tax to pay the Facilities Special Tax Requirement, the proceeds of the Services Special Tax will be applied to help cover the Facilities Special Tax shortfall before being applied to fund authorized services. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS-Series2024 Local Obligations Flow of Funds."
Residential Property Limitation. Under no circumstances will the District special taxes be levied in any fiscal year against any Assessor's Parcel of Developed Property classified as Residential Property be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within the District by more than 10o/o above the amount that would have been levied against such Assessor's Parcel in that fiscal year had there never been any such delinquencies or defaults. See "CERTAIN RISKS TO BONDHOLDERS-Maximum Special Tax."
Historical Special Tax Levy
The Special Tax (including both the Facilities Special Tax and the Services Special Tax) was first levied in the District for Fiscal Year 2019-2020. The following table is a summary of Facilities Special Tax levy, collections, and delinquencies for the past five years.
Table 3
City of F'olsom
Facilities Special Tax Levies, Delinquencies and Delinquency Rates At Fiscal Year End As of June 30'2024
29 Page 308
09/24/2024 Item No.13.
Fiscal
Year
2019-20
2020-21
2021-22
2022-23
2023-24
Levy
Amount
Parcels
Delinquent
Aggregate
Amount
Delinquent
Percent Parcels
0.20%
1.33Yo
0.89Yo
1.48%
0.2704
Maximum
Facilities Special
Tax Rate(2)
Aggregate
Amount
Total2O24-25
Maximum
Facilities
Special Tax
Percent
0.000
0,00%
0.00%
0.06%
027%
o/o o12024-25
Maximum
Facilities Tax
Delinquent Delinquent Delinquent Delinquent
$ 135,31 1
307,860
709,151
1,225,757
1,777,594
$274
4,098
6,292
I 8,1 59
4,739
I
l5
22 63
14 $o
0 0
705
4,739
0 0
0 J
14 Source: NBS.
Special Tax Calculation
The following table reflects the calculation of the Maximum Facilities Special Tax for Fiscal Year 2024-25 based on development status as of July 29,2024. The following table does not reflect the Special Tax that will actually be levied in Fiscal Year 2024-25 and does not necessarily reflect the Special Tax that will be actually levied in any other year. The Facilities Special Tax was levied on property classified as Developed for Fiscal Y ear 2024-25 in the aggregate amount of $2,27 0,890.
Table 4
Maximum Special Tax Calculation
Fiscal Year2024-25
Parcel
CountDevelopment Status(r)
Developed Property:
Single Family
Single Family - High Density
Multi Family - Low Density
Multi Family - High Density
Mixed Use
Non-Residential
Developed Property Total:
Single Family Final Map ProPerty:
Single Family
Single Family - High Density
Multi Family - Low Density
Small Lot Final Map ProPertY Total:
Permit Ready Multi Family/l\on-Residential
Property:
Multi Family - Medium Density
Non-Residential
Permit Ready Multi Family/Non-Residential
Property Total:
Totals:
316
2,687
894
I
I
5 5644
557
353
308
286
1,462
$644
557
353
$203,631
1,539,736
327,295
85,501
43,543
102,648
7.72%
5839%
12.41%
3.24%
1.65%
339%
3,904
s08
76 383
49 s2,270,890
$48,975
216,619
t7,309
s282,903
$50,334
1,233
87.320h
1.86%
8.22%
0.66%
4 I
10.730h
r9t%
0.05%
5 4,417
(r) Excludes categories with no parcels, including parcels categorized as Folsom Heights. (r) Increases by 2%o each Fiscal Year.
Source: NBS.
$51,567 1.960/0
$2,636,823
30 100.00%
09/24/2024 Item No.13.
DEVELOPMENT STATUS, PROPERTY VALUES AND OWNERSHTP WTTHIN THE
DISTRICT
I)evelopment Entitlements
Specific Plan. On June 28,2011, the City Council approved the original Specific Plan for the development of the Folsom Plan Area. Various property owners have submitted and received approvals of Specific Plan amendments since the 20ll City Council adoption. Most recently, the City revised its Specific Plan to provide for an increase in housing density in order to provide for more affordable housing options. Such Specific Plan amendments were approved by the City Council on August 27,2024.
The Specific Plan provides for 13,343 total dwelling units and 2.5 million square feet of commercial, office/industrial and mixed use. The Specific Plan also provides for 275.7 acres of public and quasi-public use (public and private schools, parks and infrastructure); 182 acres of majorroads and 1,114.5 acres ofopen space.
The Specific Plan is designed to guide and regulate the development for the area within the City south of US Route 50.
Tentative Mapping. As of June 30, 2024, 1,140 parcels (representing 1,456 residential units at buildout) were subject to vesting tentative maps.
Development Agreements. Through City entered into a Tier I Development Agreement with property owners within the Folsom Plan Area, which vests certain rights of the property owners and of the City and 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.
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.
Final Mapping. As of June 30,2024,fina1maps have been approved for 4,603 total dwelling units within the Folsom Plan Area. An initial design review approval, which provides for City review of the home plans, architecture and confonnance to certain development standards, has been completed for all 4,603 units. However, the City may undertake additional design reviews for units already approved and add additional units for review during the development process.
Design Guidelines. The Folsom Ranch Central District Design Guidelines were approved by the City concurrent with certain 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 future Design Review applications for each applicable development. 31 Page 310
09/24/2024 Item No.13.
Development Conditions/Building Permit Limitations. Certain provisigns of the PFFP for the Folsom Plan Area, as implemented through tentative subdivision map conditions, require certain infrastructure be installed or place other limits on the number of building permits that can be issued before certain facilities andlor backbone infrastructure is in place.
For example, certain tentative maps require a fire station to be operational prior to the occupancy of the 1,500th home in the Folsom Plan Area. Such first fire station was constructed by the City and opened in the third quarter of 2024.
Agreements and Section 106 Compliance. On May 22, 2014, the U.S. Army Corps of Engineers (the "USACOE") issued a Record of Decision ("ROD") fortheFolsom 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.
Environmental Permits and Approvals. CEQA 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 2071, 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. In addition, in connection with amendments to the Specific Plan, after statutorily required public notice, hearing and comment, the City Council certified as adequate and complete a final subsequent environmental impact report addressing increased density in light of the impact analysis provided in the EIR/EIS for the Specific Plan.
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 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. However, individual subdivisions may require further approvals.
Alfordable Housing. All residential projects receiving funding assistance from the City or otherwise with ten or more units within the Folsom Plan Area must comply with the City's inclusionary housing ordinance, which requires that ten percent of the units built consist of inclusionary housing units.
Residential project developers may satisfr this requirement by the payment of an in-lieu fee. In addition, the City entered into a memorandum of understanding with landowners within the Folsom Plan Area whereby the landowners committed to deed-restrict certain lots for the development of 890 units affordable to lower-income households.
32 Page 311
09/24/2024 Item No.13.
Water Supply; Utilities
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 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 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 witha Reclamation)
r I pre-1914 appropriative water right for 5,000 acre-feet per year (Co-Tenancy agreement with Golden State Water Company)
o I Central Valley Project ("CVP") repayment contract for 7,000 acre-feet per year 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 'oto 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. 1 0l -5 14, the City was a subcontractor under Sacramento County Water Agency's (SCWA) CVP water-service contract for 7,000 afa. In2016, the United States, the City and SCWA completed an assignment of this portion of SCWA's CVP water- service contract from SCWA to the City. In February 2020,the City and Reclamation executed a contract that converted the CVP water-service contract into a CVP repayment contract as authorized underthe Water Infrastructure Improvements for the Nation Act.
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 l994,the City entered into an agreement with Golden State Water Company (f/k/a Southern Califomia Water Company, herein "GSWC") to acquire the right to divert up to 55 Page 312
09/24/2024 Item No.13.
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 uses the supplies provided in the GSWC Agreement to serve the Folsom Plan Area. The cost of water under the GSWC Agreement is paid for by Folsom Plan 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 andconditions of that Agreement. To meet this intent, the City converted the East Area water supply from the GSWC Agreement to the less expensive CVP repayment 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 proviiions of Sections 860 et seq. of the State Code of Civil Procedure and Government Code Sections 5351 1 and 53589.5, the City filed a complaint in the Superior Court of the State for the County 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-l (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. 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 maintains 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. For the first phase of development to occur within the Folsom Plan Area, the developeis of the Folsom Plan Area constructed improvements to connect water supply from the north of US Route 50 and extend water infrastructure pipelines (the "Phase 1 Water Facilities").
The Phase 1 Water Facilities were completed in August 2018. The City estimates the Phase 1 Water Facilities are adequate for a sustained maximum day demand of up to 2.0 million gallons. A study prepared by Peterson Brustad, Inc. in April 2019 then estimated that water usage would equal or exceed a sustained maximum day demand of up to 2 million gallons when approximately 2,800 to 3,300 dwelling units within the Folsom Plan Area had been occupied. 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.
Additional water facilities (collectively, the "Phase 2 Water Facilities") will be constructed to provide expanded water transmission conveyance capabilities to deliver water from the water treatment plant to the Folsom Plan Area. The Phase 2Water Facilities include (i) the Phase 2 Water Transmission 34 Page 313
09/24/2024 Item No.13.
Facilities to be constructed with the proceeds of the Bonds, (ii) the Zone 4 Water Facilities (consisting of a zone-specific water tank and booster pump station), and (iii) the remaining Phase 2 Water Facilities (consisting of another zone-specific water tanks and booster pump station), which will be constructed at a later date.
The Phase 2 Water Transmission Facilities, when complete, are expected to increase capacity to up a 3.0 million gallon sustained maximum day demand in the Folsom Plan Area (which the City expects will occur when approximately 4,100 dwelling units within the Folsom Plan Area have been occupied).
Following completion of the Phase 2Water Transmission Facilities, the City anticipates that the Zone 4 Water Facilities will need to be built to provide water to zones 4,5 and 6 of the Folsom Plan Area when the water facilities for the Folsom Plan Area approach a sustained maximum day demand of 3.0 million gallons. The City expects that a series of Additional Local Obligations will be issued to help finance the |one 4 Water Facilities, although the City has not yet determined the timing and amount of this expected issuance.
The timing by which the Remaining Phase 2 Water Facilities will be needed will depend on a variety of factors, including water demand amounts within the Folsom Plan Area, the amount of additional water transmission conveyance capability generated by the Phase 2 Water Transmission Facilities and the Zone 4 Water Facilities, any events impacting the capacity of the existing water infrastructure, and any other factors that increase water demand or decrease water transmission capacity. As a result, despite the occupancy and water capacity estimates included herein, which are based on water system modeling and analysis conducted by or prepared for the City, the City cannot yet fully predict by when the Remaining Phase 2 Water Facilities will be needed. The City expects to use the proceeds of Additional Local Obligations to finance all or a portion of the Remaining Phase 2Water Facilities. However, the timing of issua-nce of future obligations is dependent upon market conditions and development within the Folsom Plan Area and there can be no assurance that proceeds will be available when needed to timely construct the Remaining Phase 2Water Facilities.
As described herein, as of June 30,2024, final maps had been approved and recorded for 4,603 dwelling units within the Folsom Plan Area. Also as of June 30,zlz4,building permits for 3,871 units and 3,266 certiftcates of occupancy had been issued in the Folsom Plan Area for projects underway.
The City continues to evaluate water usage and needs within the Folsom Plan Area but there can be no assurance that the construction of the Phase 2 Water Facilities will be completed in time to prevent delays to residential and commercial development in the Folsom Plan Area. If the Phase 2 Water Facilities are not constructed in a timely manner, future development in portions of the Folsom Plan Area may be metered, stopped, or the City may take other remedial actions, such as implementing water conservation measures to the existing residents, halting discretionary approvals, or taking other actions. If the Phase 2 Water Facilities are not constructed in a timely manner, water pressure to portions of the Folsom Plan Area could be impacted for existing water connections, which could have a negative impact on property values' Additionally, increased residential water usage approaching the maximum capacity of the current water facilities (including if exacerbated by the Phase ZWater Facilities not being constructed in a timely fashion) or a reduction in the capacity of the current water facilities could cause the City to consider restricting the continued development of the Folsom Plan Area. See "CERTAIN RISKS TO BONDHOLDERS-Failure to Develop."
To help alleviate the demand on the curent water facilities, certain developers within the Folsom Plan Area have made affangements 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 Homes has previously received construction water from EID for portions of its Russell Ranch project. Such arrangements augment, but do not replace, the need for and the use of City water, 35 Page 314
09/24/2024 Item No.13.
which is currently provided through the Phase I 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 does not expect that the demand for construction water will reach 2021 levels in coming years.
Wastewater Treatment The Sacramento Area Sewer Dishict 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 to the existing treatment plant. Developers of property within the Folsom Plan Area will need to extend infrastructure to their sites and pay appropriate connection fees for access to the existing wastewater infrastructure.
Other 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 provides electric service. Comcast provides cable service.
Hazard Zones
Flood Zones. According to the Federal Emergency Management Agency flood map, the entirety of the planned development in the District is in ZoneX, which consists of areas determined to be outside of the 500-year flood plain.
Fire Zones . The District is located within an area identified as a moderat e fire hazardseverity zone.
More information regarding Fire Hazard Severity Zones can be found at the California Department of Forestry and Fire Protection website at https:llfrap.fire.ca.gov, though such website is not incorporated herein by reference. The development within the District 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 District, 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 District and dedication of the open space to the City will be maintained by the City from funds provided through the District's Maintenance Special Tax. Homeowner's insurance is expected to be available to property owners within the District, and the coverage provided by such insurance typically insures against fire damage, although there is no assurance that homeowners within the District will purchase or maintain such insurance.
Drought Conditions and Construction Water Usage. In response to drought conditions in202l,the City imposed a state-man dated}}%o 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. The City rescinded this requirement in June 2023 . However, if prolonged drought conditions return, this could result in mandatory reductions in water usage that may adversely impact the ability of the builders within the District to develop the District in the planned development timelines.
Development Status Summary
The following table reflects latest stage of development for property within the District as of June 30, 2024,based on permits and map approvals.
36 Page 315
09/24/2024 Item No.13.
Table 5
Development Status By CategorY
As ofJune 3012024
CommerciaVlndustrial
Total Conditional Use Square Feet
Total Permit Ready Square Feet
Total Specific Plan CommerciaVlndustrial Square Feet(1) ResidentiaVMixed Use Residential
Total Occupancy Permitted Units
Total Building Permitted Units
Total Final Mapped Units
Total Tentative Mapped Units
Total Specific Plan Residential Units(t)
Specific Plan
Units
3,266
4,281
4,603
5,743
13,343
207,719
33,036
2,546,982
Based on Specific Plan as amended on August 27 ,2024.
Source: City of Folsom.
The following table summarizes certain information about the residential developments underway with Taxable Property within the District.
Table 6
Residential Development Projects and Status of Development By Total in Each Category
As ofJune 30,2024
Project Description
Mangini Ranch(r)
Russell Ranch
White Rock Springs Ranch
Folsom Ranch(2)
Broadstone Estates
Folsom Heights
(D C"mp.ts"" rn"tttple neighborhoods including projects being built out by Lennar Homes, described below. (2) Comprises multiple neighborhoods including projects being built out by Toll Brothers and Lennar Homes, described below.
Source: City of Folsom
2,973
1,025
395
1,241
81 s30
2,270
907
395
922
8l
0 1,869
881
395
692
6 0
Tentative
Mapped Units
2,973
1,025
39s
1,241
81 407
Final Mapped
Units
Residential
Units with
Building
Permits
37 Page 316
09/24/2024 Item No.13.
District.
The following table shows a 7-year summary of the number of building permits issued in the Table 7
District Historical Building Permits Issued
Single Family - Multi Family Multi Family Mixed UseFiscal Year Single Family High Density - Low Density High Density Residential Non-
Residential Total
2023-24
2022-23
202t-22
2020-21
2019-20
2018-19
2017-18
Total:
42 75
ll0
87 2
0 0
2r2
165
237
243
29 0
0 879
.602
988
814
323
236
l8
622
358
641
484
292
236
18 0
I
0 0
0 0
0 0
I
0 0
0 0
0 3
2 0
0 0
0 0
316 2,651 886 5 3,860
Source: City of Folsom.
Property Ownership Summary
Through multiple acquisitions beginning in 2012, affiliates of Westland Capital Partners, L.P. ("Westland") acquired nearly 2,400 acres within the Folsom Plan Area, including properly planned for development of approximately 8,350 dwelling units, 1.2 million square feet of commercial, office and industrial space, as well as several sites for elementary, middle and high schools.
Since development began in May 2017, Westland affiliates have invested more than $250 million into backbone infrastructure and subdivision improvements. Westland affiliates' remaining land holdings include land planned for development of nearly 3,500 dwelling units and 1.2 million square feet of commercial and office uses.
Many of the region's largest public and private homebuilders have been actively building in the Folsom Plan Area, including Toll Brothers, Lennar Homes, Tri Pointe Homes, Taylor Morrison, KB HOME Sacramento, Beazer Homes, Woodside Homes and Richmond American in more than ten separate development communities. Multifamily developers undertaking high density projects include Van Daele Homes, A.G. Spanos Company, and St. Anton Communities.
Dignity Health and UC Davis Health, two of the region's major healthcare providers, own a total of approxim ately 70 acres within the Folsom Plan Area that are being developed into hospital and medical campus facilities. Development for the Dignity Health campus began in 2027, and significant land development has progressed. The UC Davis Health property commenced development in August 2023.
The following table summarizes the top taxpayers of the Facilities Special Tax for Fiscal Year 2024-25, based on development status and ownership as of June 30,2024.
I1
38 Page 317
09/24/2024 Item No.13.
Owner
Table 8A
Top Taxpayers
Fiscal Year 2024-25
Actual Levy - Developed Property
Parcel Count Planned Use
Facilities
Special Tax
Levy(l)
Percent of
Levy
Toll Brothers(2)
Lennar Homes(2)
UC Davis Medical
Other Developer Owned Residential
Non-Residential
Individual Homeowners
Total
Owner
Maximum
Parcel Count Planned Use Special 1u* (1)
262
238
I
230
4 3,1 10
Residential
Residential
Commercial
Residential
Commercial
Residential
$ 145,418
124,391
95,267
249,473
7,381
1,648,960
6.40%
5.48 4.20
10.99 0.33
72.61 30845 $2,270,890 100.00%
(r) Based on actual2024-25 Facilities Special Tax levy. (2) Includes property for which the homebuilder holds an option to purchase in connection with a landbanking arrangement.
Source: NBS; County of Sacramento Assessor's Office.
Table 8B
",ill#;5#t,Maximum Facilities Special Tax - All Taxable Property Percent of
Levy
Toll Brothers(2)
Lennar Homes(2)
UC Davis Medical
Other Developer Owned Residential
Non-Residential
Individual Homeowners
Total
461
318
I
s22
5 3,1 l0
Residential
Residential
Commercial
Residential
Commercial
Residential
$256,167
157,326
95,267
470,488
8,614
1,648,960
9.71%
s.97
3.61 17.84
0.33 62.54
4,417 $2,636,823 1oo.0o%
(r) Reflects levy on total Taxable Property, which includes Developed Property, Single Family Final Map Property, and Permit Ready Multi FamilyA.{on-Residential Property.
(2) Includes property for which the homebuilder holds an option to purchase in connection with a landbanking arrangement.
Source: NBS; County of Sacramento Assessor's Office.
Toll Brothers Development
Toll Brothers.
Toll West Coast, Inc. ("Toll Brothers") is a subsidiary of Toll Brothers, Inc., a Delaware corporation ("TBI"). TBI is a publicly traded company whose common stock is listed on the New York Stock Exchange under the symbol *TOL." Audited financial statements for TBI can be found online at https://www.tollbrothers.com/investor_relations. TBI is subject to the information requirements of the Securities Exchange Act of 7934, as amended (the "Exchange Act"), and, in accordance therewith, files annual and quarterly reports, proxy statements and other information with the Securities Exchange Commission ("SEC"). Such reports, proxy statements and other information, including its Annual Report on Form I 0-K and its most recent Quarterly Report on Form I 0-Q, are available to the public via the SEC' s website at www. sec. gov.
39 Page 318
09/24/2024 Item No.13.
The foregoing website addresses and references to filings with the SEC are given for reference and convenienci 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. Toll Biothers and TBI are not obligated to advancefundsfor construction or development or to pay advalotem property taxes or the Special Tax and investors should not rely on the information andfinancial statements-coitained on suchweisites in evaluatingwhether to brry, 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.
Toll Brothers Development Plsn and Status.
Toll Brothers plans to construct a total of I , 1 3 0 homes in the District in two separate neighborhoods known as 'oPreserve" and "Regency". Toll Brothers either owns, or is under an option agreement to purchase, all of said homes, other than those already conveyed to individual homeowners.
The following table reflects the status of development of each neighborhood.
Table 9
Toll Brothers DeveloPment Status
As ofJune 30'2024
Preserve
Total Planned Homes (Tentative Mapped)
Final Mapped Units
Building Permits
Closed Homes
Expected Home Closings per Quarter
Expected Closeout Date
2tt
135
75 0
2l
February 2027
9t9
628
st4
331
45 October 2027
Source: Toll Brothers.
The Preserve includes two collections, Oak Trails with homes ranging from2,940 to 3,368 square feet priced from $904,995 and Heritage Trails with homes from 2,539 to 3,788 square feet priced from $1,04)2,995. The Preserve is located in the central southern portion of the District, bordered to the south by White Rock Road and to the north by Mangini Parkway. The Preserve development is approximately l35l% complete as of July 30,2024.
The Regency is an active adult community for individuals 55 years and older. The Regency is also located in the central southern portion of the District, bordered to the south by White Rock Road and The Regency features five different collections described in the table below. The Regency development is approximately 156l% complete as of July 30,2024-
40 Page 319
09/24/2024 Item No.13.
Table 10
Toll Brothers Regency
Duet/Single
Square Foot
Range Priced From
Sequoia
Redwood
Mendocino
Shasta
Tahoe
Duet
Single
Single
Single
Single
1,398-1,446
1,542-1,596
1,815-1,925
2,012-2,148
2,316-2,441
$548,995
654,995
702,995
765,995
980,995
Source: Toll Brothers.
Lennar Homes Development
Lennar Homes
Lennar Homes of California,LLC ("Lennar Homes") is wholly-owned by U.S. Home,LLC, a Delaware limited liability company ("U.S. Home"). U.S. Home is wholly-owned by Lennar Corporation, which is based in Miami, Florida ("Lennar Corporation"). Lennar Corporation is subject to the informational requirements of the Securities Exchange Act of 7934, as amended, and, in accordance therewith, files reports, proxy statements, and other information, including financial statements, with the SEC. Such filings, particularly the Annual Report on Form 10-K and its most recent Quarterly Report on Form l0-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 Homes, 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.
The foregoing website addresses and references to filings with the SEC are givenfor reference and convenience only, and the information on such websites and onfile with the SEC does notform a part of this Officiat Statement and is not incorporated by reference herein. No representation is made in this Officiat Statement as to the accuracy or adequacy of the information contained on such websites. Lennar Corporation and Lennar Homes are not obligated to advance funCs for construction or development or to pay ad valorem property taxes or the Special Tax, 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 suchwebsites may be incomplete or inaccurate and has not been reviewed by the City, the District or the Underwriter.
Lennar Homes Development Plan and Status.
Lennar Homes has constructed or expects to construct a total of 7 45 homes in the District in seven separate neighborhoods known as "Brass Pointe", "silver Knoll", "Gold Cliff', "Platinum Peak", "Sterling 4l Page 320
09/24/2024 Item No.13.
Hills", "Rockcress," and "Rockcress II". Lennar Homes either owns, or is under an option agreement to purchase, all of said homes, other than those already conveyed to individual homeowners.
The following table reflects the status of development of each of the above described neighborhoods. In addition, Lennar Homes expects to construct 1 l8 townhomes with a final map expected in fourth quarter 2024.
Brass
Pointe
Table 11
Lennar Development Status
As ofJune 3012024
Silver Platinum
Knoll Gold Ctiff Peak Rockcress Rockcress II
Sterling
Hills
Total Planned Homes
(Tentative Mapped)
Final MappedUnits
Building Permits
Closed Homes
Expected Closings per Quarter
Expected Closeout Date
Neighborhood Home
t2
9/2025
Next Gen@(r) and
Single Family
Next Gen@(l) and
Single Family
Next Gen@(r) and
Single Family
Next Gen@(l) and
Single Family
Next Gen@(r) and
Single Family
Single
Single
Square Priced
Foot Range From
143
143
132
63 63
63 r00
100
100
112
tt2
103
ll8
118
n8
115
115
63 96
96 96
12 212025
Complete
Complete
l2
312025
t2
712025
Complete
Complete
t2
7t2026
Source: Lennar
The following table generally describes the homes constructed or being constructed by Lennar in each neighborhood.
Table 12
Lennar Homes Neighborhood Summary
Location Status
Brass Pointe
Silver Knoll
Gold Cliff
Platinum Peak
Sterling Hills
Rockcress
Rockcress II
2,143-3,159
2,309-2,793
2,705-3,940
3,460-4,242
2,154-3,308
1,638-2,018
1,632-2,024
$848,796
817,831
Sold out
1,685,359
849,722
Sold out
676,184
Russell Ranch, southeastern end of
the District, bordered to the south by
White Rock Road
Russell Ranch, southeastern end of
the District, north of Sterling Hills
Russell Ranch, northeastem end of
the District, bordered to the north by
Highway 50
Russell Ranch, northeastern end of
the District, bordered to the north by
Gold Cliff
Russell Ranch, southeastern end of
the District, north of Silver Knoll
Central District, bordered on the
west by E. Bidwell Street
Russell Ranch, southeastern end of
the District, bordered to the south by
White Rock Road, west of Brass
Pointe
$01%
complete
[50]%
complete
Complete
lesl%
complete
[50]%
complete
Complete
13sl%
complete
( 1) Next Gen is a registered service mark of Lennar Corporation, used to describe homes with a separate suite with independent access.
Source: Lennar Homes.
42 Page 321
09/24/2024 Item No.13.
Property Values
An appraisal of a portion of the Taxable Property (such portion, the "Appraised Property") within the District has been prepared by the Appraiser in connection with the issuance of the Bonds. The purpose of the appraisal was to estimate the market value, subject to the Special Tax and based upon a hypothetical condition, for such portion of the properly. The appraisal estimates the market value of the property as of July 29,2024 (the "Appraisal"). The Appraisal is attached to this Official Statement as APPENDIX G.
As of the date of inspection, the Appraiser notes that development of portions of the property is underway. The subject property was valued based on the hypothetical conditions that proceeds from the Bonds will be used to finance the Phase 2 Water Transmission Facilities. The Appraisal is based on property values at the time of inspection.
Subject to the assumptions, hypothetical condition and limiting conditions, the Appraiser estimated that the value of the Appraised Property within the District had an estimated not-less-than aggregate land value of $432,321,000 as of July 29,2024. See APPENDIXG-"APPRAISAL." The parcels of Taxable Property within the District that were not appraised had aggregate assessed land and improvements value of $2,511,251,291, based on current assessed values maintained by the County, which reflect the2024-25 assessed values as of January 1,2024, as reported on July 1,2024. Any assessed values are the properly values determined by the County assessor's office for property tax purposes. Such assessed value determinations may be subject to appeal by property owners. The resolution -of
an upp"al may result in a reduction to the County Assessor's original taxable value and a tax refund to the applicanVproperty owner. Although such a result would not reduce the special taxes on the property, any rlduction in the assessed values of property would have an adverse impact on the value-to-debt ratios diicussed herein and could lessen the ability or willingness of the owners of such properly to pay their assessments. Moreover, assessed values do not necessarily represent the current market value for any parcel.
Collectively, the value of the Taxable Property within the District is$2,943,572,297.
The following table reflects the assessed value and the annual change in assessed value for all Taxable Property in the District for Fiscal Year 2019-20 through Fiscal Year 2024-25 ' Table 13
Historical Assessed Valuation
Taxable ProPertY OnlY
Aggregate
Fiscal Year Assessed Value Vo Change
2024-25
2023-24
2022-23
2021-22
2020-21
2019-20
$2,852,479,553
2,162,982,833
1,287,351,620
702,326,507
379,588,212
154,181,942
32%
680/o
83%
85%
146%
Source: NBS. Based on Sacramento County secured roll information as ofJanuary I for each fiscal year Value-to-Lien Analysis
The following tables set forth the ratios of the property values of the Taxable Properly to the liens on such property based on the development status as of July 29,2024. The value-to-lien ratio for the District 43 Page 322
09/24/2024 Item No.13.
basedsolelyontheSeries2024LocalObligationsisg8.l*:1.0. Theoverallvaluetooverlappingdebtratio, including assessment debt and special tax debt, is I 1.5-:1.0 (see "-Overlapping Debt"). The City expects that addiiional bonds secured by special assessments or special taxes on Taxable Property within the District will be issued from time to time. As described herein, the City expects that its Community Facilities District No. 23 will issue debt for Improvement Area No. 4 in the fourth quarter of 2024. Overlapping debt issued from time to time will have the effect of reducing the value to lien ratio on property within the Dishict. * Preliminary, subject to change.
44 Page 323
09/24/2024 Item No.13.
Table 14
Value-to-Lien Ratios
Fiscal Yezr2024-25
Development Status as of July 29,2024
By Development Status
Parcel
Count
2024-25
Facilities
Special Tax
Lew(r)
$203,631
1,5 I 1,098
324,469
85,501
43,543
102,648
3,904 $2,270,890
Assessed
Values(2)
s348,989,897
1,683,535,277
454,043,317
0 24,682,800
0 Share of Series
2024Local
Obtigations€).
s2,316,779
17,518,078
3,723,738
972,770
495,403
1,167,865
$557,200
2,464,542
196,933
s572,664
14,029
Obligations(s)- Lien(s)*
Appraised
Values(2) Total Values(2)
Overlapping
Debt(a)
Value to Series
2024Local
Overall
Value
to
Developed Property
Single Family
Single Family - High Density
Multi Family - Low Density
Multi Family - High Density
Mixed Use
Non-Residential
Developed Property Total
Final Map Property
Single Family
Single Family - High Density
Multi Family - Low Density
Final Map Property Total
Permit Ready Property
Multi Family - Medium Density
Non-Residential
Permit Ready Total
3r6
2,687
894
I
I
5 154.8
108.7
138.3
6.6 49.8
32.5 37.9
25.7 34.8
6.9 77.7
13.3 I1.6
I 1.0
4.5 6.9
24.7 76
383
49 N/A
N/A
N/A
N/A
N/A
N/A
N/A
24.',I
6.8 10.2
lt.6
8.4 11.5
s2,511,251,29 $335,998,000 52,847,249,291 526,194,632 5218,248,428 108.7 I
$9,707,000
221,084,000
60,867,000
6,390,000
0 37,950,000
$21,134,000
63,269,000
6,860,000
$3,970,000
1,090,000
$358,696,897
1,904,619,277
514,910,317
6,390,000
24,682,800
37,950,000
$21,134,000
63,269,000
6,860,000
$3,970,000
1,090,000
$24,705,609
146,542,176
43,097,037
459,617
3,074,034
369,954
9299,698
6,843,751
476,041
$261,943
27,112
$289,055
508
$o
0 0
$0
$o
0 s91,263,000 $91,263,000 $3,218,675 $7,619,490 28.4
4 4.8
26.5I
5 $0 $5,060,000 $5,060,000 $586,693 8.6
s2,511,2s1,29 $432J21,000 92,943,572,291 $30,000,000 $226,1560974 98.r 1 5.8
4,417 52,270,890
Total
* Preliminary, subject to change.
(r) Increases by 2o/o each Fiscal Year.
(2) Appraised values from Appraiser and assessed values from the County Assessor. See "-Property Values." (3) Allocated based on share of Fiscal Year 2024-25 Maximum Facilities Special Tax. (4) See "-Overlapping Debt."
45
09/24/2024 Item No.13.
(5) Value to lien ratio is for the Series 2024 Local Obligations. Series 2024LocaIObligations are issued in the same principal amount of the Bonds.
Source: Except as otherwise noted, NBS.
Table 15
Value-to-Lien Ratios
Fiscal Year 2024-25
Development Status as of July 29.-2024
By Stratification
Less than 3.00:l
3.00 to 4.99:1
5.00 to 9.99:l
10.00 to 19.99:l
Greater than 20.00: I
TotaI
Parcel
Count
1 266
1,552
1,995
603
2.6 4.0
8.6 12.9
30.5 2024-25
Facilities
Special Tax
LevY(t)
$39s
150,508
814,423
928,323
377,241
Assessed
Values(2)
$0
2,968,433
1,014,975,041
1,192,213,225
301,094,592
Appraised
Values(2)
$139,000
49,253,684
34,076,316
162,782,000
186,070,000
Share of Series
2024Local
Obligations(3).
$4,492
2,914,074
10,150,233
12,067,977
Overlapping
Debt
s48,273
10,043,626
ll2,26l,l4l
92,710,561
11,093,373
Value to
Series 2024
Local
Obligations(a)-
30.9 17.9
103.4
112.3
100.2
Overall
Value to
aisn(l)*Total Values(2)
$139,000
52,222,117
1,049,051,357
1,354,995,225
487 164,592 4,863,224
4,417 $2,270,890 $2,51r,251,297 s432,321,000 s2,943,572,291 $30,000,000 $226,156,974 98.1 11.s * Preliminary, subject to change.
(r) Increases by 2o/o each Fiscal Year.
(2) Appraised values from Appraiser and assessed values from the County Assessor. See "-Property Values." (3) Allocated based on share of Fiscal Yea'. 2Q24-25 Maximum Facilities Special Tax. (a) Value to lien ratio is for the Series 2024 Local Obligations. Series 2024Local Obligations are issued in the same principal amount of the Bonds' Source: Except as otherwise noted, NBS.
46 Page 325
09/24/2024 Item No.13.
Estimated Tax Burden on Single Family llome
The following table sets forth the estimated total tax burden on different home types, presented as an average, based on estimated tax rates for Fiscal Year 2023-24.
Table 16
Single Family Residential Property Sample Property Tax Bill Estimated Charges for Fiscal Year 2023-24
Tax Rate
1.0000%
0.0192%
0.0206%
0.20630/o
$750,000
($7,ooo)
$743,000
$7,430.00
142.66
153.06
1,532.81
$920,000
(s7,ooo)
$9,130.00
175.30
188.08
1,883.52
$11,376.89
$775,000
($7,ooo)
$7,680.00
147.46
158.21
1,584.38
$13,650.49
l.7610/0
SFHD -
CFD 23IA1
$720,000
($7,ooo)
$7,130.00
136.90
146.88
1,470.92
s12,505.89
l-737Vo
SFHD -
CFD 23IA3
s730,000
(s7,000)
$7,230.00
138.82
r48.94
1,491.55
$10,882.54
t.49loh
MLD - CFD
23r42
$580,000
($7,000)
$5,730.00
110.02
I18.04
1,1 82. I 0
s794.10
48.66 2,520.24
1.50 $10,504.65
l.8llo/o
MLD -
Enclave
$620,000
($7,000)
$6,130.00
117.70
126.28
1,264.62
s794.10
48.66 2,594.06
1.50 $11,076.91
1.7870
SFHD- SFHD. SFHD-
CFD 19 CFD20 CFD2l
Assessed Value(r)
Less: Homeowner Exemption
Net Assessed Value
Ad Valorem(z)
Ad Valorem Tax (Proposition 13)
Los Rios College General Obligation
Folsom-Cordova USD Imp. Dist. 2
Folsom-Cordova USD Imp. Dist. 3
Total Ad Valorem Taxes
SpeciaVDirect Assessments and Taxes
Folsom CFD No. 18 (Folsom Plan Area)(3)
Folsom CFD No. 17 (Willow Hill Pipeline)ta)
Project Specific CFD or Assessmends)
Sacramento Area Flood Control(6)
Total SpeciaUDirect Assessments and Taxes
Total Estimated Annual Property Taxes
Effective Tax Rate
$913,000 $768,000 s713,000 $723,000 $573,000 $613'000
l.246loh $9,258.52 $9,570.05 $8,884.69 $9,009.30 s7,140.15 $7,638.59 $1,072.42
78.50 3,058.24
1.s0
$1,072,42
r08.32
1,576.62
1.50 $1,072.42
78.s0
2,928.02
1.50 $1,072.42
78.50 2,468.78
1.50 $1,072.42
78.s0
720.82
1.50 $4,210.66 $2,758.86
$13,469.18 S14,135.75
1.7960 1.5360/o
$4,080.44 $3,621.20 51,873.24 $3,364.50 $3,438.32
(r)
(2)
(3)
Estimated based upon approximate average value for property within the category presented.
Based upon Fy 2023-24 Sacramento County ad valorem property tax rates.
Fiscal year 2OZ3-24 Special Tax. The Speciat Tax excludei th; Willow Hill Pipeline Special Tax, which is not currently levied while CFD No. 17 is in place. Escalates annually as further specified in the Rate and Method.
Fiscal Year 2023-24 Maximum Annual Special Tax. The Maximum Annual Special Tax escalates annttally at2o/o.
Fiscal Year 2023-24 Special Tax amounts levied for either SFHD or MLD property. (6) Approximate assessment for residential lots. Based upon lot size.
Source: NBS, based upon records and official documents provided by various governmental agencies and third-party sources. (4)
(s)
47 Page 326
09/24/2024 Item No.13.
Overlapping Debt
The City has previously formed Community Facilities District No. 17 (Willow Hill Pipeline) (.'CFD 17")to finance certain water infrastructure necessary to provide water supply and infrastructure for the first phase of development within the District. CFD 17 encompasses nearly all of the property within the Folsom Plan Area, excluding approximately 190 acres bordering El Dorado County in the eastem portion of the City south of US Route 50. The City has issued bonds for CFD 17 in the principal amount bf $6,625,000, of which $5,575,000 are currently outstanding. The bonds previously issued forCFD l7 constitute overlapping debt. In addition, other community facilities districts and assessment districts have been formed from time to time for individual subdivision projects within the boundaries of the District to finance subdivision-related improvements and services. Overlapping debt has included obligations issued to fund subdivision infrastructure for City of Folsom Community Facilities DistrictNo. 19 (Mangini Ranch) ("CFD 19"), the City of Folsom Community Facilities District No. 20 (Russell Ranch) ("CFD 20"), the City of Folsom Community Facilities DistrictNo. 21 (White Rock Springs Ranch) ("CFD 21"),the City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 1 ("CFD 23IA7"), the City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 2 ("CFD 23l1r),and the City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 3 ("CFD 231A3-).In addition, the City expects that its Community Facilities DistrictNo. 23 will issue approximately $10.7 million dollars in special tax obligations for Improvement Area No. 4 in the fourth quarter of2024.
[Direct assessments and levies payable with respect to property within the District could potentially include up to $750 million of general obligation bonds for the School Facilities Improvement District No' 3 of the Foisom 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 tenitory outside of the District, including territory in the City of Rancho Cordova and unincorporated Sacramento County. As of November 13, 2023, general obligation bonds in the aggregate principal amount of approximately $ I 95.6 million had been issued and approximately $ 1 82.2 million were outstanding for SFID g. -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 2023-24, the actual SFID 3 tax rate per $1OO,OOO was approximately $206.30. The following table sets forth the ad valorem tax rates for SFIf 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 17
SFID 3 Ad Valorem Rates
Year Rate(l)
0.2063Yo
0.2758o/o
0.3881%
0.2065Yo
0.1366%
0.l45lYo
0.1878Yo
(I) TRA 04-035
Source: NBS.
Set forth below is an overlapping debt table showing the existing authorized indebtedness payable with respect to property within the District. Additional indebtedness could be authorized by other public agencies at anyiime. 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 2023-24
2022-23
2021-22
2020-21
2019-20
2018-19
2017-18
48 Page 327
09/24/2024 Item No.13.
occurs and the assessed value grows. This table (excluding the footnotes) has been prepared by California Municipal Statistics,Inc. as ofAugust 1,2024,and is included for general information purposes only. Other than with respect to CFD 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.
Table 18
Overlapping Debt
2023-24 Local Secured Assessed Valuation: s2,370,245,209 (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. l7
City of Folsom Community Facilities District No. 18
City of Folsom Community Facilities District No. 19
City of Folsom Community Facilities District No. 20
City of Folsom Community Facilities DistrictNo. 2l
City of Folsom Community Facilities DistrictNo. 23,1.4. 1 City of Folsom Community Facilities District No. 23,1.A.2 City of Folsom Community Facilities DistrictNo. 23,1-A.3 California Statewide Community Development Authority Assessment District No. l9-18
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
%o Applicable
0.888%
12.447
51.022
100.000
r00.000
100.000
100.000
100.000
100.000
100.000
100.000
100.000
DebtSlll24
$3,109,993
1,257,406
92,962,803
5,575,000
(1)
4 1,1 80,000
24,120,000
21,130,000
24,510,000
10,760,000
9,430,000
3.654.000
$237,689,202
(r) Does not include the Bonds.
Ratios to 2023-24 Local Secured Assessed Valuation:
Direct Debt ($0)................ .......................0.00% Total Direct and Overlapping Tax and Assessment Debt..
Source: California Municipal Statistics, Inc.
l0.03Vo
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 ordei 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.
Levy of the Special Tax
The principal source of payment of debt service on the Series 2024Local 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 District. The annual levy of the Special Tax is subject to the Maximum Facilities Special Tax rates authorized within the District. 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 Series 2024 Local Obligations. Other funds which might be available include funds derived from the payment of delinquent 49
09/24/2024 Item No.13.
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, theie will rarely, if ever, be a uniform relationship between the value of such parcels and the proportionate share of debt service on the Series 2024Local 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. Application of the Rate and Method will, in turn, be dependent upon certain development factors with respect to each parcel of Taxable Property by comparison *ith ri-ilur development factors with respect to the other Taxable Property in the District. 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:
o Reduction in the amount 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 ProPeftY.
o 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 Facilities Special Tax.
Collection of Special Tax
In order for the District to pay debt service on the Series 2024 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 District be paid in a timely manner. The District has established the Series 2024Local Obligations Reserve Account under the Local Obligations Indenture in the amount of the Reserve Requirement to pay debt service on the Series 2024LocalObligations, in the event that a portion of the Special Taxes for the Series 2024Local 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' Fursuant to these procedures, iftaxes are unpaid for a period offive years or more, the property is deeded to the State and then is subject to sale by the County' 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 conduct foreclosure proceedings against delinquent installment payments when there is a greater than 5Yo deficiency in the amount of the Special Tax levied or any single property owner is then delinquent on four or more installments of the Special Tax, except where the District has received 100% of such installment from the County pursuant to the Teeter Plan. See "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS-Covenant for Foreclosure."
50
09/24/2024 Item No.13.
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 Series 2024 Local Obligations Reserve Account with respect to the Series 2024Local Obligations is depleted.
The District may be unable to make full or timely payment of debt service on the Series 2024Local Obligations if property owners in the District fail to pay installments of the Special Tax when due, if the Seriei 2024 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.
Payment of the Special Tax is Not a Personal Obligation of a Property Owner A PROPERTY OWNER IS NOT PERSONALLY OBLIGATED TO PAY TTM 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 ACCOLINT
OTFIER OBLIGATIONS ALSO PAYABLE THEREBY, TO FULLY DISCHARGE THE SPECIAL TAX, THE DISTRICT WILL HAVE NO RECOURSE AGAINST THE PROPERTY OWNER.
Potential Early Redemption of Bonds from Prepaid Special Taxes Property owners within the District 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 ipe-cial 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 Provis i ons-Ex tr aor din ary Re d e mpt i on fr o m P r ep ay me nt of S p e c ial T ax e s ." Special Tax Delinquencies
The Special Taxes are billed to the properties within the District 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 District in the Teeter Plan, the County will be obligated to pay the District 100% of the amount of the Special Taxes actually levied in the District, 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 District if the delinquency rate in the District exceeds 3o%. Moreover, the County determines annually whether to include a particular district in the Teeter Plan. gss (6-fsster Plan Termination" and '.SECURITY AND SOURCES OF PAYMENT FOR THE BONDS-Th9 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. $ss "-B,3nkruptcy" 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 circumstanees 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 iaxes and assessment levies to include in the Teeter Plan. Pursuant to its Teeter Plan, once the County 51
09/24/2024 Item No.13.
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 District, in the Teeter Plan in any fiscal year. Any termination of the Teeter Plan with respect to the District 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 the District 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 evenfualities, earthquake, flood or other natural disaster, or by environmental pollution or contamination.
Appraisal Risks
The Appraiser has estimated the market value of the Appraised Properly in the District on the basis of certain assumptions which the Appraiser believes to be reasonable under the circumstances' See the Appraisal includid 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 District are equal to oi 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 District 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 District 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 COMMLTNITY FACILITIES DISTRICT-Property Values" for a further discussion of estimated property values in the District.
Exempt Properties
Certain properties within the District are or may become exempt from the Special Tax in accordance with the Rate and Method. In addition, the Mello-Roos Act provides that properties or entities of the state, federal or local govemment are exempt from Special Tax; provided, however, that properly 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 piovides that iiproperty subject to Special Tax is acquired by a public entity through eminent domain procledings, the obligation to pay Special Tax with respect to that property is to be treated as if it were a 52
09/24/2024 Item No.13.
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. The constitutionality and operation of these provisions of the Mello-Roos Act have not been tested.
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 District becomes exempt from taxation, then, subject to the Rate and Method, including ihe limitation on the maximum special tax rates set out in the Rate and Method, the special tax will be reallocated to the remaining taxable properties within the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon the timely payment of the Special Tax. Moreover, if a substantial portion of land within the District 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 Series 2,024LocalObligations 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 District to provide an amount required to pay interest on, principal of, and redemption premiums, if any, on the Series 2024Local Obligations, and the amount, if any, necessary to cure delinquencies and replenish the Series 2024Local Obligations Reserve Account to an amount equal to the Reserve Requirement, and to pay all current Expenses.
Although the Maximum Facilities Special Tax is designed to provide Special Tax revenues on an annual basis, there is no assurance that the Maximum Facilities Special Tax on the property in the District 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-"RATE AND METHOD."
Under the Rate and Method, the Facilities Special Tax levied in any fiscal year against any Assessor's Parcel (as defined in the Rate and Method) of Developed Property classified as Residential Property may not be increased as a consequence of delinquency or default by the owner or owners of any other parcel or parcels within the District by more than l\Yo above the amount that would have been levied againJt such Assessor's Parcel in that fiscal year had there never been any such delinquencies or defaults.
Pursuant to the Rate and Method, property is considered "Residential Property" once a building permit could be issued for the purposes of constructing one or more Residential Units, including either single family detached homes or multi-family attached properties, such as apartments, and property is considered "Developed Property" if a building permit for new construction was issued prior to June 30 of the previous fiscal year.
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. 53
09/24/2024 Item No.13.
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 subsequentto 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.
Parity Taxes and Special Assessments
The ability or willingness of a property owner in the District 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 ofthe 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 ou"rlup those of the District could, with or in some circumstances without the consent of the owners of the land in the District, impose additional taxes or assessment liens on the property in the District in order to finance public improvements to be located inside or outside of the District.
Although the District has covenanted not to impose additional special taxes or assessments on property within the District except in accordance with the Local Obligations Indenture, the Authority and lh" Oist i"t 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 District. The imposition of additional liens on parity with the assessments could reduce the ability or willingness of the owners of parcels in the District to pay the Special Tax and increases the possibility that foreclosure proceeds will not Le adequate to pay delinquent Special Taxes or the principal of and interest on the Series 2024 Local Obligations when due. As described under "FOLSOM PLAN AREA-Public Facilities Financing Plan," and.iTHE COMMTINITy FACILITIES DISTRICT-Overlapping Debt" the City plans to issue additional obligations secured by special taxes from time to time to finance backbone infrastructure and public impiovements within the Folsom Plan Area and the boundaries of the District, including for remaining Phase 2 Water Facilities as described under "TFIE COMMTINITY FACILITIES DISTRICT-Water Supply; Utilities." In addition, property owners may choose to participate in a residential PACE program 1a methanism 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.
Future Private Indebtedness
At the present time, the District includes properties that are undergoing development or are developed. In oider to develop any improvements on that undeveloped land, the property owners will need to conitruct private improvements, the cost of which may increase the private debt for which the land in the District or other land or collateral owned by the property owners is security over that contemplated by the Series 2124LocalObligations, 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 District. It should be noted however, that the lien of any private financing secured by the land within the District would be subordinate to the lien of the Special Tax.
54
09/24/2024 Item No.13.
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 guaiantee 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 District or the lending of money thereon. The Mello-Roos Act requires the subdivider (or its agent or representative) of a subdivision to notiff a prospective purchaser or long-term lessor of any lot, parcel, or unit subject to a Mello-Roos special tfi of the existence and maximum amount of such rp"liul tax using a statutorily prescribed form. State Civil Code Section 1102.6b requiies 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 notifiz 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.
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 TFIE BONDS," may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws of the State relating tojudicial foreclosure. In addition, the prosecution ofa 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 io the enforceability of the various legal instruments by bankruptcy, insolvency, reorganiiation, moratorium and other similar laws affecting creditors' rights, by the application of equitable principles and by the exercise ofjudicial 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 forectsure 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 inqease 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 District continuer to b" 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 Fund to make up shortfalls resulting from delinquent payments of the Special Tax and thereby to pay principal of and interest on the Series 2024 Local Obligations on a timely basis. The payment of the ^Spl"iuf
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 District, payment of the Special Tax may be subordinated to bankruptCy lu* priorities. Thus, certain claims may have priority over the Special Tax in a bankruptcy proceeding even though they would not outside ofa bankruptcy proceeding. 55
09/24/2024 Item No.13.
FDIC/Tederal 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 govemmental entity owns a parcel that is subject to Special Taxes within the District tut 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 laxes and assessments on parity with the Special Taxes and preserve the federal government's mortgage interest. In Rust v. Johnson, 5gi 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 6f th" pur."ls subject to the Special Taxes within the District, 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 District 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 "FDIC Policy Statement") provides that property owned by the FDIC is subject to state and local real property taxis only if those taxes are assessed according to the property's value, and that the FDIC is i*11tuni from real property taxes assessed on any basis other than property value. According to the FDIC policy Statement, ine FOIC 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 ii appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the iate providea- u"a.r state law, to the extent the interest payment obligation is secured by a valid lien. The FDI| 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 properly are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The FDIC 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 FDIC 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 timelhat the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to iecure 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 FDIC Policy Statement as being imposed each year and therefore covered by the FDIC's federal 56
09/24/2024 Item No.13.
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 District.
The Authority and the District are unable to predict what effect the application of the FDIC Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within the District 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 Series 2024 Local Obligations and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the Series 2024Local Obligations and the Bonds.
Zoningand 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 ofthe property and, therefore, the tax base for the Special Tax.
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, such as Measure W adopted by Crty residents in Novembet2004 described herein. 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.
Shapiro v. San Diego
On August l,20l4,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. 46 904 (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 Uy ttre 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 State Constitution because 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 District at the time of the election to authorize the Special Tax. In City of San Diego, the Court 57
09/24/2024 Item No.13.
expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to ihe Mello-Roos Act in situations where there are fewer than l2 registered voters. Thus, by its terms, the Court's holding does not apply to the Special Tax election in the District. Moreover, Section 53341 of the Mello-Roos Ait provider ittaf uny "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 District was approved by the voters on March 28,2023 - Based on Section SZI+1 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.
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 national and local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of residential property or buildings and/or sites in the event olsale or foreclosure; (ii) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoninglaws and laws relating to endangered species, and f,azardous materials and seismic safety) and fiscal policies; (iii) increased construction costs, workforce shortages, supply chain disruptions or other similar factors affecting the development, financing or markeiing "upuUltiti"s
of the Homebuilders; (iv) natural disasters (including but not limited to severe weather, -earthquakes, wildfires, and floods) or other calamities, which may result in uninsured losses; (v) costs of remediation and liabilities associated with unknown environmental conditions affecting properties; and (vi) increased delinquency or reduced demand due to high rate of inflation, rising interest rates, increased cost of insurance, and other economic trends that adversely affects consumers, whether cyclical or resulting from geopolitical events.
No assurance can be given that the Homebuilders or any other current or future homeowners within the District will pay the Special Tax in the future or that they will be able to pay such Special Tax on a timely basis. See (1-!,3nfu'uptcy" below, for a discussion of certain limitations on the District's ability to purru" judicial proceedings with respect to delinquent parcels. Further, many homes within the District will have a higher-than-a'n"tug" price point as compared to other homes in the region, which may impact the absorption of the residential units within the District.
Current Challenges to the Homebuilding Industry
The pace of homebuilding in the District may be adversely affected by a variety of factors, including changes in economic conditions, interest rates, water shortages, and other similar factors, and recentlylncluding workforce shortages and supply chain disruptions. For example, obtaining garage doors and windows have recently been challenging for home builders generally. Additionally, some State municipalities have been experiencing supply chain disruptions for the electrical transformers and water meters needed for new development, having been advised in some cases of up to a Z-yeat delay for new electrical transformer orders. Additionally, the City has taken steps to prevent a water meter supply chain disruption. The City has made arrangements with a supplier to have approximately 500 new water meters set aiide for its future use. Also, City staff have obtained authorization from the City's City Council to purchase additional new water meters as needed for new development in the City so that such purchases can be made expeditiously and without the need for further City Council action. However, no assurance can be given that supply chain disruptions for the materials needed to complete development within the District will not occur.
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Increasing Mortgage Interest Rates and Banking Uncertainty Most of the expected purchasers of homes within the District will finance their acquisitions with mortgage financing. As such, rising interest rates, decreased availability of mortgage financing or of certain mortgage programs, higher down payment requirements, or increased monthly mortgage costs could have a negative impact on the estimated absorption rates of planned for-sale homes in the District. Further, a combination of higher mortgage rates, delays in construction stemming from delays in the supply chain, homebuyers' inability to sell their existing homes and adverse changes in local, regional or national economic conditions, among other factors, could contribute to an increase in the rate of home order cancellations, which could similarly have a negative impact on the estimated absorption rates of for-sale homes in the District.
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 District are not obtained on a timely basis or that litigation could be filed regarding approvals. Failure to obtain any such agency approval or satisff 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 District, could be enacted, and future land use initiatives approved by the voters in the City could add more restrictions and requirements on development within the District, which restrictions may increase the cost to develop the District. One such governmental restriction is the requirement to install rooftop photovoltaic solar systems for residential buildings under three stories constructed starting in2020, 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 District 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 District is presently being developed. Undeveloped property is less valuable per acre than developed property, especially ifthere are no plans to develop such property or ifthere are severe restrictions on the development ofsuch 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 District. Furthermore, an inability to develop the land within the District as currently proposed would result in slower rates of diversification of property ownership within the District. 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 final mapped and permit ready 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 District is complete. Also, the Phase 2 Water Facilities described under the heading "DEVELOPMENT PLANS AND OWNERSHIP-Development Entitlements-Water Supply" ate expected to be needed before the full development of the Folsom Plan Area. A slowdown in or cessation of the development of land within the District could reduce the ability and willingness of such owners to 59
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make Special Tax payments, and could greatly reduce the value of such property in the event it has to be forecloJed upon to collect delinquent special taxes. See '6-8,4nfu'uptcy" 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.
No Independent Review of Valuation or Viability of Completed Projects Property within the District is comprised of separate and distinct projects as described above.
Payment of Special Taxes are inherently dependent upon the development within the District, and, with respect to residential properties, the ability of the buyers of completed homes to pay. The Authority, the District, and the Underwriter have not reviewed any business plan for continued ownership, development andlor operation of the property within the District. 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 District 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 District, the value ofthe affected parcel within the District may decline andlor such owner or developer may elect to refrain from payment of future Special Taxes for such parcel. See also "-Failure to Develop."
Potential Impact of Global Health Crises or Concerns
The COVID-I9 global pandemic had a severe and continuing effect on the nation and the State, with ongoing concerns relating to health and safety, preventive protocols, fiscal and economic issues, business opeiations, and global trade. Although at present there are no restrictions on operations within the State relating to the COVID-l9 pandemic, the response to COVID-l9 had a profound effect on housing construction and the housing market. Pandemic-related shutdowns severely disrupted global supply chains, resulting in difficulty for homebuilders to access necessary materials for home completion, including wood, windows, electrical transformers, water meters, and appliances. Supply chains have substantially recovered, but many goods still experience a backlog, which has resulted in, or may in the future result in, development delays within the District, and which has further resulted in increased construction costs.
Lingering supply chain issues, labor shortages, increased interest rates, and an uncertain economy can incrlase costs to individual homeowners and therefore slow demand. Further, the pandemic saw changing trends in where people choose to live and the types of homes people choose to live in, which may impact demand for the types of homes being constructed by the Homebuilders. The impacts of the COVID-l9 pandemic continue to have a lasting effect, and the Authority, the City and the District cannot predict the effect of any potential future outbreak of COVID-19 or any other infectious disease.
Cybersecurity
The City, like other public and private entities, relies on a large and complex technology environment to conduct its operations, and consequently faces the threat of cybersecurity incidents. The City and its departments could face cybersecurity threats including, but not limited to, hacking, viruses, -ui*ur" and other attacks on computers and other sensitive digital networks and systems. Such cybersecurity incidents could result from unintentional events, or from deliberate attacks by unauthorized entities or individuals attempting to gain access to the City's information technology systems to misappropriate assets and/or information or to cause operational disruption and damage. The City maintains 60
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insurance to cover cybersecurity incidents, has cybersecurity risk management policies and procedures and periodically trains its employees on cybersecurity risks. The City, in addition to conducting regular internal reviews, also hires external auditors to perform quarterly and annual reviews of its cybersecurity program.
While the City conducts periodic tests and reviews of its networks, no assurances can be given that such security and operational control measures will be successful in guarding against all cyber threats and attacks. New technical cyber vulnerabilities are frequently discovered in the United States. In addition, cyber attacks have become more sophisticated and increasingly are capable of impacting municipal control systems and components. The techniques used to obtain unauthorized access to, or to disable or degrade, electronic networks, computers, systems and solutions are rapidly evolving and have become increasingly complex and sophisticated. The results of any attack on the computer and information technology systems could have a material adverse impact on the operations of the City and damage the digital networks and systems. The City cannot predict the outcome of any such attack, nor the effect on the operations and finances of the City.
Geologic, Topographic and Climatic Conditions
The value of the properly in the District 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 occurence of seismic activity in the District could result in substantial damage to properties in the District 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 District is not located in any existing special study zone delineated by the Chief of the Division of Mines and Geology of the State as an area of known active faults and is not 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 ofthe 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 properly in the District and in the ability or willingness of property owners to pay Special Taxes.
The District is located within an atea identified as a moderate ftre hazard severity zone. More information regarding Fire Hazard Severity Zones can be found at the California Department of Forestry and Fire Protection website athltps:llfrap.fire.ca.gov, though such website is not incorporated herein by reference. The development within the District 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 District, minimum setback of structures and irrigation requirements of the fuel modification zones. Maintenance of such zones is expected to initially 6I
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be the responsibility of the property owners but upon build-out of the District and dedication of the open space to the City will be maintained by the City from funds provided through the Maintenance Special Tax.
Homeowner's insurance is expected to be available to property owners within the District, and the coverage provided by such insurance typically insures against fire damage, although there is no assurance that homeowners within the District 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 District. 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 District could be diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Special Taxes.
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 locai 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 District.
Endangered Species
During recent years, there has been an increase in activity at the State 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 District 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 the Original Developer for all backbone projects and all District project phases. At present, the properly within the District 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 ieduction in the value of a parcel in the District 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 properly whether or not the owner (or operator) has anything 62
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to do with creating or handling the hazardous substance. The effect, therefore, should any of the parcels in the District be affected by ahazardous 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. Further, such liabilities may arise not simply from the existence of ahazardous substance but from the method of handling it. All of these possibilities could significantly affect the financial and legal liability ofa 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 District 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 r"-"dy of a hazardous substance condition of the parcel. While the District is not aware that the owner (or opirator) 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 whiih may in the future be so classified. Further, such liabilities may arise not simply from the existence of ahazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of a parcel within the District that is realizable upon a delinquency.
Naturally Occurring Asbestos
California Air Resource Board ("CARB") adopted the Airborne Toxic Control Measure ("ATCM") for Construction, Grading, Quarrying and Surface Mining Operations. This statewide regulation is applicable to grading or any other projects disturbing soil in areas of the State where asbestos may exist, as deiermined Uy ttre 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 eastern parts of the 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 asbestoi 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.
The health concerns associated with the presence of naturally occurring asbestos in the District may adversely affect the marketability of property in the area.
LEGAL MATTERS
The validity of the Bonds, the Series 2024 Local Obligations and certain other legal matters are subject to the approving legal opinion of Orrick, Herringlon & Sutcliffe LLP, Bond Counsel to the Authority 63
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("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 Series 2024Local Obligations will be passed upon by Orrick, Herrington & Sutcliffe LLP, as bond counsel to the District. Certain legal matters will be passed upon for the Underwriter by its counsel, Stradling, Yocca, Carlson & Rauth LLP. The fees of Bond Counsel, Disclosure Counsel, and counsel to the Underwriter are contingent upon the issuance of the Bonds.
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 I 03 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 individual alternative minimum tax. Bond Counsel observes that interest on the Bonds included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual, or receipt of interest on, the Bonds. 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 exempt from 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 64
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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.
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 Califomia 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 o[ the Bonds. Prospective purchasers of the-gondi shoutd 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 expresses no opinion.
The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by iuch 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 curent 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." lJnder 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, 65
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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 fumish a U.S. taxpayer identification number (,,TfN,,) 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) ofthe-Cod" or (iv) the payee fails to certifr under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(1)(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 (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 Series 2024 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 threitened against the Authority or the District affecting their existence, or the titles of their respective officers, o, ,""Ling to restrain or to enjoin the issuance, sale or delivery of the Bonds or the Series 2024 Local Obligations, the application of the proceeds thereof in accordance with the Trust Agreement, or the collection 6r levy of the Special Taxes to pay the principal of and interest on the Series 2024 Local Obligations, or in any way iontesting or affecting the validity or enforceability of the Series 2024 Local Obligations and the Bonds, the Trust Agreement, the Local Obligations Indenture, the Purchase Contract (defined herein) 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 riay contesting the completeness or accuracy of this Official Statement or any amendment or supplement thereto, or coniesting the powers of the Authority or the District or their authority with respect to the Bonds or the Series 2024 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
Fieldman, Rolapp & Associates, Inc. has acted as Municipal Advisor (the "Municipal Advisor") to the District in conjunction with the issuance of the Bonds and the Series 2024 Local Obligations' The Municipal Advisoi has assisted in matters related to the planning, structuring, execution, and delivery of the Bonds and the Series 2024 Local Obligations. The Municipal Advisor will receive compensation contingent upon the sale and delivery of the Bonds. The Municipal Advisor has not audited, authenticated, or othiwise independently verified the information set forth in this Official Statement, or any other related information avaiiable, with respect to accuracy and completeness of disclosure of such information.
Because of this limited participation, the Municipal Advisor makes no guaranty, warranty, or other representation with respect to the accuracy or completeness of this Official Statement, or any other matter related to this Official Statement.
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UI\DERWRITING
The Bonds are being purchased by Piper Sandler & Co. (the "Underwriter") pursuant to a Bond Purchase Contract (the "Purchase Contract"), by and amongthe 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]a[net]originalissue[premium/discount]of$-andlessan 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.
CONTINUING DISCLOSURE
The District has covenanted for the benefit of the Owners to provide certain financial information and operatin g 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 2023-24 Fiscal Year (the "Annual Report"), which is due April 1,2025, 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-"FORM OF CONTINUING DISCLOSURE LTNDERTAKfhtrG." These covenants have been made in order to assist the Underwriter in complying with S.E.C. Rule l5c2- 12(bX5).
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. Further, the City has policies and procedures in place in order to achieve compliance with its continuing disclosure undertakings and those of its related entities.
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 for inspection at the office of the Finance Director, City of Folsom, City Hall, 50 Natoma Street, Folsom, California 95630.
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09/24/2024 Item No.13.
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 FINAI\CING AUTHORITY
Treasurer
CITY OF f,'OLSOM COMMUNITY f,'ACILITIES
DrsTRrcT No. l8 (FoLsoM PLAII AREA -
AREA-WrDE TMPROVEMENTS AftD SERVTCES)
City of Folsom Finance Director
By
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09/24/2024 Item No.13.
APPENDIX A
RATE, METHOD OF APPORTIONMENT AND MANNER OF'
COLLBCTION OF SPECIAL TAX
A-1 Page 348
09/24/2024 Item No.13.
APPEIIDIX B
ECONOMIC AND DEMOGRAPHIC INFOR$IA*TION 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 Califurnia 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 ofthe Bonds. The Bonds are not general obligations ofthe Authority, the District or the City but are limited obligations of the Authority payable solelyfrom the Trust Estate, derived primarily from payments on the Local Obligations from the payment of the Special Tsxes levied within the District, as more fulty 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 offacts.
Information contained in this Appendix B is presented as general background data. The taxing power of tie 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 the County, approximately 1 10 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 councii members choose a mayor and vice mayor from among their members. Current City Council members are:
Mike Kozlowski (Mayor)
Sarah Aquino (Vice Mayor)
YK Chalamcherla
Rosario Rodriguez
Anna Rohrbough
Term Expires
r112026
11/2026
rU2024
1112024
rr/2026
Member
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 Managir 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. In August 2024, the City announced Ms.
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09/24/2024 Item No.13.
Andersen's plan to retire from her role as the City Manager in late December 2024.8y the time of her expected retirement, Ms. Andersen would have served in the City Manager role for approximately six and a half years and served the City for approximately 20 years. Ms. Andersen has indicated that she will facilitate the recruitment process for the next City Manager to ensure a smooth transition.
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 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 iru*f.r moneys between funds and from un-appropriated balances or fund balances to any fund or appropriation account. The City Council adopted the Fiscal Year 2024-25 budget on June 25,2024.
Budget information is adopted on an annual basis for the General Fund, special revenue funds and debt service iunds. 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 accipted accounting principles. Appropriations, except open project appropriations and unexpended grant appropriations, lapse at the end ofeach 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, and culture and recreation. General taxes and fees support most of these activities. The City's Fiscal Year 2024-25 adopted budget includes over $1247.21 million in expenditures across all funds. Of this amount, approximately $[117.1] million was allocated to the General Fund of the City. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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09/24/2024 Item No.13.
Population
The historic population of the City, the County and the State is shown in the following table City of Folsom, Sacrarnento County and State of California Population Estimates
(As of January 1)
Year
1990 (t)
2000 (t)
2010 (r)
2016
2017
2018
20t9
2020
2021
2022
2023
Citv of Folsom
29,798
51,884
72,203
76,260
77,050
77,598
78,666
82,943
83,008
84,438
85,498
Sacr&mento Countv
1,066,789
1,223,499
1,418,788
1,495,620
1,5 1 1,390
1,525,099
1,538,054
1,585,055
1,579,186
1,573,366
1,572,453
State of California
29,811,427
33,871,648'
37,253,956
39,103,587
39,352,398
39,519,535
39,605,361
39,538,223
39,286,510
39,078,674
38,940,231
$322,220,400
57,741,491
38,529,947
56,766,582
(r) Based on United States Census Bureau data as of April I in such year.
Source: State of Califomi4 Department of Finance, E-4 Population Estimates for Cities, Counties and the Slafe, Sacramento, Califomia May 2023.
Building Activity
Residential building activity for calendar years 2019 through 2023 for the City is shown in the following table.
BUILDING PERMITS AI\D VALUATIONS
City of Folsom
2019-2023
2019 2020 2021 2022 2023
Permit Valuation
New Single-Family
New Multi-Family
Res. Alterations/Additions
Res. Other
Total Residential (r)
$168,004,023
15,533,653
10,055,289
26,537,274
$ 181,531,127
11,039,625
11,214,031
34,630,673
8351,482,252
6,621,585
13,200,936
43,832,114
$390,097,685
I 5 l,128,1 35
26,225,478
133,897,573
New Commercial
New Industrial
Comm./Ind.
Alterations/Additions
Other Comm./Ind.
Total Non-Residential (1)
s220,130,239
$ 1,384,871
s238,415,456
$230,698
10,117,261
2,011,887
$415,136,887
$570,954
$47s,258,421
$9,1 13,559
33,258,978
16,602,300
$701,348,871
$5,586,481
21,778,92',1
20,807,067
26,361,400
74,185,636
17,622,910
9,611,894
s4t,g3l,g07 $12,359,846 $21,805,758 $58,974,836 $48,172,475 (r) Totals may not add to sum because of rounding.
Source: City of Folsom.
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09/24/2024 Item No.13.
Employment
The table below reflects recent employment information for the City's largest employers for the fiscal year ended June 30, 2023.
PRINCIPAL EMPLOYERS
City of Folsom
Fiscal Year2022-23
Business Name
Intel Corporation
California State Prison
Folsom Cordova Unified School District (t)
Folsom State Prison
Mercy Hospital of Folsom
California Independent System Operator
City of Folsom
SAFE Credit Union (2)
Costco Wholesale
Folsom Lake College
Total Top Employers
Number of Employees
4,476
1,514
1,117
93s
812
683
463
390
361
260
I1,011
Percent of Total
Emplovment
11.16%
3.78 2.79
2.33 2.02
1.70 1.l5
0.97 0.90
0.65 27.46%
Total Labor Force (3) 40,100 100.00%
(1) Includes both certified and classified employees in Folsom only' (2) Includes both the corporate and Folsom branch.
(3) Total Folsom labor force provided by EDD Labor Force Data.
Source: MuniServices, LLCI 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 4.3%o in2023,up from the 2022 estimate of approximately 3.8%. This compares with an unadjusted unemployment rate of 4.8Yo for California and 3.6Yo for the nation during the same period.
The unemployment rate was 4.0Yo in El Dorado County, 3.7Yo in Placer County, 4.4%o in Sacramento County, and 4.7o/o in Yolo County for 2023.
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09/24/2024 Item No.13.
The table below provides information about employment rates and employment by industry type for the Sacramento MSA for calendar years 2019 through 2023.
Sacramento-Roseville-Arden-Arcade, CA Metropolitan Statistical Area Labor Force, Employment and Unemployment Yearly Average(l) 2019 2020 2021 2022
1,105,400 1,112,100 1,129,200
2023
Civilian Labor Force (2)
Employment
Unemployment
Unemployment Rate
Wage and Salary Employment (3)
Total Farm
Mining and Logging
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation, Warehousing and Utilities
Information
Finance and Insurance
Real Estate and Rental and Leasing
Professional and Business Services
Private Education and Health Services
Leisure and Hospitality
Other Services
Federal Government
State Government
Local Government
1,099,30
0 1,059,20
0 40,100
3.7%
1,093,50
0 996,600
96,900
8.gYo
71,000
6.4%
42,400
3.8%
48,600
4,3Vo
1,034,400 1,069,700 1,080,500
8,700
500
69,400
36,800
28,600
100,500
32,200
I1,900
35,200
17,300
137,200
166,600
109,600
35,400
14,200
121,900
8,300
500
70,200
36,100
26,600
95,100
34,300
10,200
34,800
16,900
132,600
164,000
83,900
31,000
14,800
121,700
98,900
9,000
500
74,900
37,700
26,900
100,600
37,500
10,100
34,100
17,700
137,200
168,800
93,600
33,300
14,500
727,300
98,400
8,600
500
77,100
40,600
28,300
100,300
40,800
10,500
33,000
18,800
139,700
175,600
108,700
36,100
14,400
129,800
102,700
9,100
500
74,700
40,500
28,500
99,000
41,600
9,900
30,500
18,400
134,400
188,700
112,500
38,300
14,500
134,400
107,400
Total, All Indusffies (a)
105,300
7,031,20
0 979,800 1,021,900 1,065,400 1,083,000
(r) 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 ("CaIPERS"). 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, 2022, the date of the most recent actuarial study report, the safety plan and the miscellaneous plan were 61.3%o funded and 63.6oh funded, respectively. For the safety plan, the actuarial accrued liability was approximately $258 million and the market value of assets was approximately $158 million, resulting in an unfunded actuarial accrued liability ("UAAL") of $100 million. For the B-5
09/24/2024 Item No.13.
miscellaneous plan, the actuarial accrued liability was approximately $286 million and the market value of assets was approximately $182 million, resulting in a UAAL of approximately $104 million.
For the year ended June 3 0, 2023 , the City' s unaudited annual pension cost of $9 ,7 89 ,430 for the safety plan and $10,886,274 for the miscellaneous plan were equal to the City's required contributions.
The three-year trend information for the safety and miscellaneous plans combined is as follows:
Fiscal Year
Ended
Annual
Pension
Percentage
of APC
Contributed
Net
Pension
ObligationCost (o'APC')
613012021 $18,281,774 100%
613012022 18,902,039 100%
613012023 20,675,705 100%
Other Post-Emptoyment BeneJits. 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 bn 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 aituarial liabilities (or funding excess) over a period not to exceed 30 years. An employer's n"i OpBg 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- u.-you-go financing requirements, with an additional amount to prefund benefits as determined annually Uy itre City Council. por Fiscal Year 2023,the City contributed $500,000 to the plan for current premiums.
For Fiscal Year 2024, the City has budgeted to contribute another $500,000 to the plan.
For more information regarding the City's OPEB liabilities, see note 13 to the City's Annual comprehensive Financial Report for the fiscal year ended June 30,2023.
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09/24/2024 Item No.13.
Capital Improvement Program
The City's Capital Improvement Program ("CIP") is a multi-year plan that forecasts spending for all anticipated capital projects ind is considered to be the link between the City's development and financing planning pro""r.. ClPfrnding "o*"s
mainly from impact fees and a number of other special revenue funds, as well is grants and loans. Within each program category, the City identifies resources that it will commit to prioritylapital projects. CIP costs include both one-time expenses and recurring expenses related to rupitut ."ttuUititutibtt. The City's CIP for Fiscal Year 2024 is approved at $70.0 million, which is approximately 10.0% more than the City's approved CIP for Fiscal Yeat 2023 of $63.6 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 iocal 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.
Inveitmenf officers shall recogn ize thatthe 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 councii 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 elror, misrepresentation by third parties, unanticipated changes in financial markets, or imprudent actions by city employees or officers.
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09/24/2024 Item No.13.
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 cit5l'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 Chartei, 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 30,2023.
CITY OF FOLSOM
PORTFOLIO SUMMARY
As ofJune 30,2023
Investments by Fair Value Level Balance
City Pooled Investments
Certificate of Deposit
Commercial Paper
Corporate Notes
Municipal Obligations (City)
Municipal Obligations (FRFA)
Municipal Obligations (FPFA)
Federal Farm Credit Bank (FFCB)
Federal Home Loan Bank (FHLB)
Federal Home Loan Mortgage (FHLMC)
Federal National Mortgage (FNMA)
US Treasury Note
Investments Not Measured at Fair Value or Subject
to Fair Value Hierarchy
Local Agency Investment Funds
California Class
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
$16,132,816
31,965,025
23,371,45'.7
63,781,608
127,379,928
31,409,025
18,603,010
35,952,856
14,822,650
5,802,620
3,907,740
19,728,039
28,217,642
7.966^324
55.912,005
429.040.741
211,975
35"424.087
8,998,498
44.634"s60
Source: City of Folsom.
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$473.67s.301
09/24/2024 Item No.13.
Insurance, Risk Pooling and Joint Powers Arrangements
The City participates in pooled insurance programs offered by the Northern California Cities Self Insurance Fund (;'NCCSIF";, aloint powers agency that provides the City with a shared risk layer of coverage above iis 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.
NCCSF consists of 18 mimber 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 -unug.1n"niservices,andactuarialstudies. TheCity'sdepositforthefiscalyearendedJune30,2023, was $1, 1 77,00 1 , and for the fiscal year ended June 3 0, 2022, was 52,942,482. For the Fiscal Year ended June 30,2023, NCCSIF had net assets of $25,877,702 and a net income of $1,475,442.
Sales Taxes
The following table shows taxable transactions in the City during calendar years 2016 through the second quarter of2023.
TAXABLE SALES
City of Folsom
2016-2023
(in Thousands)
Year
Retail
Permits
Retail and Food
Taxable
Transactions Total Permits
Total Outlets
Taxable
Transactions
20t6
2017
201 8
2019
2020
2021
2022
2023Q)
$1,595,641
1,663,432
r,721,452
7,741,755
1,579,786
1,917,045
2,009,992
969,345
2,404
2,459
2,501
2,602
2,74r
2,418
2,546
2,536
$ 1,828,059
1,944,041
1,983,797
2,093,411
1,795,390
2,134,222
2,253,326
1,097,448
1,5 88
7,614
1,593
1,616
1,652
1,457
1,523
1,481
(1) Datathrough June 30, 2023
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, Jwimming, boating, biking, horseback riding and hiking. Varied cultural opportunities include art galleries and museums, two majoriymphonies, three ballet companies, scores of movie theaters showing first run films and many theatei gtoupr offering live stage plays. In February 2011, the $50 million performing arts complex Harris Center - thi"" 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' B-9
09/24/2024 Item No.13.
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 Califomia 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 tlie 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 Environmentai and Water Resources Department inspects and maintains, as of June30,2023,the 378 miles of water mains, 23,630 service connections and 5,275 fire hydrants. The City also provides sewage collection services for the entire City. The Sewer Division of the Crty's Environmental and Water Resources Department inspects and maintains, as of June 30, 2023,the 386 miles of sanitary sewers, 17 pump stations, and 24,330 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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09/24/2024 Item No.13.
APPENDIX C
SUMMARY OF PRINCIPAL DOCUMENTS
c-l
09/24/2024 Item No.13.
APPENDIX D
FORM OF CONTINUING DISCLOSI]RE UNDERTAKING
THIS DISTRICT CONTINUING DISCLOSURE CERTIFICATE (this "Disclosure Certificate"), 2024, is executed and delivered by the City of Folsom Community Facilitiesdated as of DistrictNo. 18 (Folsom Plan Area - Area-Wide Improvements and Services) (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 DistrictNo' 18 (Folsom Plan Area - Area-Wide Improvements and Services) Special Tax Revenue Bonds, Series 2024 (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 ofthe Holders and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(bX5).
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, tfe 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 and4 hereof.
'oAnnual 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. . 'oDissemination 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 5(a)(10) and Section 5(bX7), 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 2024,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 15c2-12(bX5) 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 identi$ing 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 2023-24 Fiscal Year. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by ieference other informution ur provided in Section 4 hereof; provided, however, thatthe audited financial siatements 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. (b) Not later than 15 business days prior to the date specified in subsection (a) of this Section for the pioviding 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 MSng 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 certiffing 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 AnnuaiReport 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 p.""Jding the Annual Report Date along with debt service schedules for the Bonds and any bonds D-2
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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 Series 2024 Local Obligations, and a statement of the Reserve Requirement amount, as of the December 3 1 next preceding the Annual Report Date;
(iii) The total assessed value of all parcels within the District on which the Special Taxes are levied, as shown on the assessment roll of the Sacramento County Assessor last equalized prior to the December 3 I next preceding the Annual Report Date , and a statement of assessed value- lo-lien ratios therefor based on special tax and assessment debt, either by individual parcel or by categories (e.g., "below 3:1," "3:1to 4:1" etc.);
(iv) The Special Tax delinquency rate for the District as of the December 3l next preceding the Annual Report Date; the number of parcels within the District delinquent in payment of special taxes as of the December 3 1 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 District as of the December 31 next preceding the Annual Report Date; (vi) The identity of any properly owner, representing more than 5%o 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 District, 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 Taxpayers for the District (excluding any individual homeowner responsible for 5oh or less of the Special Tax for the current Fiscal Year), 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 Maximum Facilities Special Tax, the actual Facilities Special Tax levied within the District and the actual Pledged Special Tax levied within the District, with such amounts reported separately for Developed Properly, Single Family Final Map Property, and Permit Ready Multi FamilyA.{on-Residential Property; provided, however, that once all Taxable Property within the District is Developed Property, the Maximum Facilities Special Tax and the actual Facilities Special Tax and the actual Special Tax levied may each be tho*n on an aggregate basis in the Annual Report. For the purposes of this subparagraph (x), all caprtalizedterms used but not otherwise defined herein shall have the meanings ascribed thereto in the Rate and Method for the District.
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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 identiff 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.
(iD 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 ofproposed or final determinations oftaxability, 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 reorganizalion, anangement or liquidation by a court or governmental authority having supervision orjurisdiction over substantially all ofthe 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 Distri ct, 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 occulrence of any of the following events with respect to the Bonds, if material:
(i) Modifications to rights of Bond holders.
(iD Bond calls.
(iii) Release, substitution or sale of property securing repayment of the Bonds. (iv) Non-paymentrelateddefaults.
(v) The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale ofall or substantially all ofthe assets ofthe 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) Incurrence 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 notifr the Dissemination Agent thereof in writing and instruct the Dissemination Agent to report the occurence 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) ofthis Section.
(e) If the Dissemination Agent has been instructed by the District to report the occurrence of a Listed bvent, the Dissemination Agent shall file a notice of such occurr6nce with the MSRB through the EMMA System. Notwithstanding the foregoing, notice of Listed Events described in paragraph (vii) of subsection (a) ofthis Section andparagraph (ii) ofsubsection (b) ofthis 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 D-5 Page 364
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of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give 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 Dissetnination 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 provision 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 iiil do"r not, in the opinion of nationally recognized bond counsel, materially impair the interests of Owners or Beneficial Owners of the Bonds.
Ifthe annual financial information or operating datato be provided in the Annual Report is amended pursuant to the provisions hereof, the annual financial information containing the amended operating data br 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 specifiring the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made .ttuil pr"i"nt a comparison between the financial statements or information prepared on the basis of the new accounting principLs 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 privide information to investors to enable them to evaluate the ability of the District to meet its obiigations. 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 4otice 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 Page 365
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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 Bondsmay 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 indemnifu 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) ofdefending 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 COMMT]NITY
FACILITIES DISTRICT NO. 18
(FOLSOM PLAN AREA - AREA-WrDE
IMPROVEMENTS AI\D SERVICES)
By
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EXHIBIT A
NOTICE OF F'AILURE TO F'ILE ANNUAL REPORT
Name of Issuer:
Name of Issue:
Folsom Ranch Financing AuthoritY
Folsom Ranch Financing Authority City of Folsom Community Facilities District No. 18 (Folsom Plan Area - Area-Wide Improvements and Services) Special Tax Revenue Bonds, Series 2024
(F
Date of Issuance: 2024
NOTICE IS HEREBY GIVEN that the City of Folsom Community Facilities District No. 18 olsom Plan Area - Area-Wide Improvements and Services) (the "Districf') has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Disclosure Certificate, dated 2024, execlfied 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 l
Dated
CITY OF' FOLSOM COMMT]NITY
FACILITIES DISTRICT NO. 18
(FOLSOM PLAI{ AREA -- AREA-WrDE
TMPROVEMENTS AND SERVTCES)
By
Finance Director of the City of Folsom
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APPENDIX E
PROPOSED FORM OF OPINION OF'BOND COUNSEL
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APPENDIX F
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, ,f ony, and interest on the Bonds to Participints or Beneficial Owners, confirmation and trander 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 oriuron""t that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners either (a) payments of principal, premium, tf 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 *iU to do on a timely basis or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Officiat Statement. The currint "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 onfile 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 iully-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, ons 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 17A 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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Purchases of the Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC's records. The ownership interest of each acfual purchaser of each Bond (the "Beneficial Owner") is in turn to be recorded on the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Bonds with DTC and their registration in the name of Cede & Co. (or such other DTC nominee) do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal, redemption price, and interest payments with respect to the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the Authority on a payable date in accordance with their respective holdings shown on DTC records.
Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC or its nominee, the Trustee, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time.
Payment of principal, redemption price and interest to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Trustee, F-2