Folsom City Council
April 14, 2026

04/14/2026 Item No.24.

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If any Bond or any portion thereof has been duly ca lled for redemption and payment of the redemption price, together with unpaid interest accrued to the date fixed for redemption, has been made or provided for by the Authority, then interest on suc h Bond or such portion will cease to accrue from su ch date, 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 Owne r thereof will have no rights in respect of such Bo nd or such portion except to receive payment of such r edemption price, and unpaid interest accrued to the date fixed for redemption.

ESTIMATED SOURCES AND USES OF FUNDS
The proceeds from the sale of the Bonds will be use d to purchase the Local Obligations. The proceeds of the Local Obligations in turn will be u sed to finance construction and acquisition of the Facilities and pay costs of issuance of the Local O bligations and Bonds. The following table sets for th the sources and uses of the funds as allocated to the Bonds:

Sources of Funds
Principal Amount $
[Plus/Less] : [Net] Original Issue [Premium/Discount]
Total Sources: $
Uses of Funds
Acquisition and Construction Fund $
Underwriter’s Discount
Deposit to Local Obligations Reserve Account (1)
Deposit to Costs of Issuance Fund (2)
Total Uses : $
___________________
(1) A portion of the purchase price of the Local Oblig ations will be deposited into the Local Obligations Reserve Account for the Local Obligations. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.” (2) A portion of the purchase price of the Local Oblig ations will be used to pay costs of issuance includ ing fees of Bond Counsel and the Municipal Advisor, the initial fees of the Trustee, noncontingent fees of the App raiser, printing costs and other miscellaneous expenses.

DEBT SERVICE SCHEDULE
The annual scheduled debt service for the Bonds, as suming no early redemption other than from mandatory sinking fund installments, is set forth i n Table 1 below. The Local Obligations are sized t o provide 100% of the debt service on the Bonds when due and have the same principal amortization as the Bonds. The Local Obligations will be issued with a n annual scheduled debt service that results in at least 110% annual debt service coverage for the Local Obligations from the revenues of the Effective Tax Rate Evaluation Maximum Facilities Special Tax (as defined herein) for Developed Property and Effective Tax Rate Evaluation Minimum Facilities Revenue (as defined herein) for Small Lot Final Map Property based on the status of development as of February 17, 202 6, net of Priority Administrative Expenses, beginni ng with the levy for Fiscal Year 2025-26. The debt se rvice on the Bonds is expected to increase approximately 2% annually through 2044 and then be level through the final maturity. The District may issue Refunding Local Obligations on parity with the Local Obligations only in accordance with the Local Obligations Indenture and only for refunding purpos es for so long as the Local Obligations are Outstanding. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Terms of the Local Obligations—Refunding Local Obligations .”

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Table 1
Folsom Ranch Financing Authority
City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 7
Special Tax Revenue Bonds, Series 2026
Debt Service Schedule (1)
Period Ending (September 1) Principal Interest
Total Debt
Service
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
2055
TOTAL $ $ $
_________________
(1) Amounts rounded to the nearest dollar.

Source: Piper Sandler & Co.

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04/14/2026 Item No.24.

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The following table shows the expected debt service coverage for the Local Obligations for bond year 2026, taking into account the debt service on the Local Obligations for that year, based on the projected Fiscal Year 2026-27 revenues from the Eff ective Tax Rate Evaluation Maximum Facilities Special Tax for the Developed Property and the Effe ctive Tax Rate Evaluation Minimum Facilities Revenue for the Small Lot Final Map Property in the Improvement Area, as of February 17, 2026, net of Priority Administrative Expenses in the amount of $25,500.

Table 2
City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 7
Fiscal Year 2026-27
Debt Service and Debt Service Coverage – Local Obligations

Fiscal
Year
Effective Tax
Rate Evaluation
Maximum
Facilities Special
Tax Revenue –
Developed
Property (1)
Effective Tax
Rate
Evaluation
Minimum
Facilities
Revenue (1)
Priority
Administrative
Expense (2)
Net Maximum
Facilities Special
Tax Revenue –
Developed and
Small Lot Final
Map Property (3)
Local
Obligations
Debt
Service *
CFD Debt
Service
Coverage
from
Developed and
Small Lot
Final Map
Property *
2026 -27 $472,650 $159,098 $25,500 $606,248 $550, 856 110. 1% _________________
* Preliminary, subject to change.
(1) The Maximum Facilities Special Tax Rates escalate annually at 2%. Based on the development status for Developed and Small Lot Final Map Property as of February 17, 2026.
(2) The Priority Administrative Expense amount was est ablished at $25,000 for Fiscal Year 2025-26 and esc alates annually at 2%.
(3) Calculated as the sum of the Effective Tax Rate Ev aluation Maximum Facilities Special Tax for the Developed Property and the Effective Tax Rate Evaluation Minimum Facilitie s Revenue for the Small Lot Final Map Property, les s Priority Administrative Expenses in the amount of $25,500.

Source: Piper Sandler & Co. for Local Obligations debt service figures; NBS for all other amounts.

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
The Bonds are secured by a lien on and pledge of th e Trust Estate, consisting primarily of payments received by the Authority from the Distric t under the Local Obligations, which payments are secured by Special Taxes (net of Priority Administr ative Expenses) levied upon property within the Improvement Area and received by the District.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER O F THE CITY, THE

DISTRICT, THE AUTHORITY, THE STATE OF CALIFORNIA OR ANY OTHER POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF TH E 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 LIMITED

OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM TH E TRUST ESTATE,

DERIVED PRIMARILY FROM PAYMENTS ON THE LOCAL OBLIGA TIONS FROM THE

PAYMENT OF THE SPECIAL TAXES LEVIED WITHIN THE IMPR OVEMENT AREA AS MORE FULLY DESCRIBED HEREIN.

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The Trust Agreement does not permit the Authority t o issue any additional bonds on parity with the Bonds. However, subject to certain conditions contained in the Local Obligations Indenture and on ly for refunding purposes so long as the Local Obligat ions are Outstanding, the District may at any time issue Refunding Local Obligations payable from the net proceeds of the Special Tax (after payment of Priority Administrative Expenses) on parity with th e Local Obligations. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Terms of the Local Obligations— Refunding Local Obligations .”
General
The Trust Estate consists of the Revenues, the amou nts in certain of the funds established and held under the Trust Agreement, and the Local Oblig ations. The Revenues consist of amounts received by the Trustee as the payment of interest on, or th e equivalent thereof, and the payment or return of principal of, or redemption premiums, if any, on, or the equivalent thereof, the Local Obligations, whether as a result of scheduled payments, or redemption pr emiums, 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).

The principal of and the interest on the Local Obli gations are payable from the annual Special Taxes levied and to be collected on all real proper ty within the Improvement Area subject to the Speci al Taxes and the proceeds, if any, from the sale of su ch property for delinquency of such Special Taxes, after payment of Priority Administrative Expenses. The Special Taxes securing the Local Obligations include both the Facilities Special Tax and the Services Special Tax (each as defined herein) levied within the Improvement Area. The Local Obligations are sec ured by a pledge on the Special Taxes (net of Priority Administrative Expenses) on parity with th e pledge of such Special Taxes for any Refunding Local Obligations, if any, issued under the Local O bligations Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Payment of the Loc al Obligations” and “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Terms of the Local Obligations.” The District may not issue indebtedness payable from the Special Taxes except as provided in the Local Obligations Indenture. See APPENDIX C—“SUMMA RY OF PRINCIPAL DOCUMENTS— SUMMARY OF THE LOCAL OBLIGATIONS INDENTURE—Authorization and Issuance of Bonds— Refunding Bonds; Subordinate Bonds .” The City has, however, formed CFD 17 and CFD 18 , each of which has issued bonds secured by special taxes with a co-equal lien on property within the Improvement Area. See “FOLSOM PLAN AREA.” The Authority, the District and the City have no control over the amount of additional debt payable from taxes or ass essments on all or any portion of the property with in the Improvement Area that may be issued in the futu re by other governmental entities or districts havi ng jurisdiction over all or a portion of the land within the Improvement Area, including CFD 17 and CFD 18.

To the extent such debt is payable from other asses sments or special taxes levied pursuant to the applicable law, such assessments or special taxes may have a lien on the property within the Improvement Area on parity with the lien of the Special Taxes.

Flow of Funds
Receipt and Deposit of Revenues. As noted above, Revenues consist of amounts receive d by the Trustee as the payment of interest on, or the equiv alent thereof, and the payment or return of princip al of, or redemption premiums, if any, on, or the equivalent thereof, all 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 under the Trust Agreemen t (except the Rebate Fund). All Revenues, other than Revenues derived from the early redemption of Local Obligations from Special Tax Prepayments received b y the Trustee from the Authority, will be deposited

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into the Revenue Fund. On each Interest Payment Da te and each Principal 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 ful ly satisfied, leaving no deficiencies therein, prio r 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 o n the Bonds due on such Interest Payment Date;
Second : To the Principal Fund (i) on each Principal Payme nt 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 ac count of any Bonds which have matured but which have not been presented for payme nt) is sufficient to pay the Principal Installments on the Bonds due on such Pri ncipal Payment Date and (ii) on each September 1 on which a Minimum Sinking Fund Payment is required to be made (for deposit in the Sinking Fund Account) from the Revenue Fund an amount of Revenues which is equal to the Minimum Sinking Fund Payment due and payable on such date. On each Principal Payment Date, the Tru stee shall pay the principal or redemption price due and payable on the Bonds on such date from the Principal Fund.

Following such deposits, any remaining money in the Revenue Fund is required to be transferred to the Local Obligations Trustee for application un der the Local Obligations Indenture. For additiona l information regarding the Flow of Funds, see “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Local Obligations Flow of Funds.”
Revenues Derived from Special Tax Prepayments. All Revenues derived from early redemption of Local Obligations from Special Tax Prepayments r eceived by the Trustee will be immediately deposited into the Redemption Fund to be applied to the extraordinary redemption of Bonds. See “THE BONDS—Redemption Provisions—Extraordinary Redemption from Prepayment of Special Taxes. ” Description of Local Obligations
The District will issue the Local Obligations in th e principal amount of $[Par Amount]. * The Local Obligations are secured solely by the Special Taxes (net of Priority Administrative Expenses) levied upon certain real property within the Improv ement Area and proceeds of foreclosure sales in the Improvement Area. The Local Obligations are sized s o that, beginning with Fiscal Year 2026-27, the revenues from the Effective Tax Rate Evaluation Max imum Facilities Special Tax for Developed Property and Effective Tax Rate Evaluation Minimum Facilities Revenue for Small Lot Final Map Property based on status of development as of Febru ary 17, 2026, net of Priority Administrative Expenses, are at least 110% of the debt service on the Local Obligations.

The pledge of Special Taxes (net of Priority Admini strative Expenses) levied within the Improvement Area is on parity with the pledge there of securing any Refunding Local Obligations issued under the Local Obligations Indenture. The Distric t may issue Refunding Local Obligations secured on parity with the pledge of the Special Taxes (net of Priority Administrative Expenses) within the Improvement Area only in accordance with the Local Obligations Indenture and only for refunding purposes for so long as the Local Obligations are O utstanding. See APPENDIX C—“SUMMARY OF PRINCIPAL DOCUMENTS—SUMMARY OF THE LOCAL OBLIGATIONS INDENTURE— Authorization and Issuance of Bonds—Refunding Bonds; Subordinate Bonds .”

* Preliminary, subject to change.

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A description of the Improvement Area is set forth under the caption, “THE IMPROVEMENT AREA.”
Issuance of Local Obligations
The Local Obligations are authorized pursuant to th e Mello-Roos Act and are issued under a resolution of the City Council of the City, as legi slative body of the District and the Local Obligati ons Indenture. The Mello-Roos Act was enacted by the S tate Legislature to provide an alternate method of financing certain essential public capital facilities and services, especially in developing areas of the State.

Subject to approval by a two-thirds vote of qualifi ed electors and compliance with the provisions of t he Mello-Roos Act, a legislative body of a local agenc y may issue bonds for a community facilities distri ct and may levy and collect a special tax within such district to repay such indebtedness.

The Local Obligations constitute special tax obliga tions of the District payable as to both principal and interest from the annual Special Tax (after payment of the District’s Priority Administrative Expenses) to be levied by the District on land with in the Improvement Area, including proceeds from th e sale of property within the Improvement Area collected as a result of foreclosure of the lien of the 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 t o pay Special Taxes on a particular parcel is to in stitute foreclosure proceedings with respect to that parcel. However, the District is not obligated under the Local Obligations Indenture to enforce the lien of any de linquent installment of the Special Tax for any Fis cal 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. See “ SECURITY

AND SOURCES OF PAYMENT FOR
THE BONDS—Covenant for Foreclosure” and “—The Teeter Plan” herein.

Payment of the Local Obligations
The Local Obligations constitute the limited obliga tions of the District payable as to both principal and interest from the annual Special Tax (net of Priority Administrative Expenses) levied by the District on Taxable Property within the Improvement Area, including proceeds from the sale of property within the Improvement Area collected as a result o f foreclosure of the lien on the 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 Special Ta xes on a particular parcel is to institute foreclos ure proceedings with respect to that parcel.

The term “Priority Administrative Expenses” means an amount equal to (a) for Fiscal Year 2025- 26, $25,000, and (b) for any subsequent Fiscal Year , the amount resulting from increasing the Priority Administrative Expenses on each July 1, from and in cluding the July 1 immediately following the end of the then current Fiscal Year to and including the J uly 1 in such Fiscal Year by 2% of the amount in ef fect for the previous Fiscal Year.

THE LOCAL OBLIGATIONS ARE SPECIAL TAX OBLIGATIONS O F THE DISTRICT,

AND THE INTEREST ON AND PRINCIPAL OF AND REDEMPTION PREMIUMS, IF ANY, ON

THE LOCAL OBLIGATIONS ARE PAYABLE SOLELY FROM THE PROCEEDS OF THE SPECIAL

TAX (INCLUDING ANY PREPAYMENTS THEREOF AND PROCEEDS FROM THE SALE OF

PROPERTY COLLECTED PURSUANT TO THE FORECLOSURE PROV ISIONS OF THE LOCAL

OBLIGATIONS INDENTURE FOR THE DELINQUENCY OF THE SP ECIAL TAX), NET OF

PRIORITY ADMINISTRATIVE EXPENSES, AND AMOUNTS IN CE RTAIN FUNDS AND

ACCOUNTS ESTABLISHED IN THE LOCAL OBLIGATIONS INDEN TURE, AND THE DISTRICT IS NOT OBLIGATED TO PAY THE LOCAL OBLIGATIONS EXCEP T FROM SUCH FUNDS. THE

GENERAL FUND OF THE CITY AND THE FUNDS OF THE DISTR ICT ARE NOT LIABLE, AND

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NEITHER THE FULL FAITH AND CREDIT OF THE DISTRICT N OR THE CITY ARE PLEDGED

FOR THE PAYMENT OF THE INTEREST ON OR PRINCIPAL OF OR REDEMPTION PREMIUMS, IF ANY, ON THE LOCAL OBLIGATIONS. NO TAX OR ASSESSM ENT OTHER THAN THE

SPECIAL TAX SHALL EVER BE LEVIED OR COLLECTED TO PA Y THE INTEREST ON OR PRINCIPAL OF OR REDEMPTION PREMIUMS, IF ANY, ON THE LOCAL OBLIGATIONS. THE

LOCAL OBLIGATIONS ARE NOT SECURED BY A LEGAL OR EQU ITABLE PLEDGE OF OR

CHARGE, LIEN OR ENCUMBRANCE UPON ANY PROPERTY OF TH E DISTRICT OR ANY OF

ITS INCOME OR RECEIPTS EXCEPT THE PROCEEDS OF THE S PECIAL TAX (INCLUDING

ANY PREPAYMENTS THEREOF AND PROCEEDS FROM THE SALE OF PROPERTY

COLLECTED PURSUANT TO THE FORECLOSURE PROVISIONS OF THE LOCAL

OBLIGATIONS INDENTURE FOR THE DELINQUENCY OF THE SP ECIAL TAX), NET OF

PRIORITY ADMINISTRATIVE EXPENSES, AND AMOUNTS IN CE RTAIN FUNDS AND

ACCOUNTS ESTABLISHED IN THE LOCAL OBLIGATIONS INDEN TURE, AND NEITHER THE

PAYMENT OF THE INTEREST ON OR PRINCIPAL OF OR REDEM PTION PREMIUMS, IF ANY,

ON THE LOCAL OBLIGATIONS IS A GENERAL DEBT, LIABILI TY OR OBLIGATION OF THE CITY OR THE DISTRICT. THE LOCAL OBLIGATIONS DO NOT CONSTITUTE AN

INDEBTEDNESS OF THE CITY OR THE DISTRICT WITHIN THE MEANING OF ANY

CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR REST RICTION, AND NEITHER

THE CITY COUNCIL NOR THE DISTRICT NOR ANY OFFICER O R EMPLOYEE THEREOF

SHALL BE LIABLE FOR THE PAYMENT OF THE INTEREST ON OR PRINCIPAL OF OR

REDEMPTION PREMIUMS, IF ANY, ON THE LOCAL OBLIGATIO NS OTHERWISE THAN

FROM THE PROCEEDS OF THE SPECIAL TAX (INCLUDING ANY PREPAYMENTS THEREOF

AND PROCEEDS FROM THE SALE OF PROPERTY COLLECTED PU RSUANT TO THE

FORECLOSURE PROVISIONS OF THE LOCAL OBLIGATIONS IND ENTURE FOR THE

DELINQUENCY OF THE SPECIAL TAX), NET OF PRIORITY AD MINISTRATIVE EXPENSES,

AND AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS ESTABLISH ED IN THE LOCAL OBLIGATIONS INDENTURE.

Although the Special Tax will constitute a lien on property subject to taxation in the Improvement Area, it will not constitute a personal indebtednes s of the owners of such property. There is no assu rance that the owners will be financially able to pay the annual Special Tax or that they will pay such tax even if financially able to do so. The risk of nonpayment by property owners is more fully described in “CERTAIN RISKS TO BONDHOLDERS—Collection of Special Tax.” Local Obligations Flow of Funds
Application of Special Tax Fund. Pursuant to the Local Obligations Indenture, the District agrees and covenants that it will deposit the Special Tax proceeds in the Community Facilities Fund, which fund is established in the treasury of the City. All mo ney 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 and Services. Pursua nt 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 Fa cilities Fund amounts sufficient and in sufficient time for the Local Obligations Trustee to make the transfers required by it, and the Local Obligations Trustee shall deposit such proceeds as and when rec eived 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 respect ive special account and fund within the Special Tax Fun d in the following order of priority, and all money in each such account and fund shall be applied, used a nd withdrawn only for the purposes specified in the Local Obligations Indenture:

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(1) Redemption Account; and
(2) Local Obligations Reserve Fund.

Redemption Account . On or before March 1 and September 1 in each yea r, 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 Local Obligations and any Refunding Local Obligations on such March 1 or September 1, as the case may be, and on or before September 1 in each year, the Local Obligations Trustee shall, from the then remaining money in the Special Tax Fund, trans fer to and deposit in the Redemption Account an amount of money equal to the aggregate amount of pr incipal becoming due and payable on all Outstanding serial Local Obligations and any Refund ing Local Obligations on such September 1 plus all Minimum Sinking Fund Account Payments required to b e made on such September 1 into the Sinking Fund Subaccount; provided, that all of the aforesai d payments shall be made without priority of any payment over any other payment, and in the event th at money in the Special Tax Fund on any March 1 or September 1 is not equal to the amount of interest becoming due on all Local Obligations and any Refunding Local Obligations on such date, or in the event that the money in the Special Tax Fund on an y September 1 is not equal to the amount of principal of the Local Obligations and Refunding Local Obligations becoming due on such date, as the case may be, then such money shall be applied pro rata i n such proportion as such interest and principal and Minimum 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 equal to the amount required by the ter ms of the preceding paragraph to be deposited there in at the times and in the amounts provided in the Local Obligations Indenture.

All money in the Redemption Account shall be used a nd withdrawn by the Local Obligations Trustee to pay the interest on the Local Obligation s and any Refunding Local Obligations as it shall become due and payable (including accrued interest on any Local Obligations or any Refunding Local Obligations purchased or redeemed prior to maturity ) plus the principal of and redemption premiums, if any, on the Local Obligations and any Refunding Local Obligations as they shall mature or upon the prior redemption thereof, except that any money in the Sinking Fund Subaccount shall be used only to purchase or redeem or retire the term Local Obligations and any Refunding Local Obligations as provided in the Local Obligations Indenture.

Local Obligations Reserve Fund . On or before March 1 and September 1 in each yea r, the Local Obligations Trustee shall, from the then remaining money in the Special Tax Fund, transfer to and deposit in each Local Obligations Reserve Account within th e Local Obligations Reserve Fund such amount of money as shall be required to restore each such Loc al Obligations Reserve Account to a sum equal to th e Required Bond Reserve (as defined herein) for the a pplicable series of Local Obligations or Refunding Local Obligations, pro rata , to the extent that amounts are available in the S pecial Tax Fund for such purpose; and for this purpose all investments in ea ch Local Obligations Reserve Account shall be value d on March 1 and September 1 of each year at the face value thereof if such investments mature within twelve (12) months from the date of valuation, or i f such investments mature more than twelve (12) months after the date of valuation, at the price at which such investments are redeemable by the holde r at his option, if so redeemable, or if not so redeemab le, at the lesser of (i) the cost of such investmen ts plus the amortization of any premium or minus the amorti zation of any discount, or (ii) the market value of such investments. For purposes of allocating remai ning money in the Special Tax Fund between more than one Local Obligations Reserve Account, any such transfers to and deposits in each Local Obligations Reserve Account shall be made equally and ratably.

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No deposit need be made into a Local Obligations Re serve Account if the value of the investments contained therein is at least equal to the Required Bond Reserve for the applicable series of Local Obligations or Refunding Local Obligations.

All money in each Local Obligations Reserve Account shall be used and withdrawn by the Local Obligations Trustee solely for the purpose of payin g the interest on or principal of the corresponding series of Local Obligations or Refunding Local Obli gations in the event there is insufficient money in the Redemption Account available for this purpose; prov ided, that if as a result of any of the foregoing valuations or due to redemption as a result of prop erty owner prepayments it is determined that the amount of money in a Local Obligations Reserve Acco unt exceeds or will exceed the Required Bond Reserve for the applicable series of Local Obligati ons or Refunding Local Obligations, the Local Obligations Trustee shall withdraw the amount of mo ney representing such excess from such fund and shall deposit such amount of money in the Redemptio n Account. For the avoidance of doubt, amounts in a Local Obligations Reserve Account are not availab le to make up a deficiency for the payment of principal and interest on any series of Local Oblig ations or Refunding Local Obligations, other than t he specific series of Local Obligations or Refunding L ocal Obligations to which that Local Obligations Reserve Account relates.

Surplus Amounts . On or before March 1 and September 1 in each yea r, the Local Obligations Trustee shall, from the then remaining money in the Special Tax Fund, transfer all amounts remaining i n the Special Tax Fund after the transfers specified in the immediately preceding paragraphs to the City for deposit in the Community Facilities Fund.

Special Tax Authorization
The Special Tax is to be levied and collected again st all Taxable Property within the Improvement Area in accordance with the Rate and Me thod. See APPENDIX A—“RATE AND
METHOD.” The 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 ad valorem property taxes. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Covenant for Foreclosure” and “CERTAIN RISKS TO BONDHOLDERS—Collection of Special Tax.”
The Rate and Method, subject to the maximum rates s et forth therein, apportions the total debt service requirement (principal, interest, and manda tory sinking fund payments), restoration of the Required Bond Reserve, current annual expenses, pay as you go improvement costs and other costs each year among the Taxable Property in the Improvement Area. See APPENDIX A—“RATE AND METHOD.”
Pursuant to the Local Obligations Indenture, so long as any Local Obligations or Refunding Local Obligations are Outstanding, the District is requir ed annually to levy the Special Tax against all Tax able Property in the Improvement Area and make provision for the collection of such 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 Obligati ons 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 Local Obligatio ns and any Refunding Local Obligations as they become due and payable, to replenish each reserve a ccount within the Local Obligations Reserve Fund to the Required Bond Reserve and to pay all current Expenses as they become due and payable.

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Under the Rate and Method, the Facilities Special T ax (as defined herein) levied in any fiscal year against any Assessor’s Parcel (as defined in t he Rate and Method) of Developed Property classifie d as Residential Property may not be increased as a c onsequence of delinquency or default in the payment of Facilities Special Taxes by the owner or owners of any other parcel or parcels within the Improveme nt Area by more than 10% above the amount that would h ave been levied against such Assessor’s Parcel in that fiscal year had there never been any such deli nquencies or defaults. Pursuant to the Rate and Method, property is considered “Residential Propert y” once a building permit could be issued for the purposes of constructing one or more Residential Un its, including either single family detached homes or multi-family attached properties, such as apartment s, and property is considered “Developed Property” if a building permit for new construction was issued p rior to June 30 of the previous fiscal year. See “CERTAIN RISKS TO BONDHOLDERS—Maximum Special Tax.”
Covenant for Foreclosure
The Local Obligations Indenture provides that the S pecial Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provide d in the special covenant for foreclosure described below and in the Mello-Roos Act, is subject to the same penalties a nd the same procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes.

Pursuant to Section 53356.1 of 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 forec lose the lien therefor within specified time limits. In such an action, the real property subject to the u npaid amount may be sold at a judicial foreclosure sale. Such judicial foreclosure action is not mandatory.

However, the District has covenanted in the Local O bligations 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 Spe cial Tax in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and if it determines on the basis of such review that (1) the amount so collected is deficient by more than five percent (5%) of the total amount of the Special Tax levied in such Fiscal Year or (2) any individual l ot or parcel is then delinquent on four or more installme nts of the Special Tax, then in each case the Distr ict agrees to, within sixty (60) days thereafter, insti tute foreclosure proceedings as authorized by the M ello- Roos Act in order to enforce the lien of the delinq uent installments of the Special Tax against (i) in the case of clause (1) above, each delinquent lot or pa rcel in the Improvement Area or (ii) in the case of clause (2) above, such delinquent lot or parcel, re spectively, which it agrees to diligently prosecute and pursue such foreclosure proceedings to judgment and sale; provided, that the District is not obligated to enforce the lien of any delinquent installment of t he Special Tax for any Fiscal Year in which the Dis trict has received one hundred percent (100%) of the amou nt of such installment from the County pursuant to the Teeter Plan (described herein). Any actions tak en to enforce delinquent Special Tax liens shall be taken only consistent with Sections 53356.1 through 53356.7, both inclusive, of the Government Code of the State of California.

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 Local Oblig ations Reserve Account has been depleted) pending such sales or the prosecution of such foreclosure p roceedings and receipt by the District of the proce eds of sale. However, within the limits of the Special Tax, the District may adjust the Special Tax levie d on Taxable Property in the Improvement Area (subject t o the limitation on the Maximum Facilities Special Tax, defined herein), to provide an amount required to pay interest on and principal of the Local Obligations and any additional obligations payable from the Special Tax, and the amount, if any, necessary to replenish each subaccount of the Local Obligations Reserve Fund to an amount equal to the Required Bond Reserve and to pay all current Expenses for the Improvement Area. There is, however, no assurance that the total amount of the Special Tax that could be levied and collected against Taxable

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Property (as defined in the Rate and Method) in the Improvement Area will be at all times sufficient t o pay the amounts required to be paid by the Local Ob ligations Indenture, even if the Special Tax is lev ied at the Maximum Facilities Special Tax rates. See “ CERTAIN RISKS TO BONDHOLDERS—Maximum Special Tax.”
No assurance can be given that the real property su bject 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 Special T ax.

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 specify that the Special T ax 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 proper ty within the Improvement Area that is sold pursuant t o foreclosure under the Mello-Roos Act be sold for not less than the amount of judgment in the foreclo sure action, plus post judgment interest and authorized costs, unless the consent of the owners of at least 75% of the Local Obligations and any Refunding Loc al Obligations issued under the Local Obligations Indenture is obtained.

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 Local Obli gations or to replenish the Local Obligations Reser ve Account; provided, that nothing shall affect the ri ght of the District under the Mello-Roos Act to mak e advances to cure any deficiencies.

Terms of the Local Obligations
General. The City Council of the City established the Distri ct and designated certain improvement areas, other than the Improvement Area, therein on May 26, 2020. On December 14, 2021, the City Council of the City adopted a resolution t o designate the Improvement Area within the Distric t.

On that same date, the qualified electors of the Di strict in the Improvement Area authorized the issua nce of bonds in an amount not to exceed $14,250,000 for the Improvement Area.

The Local Obligations will be the first issuance of bonds for the Improvement Area. The Local Obligations will be issued in the aggregate princip al amount of $[Par Amount] * pursuant to the Mello-
Roos Act and the Local Obligations Indenture. The Local Obligations will be dated the date of deliver y of the Bonds. The Local Obligations are secured by a pledge of the Special Taxes (net of Priority Administrative Expenses) levied within the Improvem ent Area. The District may issue Refunding Local Obligations on parity with the Local Obligations in accordance with the Local Obligations Indenture an d only for refunding purposes for so long as the Local Obligations are Outstanding.

Local Obligations Reserve Account. The Local Obligations Indenture establishes, for th is series of the Local Obligations specifically, a Local Obli gations Reserve Account within the Local Obligation s Reserve Fund to be held by the Local Obligations Tr ustee. The Local Obligations Indenture requires that there be maintained in the Local Obligations Reserv e Account an amount equal to the Required Bond Reserve. “Required Bond Reserve” is defined to mea n, for the Local Obligations specifically, as of an y 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 o r (c) ten (10%) percent of the original principal amount of the Local Obligations; provided that the Required Bond Reserve shall be calculated on the date of issuance of the Local Obligations issued under t he Local Obligations Indenture and shall not increa se thereafter; and provided further that such requirem ent (or any portion thereof) may be satisfied by th e

* Preliminary, subject to change.

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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 t o qualifier) assigned by Fitch or “Aa” or higher (without regard to qualifier) assigned by Moody’s o r “AA” or higher (without regard to qualifier) assigned by S&P.

The Local Obligations Reserve Account is establishe d specifically for the Local Obligations, and amounts in the Local Obligations Reserve Account ar e not available to make up a deficiency for the payment of principal and interest on any Refunding Local Obligations. Pursuant to the Local Obligations Indenture, each reserve account within the Local Ob ligations Reserve Fund is only available for paying the interest on or principal of the corresponding s eries of Local Obligations or any Refunding Local Obligations for which it was created.

The Required Bond Reserve with respect to the Local Obligations upon their date of issuance will be $___________.

All money in the 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 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 a Required Bond Reserve or as a result of any property owner prepayment it is determined that the amount of money in the Local Obligations R eserve Account exceeds the Required Bond Reserve, the Local Obligations Trustee shall withdraw the am ount 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 Account are not available to cure a deficiency in Revenues available to pay debt service on the Bonds.

Refunding Local Obligations . The District may at any time, by a supplement to the Local Obligations Indenture, issue Refunding Local Obliga tions that are payable from the proceeds of the Special Tax (after payment of Priority Administrati ve Expenses) on parity with the Local Obligations provided, that such Refunding Local Obligations sha ll only be issued for the refunding of Local Obligations that are Outstanding and the payment of the costs of issuance, subject to the following conditions, which conditions are precedent to the issuance of such Refunding Local Obligations:
(i) The District shall be in compliance with all ag reements, conditions, covenants and terms contained in the Local Obligations Indenture and in all Supplemental Indentures required to be observe d or performed by it, and no Event of Default under t he Local Obligations Indenture or under any Supplemental Indenture shall have occurred and shall be then continuing; (ii) The District shall establish a separate subacc ount of the Local Obligations Reserve Fund for the payment of such Refunding Local Obligations in an amount equal to the Required Bond Reserve; and
(iii) After the issuance and delivery of such Refun ding Local Obligations, either (i) none of the Local Obligations and Refunding Local Obligatio ns theretofore issued under the Local Obligations Indenture will be Outstanding or (ii) the Debt Serv ice in each Bond Year that begins after the issuanc e of such Refunding Local Obligations is not increased b y reason of the issuance of such Refunding Local Obligations.

Redemption of the Local Obligations . The Local Obligations are subject to extraordina ry redemption by the District prior to their respective maturity dates, from funds derived by the District from

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prepayments of the Special Tax. The Local Obligati ons are also subject to optional and mandatory redemption by the District. A description of the r edemption prices and terms of the Local Obligations is set forth under APPENDIX C—“SUMMARY OF PRINCIPAL DOCUMENTS—SUMMARY OF THE LOCAL OBLIGATIONS INDENTURE—Redemption of 2026 Bonds.” Selection of Local Obligations for Redemption . If less than all the outstanding Local Obligatio ns and any Refunding Local Obligations are to be redee med as a result of prepayments of the Special Tax a t any one time, the Local Obligations and any Refundi ng Local Obligations shall be redeemed pro rata by maturity. If less than all the outstanding Local O bligations and any Refunding Local Obligations are to be redeemed at the option of the District at any on e time, the Local Obligations and any Refunding Loc al Obligations of the latest maturity date or dates sh all be redeemed prior to or simultaneously with the redemption of the Local Obligations and any Refundi ng Local Obligations maturing prior thereto, and if less than all the outstanding Local Obligations and any Refunding Local Obligations of any one maturit y date are to be redeemed at any one time, the Trustee shall select the Local Obligations and any Refunding Local Obligations or the portions thereof of such m aturity date to be redeemed in integral multiples o f five thousand dollars ($5,000) in a manner that it deems appropriate and fair.

Special Tax Analysis
The following is a synopsis of the provisions of th e 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 definitions of the capitalized terms used under thi s caption “—Special Tax Analysis” are as set forth in APPENDIX A. This section provides only a summary o f the Rate and Method, and is qualified by more complete and detailed information contained in the entire Rate and Method attached as APPENDIX A.

The Special Tax is to be levied and collected again st all Taxable Property within the Improvement Area in accordance with the Rate and Me thod approved by the landowner electors of the Improvement Area. The total annual levy of the Spe cial Tax is calculated to satisfy the annual debt service during the ensuing Fiscal Year, to replenis h the reserve fund for the Local Obligations, the allocable portion of administrative expenses, the a mount necessary to cure any delinquencies or to fun d any deficiency of the amount to be available for th e payment of principal or interest on bonds which a re expected to occur in the ensuing Fiscal Year, to fu nd authorized facilities funded on a pay-as-you-go basis, to fund authorized services expenses and to pay amounts required to establish or replenish cert ain funds related to authorized services, less any avai lable capitalized interest and earnings on the fund s that may be used to fund the aforementioned costs.

Assignment to Land Use Categories. Each Fiscal Year, all Assessor’s Parcels within the Improvement Area will be classified as either Taxab le Property or Exempt Property. Taxable Property will be further classified as Developed Property, S mall Lot Final Map Property, Permit Ready Multi- Family/Non-Residential Property, Large Lot Property , or Undeveloped Property and shall be subject to the levy of the annual Special Tax.
“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. “Small Lot Final Map Property ” means, for each Fiscal Year, all Taxable Property for which a Small Lot Final Subdivision Map was recorded prior to June 30 of the previous Fiscal Year. “Permit Ready Multi-Family/Non-Residential Property ” means an Assessor’s Parcel of Taxable Property zoned for multi-family or non-residential land use for which all discretionary entitlements h ave been obtained, including without limitation, develo pment plan review and improvement plan approval,

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such that building permits may be issued without fu rther approvals for the construction of multi-famil y Residential Units or non-residential buildings with in such Assessor’s Parcel. The City shall have sole discretion, based upon available development inform ation, in classifying an Assessor’s Parcel as Permi t Ready Multi-Family/Non-Residential Property.
“Large Lot Property ” means, for each Fiscal Year, all Taxable Property for which a Large Lot Map was recorded prior to June 30 of the previous Fiscal Year, excluding any portion(s) thereof classified as Developed Property, Small Lot Final Map Property or Permit Ready Multi-Family/Non-Residential Property. Large Lot Property also means, for each F iscal Year, all Taxable Property classified as Smal l Lot Final Map Remainder Property as of June 30 of the previous Fiscal Year. “Small Lot Final Map Remainder Property ” means an Assessor’s Parcel that is created from t he subdivision of Large Lot Property by the recordatio n of a Small Lot Final Subdivision Map that has not yet been mapped for final development approval. Sm all Lot Final Map Remainder Property is that portion of property for which the Small Lot Final S ubdivision Map definition does not apply (i.e., doe s not contain individual lots for which building perm its may be issued for Residential Units without fur ther subdivision of such property). Each Fiscal Year, a ll Taxable Property classified as Small Lot Final M ap Remainder Property, as of June 30 of the previous Fiscal Year, will be considered Large Lot Property. “Undeveloped Property ” means, for each Fiscal Year, all Taxable Property not classified as Developed Property, Small Lot Final Map Property, P ermit Ready Multi-Family/Non-Residential Property or Large Lot Property.
“Single-Family Detached Property – MLD Zoning ” means, for each Fiscal Year, all Taxable Property for which a building permit could be issue d for purposes of constructing one or more detached or attached Residential Units with a permitted dens ity range of 7-12 Residential Units per Acre, which is more fully described in the Specific Plan.
“Single-Family Detached Property – SF/SFHD Zoning ” means, for each Fiscal Year, all Taxable Property for which a building permit could be issued for purposes of constructing one or more Residential Units. Single-Family Detached Property – SF/SFHD Zoning shall consist of either single-family property with a permitted density range of 1-4 Residential U nits per Acre or single-family high-density propert y with a permitted density range of 4-7 Residential U nits per Acre, which is more fully described in the Specific Plan.
“MMD Multi-Family Attached Property ” means all Assessor’s Parcels for which a building permit could be issued for purposes of constructing one or more attached Residential Units per Assessor’s Parcel with a permitted density range of 12-20 Resi dential Units per Acre, which is more fully describ ed in the Specific Plan.
“MHD Multi-Family Attached Property ” means all Assessor’s Parcels for which a building permit could be issued for purposes of constructing one or more attached Residential Units per Assessor’s Parcel with a permitted density range of greater th an 20 Residential Units per Acre, which is more ful ly described in the Specific Plan. MHD Multi-Family At tached Property shall also include an Assessor’s Parcel or that portion of an Assessor’s Parcel designated as a Mixed Use Residential Parcel. “Mixed Use Residential Parcel ” means a mixed use Assessor’s Parcel that is desig nated for residential land use. If the mixed use Assessor’s Parcel contains a combination of residential land use and non-residential land use, only that portion of an Assessor’s Parcel designated for residential land use shall be classified as a Mixed Use Residential Parcel and the remaining non-residential land use of the Assessor’s Parcel shall be classified as Non-Residential Property.

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“Non-Residential Property ” means, for each Fiscal Year, all Taxable Property for which a building permit could be issued for purposes of constructing non-residential buildings.

Maximum Special Tax. Maximum Special Tax is the total annual Maximum Facilities Special Tax (or Effective Tax Rate Evaluation Maximum Facilities Special Tax) and Maximum Services Special Tax.

The Rate and Method is used to allocate the amount of the Special Tax required among the Taxable Property, based upon land use categories, subject t o the Maximum Facilities Special Tax rate that may be levied against each land use category.

The following table shows the Effective Tax Rate Ev aluation Maximum Facilities Special Tax rates both with and without applying the Effective Tax Rate Evaluation Minimum Facilities Revenue calculation and the Maximum Services Special Tax ra tes within the Improvement Area for all allocable land use categories in Fiscal Year 2025-26. If cha nges are made to development plans for the Improvement Area, the projected Effective Tax Rate Evaluation Maximum Facilities Special Tax revenues may decrease, but in no event will the Eff ective Tax Rate Evaluation Maximum Facilities Special Tax revenues decrease below the amounts der ived from application of the Effective Tax Rate Evaluation Minimum Facilities Revenue.

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Table 3
City of Folsom
Communities Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 7
Maximum Special Tax Rate Categories – Fiscal Year 2025-26 Tax Category
Residential
Floor Area (1)
Rate Derived from
Effective Tax Rate
Evaluation
Minimum
Facilities Revenue (2)
Effective Tax Rate
Evaluation
Maximum
Facilities Special Tax
Rate (3)
Maximum
Services
Special Tax
Rate (4)
Maximum
Annual
Special
Tax (5)
Developed Property (per residential unit)
Detached Residential:

Zone 1: Single -Family Detached Property - SF/SFHD Zoning ≥ 2,900 $2,544 $2,652 $199 $2,850 Zone 1: Single -Family Detach ed Property - SF/SFHD Zoning 2,700 - 2,899 2,544 2,587 199 2,786 Zone 1: Single -Family Detached Property - SF/SFHD Zoning ≤ 2,699 2,544 2,544 199 2,742 Zone 2: Single -Family Detached Property - SF/SFHD Zoning ≥ 3,325 3,080 3,328 199 3,527 Zo ne 2: Single -Family Detached Property - SF/SFHD Zoning 3,000 - 3,324 3,080 3,193 199 3,392 Zone 2: Single -Family Detached Property - SF/SFHD Zoning ≤ 2,999 3,080 3,080 199 3,278 Single -Family Detached Property - MLD Zoning N/A 2,544 2,544 199 2,742 Developed Property (per acre)
MMD Multi -Family Attached Property N/A $32,473 $32,473 $561 $33,034 MHD Multi -Family Attached Property N/A 12,664 12,664 1,122 13,786 Non -Residential Property N/A 12,664 12,664 1,122 13,786 Small Lot Final Map Property (per residential lot)
Zone 1: Single -Family Detached Property - SF/SFHD Zoning N/A N/A $2,544 $199 $2,742 Zone 2: Single -Family Detached Property - SF/SFHD Zoning N/A N/A 3,080 199 3,278 Single -Family Detached Property - MLD Zoning N/A N/A 2,544 199 2,742 Permit Ready Multi-Family/Non-Residential Property (per acre) N/A N/A $12,664 $1,1 22 $13, 786 Large Lot Property (per acre) N/A N/A $19, 484 $1, 122 $2 0, 605 Undeveloped Property (per acre) N/A N/A $19, 484 $1, 122 $2 0, 605 ________________
(1) Combines certain residential categories with equal rates. (2) Increases by 2% each Fiscal Year. Reflects the low est Effective Tax Rate Evaluation Maximum Facilitie s Special Tax adjustment possible in connection wit h future subdivisions.
(3) Increases by 2% each Fiscal Year. Reflects the Fis cal Year 2025-26 Effective Tax Rate Evaluation Maximum Facilities Special Tax rates in effect. (4) Increases by the annual June consumer price index change for the San Francisco-Oakland-San Jose area, not to exceed 4% each Fiscal Year. Available to p ay debt service on the Local Obligations and any Refunding Local Obligations in the event of a shortfall in the Facilities Special Tax (as defined in the Local Obligations Indenture). (5) The sum of the Effective Tax Rate Evaluation Maximum Facilities Special Tax and the Maximum Services Special Tax.

Source: NBS and the District.

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The total Special Tax generated by the Improvement Area may change from time to time if there are amendments or modifications to the development plan. The District covenants in the Local Obligations Indenture to not approve any amendments , changes or modifications relating to development of the property within the Improvement Area that wo uld reduce the amount of the Maximum Facilities Special Tax less Priority Administrative Expenses t o equal less than one hundred ten percent (110%) of the sum of the Annual Debt Service on the Local Obligations and any Refunding Local Obligations in any year until the maturity date for the Local Obligations and any Refunding Local Obligations.

Table 4 under “—Special Tax Calculation” below show s the estimated Effective Tax Rate Evaluation Maximum Facilities Special Tax revenue a nd the estimated Effective Tax Rate Evaluation Minimum Facilities Revenue for Fiscal Year 2026-27, based on the development status of the properties as of February 17, 2026. If changes are made to de velopment plans for the Improvement Area, the projected Effective Tax Rate Evaluation Maximum Fac ilities Special Tax revenues may decrease from the amounts shown in that table, but in no event wi ll the Effective Tax Rate Evaluation Maximum Facilities Special Tax revenues decrease below the Effective Tax Rate Evaluation Minimum Facilities Revenue. Table 5 under “—Special Tax Calculation” b elow shows the actual total Special Tax levy for Fiscal Year 2025-26 based on the properties’ develo pment status as of February 17, 2026, including bot h the actual Facilities Special Tax levy and the actu al Services Special Tax levy for Fiscal Year 2025-2 6, and the percentage of the actual Special Tax levy allocable to each of the projected property owners.

Included below are additional relevant defined terms used in the Rate and Method. “Effective Tax Rate Evaluation Minimum Facilities Revenue ” means, following the Effective Tax Rate Evaluation, the total minimum amount of Effective Tax Rate Evaluation Maximum Facilities Special Tax, as adjusted annually by the Facilities Special Tax Escalation Factor after the Fiscal Year in w hich the Effective Tax Rate Evaluation occurs, les s any Effective Tax Rate Evaluation Maximum Facilities Special Tax amounts prepaid and permanen tly satisfied pursuant to Section K of the Rate and Method. The Effective Tax Rate Evaluation Minimum F acilities Revenue, based on Planned Development, is set forth in Attachment D of the Rate and Method.

“Effective Tax Rate Evaluation Maximum Facilities Sp ecial Tax ” means the total maximum annual Facilities Special Tax, as determined during the Effective Tax Rate Evaluation in accordance wi th the Rate and Method, which may be levied in any Fis cal Year on any Assessor’s Parcel of Taxable Property.

“Effective Tax Rate Evaluation ” means an evaluation of the Total Effective Tax Ra te of Residential Property at the time of such evaluation . The Effective Tax Rate Evaluation will be based upon a prepared Price Point Study to determine the Total Effective Tax Rate for Residential Property, based upon the calculated Total Estimated Tax Burden.

“Total Effective Tax Rate ” means the percentage of the Total Estimated Tax B urden as compared to the estimated average sales price identified in the Price Point Study for each land use category of Residential Property.

“Total Estimated Tax Burden ” means the total amount of overlapping property ta xes anticipated to be levied upon a Residential Unit, based upon th e estimated average sales price identified in the P rice Point Study and existing property tax rates for the current Fiscal Year. Existing property tax rates shall reflect the actual property tax rates levied upon Taxable Property in the Fiscal Year that the Effective Tax Rate Evaluation is completed.

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Future Assessor’s Parcel Changes – After an Effecti ve Tax Rate Evaluation. The Effective Tax Rate Evaluation Maximum Facilities Special Tax will be assigned to all future Assessor’s Parcel(s) created from a subdivision, lot line adjustment, or merger of one or more Assessor’s Parcels so that t he revised sum of the total Effective Tax Rate Evaluat ion Maximum Facilities Special Tax revenue is not less than the total Effective Tax Rate Evaluation M inimum Facilities Revenue amount described in the Rate and Method.

Method of Apportionment – Facilities Special Tax – After an Effective Tax Rate Evaluation. The CFD No. 23 IA7 Administrator will determine the Fac ilities Special Tax Requirement and levy the Facilities Special Tax until the amount of Faciliti es Special Taxes equals the Facilities Special Tax Requirement. The Facilities Special Tax shall be levied each Fiscal Year as follows:

First : The Facilities Special Tax shall be levied Prop ortionately on all Developed Property at a rate up to 100% of the Effective Tax Rate Evaluat ion Maximum Facilities Special Tax in order to satisfy the Facilities Special Tax Requirement.

Second : If additional monies are needed to satisfy the F acilities Special Tax Requirement after the first step has been completed, the Facilities S pecial Tax shall be levied Proportionately on all Small Lot Final Map Property at a rate up to 100% of the Effective Tax Rate Evaluation Maximum Facilities Special Tax. The Facilities Special Tax shall be levied on Small Lot Final Map Property for the entire portion of the Facilities Special Tax Requirement, excluding only Pay As You Go Costs.

Third : If additional monies are needed to satisfy the Facilities Special Tax Requirement after the first two steps have been completed, the Facili ties Special Tax will be levied Proportionately on all Permit Ready Multi-Family/No n-Residential Property at a rate up to 100% of the Effective Tax Rate Evaluation Max imum Facilities Special Tax.

The Facilities Special Tax will be levied on Permit Ready Multi-Family/Non- Residential Property for the entire portion of the Facilities Special Tax Requirement, excluding only Pay As You Go Costs.

Fourth : If additional monies are needed to satisfy the Facilities Special Tax Requirement after the first three steps have been completed, the Faci lities Special Tax shall be levied Proportionately on all Large Lot Property at a rate up to 100% of the Effective Tax Rate Evaluation Maximum Facilities Special Tax. The Facilities Special Tax shall be levied on Large Lot Property for the entire portion of the Facilities Special Tax Requirement, excluding only Pay As You Go Costs.

Fifth : If additional monies are needed to satisfy the Facilities Special Tax Requirement after the first four steps have been completed, the Facil ities Special Tax shall be levied Proportionately on all Undeveloped Property at a ra te up to 100% of the Effective Tax Rate Evaluation Maximum Facilities Special Tax. The Facilities Special Tax shall be levied on Undeveloped Property for the entire porti on of the Facilities Special Tax Requirement, excluding only Pay As You Go Costs.

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Method of Apportionment – Services Special Tax. The CFD No. 23 IA7 Administrator shall determine the Services Special Tax Requirement and levy the Services Special Tax until the amount of Services Special Taxes equals the Services Special Tax Requirement. The Services Special Tax shall be levied each Fiscal Year as follows:

First : The Services Special Tax shall be levied Propor tionately on all Developed Property at a rate up to 100% of the Maximum Services Special T ax in order to satisfy the Services Special Tax Requirement.

Second : If additional monies are needed to satisfy the S ervices Special Tax Requirement after the first step has been completed, the Services Spe cial Tax shall be levied Proportionately on all Small Lot Final Map Property at a rate up to 100% of the Maximum Services Special Tax in order to satisfy th e Services Special Tax Requirement.

Third : If additional monies are needed to satisfy the Services Special Tax Requirement after the first two steps have been completed, the Servic es Special Tax shall be levied Proportionately on all Permit Ready Multi-Family/No n-Residential Property at a rate up to 100% of the Maximum Services Special Tax in o rder to satisfy the Services Special Tax Requirement.

Fourth : If additional monies are needed to satisfy the Services Special Tax Requirement after the first three steps have been completed, the Serv ices Special Tax shall be levied Proportionately on all Large Lot Property at a rate up to 100% of the Maximum Services Special Tax in order to satisfy the Services Special Tax Requirement. “Special Tax ” means the annual Facilities Special Tax and Servi ces Special Tax to be levied in each Fiscal Year on each Assessor’s Parcel of Taxab le Property to fund the Facilities Special Tax Requirement and the Services Special Tax Requirement.
“Facilities Special Tax Requirement ” means that amount of Special Tax revenue required in any Fiscal Year for the Improvement Area to: (i) Pay Fa cilities Administrative Expenses in an amount designated by the City; (ii) pay annual debt servic e on all Outstanding Bonds due in the Bond Year beginning in such Fiscal Year; (iii) pay other peri odic costs on Outstanding Bonds, including but not limited to, credit enhancement and rebate payments on Outstanding Bonds; (iv) pay any amounts required to establish or replenish any reserve funds for all Outstanding Bonds in accordance with the Local Obligations Indenture; (v) pay for reasonably antic ipated delinquent Special Taxes based on the delinquency rate for Special Taxes levied in the previous Fiscal Year and known upcoming delinquencies; and (vi) pay for Pay As You Go Costs; less (vii) a credit for funds available to reduce the annual Facilities Special Tax levy as determined by the CFD No. 23 IA 7 Administrator pursuant to the Local Obligations Indenture.
“Authorized Services” means the landscape corridor, enhanced open space and street light maintenance, services, and expenses authorized to be financed by the Improvement Area. “Services Special Tax ” means the annual Special Tax to be levied in each Fiscal Year on each Assessor’s Parcel of Taxable Property to fund the Services Special Tax Requirement. “Services Special Tax Requirement ” means the amount of Services Special Tax revenue required in any Fiscal Year for the Improvement Area to: (i) Pay Services Administrative Expenses in an amount designated by the City; (ii) pay Authorized Service s expenses; (iii) pay any amounts required to estab lish

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or replenish any repair and contingency funds, capi tal improvement funds, or reserve funds related to the Authorized Services expenses; (iv) cover any shortf alls that exist if, in any Fiscal Year, the levy of the Facilities Special Tax on each Assessor’s Parcel of Taxable Property is insufficient to pay the Facili ties Special Tax Requirement in that Fiscal Year (Facili ties Special Tax Requirement shortfalls shall not include Pay As You Go Costs), and (v) pay for reaso nably anticipated delinquent Services Special Taxes based on the delinquency rate for Services Special Taxes levied in the previous Fiscal Year; less (vi) a credit for funds available to reduce the annual Ser vices Special Tax levy as determined by the CFD No. 23 IA7 Administrator.

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 applie d to help cover the Facilities Special Tax shortfal l before being applied to fund Authorized Services. S ee “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Local Obligations Flow of Funds.”
Term of Special Tax . Pursuant to the Rate and Method, the Facilities Special Tax is authorized to be levied until the earlier of (i) the Fiscal Year occurring 50 years following the Fiscal Year in whi ch the first building permit was issued or (ii) Fiscal Yea r 2079-2080. The first building permit within the Improvement Area was pulled in Fiscal Year 2023-24. The Services Special Tax is authorized, pursuant to the Rate and Method, to be levied in perpetuity, unless and until such time the City determines tha t revenues are no longer needed to pay the Services Special Tax Requirement.

Residential Property Limitation. Under no circumstances will the Facilities Special Tax levied in any fiscal year against any Assessor’s Parcel of De veloped Property classified as Residential Property be increased as a consequence of delinquency or defaul t by the owner or owners in the payment of the Facilities Special Taxes by any other parcel or par cels within the Improvement Area by more than 10% above the amount that would have been levied agains t such Assessor’s Parcel in that fiscal year had th ere never been any such delinquencies or defaults. Purs uant 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 fam ily detached homes or multi-family attached properties, such as apartments, and property is con sidered “Developed Property” if a building permit f or new construction was issued prior to June 30 of the previous fiscal year. See “CERTAIN RISKS TO BONDHOLDERS—Maximum Special Tax.”
Special Tax Calculation
The following tables reflect the estimated Effectiv e Tax Rate Evaluation Maximum Facilities Special Tax revenue for Fiscal Year 2026-27 (Table 4), based on the development status of the properti es as of February 17, 2026 (as shown in the Appraisal, unless otherwise noted), and the actual total Spec ial Tax levy for Fiscal Year 2025-26 (Table 5) based on the development status of the properties as of June 30, 2025 (unless otherwise noted). For Fiscal Year 2026-27, since all Taxable Property in the Improvement Area is either Developed Property or Sm all Lot Final Map Property and all Small Lot Final Map Property is assigned the Effective Tax Rate Eva luation Minimum Facilities Rate, the Effective Tax Rate Evaluation Maximum Facilities Special Tax Reve nue for Fiscal Year 2026-27 is equal to the Effective Tax Rate Evaluation Minimum Facilities Revenue for Fiscal Year 2026-27.

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Table 4
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 7
Estimated Fiscal Year 2026-27 Effective Tax Rate Evaluation Maximum Facilities Special Tax Revenue Development Status as of February 17, 2026
Property
Planned
Units
Assessed
Value (1)
Appraised
Value (1) Total Value (1)
Estimated 2026-27
Effective Tax Rate
Evaluation
Maximum Facilities
Revenue (2)(3)
Percentage of
Estimated 2026-27
Effective Tax Rate
Evaluation Maximum
Facilities Revenue
Developed Property:

Zone 1: Single -Family Detached Property - SF/SFHD Zoning 76 $29,144,294 $22,046,000 $51,190,294 $205,248 32% Zone 2: Single -Family Detached Property – SF/SFHD Zoning 80 33,973,497 43,658,000 77,631,497 267,402 42% Developed Property Total: 156 $63,117,791 $65,704,000 $128,821,791 $472,650 75% Small Lot Final Map Property:

Zone 1: Single -Family Detached Property - SF/SFHD Zoning 25 $0 $6,350,000 $6,350,000 $64,865 10% Zone 2: Single -Family Detached Property - SF/SFHD Zoning 30 0 9,450,000 9,450,000 94,233 15% Small Lot Final Map Property Total: 55 $0 $15,800,000 $15,800,000 $159,098 25% Total Effective Tax Rate Maximum Facilities Revenue: 211 $63,117,791 $81,504,000 $144,621,791 $631,748 100% ________________
(1) Appraised value amounts provided by the Appraiser.
(2) Increases by 2% each Fiscal Year.
(3) The 2026-27 Effective Tax Rate Evaluation Minimum Facilities Revenue is $607,576.

Source: NBS.

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Table 5
City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 7
Actual 2025-26 Special Tax Levy
Development Status as of June 30, 2025
Property Owner Development Status
Planned
Units
2025-26
Facilities Special
Tax Levy
2025-26
Services Special
Tax Levy
2025-26
Total Special
Tax Levy
Percent of 2025-26
Facilities Special
Tax Levy
Toll Brothers Developed Property 40 $126,347 $7,940 $134,287 36% Toll Brothers Small Lot Final Map Property 97 0 19,255 19,255 0% Total for Toll Brothers: 137 $126,347 $27,195 $153,541 36%

Individual Homeowners Developed Property 74 $221,990 $14,690 $236,680 64% Totals: 211 $348,336 $41,885 $390,221 100%

______________________
Source: NBS.

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The Teeter Plan
In July 1993, the Board of Supervisors of the Count y approved the implementation of the Alternative Method of Distribution of Tax Levies an d Collections and of Tax Sale Proceeds (the “Teeter Plan”), as provided for in Section 4701 et seq. of the California Revenue and Taxation Code. Under the Teeter Plan, the County apportions secured property taxes on an accrual basis (irrespective of actual collections) to local political subdivisions for wh ich the County acts as the tax-levying or tax-colle cting agency.

Under the Teeter Plan, the County distributes tax c ollections on a cash basis to taxing entities during the fiscal year and shortly after year-end, and also distributes 100% of any taxes delinquent a s of June 30th to the taxing entities and those special assessment districts and community facilities distr icts (and individual parcels within each district) that the County determines are eligible to participate i n 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 delinq uent 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 pip eline assessed values; (4) special assessments (sub ject to judiciary foreclosure) to be stripped from the tax bill; (5) bankruptcy; (6) demolition of the propert y; (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 delinque nt amount is greater than or equal to assessed valu e of the property; (11) property that is de-enrolled fro m the Teeter Plan in previous years under the same owner and (12) the 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 5% 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 o r special assessment district that includes its levy on the County tax roll is qualified to be unde r the County’s Teeter Plan. The District is include d in the County’s Teeter Plan. See, however “CERTAIN RISKS TO BONDHOLDERS—Teeter Plan Termination.” The District can provide no assuranc e that the County will continue to include the Dist rict in the Teeter Plan.

THE AUTHORITY
The Authority was created by a Joint Exercise of Po wers Agreement, effective April 20, 2015 (the “JPA Agreement”), between the City and the Cit y 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 o f Title 1 of the Government Code of the State. The A uthority was created for the purpose of facilitatin g financing of public improvement facilities within the City south of US Route 50.

THE CITY
The Improvement Area is located in the City, which is located in the easterly section of the Sacramento metropolitan area approximately 22 miles east of the central business district of the City of Sacramento.

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Certain economic and demographic information with r espect to the City is contained in APPENDIX B. This information is presented solely as backgro und information. The Local Obligations are not general obligations of the City but, rather , are special tax obligations of the District secur ed solely by the Special Taxes to be paid by the owners of pr operty in the Improvement Area and funds held pursuant to the Local Obligations Indenture.

THE IMPROVEMENT AREA
General Description and Location
The District is a community facilities district org anized by the City Council as the legislative body of the District under the Mello-Roos Act for t he 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 May 26, 2020, and designated six separate improvement areas therein. On December 14, 2021, the City adopt ed a resolution to designate a seventh improvement area, the Improvement Area, within the District. O n that same date, an election was held within the District at which the eligible voters in the Improv ement Area approved the levy of special taxes in accordance with the Rate and Method. In addition, the eligible voters in the Improvement Area authorized the issuance of bonds in an amount not t o exceed $14,250,000 for the Improvement Area.

Following the issuance of the Local Obligations, th e District does not anticipate financing any additi onal improvements through the issuance of Refunding Loca l Obligations. Further, for so long as the Local Obligations are Outstanding, Refunding Local Obliga tions may be issued on parity with the Local Obligations only for refunding purposes. Pursuant t o the Mello-Roos Act, the qualified electors were t he landowners of Taxable Property within the Improveme nt Area. In connection with the landowner election, all electors delivered customary waivers to certain matters relating to the conduct of the election.

The District expects that such bonds and any bonds issued for the other improvement areas within the District from time to time will be issued to fi nance the authorized public facilities for the bene fit of the District. With respect to the Improvement Area , such bonds will be issued only in accordance with the provisions of the Local Obligations Indenture, and any Refunding Local Obligations will be issued for refunding purposes only. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS— Terms of the Local Obligations—Refunding Local Obligations .” The Improvement Area is located in the southern por tion of the City, at the southeast corner of Mangini Parkway and Oak Avenue Parkway and consists of over 73.66 total gross acres (excluding non- parcel areas, such as roadways), all of which is su bject to the Special Tax. The maps appearing on the inside cover pages show the general location of the District and the Improvement Area.

The property within the Improvement Area is under d evelopment, with homes completed and sold and conveyed to individual homeowners, homes under construction and being marketed to individual homeowners, and finished lots. As of February 17, 2026, the Taxable Property within the Improvement Area was owned by Toll Brothers and individual home owners. As of that date, Toll Brothers owned 101 lots, comprising six completed single family homes (including four models), 31 homes under construction and 64 finished lots, and individual homeowners own ed 110 single family homes. See “PROPOSED PROPERTY DEVELOPMENT—Toll Brothers Development.” At full buildout, the Improvement Area is expected to include a total of 211 single-family ho mes. Construction of the public improvements and backbone infrastructure in the Improvement Area is complete as of February 17, 2026, as more particularly described “PROPOSED PROPERTY DEVELOPME NT—Toll Brothers Development— Financing Plan.”

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Property Values
The Appraiser has prepared the Appraisal Report, wh ich estimates the value of the Taxable Property within the Improvement Area as of February 17, 2026 (the “Date of Value”). According to the Appraisal Report, the Appraiser has estimated the value of the Taxable Property in the Improvement Area to be $144,621,791. The Appraisal Report estimates only the value of existing parcels in the Improvement Area that are to be subject to the lien of Special Tax.

The Appraisal Report is based on a number of genera l assumptions and limiting conditions further described therein. In addition, the Appraisal Report is subject to the hypothetical conditions named therein, including the assumption that certain impa ct fees and public improvements to be reimbursed by the proceeds of the Local Obligations have been pai d. See “THE PROPOSED DEVELOPMENT— Development Entitlements” for information about the status of such improvements.

The complete Appraisal Report, including all attach ments and appendices, is reproduced in APPENDIX G. The information contained herein is onl y a summary of certain information contained in the Appraisal Report, and such information is quali fied in its entirety by the complete Appraisal Repo rt.

See “SPECIAL RISK FACTORS – Appraisal Risks” herein.

Value-to-Lien Analysis
The following table sets forth the ratios of the property values of the Taxable Property to the total liens on the property in the Improvement Area based on the development status of the property as of February 17, 2026. The following table shows the value-to-lien ratios for the Improvement Area based on the development status of the Taxable Property as o f February 17, 2026, for (i) Developed Property and Small Lot Final Map Property and (ii) the owners of the Taxable Property. See “PROPOSED PROPERTY DEVELOPMENT—Development Entitlements.” The following table also shows the estimated Facilities Special Tax levy for Fiscal Ye ar 2026-27 based on the properties’ current map sta tus as Developed Property and Small Lot Final Map Prope rty. The value-to-lien ratio for the Improvement Area based solely on the Local Obligations and the appraised value of the land within the Improvement Area is [14.2] *:1.0. The overall value to overlapping debt ratio, including certain overlapping general obligation tax and assessment debt, CFD 17 special tax debt, and CFD 18 special tax debt, is [10.3] *:1.0 (see “THE IMPROVEMENT AREA—Overlapping Debt”). Any bonds secured by special assessments or special taxes issued from time to time may have the effect of reducing the value to lien ratio on property within the Improvement Area.

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* Preliminary, subject to change .

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Table 6
City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 7
Value-to-Lien Ratios
Development Status as of February 17, 2026

Planned
Units
Estimated
2026-27
Effective Tax
Rate
Evaluation
Maximum
Facilities
Revenue (1)

Estimated
2026-27
Facilities
Special
Tax Levy (2)
Assessed
Value (3)
Appraised
Value (3) Total Value (3)
Share of Local
Obligations (4)*
Overlapping
Debt
Local
Obligations
Value to
Lien (5)*
Overlapping
Debt Value
to Lien (5)*
By Development Status:

Developed Property 156 $472,650 $472,650 $63,117,791 $65,704,000 $128,821,791 $8, 323,670 $3,472,577 15. 5 10.9 Small Lot Final Map 55 159,098 103, 703 0 15,800,000 15,800,000 1, 826,330 369,529 8. 7 7. 2 Total 211 $631,748 $576,356 $63,117,791 $81,504,000 $144,621,791 $10,150,000 $3,842,106 14.2 10.3

By Ownership Group:

Toll Brothers 10 1 $292,139 $236, 747 $2,947,153 $31,174,000 $34,121,153 $4,1 69,273 $831,053 8. 2 6. 8 Individual Homeowners 110 339,609 339,609 60,170,638 50,330,000 110,500,638 5,980,727 3,011,053 18.5 12.3 Total 211 $631,748 $576,356 $63,117,791 $81,504,000 $144,621,791 $10,150,000 $3,842,106 14.2 10.3 ______________________
* Preliminary, subject to change.
(1) Increases by 2% each Fiscal Year. The 2026-27 Effective Tax Rate Evaluation Minimum Facilities Revenue amount is $607,576. (2) Based on estimated debt service requirements for the Local Obligations plus Priority Administrative Expenses of $25,500. (3) Appraised value amounts provided by the Appraiser. See “THE IMPROVEMENT AREA—Property Values.” (4) Allocated based on the estimated Fiscal Year 2026-27 Facilities Special Tax levy. (5) Value to lien ratio is for the Local Obligations. Local Obligations are issued in the same principal amount of the Bonds.

Source: Except as otherwise noted, NBS.

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Estimated Tax Burden on Single Family Home
The following table sets forth the estimated total tax burden on single-family/single-family high density (SF/SFHD) for Zones 1 and 2 within the Impr ovement Area, presented as an estimate of the majority of proposed homes to be constructed in the Improvement Area, based on estimated tax rates for Fiscal Year 2025-26.

Table 7
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 7
Single Family Residential Property Sample Property Tax Bill Estimated Charges for Fiscal Year 2025-26

Zone 1:

SF/SFHD
Zone 2:

SF/SFHD
Appraised Value (1) $830,000 $975,000
Less: Homeowner Exemption (7,000) (7,000)
Net Appraised Value $823,000 $968,000
Ad Valorem (2) Tax Rate
General Purpose Ad Valorem Tax (Proposition 13) 1.0000% $8,230.00 $9,680.00 Los Rios College General Obligation 0.0208% 171.18 201.34 Folsom -Cordova Unified School District Improvement Dist. 2 0.0188% 154.72 181.98 Folsom -Cordova Unified School District Improvement Dist. 3 0.1765% 1,452.60 1,708.52 Total Ad Valorem Taxes 1.2161% $10,008.50 $11,771.85
Special/Direct Assessments and Taxes
Folsom Community Facilities District No. 23 (Folsom Ranch) – Imp. Area No. 7 – Facilities Special Tax (3) $2,651.95 $3,328.47
Folsom Community Facilities District No. 23 (Folsom Ranch) – Imp. Area No. 7 – Services Special Tax (4) 198.51 198.51
Folsom Community Facilities District No. 17 (Willow Hill Pipeline) (5) 81.66 81.66 Folsom Community Facilities District No. 18 (Folsom Plan Area) (6) 1,119.88 1,119.88 Sacramento Area Flood Control (7) 1.50 1.50
Total Special/Direct Assessments and Taxes $4,053.50 $4,730.02 Total Estimated Annual Property Taxes $14,062.00 $16,501.87 Effective Tax Rate (8) 1.6942% 1.6925%
______________________
(1) Estimated based upon appraised value amount provided by the Appraiser for a sample residential unit. (2) Based upon Fiscal Year 2025-26 Sacramento County ad valorem property tax rates for TRA 04-035. (3) Fiscal Year 2025-26 Effective Tax Rate Evaluation M aximum Annual Facilities Special Tax for a Zone 1 r esidential unit with residential floor area greater than 2,900 square fe et and Zone 2 residential unit with residential flo or area greater than 3,325 square feet. The Effective Tax Rate Evaluation Maximum Annual Facilities Special Tax escalates annually at 2%. (4) Fiscal Year 2025-26 Maximum Annual Services Special Tax for a Zone 1 residential floor area greater th an 2,900 square feet and Zone 2 residential floor area greater than 3,325 square feet. The Maximum Annual Services Special Tax escalates annually based upon the annual June CPI Change, for the San Francisco-Oakland-San Jose area, not to exceed 4%. (5) Fiscal Year 2025-26 Maximum Annual Special Tax. The Maximum Annual Special Tax escalates annually at 2%. (6) Fiscal Year 2025-26 Maximum Annual Special Tax. The Maximum Annual Special Tax excludes the Willow Hil l Pipeline Special Tax, which is currently reflected under Folsom Community Facilities District No. 17 (Willow Hill Pipeline). The Area- Wide Special Tax escalates annually at 2% and the M aintenance Special Tax and TDM Services Special Tax escalate annually based upon the annual June CPI Change, for the San Francisco-Oakland-San Jose area, not to exceed 4%. (7) Approximate assessment for residential lots. Based upon lot size. (8) Estimate of annual property taxes does not include any new special financing district fees, assessment s, and/or special taxes imposed by the State, County, or local agencies tha t are yet to be established or any future annexatio n into existing special financing districts required by conditions for appr oval of development or any other imposed requiremen t. Information contained within is based upon records and official documents provided by various governmental agencie s and third-party sources.

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Overlapping Debt
Set forth below is an overlapping debt table showing the existing authorized indebtedness payable with respect to property within the Improvement Are a. Additional indebtedness could be authorized by other public agencies at any time. Further, a port ion of the overlapping debt shown in the table belo w is based on the assessed value of the underlying prope rty, which can be expected to increase over time as development occurs and the assessed value grows. This table (excluding the footnotes) has been prepared by California Municipal Statistics, Inc. as of Febr uary 1, 2026, and is included for general informati on purposes only. Other than with respect to CFD 17 a nd CFD 18, the table below allocates overlapping debt based on the assessed value of property and no t on taxes paid. The District and the Authority ha ve not reviewed the data for completeness or accuracy and make no representations in connection therewith.

The City authorized the issuance of up to $8,000,00 0 of bonds for CFD 17, of which $6,675,000 has been issued. Further, the City authorized the i ssuance of up to $200,000,000 in bonds for CFD 18. In October 2024, CFD 18 issued bonds in the aggregate principal amount of $26,735,000 to help finance certain Phase 2 water transmission facilities. A p ortion of any bonds issued for CFD 17 and CFD 18 constitutes overlapping debt. The Improvement Area constitutes approximately 1.7% by acres of CFD 17 and approximately 1.6% by acres of CFD 18, however any overlapping debt issued by CFD 17 or CFD 18 will not be allocated to the properties in the Impr ovement Area based on their acreage, and the amount of overlapping debt allocated may vary over time. Base d on the development status within CFD 18 as of June 30, 2025, the Improvement Area would generate approximately 4.3% of the maximum CFD 18 special tax levy for bonds. This share of the maxim um CFD 18 special tax levy for bonds is expected to decrease over time as undeveloped properties within CFD 18 become approved with final maps or developed. However, additional CFD 18 debt will be issued in the future, which may increase the lien amount shown. Other community facilities districts formed in the Folsom Ranch area will overlap CFD 18 and potentially CFD 17 but are not expected to overlap the Improvement Area. The lien of the Special Taxes for the Improvement Area is on parity with the lien of the special taxes for CFD 17 and CFD 18.

Direct assessments and levies payable with respect to property within the Improvement Area could potentially include up to $750 million of gen eral obligation bonds for the School Facilities Improvement District No. 3 of the Folsom Cordova Un ified School District (“SFID 3”), approved by voters on March 27, 2007. SFID 3 encompasses appro ximately 52.6 square miles of land including the District and additional territory outside of the Di strict, including territory in the City of Rancho C ordova and unincorporated Sacramento County. As of March 1, 2026, general obligation bonds in the aggregate principal amount of approximately $195.6 million ha d been issued and approximately $178.7 million were outstanding for SFID 3. At the time of the el ection approving the SFID 3 general obligation bond s, the ballot summary indicated the average tax rate p er $100,000 assessed valuation would be $73.61. Fo r 2025-26, the actual SFID 3 tax rate per $100,000 wa s approximately $176.50. The following table sets forth the ad valorem tax rates for SFID 3 over the past five years. The future tax levy per property owner in SFID 3 may vary depending on future bond issuance and/or changes in assessed value.

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Table 8
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 7
SFID 3 Ad Valorem Rates
Year Rate (1)
2025 -26 0.1765%
2024 -25 0.1970%
2023 -24 0.2063%
2022 -23 0.2758%
2021 -22 0.3881%
________________
(1) TRA 04-035
Source: NBS.

Table 9
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 7
Overlapping Debt
as of February 1, 2026
2025-26 Local Secured Assessed Valuation: $98,514,218 (Land and Improvements)

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % A pplicable Debt 2/1/26 Los Rios Community College District 0.034% $ 101 ,370 Folsom-Cordova Unified School District School Facilities Improvement District No. 2 0.462 28,983 Folsom-Cordova Unified School District School Facilities Improvement District No. 3 1.552 2,737,848 City of Folsom Community Facilities District No. 17 2.226 116,841 City of Folsom Community Facilities District No. 18 3.316 857,064 City of Folsom Community Facilities District No. 23, I.A. 7 100. 0 (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $3,842,106

OVERLAPPING GENERAL FUND DEBT:

Sacramento County General Fund Obligations 0.040% $ 31,509 Sacramento County Pension Obligation Bonds 0.040 78 ,963 Sacramento County Board of Education Certificates of Participation 0.040 450 City of Folsom General Fund Obligations 0.449 1 ,417 TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $112, 339
Less: Sacramento County supported obligations 3,185 TOTAL NET OVERLAPPING GENERAL FUND DEBT $109,15 4

GROSS COMBINED TOTAL DEBT $3,954,445
(2)
NET COMBINED TOTAL DEBT $3,951,260

(1) Excludes Mello-Roos Bonds to be sold.
(2) Excludes tax and revenue anticipation notes, enter prise revenue, mortgage revenue and non-bonded capital lease obligations.

Ratios to 2025-26 Local Secured Assessed Valuation:

Direct Debt ($0) ..................................................................................... . 0.00% Total Direct and Overlapping Tax and Assessment Debt ........................ 3.90% GROSS Combined Total Debt ................................................................. 4.01% Net Combined Total Debt ........................................................................ 4.01% Source: California Municipal Statistics, Inc.

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Historical Special Tax Levy
The Special Tax (including both the Facilities Special Tax and the Services Special Tax) was first levied in the Improvement Area for Fiscal Year 2024 -25 in the total amount of $245,801. This total Special Tax levy for Fiscal Year 2024-25 was compri sed of $204,584 for the Facilities Special Tax and $41,217 for the Services Special Tax. The Fiscal Year 2024-25 Special Tax was levied upon 136 parcels.

As of end of Fiscal Year 2024-25, delinquencies in the Improvement Area were as follows:

Table 9
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 7
Facilities Special Tax Levies, Delinquencies and Delinquency Rates At Fiscal Year End As of December 10, 2025
Fiscal
Year
Levy
Amount (1)
Parcels
Delinquent
Aggregate
Amount
Delinquent
Percent
Delinquent
Parcels
Delinquent
Aggregate
Amount
Delinquent
Percent
Delinquent
2024/25 204,584 1 1,632 0.80 % 0 0 0.00%
2025/26 (2) 174,168 N/A N/A N/A 0 0 0.00%
________________
(1) Reflects only the Facilities Special Tax.
(2) Reflects the December 10, 2025 installment only.

Source: NBS.

PROPOSED PROPERTY DEVELOPMENT
Development Entitlements
Specific Plan. On June 28, 2011, the City Council approved the o riginal Specific Plan for the development of the Folsom Plan Area. Various prope rty owners have submitted and received approvals of Specific Plan amendments since the 2011 City Cou ncil 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 wer e approved by the City Council on August 27, 2024.

The Specific Plan provides for development of appro ximately 13,343 dwelling units (including 11,296 residential units) and 2.5 million square fe et of commercial, office/industrial and mixed use. The Specific Plan also provides for 275.7 acres of publ ic and quasi-public use (public and private schools , parks and infrastructure); 182 acres of major roads and 1,114.5 acres of open space.

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

Tentative and Final Mapping . To date, final maps have been approved and recor ded for the 211 lots within the Improvement Area owned by Toll Brot hers or individual homeowners. Design review approval, which provides for City review of the hom e plans, architecture and conformance to certain development standards, has been completed for all 2 11 homes constructed by, or being constructed by, Toll Brothers within the Improvement Area.

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Site Access . External access to the project site will be prov ided via southeast corner of Mangini Parkway and Oak Avenue Parkway. Pedestrian circula tion is provided by a combinat ion of street- separated sidewalks, open space trails, and pathway connections. On-site improvements include:
underground utilities, drainage improvements, retaining walls, driveways, on-street parking, curbs/gutters, sidewalks, pathways, trails, fencing, site lighting, and site landscaping.

Design Guidelines . The Folsom Ranch Central District Design Guideli nes (of which the Improvement Area is a part) were approved by the Ci ty 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 g eneral architectural and design expectations for the propo sed residential neighborhood, the landscapes, hardscapes, open spaces, fencing, entry features an d 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 fina l 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.

Development Conditions/Building Permit Limitations. Certain provisions of the PFFP for the Folsom Plan Area, as implemented through tentative subdivision map conditions, require certain infrastructure be installed or place other limits o n the number of building permits that can be issued before certain facilities and/or backbone infrastructure is in place.

For example, certain tentative maps require a fire station to be operational prior to the occupancy of the 1,500 th home in the Folsom Plan Area. The City’s first fi re station within the Folsom Plan Area opened on September 26, 2024.

Phase 2 Water Infrastructure . The City estimates the Phase 1 Water Facilities (as defined herein) together with the completed Phase 2 Water Transmiss ion Facilities (defined below) have a sustained maximum day demand capacity of up to 3.0 million ga llons (which the City expects will occur when approximately 4,100 dwelling units within the Folsom Plan Area have been occupied).

Certain additional water backbone facilities (colle ctively, the “Phase 2 Water Facilities”) have been and will be constructed to provide expanded wa ter transmission conveyance capabilities to deliver water from the City’s water treatment plant to the Folsom Plan Area.

The Phase 2 Water Facilities include (i) a water tr ansmission pipeline (the “Phase 2 Water Transmission Facilities”), which were constructed u sing proceeds of CFD 18 bonds issued in October 2024, (ii) the Zone 3 Water Facilities (consisting of a zone-specific water tank and booster pump station), and (iii) the remaining Phase 2 Water Facilities (c onsisting of other zone-specific water tanks, transmission main, and booster pump station) (the “ Remaining Phase 2 Water Facilities”), which will be constructed at a later date. The Phase 2 Water Tra nsmission Facilities are complete and in service. T he City expects that the Zone 3 Pump Station needs to be constructed and in service by June 2027 and one Zone 3 water storage tank needs to be constructed a nd in service by June 2028. The Remaining Phase 2 Water Facilities would need to be constructed there after to maintain the City’s standards for deliveri ng water to its customers.

See “PROPOSED PROPERTY DEVELOPMENT—Development Enti tlements—Water Supply Infrastructure ” below for a more detailed discussion of the Phase 2 Water Facilities and their expected timing and cost.

Developers within the Folsom Plan Area have request ed that the Phase 2 Water Facilities be funded in whole or in part through bonds issued for CFD 18 and certain pay-go proceeds from CFD 17

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and CFD 18 special taxes. See “FOLSOM PLAN AREA—Fo lsom Plan Area Development” for a discussion of certain development and investment th at has already occurred within the Folsom Plan Area and additional future development and investment that is anticipated as the Folsom Plan Area continues to be developed. In October 2024, CFD 18 issued bonds in the aggregate principal amount of $26,735,000 to help finance the Phase 2 Water Transmission Faci lities. Though developers within the Folsom Plan Area have requested that some or all of the remaini ng Phase 2 Water Transmission Facilities be funded with CFD 18 bond proceeds, the City has not approve d such issuance. There can be no assurance that bond proceeds will be available when needed to cons truct the remaining Phase 2 Water Facilities or to reimburse the developers for costs expended therefo r. See “PROPOSED PROPERTY DEVELOPMENT—Development Entitlements—Water Supply Infrastructure ” below for a more detailed discussion of the Phase 2 Water Transmission Facilities.

Army Corps of Engineers Wetland Permitting, Biologi cal Opinion, Streambed Alteration Agreements and Section 106 Compliance . On May 22, 2014, the U.S. Army Corps of Engineer s (the “USACOE”) issued a Record of Decision (“ROD”) for t he Folsom South of U.S. Highway 50 Specific Plan Project - City of Folsom Backbone Infrastructu re. This wetland permit covered the wetland permitting requirements for the entire backbone inf rastructure necessary to serve the Folsom Plan Area .

To the extent backbone infrastructure was required within a property owner’s land, the backbone wetlan d 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. A s discussed in greater detail below, the Folsom Pla n Area has received all required environmental permits.

Development Agreement . Through City Ordinance No. 1149, the City approv ed a Tier 1 Development Agreement between the City and the prop erty owners within the Folsom Plan Area on July 12, 2011. The effective date of the ordinance was August 11, 2011. The Tier 1 Development Agreement vests certain rights of the property owne rs 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 Developm ent Agreements (the “ARDAs”) were entered into among certain property owners and the City for thei r applicable properties, as approved by the City through City Ordinance No. 1211. The ARDAs for the property owners comprising the property within the Improvement Area were recorded in the official records of the County of Sacramento in July 2014.

The City entered into Amendment No. 1 to the ARDA w ith Carpenter East, which was recorded in the official records of the County of Sacramento in Jan uary 2016. The City also entered into Amendment Nos. 1 and 2 to the ARDA with Folsom Real Estate So uth, which were each recorded in the official records of the County of Sacramento in January 2016.

Article 2.5 (commencing with Section 65864), of Cha pter 4, Division 1, Title 7 of the State Government Code, pertaining to development agreemen ts, has the general effect of authorizing development to continue in accordance with then exi sting General Plan, Specific Plan, zoning and subdivision regulations notwithstanding any subsequ ently enacted conflicting regulations, except for regulations the failure of which to enact would pla ce the residents in a condition which is dangerous to their health or safety or both.

Environmental Permits and Approvals . The California Environmental Quality Act (“CEQA” ), constituting Division 13 of the State Public Resour ces Code (commencing with Section 21000) requires that an Environmental Impact Report (an “EIR”), det ailing the significant environmental effects of the project and proposed mitigation measures, be prepar ed, considered and certified as complete by a publi c agency prior to its taking discretionary action on any project which may have a significant effect on the environment.

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In June 2011, after statutorily required public not ice, 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 of the City adopted the South of Highway 50 Backbone Infrastructure Project Initial Study/Mitigated Negative Declaration (Backbone Infrastructure MND), dated December 9, 2014. In ad dition, in connection with amendments to the Specific Plan, after statutorily required public no tice, hearing and comment, the City Council certifi ed as adequate and complete a final subsequent environmen tal 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 envi ronmental 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 jurisdictio nal wetlands and streambed alterations for the construction of backbone infrastructure to serve th e entire Folsom Plan Area at build-out. In additio n, a Biological Opinion has been obtained from the US Fi sh 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 Ar ea. All of the property in the Improvement Area subject to the Special Tax has received its Section 404 Permit.

Water Supply . The City entered into an agreement (the “Water S upply Agreement”) with the property owners in the Folsom Plan Area providing f or a water supply for new development south of US Route 50. The Water Supply Agreement was suppor ted by an addendum to the EIR. The Water Supply Agreement provides adequate water supply for full build out of the Improvement Area and the rest of the Folsom Plan Area (except the portion of the Folsom Plan Area serviced by the El Dorado Irrigation District). The amount of water provided in the Wat er 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-fe et annually (“afa”) through three different contrac ts with the United States Bureau of Reclamation (“Recl amation”). The surface water supplies were developed through different circumstances and, as s uch, are subject to unique conditions and limitatio ns.

These attributes and issues affect the volume of wa ter available under certain conditions. Surface wa ter supply for the portions of the City north of the Am erican River is obtained through a contract with th e 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 a cre-feet per year (Agreement with Reclamation)
• A pre-1914 appropriative water right for 5,000 ac re-feet per year (Co-Tenancy agreement with Golden State Water Company)
• A Central Valley Project (“CVP”) repayment contra ct 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 Natom a Water Company (“Natoma”) in 1851. Natoma’s original pre-1914 water right established a maximum diversion rate “to fill a Canal Eight feet wide an d 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 Ci ty’s 5,000 acre-foot entitlement is also based on

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Natoma’s pre-1914 appropriative right from the Sout h 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 af a (of SCWC’s remaining 10,000 afa under the origina l 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 al so formally recognized in the settlement agreement between Reclamation and the City. As authorized by Public Law No. 101-514, the City was a subcontractor under Sacramento County Water Agency’ s (SCWA) CVP water-service contract for 7,000 afa. In 2016, the United States, the City and 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-se rvice contract into a CVP repayment contract as authorized under the Water Infrastructure Improvements for the Nation Act.

Under the agreements with Reclamation for 22,000 af a and 5,000 afa, Reclamation delivers this entire water supply without reduction on a permanen t basis. Under the agreement with Reclamation for 7,000 afa of CVP water, this water supply faces pos sible reductions pursuant to Reclamation’s Municipal and Industrial Water Shortage Policy. In 1994, the City entered into an agreement with Golden State Water Company (f/k/a Southern California Water Comp any, herein “GSWC”) to acquire the right to divert up to 5,000 acre feet of pre-1914 water righ ts 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 regardle ss of whether the City is able to divert and use th at 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 i s 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 Ci ty 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 su pply available for use in the Folsom Plan Area, on the terms and conditions of that Agreement. To mee t this intent, the City converted the East Area wat er supply from the GSWC Agreement to the less expensiv e 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 provisions of Sections 860 et seq . of the State Code of Civil Procedure and Government Code Sections 53511 and 53589.5, the Cit y filed a complaint in the Superior Court of the State for the County of Sacramento to validate the agreement. The Superior Court determined that the agreement: (a) is lawful, valid, enforceable and in the best interests of the City and all persons in any way interested therein and (b) is consistent with all a pplicable laws and obligations, including the Measu re W water supply requirement.

The City’s Community Facilities District No. 2013-1 (Water Facilities and Supply) (the “Water CFD”) was formed by the City in 2014. The cost of t he GSWC Agreement water will initially be paid for by the Folsom Plan Area through special taxes colle cted for the Water CFD on certain property in the Folsom Plan Area, including the Improvement Area. When a building permit has been issued and a customer billing account has been established, the developed parcel is no longer subject to the levy o f the special tax for the Water CFD and thereafter pays for water through water rates.

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Water Conservation . The City maintains a five-stage water conservati on program with conservation goals and water use restrictions. The City Manager is authorized to implement and enforc e 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 with in the Folsom Plan Area, the developers of the Folsom Plan Area constructed improvements to connect water supply from the north of US Route 50 and extend water infrastructur e pipelines (the “Phase 1 Water Facilities”). In addition, a portion of the Phase 2 Water Facilities , the Phase 2 Water Transmission Facilities, have b een placed in service. The existing water facilities h ave a sustained maximum day demand capacity of up t o

3.0 million gallons (which the City expects will oc cur when approximately 4,100 dwelling units within the Folsom Plan Area have been occupied).

The Phase 2 Water Facilities include (i) the Phase 2 Water Transmission Facilities, which were constructed using proceeds of CFD 18 bonds issued i n October 2024, (ii) the Zone 3 Water Facilities (consisting of a zone-specific water tank and boost er pump station), and (iii) the Remaining Phase 2 Water Facilities (consisting of other zone-specific water tanks, transmission main, and booster pump station), which will be constructed at a later date.

The City anticipates that the Zone 3 Water Faciliti es will need to be built to reduce operational demands on existing pumping infrastructure north of Highway 50 (Foothills Pump Station) when the water facilities for the Folsom Plan Area approach a sustained maximum day demand of 3.0 million gallons. The City is currently assessing whether th e Zone 3 Water Facilities will be funded in whole o r in part with CFD 18 or other community facilities dist rict bond proceeds, although the City has not yet determined the timing and amount of issuance.

The timing by which the Remaining Phase 2 Water Fac ilities 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 3 Water Facilities, any eve nts impacting the capacity of the existing water infrastructure, and any other factors that increase water demand or decrease water transmission capaci ty.

As a result, despite the occupancy and water capacity estimates included herein, which are based on water system modeling and analysis conducted by or prepar ed for the City, the City cannot yet fully predict by when the Remaining Phase 2 Water Facilities will be needed. Proceeds of one or more additional series of CFD 18 bonds could be used to finance all or a p ortion of the Remaining Phase 2 Water Facilities, which would constitute overlapping debt. However, t he timing of issuance of future obligations is dependent upon market conditions and development wi thin the Folsom Plan Area and there can be no assurance that proceeds will be available when need ed to timely construct the Remaining Phase 2 Water Facilities.

As of February 28, 2026, final maps had been approv ed and recorded for 5,017 single family dwelling units (tentative maps approved for 5,719 s ingle family dwelling units). In addition, as of February 28, 2026, building permits for 4,516 singl e family residential units and 4,332 single family certificates of occupancy had been issued in the Fo lsom Plan Area for projects underway. Additionally, there are a total of 450 multifamily units now constructed and approved for occupancy.

The City continues to evaluate water usage and need s 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 pre vent 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 A rea may be metered, stopped, or the City may take other remedial actions, such as implementing water

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conservation measures to the existing residents, ha lting discretionary approvals, or taking other acti ons.

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 wat er connections, which could have a negative impact on property values, including within the Improvemen t Area. Additionally, increased water demands have exceeded the City’s standard pumping operations (pu mps stations should not operate more than 16 hours per day to meet demands) of the current water fac ilities (including if exacerbated by the Phase 2 Wa ter Facilities not being constructed in a timely fashio n) or a reduction in the capacity of the current wa ter facilities could cause the City to consider restric ting the continued development of the Folsom Plan A rea, including within the Improvement Area. See “CERTAI N RISKS TO BONDHOLDERS—Failure to Develop.”
Based on the development stage and planned developm ent timeline for the Improvement Area as described in this Official Statement and the available water facilities servicing the Improvement Area, the City does not expect to impose restrictions on cont inued development of the Improvement Area.

However, multiple other development projects are un derway in the Folsom Plan Area, and if there were an unforeseen and significant delay in construction in the Improvement Area it is possible that other development within the Folsom Plan Area will overta ke development of the Improvement Area, resulting in the need for the City to take some or all of the actions described in the preceding paragraph.

To help alleviate the demand on the current water f acilities, certain developers within the Folsom Plan Area have made arrangements to obtain construc tion water from the El Dorado Irrigation District (“EID”), an alternative water provider that has exi sting facilities adjacent to the Folsom Plan Area. For instance, Lennar Homes has previously received cons truction water from EID for portions of its Russell Ranch project. Such arrangements augment, but do n ot replace, the need for and the use of City water, which is currently provided through the Phase 1 Wat er Facilities and Phase 2 Water Transmission Facilities. Due to such alternative arrangements f or 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 impact development in coming years.

Wastewater Treatment . The Sacramento Area Sewer District has an existi ng wastewater treatment plant with its ongoing and permitted impr ovement projects projected to accommodate all wastewater from development in the Folsom Plan Area. Existing sewer transmission mains are capable of conveying wastewater from the Folsom Plan Area and initial development sites (including the Improvement Area) to the existing treatment plant. Developers of property within the Folsom Plan Area will need to extend infrastructure to their sites a nd pay appropriate connection fees for access to th e existing wastewater infrastructure.

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

Fire Zones . The Improvement Area is located within an area i dentified as a moderate fire hazard severity zone. More information regarding Fire Haz ard Severity Zones can be found at the California Department of Forestry and Fire Protection website at https://frap.fire.ca.gov, though such website is not incorporated herein by reference. The development within the Improvement Area is subject to mitigation measures set forth in a fuel modification plan appr oved by the City Fire Department. The mitigation measures include, among others, limitations on the type of vegetation that may be planted within fuel modification zones established in open space areas along certain portions of the perimeter of the Improvement Area, minimum setback of structures and irrigation requirements of the fuel modification zones. Maintenance of such zones is expected to in itially be the responsibility of the property owners but upon build-out of the Improvement Area and dedicati on of the open space to the City will be maintained

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by the City from funds provided through CFD 18. Ho meowner’s insurance is expected to be available to property owners within the Improvement Area, and th e coverage provided by such insurance typically insures against fire damage, although there is no a ssurance that homeowners within the Improvement Area will purchase or maintain such insurance. Add itionally, there have been growing community challenges around securing fire insurance for struc tures located adjacent to large, protected trees. T he Improvement Area includes approximately 10 large oak trees with protected status that are expected to be located near homes and could impact the availabilit y of fire insurance. See “CERTAIN RISKS TO BONDHOLDERS —Availability of Hazard Insurance.”
Drought Conditions and Construction Water Usage . In response to drought conditions in 2021, the City imposed a state mandated 20% reduction in water use on its water customers. In addition, use of City water for construction purposes required City approval. At the time, the City allowed constructi on within the Folsom Plan Area to proceed, including t he use of City water. The City rescinded this requirement in June 2023. However, if prolonged dro ught conditions return, this could result in mandatory reductions in water usage that may advers ely impact the ability of builders within the Improvement Area to develop the Improvement Area in the timeline described in this Official Statement.

To help alleviate the demand on the current water f acilities, certain developers within the Folsom Plan Area have made arrangements to obtain construc tion water from the El Dorado Irrigation District (“EID”), an alternative water provider that has exi sting facilities adjacent to the Folsom Plan Area. For instance, Lennar Homes has previously received cons truction water from EID for portions of its Russell Ranch project. Such arrangements augment, but do n ot replace, the need for and the use of City water, which is currently provided through the Phase 1 Wat er Facilities. Due to such alternative arrangement s 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.

Affordable Housing . All residential projects receiving funding assis tance 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 satisfy this req uirement by the payment of an in-lieu fee. In addi tion, the City entered into a memorandum of understanding with landowners within the Folsom Plan Area whereby the landowners committed to deed-restrict c ertain lots for the development of 890 units affordable to lower-income households.

Toll Brothers is satisfying the City’s inclusionary housing requirement for its properties within the Improvement Area by payment of an in-lieu fee t o the City concurrent with their pulling of buildin g permits.

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

Specific Plan Infrastructure Fee Credits and Improv ements. The SPIF is administered by the City for the purposes of collecting impact fees for plan area wide improvements for the construction o f roadways, water, sewer, drainage, dry utilities, re cycled water and habitat mitigation in the Folsom P lan Area. The purpose of the SPIF is to require each l andowner to pay its fair share of Folsom Plan Area area-wide improvements and to be reimbursed for any amount expended in excess of a landowner’s fair share requirement. Under the terms of the SPIF Ord inance adopted by the City, property owners in the Folsom Plan Area will be eligible to enter into an agreement with the City and receive future

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reimbursements (that are convertible to fee credits for use within the owner’s property) in exchange f or the construction of eligible SPIF improvements. Af ter applying the SPIF reimbursements as SPIF fee credits to all properties in the Improvement Area, all amounts expended in excess of the project’s SPI F obligation are eligible to be reimbursed from the C ity as other SPIF fees are collected in the Folsom Plan Area. Under the SPIF program, the amounts expended in excess of the project’s SPIF obligation are eligible for conversion to fee credits for future properties owned by Toll Brothers.

Within the Folsom Plan Area, initial development wi ll be required to pay a “SPIF Set-Aside” component to address initial water and sewer facili ty costs. This is a loan of SPIF collections to he lp the cash flow for the initial water and sewer costs. I t will be repaid or equalized to all properties thr ough the SPIF program as well as through CFD 18. The SPIF S et-Aside will apply to the first 2,500 Folsom Plan Area dwelling units that would be subject to the SP IF. A portion of the SPIF will be required to be p aid 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 infrast ructure 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 o rdinance amending certain provisions of the SPIF ordinance to include a new SPIF – Offsite Wate r 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.

Toll Brothers Development
The information in this section has been provided b y Toll Brothers or other sources that the District believes to be reliable. The District and the Underwriter believe this information to be rel iable, but can give no assurances that it is accurate or c omplete. There may be material adverse changes in this information after the date of this Official Statement.

Information in this section is included because it may be considered relevant to some investors to an informed evaluation and analysis of the taxable property within the Improvement Area and any existing or future improvements thereon as security for the Bonds. The information contained in this section does not guarantee that property ownership will not change or that the current or any subseque nt property owners will pay the Special Tax when due. In fact, as described herein, ownership of much of the Taxable Property in the Improvement Area will c hange prior to, or in connection with, development thereof. The Special Tax will constitute a lien on parcels subject to taxation within the Improvement Area and not a personal indebtedness of the owners of pr operty within the Improvement Area. There is no assurance that Toll Brothers or any subsequent owne rs will have the ability to pay the Special Taxes o r that, even if they have the ability, they will choo se to pay the Special Taxes. An owner may elect to not pay the Special Taxes when due and cannot be legall y compelled to do so. Neither the District nor any Bond Owner will have the ability at any time to see k payment directly from Toll Brothers or any subsequent owners of property within the Improvemen t Area of the Special Tax or the principal or interest on the Local Obligations, or the ability t o control who becomes a subsequent owner of any property within the Improvement Area.

Property Ownership . As previously defined, “Toll Brothers” refers to Toll West, Inc. which will do business in California as Toll Brothers West, In c., a Delaware corporation. As of February 17, 2026 , the Taxable Property within the Improvement Area wa s owned by Toll Brothers and individual homeowners. At full buildout, the Improvement Area that has been, and is being, developed by Toll Brothers is expected to include 211 single family homes.

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Toll Brothers is a subsidiary of Toll Brothers, Inc ., a Delaware corporation (“TBI”). TBI is a publicly traded company whose common stock is liste d on the New York Stock Exchange under the symbol “TOL.” TBI was incorporated in 1986, began doing business through predecessor entities in 1967 and became a public company in 1986. Through its s ubsidiaries, the company designs, builds, markets, sells, and arranges financing for any array of luxu ry residential single-family detached homes, attach ed homes, master-planned resort-style golf, and urban low-, mid-, and high-rise communities.

TBI caters to luxury first-time, move-up, empty-nes ter (move-down), active-adult and second- home buyers in the United States, as well as urban and suburban renters under the brand names Toll Brothers Apartment Living® and Toll Brothers Campus Living®. TBI also designs, builds, markets, and sells high-density, high-rise urban luxury condomin iums with third-party joint venture partners throug h Toll Brothers City Living® (“City Living”). As of O ctober 31, 2025, TBI operated in 24 states and in t he District of Columbia. In the five years ended October 31, 2025, TBI delivered 52,203 homes across 1,061 communities, including 11,292 homes across 556 comm unities in fiscal year 2025 alone. As of October 31, 2025, TBI had 1,137 communities in various stag es of planning, development or operations containing approximately 76,100 home sites that are either owned or controlled by TBI through options.

TBI operates its own architectural, engineering, mo rtgage, title, land development, insurance, smart home technology and landscaping subsidiaries. TBI also develops master-planned and golf course communities as well as operates, in certain regions , its own lumber distribution, house component assembly and manufacturing operations.

TBI is subject to the information requirements of t he Securities Exchange Act of 1934, as amended (the “Exchange Act”), and, in accordance th erewith, 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 Ann ual Report on Form 10-K and its most recent Quarterly Report on Form 10-Q, are available to the public via the SEC’s website at www.sec.gov.

Copies of TBI’s Annual Report and each of its other quarterly and current reports, including any amendments, are available under the investor relations tab at its website at investors.tollbrothers.com.

The foregoing website addresses and references to filings with the SEC are included for reference only, and the information on such websites and on file with the SEC is not a part of this Official Statement and is not incorporated by reference into this Offi cial Statement. No representation is made in this Official Statement as to the accuracy or adequacy o f the information contained on such websites. Toll Brothers and TBI are not obligated to advance funds for construction or development or to pay ad valorem property taxes or the Special Tax, and inve stors should not rely on the information and financ ial statements contained on such websites in evaluating whether to buy, hold or sell the Bonds. The information on such websites may be incomplete or i naccurate and has not been reviewed by the District or Underwriter.

Development Plan . To date, final maps have been approved and recor ded for all of the Taxable Property within the Improvement Area. Development within the Improvement Area is entitled for a total of 211 single family homes at full buildout. Toll Brothers’ development plans for the Improvement Are a consist of the construction and sale to individual homebuyers of homes in two product lines known as Oak Trails – Preserve at Folsom Ranch and Heritage Trails – Preserve at Folsom Ranch, which are expected to ultimately include 101 and 110 total ho mes, respectively. The homes are being sold across eight separate floor plans: Zion, Greenstone, Haydu ke, and Inca within the Oak Trails product line and Azul, Kruger, Ramona and Volcan within the Heritage Trails product line.

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The following table is a summary of the expected product mix within the Oak Trails and Heritage Trails communities currently being constructed and sold by Toll Brothers within the Improvement Area.

Table 10
City of Folsom
Communities Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 7
Expected Product Mix – Toll Brothers

Plan
Living Area
(square feet) Stories Bedrooms Bathrooms

Garage Size
Estimated
Base Price (1)
Expected
Units
Oak Trails – Preserve at Folsom Ranch
Zion 2,655 2 4-5 3-4 2 $799,995 3
Greenstone 2,940 2 4-5 3 2 $875,995 27
Hayduke 3,105 2 5 4.5 2 (w/storage) $900,995 41
Inca 3,369 2 5 4.5 2 (w/storage) $935,995 30
101
Heritage Trails – Preserve at Folsom Ranch
Azul 2,539 1 4 3.5 2 $1,032,995 20
Kruger 3,501 2 5 4.5 3 (tandem) $1,114,995 30
Ramona 3,638 2 5 4.5 3 $1,147,995 27
Volcan 3,778 2 5 5.5 3 $1,177,995 33
110
TOTAL 211
_________________________
(1) Base sales prices are as of February 17, 2026, an d are subject to change at any time by Toll Brother s. Base sales prices are exclusive of any premiums, options, upgrades, incen tives, and any selling concessions or price reducti ons currently being offered.

Source: Toll Brothers.

Development Status . As of February 17, 2026, within the Improvement Area, Toll Brothers had confirmed receipt of 149 building permits. Additio nal building permits have been applied for, but Tol l Brothers had not received confirmation of issuance by the City as of such date.

As of February 17, 2026, within the Improvement Are a, 110 completed homes had been conveyed to individual homebuyers (45 homes within the Oak Trails product line and 65 homes within the Heritage Trails product line), and Toll Brother s owned six completed homes (two models and one production home within each product line), 31 homes under construction (19 homes within the Oak Trails product line and 12 homes within the Heritage Trail s product line), and 64 finished lots without any vertical home construction thereon (34 lots within the Oak Trails product line and 30 lots within the Heritage Trails product line).

As of February 17, 2026, 17 homes were under contra ct for sale but not yet been conveyed to individual homeowners, including one completed home , 12 homes under construction and four finished lots without any vertical construction. Homes unde r contract may not result in closed escrows as sale s contracts are subject to cancellation.

The following table summarizes the development stat us of the residential lots and home within the Improvement Area by product line as of February 17, 2026:

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Table 11
City of Folsom
Community Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 7
Development Status as of February 17, 2026

Oak Trails Heritage Trails Totals
Completed Homes Conveyed to Individual Homebuyers 45 65 110 Completed Homes Owned by Toll Brothers (1) 3 3 6
Homes Under Construction 19 12 31
Finished Lots (2) 34 30 64
TOTAL PROPOSED UNITS: 101 110 211
_________________
(1) Includes four model homes (two within each product line) and two production homes (one within each pr oduct line).
(2) Represents lots without any vertical home construc tion, but for which all conditions to issuance of a building permit have been completed, consisting generally of paved lots with streets installed and paved with a ll utilities stubbed to the pad. Three building permits for fin ished lots have been received as of February 17, 20 27 (two within the Oak Trails product line and one within the Heritage Trails product line).

Source: Toll Brothers.

Toll Brothers is actively constructing and marketin g its homes within the Improvement Area to individual homeowners. Toll Brothers began marketi ng its homes in the Improvement Area in July 2023 and expects to reach full buildout and close escrow on the final homes by the fourth quarter of 2027.

Below is a summary of Toll Brothers’ anticipated timing for the sale and delivery of finished homes.

Table 12
City of Folsom
Communities Facilities District No. 23 (Folsom Ranch)
Improvement Area No. 7
Expected Delivery of Finished Homes by Sales Year

Actual Projected
Product Line Total
Through
2/17/26
2/18/26–
12/31/26

2027
Oak Trails 101 47 26 28
Heritage Trails 110 65 33 12
TOTAL 211 112 59 40
__________________
Source: Toll Brothers.

No assurance can be given that home construction an d sales will be carried out on the schedule and according to the plans outlined herein, or that the home construction and sale plans or base price s set forth above will not change after the date of this Official Statement. Additionally, homes sold may not result in closed escrows as sales contracts are sub ject to cancellation. See “CERTAIN RISKS TO BONDHOLDERS – Failure to Develop,” “– Current Chall enges to the Homebuilding Industry” and “– Increasing Mortgage Interest Rates and Banking Uncertainty.” Financing Plan . To date, Toll Brothers has financed its land acq uisition and home construction costs related to its property in the Improvement Ar ea through internally generated funds (which may include home sales revenues and funding from its pa rent company). As of February 28, 2026, Toll

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Brothers had expended approximately $85 million on its development in the Improvement Area, including land acquisition costs, site development costs, permits and fees, direct and indirect home construction costs, and marketing and sales costs and expenses (exclusive of corporate overhead and other carry costs). As of such date, Toll Brothers expec ted to incur an additional approximately $87 millio n to complete its development in the Improvement Area, c onsisting of site development costs, permits and fees, direct and indirect home construction costs, and marketing and sales costs and expenses (exclusi ve of corporate overhead and other carry costs).

Toll Brothers expects to use internally generated f unding (which may include home sales revenues and funding from its parent company) to co mplete the home construction in the Improvement Area. Toll Brothers believes that it will have suf ficient funds available to complete its planned development in the Improvement Area in accordance w ith the development schedule described in this Official Statement.

Notwithstanding the belief of Toll Brothers that it will have sufficient funds to complete its planned development in the Improvement Area, no ass urance can be given that sources of financing available to Toll Brothers will be sufficient to co mplete its development in the Improvement Area as currently anticipated. While Toll Brothers has mad e such internal financing available in the past, th ere can be no assurance whatsoever of its willingness o r ability to do so in the future. Neither Toll Bro thers nor any of its affiliates has any legal obligation of any kind to make any such funds available or to obtain loans. Other than pointing out the willingness of Toll Brothers to provide internal financing in the past, Toll Brothers has not represented in any way that it will do so in the future.

If and to the extent that internal financing and ho me sales revenues are inadequate to pay the costs to complete Toll Brothers’ planned developmen t in the Improvement Area as currently anticipated and other financing by Toll Brothers is not put int o place, there could be a shortfall in the funds re quired to complete the planned development by Toll Brother s in the Improvement Area and portions of the project may not be developed.

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 Off icial Statement, in evaluating an investment in the Bonds.

This section is not meant to be a comprehensive or definitive discussion of the risks associated with an investment in the Bonds, and the order in which thi s information is presented does not necessarily ref lect the relative importance of various risks. Potentia l investors in the Bonds are advised to consider th e 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 th e market value and/or in the marketability of the Bonds. There can be no assurance that other risk f actors 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 Local Obligations, from which funds for the payment of the Bonds are derived, is the proceeds of the annual levy and collection of the Special Tax against property in the Improvement Area. The annual levy of the Special Tax is subject to the Maximum Facilities Special Tax rates authorized within the Improvement Area. The levies cannot be made at higher rates even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available moneys, will not be sufficient to pay debt service on the L ocal Obligations. Other funds which might be available include funds derived from the payment of delinquent

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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, r esult in a uniform relationship between the value of particular Taxable Property and the amount of th e levy of the Special Tax against such parcels. Th us, there will rarely, if ever, be a uniform relationsh ip between the value of such parcels and the proportionate share of debt service on the Local Obligations, and certainly not a direct relationship.

The Special Tax levied in any particular tax year on a Taxable Property is based upon the revenue needs and application of the Rate and Method. Appl ication of the Rate and Method will, in turn, be dependent upon certain development factors with res pect to each parcel of Taxable Property by comparison with similar development factors with re spect to the other Taxable Property in the Improvement Area. Thus, in addition to annual vari ations of the revenue needs from the Special Tax, t he following are some of the factors which might cause the levy of the Special Tax on any particular Taxable Property to vary from the Special Tax that might otherwise be expected:
 Reduction in the amount of Taxable Property for suc h reasons as acquisition of Taxable Property by the federal government or an agency the reof, asserting immunity (however, see “Exempt Properties” below) from taxation, there by resulting in an increased tax burden on the remaining Taxable Property.
 Failure of the related owners of Taxable Property to pay the Special Tax and delays in the collection of or inability to collect the Special T ax by tax sale or foreclosure and sale of the delinquent parcels, thereby resulting in an inc reased 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 th e Local Obligations, from which funds for the payment of the Bonds are derived, it is necessary t hat the Special Tax levied against land in the Improvement Area be paid in a timely manner. The D istrict has established the Local Obligations Reserve Account under the Local Obligations Indentu re in the amount of the Required Bond Reserve to pay debt service on the Local Obligations, in the e vent that a portion of the Special Taxes for the Lo cal Obligations are not paid on time.

The Local Obligations Indenture provides that the S pecial Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provide d 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 c ase of delinquency as is provided for ad valorem property taxes. Pursuant to these procedures, if t axes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the County.

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 Su perior 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 foreclosu re action is not mandatory. However, the District has covenanted that it will conduct foreclosure proceed ings against delinquent installment payments when there is a greater than 5% 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 rece ived 100% of such installment from the County pursuant t o the Teeter Plan. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Covenant for Foreclosure.”

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In the event that sales or foreclosures of property are necessary, there could be a delay in payments to Owners of the Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the District of the proceeds of sale if the Local Obligations Reserve Account with respect to the Local Obligations is depleted.

The District may be unable to make full or timely p ayment of debt service on the Local Obligations if property owners in the Improvement A rea fail to pay installments of the Special Tax whe n due, if the Local Obligations Reserve Account is de pleted, or if the District is unable to sell relate d foreclosed parcels for amounts sufficient to cover the delinquent installments of the Special Tax.

Concentration of Ownership
Currently, a large portion of the Taxable Property in the Improvement Area is owned by Toll Brothers, and consequently, a large portion of the Special Tax within the Improvement Area will be pai d by Toll Brothers until the homes are completed and sold. See “PROPOSED PROPERTY DEVELOPMENT —Toll Brothers Development—Property Ownership. ” Toll Brothers is in the process of building and sel ling completed homes to individual homeowners. No assurance can be given that the pro perty sales will close when anticipated. See “PROPOSED PROPERTY DEVELOPMENT —Toll Brothers Development— Property Ownership. ” Generally, the risk of delinquency or nonpayment of Special Taxes at levels which do not permit the timely payment of principal of and interest on the Bonds is inversely correlated to the diversity of ownership of Taxable Property within the Improvemen t Area. The fact that a substantial portion of the property providing the ultimate security for the pa yment of Local Obligations is controlled by only a few owners means that timely payment of the respective Special Tax and, therefore, the Bonds, will depend initially upon the willingness and ability of these few owners to pay the Special Tax when due. The o nly assets of Toll Brothers that constitute security fo r the Local Obligations are their real property hol dings located within the Improvement Area.

There can be no assurance that the remaining proper ty within the Improvement Area will be fully developed and that property ownership will be furth er diversified as a result. See “CERTAIN RISKS TO BONDHOLDERS—Failure to Develop.”
Payment of the Special Tax is Not a Personal Obligation of a Property Owner A PROPERTY OWNER IS NOT PERSONALLY OBLIGATED TO PAY THE SPECIAL TAX.

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

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

OTHER OBLIGATIONS ALSO PAYABLE THEREBY, TO FULLY DI SCHARGE 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 Improvement Area are per mitted to prepay their Special Taxes at any time. Such prepayments could also be made from the proceeds of bonds issued by or on behalf of an overlapping special assessment district or communit y facilities district. Such payments will result i n a redemption of the Bonds on the Interest Payment Dat e for which timely notice may be given under the Trust Agreement following the receipt of the prepay ment. The resulting redemption of Bonds purchased at a price greater than par could reduce the otherw ise expected yield on such Bonds. See “THE BONDS—Redemption Provisions—Extraordinary Redemption from Prepayment of Special Taxes .”

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Special Tax Delinquencies
The Special Taxes are billed to the properties with in the Improvement Area on the ad valorem property tax bills sent to owners of such propertie s. Such Special Tax installments are due and payab le, and bear the same penalties and interest for non-pa yment, as do ad valorem property tax installments. In each year the County includes the Improvement Area in the Teeter Plan, the County will be obligated to pay the District 100% of the amount of the Special Taxes actually levied in the Improvement Area, regardless of any delinquencies. However, the Coun ty is required to terminate the Teeter Plan if two- thirds of the participants so petition the Board of Supervisors and may discontinue the Teeter Plan as to the Improvement Area if the delinquency rate in the Improvement Area exceeds 3%. Moreover, the County determines annually whether to include a par ticular district in the Teeter Plan. See “—Teeter Plan Termination” and “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—The Teeter Plan.” Significant delinquencies in the payment of annual Special Tax installments, or delays in the prosecution of foreclosure proceedings to collect s uch Special Taxes, could result in a default in the payment of the debt service on the Bonds. See “—Ba nkruptcy” and “—FDIC/Federal Government Interests in Properties” below, for a discussion of the limitations on the District’s ability to forec lose on the lien of the Special Taxes in certain circumstan ces 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 al ternate procedure for the distribution of certain property tax and assessment levies on the s ecured roll. The County determines annually which special taxes and assessment levies to include in t he Teeter Plan. Pursuant to its Teeter Plan, once the County determines to include special taxes and asse ssment levies in the Teeter Plan, the County provid es the local agency and taxing area with full tax and assessment levies instead of actual tax and assessm ent 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. How ever, the County is entitled, and under certain circumstances could be required, to terminate its T eeter Plan with respect to all or part of the local agencies and taxing areas covered thereby. In addi tion, the County may decide not to include certain special taxes and assessment levies, including the Improvement Area, in the Teeter Plan in any fiscal year. Any termination of the Teeter Plan with resp ect to the Improvement Area would eliminate such protection from delinquent Special Taxes. See “SEC URITY 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 remed y is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delin quent Special Tax. The value of taxable property i n the Improvement Area is therefore an important cons ideration 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 l and use regulations, the absence of water, or destr uction of property caused by, among other eventualities, e arthquake, flood or other natural disaster, or by environmental pollution or contamination.

The Local Obligations are sized so that, beginning with Fiscal Year 2026-27, the Special Tax revenues from the 211 lots of Developed Property and Small Lot Final Map Property owned or developed by Toll Brothers, net of Priority Administrative Ex penses, are at least 110% of the debt service on th e Local Obligations. Based on this sizing for the Lo cal Obligations (and the Bonds) and the aggregate

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appraised value for Taxable Property within the Imp rovement Area of $144,621,791, the overall value to overlapping debt ratio, including certain overlappi ng general obligation tax and assessment debt and CFD 17 and CFD 18 special tax debt, is 14.2 *:1.0. See “THE IMPROVEMENT AREA—Value-to-Lien Analysis” and “—Overlapping Debt.” However, the Di strict may at any time issue Refunding Local Obligations, but only for refunding purposes, subje ct to certain conditions contained in the Local Obligations Indenture. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS—Terms of the Local Obligations—Refunding Local Obligations.”
Appraisal Risks
The Appraiser has estimated the market value of the property in the Improvement Area on the basis of certain assumptions which the Appraiser be lieves to be reasonable under the circumstances. S ee the Appraisal included in APPENDIX G hereto. Howev er, 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 a ggregate values of property in the Improvement Area are equal to or greater than the Appraiser’s estima ted values, nor can any assurance be given that suc h aggregate values will not decline during the period of time the Bonds are Outstanding. The values of the property in the Improvement Area can be adversely a ffected by a variety of factors, including, but not limited to, the occurrence of one or more of the sp ecial risk events discussed herein. A decline in t he value of a parcel in the Improvement Area could low er the ability or willingness of the owner of such parcel to pay Special Taxes when due and would decr ease the amount recoverable at a foreclosure sale o f such parcel.

See “THE IMPROVEMENT AREA—Property Values” for a further discussion of e stimated property values in the Improvement Area.

Exempt Properties
Certain properties within the Improvement Area are or may become exempt from the Special Tax in accordance with the Rate and Method. In additio n, the Mello-Roos Act provides that properties or entities of the state, federal or local government are exempt from Special Tax; provided, however, tha t property acquired by a public entity through a nego tiated transaction or by gift or devise, which is n ot otherwise exempt from the Special Tax, will continu e to be subject to the Special Tax. In addition, t he Mello-Roos Act provides that if property subject to Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay S pecial Tax with respect to that property is to be treated as if it were a special assessment. Furthe r, properties receiving a welfare exemption under subsection (g) of Section 214 of the California Rev enue 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 bee n tested.

In particular, insofar as the Mello-Roos Act requir es payment of a special tax by a federal entity acquiring property within the community facilities district, it may be unconstitutional. If for any re ason property within the Improvement Area becomes exempt from taxation, then, subject to the Rate and Method, including the limitation on the maximum spe cial tax rates set out in the Rate and Method, the special tax will be reallocated to the remaining ta xable properties within the Improvement Area. This

* Preliminary, subject to change .

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

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

Although the Maximum Facilities Special Tax is desi gned to provide Special Tax revenues on an annual basis, there is no assurance that the Maximu m Facilities Special Tax on the property in the Improvement Area will be sufficient to pay the amou nts required to be paid by the Local Obligations Indenture at all times, from which funds for the pa yment 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 T ax levied in any fiscal year against any Assessor’s Parcel (as defined in the Rate and Metho d) of Developed Property classified as Residential Property may not be increased as a consequence of d elinquency or default by the owner or owners of any other parcel or parcels within the Improvement Area by more than 10% 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. Pursuant to the Rate an d 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 home s or multi-family attached properties, such as apartments, and property is considered “Developed P roperty” 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.

Loss of Tax Exemption
As discussed under “TAX MATTERS,” acts or omissions of the Authority, City or the District subsequent to the issuance of the Bonds in violation of the Authority’s, City’s or District’s covenants with respect to the Bonds, or enactment of certain legis lative proposals into law, clarification of the Cod e or court decisions, could result in interest on the Bonds becoming includable in gross income for purposes of federal income taxation, potentially even retroacti ve to the date of issuance. Should interest become includable in gross income, the Bonds are not subje ct to redemption by reason thereof and will remain outstanding until maturity or unless earlier redeemed pursuant to optional or mandatory redemption.

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Parity Taxes and Special Assessments
The ability or willingness of a property owner in t he Improvement Area to pay the Special Tax, from which funds for the payment of the Bonds are d erived, could be affected by the existence of other taxes and assessments imposed upon the property eit her currently existing or imposed in the future. T he 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 asses sments levied by other agencies and is co-equal to and ind ependent of the lien for general property taxes and other special assessments regardless of when they a re imposed upon the same property. The Special Tax has priority over all existing and future private l iens imposed on the property. In addition, other p ublic agencies whose boundaries overlap those of the Impr ovement Area could, with or in some circumstances without the consent of the owners of the land in th e Improvement Area, impose additional taxes or assessment liens on the property in the Improvement Area in order to finance public improvements to be located inside or outside of the Improvement Area.

Although the District has covenanted not to impose additional special taxes or assessments on property within the Improvement Area except in acco rdance with the Local Obligations Indenture, the Authority and the District have no control over the ability of other entities and districts to issue indebtedness secured by special taxes or assessment s payable from all or a portion of the property in the Improvement Area. The imposition of additional lie ns on parity with the assessments could reduce the ability or willingness of the owners of parcels in the Improvement Area to pay the Special Tax and increases the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Taxes or the principal of and interest on the Local Obligati ons when due. As described under “FOLSOM PLAN AREA—Public Facilities Financing Plan,” and “THE IM PROVEMENT AREA—Overlapping Debt” the City plans to issue additional obligations secured by special taxes from time to time to finance backb one infrastructure and public improvements within the F olsom Plan Area and the boundaries of the Improvement Area. For example, in October 2024, CF D 18 issued bonds in the aggregate principal amount of $26,735,000 and CFD 18 is authorized to issue an additional $173,265,000 in obligations. The special taxes securing such additional obligations would be payable on parity with the Special Taxes. In addition, property owners may choose to participate in a residential PACE program (a mechanism for financing energy efficiency and renewable energy im provements 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 Improvement Area includes properties that are undergoing development or are developed. In order to develop any improvem ents on that undeveloped land, the property owners will need to construct private improvements, the cost of which may increase the private debt for which the land in the Improvement Area or other land or colla teral owned by the property owners is security over that contemplated by the Local Obligations, and suc h increased debt could reduce the ability or desire of the property owners to pay the Special Tax secured by the land in the Improvement Area. It should be noted however, that the lien of any private financi ng secured by the land within the Improvement Area would be subordinate to the lien of the Special Tax.

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 no rmally refer to such notices in title reports, ther e can be no guarantee that such reference will be made or , if made, that a prospective purchaser or lender w ill consider such Special Tax obligation in the purchas e of a parcel of land, a home or a commercial or industrial facility in the Improvement Area or the lending of money thereon. The Mello-Roos Act

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requires the subdivider (or its agent or representative) of a subdivision to notify a prospective purchaser or long-term lessor of any lot, parcel, or unit subjec t to a Mello-Roos special tax of the existence and maximum amount of such special tax using a statutor ily prescribed form. State Civil Code Section 1102.6b requires that in the case of transf ers other than those covered by the above requireme nt, the seller must at least make a good faith effort t o notify the prospective purchaser of the special t ax lien in a format prescribed by statute. Failure by an o wner of the property to comply with the above requirements, or failure by a purchaser or lessor t o consider or understand the nature and existence o f 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 t he District to foreclose the lien of a delinquent unpaid tax, as discussed in “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS,” may be limited by bankruptcy, insolvency or other laws gen erally affecting creditors’ rights or by the laws o f the State relating to judicial foreclosure. In addition, the prosecution of a foreclosure action could be delayed due to crowded local court calendars or delays in t he legal process. The various legal opinions to be delivered concurrently with the delivery of the Bon ds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other si milar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.

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

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

FDIC/Federal Government Interests in Properties
The ability of the District to foreclose the lien o f 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 Servi ce, or other federal agency has or obtains an interest.

Under the Supremacy Clause of the United States Con stitution, unless Congress has otherwise provided, if a federal governmental entity owns a p arcel that is subject to Special Taxes within the Improvement Area but does not pay taxes and assessments levied on the parcel (including Special Taxes),

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the applicable state and local governments cannot f oreclose on the parcel to collect the delinquent ta xes and assessments. Moreover, unless Congress has oth erwise provided, if the federal government has a mortgage interest in the parcel and the District wi shes to foreclose on the parcel as a result of deli nquent Special Taxes, the property cannot be sold at a for eclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on parity with the Special Taxes and preserve the federal government’s mortgage interest. In Rust v. Johnson , 597 F.2d 174 (1979), the United States Court of Appeal, Ninth Circuit held that the Federal Nati onal Mortgage Association (“FNMA”) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exe rcise of state power over a mortgage interest held by FNMA c onstitutes an exercise of state power over property of the United States.

Neither the Authority nor the District have underta ken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interes t) in any of the parcels subject to the Special Taxes wit hin the Improvement Area, and therefore expresses n o view concerning the likelihood that the risks descr ibed above will materialize while the Bonds are outstanding.

In the event that any financial institution making any loan which is secured by real property within the Improvement Area is taken over by the FD IC, and prior thereto or thereafter the loan or loa ns 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 o f state and local real property taxes (the “Policy Statement”) provides that property owned by the FDIC is subject to state and local real proper ty taxes only if those taxes are assessed according to the property’s value, and that the FDIC is immune from real property taxes assessed on any basis other tha n property value. According to the Policy Statemen t, the FDIC will pay its property tax obligations when they become due and payable and will pay claims fo r delinquent property taxes as promptly as is consist ent with sound business practice and the orderly administration of the institution’s affairs, unless abandonment of the FDIC’s interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amou nts.

If any property taxes (including interest) on FDIC- owned property are secured by a valid lien (in effe ct before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is su bject to levy, attachment, garnishment, foreclosure or sale without the FDIC’s consent. In addition, the FDIC will not permit a lien or security interest he ld by the FDIC to be eliminated by foreclosure without the FDIC’s consent.

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

The Authority and the District are unable to predic t what effect the application of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within

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the Improvement Area in which the FDIC has or obtai ns an interest, although prohibiting the lien of th e FDIC to be foreclosed out at a judicial foreclosure sale could reduce or eliminate the number of perso ns willing to purchase a parcel at foreclosure sale. Such an outcome could cause a draw on the reserve account for the Local Obligations and perhaps, ulti mately, if enough property were to become owned by the FDIC, a default in payment on the Local Obligations and the Bonds.

Zoning and Land Use Decisions
The Special Taxes, from which funds for the payment of the Bonds are derived, are to be levied annually based upon the land use categories in effe ct 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 th e prospective use of the property and, therefore, the tax base for the Special Tax. The Rate and Method does not permit land use changes to reduce the tax base to below the Special Tax Requirement.

Ballot Initiatives and Measures
From time to time constitutional initiatives or oth er initiative measures may be adopted by State voters or voters of the City, such as Measure W ado pted by City residents in November 2004 described herein. The adoption of any such initiative in the future might place limitations on the ability of t he State or any political subdivisions thereof, including th e 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 1, 2014, the California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in Shapiro v. San Diego City Council , 175 Cal. Rptr. 3d 670, 228 Cal. App. 4 th 756
(2014). The case involved a Convention Center Faci lities District (the “CCFD”) established by the Cit y of San Diego, much like a community facilities dist rict 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 pro perties. Thus, the election was a landowner electi on limited to owners and lessees of properties on whic h the special tax would be levied, and not a regist ered voter election. Such approach to determining who w ould 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 w ill not be apportioned in any tax year on residential p roperty, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the special tax .

The Court held that the CCFD special tax election w as invalid under the California Constitution becaus e Article XIII A, Section 4 thereof and Article XIII C, Section 2 thereof require that the electors in s uch an election be the registered voters within the district.

In the case of the CCFD, at the time of the electio n there were many, many registered voters within the CCFD (viz., all of the registered voters in the City of San Diego). There were no register ed voters within the Improvement Area at the time of t he election to authorize the Special Tax. In City of San Diego, the Court expressly stated that it was n ot addressing the validity of landowner voting to impose special taxes pursuant to the Mello-Roos Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the Cour t’s holding does not apply to the Special Tax elect ion in the Improvement Area. Moreover, Section 53341 of t he Mello-Roos Act provides that any “action or proceeding to attack, review, set aside, void or an nul the levy of a special tax shall be commenced wi thin

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30 days after the special tax is approved by the voters.” The Special Tax with respect to the Improvement Area was approved by the voters on December 14, 202 1. Based on Section 53341 of the Mello-Roos Act and its analysis of existing laws, regulations, rulings and court decisions, the District does not believe that a challenge to the Special Tax may now be brought.

Risks of Real Estate Secured Investments Generally
The owners of the Bonds will be subject to the risk s generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in national and local market condit ions, such as changes in the market value of real propert y in the vicinity of the Improvement Area, the supp ly of or demand for competitive properties in such are a, and the market value of residential property or buildings and/or sites in the event of sale or fore closure; (ii) changes in real estate tax rates and other operating expenses, governmental rules (including, without limitation, zoning laws and laws relating t o endangered species, and hazardous materials and sei smic safety) and fiscal policies; (iii) increased construction costs, workforce shortages, supply cha in disruptions or other similar factors affecting t he development, financing or marketing capabilities of Toll Brothers or any other additional homebuilder within the Improvement Area; (iv) natural disasters (including but not limited to severe weather, earthquakes, wildfires, and floods) or other calami ties, which may result in uninsured losses; (v) cos ts 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, inc reased cost of insurance, and other economic trends that a dversely affects consumers, whether cyclical or resulting from geopolitical events.

No assurance can be given that Toll Brothers, or an y other current or future homeowners within the Improvement Area will pay the Special Tax in th e future or that they will be able to pay such Spec ial Tax on a timely basis. See “—Bankruptcy” above, fo r a discussion of certain limitations on the District’s ability to pursue judicial proceedings with respect to delinquent parcels. Further, many homes within the Improvement Area will have a higher-than-average pr ice point as compared to other homes in the region, which may impact the absorption of the residential units within the Improvement Area.

Current Challenges to the Homebuilding Industry
The pace of homebuilding in the Improvement Area ma y be adversely affected by a variety of factors, including changes in economic conditions, interest rates, water shortages, and other similar factors, and recently including workforce shortages and supply chain disruptions. For example, obtaini ng garage doors and windows have recently been challen ging for home builders generally. Additionally, some California municipalities have experienced sup ply chain disruptions for the electrical transforme rs and water meters needed for new development, having been advised in some cases of up to a 2-year delay for new electrical transformer orders. The lots in the Improvement Area being developed by Toll Brothers are fully energized. Toll Brothers is curr ently not aware of any anticipated supply chain disruptions for the development within the Improvem ent Area. 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 aside for it s future use. Also, City staff have obtained authorization from the City Council to purchase add itional 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 Improvement Area will not occur.

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Increasing Mortgage Interest Rates and Banking Uncertainty Most of the expected purchasers of homes within the Improvement Area will finance their acquisitions with mortgage financing. As such, ris ing interest rates, decreased availability of mortg age financing or of certain mortgage programs, higher d own payment requirements, or increased monthly mortgage costs could have a negative impact on the estimated absorption rates of planned for-sale home s in the Improvement Area. Further, a combination of higher mortgage rates, delays in construction stemming from delays in the supply chain, homebuyer s’ inability to sell their existing homes and adver se changes in local, regional or national economic con ditions, among other factors, could contribute to a n increase in the rate of home order cancellations, w hich could similarly have a negative impact on the estimated absorption rates of for-sale homes in the Improvement Area.

Failure to Develop
Land development operations are subject to comprehe nsive 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 act ivity, land use, zoning, school and health requirements, as well as numerous other matters. I t is possible that the approvals necessary to compl ete development of all taxable property within the Impr ovement Area are not obtained on a timely basis or that litigation could be filed regarding approvals. Failure to obtain any such agency approval or sat isfy any such government requirement or any litigation c oncerning such agency approval or government requirement could adversely affect land development operations. In addition, current and future governmental restrictions, including, but not limit ed to, governmental policies restricting or control ling development within the Improvement Area, could be e nacted, and future land use initiatives approved by the voters in the City could add more restrictions and requirements on development within the Improvement Area, which restrictions may increase the cost to develop the Improvement Area. One such governmental restriction is the requirement to inst all rooftop photovoltaic solar systems for resident ial buildings under three stories constructed starting in 2020. Costs associated with the installation of solar to the homebuilders may reduce the willingness of h omebuilders to construct homes and increased costs of those homes may decrease the willingness of homeowners to buy such homes.

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

A portion of the Taxable Property in the Improvemen t Area is presently being developed.

Undeveloped property is less valuable per acre than developed property, especially if there are no plans to develop such property or if there are severe restri ctions on the development of such property, and therefore provides less security to the owners of t he Bonds should it be necessary for the District to foreclose due to the nonpayment of the Special Taxe s. Delays in any property owner’s ability to obtai n discretionary approvals (including any delays caused by litigation) would in turn delay the construction of improvements and development of the Taxable Propert y within the Improvement Area. Furthermore, an inability to develop the land within the Improvemen t Area as currently proposed would result in slower rates of diversification of property ownership with in the Improvement Area. Concentration of ownershi p increases the risk of a failure to collect sufficient Special Taxes to pay debt service on the Bonds, all other things being equal. The timely payment of Special Taxes levied on undeveloped property depends primarily upon the ability and willingness of owner s of such property to pay such taxes when due. Als o, certain Phase 2 Water Facilities described under th e heading “PROPOSED PROPERTY DEVELOPMENT—Development Entitlements—Water Supply ” are expected to be needed before the full

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development of the Folsom Plan Area. A slowdown in or cessation of the development of land within the Improvement Area could reduce the ability and willi ngness of such owners to make Special Tax payments, and could greatly reduce the value of suc h property in the event it has to be foreclosed upo n to collect delinquent special taxes. See “—Bankruptcy ” above for a discussion of certain limitations on the ability of the District to pursue judicial foreclos ure proceedings with respect to taxpayers with deli nquent Special Taxes.

No Independent Review of Valuation or Viability of Completed Projects Property within the Improvement Area is comprised o f separate and distinct projects as described above. Payment of Special Taxes are inherently dep endent upon the development within the Improvement Area, 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 fo r continued ownership, development and/or operation o f the property within the Improvement Area.

Similarly, the Authority, the District and the Unde rwriter have not conducted any independent evaluati on of the existing or projected economic viability or profitability of any of the plans for development, including review and/or evaluation of financial sta tements of any owner or developer of any parcel subject to the Special Tax. The information contained herein regarding the proposed development and the owners of the parcels within the Improvement Area h as been supplied by such owners and the Underwriter has not independently verified, makes n o representation regarding, and does not accept any responsibility for the accuracy or completeness of such information.

In the event an owner or developer experiences fina ncial difficulties, including difficulties resulting from construction or operation of the dev elopment within the Improvement Area, the value of the affected parcel within the Improvement Area may decline and/or such owner or developer may elect to refrain from payment of future Special Taxes for such parcel. See also “ —Failure to Develop.”
Potential Impact of Global Health Crises or Concerns
The COVID-19 global pandemic had a severe and conti nuing effect on the nation and the State, with ongoing concerns relating to health and safety , preventive protocols, fiscal and economic issues, business operations, and global trade. Although at present there are no restrictions on operations wi thin the State relating to the COVID-19 pandemic, the re sponse to COVID-19 had a profound effect on housing construction and the housing market. Pande mic-related shutdowns severely disrupted global supply chains, resulting in difficulty for homebuilders to access necessary materials for home completion, including wood, windows, electrical transformers, w ater meters, and appliances. Supply chains have substantially recovered, but many goods still exper ience a backlog, which has resulted in, or may in t he future result in, development delays within the Dis trict, and which has further resulted in increased construction costs. Lingering supply chain issues, labor shortages, increased interest rates, and an uncertain economy can increase 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 h omes being constructed by Toll Brothers and any other homebuilder within the Improvement Area. The impacts of the COVID-19 pandemic continue to have a lasting effect, and the Authority, the City and the District cannot predict the effect of any p otential future outbreak of COVID-19 or any other infectious disease.

Cybersecurity
The City, like other public and private entities, r elies on a large and complex technology environment to conduct its operations, and conseque ntly faces the threat of cybersecurity incidents. The City and its departments could face cybersecurity t hreats including, but not limited to, hacking, viru ses,

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malware and other attacks on computers and other se nsitive digital networks and systems. Such cybersecurity incidents could result from unintenti onal events, or from deliberate attacks by unauthor ized entities or individuals attempting to gain access t o the City’s information technology systems to misappropriate assets and/or information or to caus e operational disruption and damage. The City maintains insurance to cover cybersecurity incident s, 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 ext ernal auditors to perform quarterly and annual revi ews 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 a re frequently discovered in the United States. In addition, cyber attacks have become more sophistica ted and increasingly are capable of impacting municipal control systems and components. The tech niques used to obtain unauthorized access to, or to disable or degrade, electronic networks, computers, systems and solutions are rapidly evolving and hav e become increasingly complex and sophisticated. The results of any attack on the computer and information technology systems could have a materia l 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 property in the Improvement Area i n the future can be adversely affected by a variety of additional factors, particularly those w hich may affect infrastructure and other public improvements and private improvements on property a nd the continued habitability and enjoyment of such private improvements. Such additional factors include, without limitation, geologic conditions s uch as earthquakes, topographic conditions such as eart h movements, landslides and floods and climatic conditions such as droughts and wildfire.

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

The Improvement Area is not located in any existing special study zone delineated by the Chief of the Division of Mines and Geology of the State of Calif ornia 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 oc cur and may result in damage to improvements of varying seriousness, that the damage may entail sig nificant repair or replacement costs and that repai r 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 conside rations preclude such repair or replacement. Under any of these circumstances, the value of the property may decline.

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

The Improvement Area is located within an area iden tified as a moderate fire hazard severity zone. More information regarding Fire Hazard Severity Zones can be found at the California Department

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of Forestry and Fire Protection website at https:// frap.fire.ca.gov, though such website is not incorp orated herein by reference. The development within the Im provement Area is subject to mitigation measures set forth in a fuel modification plan approved by the City Fire Department. The mitigation measures include, among others, limitations on the type of vegetation that may be planted within fuel modification zones established in open space areas along certain porti ons of the perimeter of the Improvement Area, minimum setback of structures and irrigation requir ements of the fuel modification zones. Maintenance of such zones is expected to initially be the responsibility of the property owners but upon build-out of the Improvement Area and dedication of the open space to the City will be maintained by the City from funds provided through CFD 18. Homeowner’s insurance is expected to be available to property owners within the Improvement Area, and the coverage provided by such insurance typically insures against fire damage, although there is no assurance that homeown ers within the Improvement Area will purchase or maintain such insurance. See also “ —Availability of Hazard Insurance.” In the event of a wildfire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the Improvement Area . As a result, a substantial portion of the proper ty owners may be unable or unwilling to pay the Specia l Taxes when due. In addition, the value of land in the Improvement Area could be diminished in the aft ermath 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 En gineers and is owned by the United States Bureau of Reclamation. An auxiliary spillway to enable the d am to more easily release water as it nears capacit y was completed by the Army Corps of Engineers in October 2017. The City, together with the County and other local agencies, have established a hazard mit igation plan in the event of a dam failure. Geolog ic, topographic and climatic conditions, if severe, cou ld result in damage to the dam which could further cause damage to the surrounding region and may limi t water supply for the City and the Improvement Area.

Availability of Hazard Insurance
Toll Brothers reports that home purchasers within t he District have so far been able to obtain homeowners insurance at affordable rates. However, according to the California Department of Insurance, insurance companies declined to renew 2.8 million h omeowner policies in the State. Insurers have been exiting the State, refusing to write new policies i n areas they consider to be at high risk, or in som e cases refusing to offer coverage for high-value homes, wh ich insurance companies generally classify as homes with a replacement cost of $750,000 or higher. Suc h cancellations generally have resulted in increase d cost to homeowner’s as they obtain replacement cove rage. The California FAIR Plan Association provides insurance to homeowners who cannot otherwi se find insurance coverage, but policies through the FAIR Plan do not provide as much coverage as tr aditional homeowner’s insurance and tend to bear rates that are higher than traditional homeowner’s insurance. Though a number of legislative and poli cy revisions are circulating, the City, the District a nd Toll Brothers cannot predict whether homeowner’s insurance will continue to be available to home pur chasers at affordable rates. An increase in homeowner’s insurance rates or a reduction in the a vailability of new homeowner’s insurance policies will increase the overall cost to purchase homes an d may in turn reduce Toll Brothers’ ability to sell new homes to homeowners. Further, increases in homeown er’s insurance rates may reduce affordability and may cause homeowners to be unable or unwilling to pay the Special Taxes when due.

Endangered Species
During recent years, there has been an increase in activity at the State of California and federal level related to the possible listing of certain pl ant and animal species found in California as endan gered

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species. An increase in the number of endangered species is expected to curtail development in a number of areas. The property within or near the Improvem ent Area contains protected habitat and species, including but not limited to Swainson’s hawk and tr i-colored blackbird foraging habitats and wetlands regulated by state and federal agencies. Foraging h abitat mitigation credits have been satisfied by To ll Brothers for the portion of the Improvement Area cu rrently owned by Toll Brothers and individual homeowners. At present, the property within the Imp rovement Area is not known to be inhabited by any other plant or animal species listed as threatened or endangered under either the State or federal endangered species acts or which either the Califor nia 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 lis ts on a regular basis. Any action by the State or federa l governments to protect species located on or adja cent to undeveloped property could negatively affect the developer’s ability to complete development as planned. This, in turn, could reduce the likelihoo d 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 “—Land Values” above.

Hazardous Substances
While governmental taxes, assessments, and charges are a common claim against the value of a parcel, other less common claims may be relevant. One of the most serious in terms of the potential reduction in the value of a parcel in the Improveme nt Area is a claim with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditio ns of the parcel relating to releases or threatened re leases 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 wel l-known and widely applicable of these laws, but laws with regard to hazardous substances are also s tringent and similar. Under many of these laws, th e owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creatin g or handling the hazardous substance. The effect, therefore, should any of the parcels in the Improve ment Area be affected by a hazardous substance is t o reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligat ed to remedy the condition just as is the seller.

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

The appraised value of property in the Improvement Area does not take into account the possible reduction in marketability and value of any of the parcels by reason of the possible liability of the owner (or operator) for the remedy of a hazardous substan ce condition of the parcel. While the District is not aware that the owner (or operator) of any of parcel s 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 par cel of a substance presently classified as hazardou s but which has not been released or the release of which is not presently threatened, or may arise in the f uture resulting from the existence, currently, on the par cel of a substance not presently classified as haza rdous but which may in the future be so classified. Furt her, such liabilities may arise not simply from the existence of a hazardous substance but from the met hod of handling it. All of these possibilities cou ld significantly affect the value of a parcel within t he Improvement Area that is realizable upon a delinquency.

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Naturally Occurring Asbestos
California Air Resource Board (“CARB”) adopted the Airborne Toxic Control Measure (“ATCM”) for Construction, Grading, Quarrying and S urface Mining Operations. This statewide regulation is applicable to grading or any other pr ojects disturbing soil in areas of the State where asbestos may exist, as determined by the California Geological Survey (“CGS”). The ATCM applies to any size construction project although there are ad ditional notification requirements for projects tha t exceed one acre. Areas and parcels moderately like ly to contain naturally occurring asbestos are loca ted in the eastern parts of the County, including in the City.

Natural weathering or human disturbance can break t he asbestiform minerals down to microscopic fibers, which are easily suspended in a ir. There is no health threat if asbestos fibers i n 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 tha t inhibit lung function. Scientists consider certa in types of asbestos fibers (i.e., tremolite fibers and simi larly 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 d evelopment to undertake a site investigation to determine the presence of naturally occurring as bestos and, if necessary, prepare and implement an asbestos dust control plan. Toll Brothers undertoo k a dust control plan with respect to the grading o f the 211 lots currently owned by Toll Brothers and indiv idual homeowners, which included provisions for investigation of potential asbestos dust. A specifi c asbestos dust control plan was not required to be prepared or implemented.

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

LEGAL MATTERS
The validity of the Bonds, the Local Obligations an d certain other legal matters are subject to the approving legal opinion of Stradling Yocca Carlson & Rauth LLP, Bond Counsel to the Authority (“Bond Counsel”). Bond Counsel has not undertaken any res ponsibility for the accuracy, completeness or fairness of this Official Statement and expresses n o opinion as to the matters set forth herein. Cert ain legal matters will be passed upon for the District and the Authority by the City Attorney. Certain le gal matters relating to the Local Obligations will be p assed upon by Stradling Yocca Carlson & Rauth LLP, as bond counsel to the District. Certain legal mat ters will be passed upon for the Underwriter by its counsel, Kutak Rock 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 Stradling Yocca Carlson & Rauth L LP, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accura cy of certain representations and compliance with certain covenants and requirements described herein, interest (and original issue discount) on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes o f calculating the federal alternative minimum tax imposed on individuals. However, it should be noted that, with respect to applicable corporations as defined in Section 59(k) of the Internal Revenue Co de of 1986, as amended (the “Code”), generally certain corporations with more than $1,000,000,000 of average annual adjusted financial statement income, interest (and original issue discount) with respect to the Bonds might be taken into account i n

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determining adjusted financial statement income for purposes of computing the alternative minimum tax imposed by Section 55 of the Code on such corporations. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax.

The excess of the stated redemption price at maturi ty of a Bond over the issue price of a Bond (the first price at which a substantial amount of t he Bonds of a maturity is to be sold to the public) constitutes original issue discount. Original issue discount accrues under a constant yield method, an d original issue discount will accrue to a Beneficial Owner before receipt of cash attributable to such excludable income. The amount of original issue dis count deemed received by the Beneficial Owner will increase the Beneficial Owner’s basis in the applicable Bond.

Bond Counsel’s opinion as to the exclusion from gro ss income of interest (and original issue discount) on the Bonds is based upon certain repres entations of fact and certifications made by the Authority, the District, the City and others and is subject to the condition that the Authority, the D istrict, the City and others making such representations com ply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds t o assure that interest (and original issue discount ) on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the interest (and original issue discount) on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Authority, the District and the City will covenant to comply with all such requirements.

The amount by which a Beneficial Owner’s original b asis for determining loss on sale or exchange in the applicable Bond (generally, the pur chase price) exceeds the amount payable on maturity (or on an earlier call date) constitutes amortizable Bond premium, which must be amortized under Section 171 of the Code; such amortizable Bond premium redu ces the Beneficial Owner’s basis in the applicable Bond (and the amount of tax exempt interest receive d), and is not deductible for federal income tax purposes. The basis reduction as a result of the a mortization of Bond premium may result in a Benefic ial Owner realizing a taxable gain when a Bond is sold by the Beneficial Owner for an amount equal to or less (under certain circumstances) than the origina l cost of the Bond to the Beneficial Owner. Purcha sers of the Bonds should consult their own tax advisors as to the treatment, computation and collateral consequences of amortizable Bond premium.

The Internal Revenue Service (the “IRS”) has initia ted an expanded program for the auditing of tax-exempt bond issues, including both random and t argeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of the Bonds might be affect ed as a result of such an audit of the Bonds (or by an audi t of other similar bonds). No assurance can be giv en that in the course of an audit, as a result of an a udit, or otherwise, Congress or the IRS might not c hange the Code (or interpretation thereof) subsequent to the issuance of the Bonds to the extent that it adv ersely affects the exclusion from gross income of interest (and original issue discount) on the Bonds or thei r market value.

SUBSEQUENT TO THE ISSUANCE OF THE BONDS THERE MIGHT BE FEDERAL,

STATE, OR LOCAL STATUTORY CHANGES (OR JUDICIAL OR R EGULATORY CHANGES TO

OR INTERPRETATIONS OF FEDERAL, STATE, OR LOCAL LAW) THAT AFFECT THE

FEDERAL, STATE, OR LOCAL TAX TREATMENT OF THE BONDS INCLUDING THE

IMPOSITION OF ADDITIONAL FEDERAL INCOME OR STATE TA XES BEING IMPOSED ON OWNERS OF TAX-EXEMPT STATE OR LOCAL OBLIGATIONS, SUCH AS THE BONDS. THESE

CHANGES COULD ADVERSELY AFFECT THE MARKET VALUE OR LIQUIDITY OF THE BONDS. NO ASSURANCE CAN BE GIVEN THAT SUBSEQUENT T O THE ISSUANCE OF THE

BONDS STATUTORY CHANGES WILL NOT BE INTRODUCED OR ENACTED OR JUDICIAL OR

REGULATORY INTERPRETATIONS WILL NOT OCCUR HAVING TH E EFFECTS DESCRIBED

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ABOVE. BEFORE PURCHASING ANY OF THE BONDS, ALL POT ENTIAL PURCHASERS

SHOULD CONSULT THEIR TAX ADVISORS REGARDING POSSIBL E STATUTORY CHANGES

OR JUDICIAL OR REGULATORY CHANGES OR INTERPRETATION S, AND THEIR COLLATERAL TAX CONSEQUENCES RELATING TO THE BONDS.

Bond Counsel’s opinions may be affected by actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bo nds. Bond Counsel has not undertaken to determine, or to inform any person, whether any such actions or e vents are taken or do occur. The Indenture and the Tax Certificate relating to the Bonds permit certai n actions to be taken or to be omitted if a favorab le opinion of Bond Counsel is provided with respect th ereto. Bond Counsel expresses no opinion as to the effect on the exclusion from gross income of intere st (and original issue discount) on the Bonds for federal income tax purposes with respect to any 202 4 Bond if any such action is taken or omitted based upon the advice of counsel other than Stradling Yocca Carlson & Rauth LLP.

Although Bond Counsel will render an opinion that i nterest (and original issue discount) on the Bonds is excluded from gross income for federal inc ome tax purposes provided that the Authority, the District and the City continue to comply with certa in requirements of the Code, the ownership of the Bonds and the accrual or receipt of interest (and o riginal issue discount) with respect to the Bonds m ay otherwise affect the tax liability of certain perso ns. Bond Counsel expresses no opinion regarding an y such tax consequences. Accordingly, before purchasing any of the Bonds, all potential purchasers shou ld consult their tax advisors with respect to collateral tax consequences relating to the Bonds.

Should interest on the Bonds (including any origina l issue discount) become includable in gross income for federal income tax purposes, the Bonds a re not subject to early redemption and will remain outstanding until maturity or until redeemed in accordance with the Indenture.

A copy of the proposed form of the opinion of Bond Counsel to be delivered at Closing with respect to the Bonds is attached hereto as Appendix E.

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

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NO RATING
The Authority has not made, and does not contemplat e 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 Mu nicipal Advisor (the “Municipal Advisor”) to the District in conjunction with the issuance of the Bonds. The Municipal Advisor has assisted in matters related to the planning, structuring, execution, and delivery of the Bonds. The Municipal Advisor will receive compensation contingent upon the sale and delivery of the Bonds. The Municipal Advisor has not audited, authenticated, or otherwise indepe ndently verified the information set forth in this Official Statement, or any other related informatio n available, with respect to accuracy and completen ess of disclosure of such information. Because of this limited participation, the Municipal Advisor makes no guaranty, warranty, or other representation with re spect to the accuracy or completeness of this Offic ial Statement, or any other matter related to this Official Statement.

UNDERWRITING
The Bonds are being purchased by Piper Sandler & Co . (the “Underwriter”) pursuant to a Bond Purchase Contract (the “Purchase Contract”), by and among the Authority, the District and the Underwriter. Pursuant to the Purchase Contract, th e Underwriter has agreed to purchase all of the Bon ds from the Authority at a purchase price of $_________, being the aggregate principal amount of the Bonds of $_________, [plus/less] a [net] original issue [ premium/discount] of $__________ and less an Underwriter’s discount of $____________. The Under writer 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
The District has covenanted for the benefit of the Owners to provide certain financial information and operating data relating to the Bonds by not lat er than nine months following the end of the Distri ct’s fiscal year (which fiscal year currently ends June 30) commencing with the report for the 2025-26 Fisc al Year (the “Annual Report”), which is due April 1, 2 027, and to provide notices of the occurrence of certain enumerated events. The Annual Report and t he 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-1—“FORM OF DI STRICT CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in or der to assist the Underwriter in complying with S.E.C. Rule 15c2-12(b)(5).

The District has multiple continuing disclosure und ertakings and is committed to complete and accurate continuing disclosure in accordance with i ts continuing disclosure obligations under the fede ral securities laws, including rules and regulations pr omulgated by the SEC and the MSRB, as those rules may be amended from time to time. Further, the Cit y has policies and procedures in place in order to achieve compliance with its continuing disclosure u ndertakings and those of its related entities. In connection with the Folsom Ranch Financing Authorit y Special Tax Revenue Bonds, Series 2017, the City did not timely file its audited or unaudited f inancial statements for the fiscal year ended June 30, 2024 and June 30, 2025. The City did file a Notice of Failure to File Audited/Unaudited Financial

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Statements on EMMA on January 15, 2025 and January 14, 2026, and filed the City’s audited financial statement for fiscal year ended June 30, 2024, on E MMA on March 18, 2025 and for fiscal year ended June 30, 2025, on EMMA on April 1, 2026.

Toll Brothers
Pursuant to Continuing Disclosure Certificates to be executed by Toll Brothers in connection with the issuance of the Bonds, Toll Brothers will coven ant for the benefit of the Bondholders to provide certain information relating to it and its developm ent within the Improvement Area no later than June 1 and December 1 in each year, commencing December 1, 2026 (the “Disclosure Reports”), and to provide notices of the occurrence of certain enumerated events until the obligation to so provide such information, data and notices is otherwise terminated in accorda nce with the provisions of such Continuing Disclosu re Certificate. A form of the Continuing Disclosure C ertificate for Toll Brothers is included in APPENDIX D-2—“FORM OF CONTINUING DISCLOSURE CERTIFI CATE – Toll Brothers.” The Disclosure Reports are to be filed with EMMA.

The Authority and the District have not considered, or reached any conclusion as to, whether or not Toll Brothers is an obligated person under the Rule. The Authority takes no responsibility for th e form or content or for the adequacy of the applicab le Continuing Disclosure Certificate for Toll Broth ers for its intended purpose.

The obligations of Toll Brothers will terminate upo n the occurrence of certain events as set forth in the applicable Continuing Disclosure Certificate , including at such time as Toll Brothers (and each of its Affiliates (as defined in the applicable Contin uing Disclosure Certificate)), in the aggregate, ow ns property that is entitled to include less than 37 of the residential lots within the Improvement Area subject to the Special Taxes. Additionally, the Continuing Disclosure Certificate provide that the obligations thereunder shall be assumed by any purchaser that a cquires a sufficient amount of Taxable Property within the Improvement Area to be considered a Majo r Developer or a Major Owner, as applicable (each as defined therein).

Prior Continuing Disclosure Compliance . To the actual knowledge of Toll Brothers, in the last five years, Toll Brothers has not failed to comply in any material respect with any previous undertaki ng by it to provide periodic continuing disclosure rep orts or notices of material events with respect to community facilities districts or assessment districts in northern California.

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 stat ements 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 m ade that any of the estimates will be realized. Th e information and expressions of opinion herein are s ubject 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 af fairs of the Authority, the City or the District si nce 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 thereo f. Copies of such documents and reports are availa ble for inspection at the office of the Finance Directo r, City of Folsom, City Hall, 50 Natoma Street, Fol som, California 95630.

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The execution and delivery of the Official Statemen t by the Authority and the District has been duly authorized by the Board of Directors of the Authority and the City Council, respectively.

FOLSOM RANCH FINANCING AUTHORITY
By:

Treasurer

CITY OF FOLSOM COMMUNITY FACILITIES
DISTRICT NO. 23 (FOLSOM RANCH)
By:

City of Folsom Finance Director

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APPENDIX A

RATE AND METHOD

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APPENDIX B

ECONOMIC AND DEMOGRAPHIC INFORMATION RELATING TO THE CITY OF FOLSOM 3
This Appendix contains certain economic and demogra phic information relating to the City.

Neither the faith and credit nor the taxing power o f the City, the Authority, the State of California or any political subdivision thereof is pledged to the payment of the Bonds. Except for the Trust Estate, no other revenues or taxes are pledged to the payment of the Bonds. The Bonds are not general obligations of t he Authority, the District or the City but are limited obligations of the Authority payable solely from t he Trust Estate, derived primarily from payments on th e Local Obligations from the payment of the Special Taxes levied within the District, as more fully des cribed in the Official Statement to which this Appe ndix 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 no t 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 representati ons of facts. Information contained in this Appendix B is presented as general background data. The taxi ng power of the City, the State of California, or any political subdivision thereof is not pledged to the payment of the Bonds.

General
The City is located in the eastern portion of the County, approximately 110 miles northeast of San Francisco and 20 miles east of Sacramento. The Cit y is located along the eastern end of the Highway 5 0 corridor in an area of the Sacramento Valley that h as 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 from separate districts within the City and who serve four-year terms. The council members cho ose a mayor and vice mayor from among their members. Current City Council members are:

Member
Term Expires
Sarah Aquino 11/2026
Justin Raithel (Mayor) 11/202 8
Mike Kozlowski 11/202 6
Barbara Leary 11/202 8
Anna Rohrbough (Vice Mayor)

11/2026
The City operates under a Council-Manager form of g overnment. The City Manager is responsible for daily administration of City affair s. Bryan Whitemyer was appointed as City Manager i n January 2025 and took office in March 2025. The Ci ty Manager is appointed by and serves at the will o f the City Council. The City Manager is responsible for implementation of City Council policy, enforcement of City laws and ordinances, appointmen t and discipline of City officers and employees, oversight of City departments, preparation and subm ission of the City budget to the City Council, and other related functions.

3 Note to draft: To be updated with appraisal information.

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City Budget Process
The City’s annual budget is adopted by the City Cou ncil 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 Manag er shall be deemed adopted. The City Manager may tran sfer moneys between departments and divisions, and programs and accounts within departments and di visions, but only the City Council may by resolution transfer moneys between funds and from u n-appropriated balances or fund balances to any fund or appropriation account. The City Council ad opted the Fiscal Year 2025-26 budget on June 24, 2025.

Budget information is adopted on an annual basis for the General Fund, special revenue funds and debt service funds. The budget is adopted on a pro ject 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 budge t 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 Fun d, Successor to the Redevelopment Agency, Special Revenue Funds, Capital Projects Funds, Prop rietary Funds and Internal Service Fund as required supplementary information. The budget information is presented on a basis consistent with generally accepted accounting principles. Appropriations, ex cept open project appropriations and unexpended grant appropriations, lapse at the end of each fiscal year.

Revenues and expenditures relating to the City’s ge neral governmental operations are budgeted and accounted for in the City’s General Fund, inclu ding public safety, highways and streets, and cultu re and recreation. General taxes and fees support mos t of these activities. The City’s Fiscal Year 2025 -26 adopted budget includes over $266 million in expend itures across all funds. Of this amount, approximately $123 million was allocated to the General Fund of the City. The budget applies $3 million of the City’s unassigned fund balance, often referr ed to as “rainy day reserves” toward a shortfall in the General Fund.

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Population
The historic population of the City, the County and the State is shown in the following table.

City of Folsom, Sacramento County and State of California Population Estimates
(As of January 1)

Year City of Folsom Sacramento County State of California 1990 (1) 29,798 1,066,789 29,811,427
2000 (1) 51,884 1,223,499 33,871,648
2010 (1) 72,203 1,418,788 37,253,956
2017 77,050 1,511,390 39,352,398
2018 77,598 1,525,099 39,519,535
2019 78,666 1,538,054 39,605,361
2020 82,908 1,585,055 39,538,223
2021 83, 116 1,581,162 39,369,530
2022 84, 677 1,57 7,672 39,179,680
2023 86,104 1,5 83,676 39,228,444
2024 88, 996 1,5 96,281 39,420,663
2025 92,577 1,604,745 39,529,101

(1) Based on United States Census Bureau data as of April 1 in such year.

Source: State of California, Department of Finance, E-4 Population Estimates for Cities, Counties and the State, Sacramento, California, May 2025.

Building Activity
Residential building activity for calendar years 20 20 through 2024 for the City is shown in the following table.

BUILDING PERMITS AND VALUATIONS
City of Folsom
2020-2024
2021 2022 2023 2024 2025
Permit Valuation
New Single-Family $351,482,252 $322,220,400 $390,097,685 $312,259,108 $180,847,952 New Multi -Family 6,621,585 57,741,491 151,128,135 35,183,428 25,908,987 Res. Alterations/Additions 13,200,936 38,529,947 26,225,478 24,214,596 28,018,048 Res. Other 43,832,114 56,766,582 133,897,573 64,437,753 78,050,195 Total Residential (1) $415,136,887 $475,258,421 $701,348,871 $436,094,886 $312,825,182

New Commercial $570,954 $9,113,559 $5,586,481 $34,885,117 $23,620,803 New Industrial -- -- -- 218,721 --
Comm./Ind. Alterations/Additions 11,622,910 33,258,978 21,778,927 33,636,556 25,218,048 Other Comm./Ind. 9,611,894 16,602,300 20,807,067 27,820,255 61,956,669 Total Non -Residential (1) $21,805,758 $58,974,836 $48,172,475 $96,560,649 $110,795,520

(1) Totals may not add to sum because of rounding.

Source: City of Folsom.

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Employment
The table below reflects recent employment informat ion for the City’s largest employers for the fiscal year ended June 30, 2025.

PRINCIPAL EMPLOYERS
City of Folsom
Fiscal Year 2024-25
Business Name Number of Employees
Percent of Total
Employment
Intel Corporation 4, 300 10. 07 %
California State Prison 1, 601 3.75
Folsom Cordova Unified School District (1) 1, 212 2. 84 Folsom State Prison 993 2. 33
Mercy Hospital of Folsom 924 2. 16
California Independent System Operator 737 1. 73
City of Folsom 459 1. 07
SAFE Credit Union (2) 458 1.07
Costco Wholesale 420 0.9 8
Folsom Lake College 331 0.78
Total Top Employers 11,435 26.78%

Total Labor Force (3) 42,700 100.00%

(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, LLC/ Avenu Insights & Analytics
The unemployment rate in the Sacramento—Roseville— Folsom Metropolitan Statistical Area (“Sacramento MSA”), which includes Sacramento, Plac er, El Dorado, and Yolo Counties, was approximately 4.8% in December 2025, which is sligh tly increased from the December 2024 estimate of approximately 4.5%. This compares with an unadjust ed unemployment rate of 5.1% for California and

4.1% for the nation during December 2025. The unemp loyment rate was 4.8% in El Dorado County,

4.2% in Placer County, 4.8% in Sacramento County, and 5.8% in Yolo County for December 2025.

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The table below provides information about employme nt rates and employment by industry type for the Sacramento MSA for calendar years 2019 through 2023 and for September 1, 2024.

Sacramento—Roseville—Folsom Metropolitan Statistical Area Labor Force, Employment and Unemployment Yearly Average (1) 2020 2021 2022 2023 2024 2025 (2)
Civilian Labor Force (3) 1,093,500 1,105,400 1,112,100 1,129,200 1,183,100 1,196,100 Employment 996,600 1,034,400 1,069,700 1,080,500 1,129,400 1,138,200 Unemployment 96,900 71,000 42,400 48,600 53,700 58,000 Unemployment Rate 8.9% 6.4% 3.8% 4.3% 4.5% 4.8%
Wage and Salary Employment (4)
Total Farm 8,300 9,000 8,600 9,100 7,700 7,800
Mining and Logging 500 500 500 500 400 400
Construction 70,200 74,900 77,100 74,700 75,400 70,300 Manufacturing 36,100 37,700 40,600 40,500 40,000 39,300 Wholesale Trade 26,600 26,900 28,300 28,500 28,600 28,100 Retail Trade 95,100 100,600 100,300 99,000 101,500 101,100 Transportation, Warehousing and Utilities 34,300 37,500 40,800 41,600 44,600 45,300 Information 10,200 10,100 10,500 9,900 9,400 8,700 Finance and Insurance 34,800 34,100 33,000 30,500 28,900 29,200 Real Estate and Rental and Leasing 16,900 17,700 18,800 18,400 17,90 0 17,700 Professional and Business Services 132,600 137,200 139,700 134,400 134,60 0 128,100 Private Education and Health Services 164,000 168,800 175,600 188,700 206,000 215,800 Leisure and Hospitality 83,900 93,600 108,700 112,500 111,800 114,200 Other Services 31,000 33,300 36,100 38,300 38,600 39,300 Federal Government 14,800 14,500 14,400 14,500 14,700 13,700 State Government 121,700 127,300 129,800 134,400 135,900 133,100 Local Government 98,900 98,400 102,700 107,400 114,400 115,400 Total, All Industries (5) 979,800 1,021,900 1,065,400 1,083,000 1,110,400 1,107,500

(1) Data not adjusted for seasonality.
(2) Preliminary estimates as of December 2025.
(3) Labor force data is by place of residence; include s self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(4) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, h ousehold domestic workers, and workers on strike.
(5) 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 Califor nia Public Employees’ Retirement System (“CalPERS”). The safety plan covers all of t he 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, 2024, based on the most recent actua rial study report dated June 30, 2023, as rolled forward to June 30, 2024, the safety plan an d the miscellaneous plan were 64.9% funded and

67.7% funded, respectively. For the safety plan, t he actuarial accrued liability was approximately $2 83 million and the market value of assets was approximately $184 million, resulting in an unfunded actuarial accrued liability (“UAAL”) of $99 million. For the miscellaneous plan, the actuarial accrued liability was

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approximately $308 million and the market value of assets was approximately $209 million, resulting in a UAAL of approximately $99 million.

For the year ended June 30, 2025, the City’s unaudited annual pension cost of $11,609,094 for the Safety plan and $11,413,995 for the miscellaneous p lan were greater than the City’s required contributions by $379,484 and $50,478, respectively. The three-year trend information for the safety and miscellaneous plans combined is as follows:

Fiscal Year
Ended
Annual
Pension
Cost (“APC”)
Percentage
of APC
Contributed
Net
Pension
Obligation

6/30/2022 $18,902,039 100% –
6/30/2023 20,675,705 100% –
6/30/2024 21,582,509 100% –
6/30/2025 23,023,089 100% –

Other Post-Employment Benefits . In 2004, the Government Accounting Standards Board (“GASB”) issued Statement No. 45, Accounting and Fi nancial 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 B enefits (“OPEB”) from a pay-as-you-go to an accrual basis. The City has implemented the requir ements 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 pla ns are required to measure and disclose an amount for annual OPEB cost on the accrual basis of accoun ting. Annual OPEB cost is equal to the employer’s annual required contribution to the plan, with cert ain adjustments. The annual required contribution represents a level of funding that, if paid on an o ngoing basis, is projected to cover normal cost eac h year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 yea rs.

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

The City sponsors and administers a single-employer defined benefit post-employment healthcare plan (the “Healthcare Plan”) to provide healthcare insurance benefits to eligible retired employees an d 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 City Council member, the City Manager, the Finance Director, and the Human Resources Direc tor. The Retirement Board of Authority delegated authority of the trust to the Benefit Trust Company . The required contribution is based on projected pay- as-you-go financing requirements, with an additiona l amount to prefund benefits as determined annually by the City Council. For Fiscal Year ended June 30, 2025, the City contributed $6,457,277 to the plan for current premiums.

For more information regarding the City’s OPEB liab ilities, see note 14 to the City’s Annual Comprehensive Financial Report for the fiscal year ended June 30, 2025.

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Capital Improvement Program

The City’s Capital Improvement Program (“CIP”) is a multi-year plan that forecasts spending for all anticipated capital projects and is considered to be the link between the City’s development and financing planning process. CIP funding comes mainl y from impact fees and a number of other special revenue funds, as well as grants and loans. Within each program category, the City identifies resourc es that it will commit to priority capital projects. CIP costs include both one-time expenses and recurr ing expenses related to capital rehabilitation. The Ci ty’s Fiscal Year 2025-26 budget provides for $5.2 million in total capital expenditures, including CIP costs.

Investment Policy

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

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

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

B. The city investment portfolio shall be designed to equal or exceed the rate of return of the state’s local agency investment fund (LAIF) through out budgetary and economic cycles, taking into account the city’s risk constraints, ca sh 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 gu idance 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 ac t as custodians of the public trust.

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

F. The city’s chief investment officer shall quarterly submit an investment report to the city council, which report shall include all required el ements as prescribed by California Government Code Section 53646. The city’s chief in vestment 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 inte rnal controls over investments, which control system shall be documented in writing accor ding to California Debt and Investment Advisory Commission guidelines. The syst em shall be designed to prevent losses of public moneys arising from fraud, employe e error, misrepresentation by third parties, unanticipated changes in financial markets , or imprudent actions by city employees or officers.

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H. Financial institutions in which the city has invest ments shall be monitored as to financial condition throughout the period in which the city h as moneys deposited or invested, to assure that the condition of the institution does n ot materially deteriorate so as to risk the city’s investments.

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

J. Security purchases and holdings shall be maintained within the limits permitted by the City Charter, this chapter and the California Gover nment Code, whichever is the most restrictive both as to percentages of the total inv estment 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 a nd other information on the portfolio as of June 30, 2025.

CITY OF FOLSOM

PORTFOLIO SUMMARY
As of June 30, 2025
Investments by Fair Value Level Balance

City Pooled Investments
Certificate of Deposit $ 15,805,755
Commercial Paper 4,994,900
Corporate Notes 28,917,589
Municipal Obligations (City) 83,872,563
Municipal Obligations (FRFA) 170,413,934
Municipal Obligations (FPFA) 25,069,790
Federal Farm Credit Bank (FFCB) 15,483,055
Federal Home Loan Bank (FHLB) 32,058,220
Federal Home Loan Mortgage (FHLMC) 13,978,700
Federal National Mortgage (FNMA) 5,985,840
US Treasury Note 6,027,450

Investments Not Measured at Fair Value or Subject
to Fair Value Hierarchy

Local Agency Investment Funds 65,011,531
California Class 67,882,490
Money Market Mutual Funds 19,242,707
Total Investments Not Measured at Fair Value or
Subject to Fair Value Hierarchy 152,136,728

Total City’s Pooled Investments 554,744,524

Investments Held with Fiscal Agent Not Measured at
Fair Value

JPA (CAMP) 234,913
Money Market Mutual Funds 58,066,277

Investments Held with Fiscal Agent by Fair Value Le vel OPEB Plan Investments – Mutual Funds 12,296,103
Total Investments Held with Fiscal Agents 70,597,293

Total Investments $625,341,817

Source: City of Folsom.

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

NCCSIF consists of 18 member cities, all located wi thin California, and is governed by a board of directors appointed by the member cities. It provi des pooled claims processing administrative service s, risk management services, and actuarial studies. T he City’s deposit for the fiscal year ended June 30 , 2025, was $1,539,122 and for the fiscal year ended June 30, 2024, was $1,707,326. For the Fiscal Year ended June 30, 2025, NCCSIF had net assets of $35,245,520 and a net income of $8,897,038.

Sales Taxes
The following table shows taxable transactions in t he City during calendar years 2016 through 2025.

TAXABLE SALES
City of Folsom
2016-2025
(in Thousands)
Year
Retail
Permits
Retail and Food
Taxable
Transactions Total Permits
Total Outlets
Taxable
Transactions
2016 1,588 $1,595,641 2,404 $1,828,059
2017 1,614 1,663,432 2,459 1,944,041
2018 1,593 1,721,452 2,501 1,983,797
2019 1,616 1,741,755 2,602 2,093,411
2020 1,652 1,579,786 2,741 1,795,390
2021 1,457 1,917,045 2,418 2,134,222
2022 1,523 2,009,992 2,546 2,253,326
2023 1,4 92 1,986,848 2,537 2,229,309
202 4 1,4 77 2,007,325 2,5 37 2,226,804
2025 1,692 1,192,972 2,563 2,234,801

Source: City of Folsom.

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

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

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

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

Private universities, such as William Jessup Univer sity, the University of Sacramento, and National University also have campuses in the Sacramento reg ion. Other institutions include the McGeorge School of Law (University of the Pacific), and exte nsions and satellites of schools such as the Univer sity 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 C ity, 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 deliv ers high-quality drinking water, supplying water to the portion of the City south of the Ameri can River. The Water Division of the City’s Utilit ies Department inspects and maintains, as of June 30, 2 025, the 421 miles of water mains, 25,660 service connections, and 3,940 fire hydrants. The City als o provides sewage collection services for the entir e City. The Sewer Division of the City’s Utilities D epartment inspects and maintains, as of June 30, 20 25, the 310 miles of sanitary sewers, 18 pump stations, and 25,367 service connections. Sewage treatment is provided by the Sacramento Regional County Sanitation District.

The City also provides solid waste collection servi ces. The Solid Waste Division of the City’s Utilities Department operates a fleet of solid wast e vehicles for collection, as well as providing rec ycling, household hazardous waste pickup and disposal, and neighborhood clean-up services for the entire City.

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APPENDIX C

SUMMARY OF PRINCIPAL DOCUMENTS

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APPENDIX D-1

FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE
THIS DISTRICT CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”), dated as of ___________, 2026, is executed and deli vered by the City of Folsom Community Facilities District No. 23 (Folsom Ranch) (the “District”) rel ative to the Folsom Ranch Financing Authority (the “Authority”) in connection with the issuance by the Authority of the Folsom Ranch Financing Authority City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 7 Special Tax Revenue Bonds, Series 2026 (the “Bonds”). The Bonds are being issued pursuant to a Trust Agreement (the “Trust Agreement”), among the Distri ct, the Authority and U.S. Bank Trust Company, National Association (the “Trustee”). The District covenants and agrees as follows.

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

SECTION 2. Definitions. In addition to the definitions set f orth in the Trust Agreement, which apply to any capitalized term used in this Disclosu re Certificate unless otherwise defined in this Sec tion, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the District pursuant to, and as described in, Sections 3 and 4 hereof.
“Annual Report Date” means the date in each year th at is nine months after the end of the District’s fiscal year, which date, as of the date of this Disclosure Certificate, is April 1. “Dissemination Agent” shall mean NBS, or any succes sor 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 L isted Events set out in Section 5(a)(10) and Section 5(b)(7), a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term “Financial Obligation” shall not in clude Municipal Securities (as defined in the Secur ities Exchange Act of 1934, as amended) as to which a fin al 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 ___________, 2026, 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(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.

SECTION 3. Provision of Annual Reports.
(a) The District shall, or shall cause the Dissemi nation Agent to, provide to the MSRB through the EMMA System, in an electronic format an d accompanied by identifying information all as prescribed by the MSRB, an Annual Report which is consistent with the requirements of Section 4 hereof, not later than the Annual Report Date, commencing w ith the report for the 2025-26 Fiscal Year. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as p rovided in Section 4 hereof; provided, however, tha t the audited financial statements of the District ma y be submitted separately from the balance of the Annual Report, and later than the date required abo ve for the filing of the Annual Report if not avail able by that date. If the District’s fiscal year change s, it shall, or shall instruct the Dissemination Ag ent to, give notice of such change in the same manner as fo r 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 da te specified in subsection (a) of this Section for the providing of the Annual Report to the MSRB, the District shall provide the Annual Report to th e Dissemination Agent.
(c) If the Dissemination Agent is other than the Di strict, 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 Rep ort to the MSRB by the Annual Report Date, the District shall send a notice to the MSRB in substan tially the form attached as Exhibit A to the Disclo sure Certificate.
(d) The Dissemination Agent shall:
(i) provide any Annual Report received by it to the MS RB, as provided herein; and (ii) file a report with the District certifying that th e 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 an y, prepared in accordance with generally accepted accounting principles as promulgated to ap ply to governmental entities from time to time by t he Governmental Accounting Standards Board. If the Di strict’s audited financial statements, if any, are not available by the time the Annual Report is required to be filed pursuant to subsection (a) of Section 3 hereof, the Annual Report shall contain unaudited f inancial 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 c onsolidated with the financial statement for the Ci ty 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 secure d by Refunding Local Obligations (as defined in the Official Statement) Outstanding as of the December 31 next preceding the Annual Report Date along with debt service schedules for the Bonds and any bonds

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secured by Refunding Local Obligations (as defined in the Official Statement) Outstanding as of such date;
(ii) The balance in each reserve account for the Local Obligations, and a statement of the required bond reserve amount, as of the December 31 next preceding the Annual Report Date; (iii) The total assessed value of all parcels within the Improvement Area on which the Special Taxes are levied, as shown on the assessment roll of the Sacramento County Assessor last equalized prior to the December 31 next preceding t he Annual Report Date, and a statement of assessed value-to-lien ratios therefor based on spe cial tax and assessment debt, either by individual parcel or by categories (e.g., “below 3:1,” “3:1 to 4:1” etc.); (iv) The Special Tax delinquency rate for the Improveme nt Area as of the December 31 next preceding the Annual Report Date; the number of parcels within the Improvement Area delinquent in payment of special t axes as of the December 31 next preceding the Annual Report Date; the amount of each delinque ncy; 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, howev er, 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 summar y of the results of any foreclosure sales in the Improvement Area as of the December 31 next preceding the Annual Report Date;
(vi) The identity of any property owner, representing m ore than 5% of the Special Tax levy, delinquent in payment of special taxes as of the December 31 next preceding the Annual Report Date;
(vii) All tentative and final maps approved and/or recor ded within the Improvement Area, describing the gross acres, the planned comme rcial acres and the number and type of planned residential dwelling units;
(viii) The number of new building permits issued and a de scription 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 Speci al Taxpayers for the Improvement Area (excluding any individual homeowne r responsible for 5% 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 Eff ective Tax Rate Evaluation Maximum Facilities Special Tax, the Maximum Facilit ies Special Tax, the actual Facilities Special Tax levied within the Improvement Area and the actual Special Tax levied within the Improvement Area, with such amounts reported separa tely for Developed Property, Small Lot Final Map Property and Large Lot Property; provided , however, that once all Taxable Property within the Improvement Area is Developed Property, the Maximum Facilities Special Tax and the actual Facilities Special Tax and the actual Specia l Tax levied may each be shown on an aggregate basis in the Annual Report. For the purp oses of this subparagraph (x), all capitalized

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terms used but not otherwise defined herein shall h ave the meanings ascribed thereto in the Rate and Method for the Improvement Area.

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

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

SECTION 5. Reporting of Significant Events.
(a) Pursuant to the provisions of this Section, the District shall give notice, or cause notice to be given, not less than ten Business Days after the occurrence of any of the following events with res pect to the Bonds:
(i) Principal and interest payment delinquencies.
(ii) Unscheduled draws on debt service reserves reflect ing financial difficulties. (iii) Unscheduled draws on credit enhancements reflectin g financial difficulties. (iv) Substitution of credit or liquidity providers, or their failure to perform. (v) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of P roposed 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 simi lar 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 obligat ed 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 assu med jurisdiction over substantially all of the assets or business of the obligated person, or if such jurisdiction has been assumed by leaving the existi ng governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a cou rt or governmental authority having supervision or jurisdiction over substantial ly all of the assets or business of the obligated person.

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(ix) Rating changes.
(x) Default, event of acceleration, termination eve nt, modification of terms or other similar events under the terms of a financial Oblig ation of the District, any of which reflect financial difficulties.
(b) The District shall give notice, or cause notice to be given, not less than ten Business Days after the occurrence of any of the following events with respect to the Bonds, if material:
(i) Modifications to rights of Bond holders.
(ii) Bond calls.
(iii) Release, substitution or sale of property se curing repayment of the Bonds. (iv) Non-payment related defaults.
(v) The consummation of a merger, consolidation, o r acquisition involving an obligated person or the sale of all or substantiall y all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms.
(vi) Appointment of a successor or additional trus tee or the change of name of a trustee.
(vii) Incurrence of a Financial Obligation of the D istrict, or agreement to covenants, events of default, remedies, priority rights, or si milar 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 determi ne if such event would be material under applicable federal securities laws.
(d) If the District learns of the occurrence of a L isted Event described in subsection (a) of this Section, or determines that knowledge of a Lis ted Event described in subsection (b) of this Secti on would be material under applicable federal securiti es laws, the District shall notify the Disseminatio n Agent thereof in writing and instruct the Dissemina tion Agent to report the occurrence pursuant to subsection (e) of this Section. If in response to a request under subsection (b) of this Section, the District determines that the Listed Event would not be mater ial under applicable Federal securities law, the District shall so notify the Dissemination Agent in writing and instruct the Dissemination Agent not t o report the occurrence pursuant to subsection (e) of this Section. (e) If the Dissemination Agent has been instructed by the District to report the occurrence of a Listed Event, the Dissemination Agent shall file a notice of such occurrence with the MSRB through the EMMA System. Notwithstanding the foregoing, notice of Listed Events described in paragraph (vii) of subsection (a) of this Section and paragraph (ii) o f subsection (b) of this Section need not be given under this subsection any earlier than the notice (if any ) of the underlying event is given to holders of af fected Bonds pursuant to the Trust Agreement.

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SECTION 6. Termination of Reporting Obligation. The District ’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the District shall give notice of such termination in the same manner as fo r 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 it s obligations under this Disclosure Certificate, an d may discharge any such Dissemination Agent, with or wit hout 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 prov ision 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 provisio ns of subsection (a) of Section 3 hereof, Section 4 hereof or subsections (a) and (b) of Sect ion 5 hereof, it may only be made in connection wit h a change in circumstances that arises from a change i n legal requirements, change in law, or change in t he 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 w ith 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 b y Owners of the Bonds in the manner provided in the Trust Agreement for amendments to t he Trust Agreement with the consent of Owners, or (ii) does not, in the opinion of nationally recogni zed bond counsel, materially impair the interests o f Owners or Beneficial Owners of the Bonds.

If the annual financial information or operating da ta to be provided in the Annual Report is amended pursuant to the provisions hereof, the annu al financial information containing the amended operating data or financial information shall expla in, in narrative form, the reasons for the amendmen t 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 specifyi ng the accounting principles to be followed in preparing financial statements, the annual finan cial information for the year in which the change i s made shall present a comparison between the financi al statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Th e comparison shall include a qualitative discussion o f the differences in the accounting principles and the impact of the change in the accounting principles o n the presentation of the financial statements or information, in order to provide information to inv estors to enable them to evaluate the ability of th e District to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles s hall be given in the same manner as for a Listed Ev ent under subsection (e) of Section 5 hereof.

SECTION 9. Additional Information. Nothing in this Disclosur e Certificate shall be deemed to prevent the District from disseminating any other i nformation, using the means of dissemination set fo rth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a List ed Event, in addition to that which is required by this

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Disclosure Certificate. If the District chooses to include any information in any Annual Report or no tice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure 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 Distric t or the Dissemination Agent to comply with any provision of this Disclosure Certif icate, any Holder or Beneficial Owner of outstandin g Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the District t o comply with its obligations under the Disclosure Certificate. A default under the Disclosure Certif icate shall not be deemed an Event of Default under the Trust Agreement, and the sole remedy under the Disc losure Certificate in the event of any failure of t he District to comply with the Disclosure Certificate shall be an action to compel performance.

SECTION 11. Duties, Immunities and Liabilities of Disseminatio n Agent. The Dissemination Agent shall be entitled to the protections and limi tations from liability afforded to the Trustee unde r 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 Disse mination Agent shall receive reasonable compensation for its services provided under this D isclosure Certificate. The Dissemination Agent sha ll have only such duties as are specifically set forth in this Disclosure Certificate, and the District a grees to indemnify and save the Dissemination Agent, its off icers, 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, inc luding the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the District under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.

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

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

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

CITY OF FOLSOM COMMUNITY FACILITIES
DISTRICT NO. 23 (FOLSOM RANCH)
By:

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EXHIBIT A

NOTICE OF FAILURE TO FILE ANNUAL REPORT

Name of Issuer: Folsom Ranch Financing Authority
Name of Issue: Folsom Ranch Financing Authority Cit y of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 7 Special Tax Revenue Bonds, Series 2026
Date of Issuance: ___________, 2026
NOTICE IS HEREBY GIVEN that the City of Folsom Comm unity Facilities District No. 23 (Folsom Ranch) (the “District”) has not provided an Annual Report with respect to the above-named Bonds as required by Section 3 of the Continuing Di sclosure Certificate, dated ___________, 2026, executed by the District for the benefit of the Hol ders and Beneficial Owners of the above-referenced bonds. [The District anticipates that the Annual Report will be filed by ____________.] Dated: _________________

CITY OF FOLSOM COMMUNITY FACILITIES
DISTRICT NO. 23 (FOLSOM RANCH)

By:

Finance Director of the City of Folsom

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APPENDIX D-2
FORM OF CONTINUING DISCLOSURE CERTIFICATE – TOLL BROTHERS This Continuing Disclosure Certificate – Toll Broth ers (the “Disclosure Certificate”) dated as of ___________, 2026, is executed and delivered by Tol l West Inc. doing business in California as Toll Brothers West Inc., a Delaware corporation (the “De veloper”) in connection with the issuance of $_________ aggregate principal amount of Folsom Ran ch Financing Authority City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improvement Area No. 7 Special Tax Revenue Bonds, Series 2026 (the “Bonds”). The Bonds are be ing issued pursuant to a Trust Agreement, dated as of May 1, 2026 (the “Trust Agreement”), among the F olsom Ranch Financing Authority (the “Issuer”), the City of Folsom Community Facilities District No . 23 (Folsom Ranch) (the “District”) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

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

SECTION 2. Definitions. In addition to the definit ions set forth in the Trust Agreement, which apply to any capitalized term used in this Disclosu re Certificate unless otherwise defined herein, the following capitalized terms shall have the following meanings:
“Affiliate” shall mean, with respect to the Develop er, any person directly (or indirectly through one or more intermediaries) that exercises manageri al control over the Developer or that is under managerial control of the Developer, and about whom information could be material to potential investors in their investment decision regarding the Bonds (i ncluding without limitation information relevant to the proposed development of the Property, or to the Dev eloper’s ability to pay the applicable Special Tax obligation levied on the Property owned by it when due). “Assumption Agreement” means an agreement containin g terms substantially similar to this Disclosure Certificate, whereby a Major Developer agrees to provide Semi-Annual Reports and notices of significant events with respect to the portion of t he Property owned by such Major Developer and its Affiliates, and with respect to the improvements or payments necessary to cause the Planned Development Stage to be reached that such Major Dev eloper, or an Affiliate thereof, intends or is obligated (contractually or otherwise) to make or cause to be made. “Bonds” means the $__________ Folsom Ranch Financing Authority City of Folsom Community Facilities District No. 23 (Folsom Ranch) Improveme nt Area No. 7 Special Tax Revenue Bonds, Series 2026.
“Developer” means Toll West Inc. which will do busi ness in California as Toll Brothers West Inc., a Delaware corporation.
“Development Plan” means with respect to a Major De veloper, the specific improvements such Major Developer intends to make, or cause to be mad e, in order for the Planned Development Stage to be reached, and the time frame in which such improveme nts are intended to be made; the Developer’s Development Plan, as of the date hereof, is describ ed in the Official Statement under the captions

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“PROPOSED PROPERTY DEVELOPMENT—Toll Brothers Develo pment—Development Plan ” and “—Development Status .”
“Disclosure Certificate” means this Disclosure Certificate as the same may be amended from time to time.
“Dissemination Agent” means initially, the Develope r, and any successor Dissemination Agent designated in writing by the Developer and which ha s filed with the District a written acceptance of s uch designation.
“District” means the City of Folsom Community Facilities District No. 23 (Folsom Ranch), as the same may be modified by the City Council of the City from time to time. “Event of Bankruptcy” means, with respect to a Pers on, that such Person files a petition or institutes a proceeding under any act or acts, stat e or federal, dealing with or relating to the subje ct or subjects of bankruptcy or insolvency, or under any amendment of such act or acts, either as a bankrupt or as an insolvent, or as a debtor, or in any similar capacity, wherein or whereby such Person asks or se eks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of such Person’s debts o r obligations, or offers to such Person’s creditors t o effect a composition or extension of time to pay such Person’s debts or asks, seeks or prays for reorgani zation or to effect a plan of reorganization, or fo r a readjustment of such Person’s debts, or for any oth er similar relief, or if any such petition or any s uch proceedings of the same or similar kind or characte r is filed or instituted or taken against such Pers on, or if a receiver of the business or of the property or assets of such Person is appointed by any court, o r if such Person makes a general assignment for the benefit of such Person’s creditors. “Financing Plan” means, with respect to a Major Dev eloper, the method by which such Major Developer intends to finance its Development Plan, including specific sources of funding for such Development Plan; the Developer’s Financing Plan, a s of the date hereof, is described in the Official Statement under the caption “PROPOSED PROPERTY DEVE LOPMENT—Toll Brothers Development—Financing Plan.”
“Improvement Area” means Improvement Area No. 7 of the District. “Listed Event” means any of the events listed in Section 5 hereof. “Major Developer” means, as of any date of determin ation, any owner of land (which owns itself or through any Affiliates), who owns Property that is entitled to include 37 or more of the residentia l lots in the Improvement Area subject to the Special Taxes.
“MSRB” shall mean the Municipal Securities Rulemaki ng Board or any other entity designated or authorized by the Securities and Exchange Commis sion as a repository of disclosure information.

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

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“Person” means an individual, a corporation, a partnership, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof. “Planned Development Stage” means the stage of development to which the Developer intends to develop the Property, as described in the Official Statement, which is the construction of finished homes. “Property” means, as of the date of determination, collectively, the Taxable Property within the boundaries of the Improvement Area that (i) is owned by the Developer or any Affiliate thereof (including Taxable Property for which the Developer or any Aff iliate thereof has the option to purchase) and (ii) the Developer or any Affiliate thereof has sold to a Ma jor Developer who has not assumed the obligations under this Disclosure Certificate pursuant to an As sumption Agreement. Property as of any date of determination does not include real property within the boundaries of the Improvement Area that has been conveyed to individual homeowners or any real property that is the subject of an Assumption Agreement. “Semiannual Report” shall mean any Semiannual Report provided by the Developer on or prior to June 1 and December 1 of each year, commencing with the Semiannual Report due December 1, 2026, pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Special Taxes” means the special taxes levied on t he Taxable Property within the Improvement Area.
“State” shall mean the State of California.
“Taxable Property” means the real property within t he boundaries of the Improvement Area that is not exempt from the Special Taxes authorized to be levied in the Improvement Area. “Trust Agreement” means the Trust Agreement, dated as of May 1, 2026, among the Issuer, the District and the Trustee, and as further amended and supplemented from time to time. “Trustee” means U.S. Bank Trust Company, National A ssociation, as trustee under the Trust Agreement, or any successor as trustee.

SECTION 3. Provision of Semiannual Reports. So lon g as the Developer’s obligations hereunder have not been terminated pursuant to Sect ion 7, the Developer shall, or shall cause the Dissemination Agent (if the Dissemination Agent is other than the Developer) to, provide to the MSRB a Semiannual Report which is consistent with the requ irements of Section 4, not later than June 1 and December 1 of each year, commencing December 1, 202 6. If, in any year, June 1 or December 1 falls on a Saturday, Sunday or holiday, such deadline shall be extended to the next following business day. Th e Semiannual Report must be submitted in electronic f ormat, accompanied by such identifying information as is prescribed by the MSRB, and may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Sections 4 or 5 hereof.

SECTION 4. Content of Semiannual Reports. The Deve loper’s Semiannual Report shall contain or incorporate by reference the following information:
(a) If information regarding such Major Developer h as not previously been included in the Official Statement or a more recently filed Semiannual Report, the Development Plan and Financing Plan of such Major Developer or, if information regarding such Major Developer has previously been included in the Official Statement or a more recently filed Semiannual Report, a description of the progress ma de in the Development Plan of such Major Developer sin ce the date of such information and a description o f

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any significant changes in such Development Plan an d the Financing Plan and the causes or rationale fo r such changes.
(b) Identification of the conveyance by the Develop er of any portion of the Property to an entity that is not an Affiliate of the Developer, t he result of which conveyance is to cause such tran sferee to become a Major Developer.
(c) The number of building permits issued with resp ect to the Property. (d) The number of residential lots within the Prope rty that have not reached the Planned Development Stage and sold (closed escrow) by the D eveloper since the date of the Official Statement o r a more recent Semiannual Report, and, if any such lots were sold to a Major Developer, the identity of the Major Developer.
(e) The number of finished homes within the Propert y sold and conveyed to individual homeowners by the Developer.
(f) Any material amendments to land use entitlement s for the Property, if such amendments would prevent or significantly delay the implementa tion of the Developer’s Development Plan as described in the Official Statement or a more recently filed Semiannual Report.

The Developer’s Semiannual Reports required to be p rovided under Section 4 hereof must be filed in accordance with Section 3.

SECTION 5. Reporting of Significant Events. Pursua nt to the provisions of this Section 5, the Developer shall promptly give, or cause to be given , notice of the occurrence of any of the following events with respect to the Developer:
(a) Any failure of the Developer, or any Affiliate of the Developer owning any Property, to pay prior to delinquency any property taxes or asse ssments due with respect to the Property (to the ex tent the responsibility of the Developer or any such Aff iliate), to the extent such failure is not promptly cured upon discovery thereof.
(b) Any denial or termination of credit, any denial or termination of, or default under, any line of credit or loan or any other loss of a source of funds that could have a material adverse effect on the Developer’s most recently disclosed Financing Plan or Development Plan or on the ability of the Developer, or any Affiliate of the Developer owning any Property, to pay the Special Taxes with respec t to the Property prior to delinquency (to the extent the responsibility of the Developer or any such Affiliate).
(c) The occurrence of an Event of Bankruptcy with r espect to the Developer, or any Affiliate owning any Property, that could reasonably be expec ted to have a material adverse effect on the Developer’s most recently disclosed Financing Plan or Development Plan or on the ability of the Developer, or any Affiliate of the Developer owning Property, to pay Special Taxes with respect to the Property prior to delinquency (to the extent the responsibility of the Developer or any such Affiliate). (d) Any previously undisclosed governmentally-impos ed preconditions to commencement or continuation of development on the Property, if suc h preconditions would prevent or significantly dela y the Developer’s Development Plan as described in th e Official Statement or a more recently filed Semiannual Report.