Agenda packet — Lincoln City Council, November 18, 2025 (part 2 of 4)

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File ID: 2019-00385 Discussion Item 05
April 16, 2019
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City of Sacramento

Description/Analysis

Issue Detail: At the July 24, 2018 Law and Legislation Committee session, the Committee instructed staff to prepare an ordinance that will: 1) update Chapter 5.138; 2) adopt a distance requirement between new tobacco retailers; and 3) adopt a prohibition of flavored tobacco products.

The use of tobacco has been a health and safety issue addressed by the City over the past several years. In 2003, the Sacramento County Department of Health and Human Services Tobacco Education Program found that 24.4 percent of tobacco retailers sampled in the City of Sacramento unlawfully sold tobacco products to minors. In 2004, the City adopted Sacramento City Code Chapter 5.138 to regulate tobacco retailers by requiring yearly non-transferrable licenses and conducting regular business compliance inspections, under-age sales sting operations, and license suspension and revocation proceedings. The program is designed to promote compliance with federal, state and local laws regulating tobacco sales and discourage the illegal sale and distribution of tobacco to minors. In 2009, the Family Smoking Prevention and Tobacco Control Act was enacted which prohibits candy and fruit flavored cigarettes, however, a recent study by the California Department of Public Health estimates that 82 percent of tobacco retailers in California sold flavored non-cigarette tobacco products. Over 90 percent of tobacco retailers sell menthol cigarettes, and 8 out of 10 tobacco retailers near schools sold flavored non-cigarette tobacco products.

There are more than 15,000 tobacco flavors on the market, many of which have names that are enticing to youth including “Gummy Bear”, “Bubblegum” and “Unicorn Pop!”. Mentholated and flavored products have been shown to be “starter” products for youth who begin using tobacco. These products are proven to help establish tobacco habits that can lead to long-term addiction. Flavored tobacco has significant public health implications for youth and people of color because of targeted industry marketing strategies and product manipulation.

In 2016, state law was changed to raise the legal age to buy tobacco products from 18 to 21, tightening restrictions on e-cigarettes and expanding the definition of smoke-free workplaces.

Unlike cigarette use that has steadily declined among youth, the prevalence of the use of non- cigarette tobacco products has remained statistically unchanged and, in some cases, increased among youth. From 2013 to 2015, an estimated 15 percent of ninth and eleventh grade students in California reported using electronic smoking devices. Nine and three-tenths percent of high school students in California reported buying their own electronic cigarettes from a store.

The density and proximity of tobacco retailers influence smoking behaviors, including the number of cigarettes smoked per day. Adults who smoke have a harder time quitting when

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density is higher. There are currently 386 tobacco retailers operating within the City of Sacramento. Currently, 79 percent of tobacco retailers are located within 1,000 feet of other retailers. 26 percent of retailers are located within 1,000 feet from a public or private school (K – 12). Policies to reduce tobacco retailer density have been shown to be effective and may reduce or eliminate inequities in the location and distribution of tobacco retailers.

Staff met with representatives of the Sacramento County Tobacco Control Coalition and representatives with the Saving Our Legacy Project. Both organizations shared concerns with:

• Flavored tobacco products and the apparent advertisement to persons under 21 years of age;
• The absence of a distance requirement between tobacco retailers; and • E- cigarettes and the availability of these products to youth.

At the request of the Law and Legislation Committee, staff met with stakeholders representing the tobacco industry on February 8, 2019. The intent of the meeting was to gather solutions that would help reduce access of tobacco to persons under the age of 21 in lieu of the proposed amendments. Staff met with representatives from JUUL (the electronic cigarette manufacturer), the American Petroleum and Convenience Store Association, and the California Fuels and Convenience Alliance. In summary, the group proposed that the City adopt five alternatives in lieu of the proposed amendment including:

1. Require tobacco retailers to utilize Age Verification Technology (AVT) that can scan identification

2. Regulate packaging of flavored tobacco products that is “knowingly attractive to minors” prohibiting the use of cartoon-like characters, symbols and celebrity images

3. Require child-resistant caps and tamper evident packaging on all electronic cigarettes

4. Regulate density of tobacco retailers by requiring a Conditional Use Permit from the Planning Department for new tobacco retailers

5. Impose penalties in lieu of suspension periods after a tobacco retailer is caught selling tobacco to minors

The following findings support the proposed amendments:

• From 2013 to 2015, an estimated 15% of ninth and eleventh grade students in California reported using electronic smoking devices. (California Department of Public Health California Tobacco Control Program. California Tobacco Facts and Figures 2016. Sacramento, CA: California Department of Public Health. 2016.)

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• Nine and three-tenths percent of high school students in California reported buying their own electronic cigarette from a store. (Kann L, McManus T, Harris WA, et al. Youth Risk Behavior Surveillance - United States, 2017; Centers for Disease Control and Prevention. Youth Risk Behavior Surveillance — United States, 2017. Supplementary Tables 52-93.)

• In 2016, an estimated 82 percent of tobacco retailers in California sold flavored non- cigarette tobacco products, over 90 percent of tobacco retailers sold menthol cigarettes, and eight out of 10 tobacco retailers near schools sold flavored non-cigarette tobacco products. (California Department of Public Health California Tobacco Control Program. 2016 Healthy Stores for a Healthy Community Survey Results-all counties. 2016.)

• Mentholated and flavored products have been shown to be “starter” products for youth who begin using tobacco and these products help establish tobacco habits that can lead to long-term addiction. (U.S. Department of Health and Human Services. Preventing Tobacco Use Among Youth and Young Adults: A Report of the Surgeon General.

Atlanta, GA: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health. 2012; Hersey JC, Ng SW, Nonnemaker JM, et al. Are menthol cigarettes a starter product for youth? Nicotine Tob Res. 2006; Wackowski O, Delnevo CD. Menthol cigarettes and indicators of tobacco dependence among adolescents. Addict Behav. 2007; Oliver AJ, Jensen JA, Vogel RI, Anderson AJ, Hatsukami DK. Flavored and nonflavored smokeless tobacco products: rate, pattern of use, and effects. Nicotine Tob Res. 2013.)

• Between 2004 and 2014, use of non-menthol cigarettes decreased among all populations, but overall use of menthol cigarettes increased among young adults (18 to 25 years of age) and adults (over 26 years of age). (Villanti AC, Mowery PD, Delnevo CD, Niaura RS, Abrams DB, Giovino GA. Changes in the prevalence and correlates of menthol cigarette use in the USA, 2004-2014. Tob Control. 2016.)

• Unlike cigarette use that has steadily declined among youth, the prevalence of the use of non-cigarette tobacco products has remained statistically unchanged and, in some cases, increased among youth. (U.S. Department of Health and Human Services.

Preventing Tobacco Use Among Youth and Young Adults: A Report of the Surgeon General. Atlanta, GA: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health. 2012; Johnston LD, O’Malley PM, Bachman JG, Schulenberg JE, Miech RA. Monitoring the Future national survey results on drug use, 1975–2013: Volume I, Secondary school students. Ann Arbor, MI: Institute

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for Social Research, The University of Michigan. 2014; Harrell PT, Naqvi SMH, Plunk AD, Ji M, Martins SS. Patterns of youth tobacco and polytobacco usage: The shift to alternative tobacco products. Am J Drug Alcohol Abuse. 2017; Substance Abuse and
Mental Health Services Administration. Results from the 2010 National Survey on Drug Use and Health: Summary of National Findings. Rockville, MD: Substance Abuse and Mental Health Services Administration. 2011;
Wang TW, Gentzke A, Sharapova S,
Cullen KA, Ambrose BK, Jamal A. Tobacco Product Use Among Middle and High School Students - United States, 2011-2017; Cobb C, Ward KD, Maziak W, Shihadeh AL, Eissenberg T. Waterpipe Tobacco Smoking: An Emerging Health Crisis in the United States. American Journal of Health Behavior. 2010.)

• Flavored tobacco has significant public health implications for youth and people of color as a result of targeted industry marketing strategies and product manipulation. (United States v. Philip Morris USA, Inc., 449 F. Supp. 2d 1 (D.D.C. 2006); U.S. Department of Health and Human Services. Preventing Tobacco Use Among Youth and Young Adults:

A Report of the Surgeon General. Atlanta, GA: U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health. 2012; Yerger VB, Przewoznik J, Malone RE. Racialized geography, corporate activity, and health disparities: tobacco industry targeting of inner cities. J Health Care Poor Underserved. 2007;
Kreslake JM, Wayne GF, Alpert HR, Koh HK, Connolly GN. Tobacco industry control of menthol in cigarettes and targeting of adolescents and young adults. Am J Public Health. 2008.)

• The density and proximity of tobacco retailers influence smoking behaviors, including the number of cigarettes smoked per day. (Chuang YC, Cubbin C, Ahn D, Winkleby MA.

Effects of neighbourhood socioeconomic status and convenience store concentration on individual level smoking. J Epidemiol Community Health. 2005.)

• Adults who smoke have a harder time quitting when density is higher. (Reitzel LR, Cromley EK, Li Y, et al. The effect of tobacco outlet density and proximity on smoking cessation. Am J Public Health. 2011; Cantrell J, Anesetti-Rothermel A, Pearson JL, Xiao H, Vallone D, Kirchner TR. The impact of the tobacco retail outlet environment on adult cessation and differences by neighborhood poverty. Addiction. 2015.)

• Policies to reduce tobacco retailer density have been shown to be effective and may reduce or eliminate inequities in the location and distribution of tobacco retailers. (Ribisl KM, Luke DA, Bohannon DL, Sorg AA, Moreland-Russell S. Reducing Disparities in Tobacco Retailer Density by Banning Tobacco Product Sales Near Schools. Nicotine Tob Res. 2017; Myers AE, Hall MG, Isgett LF, Ribisl KM. A comparison of three policy

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approaches for tobacco retailer reduction. Prev Med. 2015; Luke DA, Hammond RA, Combs T, et al. Tobacco Town: Computational Modeling of Policy Options to Reduce Tobacco Retailer Density. Am J Public Health. 2017.)

Policy Considerations: The City of Sacramento’s 2035 General Plan encourages a healthy lifestyle for Sacramento residents to improve overall public health. The Public Health and Safety Goal 5.1 states that a goal of the General Plan is to: “Improve the provision of human services and promote public health and safety.”

Economic Impacts: None

Environmental Considerations: None

Sustainability: None

Commission/Committee Action: On October 23, 2018, staff presented recommendations to the Law and Legislation Committee adopting revisions to amending section 5.138 of the City Code relating to Tobacco Retailers. The Law and Legislation Committee forwarded a recommendation to the City Council to adopt the revisions. On March 19, 2019, the Law and Legislation Committee heard alternate ordinance language with amendments provided by the tobacco coalition. The Committee directed staff to move forward with the original revisions approved on October 23, 2018.

Rationale for Recommendation: The proposed ordinance is consistent with General Plan policies to promote a safe and healthy lifestyle for residents of the City of Sacramento.

Financial Considerations: The Tobacco Retailers Licensing program recovers costs through the collection of program fees. For FY 2018/19, the revenue budget for the program is approximately $148,869.

Local Business Enterprise (LBE): Not applicable.

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1 ORDINANCE NO. 2019-xxx

Adopted by the Sacramento City Council
xxxxx, 2019

AN ORDINANCE AMENDING VARIOUS SECTIONS OF CHAPTER

5.138 OF THE SACRAMENTO CITY CODE, RELATING TO

TOBACCO RETAILERS

BE IT ENACTED BY THE COUNCIL OF THE CITY OF SACRAMENTO:

SECTION 1.

Section 5.138.010 of the Sacramento City Code is amended to read as follows:

5.138.010 Legislative findings.

A. State law prohibits the sale or furnishing of cigarettes, tobacco products and smoking paraphernalia to minors, as well as the purchase, receipt, or possession of tobacco products by minors (Penal Code persons under 21 years of age except active duty military personnel who are 18 years of age or older (California Penal Code § 308).

B. State law requires that tobacco retailers check the identification of tobacco purchasers who reasonably appear to be under eighteen (18)21 years of age (California Business & Professions Code § 22956) and provides procedures for using persons under eighteen (18)21 years of age to conduct onsite compliance checks of tobacco retailers (California Business & Professions Code § 22952).

C. State law requires that tobacco retailers post a conspicuous notice at each point of sale stating that selling tobacco products to anyone under eighteen (18)21 years of age is illegal (California Business & Professions Code § 22952, California Penal Code § 308).

D. State law prohibits the sale or display of cigarettes through a self-service display and prohibits public access to cigarettes without the assistance of a clerk (California Business & Professions Code § 22962).

E. State law prohibits the sale of “bidis” (a type of hand-rolled filterless cigarettes imported primarily from India and Southeast Asian countriescigarette) except at those businesses that prohibit the presence of minors. ( (California Penal Code § 308.1).

F. State law prohibits the manufacture, distribution, or sale of cigarettes in packages of less than twenty (20) and prohibits the manufacture, distribution, or sale of “roll-your-own” tobacco in packages containing less than six -tenths of an ounce of tobacco (California Penal Code § 308.3).

G. State law prohibits public school students from smoking or using tobacco products while on campus, while attending school-sponsored activities, or while under

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2 the supervision or control of school district employees (California Education Code § 48901(a)).

H. Sacramento City Code Section section 5.140.040 prohibits the sale or distribution of tobacco products from vending machines.

I. In 2003, the Sacramento County DepartmentFrom 2013 to 2015, an estimated 15% of Healthninth and Human Services Tobacco Education Program found that twenty- seven and four-tenths (27.4) percenteleventh grade students in California reported using electronic smoking devices.

J. Over 9% of high school students in California reported buying their own electronic cigarette from a store.

K. In 2016, an estimated 82% of tobacco retailers sampled in the city of Sacramento unlawfullyin California sold flavored non-cigarette tobacco products to minors, over 90% of tobacco retailers sold menthol cigarettes, and 80% tobacco retailers near schools sold flavored non-cigarette tobacco products.

J. Eighty-eight (88) percent
L. Mentholated and flavored products have been shown to be “starter” products for youth who begin using tobacco and these products help establish tobacco habits that can lead to long-term addiction.

M. Between 2004 and 2014, use of non-menthol cigarettes decreased among all populations, but overall use of menthol cigarettes increased among young adults who have ever smoked tried their first(18 to 25 years of age) and adults (over 26 years of age).

N. Unlike cigarette byuse that has steadily declined among youth, the ageprevalence of eighteen (18), and the average age at which smokers try their first use of non-cigarette tobacco products has remained statistically unchanged and, in some cases, increased among youth.

O. Flavored tobacco has significant public health implications for youth and people of color as a result of targeted industry marketing strategies and product manipulation.

P. The density and proximity of tobacco retailers influence smoking behaviors, including the number of cigarettes smoked per day.

Q. Adults who smoke have a harder time quitting when density of tobacco retailers is fourteen and a half (14½).high.

K. R. Policies to reduce tobacco retailer density have been shown to be effective and may reduce or eliminate inequities in the location and distribution of tobacco retailers.

S. Neither federal nor California state laws restrict the sale of menthol cigarettes or flavored non-cigarette tobacco products, electronic smoking devices, or the solutions used in these devices.

T. The city of Sacramento has a substantial interest in promoting compliance with federal, state, and local laws intended to regulate tobacco sales and use; in discouraging

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3 the illegal purchase of tobacco products by minorspersons under 21 years of age; in promoting compliance with laws prohibiting sales of cigarettes and tobacco products to minorspersons under 21 years of age; and in protecting childrenyouth and underserved populations from being lured into illegal activity through the misconductharms of adultstobacco use.

L. U. California courts in Cohen v. Board of Supervisors, (1985) 40 Cal. 3d 277 (1985), and, Bravo Vending v. City of Rancho Mirage, (1993) 16 Cal. App. 4th 383 (1993),, and Prime Gas v. City of Sacramento (2010) 184 Cal.App.4th 697, have affirmed the power of local jurisdictions to regulate business activity in order to discourage violations of law.

M. V. State law authorizes local tobacco retailer licensing laws to provide for the suspension or revocation of the local tobacco retailer license for any violation of a state tobacco control law (California Business & Professions Code § 22971.3).

N. W. A requirement for a tobacco retailer license will not unduly burden legitimate business activities of retailers who sell or distribute cigarettes or other tobacco products to adults. It will, however, allow the city to regulate the operation of lawful businesses to discourage violations of federal, state, and local tobacco-related laws.

SECTION 2.

Section 5.138.030 of the Sacramento City Code is amended to read as follows:

5.138.030 Definitions.

As used in this chapter, the following words and phrases shall have the meaning given them in this Sectionsection, unless the context clearly requires otherwise:
“City” means the city of Sacramento.
“Arm’s length transaction” means a sale in good faith and for valuable consideration that reflects the fair market value in the open market between two informed and willing parties, neither under any compulsion to participate in the transaction. A sale between relatives, related companies or partners, or a sale for the primary purpose of avoiding the effect of the violations of this chapter that occurred at the location, is presumed not to be an “arm’s length transaction.”
“Characterizing flavor” means a taste or aroma, other than the taste or aroma of tobacco, imparted either prior to or during consumption of a tobacco product or any byproduct produced by the tobacco product, including, but not limited to, tastes or aromas relating to menthol, mint, wintergreen, fruit, chocolate, vanilla, honey, candy, cocoa, dessert, alcohol beverage, herb, or spice.
“City manager” means the city manager of the city of Sacramento or his or her designee. “Flavored tobacco product” means any tobacco product that imparts a characterizing flavor.

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4 “Itinerant tobacco retailing” means engaging in tobacco retailing at other than a fixed location.
“License” means a tobacco retailer license issued by the city pursuant to this chapter. “Licensee” means any proprietor holding a license issued by the city pursuant to this chapter.
“Person” means any individual, firm, partnership, joint venture, limited liability company, association, social club, fraternal organization, corporation, estate, trust, business trust, receiver, trustee, syndicate, or any other group or combination acting as a unit.
“Proprietor” means a person with an ownership or managerial interest in a business. An ownership interest shall be deemed to exist when a person has a ten (10) percent% or greater interest in the stock, assets, or income of a business other than the sole interest of security for debt. A managerial interest shall be deemed to exist when a person has, or can have, sole or shared control over the day-to-day operations of a business. “Tobacco product” means any substance:

1. A product containing, made, or derived from tobacco leafor nicotine that is intended for human consumption, whether smoked, heated, chewed, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means, including, but not limited to, cigarettes, cigars, pipe tobacco, snufflittle cigars, chewing tobacco, dippingpipe tobacco, or snuff;

2. An electronic device that delivers nicotine or other vaporized liquids to the person inhaling from the device, including, but not limited to, an electronic cigarette, cigar, pipe, or hookah; and

3. Any component, part, or accessory of a tobacco, bidis or any other preparation of product, whether or not sold separately.

1.4. “Tobacco product” does not include a product that has been approved by the United States Food and Drug Administration for sale as a tobacco cessation product or for other therapeutic purposes where the product is marketed and sold solely for such an approved purpose.
“Tobacco paraphernalia” means cigarette papers or wrappers, pipes, holders of smoking materials of all types, cigarette rolling machines and any other any item designed or usedmarketed for the smokingconsumption, use, or ingestionpreparation of a tobacco productsproduct.
“Tobacco retailer” means any person who sells, offers for sale, exchanges, or offers to exchange for any form of consideration, tobacco, tobacco products, or tobacco paraphernalia without regard to the quantity sold, offered for sale, exchanged, or offered for exchange.
“Tobacco retailing” means selling, offering for sale, exchanging, or offering to exchange for any form of consideration, tobacco, tobacco products, or tobacco paraphernalia without regard to the quantity sold, offered for sale, exchanged, or offered for exchange.

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5 SECTION 3.

Section 5.138.040 of the Sacramento City Code is amended to read as follows:

5.138.040 Requirement for tobacco retailer license.

A. It shall be unlawful for any person to act as a tobacco retailer without first obtaining aa valid license for each location at which tobacco retailing is to occur. No license will be issued to authorize tobacco retailing at other than a fixed location. No license will be issued for itinerant tobacco retailing or tobacco retailing from vehicles.

B. B. No license shall issue, and no existing license shall be renewed, to authorize tobacco retailing within 1,000 feet of a tobacco retailer already licensed pursuant to this chapter as measured by a straight line from the nearest point of the property line of the parcel on which the applicant’s business is located to the nearest point of the property line of the parcel on which an existing licensee’s business is located.

C. Nothing in this chapter shall be construed to grant any person obtaining a license any status or right other than the right to act as a tobacco retailer at the location in the city identified on the face of the license, subject to compliance with all other applicable laws, regulations, and ordinances. Nothing in this chapter shall be construed to render inapplicable, supercedesupersede, or apply in lieu of any other provision of applicable law, including, without limitation, any condition or limitation on indoor smoking made applicable to business establishments by California Labor Code Sectionsection 6404.5.

SECTION 4.

Section 5.138.060 of the Sacramento City Code is amended to read as follows:

5.138.060 Issuance and renewal of license.

A. Upon the receipt of an application for a license and the applicable license fee, the city manager shall issue a license unless:

1. The application is incomplete or inaccurate;

2. The application seeks authorization for tobacco retailing at an address that appears on a license that is suspended, has been revoked, or is subject to suspension or revocation proceedings for violation of any of the provisions of this chapter; provided, however, this subparagraph shall not constitute a basis for denial of a license if either or both of the following apply:
a. The applicant provides the city with documentation demonstrating that the applicant has acquired or is acquiring the premises or business in an arm’s length transaction. For the purposes of this subparagraph, an “arm’s length transaction” is defined as a sale in good faith and for valuable consideration that reflects the fair market value in the open market between two informed and willing parties, neither under any compulsion to participate in the transaction. A sale between relatives, related companies or partners, or a sale for the primary purpose of avoiding the effect of the

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6 violations of this chapter that occurred at the location, is presumed not to be an “arm’s length transaction”;;
b. It has been more than five years since the most recent license for that location was revoked;

3. The application seeks authorization for tobacco retailing that is unlawful pursuant to this code, or that is unlawful pursuant to any other local, state, or federal law; or,

4. The city manager has information that the applicant or his or her agents or employees has violated any local, state or federal tobacco control law at the location for which the license or renewal of the license is sought within the preceding thirty (30) - day period.

B. A license shall beis valid for one year and must be renewed not later than thirty (30) days prior to the expiration of the license, but no earlier than sixty (60) days prior to the expiration of the license. Unless revoked on an earlier date, all licenses shall expire one year after the date of issuance. A license may be renewed for additional one-year periods of one year by submitting an application to the city manager and payment of the applicable license fee; provided, however, a license that is suspended, has been revoked, or is subject to suspension or revocation proceedings shall not be renewed.

The application and license fee shall be submitted at least thirty (30) days, but not more than sixty (60) days, prior to the expiration of the current valid license. The applicant shall follow all of the procedures and provide all of the information required by Sectionsection 5.138.050. The city manager shall process the application according to the provisions of this section.

C. WhereC. N otwithstanding section 5.138.040B, a tobacco retailer operating lawfully on the date this subsection C is effective that would otherwise be eligible for a tobacco retailer license for the location for which a license is sought may receive or renew a license for that location so long as all of the following conditions are met:

1. The license is timely obtained and is renewed without lapse or permanent revocation (as opposed to temporary suspension);

2. The tobacco retailer is not closed for business or has not ceased tobacco retailing for more than 60 consecutive days;

3. The tobacco retailer does not substantially change the business premises or business operation for the purpose of increasing the sale or display of tobacco products; and

4. The tobacco retailer retains the right to operate under all other applicable laws.

D. When the city manager does not approve a license or renewal of a license, the city manager shall notify the applicant of the specific grounds for the denial in writing.

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7 the notice in the United States mail without extension of time for any reason. In lieu of mailing, the notice may be served personally by delivering to the person to be served and service shall be deemed complete at the time of such delivery. Personal service to a corporation may be made by delivery of the notice to any person designated in the California Code of Civil Procedure to be served for the corporation with summons and complaint in a civil action.

SECTION 5.

Section 5.138.100 of the Sacramento City Code is amended to read as follows:

5.138.100 License violation.

It shall beA. It is a violation of a license for a licensee or his or her agents or employees to sell or offer for sale any flavored tobacco product. There is a rebuttable presumption that a tobacco product is a flavored tobacco product if a manufacturer or its agents or employees has made a public statement or claim that the tobacco product has or produces a characterizing flavor, including, but not limited to, text, color, or images on the product’s labeling or packaging that are used to expressly or impliedly communicate that a tobacco product has a characterizing flavor.

B. It is a violation of a license for a licensee or his or her agents or employees to violate any local, state, or federal tobacco-related law.

SECTION 6.

Section 5.138.110 of the Sacramento City Code is amended to read as follows:

5.138.110 Suspension or revocation of license.

A. In addition to any other remedy authorized by law, a license shall be suspended or revoked as provided in this section, if the city manager finds that the licensee or his or her agents or employees has or have violated any of the provisions of this chapter; provided, however, violations by a licensee at one location may not be accumulated against other locations of that same licensee, nor may violations accumulated against a prior licensee at a licensed location be accumulated against a new licensee at the same licensed location.

1. Upon a finding by the city manager of a first license violation within any five-year period, the license shall be suspended for thirty (30) days.

2. Upon a finding by the city manager of a second license violation within any five- year period, the license shall be suspended for ninety (90) days.

3. Upon a finding by the city manager of a third license violation within any five- year period, the license shall be suspended for one yearrevoked.

4. Upon a finding by the city manager of a fourth license violation within any five-year period, the license shall be revoked.

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8 B. Notwithstanding Sectionsection 5.138.110(A),110A, a license shall be revoked if the city manager finds that either one or both of the following conditions exist:

1. One or more of the bases for denial of a license under Sectionsection 5.138.060(A)060A existed at the time application was made or at anytimeany time before the license issued.

2. The information contained in the license application, including supplemental information, if any, is found to be false in any material respect.

C. In the event the city manager suspends or revokes a license, written notice of the suspension or revocation shall be served upon the licensee within five days of the suspension or revocation in the manner prescribed in Sectionsection 5.138.060(C).060D.

The notice shall contain:

1. A brief statement of the specific grounds for such suspension or revocation;

2. A statement that the licensee may appeal the suspension or revocation by submitting an appeal, in writing, in accordance with the provisions of Sectionsection 5.138.120, to the city manager, within ten (10) calendar days of the date of service of the notice; and

3. A statement that the failure to appeal the notice of suspension or revocation will constitute a waiver of all right to an administrative appeal hearing, and the suspension or revocation will be final.

D. A licensee for whom a license suspension is in effect, or whose license has been revoked, must cease all tobacco retailing and remove all tobacco products and tobacco paraphernalia from public view at the address that appears on the suspended or revoked license.

SECTION 7.

Section 5.138.120 of the Sacramento City Code is amended to read as follows:

5.138.120 Denial, suspension and revocation—Appeals.

A. A ny applicant or licensee aggrieved by the decision of the city manager in denying, suspending, or revoking a license, may appeal the decision by submitting a written appeal to the city manager within ten (10) calendar days from the date of service of the notice of denial, suspension, or revocation. The appeal must be accompanied by an appeal fee set by resolution of the city council. The written appeal shall contain:

1. A brief statement in ordinary and concise language of the specific action protested, together with any material facts claimed to support the contentions of the appellant;

2. A brief statement in ordinary and concise language of the relief sought, and the reasons why it is claimed the protested action should be reversed or otherwise set aside;

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9 3. The signatures of all parties named as appellants and their official mailing addresses; and

4. The verification (by declaration under penalty of perjury) of at least one appellant as to the truth of the matters stated in the appeal.

B. The appeal hearing shall be conducted by a hearing examiner appointed pursuant to Sectionsection 8.04.070 of this code.

C. Upon receipt of any appeal filed pursuant to this Sectionsection, the city manager shall transmit saidthe appeal to the secretary of the hearing examiner who shall calendar it for hearing as follows:

1. If the appeal is received by the city manager not later than fifteen (15) days prior to the next regular appeal hearing, it shall be calendared for hearing at said meeting.

2. I f the appeal is received by the city manager on a date less than fifteen (15) days prior to the next appeal hearing, it shall be calendared for the next subsequent appeal hearing.

D. Written notice of the time and place of the hearing shall be given at least ten (10) calendar days prior to the date of the hearing to each appellant by the secretary of the hearing examiner either by causing a copy of such notice to be delivered to the appellant personally or by mailing a copy thereof, postage prepaid, addressed to the appellant at the address shown on the appeal.

E. Failure of any person to file a timely appeal in accordance with the provisions of this section shall constitute an irrevocable waiver of the right to anadministrative hearing and a final adjudication of the notice and order, or any portion thereof.administrative hearing and a final adjudication of the notice and order, or any portion of the notice and order.

F. Only those matters or issues specifically raised by the appellant in the appeal notice shall be considered in the hearing of the appeal.

G. Any suspension or revocation of a license shall be stayed during the pendency of an appeal which is properly and timely filed pursuant to this section.

SECTION 8.

Section 5.138.140 of the Sacramento City Code is amended to read as follows:

5.138.140 Conduct of hearing.

A. Hearings need not be conducted according to the technical rules relating to evidence and witnesses. California Government Code Sectionsection 11513, subsectionssubdivisions (a), (b) and (c) as presently written or hereinafter amended ), shall apply to hearings under this chapter.

B. Oral evidence shall be taken only upon oath or affirmation.

C. Irrelevant and unduly repetitious evidence shall be excluded.

D. Each party shall have these rights, among others:

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10 1. To call and examine witnesses on any matter relevant to the issues of the hearing;

2. To introduce documentary and physical evidence;

3. To cross-examine opposing witnesses on any matter relevant to the issues of the hearing;

4. To impeach any witness regardless of which party first called the witness to testify;

5. To rebut the evidence presented against the party; and

6. To represent himself, herself, or itself or to be represented by anyone of his, her, or its choice who is lawfully permitted to do so.

E. In reaching a decision, official notice may be taken, either before or after submission of the case for decision, of any fact that may be judicially noticed by the courts of this state or that may appear in any of the official records of the city or any of its departments.

SECTION 9.

Section 5.138.150 of the Sacramento City Code is amended to read as follows:

5.138.150 Form and contents of decision—Finality of decision.

A. If it is shown, by a preponderance of the evidence, that one or more bases exist to deny, suspend, or revoke the license, the hearing examiner shall affirm the city manager’s decision to deny, suspend, or revoke the license. The decision of the hearing examiner shall be in writing and shall contain findings of fact and a determination of the issues presented.

B. The decision shall inform the appellant that the decision is a final decision and that the time for judicial review is governed by California Code of Civil Procedure Sectionsection 1094.6. Copies of the decision shall be delivered to the parties personally or sent by certified mail to the address shown on the appeal. The decision shall be final when signed by the hearing examiner and served as provided in this section.

SECTION 10.

Section 5.138.160 of the Sacramento City Code is amended to read as follows:

5.138.160 Enforcement.

A. In addition to any other remedy, any person violating any provision of this chapter shall be guilty of a misdemeanor for each day such violation continues.

B. Any violation of this chapter may be remedied by a civil action brought by the city attorney. The city may recover reasonable attorneysattorneys’ fees and costs of suit in any civil action brought by the city attorney to remedy any violation of this chapter.

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11 C. Any person violating the provisions of this chapter shall also be liable for civil penalties of not less than two hundred fifty dollars ($$250.00) or more than twenty-five thousand dollars ($$25,000.00) for each day the violation continues.

D. Violations of this chapter are hereby declared to be public nuisances subject to abatement by the city.

E. In addition to criminal sanctions, civil penalties as provided in this section, and other remedies set forth in this chapter, administrative penalties may be imposed pursuant to Chapterchapter 1.28 against any person violating any provision of this chapter. Imposition, enforcement, collection and administrative review of administrative penalties imposed shall be conducted pursuant to Chapterchapter 1.28.

SECTION 11.

The effective date of this ordinance is October 1, 2019.

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1 ORDINANCE NO. 2019-xxx
Adopted by the Sacramento City Council
xxxxx, 2019

AN ORDINANCE AMENDING VARIOUS SECTIONS OF CHAPTER

5.138 OF THE SACRAMENTO CITY CODE, RELATING TO

TOBACCO RETAILERS
BE IT ENACTED BY THE COUNCIL OF THE CITY OF SACRAMENTO:

SECTION 1.

Section 5.138.010 of the Sacramento City Code is amended to read as follows:

5.138.010 Legislative findings.

A. State law prohibits the sale or furnishing of
cigarettes, tobacco products and
smoking paraphernalia to persons under 21 years of age except active duty military personnel who are 18 years of age or older (California Penal Code § 308).

B. State law requires that tobacco retailers check the identification of tobacco purchasers who reasonably appear to be under 21 years of age (California Business & Professions Code § 22956) and provides procedures for using persons under 21 years of age to conduct onsite compliance checks of tobacco retailers (California Business & Professions Code § 22952).

C. State law requires that tobacco retailers post a conspicuous notice at each point of sale stating that selling tobacco products to anyone under 21 years of age is illegal (California Business & Professions Code § 22952, California Penal Code § 308).

E. State law prohibits the sale of “bidis” (a type of hand-rolled filterless cigarette) except at those businesses that prohibit the presence of minors (California Penal Code § 308.1).

F. State law prohibits the manufacture, distribution, or sale of cigarettes in packages of less than 20 and prohibits the manufacture, distribution, or sale of “roll- your-own” tobacco in packages containing less than six-tenths of an ounce of tobacco (California Penal Code § 308.3).

G. State law prohibits public school students from smoking or using tobacco products while on campus, while attending school-sponsored activities, or while under the supervision or control of school district employees (California Education Code § 48901(a)).

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2 H. Sacramento City Code section 5.140.040 prohibits the sale or distribution of tobacco products from vending machines.

I. From 2013 to 2015, an estimated 15% of ninth and eleventh grade students in California reported using electronic smoking devices.

J. Over 9% of high school students in California reported buying their own electronic cigarette from a store.

K. In 2016, an estimated 82% of tobacco retailers in California sold flavored non- cigarette tobacco products, over 90% of tobacco retailers sold menthol cigarettes, and 80% tobacco retailers near schools sold flavored non-cigarette tobacco products.

L. Mentholated and flavored products have been shown to be “starter” products for youth who begin using tobacco and these products help establish tobacco habits that can lead to long-term addiction.

M. Between 2004 and 2014, use of non-menthol cigarettes decreased among all populations, but overall use of menthol cigarettes increased among young adults (18 to 25 years of age) and adults (over 26 years of age).

N. Unlike cigarette use that has steadily declined among youth, the prevalence of the use of non-cigarette tobacco products has remained statistically unchanged and, in some cases, increased among youth.

O. Flavored tobacco has significant public health implications for youth and people of color as a result of targeted industry marketing strategies and product manipulation.

P. The density and proximity of tobacco retailers influence smoking behaviors, including the number of cigarettes smoked per day.

Q. Adults who smoke have a harder time quitting when density of tobacco retailers is high.

R. Policies to reduce tobacco retailer density have been shown to be effective and may reduce or eliminate inequities in the location and distribution of tobacco retailers.

S. Neither federal nor California state laws restrict the sale of menthol cigarettes or flavored non-cigarette tobacco products, electronic smoking devices, or the solutions used in these devices.

T. The city has a substantial interest in promoting compliance with federal, state, and local laws intended to regulate tobacco sales and use; in discouraging the illegal purchase of tobacco products by persons under 21 years of age; in promoting compliance with laws prohibiting sales of cigarettes and tobacco products to persons under 21 years of age; and in protecting youth and underserved populations from the harms of tobacco use.

U. California courts in Cohen v. Board of Supervisors (1985) 40 Cal.3d 277, Bravo Vending v. City of Rancho Mirage (1993) 16 Cal.App.4th 383, and Prime Gas v. City of Sacramento (2010) 184 Cal.App.4th 697, have affirmed the power of local jurisdictions to regulate business activity in order to discourage violations of law.

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3 V. State law authorizes local tobacco retailer licensing laws to provide for the suspension or revocation of the local tobacco retailer license for any violation of a state tobacco control law (California Business & Professions Code § 22971.3).

W. A requirement for a tobacco retailer license will not unduly burden legitimate business activities of retailers who sell or distribute cigarettes or other tobacco products to adults. It will, however, allow the city to regulate the operation of lawful businesses to discourage violations of federal, state, and local tobacco-related laws.

SECTION 2.

Section 5.138.030 of the Sacramento City Code is amended to read as follows:

5.138.030 Definitions.

As used in this chapter, the following words and phrases shall have the meaning given them in this section, unless the context clearly requires otherwise:
“Arm’s length transaction” means a sale in good faith and for valuable consideration that reflects the fair market value in the open market between two informed and willing parties, neither under any compulsion to participate in the transaction. A sale between relatives, related companies or partners, or a sale for the primary purpose of avoiding the effect of the violations of this chapter that occurred at the location, is presumed not to be an “arm’s length transaction.”
“Characterizing flavor” means a taste or aroma, other than the taste or aroma of tobacco, imparted either prior to or during consumption of a tobacco product or any byproduct produced by the tobacco product, including, but not limited to, tastes or aromas relating to menthol, mint, wintergreen, fruit, chocolate, vanilla, honey, candy, cocoa, dessert, alcohol beverage, herb, or spice.
“City manager” means the city manager of the city or his or her designee. “Flavored tobacco product” means any tobacco product that imparts a characterizing flavor.
“Itinerant tobacco retailing” means engaging in tobacco retailing at other than a fixed location.
“License” means a tobacco retailer license issued by the city pursuant to this chapter. “Licensee” means any proprietor holding a license issued by the city pursuant to this chapter.
“Proprietor” means a person with an ownership or managerial interest in a business. An ownership interest shall be deemed to exist when a person has a 10% or greater interest in the stock, assets, or income of a business other than the sole interest of security for debt. A managerial interest shall be deemed to exist when a person has, or can have, sole or shared control over the day-to-day operations of a business. “Tobacco product” means:

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4 1. A product containing, made, or derived from tobacco or nicotine that is intended for human consumption, whether smoked, heated, chewed, absorbed, dissolved, inhaled, snorted, sniffed, or ingested by any other means, including, but not limited to, cigarettes, cigars, little cigars, chewing tobacco, pipe tobacco, or snuff;

2. An electronic device that delivers nicotine or other vaporized liquids to the person inhaling from the device, including, but not limited to, an electronic cigarette, cigar, pipe, or hookah; and

3. Any component, part, or accessory of a tobacco product, whether or not sold separately.

4. “Tobacco product” does not include a product that has been approved by the United States Food and Drug Administration for sale as a tobacco cessation product or for other therapeutic purposes where the product is marketed and sold solely for such an approved purpose.
“Tobacco paraphernalia” means any item designed or marketed for the consumption, use, or preparation of a tobacco product.
“Tobacco retailer” means any person who sells, offers for sale, exchanges, or offers to exchange for any form of consideration, tobacco, tobacco products, or tobacco paraphernalia without regard to the quantity sold, offered for sale, exchanged, or offered for exchange.
“Tobacco retailing” means selling, offering for sale, exchanging, or offering to exchange for any form of consideration, tobacco, tobacco products, or tobacco paraphernalia without regard to the quantity sold, offered for sale, exchanged, or offered for exchange.

SECTION 3.

Section 5.138.040 of the Sacramento City Code is amended to read as follows:

5.138.040 Requirement for tobacco retailer license.

A. It shall be unlawful for any person to act as a tobacco retailer without a valid license for each location at which tobacco retailing is to occur. No license will be issued to authorize tobacco retailing at other than a fixed location. No license will be issued for itinerant tobacco retailing or tobacco retailing from vehicles.

B. No license shall issue, and no existing license shall be renewed, to authorize tobacco retailing within 1,000 feet of a tobacco retailer already licensed pursuant to this chapter as measured by a straight line from the nearest point of the property line of the parcel on which the applicant’s business is located to the nearest point of the property line of the parcel on which an existing licensee’s business is located.

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5 inapplicable, supersede, or apply in lieu of any other provision of applicable law, including, without limitation, any condition or limitation on indoor smoking made applicable to business establishments by California Labor Code section 6404.5.

SECTION 4.

Section 5.138.060 of the Sacramento City Code is amended to read as follows:

5.138.060 Issuance and renewal of license.

A. Upon the receipt of an application for a license and the appli cable license fee, the city manager shall issue a license unless:

1. The application is incomplete or inaccurate;

3. The application seeks authorization for tobacco retailing that is unlawful pursuant to this code, or that is unlawful pursuant to any other local, state, or federal law; or

B. A license is valid for one year and must be renewed not later than 30 days prior to the expiration of the license, but no earlier than 60 days prior to the expiration of the license. Unless revoked on an earlier date, all licenses expire one year after the date of issuance. A license may be renewed for additional one-year periods by submitting an application to the city manager and payment of the applicable license fee; provided, however, a license that is suspended, has been revoked, or is subject to suspension or revocation proceedings shall not be renewed. The application and license fee shall be submitted at least 30 days, but not more than 60 days, prior to the expiration of the current valid license. The applicant shall follow all of the procedures and provide all of the information required by section 5.138.050. The city manager shall process the application according to the provisions of this section.

C. Notwithstanding section 5.138.040B, a tobacco retailer operating lawfully on the date this subsection C is effective that would otherwise be eligible for a tobacco retailer

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6 license for the location for which a license is sought may receive or renew a license for that location so long as all of the following conditions are met:

1. The license is timely obtained and is renewed without lapse or permanent revocation (as opposed to temporary suspension);

2. The tobacco retailer is not closed for business or has not ceased tobacco retailing for more than 60 consecutive days;

3. The tobacco retailer does not substantially change the business premises or business operation for the purpose of increasing the sale or display of tobacco products; and

4. The tobacco retailer retains the right to operate under all other applicable laws.

D. When the city manager does not approve a license or renewal of a license, the city manager shall notify the applicant of the specific grounds for the denial in writing.

The notice of denial shall be served personally or by mail not later than five calendar days after the date of the denial. If by mail, the notice shall be placed in a sealed envelope, with postage paid, addressed to the applicant at the address as it appears on the application. The giving of notice shall be deemed complete at the time of deposit of the notice in the United States mail without extension of time for any reason. In lieu of mailing, the notice may be served personally by delivering to the person to be served and service shall be deemed complete at the time of such delivery. Personal service to a corporation may be made by delivery of the notice to any person designated in the California Code of Civil Procedure to be served for the corporation with summons and complaint in a civil action.

SECTION 5.

Section 5.138.100 of the Sacramento City Code is amended to read as follows:

5.138.100 License violation.

A. It is a violation of a license for a licensee or his or her agents or employees to sell or offer for sale any flavored tobacco product. There is a rebuttable presumption that a tobacco product is a flavored tobacco product if a manufacturer or its agents or employees has made a public statement or claim that the tobacco product has or produces a characterizing flavor, including, but not limited to, text, color, or images on the product’s labeling or packaging that are used to expressly or impliedly communicate that a tobacco product has a characterizing flavor.

B. It is a violation of a license for a licensee or his or her agents or employees to violate any local, state, or federal tobacco-related law.

SECTION 6.

Section 5.138.110 of the Sacramento City Code is amended to read as follows:

5.138.110 Suspension or revocation of license.

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7 A. In addition to any other remedy authorized by law, a license shall be suspended or revoked as provided in this section, if the city manager finds that the licensee or his or her agents or employees has or have violated any of the provisions of this chapter; provided, however, violations by a licensee at one location may not be accumulated against other locations of that same licensee, nor may violations accumulated against a prior licensee at a licensed location be accumulated against a new licensee at the same licensed location.

1. Upon a finding by the city manager of a first license violation within any five-year period, the license shall be suspended for 30 days.

2. Upon a finding by the city manager of a second license violation within any five- year period, the license shall be suspended for 90 days.

3. Upon a finding by the city manager of a third license violation within any five- year period, the license shall be revoked.

B. Notwithstanding section 5.138.110A, a license shall be revoked if the city manager finds that either one or both of the following conditions exist:

1. One or more of the bases for denial of a license under section 5.138.060A existed at the time application was made or at any time before the license issued.

2. The information contained in the license application, including supplemental information, if any, is found to be false in any material respect.

1. A brief statement of the specific grounds for such suspension or revocation;

2. A statement that the licensee may appeal the suspension or revocation by submitting an appeal, in writing, in accordance with the provisions of section 5.138.120, to the city manager, within 10 calendar days of the date of service of the notice; and

SECTION 7.

Section 5.138.120 of the Sacramento City Code is amended to read as follows:

5.138.120 Denial, suspension and revocation—Appeals.

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8 A. Any applicant or licensee aggrieved by the decision of the city manager in denying, suspending, or revoking a license, may appeal the decision by submitting a written appeal to the city manager within 10 calendar days from the date of service of the notice of denial, suspension, or revocation. The appeal must be accompanied by an appeal fee set by resolution of the city council. The written appeal shall contain:

1. A brief statement in ordinary and concise language of the specific action protested, together with any material facts claimed to support the contentions of the appellant;

2. A brief statement in ordinary and concise language of the relief sought, and the reasons why it is claimed the protested action should be reversed or otherwise set aside;

3. The signatures of all parties named as appellants and their official mailing addresses; and

4. The verification (by declaration under penalty of perjury) of at least one appellant as to the truth of the matters stated in the appeal.

B. The appeal hearing shall be conducted by a hearing examiner appointed pursuant to section 8.04.070.

C. Upon receipt of any appeal filed pursuant to this section, the city manager shall transmit the appeal to the secretary of the hearing examiner who shall calendar it for hearing as follows:

1. If the appeal is received by the city manager not later than 15 days prior to the next regular appeal hearing, it shall be calendared for hearing at said meeting.

2. If the appeal is received by the city manager on a date less than 15 days prior to the next appeal hearing, it shall be calendared for the next subsequent appeal hearing.

D. Written notice of the time and place of the hearing shall be given at least 10 calendar days prior to the date of the hearing to each appellant by the secretary of the hearing examiner either by causing a copy of such notice to be delivered to the appellant personally or by mailing a copy thereof, postage prepaid, addressed to the appellant at the address shown on the appeal.

E. Failure of any person to file a timely appeal in accordance with the provisions of this section shall constitute an irrevocable waiver of the right to an administrative hearing and a final adjudication of the notice and order, or any portion of the notice and order.

F. Only those matters or issues specifically raised by the appellant in the appeal notice shall be considered in the hearing of the appeal.

G. Any suspension or revocation of a license shall be stayed during the pendency of an appeal which is properly and timely filed pursuant to this section.

SECTION 8.

Section 5.138.140 of the Sacramento City Code is amended to read as follows:

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9 5.138.140 Conduct of hearing.

A. Hearings need not be conducted according to the technical rules relating to evidence and witnesses. California Government Code section 11513, subdivisions (a), (b) and (c), shall apply to hearings under this chapter.

B. Oral evidence shall be taken only upon oath or affirmation.

C. Irrelevant and unduly repetitious evidence shall be excluded.

D. Each party shall have these rights, among others:

1. To call and examine witnesses on any matter relevant to the issues of the hearing;

2. To introduce documentary and physical evidence;

3. To cross-examine opposing witnesses on any matter relevant to the issues of the hearing;

4. To impeach any witness regardless of which party first called the witness to testify;

5. To rebut the evidence presented against the party; and

6. To represent himself, herself, or itself or to be represented by anyone of his, her, or its choice who is lawfully permitted to do so.

SECTION 9.

Section 5.138.150 of the Sacramento City Code is amended to read as follows:

5.138.150 Form and contents of decision—Finality of decision.

B. The decision shall inform the appellant that the decision is a final decision and that the time for judicial review is governed by California Code of Civil Procedure section 1094.6. Copies of the decision shall be delivered to the parties personally or sent by certified mail to the address shown on the appeal. The decision shall be final when signed by the hearing examiner and served as provided in this section.

SECTION 10.

Section 5.138.160 of the Sacramento City Code is amended to read as follows:

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10 5.138.160 Enforcement.

A. In addition to any other remedy, any person violating any provision of this chapter shall be guilty of a misdemeanor for each day such violation continues.

B. Any violation of this chapter may be remedied by a civil action brought by the city attorney. The city may recover reasonable attorneys’ fees and costs of suit in any civil action brought by the city attorney to remedy any violation of this chapter.

C. Any person violating the provisions of this chapter shall also be liable for civil penalties of not less $250 or more than $25,000 for each day the violation continues.

D. Violations of this chapter are hereby declared to be public nuisances subject to abatement by the city.

Imposition, enforcement, collection and administrative review of administrative penalties imposed shall be conducted pursuant to chapter 1.28.

SECTION 11.

The effective date of this ordinance is October 1, 2019.

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FILE NO. 190312 ORDINANCE NO. 122-19
1 [Health Code- Restricting the Sale, Manufacture, and Distribution of Tobacco Products, Including Electronic Cigarettes]
2 3 Ordinance amending the Health Code to prohibit the sale by tobacco retail 4 establishments of electronic cigarettes that require, but have not received, an order 5 from the Food and Drug Administration (FDA) approving their marketing; and 6 prohibiting the sale and distribution to any person in San Francisco of flavored 7 tobacco products and electronic cigarettes that require, but have not received, an FDA 8 order approving their marketing.
9 10
11 12
13 14
15 NOTE: Unchanged Code text and uncodified text are in plain Arial font.

Additions to Codes are in single-underline italics Times New Roman font.

Deletions to Codes are in strikethrough italics Times }/nv Roman font.

Board amendment additions are in double-underlined Arial font.

Board amendment deletions are in strikethrough /\rial font.

Asterisks (* * * *) indicate the omission of unchanged Code subsections or parts of tables.

Be it ordained by the People of the City and County of San Francisco:
16 Section 1. Findings.
17 (a) Despite progress in reducing smoking, tobacco use is still the leading cause of 18 preventable death in the United States. Tobacco kills more than 480,000 people in this 19 country annually- more than AIDS, alcohol, car accidents, illegal drugs, murders, and 20 suicides combined. And beyond this large, impersonal statistic, are countless human beings, 21 whose lives are forever devastated by the irreparable loss of a loved one caused by tobacco 22 use, and the inevitable rupture of family that follows such a loss. And that is to say nothing of 23 the huge financial costs tobacco use places on our health care system, and the constraints on 24 productivity it imposes on our economic system.
25 Supervisors Walton; Peskin; Fewer, Safai, Yee, Brown BOARD OF SUPERVISORS Page 1
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1 (b) Electronic cigarettes (or "e-cigarettes") entered the marketplace around 2007, and 2 since 2014, they have been the most commonly used tobacco product among youth in the 3 United States. The dramatic surge in youth e-cigarette use ("vaping") is no accident. E- 4 cigarettes are frequently marketed in a variety of flavors with obvious appeal to youth, such as 5 gummy bear, cotton candy, and fruit punch. As of 2017, researchers had identified more than 6 15,500 unique e-cigarette flavors available online. In addition, e-cigarette companies have 7 effectively used marketing strategies, including celebrity endorsements, slick magazine 8 advertisements, social media campaigns, paid influencers, and music sponsorships, to reach 9 youth and young adults. A 2016 study found that 78.2% of middle and high school students- 1 0 20.5 million youth-had been exposed toe-cigarette advertisements from at least one source, 11 an increase from 68.9% only two years before, in 2014. 12 (c) According to the Centers for Disease Control and Prevention ("CDC"), the number 13 of middle and high school students who reported being current users of tobacco products 14 increased 36%-from 3.6 million to 4.9 million students-between 2017 and 2018. This 15 dramatic increase, which has erased past progress in reducing youth tobacco use, is directly 16 attributable to a nationwide surge in e-cigarette use by adolescents. There were 1.5 million 17 more youth e-cigarette users in 2018 than 2017, and those who were using e-cigarettes were 18 using them more often. Frequent use of e-cigarettes increased from 20 percent in 2017 to 28 19 percent in 2018 among current high school e-cigarette users. 20 (d) The widespread use of e-cigarettes by youth has significant public health 21 consequences. As stated by the Surgeon General, "Most e-cigarettes contain nicotine- the 22 addictive drug in regular cigarettes, cigars, and other tobacco products. Nicotine exposure 23 during adolescence can harm the developing brain -which continues to develop until about 24 age 25. Nicotine exposure during adolescence can impact learning, memory, and attention. 25 Using nicotine in adolescence can also increase risk for future addiction to other drugs. In Supervisors Walton; Peskin; Fewer, Safai, Yee, Brown
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1 addition to nicotine, the aerosol that users inhale and exhale from e-cigarettes can potentially 2 expose both themselves and bystanders to other harmful substances, including heavy metals, 3 volatile organic compounds, and ultrafine particles that can be inhaled deeply into the lungs." 4 (e) And while there is some evidence that the use of e-cigarettes by adults may 5 support smoking cessation under certain circumstances, a 2018 National Academy of 6 Sciences, Engineering, and Medicine report concluded that there was moderate evidence that 7 e-cigarette use in fact increases the frequency and intensity of cigarette smoking in the future. 8 (f) In addition, there is a growing body of research concluding that there are significant 9 health risks associated with electronic cigarette use. For example, daily e-cigarette use is 1 0 associated with increased odds of a heart attack. And the American Lung Association has 11 warned that the inhalation of harmful chemicals through vaping may cause irreversible lung 12 damage and lung disease.
13 (g) To reduce the burden of tobacco use, the City and County of San Francisco (the 14 "City") licenses tobacco retail establishments. (Health Code Article 19H). In 2017, to address 15 the appeal of flavored tobacco products to youth, the City enacted Ordinance No. 140-17, 16 prohibiting tobacco retail establishments from selling flavored tobacco products. As a result of 17 the referendum process, the ordinance was placed before the voters, who approved the 18 ordinance in June 2018 (Proposition E) by a majority of 68.39%. 19 (h) Notwithstanding these efforts, San Francisco's youth still access and use tobacco 20 products. According to the most recent Youth Risk Behavior Survey for which local data are 21 available, in 2017, 16.7% of San Francisco's high school students had tried smoking, 25% 22 had used an electronic cigarette (or "vaped"), and 7.1% reported current e-cigarette use, 23 which is defined as use on at least one day in the past 30 days. 24 (i) Among San Francisco high school students who reported currently using electronic 25 cigarettes, 13.6% reported that they usually purchased their electronic cigarette products in a Supervisors Walton; Peskin; Fewer, Safai, Yee, Brown
BOARD OF SUPERVISORS Page 3
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1 store. The remaining 86.4% reported that they obtained them from places other than the 2 City's licensed tobacco retail establishments, including friends, other social sources, and 3 internet e-cigarette vendors.
4 U) To protect the public, especially youth, against the health risks created by tobacco 5 products, Congress enacted the Family Smoking Prevention and Tobacco Control Act 6 ("Tobacco Control Act") in 2009. Among other things, the Tobacco Control Act authorized the 7 U.S. Food and Drug Administration ("FDA") to set national standards governing the 8 manufacture of tobacco products, to limit levels of harmful components in tobacco products 9 and to require manufacturers to disclose information and research relating to the products' 10 health effects.
11 (k) A central requirement of the Tobacco Control Act is premarket review of all new 12 tobacco products. Specifically, every "new tobacco product"-defined to include any tobacco 13 product not on the market in the United States as of February 15, 2007-must be authorized 14 by the FDA for sale in the United States before it may enter the marketplace. A new tobacco 15 product may not be marketed until the FDA has found that the product is: (1) appropriate for 16 the protection of the public health upon review of a premarket tobacco application; (2) 17 substantially equivalent to a grandfathered product; or (3) exempt from substantial 18 equivalence requirements.
19 (I) In determining whether the marketing of a tobacco product is appropriate for the 20 protection of the public health, the FDA must consider the risks and benefits of the product to 21 the population as a whole, including users and nonusers of the product, and taking into 22 account the increased or decreased likelihood that existing users of tobacco products will stop 23 using tobacco products and the increased or decreased likelihood that those who do not use 24 tobacco products will start using them. Where there is a lack of showing that permitting the 25 Supervisors Walton; Peskin; Fewer, Safai, Yee, Brown BOARD OF SUPERVISORS Page
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1 sale of a tobacco product would be appropriate for the protection of the public health, the 2 Tobacco Control Act requires that the FDA deny an application for premarket review. 3 (m) Virtually all electronic cigarettes that are sold today entered the market after 2007, 4 but have not been reviewed by the FDA to determine if they are appropriate for the public 5 health. In 2017, the FDA issued Guidance that purports to give electronic cigarette 6 manufacturers until August 8, 2022 to submit their application for premarket review. The 7 Guidance further purports to allow unapproved products to stay on the market indefinitely, 8 until such time as the FDA complies with its statutory duty to conduct a premarket review to 9 determine whether a new tobacco product poses a risk to public health. In March 2019, the 1 0 FDA issued draft guidance in which it considered moving the premarket application deadline 11 up by one year for certain flavored e-cigarette products. It is not known when, if ever, this 12 narrow adjustment will become final or will take effect. 13 (n) By the time e-cigarette manufacturers will be required to submit their premarket 14 review applications, e-cigarettes will have been on the market for fifteen years without any 15 FDA analysis of their safety and alleged benefit. If current trends continue, six million more 16 youth in the United States will begin using e-cigarettes between now and then. Until such 17 time as the FDA fulfills its statutory duty to conduct premarket reviews of new tobacco 18 products, a generation of young people will become addicted to tobacco, resulting in an 19 entirely preventable increase in the burdens and tragedies associated with tobacco use. San 20 Francisco is not content to wait until then before addressing, for its residents, what appears 21 from the evidence to be a major public health crisis that is going unattended. 22 23 Section 2. The Health Code is amended by adding new Article 19R, consisting of 24 Sections 19R.1 through 19R.5, to read as follows:
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1 ARTICLE 19R: PROHIBITING THE SALE OF ELECTRONIC CIGARETTES LACKING FOOD 2 AND DRUG ADMINISTRATION PREMARI(ET APPROVAL
3 SEC. 19R.l. DEFINITIONS.
4 For purposes o[this Article 19R, the (allowing terms have the (allowing meanings:
5 "Director" has the meaning set forth in Health Code Section 19H2. 6 "Electronic Cigarette" has the meaning set forth in Section 3 0121 oft he California Revenue 7 and Taxation Code, as mav be amended from time to time. 8 "Establishment" has the meaning set forth in Health Code Section 19H2. 9 "New Tobacco Product" has the meaning set forth in 21 U.S. C. § 387j(a)(l ), as may be 1 0 amended from time to time.
11 12 SEC. 19R.2. SALE OR DISTRIBUTION OF ELECTRONIC CIGARETTES LACKING 13 FOOD AND DRUG ADMINISTRATION PREMARKET ORDER OF APPROVAL PROHIBITED. 14 The sale or distribution by an Establishment o[an Electronic Cigarette is prohibited where the 1 5 Electronic Cigarette:
16 (a) Is a New Tobacco Product,·
17 (lz) Requires premarket review under 21 U.S. C. § 387j, as may be amended from time to time; 18 and
19 (c) Does not have a premarket review order under 21 U.S. C. § 387j(c)(l )(A){i), as may be 20 amended from time to time.
21 22 SEC. 19R.3. ADMINISTRATIVE REGULATIONS.
23 The Director may adopt rules, regulations, or guidelines (or the implementation and 24 enforcement ofthis Article 19R.
25 Supervisors Walton; Peskin; Fewer, Safai, Yeo, Brown BOARD OF SUPERVISORS Page 6
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1 SEC. 19R.4. ENFORCEMENT.
2 The Director may enforce Section 19R.2 under Articles 19 et seq. ofthe Health Code, including 3 but not limited to Article 19H
4 5 SEC. 19R.5. NO CONFLICT WITH FEDERAL OR STATE LAW.
6 Nothing in this Article 19R shall be interpreted or applied so as to create any requirement, 7 power, or duty that is preempted by federal or state law. 8 9 Section 3. Article 19H of the Health Code is amended by adding new Section 19H.14- 1 0 3, to read as follows:
11 12 SEC. 19H.l4-3. CONDUCT VIOLATING HEALTH CODE ARTICLE 19R 13 (PROHIBITING THE SALE OR DISTRIBUTION OF ELECTRONIC CIGARETTES LACKING 14 FOOD AND DRUG ADMINISTRATION PREMARKET ORDER OF APPROVAL). 15 (a) Upon a decision by the Director that the Permittee or the Permittee's agent or employee 16 has engaged in any conduct that violates Health Code Section 19R.2 (Sale or Distribution o(Electronic 17 Cigarettes Lacking Food and Drug Administration Premarket Order of Approval Prohibited), the 18 Director may suspend a Tobacco Sales permit as set forth in Section 19H 19. 19 (b) The Director shall commence enforcement under this Section 19H 14-3 by serving either a 20 notice o(correction under Section 19H21 or a notice o[initial determination under Section 19H22. 21 22 Section 4. The Health Code is hereby amended by adding new Article 19S, consisting 23 of Sections 19S.1 through 19S.6, to read as follows:
24 25
Supervisors Walton; Peskin; Fewer, Safai, Yee, Brown
BOARD OF SUPERVISORS Page 7
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1 ARTICLE 19S. PROHIBITING THE SALE AND DISTRIBUTION OF TOBACCO PRODUCTS 2 IN SAN FRANCISCO
3 SEC.l9S.l. DEFINITIONS.
4 For purposes o(this Article 19S, the [allowing terms have the following meanings:
5 "Characterizing Flavor" has the meaning set forth in Health Code Section 19Q.2. 6 "Cigarette" has the meaning set forth in Health Code Section 19Q.2. 7 "City" means the City and County o[San Francisco.
8 "Constituent" has the meaning set forth in Health Code Section 19Q.2. 9 "Director" means the Director o[Health, or the Director's designee. 1 0 "Distinguishable" has the meaning set forth in Health Code Section 19Q.2. 11 "Distribute" or "Distribution" means the transfer, by any Person other than a common carrier, 12 o[a Tobacco Product at any point from the place o[Manu[acture or thereafter to the Person who sells 13 the Tobacco Product to an individual [or personal consumption. 14 "Electronic Cigarette" has the meaning set forth in Section 30121 o(the California Revenue 15 and Taxation Code, as may be amended from time to time. 16 "Flavored Tobacco Product" has the meaning set forth in Health Code Section 19Q.2. 17 "Labeling" has the meaning set forth in Health Code Section 19Q.2. 18 "New Tobacco Product" has the meaning set forth in 21 U.S. C. § 387j(a){l ), as may be 19 amended from time to time.
20 "Packaging" has the meaning set forth in Health Code Section 19Q. 2. 21 "Person" has the meaning set forth in Health Code Section 19H2. 22 "Sell, " "Sale, " and "to Sell" mean any transaction where, for any consideration, ownership of 23 a Tobacco Product is transferred from one Person to another, including but not limited to any transfer 24 o[title or possession [or consideration, exchange, or barter, in any manner or by any means. 25 "Tobacco Product" has the meaning set forth in Health Code Section 19H2.

Supervisors Walton; Peskin; Fewer, Safai, Yee, Brown
BOARD OF SUPERVISORS Page 8
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1 2 SEC. 19S.2. PROHIBITION ON SALE OR DISTRIBUTION OF TOBACCO PRODUCTS. 3 (a) No Person shall Sell or Distribute any Flavored Tobacco Product to a Person in San 4 Francisco. There shall be a rebuttable presumption that a Tobacco Product, other than a Cigarette, is 5 a Flavored Tobacco Product if a manufacturer or any o[the manufacturer's agents or employees, in 6 the course oftheir agency or employment, has made a statement or claim directed to consumers or to 7 the public that the Tobacco Product has or produces a Characterizing Flavor, including, but not 8 limited to, text, color, and/or images on the product's Labeling or Packaging that are used to explicitly 9 or implicitly communicate that the Tobacco Product has a Characterizing Flavor. 1 0 (jz) No Person shall Sell or Distribute an Electronic Cigarette to a Person in San Francisco 11 where the Electronic Cigarette:
12 (1) Is a New Tobacco Product;
13 (2) Requires premarket review under 21 U.S. C. § 387;. as may be amended from time 14 to time,· and
15 {3) Does not have a premarket review order under 21 U.S. C. § 387j(c){l )(A)(i), as may 16 be amended from time to time.
17 18 SEC. 19S.3. ADMINISTRATIVE REGULATIONS.
19 The Director may adopt rules, regulations, or guidelines {Or the implementation ofthis Article 20 19S.
21 22 SEC.19S.4. ENFORCEMENT.
23 (a) Violations o[this Article 19S or of any rule or regulation issued under this Article shall be 24 punishable by administrative fines imposed pursuant to administrative citations. Administrative Code 25 Chapter 100 "Procedures Governing the Imposition ofAdministrative Fines, " as amended from time to Supervisors Walton; Peskin; Fewer, Safai, Yee, Brown
BOARD OF SUPERVISORS Page 9
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1 time, shall govern the issuance and enforcement ofadministrative citations, and collection and review 2 ofadministrative fines, to enforce this Article and any rule or regulation adopted pursuant to this 3 Article.
4 (b) The City Attorney may at any time institute civil proceedings (or injunctive and monetary 5 relie(including civil penalties, against any Person (or violations o[this Article 19S, without regard to 6 whether the Director has assessed or collected administrative penalties. 7 (c) At any time, the Director may refer a case to the City Attorney's Office (or civil 8 enforcement, but a referral is not required (or the City Attorney to bring a civil action under subsection 9 0L
1 0 (d) Any Person that violates any provision ofthis Article 19S shall be subject to injunctive 11 reliefand a civil penalty in an amount not to exceed $1,000 (or each violation, which penalty shall be 12 assessed and recovered in a civil action brought in the name o[the people ofthe City and County of 13 San Francisco by the City Attorney in any court of competent jurisdiction. In assessing the amount of 14 the civil penalty, the court shall consider any one or more o[the relevant circumstances presented by 15 any o[the parties to the case, including but not limited to, the (allowing: the nature and seriousness of 16 the misconduct giving rise to the violation, the number of violations, the persistence o[the misconduct, 17 the length oftime over which the misconduct occurred, the will{itlness ofthe misconduct, and the 18 defendant's assets, liabilities, and net worth.
19 (e) The City may recover reasonable attorneys' fees and costs (or civil actions brought 20 pursuant to this Section 19S. 4.
21 (f) Remedies under this Section 19S.4 are non-exclusive and cumulative to all other remedies 22 available at law or equity.
23 24
25 SEC. 19S.5. NO CONFLICT WITH FEDERAL OR STATE LAW.

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1 Nothing in this Article 19S shall be interpreted or applied so as to create any requirement, 2 power, or duty that is preempted by federal or state law. 3 4 SEC.J9S.6. SEVERABILITY.
5 ![any section, subsection, sentence, clause, phrase, or word o[this Article 19S, or anv 6 application thereo{to any person or circumstance, is held to be invalid or unconstitutional by a 7 decision o[a court of competent jurisdiction, such decision shall not affect the validity o{the remaining 8 portions or applications o[the Article. The Board o[Supervisors hereby declares that it would have 9 passed this ordinance and each and every section, subsection, sentence, clause, phrase, and word not 1 0 declared invalid or unconstitutional without regard to whether any other portion o{this Article or 11 application thereof would be subsequently declared invalid or unconstitutional. 12 13 Section 5. Effective and Operative Dates.
14 (a) This ordinance shall become effective 30 days after enactment. Enactment occurs 15 when the Mayor signs the ordinance, the Mayor returns the ordinance unsigned or does not 16 sign the ordinance within ten days of receiving it, or the Board of Supervisors overrides the 17 Mayor's veto of the ordinance.
18 (b) This ordinance shall become operative six months after the effective date. 19 20 Section 6. Severability. If any section, subsection, sentence, clause, phrase, or word of 21 this ordinance, or any application thereof to any person or circumstance, is held to be invalid 22 or unconstitutional by a decision of a court of competent jurisdiction, such decision shall not 23 affect the validity of the remaining portions or applications of the ordinance. The Board of 24 Supervisors declares that it would have passed this ordinance and each and every section, 25 subsection, sentence, clause, phrase, and word not declared invalid or unconstitutional Supervisors Walton; Peskin; Fewer, Safai, Yeo, Brown
BOARD OF SUPERVISORS Page 11
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1 without regard to whether any other portion of this ordinance or application thereof would be 2 subsequently declared invalid or unconstitutional.
3 4 Section 7. Undertaking for the General Welfare. In enacting and implementing this 5 ordinance, the City is assuming an undertaking only to promote the general welfare. It is not 6 assuming, nor is it imposing on its officers and employees, an obligation for breach of which it 7 is liable in money damages to any person who claims that such breach proximately caused 8 injury.
9 10
11 12
13 APPROVED AS TO FORM:

DENNIS J. HERRERA, City Attorney
By:
14 n:\legana\as2019\1900441\01345951.docx
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17 18
19 20
21 22
23 24
25 Supervisor Walton, Peskin, Fewer, Safai, Yee, Brown
BOARD OF SUPERVISORS Page 1 202
City and County of San Francisco
Tails
Ordinance
City Hall
I Dr. Carlton B. Goodlett Place
San Francisco, CA 94102-4689
File Number: 190312 Date Passed: June 25, 2019
Ordinance amending the Health Code to prohibit the sale by tobacco retail establishments of electronic cigarettes that require, but have not received, an order from the Food and Drug Administration (FDA) approving their marketing; and prohibiting the sale and distribution to any person in San Francisco of flavored tobacco products and electronic cigarettes that require, but have not received, an FDA order approving their marketing.

June 07, 2019 Public Safety and Neighborhood Services Committee- RECOMMENDED June 18, 2019 Board of Supervisors- PASSED ON FIRST READING Ayes: 11 -Brown, Fewer, Haney, Mandelman, Mar, Peskin, Ronen, Safai, Stefani, Walton and Yee
June 25, 2019 Board of Supervisors-FINALLY PASSED
Ayes: 10- Brown, Haney, Mandelman, Mar, Peskin, Ronen, Safai, Stefani, Walton and Yee

Absent: 1 -Fewer
File No. 190312
London N. Breed
Mayor
City and County of San Francisco Page 1
I hereby certify that the foregoing
Ordinance was FINALLY PASSED on
6/25/2019 by the Board of Supervisors of
the City and County of San Francisco.

Date Approved
Printed at 11:00 am on 6/26/19
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SUBJECT:

Adopt a Resolution Approving the Downtown Innovation Hub Partnership with Jessup University. (Sean Scully)
SUBMITTED BY:

City Clerk
DEPARTMENT:

City Manager's Office
DATE:

November 18, 2025

Item Number 16.B

STAFF RECOMMENDATION:

Staff recommends that the City Council adopt a resolution approving the establishment of the Downtown Innovation Hub, a partnership between the City of Lincoln and Jessup University, including authorization to allocate $50,000 in remaining ARPA funds and provide the second floor of Old City Hall rent-free for a one-year pilot period. Resolution 2024-243 was approved by City Council on November 14th, 2024 which allocated $500,000 to the Community Development Department; this $50,000 would reallocate a portion of those funds.

BACKGROUND/INTRODUCTION:

On March 10, 2021, the United States Congress passed, and on March 11, 2021, President Joseph Biden signed into law, the American Rescue Plan Act (“ ARPA
”). ARPA established
the Coronavirus State Fiscal Recovery Fund (“
CSFRF
”) and Coronavirus Local Fiscal
Recovery Fund (“
CLFRF
”), together known as the Coronavirus State and Local Fiscal Recovery Funds (“
SLFRF
”) program, which provides a combined $350 billion in assistance to eligible state, local, territorial, and Tribal governments to help turn the tide on the pandemic, address its economic fallout, and lay the foundation for a strong and equitable recovery. The City received federal funding in the form of the SLFRF under ARPA in response to the coronavirus (“
COVID-19
”) pandemic. These funds may be used to carry out a wide range of community development activities, including those that benefit local communities.

The interim final rule on SLFRF was issued by the Department of the Treasury effective May 17, 2021 with the final rule issued by the Department of the Treasury effective April 1, 2022.

On December 29, 2022, Congress amended the SLFRF program in the Consolidated Appropriations Act, 2023 (“
2023 CAA
”) to provide state, local, territorial and Tribal
governments more flexibility to use SLFRF funds to provide emergency relief from natural disasters, build critical transportation infrastructure, and support community development. On August 10, 2023, Treasury released an interim final rule implementing these new eligible uses, and this interim final rule was published in the Federal Register on September 20, 2023.

STAFF REPORT
213
Collectively the rules passed provide the rules and guidelines for how the ARPA funds may specifically be spent (the interim and final rules passed between 2021 and 2023 are herein referred to as the “
Rule
”).

The City received approximately $11.5 million in ARPA funds. Subsequently, the City made the determination to designation $10 million of these funds as Standard Allowance funds which could be used for any general governmental purposes. The remaining $1.5 million are restricted to those purposes determined allowable under the Department of the Treasury final rule, the amended Consolidated Appropriations Act and other related rules and regulations.

On November 14, 2024, City Council authorized an MOU between the City of Lincoln and the Community Development Department to be utilized for Planning updates such as the Downtown Specific Plan, Planning/Building Code updates, etc. Since that time the City has received funding through grant and other sources for some of these endeavors and would therefore request a reallocation of the purpose of these funds.

FINDINGS/ANALYSIS:

The City of Lincoln and Jessup University have collaborated on a proposal to create the Downtown Lincoln Innovation Hub, a shared learning, collaboration, and entrepreneurship center located on the second floor of Old City Hall. The concept is designed to support local economic development, enhance workforce readiness, and provide meaningful downtown activation.

Under the proposal, the City will contribute $50,000 in seed funding from the ARPA, Standard Allocation funding allocation provided to the Community Development Department and make the second floor of Old City Hall available at no cost for the first year of the pilot program.

Jessup University will activate the space using its graduate and professional programs while supporting the broader Lincoln business community through workshops, mentorship, and community-based projects.

This partnership creates a model of city-university collaboration that strengthens Lincoln’s entrepreneurial ecosystem and supports long-term downtown revitalization.

The Downtown Innovation Hub will serve several interconnected purposes. It will operate as a real-world learning laboratory where Jessup graduate students across business, leadership, and data analytics can apply classroom concepts to live projects. The space will also function as a coworking and entrepreneurial support center for startups, small businesses, and nonprofits that are operating in or entering the Lincoln market. In addition, the Hub will help activate downtown by transforming unused civic space into a dynamic site for learning, collaboration, and community engagement. Finally, the Innovation Hub will serve as a platform for academic expansion by supporting feasibility work related to Jessup’s emerging program pathways.

In addition to providing seed funding and space for the Downtown Innovation Hub, the City will participate in a quarterly Steering Committee to support oversight and performance review.

Jessup University will lead day-to-day operations of the Innovation Hub, including faculty 214
engagement, curriculum integration, and overall program design. Jessup will staff the space with faculty, graduate assistants, and program coordinators; deliver workshops open to Lincoln entrepreneurs; and conduct feasibility studies to explore long-term academic expansion in Downtown Lincoln.

The Innovation Hub advances key goals in the City’s Economic Development Committee Strategic Action Plan. It reactivates a vacant City-owned asset into a productive community resource, enhances workforce and business readiness through mentorship and applied learning, and strengthens higher-education partnerships that can attract new investment, talent, and innovation to Lincoln.

During the pilot year, the Innovation Hub is expected to engage more than 100 Jessup graduate students who will participate through applied research and consulting projects. At least 15 Lincoln businesses are anticipated to benefit from workshops, coworking opportunities, and mentorship services. Additionally, the Hub will host a minimum of two community-wide innovation events to support local entrepreneurship and elevate downtown activity.

The Downtown Innovation Hub pilot represents a mutually beneficial opportunity for the City of Lincoln and Jessup University. The project activates a key downtown asset, supports local entrepreneurs and small businesses, and strengthens connections between higher education and civic innovation. It also creates an avenue to explore long-term academic expansion for Jessup within Lincoln’s downtown core. By leveraging a limited, one-time ARPA investment, the City can launch a high-impact program that advances economic vitality, workforce development, and downtown reinvestment in alignment with City Council’s strategic goals.

FISCAL IMPACT:

The proposed action authorizes the reallocation of $50,000 in the funds provided to Community Development to support pilot year operations. No additional General Fund impact is anticipated. Utilities and Wi-Fi for the space are already included within existing facility operating budgets.

ATTACHMENTS:

RESOLUTION_-_Downtown_Innovation_Hub__11.18.2025.docx
InnovationHub_Proposal.pdf
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216
Resolution No. 2025-

Page 1 of 3 ends

RESOLUTION 2025 -

A RESOLUTION OF THE CITY COUNCIL OF LINCOLN AUTHORIZING THE

COMMUNITY DEVELOPMENT DEPARTMENT TO ENTER INTO A MEMORANDUM

OF UNDERSTANDING WITH JESSUP UNIVERSITY IN AN AMOUNT NOT TO EXCEED $50,000 FOR THE ESTABLISHMENT OF THE DOWNTOWN INNOVATION

HUB SUBJECT TO CITY ATTORNEY APPROVAL AND CONCURRENCE
WHEREAS, on March 10, 2021, the United States Congress passed, and on March 11, 2021, President Joseph Biden signed into law, the American Rescue Plan Act (“ARPA”). ARPA established the Coronavirus State Fiscal Recovery Fund (“CSFRF”) and Coronavirus Local Fiscal Recovery Fund (“CLFRF”), together known as the Coronavirus State and Local Fiscal Recovery Funds (“SLFRF”) program, which provides a combined $350 billion in assistance to eligible state, local, territorial, and Tribal governments to help turn the tide on the pandemic, address its economic fallout, and lay the foundation for a strong and equitable recovery. The City received federal funding in the form of the SLFRF under ARPA in response to the coronavirus (“COVID- 19”) pandemic. These funds may be used to carry out a wide range of community development activities, including those that benefit local communities; and WHEREAS, the interim final rule on SLFRF was issued by the Department of the Treasury effective May 17, 2021 with the final rule issued by the Department of the Treasury effective April 1, 2022. On December 29, 2022, Congress amended the SLFRF program in the Consolidated Appropriations Act, 2023 (“2023 CAA”) to provide state, local, territorial and Tribal governments more flexibility to use SLFRF funds to provide emergency relief from natural disasters, build critical transportation infrastructure, and support community development. On August 10, 2023, Treasury released an interim final rule implementing these new eligible uses, and this interim final rule was published in the Federal Register on September 20, 2023. Collectively the rules passed provide the rules and guidelines for how the ARPA funds may specifically be spent (the interim and final rules passed between 2021 and 2023 are herein referred to as the “Rule”); and WHEREAS, the City received approximately $11.5 million in ARPA funds.

Subsequently, the City made the determination to designation $10 million of these funds as Standard Allowance funds which could be used for any general governmental purposes. The remaining $1.5 million are restricted to those purposes determined allowable under the Department of the Treasury final rule, the amended Consolidated Appropriations Act and other related rules and regulations; and WHEREAS, on November 14, 2024, City Council authorized an MOU between the City of Lincoln and the Community Development Department to be utilized for Planning updates such as the Downtown Specific Plan, Planning/Building Code updates, etc. Since that time the City has received funding through grant and other sources for some of these endeavors and would therefore request a reallocation of the purpose of these funds; and
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Resolution No. 2025-

Page 2 of 3 ends

WHEREAS, over the past number of years, the City Council has frequently discussed opportunities to activate key downtown facilities in support of economic development, entrepreneurship, and community-serving innovation; and WHEREAS, the Economic Development Committee (EDC) has identified activation of the downtown area—particularly through partnerships that strengthen workforce readiness, higher education engagement, and small business support—as a strategic priority and has been working diligently on initiatives aimed at identifying opportunities and paths forward to enhance downtown vibrancy; and WHEREAS, the City of Lincoln has sought ways to leverage existing City-owned facilities, such as the second floor of the Old City Hall building, to support new forms of educational, entrepreneurial, and civic use; and
WHEREAS, Jessup University has agreed to partner with the City to create the Downtown Innovation Hub, a collaborative teaching, research, and business incubation space that will be used for graduate coursework, mentorship, community workshops, and small business support; and
WHEREAS, City staff and Jessup University have developed a detailed program concept identifying the scope of the Downtown Innovation Hub pilot program and outlining the first-year operational needs for activation of the space; and WHEREAS, the Council has approved funding under the ARPA Standard Allowance revenues to address civic amenities and economic recovery initiatives, including the activation of downtown facilities and programs such as the Downtown Innovation Hub;
WHEREAS, this action is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the CEQA Guidelines, as it can be seen with certainty that there is no possibility the activity in question may have a significant effect on the environment.

NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Lincoln as follows:

Section 1: The City Council hereby authorizes the Community Development Department to enter into a Memorandum of Understanding (MOU) with Jessup University in an amount not to exceed $50,000 for the purpose of establishing and implementing the Downtown Innovation Hub pilot program. The MOU shall identify that the funding shall not go toward university administrative expenses or salaries unrelated to the operation of the Innovation Hub and will be for the sole purpose of supporting equipment, startup costs, program delivery, and activation of the Old City Hall space. Additionally, the MOU shall identify any other reasonable requirements, timelines, and laws relevant to ensure that the agreement facilitates successful implementation of the program. 218
Resolution No. 2025-

Page 3 of 3 ends

Section 2: In the event that Jessup University is unable to perform under the provisions of the MOU or for any other reason that makes implementation of the Downtown Innovation Hub not possible, the funds will be transferred to the Lincoln Community Foundation, where they will be held in trust while another appropriate partner is sought to carry out the intended programmatic activities.

Section 3: The MOU shall not be executed until approval and concurrence is received by the City Attorney for legal sufficiency.

PASSED AND ADOPTED this 18th day of November, 2025 by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ABSTAIN: Councilmembers:

___________________________
Holly Andreatta, Mayor

ATTEST:

Hope Ithurburn, City Clerk

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CITY OF LINCOLN & JESSUP UNIVERSITY

DOWNTOWN INNOVATION HUB
The City of Lincoln proposes a strategic partnership with Jessup University to establish the Downtown Lincoln Innovation Hub, a collaborative learning, research, and business incubation space on the second floor of the Old City Hall building.

The City will provide $50,000 in seed funding from remaining ARPA resources and will make the space available free of charge for the first year. Jessup University will activate the space through its graduate and professional programs, using it as a teaching, collaboration, and applied innovation site for students, faculty, and local entrepreneurs.

The Innovation Hub will serve as:

A real-world learning lab for Jessup graduate students across business, law, health, and leadership disciplines;
A flexible coworking and support space for small businesses, startups, and nonprofits in Lincoln; and
A launchpad for future academic expansion, potentially including Jessup’s emerging law and medical program pathways.

This proposal creates a flagship example of city–university collaboration in Placer County while advancing local entrepreneurship, workforce development, and downtown revitalization.

PURPOSE & VISION
The Downtown Lincoln Innovation Hub aligns with the City’s Economic Development Committee Strategic Action Plan by:

1.Reactivating a City-owned asset (Old City Hall) into a productive, education-focused community use.

2.Enhancing workforce and business readiness through direct mentorship and collaboration.

3.Strengthening partnerships with higher education to attract investment, talent, and innovation to Lincoln.

The vision is to establish an innovative ecosystem where students, entrepreneurs, and civic leaders work side-by-side to develop business ideas, tackle community challenges, and accelerate career and enterprise growth.
220

PROGRAM OVERVIEW
Jessup Operations:

Utilize the space for graduate coursework, workshops, and student collaboration across MBA, Executive MBA, MS Business Analytics, and MAcc programs.

Incorporate community-based projects into graduate curricula (consulting, data analytics, leadership, and policy design).

Community Activation:

Host regular open workshops, pitch nights, and business education sessions for Lincoln’s entrepreneurial community.

Provide shared workspace and mentoring for local startups and small businesses.

Future Planning:

Conduct a feasibility study for Jessup Law School and Medical Program expansion utilizing this downtown campus concept.

ROLES & RESPONSIBILITIES
City of Lincoln
Provide $50,000 seed funding (ARPA) to support startup costs, equipment, and program coordination.

Offer Old City Hall’s second floor rent-free for 12 months, with utilities and Wi-Fi included.

Partner on program promotion, business outreach, and downtown integration.

Participate in quarterly Innovation Hub Steering Committee meetings for oversight and performance tracking.

Jessup University
Lead program design, curriculum integration, and on-site management.

Staff the Innovation Hub with faculty, graduate assistants, and program coordinators.

Deliver monthly workshops and mentorship sessions open to Lincoln entrepreneurs.

Explore long-term academic programming opportunities.
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PROJECTED OUTCOMES
City of Lincoln Benefits
Economic Development: activates vacant downtown space; supports small business ecosystem
Education & Workforce: trains Lincoln residents, entrepreneurs, and future workforce Regional Branding: position Lincoln as a hub for innovation and higher education Future Growth: builds groundwork for permanent Innovation Center Jessup University Benefits
Economic Development: provides real-world business consulting and entrepreneurship experience
Educations & Workforce integrates graduate student capstones and research with community partners
Regional Branding: expands Jessup’s regional presence and builds a pathway for new academic programs
Future Growth: Tests expansion opportunities for new faith-based programs

GOVERNANCE
A City–Jessup Innovation Hub Steering Committee will meet quarterly to guide operations, review performance metrics, and set priorities for expansion. After the initial 12-month pilot, both parties will evaluate extending the partnership, with potential for:

Multi-year facility use agreement;
Joint pursuit of grants or sponsorships; and
Establishment of a permanent Downtown Innovation Center housing future Jessup programs

PERFORMANCE METRICS
Performance Metrics
100+ Jessup graduate students participating annually through applied projects. 15+ Lincoln businesses engaged through workshops, coworking, or mentorship. 2+ community-wide innovation events hosted in the first year. 222

CONCLUSION
The Downtown Lincoln Innovation Hub represents a forward-thinking, mutually beneficial collaboration that blends education, entrepreneurship, and civic purpose. By providing $50,000 in seed funding and Old City Hall rent-free for one year, the City of Lincoln will activate a key downtown asset while fueling innovation, workforce readiness, and higher education partnership.

Jessup University, in turn, brings academic rigor, faculty expertise, and student energy, turning Old City Hall into a living laboratory for business, leadership, law, and health innovation in Lincoln.
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SUBJECT:

Adopt a Resolution Approving the Issuance of the City of Lincoln Community Facilities District No. 2025-1 (Joiner Ranch East) Special Tax Bonds, Series 2025. (Nita Wracker)
SUBMITTED BY:

Nita Wracker
DEPARTMENT:

Finance
DATE:

November 18, 2025

Item Number 16.C

STAFF RECOMMENDATION:

Staff Recommends the City Council adopt a resolution to approve the issuance of the City of Lincoln

Community Facilities District No. 2025-1 (Joiner Ranch East) Special Tax Bonds, Series 2025 (the “Bonds”).

BACKGROUND/INTRODUCTION:

The Mello-Roos Community Facilities Act of 1982 (the “Act”) was adopted by the State of California as a method for financing infrastructure improvements and services. The Act has been frequently used throughout the State to finance infrastructure improvements, especially those associated with new developments.

In 2025, the City Council formed City of Lincoln Community Facilities District No. 2025-1 (Joiner Ranch East) (the “District”) pursuant to the Act to finance certain public capital improvements required for the development of the proposed project within the District and certain improvements eligible for construction from development impact fees. The project within the District is called “Joiner Ranch East.” The District is generally located along the southeast corner of Nicolaus Road and Joiner Parkway within the City.

The master developer, JEN California 24 LLC, is responsible for constructing major infrastructure and delivering finished lots to D.R. Horton in two phases. Phase 1 included 101 lots, with 11 homes completed, 26 under construction, and 64 finished lots as of October 1, 2025. Phase 2, consisting of 97 lots, is expected to be transferred by March 2026. D.R. Horton acquires lots either directly or through Jasper-Lincoln, L.P. (the Hearthstone Landbank), under an option agreement that obligates it to pay the special tax on lots under contract. If the agreement ends before all lots are acquired, the Hearthstone Landbank will be responsible for the special taxes due on its holdings.

FINDINGS/ANALYSIS:

The Bonds are estimated to be issued in the principal amount of approximately $11,845,000

STAFF REPORT
224
with a final maturity of September 1, 2055 (approximately 30-year financing term). The final structure and payment schedule will be determined when the Bonds are priced and sold, which is expected to be in early December 2025. The closing is scheduled to occur approximately two weeks after pricing the Bonds.

The Series 2025 Bonds are being sized based solely on Special Taxes generated from parcels that had been issued building permits as of October 1, 2025. As of the October 1, 2025 date of value in the appraisal report presented at this meeting, the appraised market value of all taxable parcels in the District—assuming full buildout of 198 residential units—is approximately $42,554,000. Based on this valuation, the District may issue up to $10,635,000 in bonds and still meet the required 4:1 value-to-lien ratio. This approach aligns with the City of Lincoln’s adopted CFD Goals and Policies and reflects market standards across California, which require a minimum 4:1 value-to-lien ratio.

To maintain compliance with the 4:1 standard, the financing includes a self-supporting escrow bond structure (i.e. interest on the escrow bonds is funded through September 1, 2026 and the escrows are subject to extraordinary redemption if the escrow release test is not met). An additional $1,210,000 in Escrow Term Bonds will be issued and held in escrow. These funds will only be released to the Acquisition and Construction Fund upon receipt of an updated appraisal demonstrating that the District continues to meet the 4:1 value-to-lien ratio after the release. If the release test is not satisfied by the Escrow Closing Date, the escrowed funds will be used to redeem the Escrow Term Bonds in full on September 1, 2026.

The proposed Series 2025 Bonds will be issued to fund the following:

Acquisition and construction of public improvements.

Capitalized interest through September 1, 2026.

Establishment of a reserve subaccount.

Costs of issuance.

Funding of an escrow account for Escrow Term Bonds.

The Escrow Fund is a temporary holding account for an estimated $1,210,000 of Escrow Term Bonds. As a condition to release the escrow funds, the District and Trustee must receive a certificate from an Independent Financial Consultant confirming that the Value of District Property is at least four times the sum of: Outstanding Bonds, Parity Bonds, and Overlapping Debt (other district obligations).

The Bonds are secured solely by Net Taxes, which consist of special tax revenues remaining after payment of administrative expenses. A 2025 Bonds Reserve Subaccount will be funded at closing to provide additional security for bondholders. Under the Indenture, the District may issue additional indebtedness secured by the Net Taxes on a parity with the Bonds only for the purposes of refunding all or a portion of the Bonds or Parity Bonds.

The Fiscal Year 2026-27 estimated Special Tax levy on homes within the District range from $3,533 to $4,096 depending on the home size of the residential unit. On July 1 each fiscal year, rates increase at 2.0%.

As required under Section 5852.1 of the California Government Code, the good faith estimates as provided by the Municipal Advisor and Underwriter are set forth below.

225
Principal Amount.

The Municipal Advisor has informed the District that, based on the District’s financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Bonds to be issued and sold is $11,845,000 (the “Estimated Principal Amount”). Such Estimated Principal Amount net of original issue discount amount would produce approximately $9,695,029 of gross proceeds.

True Interest Cost.

The Municipal Advisor has informed the District that, assuming that the Estimated Principal Amount of the Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is 5.26%.

Finance Charge.

The Municipal Advisor has informed the District that, assuming that the Estimated Principal Amount of the Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Bonds), is $567,675.

Amount of Proceeds to be Received
. The Municipal Advisor has informed the District that, assuming that the Estimated Principal Amount of the Bonds is issued and sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the District for sale of the Bonds, less the finance charge of the Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the Bonds, is $9,695,029.

Total Payment Amount.

The Municipal Advisor has informed the District that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the District will make to pay debt service on the Bonds, plus the finance charge for the Bonds, as described above, not paid with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $24,988,945, which excludes any reserves or capitalized interest funded or paid with proceeds of the Bonds (which may offset such total payment amount).

Approval of the resolution presented approves the preparation, form of, and/or authorizes the execution and delivery of the following documents:

Preliminary Official Statement
: The Preliminary Official Statement (the "POS") is the "offering document" for the Bonds. The POS describes the District, the Bonds, the proposed development within the District, and any other information that would be material to a prospective investor's decision on whether to purchase the Bonds.

Bond Indenture
: The Bond Indenture is a contract between the District and U.S. Bank Trust Company, National Association, as the appointed Trustee for the Bonds. This agreement contains terms of the Bonds, including, but not limited to, the payment and redemption provisions, the pledge of revenues to pay Bonds, rights and duties of the Trustee, remedies upon a default in the payment of the Bonds, and other related matters.

Continuing Disclosure Certificate
: Executed for the benefit of bondholders, the
Continuing Disclosure Certificate obligates the District to file an annual report each 226
Fiscal Year which includes, among other things, the most recent audited financial statements of the City and financial data relating to the District. The District is also required to report certain significant events to bondholders if they occur.

Bond Purchase Agreement
: Under the Bond Purchase Agreement, the District agrees to sell the Bonds to the underwriter, and the underwriter agrees to purchase the Bonds, subject to typical closing conditions. City staff, the City's Municipal Advisor, and Bond Counsel will sign off on the final pricing of the Bonds before the Bond Purchase Agreement is executed.

Bond Counsel and the City Attorney have reviewed the attached financing documents on behalf of the City.

If this resolution is approved, City staff will continue working with the financing team to finalize all of the documents mentioned above.

ENVIRONMENTAL REVIEW:

The Joiner Ranch East development previously receive all approval required pursuant to the California Environmental Quality Act (“CEQA”), as codified at Public Resources Code
§§
21000,
et seq
.>.

FISCAL IMPACT:

The Bonds are paid from Special Taxes levied in the District. There is no fiscal impact on the City's General Fund. The City will, however, be required to provide administration for the District. City administration costs are funded as part of the annual Special Tax levy.

ATTACHMENTS:

REVISED - Resolution_of_Issuance_4906-9921-4450_4.docx
Bond Indenture 4922-2377-8418_4.docx
Preliminary Official Statement 4910-4524-4530_7.docx
BPA - City of Lincoln CFD 2025-1 (Joiner Ranch East) 2025 Bonds.docx 193-2025-0374 - City of Lincoln CFD No. 2025-1 (Joiner Ranch East).pdf 227
4906-9921-4450v4/024161-0013
RESOLUTION NO. 2025-

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LINCOLN,

CALIFORNIA, ACTING AS THE LEGISLATIVE BODY OF CITY OF LINCOLN COMMUNITY FACILITIES DISTRICT NO. 2025-1 (JOINER RANCH EAST) AUTHORIZING THE ISSUANCE OF ITS SPECIAL TAX BONDS, SERIES 2025

IN A PRINCIPAL AMOUNT NOT TO EXCEED THIRTEEN MILLION DOLLARS ($13,000,000) AND APPROVING CERTAIN DOCUMENTS AND TAKING

CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH
WHEREAS, on June 24, 2025, the City Council (the “City Council”) of the City of Lincoln (the “City”), adopted Resolution 20 25-087 stating its intention to form City of Lincoln Community Facilities District No. 2025-1 (Joiner Ranch East) (“CFD No. 2025-1” or the “District” ) pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (the “Act”); and
WHEREAS, on June 24, 2025, the City Council adopted Resolution 2025 -088 stating its intention to incur bonded indebtedness in any amount not to exceed $23,500,000 within CFD No. 2025-1 pursuant to the Act; and WHEREAS, after a public hearing, on August 12 , 2025 , the Council adopted Resolution Nos. 2025-120 and 2025-121, which formed the District and called a special election for August 12, 2025 within the District on propositions relating to the levying of a special tax, the incurring of bonded indebtedness in a principal amount not to exceed $23,500,000 and the establishment of an appropriations limit for the District, which were approved by more than two-thirds vote by the qualified electors on August 12, 2025 ; and WHEREAS, the legislative body of the District desires to issue a first series of bonds for the Distric t at this time under the Act to finance certain public facilities which the District is authorized to finance (the “Facilities”); and WHEREAS, the District desires to finance certain Facilities through the issuance of bonds in an aggregate principal amount not to exceed $13,000,000 designated as the “Community Facilities District No. 2025-1 (Joiner Ranch East ) of the City of Lincoln Special Tax Bonds, Series 2025 (the “Bonds”); and
WHEREAS, in order to effect the issuance of the Bonds, the District desires to enter into various agreements and approve certain documents in substantially the forms presented herein; and
WHEREAS, based on the appraisal of real property prepared by Integra Realty Resources (the “Appraisal”) of certain property within the District, and the full cash value as shown on the ad valorem assessment roll of the County of Placer with respect to property in the District not appraised in the Appraisal, the value of the real property in the District subject to the special tax to pay debt service on the Bonds is more than three times the sum of the principal amount of the Bonds and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act or a special 228
Resolution No. 2025-

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assessment levied on property within the District as calculated in the manner set forth in Section 53345.8(a) of the Act; and
WHEREAS, the City Council has determined in accordance with Section 53360.4 of the Act that a negotiated sale of the Bonds to Piper Sandler & Co. (the “Underwriter”) in accordance with the terms of the Bond Purchase Agreement for the Bonds to be entered into by the District and the Underwriter ( the “ Bond Purchase Agreement ”) approved as to form by this City Council herein will re sult in a lower overall cost to the District than a public sale; and
WHEREAS, depending on the conditions of the municipal bond market, the Bonds may be sold to allow a portion of the proceeds of the Bonds to be placed in the Escrow Fund (as defined below), which structure, based on the Appraisal, would result in the value of the real property in the District subject to the special tax to pay debt service on the Bonds being less than four times the sum of the principal amount of the Bonds and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act or a special assessment levied on property within the District, as calculated in the manner set forth in Section 53345.8(a) of the Act (the “Value -to-Lien Test”); and
WHEREAS, based on the escrow structure, the legislative body of th e District desires to waive the four to one Value -to-Lien Test set forth in the City’s Goals and Policies for Community Facilities Districts (the “Goals and Policies”) to allow for the funding of a self-financing and self-liquidating escrow fund (the “Escrow Fund”) under the Indenture (as defined below), to the extent that the conditions of the municipal bond market allow, which determinations are based on the considerations set forth in Section 8 hereof;
WHEREAS, the District has determined to adopt the C ity’s Debt Management Policy as the debt management policy of the District.

NOW, THEREFORE, THE CITY COUNCIL, ACTING AS THE LEGISLATIVE BODY OF CITY OF LINCOLN COMMUNITY FACILITIES DISTRICT NO. 2019-1 (INDEPENDENCE AT LINCOLN ), DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOW:

SECTION 1. Each of the above recitals is true and correct.

SECTION 2. The issuance of the Bonds is hereby authorized in an aggregate principal amount not to exceed $13,000,000 with the exact principal amount to be determined by the official signing the Bond Purchase Agreement in accordance with Section 5 below.

The City Council hereby determines that it is prudent in the management of the District’s fiscal affairs to issue the Bonds. The Bonds shall mature on the dates and pay interest at the rates set forth in the Bond Purchase Agreement to be executed on behalf of the District in accordance with Section 5 hereof. All other provisions of the Bonds shall be governed by the terms and conditions of the Bond Indenture ( the “ Indenture”), which Indenture is hereby approved in substantially the form on file with the City Clerk, with such 229
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additions thereto and changes therein (including, but not limited to, changes in the amount to be maintained in the 2025 Bonds Reserve Subaccount (as defined in the Indenture) ) as the officer or officers executing the same deem necessary to enhance the security for the Bonds, to cure any ambiguity or defect therein, to insert the offering price(s), interest rate(s), selling compensation, principal amount per maturity, redemption dates and prices and such other related terms and provisions as limited by Section 5 hereof or to conform any provisions therein to the Bond Purchase Agreement or the Official Statement delivered to the Underwriter of the Bonds. Approval of such changes shall be conclusively evidenced by the execution and delivery of the Indenture by one of the following: the Mayor, the City Manager, the Assistant City Manager, the Finance Director , or their written designees (each, an “Authorized Officer ” and collectively, the “Authorized Officers”), each of whom is authorized to execute the Indenture. Capitalized terms used in this Resolution which are not defined herein have the meanings ascribed to them in the Indenture.

SECTION 3. The Bonds shall be executed on behalf of the District by the manual or facsimile signature of the Mayor of the City or his or her written designee and be attested by the manual or facsimile signature of the City Clerk . U.S. Bank Trust Company, National Association is hereby appointed to act as trustee, registrar and transfer agent for the Bonds.

SECTION 4. The covenants set forth in the Indenture to be executed in accordance with Section 2 above are hereby approved, shall be deemed to be covenants of the City Council and shall be complied with by the District and its officers. The Indenture shall constitute a contract between the District and the Owners of the Bonds.

SECTION 5. The form of the Bond Purchase Agreement presented at t his meeting is hereby approved and each of the Authorized Officers is hereby authorized to execute the Bond Purchase Agreement, with such additions thereto and changes therein relating to dates and numbers as are necessary to conform the Bond Purchase Agre ement to the dates, amounts and interest rates applicable to the Bonds as of the sale date. Approval of such additions and changes shall be conclusively evidenced by the execution and delivery of the Bond Purchase Agreement by one or more of such Authoriz ed Officers; provided, however, that the Bond Purchase Agreement shall be signed only if the Underwriter’s discount does not exceed 1.60% of the principal amount of the Bonds and only if the true interest cost on the Bonds does not exceed 6.50%. Each of the Authorized Officers is authorized to determine the day on which the Bonds are to be priced in order to attempt to produce the lowest borrowing cost for the District and may reject any terms presented by the Underwriter if determined not to be in the best interest of the District.

SECTION 6. The form of the Continuing Disclosure Certificate presented at this meeting is hereby approved and each of the Authorized Officers is hereby authorized and directed to execute the Continuing Disclosure Certificate i n the form hereby approved, with such additions therein and changes thereto as the officer or officers executing the same deem necessary to cure any defect or ambiguity therein, with such approval to be conclusively evidenced by the execution and delivery of such certificate. 230
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SECTION 7. The form of the Preliminary Official Statement presented at this meeting is hereby approved and the Underwriter is hereby authorized to distribute the Preliminary Official Statement to prospective purchasers of the Bonds in the form hereby approved, together with such additions thereto and changes therein as are determined necessary by the Authorized Officers to make such Preliminary Official Statement final as of its date for purposes of Rule 15c2-12 of the Securities and Exchange Commission. Each of the Authorized Officers is hereby authorized to execute a final Official Statement in the form of the Preliminary Official Statement, together with such changes as are determined necessary by the Authorized Officers, to make su ch Official Statement complete and accurate as of its date. The Underwriter is further authorized to distribute the final Official Statement for the Bonds and any supplement thereto to the purchasers of the Bonds upon the execution of the final Official Statement as described above.

SECTION 8. If market conditions at the time the Bonds are sold permit the funding of the Escrow Fund from a portion of the proceeds of the Bonds and the Value -to-Lien Test is not satisfied, (i) a portion of the Bonds will be placed in the Escrow Fund, which together with investment earnings, if any, and with other funds on deposit under the Indenture for the Bonds, will be adequate to pay debt service on the amount of Bonds in the Escrow Fund unless and until amounts in the Escrow Fund are released or applied to redee m Bonds; and (ii) additional proceeds will not be released from the Escrow Fund until the four to one Value-to-Lien Test is satisfied, as set forth in the Indenture. Based on the foregoing requirements, the legislative body of the District waives the four to one Value- to-Lien Test set forth in the Goals and Policies.

SECTION 9. In accordance with the requirements of Section 53345.8 of the Act, based on the Appraisal, and the full cash value as shown on the ad valorem assessment roll of the County of Placer with respect to property in the District not appraised in the Appraisal, the legislative body of the District hereby determines that the value of the real property in the District subject to the special tax to pay debt service on the Bonds is more than three times the principal amount of the Bonds and the principal amount of all other bonds outstanding that are secured by a special tax levied pursuant to the Act or a special assessment levied on property within the District, all as calculated in the manner provided in Section 53345.8(a) of the Act.

SECTION 10. Each Authorized Officer is authorized to provide for all services necessary to effect the issuance of the Bonds. Such services shall include, but not be limited to, printing the Bonds, obtaining legal services, trustee and paying agent services, and any other services deemed appropriate as set forth in a certificate of such Authorized Officer.

Each Authorized Officer is authorized to pay for the cost of such services, together with other costs of issuance, from Bond proceeds deposited pursuant to the Indenture. The City Council hereby appoints Piper Sandler & Co. as Underwriter, PFM Financial Advisors LLC as Municipal Advisor, and Stradling Yocca Carlson & Rauth LLP, as Bond Counsel and Disclosure Counsel with respect to the issuance of the Bonds.

SECTION 11. The Authorized Officers, the City Clerk and the other officers and staff of the City and the District responsible for the fiscal affairs of the District are hereby authorized and directed to take any actions and execute and deliver any and all 231
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documents as are necessary to accomplish the issuance, sale and delivery of the Bonds in accordance with the provisions of this Resolution and the fulfillment of the purposes of the Bonds as described i n the Indenture, including, in the discretion of any of the Authorized Officers, the execution and delivery of a letter of credit or cash depository agreements with respect to the special taxes to be levied on property owned by developers within the District, and providing certificates to the Underwriter as to the accuracy of any information relating to the District which is included within the Official Statement. Any document authorized herein to be signed by the City Clerk may be signed by a duly appointed deputy clerk.

SECTION 12. The District hereby adopts the City’s Debt Management Policy, as amended, supplemented and restated from time to time, as the debt management policy of the District pursuant to California Government Code Section 8855.

SECTION 13. The City Council acknowledges that the good faith estimates required by Section 5852.1 of the California Government Code are disclosed in the staff report and are available to the public at the meeting at which this Resolution is approved.

SECTION 14. This Resolution shall be effective upon its adoption.

PASSED AND ADOPTED this 18th day of November, 2025 by the following vote:

AYES: Councilmembers:

NOES: Councilmembers:

ABSENT: Councilmembers:

ABSTAIN: Councilmembers:

___________________________
Holly Andreatta, Mayor

ATTEST:

Hope Ithurburn, City Clerk

232
Stradling Yocca Carlson & Rauth
Draft of 11/4/25

4922-2377-8418v4/024161-0013

BOND INDENTURE
Between
CITY OF LINCOLN COMMUNITY FACILITIES DISTRICT NO. 2025-1 (JOINER RANCH EAST)

and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Relating to

$________
CITY OF LINCOLN COMMUNITY FACILITIES DISTRICT NO. 2025-1 (JOINER RANCH EAST)
SPECIAL TAX BONDS, SERIES 2025

Dated as of December 1, 2025

233
Table of Contents

Page
i
4922-2377-8418v4/024161-0013

ARTICLE I

DEFINITIONS
Section 1.1. Definitions ..................................................................................................................... 1

ARTICLE II

GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds .......................... 11 Section 2.2. Type and Nature of Bonds and Parity Bonds .............................................................. 12 Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Taxes ................................... 12 Section 2.4. Description of Bonds; Interest Rates .......................................................................... 13 Section 2.5. Place and Form of Payment ........................................................................................ 14 Section 2.6. Form of Bonds and Parity Bonds ................................................................................ 14 Section 2.7. Execution and Authentication ..................................................................................... 15 Section 2.8. Bond Register .............................................................................................................. 15 Section 2.9. Registration of Exchange or Transfer ......................................................................... 15 Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds ..................................... 16 Section 2.11. Validity of Bonds and Parity Bonds ........................................................................... 16 Section 2.12. Book-Entry System ..................................................................................................... 16 Section 2.13. Representation Letter .................................................................................................. 17 Section 2.14. Transfers Outside Book-Entry System ....................................................................... 17 Section 2.15. Payments to the Nominee ........................................................................................... 18 Section 2.16. Initial Depository and Nominee .................................................................................. 18 Section 2.17. CUSIP Numbers .......................................................................................................... 18

ARTICLE III

CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1. Creation of Funds; Application of Proceeds ............................................................... 18 Section 3.2. Deposits to and Disbursements from Special Tax Fund ............................................. 19 Section 3.3. Administrative Expense Account of the Special Tax Fund ........................................ 20 Section 3.4. Interest Account and Principal Account of the Special Tax Fund .............................. 20 Section 3.5. Redemption Account of the Special Tax Fund ........................................................... 21 Section 3.6. Reserve Account of the Special Tax Fund .................................................................. 22 Section 3.7. Rebate Fund ................................................................................................................ 24 Section 3.8. Surplus Fund ............................................................................................................... 27 Section 3.9. Acquisition and Construction Fund ............................................................................ 28 Section 3.10. Escrow Fund ............................................................................................................... 28 Section 3.11. Investments ................................................................................................................. 30 234
Table of Contents
(continued)
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4922-2377-8418v4/024161-0013

ARTICLE IV

REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds ................................................................................................. 33 Section 4.2. Selection of Bonds and Parity Bonds for Redemption ............................................... 35 Section 4.3. Notice of Redemption ................................................................................................. 35 Section 4.4. Partial Redemption of Bonds or Parity Bonds ............................................................ 37 Section 4.5. Effect of Notice and Availability of Redemption Money ........................................... 37

ARTICLE V

COVENANTS AND WARRANTY
Section 5.1. Warranty ..................................................................................................................... 37 Section 5.2. Covenants .................................................................................................................... 37

ARTICLE VI

AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Owner Consent ........................... 41 Section 6.2. Supplemental Indentures or Orders Requiring Owner Consent .................................. 42 Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity Bonds .......................................................................................................................... 43

ARTICLE VII

TRUSTEE
Section 7.1. Trustee ......................................................................................................................... 43 Section 7.2. Removal of Trustee ..................................................................................................... 44 Section 7.3. Resignation of Trustee ................................................................................................ 45 Section 7.4. Liability of Trustee ..................................................................................................... 45 Section 7.5. Merger or Consolidation ............................................................................................. 49

ARTICLE VIII

EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default ........................................................................................................ 50 Section 8.2. Remedies of Owners ................................................................................................... 50 Section 8.3. Application of Revenues and Other Funds After Default ........................................... 51 Section 8.4. Power of Trustee to Control Proceedings ................................................................... 51 Section 8.5. Appointment of Receivers .......................................................................................... 52 Section 8.6. Non-Waiver ................................................................................................................. 52 Section 8.7. Limitations on Rights and Remedies of Owners ........................................................ 52 235
Table of Contents
(continued)
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4922-2377-8418v4/024161-0013
Section 8.8. Termination of Proceedings ........................................................................................ 53

ARTICLE IX

DEFEASANCE AND PARITY BONDS
Section 9.1. Defeasance .................................................................................................................. 53 Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness ................................................................................................................ 54

ARTICLE X

MISCELLANEOUS
Section 10.1. Cancellation of Bonds and Parity Bonds .................................................................... 56 Section 10.2. Execution of Documents and Proof of Ownership ..................................................... 56 Section 10.3. Unclaimed Moneys ..................................................................................................... 57 Section 10.4. Provisions Constitute Contract; Governing Law; Venue ............................................ 57 Section 10.5. Future Contracts .......................................................................................................... 58 Section 10.6. Further Assurances ...................................................................................................... 58 Section 10.7. Entire Agreement; Severability ................................................................................... 58 Section 10.8. Notices ........................................................................................................................ 58 Section 10.9. Execution in Counterparts ........................................................................................... 58 Section 10.10. U .................................................................................................................................. 58

Signatures ................................................................................................................................... S-1

EXHIBIT A FORM OF SPECIAL TAX BOND .......................................................................... A-1 EXHIBIT B REQUISITION FOR DISBURSEMENT OF PROJECT COSTS ........................... B-1

236

4922-2377-8418v4/024161-0013

BOND INDENTURE
THIS BOND INDENTURE dated as of December 1, 202 5, by and between CITY OF LINCOLN COMMUNITY FACILITIES DISTRICT NO. 20 25-1 ( JOINER RANCH EAST ) (the “District”) and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION , as trustee (the “Trustee”), governs the terms of the City of Lincoln Community Facilities District No. 2025-1 (Joiner Ranch East) Special Tax Bonds, Series 2025 and any Parity Bonds issued in accordance herewith from time to time.

RECITALS :

A. The City Council of the City of Lincoln, located in the County of Placer, California (the “City Council”), has undertaken proceedings and declared the necessity to issue bonds on behalf of the District pursuant to the terms and provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5, of the Government Code of the State of California (the “Act”).

B. Based upon Resolution Nos. 2025-087 and 2025-088, adopted by the City Council on June 24, 2025 and Resolutions No. 2025-120 and 2025-121 and adopted by the City Council on August 12, 2025, and elections held on August 12, 2025 authorizing the levy of a special tax and the issuance of bonds, the District is authorized to issue bonds in one or more series pursuant to the Act, in an aggregate principal amount not to exceed $23,500,000.

C. The District intends to finance various Project Costs (as defined herein) through the issuance of bonds in an aggregate principal amount of $___________ designated as the “ City of Lincoln Community Facilities District No. 2025-1(Joiner Ranch East) Special Tax Bonds, Series 2025” (the “Bonds”); and
D. The District has determined that all requirements of the Act for the issuance of the Bonds have been satisfied.

NOW, THEREFORE, in order to establish the terms and conditions upon and subject to which the Bonds are to be issued, and in consideration of the premises and of the mutual covenants contained herein and of the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable consideration, the receipt of which is hereby acknowledged, the District does hereby covenant and agree, for the benefit of the Owners of the Bonds and any Parity Bonds (as defined herein) which may be issued hereunder from time to time, as follows:

ARTICLE I

DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires, the following terms shall have the following meanings:

Account. The term “Account” means any account created pursuant to this Indenture.

Act. The term “Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Section 53311 et seq. of the California Government Code. 237

2 4922-2377-8418v4/024161-0013
Acquisition and Construction Fund. The term “Acquisition and Construction Fund” means the fund by that name established pursuant to Section 3.1 hereof.

Administrative Expense Account . The term “Administrative Expense Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.

Administrative Expenses. The term “Administrative Expenses” means the administrative costs with respect to the calculation and collection of the Special Taxes, including all attorneys’ fees , expenses and other costs related thereto (including those of the Trustee’s counsel) , the fees and expenses of the Trustee, any fees and related costs for credit enhancement for the Bonds or any Parity Bonds which are not otherwise paid as Costs of Issuance, any costs related to the District’s compliance with state and federal laws requiring continuing dis closure of information concerning the Bonds and the District, and any other costs otherwise incurred by City staff on behalf of the District in order to carry out the purposes of the District as set forth in the Resolution of Formation and any obligation of the District hereunder.

Administrative Expenses Cap . The term “Administrative Expenses Cap” means $ 40,000, which amount shall escalate at 2.00% per Fiscal Year, commencing July 1, 2026.

Alternate Penalty Account. The term “Alternate Penalty Account” means the account by that name created and established in the Rebate Fund pursuant to Section 3.1 hereof.

Annual Debt Service . The term “Annual Debt Service” means the principal amount of any Outstanding Bonds or Parity Bonds payable in a Bond Year either at maturity or pursuant to a Sinking Fund Payment and any interest payable on any Outstanding Bonds or Parity Bonds in such Bond Year, if the Bonds and any Parity Bonds are retired as scheduled.

Authorized Investmen ts. The term “Authorized Investments” means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein:
(1) For all purposes, including defeasance investments in refunding escrow accounts:
(a) cash; or
(b) obligations of, or obligations guaranteed as to principal and interest by, the U.S. or any agency or instrumentality thereof, when such obligations are backed by the full faith and credit of the U.S., including U.S . treasury obligations, all direct or fully guaranteed obligations, Farmers Home Administration, General Services Administration, guaranteed Title XI financing, Government National Mortgage Association (GNMA) and State and Local Government Series; or (c) obligations of government-sponsored agencies that are not backed by the full faith and credit of the U.S. Government: Federal Home Loan Mortgage Corporation (FHLMC) debt obligations, Farm Credit System (formerly: Federal Land Banks, Federal Intermediate Cre dit Banks and Banks for Cooperatives), Federal Home Loan Banks (FHL Banks), Federal National Mortgage Association (FNMA) debt obligations, Financing Corp. (FICO) debt obligations, Resolution Funding Corp. (REFCORP) debt obligations and U.S. Agency for Inte rnational Development (U.S.A.I.D.) guaranteed notes.
238

3 4922-2377-8418v4/024161-0013
(2) For all purposes other than defeasance investments in refunding escrow accounts:
(a) obligations of any of the following federal agencies, which obligations represent the full faith and credit of the United States of America: Export -Import Bank, Rural Economic Community Development Administration, U.S. Maritime Administration, Small Business Administration, U.S. Department of Housing & Urban Development (PHAs), Federal Housing Administration and Federal Financing Bank;
(b) direct obligations of any of the following federal agencies, which obligations are not fully guaranteed by the full faith and credit of the United States of America: senior debt obligations issued by the Federal National Mortgage Ass ociation (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC), obligations of the Resolution Funding Corporation (REFCORP) and senior debt obligations of the Federal Home Loan Bank System; (c) U.S. dollar denominated deposit accounts, federal funds and bankers’ acceptances with domestic commercial banks (including those of the Trustee and its affiliates) which have a rating on their short term certificates of deposit on the date of purchase of “A-1” or “A-1+” by S&P and “P-1” by Moody’s and maturing no more than 360 days after the date of purchase (ratings on holding companies are not considered as the rating of the bank); (d) commercial paper which is rated at the time of purchase in the single highest classification “A-1+” by S&P and “P-1” by Moody’s and which matures not more than 270 days after the date of purchase;
(e) investments in a money market fund rated “AAm,” “AAm -G” or better by S&P, including funds for which the Trustee or its affiliates provide investment advisory or other management services;
(f) pre-refunded municipal obligations defined as follows: any bonds or other obligations of any state of the United States of America, or any agency, instrumentality or local governmental unit of any such state, which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice, and
(i) which are rated, based on irrevocable escrow account or fund (the “escrow”), in the highest rating category of S&P and Moody’s or any successors thereto; or (ii) (1) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (1)(b) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate; and (2) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragra ph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate;
(g) municipal obligations rated “Aaa/AAA” or general obligations of states with a rating of at least “Aa2/AA” or higher by both Moody’s and S&P; 239

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(h) Investment Agreements (supported by appropriate opinions of counsel); and (i) the Local Agency Investment Fund of the State, created pursuant to Section 16429.1 of the California Government Code, to the extent the Trustee is authorized to register such investment in its name.

The value of the above investments shall be determined as follows:
(a) for the purpose of determining the amount in any fund, all Authorized Investments credited to such fund shall be valued at market value. The Trustee shall dete rmine the market value based on accepted industry standards, including the Trustee’s internal systems, and from accepted industry providers. Accepted industry providers shall include, but are not limited to, pricing services provided by Financial Times In teractive Data Corporation, Bank of America Merrill Lynch or Salomon Smith Barney. Notwithstanding anything to the contrary herein, in making any valuation of investments hereunder, the Trustee may utilize computerized securities pricing services that may be available to it, including those available through its regular accounting system, and rely thereon; (b) as to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest thereon; and
(c) as to any investment not specified above: the value thereof established by prior agreement between the City and the Trustee.

Authorized Representative of the District . The term “Authorized Representative of the District” means the Mayor, City Manager, Assistant City Manager, Finance Director or City Clerk of the City, or any other officer or employee authorized by the City Council of the City or by an Authorized Representative of the District to undertake the action referenced in this Indenture as required to be undertaken by an Authorized Representative of the District.

Bond Counsel. The term “Bond Counsel” means Stradling Yocca Carlson & Rauth LLP, or another attorney at law or a firm of attorneys selected by the District of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on bonds issued by states and their political subdivisions duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia.

Bond Register. The term “Bon d Register” means the books which the Trustee shall keep or cause to be kept on which the registration and transfer of the Bonds and any Parity Bonds shall be recorded.

Bonds. The term “Bonds” means the District’s Special Tax Bonds, Series 2025 issued on December __, 2025 in the aggregate principal amount of $__________.

Bond Year . The term “Bond Year” means the twelve-month period commencing on September 2 of each year and ending on September 1 of the following year, except that the first Bond Year for the Bonds or an issue of Parity Bonds shall begin on the Delivery Date and end on the first September 1 which is not more than 12 months after the Delivery Date.

Business Day. The term “Business Day” means a day which is not a Saturday or Sunday or a day of the year on which banks or trust companies in New York, New York, Los Angeles, California, 240

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or the city where the Principal Office of the Trustee is located, are not required or authorized by law, regulation or executive order, to close or to remain closed.

Certificate of an Authorized Representative . The term “Certificate of an Authorized Representative” means a written certificate or warrant request executed by an Authorized Representative of the District.

City. The term “City” means the City of Lincoln, County of Placer, State of California.

City Council. The term “City Council” means the City Council of the City.

City Facilities Account. The term “City Facilities Account” means the accou nt by that name created and established in the Acquisition and Construction Fund pursuant to Section 3.1 hereof.

Code. The term “Code” means the Internal Revenue Code of 1986, as amended, and any Regulations, rulings, judicial decisions, and notices, announcements, and other releases of the United States Treasury Department or Internal Revenue Service interpreting and construing it.

Continuing Disclosure Certificate. The term “Continuing Disclosure Certificate” means that certain Continuing Disclosure Certificate dated as of December 1, 2025, as originally executed by the District and as it may be from time to time amended or supplemented in accordance with its terms.

Costs of Issuance . The term “Costs of Issuance” means the costs and expenses incurred in connection with the formation of the District and the issuance and sale of the Bonds or any Parity Bonds, including the acceptance and initial annual fees and expenses of the Trustee and its counsel, legal fees and expenses, costs of printing the Bonds and Parity Bonds and the preliminary and final official statements for the Bonds and Parity Bonds, fees of financial consultants, costs of the appraisal and all other related fees and expenses, including reimbursement to property owners within the District for design, engineering and legal costs, as set forth in a Certificate of an Authorized Representative of the District.

Costs of Issuance Account. The term “Costs of Issuance Account” means the account by that name created and established in the Acquisition and Construction Fund pursuant to Section 3.1 hereof.

Delivery Date. The term “Delivery Date” means, with respect to the Bonds and each issue of Parity Bonds, the date on which the bonds of such issue were issued and delivered to the initial purchasers thereof.

Depository. The term “Depository” means The Depository Trust Company, New York, New York, and its successors and assigns as securities depository for the Bonds, or any other securities depository acting as Depository under Article II hereof.

Developer. The term “Developer” means JEN California 24, LLC, a California limited liability company, and any successor thereto as the “Developer” under the Acquisition, Construction and Funding Agreement dated August 12, 2025, by and between the City, acting for and on behalf of itself and the District, and the Developer.

Direct Debt for District Property . The term “Direct Debt for District Property” means that portion of the aggregate p rincipal amount of the Outstanding Bonds and Parity Bonds which is allocable to the property in the District.
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District. The term “District” means City of Lincoln Community Facilities District No. 2025- 1 (Joiner Ranch East) established pursuant to the Act and Resolution No. 2025-120 adopted by the City Council of the City on August 12, 2025.
“Escrow Closing Date” means July 15, 2026, or such later date as is permitted under section

3.10(e) hereof.
“Escrow Fund” means the Fund by that name created and established pursuant to Section 3.10 hereof.
“Escrow Interest Account” means the Account in the Escrow Fund by that name created and established pursuant to Section 3.10 hereof.
“Escrow Redemption Date” means September 1, 2026, or such later date as is permitted under section 3.10(e) hereof.
“Escrow Term Bonds ” means the Bonds maturing on September 1, 20__ in an aggregate principal amount of $_________ to which CUSIP No. ___________ has been assigned.

Event of Default. The term “Event of Default” means an event described in Section 8.1 hereof.

Fiscal Year. The term “Fiscal Year” means the period beginning on July 1 of each year and ending on the next following June 30.

Funds. The term “Funds” means any funds created pursuant to this Indenture.

Gross Taxes. The term “Gross Taxes” means the amount of all Special Taxes received by the District together with the proceeds collected from the sale of property pursuant to foreclosure for the delinquency of such Special Taxes remaining after the payment of all costs related to such foreclosure actions.

Indenture. The term “Indenture” means this Bond Indenture, together with any Supplemental Indenture approved pursuant to Article VI hereof.

Independent Financial Consultant . The term “Independent Financial Consultant” means a financial consultant or firm of such consultants generally recognized to be well qualified in the financial consulting field, appointed and paid by the District, who, or each of whom: (1) is in fact independent and not under the domination of the District or the City; (2) does not have any substantial interest, direct or indirect, in the District or the City; and (3) is not connected with the District or the City as a member, officer or employee of the District or the City, but who may be regularly retained to make annual or other reports to the District or the City.

Interest Account. The term “Interest Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.

Interest Payment Date . The term “Interest Payment Date” means March 1, 2026 and each March 1 and September 1 thereafter; provided, however, that, if any such day is not a Business Day, interest up to the Interest Payment Date will be paid on the Business Day next succeeding such date. 242

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Investment Agreement. The term “Investment Agreement” means one or more agreements for the investment of funds of the District complying with the criteria therefor as set forth in subsection (2)(h) of the definition of Authorized Investments herein.

Maximum Annual Debt Service . The term “Maximum Annual Debt Service” means the maximum sum obtained for any Bond Year prior to the final maturity of the Bonds and any Parity Bonds by adding the following for each Bond Year: (1) the principal amount of all Outstanding Bonds and Parity Bonds payable in such Bond Year either at maturity or pursuant to a Sinking Fund Payment; and (2) the interest payable on the aggregate principal amount of all Bonds and Parity Bonds Outstanding in such Bond Year if the Bonds and Parity Bonds are retired as scheduled.

Moody’s. The term “Moody’s” means Moody’s Investors Service, Inc., its successors and assigns.

Net Taxes . The term “Net Taxes” means Gross Taxes minus amounts set asid e to pay Administrative Expenses.

Nominee. The term “Nominee” means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.16 hereof.

Ordinance. The term “Ordinance” means Ordinance No. 1098B adopted by the City Council on August 26, 2025 providing for the levying of the Special Tax.

Outstanding. The terms “Outstanding” or “Outstanding Bonds and Parity Bonds” means all Bonds and Parity Bonds theretofore issued by the District, except: (i) Bonds a nd Parity Bonds theretofore cancelled or surrendered for cancellation in accordance with Section 10.1 hereof; (ii) Bonds and Parity Bonds for payment or redemption of which monies shall have been theretofore deposited in trust (whether upon or prior to the maturity or the redemption date of such Bonds or Parity Bonds), provided that, if such Bonds or Parity Bonds are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in this Indenture or any applicable Supplemental Indenture for Parity Bonds; and (iii) Bonds and Parity Bonds which have been surrendered to the Trustee for transfer or exchange pursuant to Section 2.9 hereof or for which a replacement has been issued pursuant to Section 2.10 hereof.

Overlapping Debt. The term “Overlapping Debt” means with respect to any property within the District, the sum of (a) the aggregate amount of all unpaid assessments which are a lien on such property and which are pledged to secure the repayment of bonds, plus (b) a portion of the principal amount of any outstanding bonds of other community facilities districts which are payable at least partially from special taxes to be levied on such property (the “Other CFD Bonds”) determined by multiplying the aggregate princi pal amount of the Other CFD Bonds by a fraction, the numerator of which is the amount of special taxes levied for the Other CFD Bonds on such property and the denominator of which is the total amount of special taxes levied for the Other CFD Bonds on all parcels of property which are subject to the levy of such special taxes, based upon information which is available for the then current Fiscal Year.

Owner. The term “Owner” means the person or persons in whose name or names any Bond or Parity Bond is registered.
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Parity Bonds. The term “Parity Bonds” means all bonds, notes or other similar evidences of indebtedness hereafter issued, payable out of the Net Taxes and which, as provided in this Indenture or any Supplemental Indenture, rank on a parity with the Bonds.

Participants. The term “Participants” means those broker -dealers, banks and other financial institutions from time to time for which the Depository holds Bonds or Parity Bonds as securities depository.

Person. The term “Person” means natural persons, firms, corporations, partnerships, associations, trusts, public bodies and other entities.

Prepayments. The term “Prepayments” means any amounts paid by the District to the Trustee and designated by the District as a prepayment of Special Taxes for one or more parcels in the District made in accordance with the RMA.

Principal Account. The term “Principal Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.

Principal Office of the Trustee. The term “Principal Office of the Trustee” means the office of the Trustee located in San Francisco, California, or such other office or offices as the Trustee may designate from time to time by notice to the Owners and the District , or the designated office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Owners and the District), where it principally conducts and administers its corporate trust business under indentures pursuant to which municipal or governmental obligations are issued.

Project. The term “Project” means those public facilities described in the Resolution of Formation which are to be acquired or constructed within and outside of the District, including all engineering, planning and design services and other incidental expenses related to such facilities and other facilities, if any, authorized by the qualified electors within the District from time to time.

Project Costs. The term “Project Costs” means the amounts necessary to finance the Project, to create and replenish any necessary reserve funds, to pay the initial and annual costs associated with the Bonds or any Parity Bonds, including, but not limited to, remarketing, credit enhancement, Trustee and other fees and expenses relating to the issuance of the Bonds or any Parity Bonds and the formation of the District, and to pay any other “incidental expenses” of the District, as such term is defined in the Act.

Rating Agency. The term “Rating Agency” mea ns Moody’s or S&P, or both, as the context requires.

Rebate Account. The term “Rebate Account” means the account by that name created and established in the Rebate Fund pursuant to Section 3.1 hereof.

Rebate Fund. The term “Rebate Fund” means the fund by that name established pursuant to Section 3.1 hereof in which there are established the Accounts described in Section 3.1 hereof.

Rebate Regulations. The term “Rebate Regulations” means any final, temporary or proposed Regulations promulgated under Section 148(f) of the Code. 244

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Record Date. The term “Record Date” means the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day.

Redemption Account . The term “Redemption Account” means the account by t hat name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.

Regulations. The term “Regulations” means the regulations adopted or proposed by the Department of Treasury from time to time with respect to obligations issued pursu ant to Section 103 of the Code.

Representation Letter . The term “Representation Letter” means the Blanket Letter of Representations from the District to the Depository as described in Section 2.13 hereof.

Reserve Account. The term “Reserve Account” means the account by that name created and established in the Special Tax Fund pursuant to Section 3.1 hereof.

Reserve Policy means a letter of credit, insurance policy, surety bond or other such funding instrument issued by a municipal bond insurance company rated least “Aa3” or higher by Moody’s or “AA-” or higher by S&P, delivered to the Trustee for the purpose of providing a ll or a portion of the 2025 Bonds Reserve Requirement for the Bonds or all or a portion of the Reserve Requirement for a series of Parity Bonds.

Reserve Requirement. The term “Reserve Requirement” means, with respect to the Bonds, the 2025 Bonds Reserve Requirement, and with respect to a series of Parity Bonds, that amount as shall be set forth in the Supplemental Indenture executed and delivered in connection with such series of Parity Bonds.

Resolution of Formation. The term “Resolution of Fo rmation” means Resolution No. 2025- 120 adopted by the City Council on August 12, 2025 pursuant to which the City Council established the District and undertook certain change proceedings.

RMA. The term “RMA” means the Rate and Method of Apportionment of City of Lincoln Community Facilities District No. 2025 -1 (Joiner Ranch East) approved by the qualified electors of the District at the August 12, 2025 election.

Sinking Fund Payment. The term “Sinking Fund Pa yment” means the annual payment to be deposited in the Redemption Account to redeem a portion of the Term Bonds in accordance with the schedules set forth in Section 4.1(b) hereof and any annual sinking fund payment schedule to retire any Parity Bonds which are designated as Term Bonds.

Six-Month Period. The term “Six-Month Period” means the period of time beginning on the Delivery Date of each issue of Bonds or Parity Bonds, as applicable, and ending six consecutive months thereafter, and each six -month period thereafter until the latest maturity date of the Bonds and the Parity Bonds (and any obligations that refund an issue of the Bonds or Parity Bonds).

Special Tax Administrator . The term “Special Tax Administrator” means the individual or entity appointed by the City to administer the calculation and collection of the Special Taxes.

Special Tax Fund . The term “Special Tax Fund” means the fund by that name created and established pursuant to Section 3.1 hereof.
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Special Taxes . The term “Special Taxes” means the taxes authorized to be levied by the District on property within the District in accordance with the Ordinance, the Resolution of Formation, the Act and the voter approval obtained at the August 12, 2025, election in the District, including any scheduled payments and any Prepayments thereof, the net proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes to the amount of said lien and penalties and interest thereon; provided that any delinquent Special Tax sold to an independent third- party or to the City for 100% of the delinquent amount shall no longer be pledged hereunder to the payment of the Bonds or Parity Bonds.

S&P. The term “S&P” means S&P Global Ratings, a Standard & Poor’s Financia l Services LLC business, its successors and assigns.

State. The term “State” means the State of California.

Subaccount. The term “Subaccount” means any subaccount created pursuant to this Indenture.

Supplemental Indenture . The term “Supplemental Indenture” means any supplemental indenture amending or supplementing this Indenture.

Surplus Fund. The term “Surplus Fund” means the fund by that name created and established pursuant to Section 3.1 hereof.

Tax Certificate. The term “Tax Certificate” means the certificate by that name to be executed by the District on a Delivery Date to establish certain facts and expectations and which contains certain covenants relevant to compliance with the Code.

Tax-Exempt. The term “Tax-Exempt” means, with reference to an Authorized Investment, an Authorized Investment the interest earnings on which are excludable from gross income for federal income tax purposes pursuant to Section 103(a) of the Code, other than one described in Section 57(a)(5)(C) of the Code.

Taxable Property. The term “Taxable Property” has the meaning ascribed to it in the RMA.

Term Bonds . The term “Term Bonds” means the Bonds maturing on September 1, 20__, September 1, 20__, September 1, 20__, and September 1, 20__ and any term maturities of an issue of Parity Bonds as specified in a Supplemental Indenture.

Trustee. The term “Trustee” means U.S. Bank Trust Company, National Association , a national banking association duly organized and existing under the laws of the United States, at its designated corporate trust office in San Francisco, California, and its successors or assigns, or any other bank or trust company which may at any time be substituted in its place as provided in Sections 7.2 or 7.3, and any successor thereto.
2025 Bonds Reserve Subaccount. The term “ 2025 Bonds Reserve Subaccount” means the Subaccount by that name created and established in the Reserve Account pursuant to Section 3.1 hereof.
2025 Bonds Reserve Requirement. The term “2025 Bonds Reserve Requirement” means that amount as of any date of calculation equal to the lesser of: (i) 10% of the initial principal amount of the Bonds; (ii) Maximum Annual Debt Service on the then Outstanding Bonds; (iii) 125% of average 246

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Annual Debt Service on the then Outstanding Bonds; provided, however, that the 2025 Bonds Reserve Requirement shall not exceed $___________ except upon a release from the Escrow Fund as set forth in Section 3.10(b)(2) hereof; and provided further that, in calculating the amounts referred to in the preceding clauses (i), (ii) and (iii), there will be excluded the debt service on, or the principal amount of, as applicable, the Escrow Term Bonds as of such date of calculation unless amounts are released from the Escrow Fund in accordance with Section 3.10(b)(2) hereof.

Upon a release from the Escrow Fund in accordance with Section 3.10(b)(2) hereof, the 2025 Bonds Reserve Requirement will be calculated as of the date of such release and the 2025 Bonds Reserve Requirement shall not thereafter increase beyond such amount.

Underwriter. The term “Underwriter” means, with respect to the Bonds, Piper Sandler & Co., and with respect to each issue of Parity Bonds, the institution or institutions, if any, with whom the District enters into a purchase contract for the sale of such issue.

Value of District Property . The term “Value of District Property” means for all parcels of property in the District which are subject to the levy of the Special Taxes, either (i) the fair market value, as of the date of the appraisal provided for below of such parcels, including with respect to such parcels the value of the then existing improvements thereon, as estimated by an appraiser, who shall be a State of California certified general real estate appraiser selected and employed by the District, in an appraisal performed within ninety (90) days preceding the date of such determination based upon a methodology of valuation consistent with the City’s policy for appraisals, provided that a mass appraisal methodology may be applied when valuing Developed Property (as defined in the RMA) ; (ii) the full cash value of any or all of such parcels, including with respect to such parcels the value of the improvements thereon, as set forth on the last equalized assessment roll of the County Assessor of the County of Placer; or (iii) a combination of the value derived from the foregoing paragraphs (i) and (ii).

ARTICLE II

GENERAL AUTHORIZATION AND BOND TERMS
Section 2.1. Amount, Issuance, Purpose and Nature of Bonds and Parity Bonds. Under and pursuant to the Act, the Bonds in the aggregate principal amount of $__________, together with any Parity Bonds authorized by the City Council in accordance with Section 9.2 hereof, shall be issued for the purposes of financing and/or refinancing the Project, paying Costs of Issuance and funding the applicable Subaccount of the Reserve Account with respect to the Bonds or a series of Parity Bonds ; provided that the aggregate principal amount of the Bonds and any Parity Bonds shall not exceed the total indebtedness presently authorized or subsequently authorized by the qualified electors within the District in accordance with the Act. The Bonds and any Parity Bonds shall be and are limited obligations of the District and shall be payable as to the principal thereof and interest thereon and any premiums upon the redemption thereof solely from the Net Taxes and the other amounts in the Special Tax Fund (other than amounts in the Administrative Expense Account of the Special Tax Fund and provided that amount s in the 202 5 Bonds Reserve Subaccount shall only secure and be available to pay the principal of, redemption premium, if any, and interest on the Bonds , and amounts in the Subaccount of the Reserve Account established for a series of Parity Bonds shall se cure only and be available to pay the principal of, redemption premium, if any, and interest on, only such series of Parity Bonds).
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Section 2.2. Type and Nature of Bonds and Parity Bonds . Neither the faith and credit nor the taxing power of the City, the State of California, or any political subdivision thereof other than the District is pledged to the payment of the Bonds or any Parity Bonds. Except for the Net Taxes, no other taxes are pledged to the payment of the Bonds or any Parity Bonds. The Bonds and any Parit y Bonds are not general or special obligations of the City nor general obligations of the District, but are limited obligations of the District payable solely from certain amounts deposited by the District in the Special Tax Fund (exclusive of the Administrative Expense Account), as more fully described herein.

The District’s limited obligation to pay the principal of, premium, if any, and interest on the Bonds and any Parity Bonds from amounts in the Special Tax Fund (exclusive of the Administrative Expen se Account) is absolute and unconditional, free of deductions and without any abatement, offset, recoupment, diminution or set -off whatsoever. No Owner of the Bonds or any Parity Bonds may compel the exercise of the taxing power by the District (except as pertains to the Special Taxes) or the City or the forfeiture of any of their property. The principal of and interest on the Bonds and any Parity Bonds and premiums upon the redemption thereof, if any, are not a debt of the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory limitation or restriction. The Bonds and any Parity Bonds are not a legal or equitable pledge, charge, lien, or encumbrance upon any of the District’s property, or u pon any of its income, receipts or revenues, except the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) which are, under the terms of this Indenture and the Act, set aside for the payment of the Bonds, any Parity Bonds and interest thereon, and neither the members of the legislative body of the District or the members of the City Council nor any persons executing the Bonds or any Parity Bonds are liable personally on the Bonds or any Parity Bonds, by reason of their issuance.

Notwithstanding anything to the contrary contained in this Indenture, the District shall not be required to advance any money derived from any source of income other than the Net Taxes for the payment of the interest on or the principal of the Bonds or any Parity Bonds, or for the performance of any covenants contained herein. The District may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose.

Section 2.3. Equality of Bonds and Parity Bonds and Pledge of Net Taxes. Pursuant to the Act and this Indenture, the Bonds and any Parity Bonds shall be equally payable from and secured by a first pledge of and lien on the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account), without priority for number, date of the Bonds or Parity Bonds, date of sale, date of execution, or date of delivery, and the payment of the interest on and principal of the Bonds and any Parity Bonds and any premiums upon the redemption thereof, shall be exclusively paid from the Net Taxes and other amounts in the Special Tax Fund (exclusive of the Administrative Expense Account) which are hereby set aside for the payment of the Bonds and any Parity Bonds ; provided that any delinquent Special Tax sold to an independent third-party or to the City for 100% of the delinquent amount shall no longer be pledged hereunder to the payment of the Bonds or Parity Bonds. Amounts in the Special Tax Fund (other than the Administrative Expense Account therein) shall constitute a trust fund held for the benefit of the Owners to be applied to the payment of the interest on and principal of the Bonds and any Parity Bonds and, so long as any of the Bonds and any Parity Bonds or interest thereon remain Outstanding, shall not be used for any other purpose, except as permitted by this Indenture or any Supplemental Indenture. Notwithstanding any provision contained in this Indenture to the contrary, Net Taxes deposited in the Reba te Fund and the Surplus Fund shall no longer be considered to be pledged to the Bonds or any Parity Bonds, and none of the Rebate Fund, the Surplus Fund, the Acquisition and Construction Fund or the Administrative Expense Account of the Special Tax Fund shall be construed as a trust fund held for the benefit of the Owners. 248

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Notwithstanding anything to the contrary contained in this Indenture , amounts in the 202 5 Bonds Reserve Subaccount shall only secure and be available to pay the principal of, redemption premium, if any, and interest on the Bonds, and amounts in the Subaccount of the Reserve Account established for a series of Parity Bonds shall secure only and be available to pay the principal of, redemption premium, if any, and interest on, only such series of Parity Bonds.

Nothing in this Indenture or any Supplemental Indenture shall preclude: (i) subject to the limitations contained hereunder, the redemption prior to maturity of any Bonds or Parity Bonds subject to call and redemption and payment of said Bonds or Parity Bonds from proceeds of refunding bonds issued under the Act as the same now exists or as hereafter amended, or under any other law of the State of California; or (ii) the issuance, subject to the limitations contained herein, of Parity Bonds which shall be payable from Net Taxes.

Section 2.4. Description of Bonds; Interest Rates. The Bonds and any Parity Bonds shall be issued in fully registered form in denominations of $5,000 or any integral multiple thereof. The Bonds and any Parity Bonds of each issue shall be numbered as desired by the Trustee.

The Bonds shall be designated “ City of Lincoln Community Facilities District No. 2025 -1 (Joiner Ranch East) Special Tax Bonds, Series 2025 .” The Bonds shall be dated as of their Delivery Date and sha ll mature and be payable on September 1 in the years and in the aggregate principal amounts and shall be subject to and shall bear interest at the rates set forth in the table below payable on March 1, 2026 and each Interest Payment Date thereafter:

Maturity Date
September 1
Principal
Amount
Interest
Rate
$ %

*Term Bond

Interest shall be payable on each Bond and Parity Bond from the date established in accordance with Section 2.5 below on each Interest Payment Date thereafter until the principal sum of such Bond or Parity Bond has been paid; provided, however, that if at the maturity date of any Bond or Parity Bond (or if the same is redeemable and shall be duly called for redemption, then at th e date fixed for redemption) funds are available for the payment or redemption thereof in full, in accordance with the terms of this Indenture, such Bonds and Parity Bonds shall then cease to bear interest. Interest due on 249

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the Bonds and Parity Bonds shall be calculated on the basis of a 360 -day year comprised of twelve 30-day months.

Section 2.5. Place and Form of Payment . The Bonds and Parity Bonds shall be payable both as to principal and interest, and as to any premiums upon the redemption thereof, in lawful money of the United States of America. The principal of the Bonds and Parity Bonds and any premiums due upon the redemption thereof shall be payable upon presentation and surrender thereof at the Principal Office of the Trustee, or at the designated office of any successor Trustee. If the Nominee of the Bonds or Parity Bonds is registered to Cede & Co., payment of principal and any premiums shall be made without presentment. Interest on any Bond or Parity Bond shall be payable from the Interest Payment Date next preceding the date of authentication of such Bond or Parity Bond, unless: (i) such date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication; (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication; or (iii) the date of authentication is prior to the close of business on the first Record Date occurring after the issuance of such Bond or Parity Bond, in which event interest shall be payable from the dated date of such Bond or Parity Bond, as applicable; provided, however, that if at the time of authentication of such Bond or Parity Bond, interest is in default, interest on such Bond or Parity Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment on such Bond or Parity Bond, interest on such Bond or Parity Bond shall be payable from its dated date. Interest on any Bond or Parity Bond shall be paid to the person whose name shall appear in the Bond Register as the Owner of such Bond or Parity Bond as of the close of business on the Record Date. Such interest shall be paid by check of the Trustee mailed by first class mail, postage prepaid, to such Owner at his or her address as it appears on the Bond Register. In addition, upon a r equest in writing received by the Trustee on or before the applicable Record Date from an Owner of $1,000,000 or more in principal amount of the Bonds or of any issue of Parity Bonds, payment shall be made on the Interest Payment Date by wire transfer in i mmediately available funds to an account within the United States of America designated by such Owner.

Section 2.6. Form of Bonds and Parity Bonds. The definitive Bonds may be printed from steel engraved or lithographic plates or may be typewritten. The Bonds and the certificate of authentication shall be substantially in the form attached hereto as Exhibit A, which form is hereby approved and adopted as the form of such Bonds and of the certificate of authentication. Each issue of Parity Bonds and the certificate of authentication therefor shall be in the form provided in the Supplemental Indenture for such issue of Parity Bonds.

Until definitive Bonds or Parity Bonds, as applicable, shall be prepared, the District may cause to be executed and delivered in lieu of such definitive Bonds or Parity Bonds temporary bonds in typed, printed, lithographed or engraved form and in fully registered form, subject to the same provisions, limitations and conditions as are applicable in the case of definitive Bonds or Parity Bonds, except that they may be in any denominations authorized by the District. Until exchanged for definitive Bonds or Parity Bonds, as applicable, any temporary bond shall be entitled and subject to the same benefits and provisions of this Indenture as defini tive Bonds and Parity Bonds. If the District issues temporary Bonds or Parity Bonds, it shall execute and furnish definitive Bonds or Parity Bonds, as applicable, without unnecessary delay and thereupon any temporary Bond or Parity Bond may be surrendered to the Trustee at the Principal Office of the Trustee, without expense to the Owner and at the sole expense of the District, in exchange for a definitive Bond or Parity Bond of the same issue, maturity, interest 250

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rate and principal amount in any authorized denomination. All temporary Bonds or Parity Bonds so surrendered shall be cancelled by the Trustee and shall not be reissued.

Section 2.7. Execution and Authentication. The Bonds and Parity Bonds shall be signed on behalf of the District by the manual or facsimile s ignature of the Mayor of the City and countersigned by the manual or facsimile signature of the City Clerk of the City, or any duly appointed Deputy Clerk, in their capacity as officers of the District, and the seal of the City or the District (or a facsimile thereof) may be impressed, imprinted, engraved or otherwise reproduced thereon, and attested by the signature of the City Clerk of the City . In case any one or more of the officers who shall have signed or sealed any of the Bonds or Parity Bonds shall cease to be such officer before the Bonds or Parity Bonds so signed and sealed have been authenticated and delivered by the Trustee (including new Bonds or Parity Bonds delivered pursuant to the provisions hereof with reference to the transfer and exchang e of Bonds or Parity Bonds or lost, stolen, destroyed or mutilated Bonds or Parity Bonds), such Bonds and Parity Bonds shall nevertheless be valid and may be authenticated and delivered as herein provided, and may be issued as if the person who signed or s ealed such Bonds or Parity Bonds had not ceased to hold such office.

Only the Bonds as shall bear thereon such certificate of authentication in the form set forth in Exhibit A attached hereto shall be entitled to any right or benefit under this Indenture, and no Bond shall be valid or obligatory for any purpose until such certificate of authentication shall have been duly executed by the Trustee.

Section 2.8. Bond Register . The Trustee will keep or cause to be kept, at its office, sufficient books for the registration and transfer of the Bonds and any Parity Bonds which shall upon reasonable prior notice be open to inspection by the District during all regular business hours, and, subject to the limitations set forth in Section 2.9 below, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be transferred on said Bond Register, Bonds and any Parity Bonds as herein provided.

The District and the Trustee may treat the Owner of any Bon d or Parity Bond whose name appears on the Bond Register as the absolute Owner of that Bond or Parity Bond for any and all purposes and the District and the Trustee shall not be affected by any notice to the contrary. The District and the Trustee may rely on the address of the Owner as it appears in the Bond Register for any and all purposes. It shall be the duty of the Owner to give prompt written notice to the Trustee of any change in the Owner’s address so that the Bond Register may be revised accordingly.

Section 2.9. Registration of Exchange or Transfer. Subject to the limitations set forth in the following paragraph, the registration of any Bond or Parity Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond or Parity Bond for cancellation at the office of the Trustee, accompanied by delivery of written instrument of transfer in a form acceptable to the Trustee and duly executed by the Owner or his or her duly authorized attorney.

Bonds or Parity Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of Bonds or Parity Bonds for other authorized denominations of the same maturity and issue. The Trustee shall not collect from the Owner any charge for any new Bond or Parity Bond issued upon any exchange or transfer, but shall require the Owner requesting such exchange or transfer to pay any tax or other governmental charge required t o be paid with respect to such exchange or transfer. Whenever any Bonds or Parity Bonds shall be surrendered for registration of transfer or 251

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exchange, the District shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds or a new Parity Bond or Parity Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount; provided that the Trustee shall not be required to register transfers or make exchanges of: (i) Bonds or Parity Bonds for a period of 15 days next preceding any selection of the Bonds or Parity Bonds to be redeemed; or (ii) any Bonds or Parity Bonds chosen for redemption.

The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer or exchange imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Bond or Parity Bond other than to require delivery of such certificates and other documentation or evidence as are expressly requi red by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

Section 2.10. Mutilated, Lost, Destroyed or Stolen Bonds or Parity Bonds . If any Bond or Parity Bond shall become mutilated, the District shall execute, and the Trustee shall authenticate and deliver, a new Bond or Parity Bond of like tenor, date, issue and maturity in exchange and substitution for the Bond or Parity Bond so muti lated, but only upon surrender to the Trustee of the Bond or Parity Bond so mutilated. Every mutilated Bond or Parity Bond so surrendered to the Trustee shall be cancelled by the Trustee pursuant to Section 10.1 hereof. If any Bond or Parity Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence is satisfactory to the Trustee and, if any indemnity satisfactory to the Trustee shall be given, the District shall execute and the Trustee shall authenticate and deliver a new Bond or Parity Bond, as applicable, of like tenor, maturity and issue, numbered and dated as the Trustee shall determine in lieu of and in substitution for the Bond or Parity Bond so lost, destroyed or stolen . Any Bond or Parity Bond issued in lieu of any Bond or Parity Bond alleged to be mutilated, lost, destroyed or stolen shall be equally and proportionately entitled to the benefits hereof with all other Bonds and Parity Bonds issued hereunder. The Trustee shall not treat both the original Bond or Parity Bond and any replacement Bond or replacement Parity Bond as being Outstanding for the purpose of determining the principal amount of Bonds or Parity Bonds which may be executed, authenticated and delivered hereunder or for the purpose of determining any percentage of Bonds or Parity Bonds Outstanding hereunder, but both the original and replacement Bond or Parity Bond shall be treated as one and the same. Notwithstanding any other provision of this Section, in lieu of delivering a new Bond or Parity Bond which has been mutilated, lost, destroyed or stolen, and which has matured, the Trustee may make payment with respect to such Bonds or Parity Bonds.

Section 2.11. Validity of Bonds and Parity Bonds . The validity of the authorization and issuance of the Bonds and any Parity Bonds shall not be affected in any way by any defect in any proceedings taken by the District for the financing of the Project, or by the invalidity, in whole or in part, of any contracts made by the D istrict in connection therewith, and shall not be dependent upon the completion of the financing of the Project or upon the performance by any Person of his obligation with respect to the Project, and the recital contained in the Bonds or any Parity Bonds that the same are issued pursuant to the Act and other applicable laws of the State shall be conclusive evidence of their validity and of the regularity of their issuance.

Section 2.12. Book-Entry System. The Bonds shall be initially delivered in the form of a separate single fully registered Bond (which may be typewritten) for each maturity of the Bonds. Upon initial delivery, the ownership of each such Bond shall be registered in the registration books kept by the Trustee in the name of the Nominee as nominee of the Depository. Except as provided in Section 2.14 hereof, all of the Outstanding Bonds shall be registered in the registration books kept by 252

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the Trustee in the name of the Nominee. At the election of the District, any Parity Bonds may also be issued as book-entry bonds registered in the name of the Nominee as provided herein, in which case the references in Sections 2.12 through 2.15 to “Bonds” shall be applicable to such Parity Bonds.

With respect to Bonds registered in the Bond Register kept by the Trustee in the name of the Nominee, the District and the Trustee shall have no responsibility or obligation to any such Participant or to any Person on behalf of which such a Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the District and the Trustee shall have no responsibility or obligation with respect to: (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds; (ii) the delivery to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Trustee, of any notice with respect to the Bonds, including any notice of redemption; (iii) the selection by the Depository and its Participants of the beneficial interests in the Bonds to be redeemed in the event that the Bonds are redeemed in part; or (iv) the payment to any Participant or any other Person, other than an Owner as shown in the registration books kept by the Trustee, of any amount with re spect to principal of, premium, if any, or interest due with respect to the Bonds. The District and the Trustee may treat and consider the Person in whose name each Bond is registered in the registration books kept by the Trustee as the holder and absolut e owner of such Bond for the purpose of payment of the principal of, premium, if any, and interest on such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond and for all other purposes whatsoever. The Trustee shall pay all principal of, premium, if any, and interest due on the Bonds only to or upon the order of the respective Owner, as shown in the registration books kept by the Trustee, or th eir respective attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfy and discharge fully the District’s obligations with respect to payment of the principal, premium, if any, and interest due on the Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the registration books kept by the Trustee, shall receive a Bond evidencing the obligation of the District to make payments of principal, premium, if any, and interest pursuant to this Indenture. Upon delivery by the Depository to the Trustee and the District of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Indenture shall refer to such new nominee of the Depository.

Section 2.13. Representation Letter. In order to qualify the Bonds and any Parity Bonds which the District elects to register in the name of the Nominee for the Depository’s book-entry system, an Authorized Representative of the District is hereby authorized to execute from time to time and deliver to such Depository the Representation Letter. The execution and delivery of the Representation Letter shall not in any wa y limit the provisions of Section 2.12 or in any other way impose upon the District or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the registration books kept by the Trustee. The District agrees to take all action necessary to continuously comply with all representations made by it in the Representation Letter. In addition to the execution and delivery of the Representation Letter, the Authorized Representatives of the Dist rict are hereby authorized to take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program.

Section 2.14. Transfers Outside Book-Entry System. In the event that: (i) the Depository determines not to continue to act as securities depository for the Bonds; or (ii) the District determines that the Depository shall no longer so act, then the District will discontinue the book-entry system with the Depository. If the District fails to identify another qualified s ecurities depository to replace the 253

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Depository then the Bonds so designated shall no longer be restricted to being registered in the registration books kept by the Trustee in the name of the Nominee, but shall be registered in whatever name or names Person s transferring or exchanging Bonds shall designate, in accordance with the provisions of Section 2.9 hereof.

Section 2.15. Payments to the Nominee . Notwithstanding any other provisions of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal, premium, if any, and interest due with respect to such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository.

Section 2.16. Initial Depository and Nominee. The initial Depository under this Indenture shall be The Depository Trust Company, New York, New York. The initial Nominee shall be Cede & Co., as Nominee of The Depository Trust Company, New York, New York.

Section 2.17. CUSIP Numbers. The District in issuing Bonds or Parity Bonds, as applicable, may use "CUSIP" numbers, and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Owners; provided that the Trustee shall have no liability for any defect in the “CUSIP” numbers as they appear on any Bond, Parity Bond, notice or elsewhere, and, provided further that any such notice may state that no representation is made as to the correctness of such numbers either as printed on th e Bonds or Parity Bonds, as applicable, or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Bonds or Parity Bonds, as applicable, and any such redemption shall not be affecte d by any defect in or omission of such numbers. The District will promptly notify the Trustee in writing of any change in the "CUSIP" numbers.

ARTICLE III

CREATION OF FUNDS AND APPLICATION OF PROCEEDS
Section 3.1. Creation of Funds; Application of Proceeds. (a) There are hereby created and established and shall be maintained by the Trustee the following funds and accounts:
(1) The City of Lincoln Community Facilities District No. 2025 -1 (Joiner Ranch East Special Tax Fund (the “Special Tax Fund”) (in which there shall be established a nd created an Interest Account, a Principal Account, a Redemption Account, a Reserve Account (and within the Reserve Account, the 2025 Bonds Reserve Subaccount), and an Administrative Expense Account). (2) The City of Lincoln Community Facilities District No. 2025-1 (Joiner Ranch East) Rebate Fund (the “Rebate Fund”) (in which there shall be established a Rebate Account and an Alternate Penalty Account).
(3) The City of Lincoln Community Facilities District No. 2025 -1 (Joiner Ranch East) Acquisition and Construction Fund (the “Acquisition and Construction Fund”) (in which there shall be established a City Facilities Account and a Costs of Issuance Account). 254

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(4) The City of Lincoln Community Facilities District No. 2025 -1 (Joiner Ranch East) Surplus Fund (the “Surplus Fund”).
(5) The City of Lincoln Community Facilities District No. 2025 -1 (Joiner Ranch East) Escrow Fund (the “Escrow Fund”) (in which there shall be established an Escrow Interest Account).

The amounts on deposit in the foregoing Funds, Accounts and Subaccounts shall be held by the Trustee. The Trustee shall invest and disburse the amounts in such Funds, Accounts and Subaccounts in accordance with the provisions of this Article III and shall disburse investment earnings thereon in accordance with the provisions of Section 3.11 hereof.

In connection with the issuance of any Parity Bonds as described in Section 9.2, the Trustee, at the written direction of an Authorized Representative of the District, may create new Funds, Accounts and Subaccounts , or may create a dditional Accounts and Subaccounts within any of the foregoing Funds and Accounts for the purpose of separately accounting for the proceeds of the Bonds and any Parity Bonds.
(b) The proceeds of the sale of the Bonds shall be received by the Trustee on behalf of the District and deposited and transferred as follows:
(1) $___________ shall be transferred to the Costs of Issuance Account of the Acquisition and Construction Fund to pay the Costs of Issuance of the Bonds; (2) $___________ shall be transferred to Interest Account of the Special Tax Fund; (3) $___________ shall be transferred to the 2025 Bonds Reserve Subaccount of the Reserve Account to fund the 2025 Bonds Reserve Requirement; (4) $___________ shall be transferred to the City Facilities Account of the Acquisition and Construction Fund;
(5) $___________ shall be transferred to the Escrow Fund; and (6) $___________ shall be transferred to the Escrow Interest Account of the Escrow Fund.

The Trustee may, in its discretion, establish temporary funds or accounts in its books and records to facilitate such transfers.

Section 3.2. Deposits to and Disbursements from Special Tax Fund. (a) Except for Prepayments, which shall be deposited to the Redemption Account of the Special Tax Fund, the Trustee shall, on each date on which the Special Taxes are r eceived from the District, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Owners. The Trustee shall transfer the Special Taxes on deposit in the Special Tax Fund on the dates and in the amounts set forth in the following Sections, in the following order of priority, to:
(1) the Administrative Expense Account of the Special Tax Fund up to the Administrative Expenses Cap;
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(2) the Interest Account of the Special Tax Fund;
(3) the Principal Account of the Special Tax Fund;
(4) the Redemption Account of the Special Tax Fund;
(5) the Subaccounts of the Reserve Account of the Special Tax Fund , on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds; (6) the Administrative Expense Account of the Special Tax Fund to the extent that Administrative Expenses exceed or are expected to exceed the Administrative Expense Cap; (7) the Rebate Fund; and
(8) the Surplus Fund.
(b) At maturity of all of the Bonds and Parity Bonds and, after all principal and interest then due on the Bonds a nd Parity Bonds then Outstanding have been paid or provided for and any amounts owed to the Trustee have been paid in full, moneys in the Special Tax Fund and any accounts therein may be used by the District for any lawful purpose.

Section 3.3. Administrative Expense A ccount of the Special Tax Fund . The Trustee shall transfer from the Special Tax Fund and deposit in the Administrative Expense Account of the Special Tax Fund from time to time amounts necessary to make timely payment of Administrative Expenses as set forth in a Certificate of an Authorized Representative; provided, however, that, except as set forth in the following sentence, the total amount transferred with respect to a Bond Year shall not exceed the Administrative Expenses Cap until such time as there has been deposited to the Interest Account and the Principal Account an amount, together with any amounts already on deposit therein, that is sufficient to pay the interest and principal on all Bonds and Parity Bonds due in such Bond Year and to restore the 2025 Bonds Reserve Subaccount to the 2025 Bonds Reserve Requirement and any other Subaccount of the Reserve Account to the applicable Reserve Requirement. Notwithstanding the foregoing, amounts in excess of the Administrative Expenses Cap may be transfe rred to the Administrative Expense Account to the extent necessary to collect delinquent Special Taxes. Subject to Section 3. 11, moneys in the Administrative Expense Account of the Special Tax Fund may be invested in any Authorized Investments as directed in writing by an Authorized Representative of the District and shall be disbursed as directed in a Certificate of an Authorized Representative.

Section 3.4. Interest Account and Principal Account of the Special Tax Fund . The principal of and interest due on the Bonds and any Parity Bonds until maturity, other than principal due upon redemption, shall be paid by the Trustee from the Principal Account and the Interest Account of the Special Tax Fund, respectively.

For the purpose of assuring that the payment of principal of and interest on the Bonds and any Parity Bonds will be made when due, after making the transfer required by Section 3.3, at least one Business Day prior to each March 1 and September 1, the Trustee shall make the following transfers from the Special Tax Fund first to the Interest Account and then to the Principal Account; provided, however, that to the extent that deposits have been made in the Interest Account or the Principal Account from the proceeds of the sale of an issue of the Bonds or any Parity Bonds, or otherwise, the transfer from the Special Tax Fund need not be made; and provided, further, that, if amounts in the 256

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Special Tax Fund (exclusive of the Reserve Account and the Administrative Expense Account ) are inadequate to make the foregoing transfers, then any deficiency shall be made up by transfers from the Subaccounts of the Reserve Account:
(a) To the Interest Account, an amount such that the balance in the Interest Account one Business Day prior to each Interest Payment Date shall be equal t o the installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date which remains unpaid. Moneys in the Interest Account shall be used for the payment of interest on the Bonds and any Parity Bonds as the same become due. (b) To the Principal Account, an amount such that the balance in the Principal Account one Business Day prior to September 1 of each year, commencing September 1, 2026, shall equal the principal payment due on the Bonds and any Parity Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account shall be used for the payment of the principal of such Bonds and any Parity Bonds as the same become due at maturity.

Section 3.5. Redemption Account of the Special Tax Fund. (a) With respect to each September 1 on which a Sinking Fund Payment is due, after the deposits have been made to the Administrative Expense Account, the Interest Ac count and the Principal Account of the Special Tax Fund as required by Sections 3.3 and 3.4 hereof, the Trustee shall next transfer into the Redemption Account of the Special Tax Fund from the Special Tax Fund the amount needed to make the balance in the R edemption Account one Business Day prior to each September 1 on which a Sinking Fund Payment is due equal to the Sinking Fund Payment due on any Outstanding Bonds and Parity Bonds on such September 1; provided, however, that, if amounts in the Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency with respect to the Bonds shall be made up by an immediate transfer from the 202 5 Bonds Reserve Subaccount and any deficiency with respect to a series of Parity Bonds shall be made up by an immediate transfer from the Subaccount of the Reserve Account for such series of Parity Bonds , if funded, pursuant to Section 3.6 below. Moneys so deposited in the Redemption Account shall be used and applied by the Trustee to call and redeem Term Bonds in accordance with the Sinking Fund Payment schedules set forth in Section 4.1(b) hereof, and to redeem Parity Bonds in accordance with any Sinking Fund Payment schedule in the Supplemental Indenture for such Parity Bonds. (b) After making the deposits to the Administrative Expense Account, the Interest Account and the Principal Account of the Special Tax Fund pursuant to Sections 3.3 and 3.4 above and to the Redemption Account for Sinking Fund Payments then due pursuant to subparagraph (a) of this Section, and in accordance with the District’s election to call Bonds for optional redemption as set forth in Section 4.1(a) hereof, or to call Parity Bonds for optional redemption as set forth in any Supplemental Indenture for Parity Bonds, the Trustee shall tr ansfer from the Special Tax Fund and deposit in the Redemption Account moneys available for the purpose and sufficient to pay the principal and the premiums, if any, payable on the Bonds or Parity Bonds called for optional redemption; provided, however, th at amounts in the Special Tax Fund (other than the Administrative Expense Account therein) may be applied to optionally redeem Bonds and Parity Bonds only if immediately following such redemption the amount in the 2025 Bonds Reserve Subaccount will equal the 2025 Bonds Reserve Requirement and the amount in each other Subaccount of the Reserve Account will equal the related Reserve Requirement.
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(c) Prepayments deposited to the Redemption Account shall be applied on the redemption date established pursuant to Section 4.1(c) hereof to the payment of the principal of, premium, if any, and interest on the Bonds and Parity Bonds to be redeemed with such Prepayments. (d) Moneys set aside in the Redemption Account shall be used solely for the purpose of redeeming Bonds and Parity Bonds and shall be applied on or after the redemption date to the payment of principal of and premium, if any, on the Bonds or Parity Bonds to be redeemed upon presentation and surrender of such Bonds or Parity Bonds, and, in the case of an optional redemption or a special mandatory redemption from Prepayments, to pay the interest thereon; provided, however, that in lieu or partially in lieu of such call and redemption, moneys deposited in the Redemption Account may be used to purchase Outstanding Bo nds or Parity Bonds in the manner hereinafter provided. Purchases of Outstanding Bonds or Parity Bonds may be made by the District at public or private sale as and when and at such prices as the District may in its discretion determine but only at prices (including brokerage or other expenses) not more than par plus accrued interest, plus, in the case of moneys set aside for an optional redemption or a special mandatory redemption, the premium applicable at the next following call date according to the pre mium schedule established pursuant to Section 4.1(a) or

4.1(c) hereof, as applicable, or in the case of Parity Bonds the premium established in any Supplemental Indenture. Any accrued interest payable upon the purchase of Bonds or Parity Bonds may be paid from the amount reserved in the Interest Account of the Special Tax Fund for the payment of interest on the next following Interest Payment Date.

Section 3.6. Reserve Account of the Special Tax Fund. There shall be maintained in the 2025 Bonds Reserve Subaccount an amount equal to the 2025 Bonds Reserve Requirement and in each other Subaccount of the Reserve Account established for a series of Parity Bonds, an amount equal to the Reserve Requirement for such series of Parity Bonds . The 2025 Reserve Requirement and the Reserve Requirement established for a series of Parity Bonds may be satisfied in whole or in part by cash, a Reserve Policy, or a combination thereof. The amounts in a Subaccount of the Reserve Account shall be applied as follows:
(a) Moneys in the 2025 Bonds Reserve Subaccount shall be used solely for the purpose of paying the principal of, including Sinking Fund Payments, and interest on the Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due and for the purpose of making any required transfer to the Rebate Fund with respect to the Bonds pursuant to Section 3.7 hereof upon written direction from the District. Moneys in any other Subaccount of the Reserve Account established for a series of Parity Bonds shall be used solely for the purpose of paying the principal of, including Sinking Fund Payments, and interest on such series of Parity Bonds when due in the event that the moneys in the Interest Account and the Principal Account of the Special Tax Fund are insufficient therefor or moneys in the Redemption Account of the Special Tax Fund are insufficient to make a Sinking Fund Payment when due and for the purpose of making any required transfer to the Rebate Fund with respect to such series of Parity Bonds pursuant to Section 3.7 hereof upon written direction from the District.

If the amounts in the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund are insufficient to pay the principal of, including Sinking Fund Payments, or interest on any Bonds or Parity Bonds when due, or amounts in the Special Tax Fund are i nsufficient to make transfers to the Rebate Fund when required, the Trustee shall withdraw from the applicable Subaccount of the Reserve Account, first from the cash on deposit therein, and second from a draw on the Reserve Policy, if any, for deposit in the Interest Account, the Principal Account or the Redemption 258

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Account of the Special Tax Fund or the Rebate Fund, as applicable, moneys necessary for such purposes.
(b) Whenever moneys are withdrawn from a Subaccount of the Reserve Account, after making the required transfers referred to in Sections 3.3, 3.4 and 3.5 above, the Trustee shall transfer to each Subaccount of the Reserve Account from available moneys in the Special Tax Fund, or from any other legally available funds which the District elects to apply to such purpose, on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds, the amount needed to restore the amount of each Subaccount of the Reserve Account to, with respect to the Bonds, the 2025 Bonds Reserve Requirement and, with respect to each series of Parity Bonds, the applicable Reserve Requirement for such series, by first, repaying any amounts due under each Reserve Policy, and second, to fund each Subaccount of the Reserve Account to, with respect to the Bonds, the 2025 Bonds Reserve Requirement and, with respect to each series of Parity Bonds, the applicable Reserve Requirement for such series. Moneys in the Special Tax Fund shall be deemed available for transfer to the Subaccounts of the Reserve Account only if the District certifies to the Trustee that such amounts will not be needed to make the deposits required to be made to the Administrative Expense Account, the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund on or before the next September 1. If amounts in the Special Tax Fund together with any other amounts transferred to replenish the Subaccounts of the Reserve Account are inadequate to restore the Subaccounts of the Reserve Account to , with respect to the Bonds, the 202 5 Bonds Reserve Requirement and, with respect to each series of Parity Bonds, the applicable Reserve Requirement for such series, including any amounts necessary to pay costs related to each Reserve Policy, if any, then the District shall include the amount necessary to restore the Subaccounts of the Reserve Account to, with respect to the Bonds, the 202 5 Bonds Reserve Requirement and, with respect to each series of Parity Bonds, the applicable Reserve Requirement for such series, in the next annual Special Tax levy to the extent of the maximum permitted Special Tax rates. (c) In connection with a redemption of Bonds pursuant to Section 4.1(a) or 4.1(c), or a partial defeasance of Bonds in accordance with Section 9.1 hereof, amounts in the 2025 Bonds Reserve Subaccount may be applied to such redemption or partial defeasance so long as the amount on deposit in the 2025 Bonds Reserve Subaccount following such redemption or partial defeasance equals the 2025 Bonds Reserve Requirement. The District shall set forth in a Certificate of an Authorized Representative the amount in the 2025 Bonds Reserve Subaccount to be transferred to the Redemption Account on a redemption date or to be transferred pursuant to the Indenture to partially defease Bonds, and the Trustee shall make such transfer on the applicable redemption or defeasance date, subject to the limitation in the preceding sentence.

In connection with a redemption of a series of Parity Bonds in accordance with an y Supplemental Indenture, or a partial defeasance of such series of Parity Bonds in accordance with Section 9.1 hereof, amounts in the related Subaccount of the Reserve Account may be applied to such redemption or partial defeasance so long as the amount on deposit in such Subaccount of the Reserve Account following such redemption or partial defeasance equals the Reserve Requirement for such series of Parity Bonds. The District shall set forth in a Certificate of an Authorized Representative the amount in the Subaccount of the Reserve Account to be transferred to the Redemption Account on a redemption date or to be transferred pursuant to the Indenture to partially defease such Parity Bonds, and the Trustee shall make such transfer on the applicable redemp tion or defeasance date, subject to the limitation in the preceding sentence.
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(d) To the extent that the 2025 Bonds Reserve Subaccount is at the 2025 Bonds Reserve Requirement as of the first day of the final Bond Year for the Bonds, amounts in the 2025 Bonds Reserve Subaccount may be applied to pay the principal of and interest due on the Bonds in the final Bond Year for the Bonds. Moneys in the 2025 Bonds Reserve Subaccount in excess of the 2025 Bonds Reserve Requirement not transferred in accordance with the preceding provisions of this Section shall be withdrawn from the 2025 Bonds Reserve Subaccount on the Business Day before each March 1 and September 1 and shall be transferred to the Acquisition and Construction Fund or an Account therein, as directed by a Certificate of an Authorized Representative , until all amounts have been disbursed from the Acquisition and Construction Fund (or such fund is closed) and thereafter to the Interest Account of the Special Tax Fund.
(e) To the extent that the Subaccount of the Reserve Account for a series of Parity Bonds is at the Reserve Requirement for such series as of the first day of the final Bond Year for such series of Parity Bonds, amounts in such Subaccount of the Reserve Account may be applied to pay the principal of and interest due on such series of Parity Bonds in the final Bond Year for such issue.

Moneys in the Subaccount of the Reserve Account for a series of Parity Bonds in excess of the Reserve Requirement for such series not transferred in accordance with the preceding provisions of this Section shall be withdrawn from such Subaccount of the Reserve Account on the Business Day before each March 1 and September 1 and shall be transferred to the Acquisition and Construction Fund or an Account therein, as directed by a Certificate of an Authorized Representative, until all amounts have been disbursed from the Acquisition and Construction Fund (or such fund is closed) and thereafter to the Interest Account of the Special Tax Fund.

Section 3.7. Rebate Fund.
(a) The Trustee shall establish and maintain a fund separate from any other fund established and maintained hereunder designated as the Rebate Fund and shall establish a separate Rebate Account and Alternate Penalty Account therein. All money at any time deposited in the Rebate Account or the Alternate Penalty Account of the Rebate Fund shall be held by the Trustee in trust, for payment to the United States Treasury. A separate subaccount of the Rebate Account and the Alternate Penalty Account shall be established for the Bonds and each issue of Parity Bonds the interest on which is excluded from gross income for federal income tax purposes. All amounts on deposit in the Rebate Fund with respect to the Bonds or an issue of Parity Bonds shall be governed by this Section 3.7 and the Tax Certificate for such issue, unless the District obtains an opinion of Bond Counsel that the exclusion from gross income for federal income tax purposes of interest payments on the Bonds and Parity Bonds will not be adversely affected if such requirements are not satisfied. (1) Rebate Account. The following requirements shall be satisfied with respect to each subaccount of the Rebate Account:
(i) Annual Computation. Within 55 days of the end of each fifth Bond Year, the District shall calculate or cause to be calculated the amount of rebatable arbitrage for the Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable, in accordance with Section 148(f)(2) of the Code and Section 1.148-3 of the Rebate Regulations (taking into account any applicable exceptions with respect to the computation of the rebatable arbitrage described in the Tax Certificate for each issue (e.g., the temporary investments exceptions of Section 148(f)(4)(B) and (C) of the Code), and taking into account whether the election pursuant to Section 148(f)(4)(C)(vii) of the Code (the “1½% Penalty”) has been made), for this purpose treating the last day of the applicable Bond Year as a computation date, within the meaning of Section 1.148-1(b) of the Rebate Regulations (the 260

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“Rebatable Arbitrage”). The District shall obtain expert advice as to the amount of the Rebatable Arbitrage to comply with this Section.
(ii) Annual Transfer. Within 55 days of the end of each fifth Bond Year for which Rebatable Arbitrage must be calcu lated as required by the Tax Certificate for each issue, upon the written direction of an Authorized Representative of the District, an amount shall be deposited to each subaccount of the Rebate Account by the Trustee from any funds so designated by the District if and to the extent required, so that the balance in the Rebate Account shall equal the amount of Rebatable Arbitrage so calculated by or on behalf of the District in accordance with clause (i) of this subsection (a)(1) with respect to the Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable. In the event that immediately following any transfer required by the previous sentence, or the date on which the District determines that no transfer is required for such Bond Year, the amount then on deposit to the credit of the applicable subaccount of the Rebate Account exceeds the amount required to be on deposit therein, upon written instructions from an Authorized Representative of the District, the Trustee shall withdraw the excess from the appropriate subaccount of the Rebate Account and then credit the excess to the Special Tax Fund.
(iii) Payment to the Treasury. The Trustee shall pay, as directed in writing by an Authorized Representative of the District, to the United States Treasury, out of amounts in each subaccount of the Rebate Account:
(X) not later than 60 days after the end of: (A) the fifth Bond Year for the Bonds and each issue of Parity Bonds to which this Section 3.7 is applicable; and (B) each applicable fifth Bond Year thereafter, an amount equal to at least 90% of the Rebatable Arbitrage calculated as of the end of such Bond Year for the Bonds and each issue of Parity Bonds, as applicable; and
(Y) not later than 60 days after the payment or redemption of all of the Bond s or an issue of Parity Bonds, as applicable, an amount equal to 100% of the Rebatable Arbitrage calculated as of the end of such applicable Bond Year, and any income attributable to the Rebatable Arbitrage, computed in accordance with Section 148(f) of the Code.

In the event that, prior to the time of any payment required to be made from the Rebate Account, the amount in the Rebate Account is not sufficient to make such payment when such payment is due, the District shall calculate or cause to be calculated the amount of such deficiency and deposit an amount received from any legally available source equal to such deficiency prior to the time such payment is due. Each payment required to be made pursuant to this subsection (a)(1) shall be made to the Internal Revenue Service Center, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T, or shall be made in such other manner as provided under the Code.
(2) Alternate Penalty Account.
(i) Six-Month Computation. If the 1½% Penalty has been elected for the Bonds or an issue of Parity Bonds, within 85 days of each particular Six -Month Period, the District shall determine or cause to be determined whether the 1½% Penalty is payable (and the amount of such penalty) as of the close of the applicable Six-Month Period. The District shall obtain expert advice in making such determinations.
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(ii) Six-Month Transfer. Within 85 days of the close of each Six -Month Period, the Trustee, at the written dire ction of an Authorized Representative of the District, shall deposit an amount in the appropriate subaccounts of the Alternate Penalty Account from any source of funds held by the Trustee pursuant to this Indenture and designated by the District in such wr itten directions or provided to it by the District, if and to the extent required, so that the balance in each subaccount of the Alternate Penalty Account equals the amount of 1½% Penalty due and payable to the United States Treasury determined as provided in subsection (a)(2)(i) above. In the event that immediately following any transfer provided for in the previous sentence, or the date on which the District determines that no transfer is required for such Bond Year, the amount then on deposit in a subaccount of the Alternate Penalty Account exceeds the amount required to be on deposit therein to make the payments required by subsection (iii) below, the Trustee, at the written direction of an Authorized Representative of the District, may withdraw the excess from the applicable subaccount of the Alternate Penalty Account and credit the excess to the Special Tax Fund. (iii) Payment to the Treasury. The Trustee shall pay, as directed in writing by an Authorized Representative of the District, to the United States Treasury, out of amounts in a subaccount of the Alternate Penalty Account, not later than 90 days after the close of each Six-Month Period the 1½% Penalty, if applicable and payable, computed with respect to the Bonds and any issue of Parity Bonds in accordance with Section 148(f)(4) of the Code. In the event that, prior to the time of any payment required to be made from a subaccount of the Alternate Penalty Account, the amount in such subaccount is not sufficient to make such payment when such payment is due, the District shall calculate the amount of such deficiency and direct the Trustee, in writing, to deposit an amount equal to such deficiency into such subaccount of the Alternate Penalty Account from any funds held by the Trustee pursuant to this Indenture and designated by the District in such written directions prior to the time such payment is due. Each payment required to be made pursuant to this subsection (a)(2) shall be made to the Internal Revenue Service, Ogden, Utah 84201 on or before the date on which such payment is due, and shall be accompanied by Internal Revenue Service Form 8038-T or shall be made in such other manner as provided under the Code.
(b) Disposition of Unexpended Funds. Any funds remaining in the Accounts of the Rebate Fund with respect to the Bonds or an issue of Parity Bonds after redemption and payment of such issue and after making the payments described in subsections (a)(1)(iii) or (a)(2)(iii) (whichever is applicable), may be withdrawn by the Trustee at the written direction of the District and utilized in any manner by the District.
(c) Survival of Defeasance and Final Payment. Notwithstanding anything in this Section or this Indenture to the contrary, the obligation to comply with the requirements of this Section shall survive the defeasance and final payment of the Bonds and any Parity Bonds with respect to which an Account has been created in the Rebate Fund.
(d) Amendment Without Consent of Owners. This Section 3.7 may be deleted or amended in any manner without the consent of the Owners, provided that prior to such event there is delivered to the District an opinion of Bond Counsel to the effect that such deletion or amendment will not adversely affect the exclusion from gross income for federal income tax purposes of inte rest on the Bonds and any issue of Parity Bonds issued on a tax-exempt basis. (e) Trustee. The Trustee shall have no responsibility to monitor or calculate any amounts payable to the U.S. Treasury pursuant to this Section and shall be deemed constructively to have complied with its obligations hereunder if it follows the written instructions of the District given 262

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pursuant to this Section. The Trustee shall not be responsible for calculating rebate amounts or for the adequacy or correctness of any rebate report . The Trustee shall be deemed conclusively to have complied with the provisions of this Indenture and any other agreement relating to the Bonds or Parity Bonds regarding calculation and payment of rebate if it follows the directions of the District, and it shall have no independent duty to review or enforce the District’s compliance with such rebate requirements. The Trustee may rely conclusively upon and shall be fully protected from all liability in relying upon the District’s opinions, calculations, det erminations, directions, and certifications required by this Section. Except to the extent expressly herein provided, the Trustee shall in no instance be responsible or liable for the tax treatment of the Bonds or the Parity Bonds, the District’s compliance with the Code, or any other tax consequences in connection with the Bonds or the Parity Bonds.

Section 3.8. Surplus Fund. After making the transfers required by Sections 3.3, 3.4, 3.5,

3.6 and 3.7 hereof, as soon as practicable after each September 1, the Trustee shall transfer all remaining amounts in the Special Tax Fund to the Surplus Fund, unless on or prior to such date, it has received a Certificate of an Authorized Representative directing that certain amounts be retained in the Special Tax Fund because the District has included such amounts as being available in the Special Tax Fund in calculating the amount of the levy of Special Taxes for such Fiscal Year pursuant to Section 5.2(b) hereof. Moneys deposited in the Surplus Fund will be trans ferred by the Trustee pursuant to a Certificate of an Authorized Representative: (i) to the Interest Account, the Principal Account or the Redemption Account of the Special Tax Fund to pay the principal of, including Sinking Fund Payments, premium, if any, and interest on the Bonds and any Parity Bonds when due in the event that moneys in the Special Tax Fund and the Subaccounts of the Reserve Account of the Special Tax Fund are insufficient therefor; (ii) to each Subaccount of the Reserve Account, on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds , to replenish the 2025 Bonds Reserve Subaccount to the 2025 Bonds Reserve Requirement , and to each other Subaccount of the Reserve Account to the applicable Reserve Requirement; (iii) to the Administrative Expense Account of the Special Tax Fund to pay Administrative Expenses to the extent that the amounts on deposit in the Administrative Expense Account of the Special Tax Fund are insufficient to pay Administrative Expenses; (iv) to the Acquisition and Construction Fund to pay Project Costs; or (v) after all Project Costs have been paid, to the District, for any other lawful purpose of the District.

The amounts in the Surplus Fund are not pledged to the repayment of the Bonds or the Parity Bonds and may be used by the District for any lawful purpose. In the event that the District reasonably expects to use any portion of the moneys in the Surplus Fund to pay debt service on any Outstanding Bonds or Parity Bonds, the District shall notify the Trustee in a Certificate of an Authorized Representative and the Trustee shall segregate such amount into a separate subaccount and the moneys on deposit in such subaccount of the Surplus Fund shall , subject to Section 3.1 1, be invested at the written direction of the District in Authorized Investments the interest on which is excludable from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing t he alternative minimum tax of individuals under the Code) or in Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds to which such amounts are to be applied, unless, in the opinion of Bond Counsel, investment a t a higher yield will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes. Such amounts shall be disburse d as directed by an Authorized Representative of the District.
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Section 3.9. Acquisition and Construction Fund.
(a) The moneys in the Costs of Issuance Account shall be disbursed by the Trustee pursuant to a Certificate of an Authorized Representative, and any balance remaining therein after 180 days shall be tr ansferred by the Trustee to the City Facilities Account within the Acquisition and Construction Fund or earlier as directed in writing by an Authorized Representative of the District.

Following such transfer to the City Facilities Account within the Acquisition and Construction Fund, the Costs of Issuance Account shall be closed.
(b) The moneys in the Acquisition and Construction Fund and the Accounts therein (other than the Costs of Issuance Account) shall be applied exc lusively to pay the Project Costs. Amounts for Project Costs shall be disbursed by the Trustee from the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account) , as specified in a Requisition for Disbursement of Project Costs, substantially in the form of Exhibit B-1 attached hereto. A properly executed Requisition for Disbursement of Project Costs must be submitted in connection with each requested disbursement and the Trustee may rely thereon without investiga ting the accuracy thereof.

Amounts in an Account of the Acquisition and Construction Fund may be transferred to another Account or Accounts therein pursuant to a Certificate of an Authorized Representative of the District.

For purposes of complying with t he requirements of this Section, the Trustee may conclusively rely and shall be protected in acting or refraining from acting upon the Requisition signed by the authorized officer of the District. The Trustee shall not be bound to make an investigation into the facts or matters stated in any Requisition of the District. The Trustee shall not be responsible for determining whether the funds on hand in the Acquisition and Construction Fund are sufficient to complete the Project. The Trustee shall not be responsible to collect lien waivers. (c) Upon receipt of a Certificate of an Authorized Representative of the District stating that all or a specified portion of the amount remaining in the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account) is no longer needed to pay Project Costs, the Trustee shall: (i) transfer all or such specified portion, as applicable, of the moneys remaining on deposit in the Acquisition and Construction Fund or the Accounts therein (other than the Costs of Issuance Account) to the Interest Account, the Principal Account or Redemption Account of the Special Tax Fund, to the Costs of Issuance Account or to the Surplus Fund, as directed in such certificate, provided that in connection with any direction to transfer amounts to the Surplus Fund there shall have been delivered to the Trustee with such certificate an opinion of Bond Counsel to the effect that such transfer to the Surplus Fund will not adversely affect the exclusion from gross income for federal income tax purposes of interest on the Bonds or any Parity Bonds which were issued on a tax-exempt basis for federal income tax purposes; and (ii) thereafter, close the Acquisition and Construction Fund.

Section 3.10. Escrow Fund.
(a) Establishment of Escrow Fund. Moneys in the Escrow Fund (and the 2025 Bonds Subaccount and the Escrow Interest Account therein) shall be held in trust by the Trustee and, pending disbursement as hereinafter provided, shall be subject to a lien in favor of the Owners of the Bonds and shall be administered as provided herein.
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(b) Disbursements Prior to Escrow Closing Date.
(1) Prior to the Escrow Closing Date and the Escrow Disbursement Date, the Trustee shall transfer from the Escrow Interest Account to the Interest Account of the Special Tax Fund on the Business Day prior to each Interest Payment Date prior to the Escrow Redemption Date or the Escrow Disbursement Date, an amount that is equal to the interest payable on the Escrow Term Bonds on such Interest Payment Date.
(2) In addition to di sbursements pursuant to paragraph ( 1) above, assuming the conditions to the release of amounts in the Escrow Fund to the Acquisition and Construction Fund are satisfied prior to the Escrow Closing Date, the Trustee shall make disbursements from the Escrow Fund and the Escrow Interest Account to the Acquisition and Construction Fund, in such amounts as directed a Certificate of an Authorized Representative, on any date other than an Interest Payment Date (each an “Escrow Disbursement Date”), provided that an Escrow Disbursement Date shall not occur in the five days preceding an Interest Payment Date, if at least ten (10) Business Days prior to an Escrow Disbursement Date, the District and the Trustee shall have received a certificate of an Independent Financial Consultant certifying that the Value of District Property is at least four (4) times the sum of the principal amount of the Direct Debt for District Property and the Overlapping Debt, including within such calculation the principal amount of the Escrow Term Bonds.

The Developer shall be responsible for all costs in connection with the disbursement from the Escrow Fund pursuant to this Section 3.10(b)(2), including, but not limited to, the appraisal, and the Independent Financial Consultant, subject to reimbursement of such costs from amounts in the Acquisition and Construction Fund.
(c) If the District and the Trustee receive the Certificate of an Independent Financial Consultant pursuant to Section 3. 10(b)(2) above prior to the Escro w Closing Date, the Trustee shall transfer the amounts then on deposit in the Escrow Fund and the Escrow Interest Account as follows:
(1) First, the Trustee shall transfer from the Escrow Interest Account to the Interest Account of the Special Tax Fund an amou nt sufficient to pay interest on the Escrow Term Bonds on each Interest Payment Date that will occur before Special Taxes can be levied and collected in an amount sufficient to pay such interest;
(2) Second, the Trustee shall transfer from the Escrow Fund to the 2025 Bonds Reserve Subaccount, an amount sufficient to cause the amount on deposit in the 2025 Bonds Reserve Subaccount to be at least equal to the 2025 Bonds Reserve Requirement (calculated as if the disbursement pursuant to Section 3.10(b)(2) above had already occurred); and (3) Third, the Trustee shall transfer from the remaining amounts in the Escrow Fund and the Escrow Interest Account, to the Acquisition and Construction Fund, as directed in a Certificate of an Authorized Representative on the Escrow Disbursement Date. (d) Disbursement for Special Mandatory Redemption from Escrow Fund Transfer . The Trustee shall not disburse any funds from the Escrow Fund or the Escrow Interest Account pursuant to subsection (b) above if the certificate pursuant to Section 3.10(b)(2) above is not delivered prior to the Escrow Closing Date except that on the Escrow Redemption Date the Trustee shall transfer the amounts on deposit in the Escrow Fund and the Escrow Interest Account to the Redemption Account of the Special Tax Fund, to be applied to the redemption of Escrow Term Bonds on the Escrow Redemption 265

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Date at the redemption price set forth in Section 4.1(d) hereof, with any excess not required to pay such redemption price transferred to the Interest Account of the Special Tax Fund. After the foregoing transfers, the Escrow Fund and the Escrow Interest Account shall be closed. (e) Extension of Escrow Closing Date and Escrow Redemption Date . Notwith standing any other provision of this Indenture, the District may extend the Escrow Closing Date to July 15, 2027 and the Escrow Redemption Date to September 1, 2027, provided that, no later than five (5) Business Days prior to July 15, 2026, the Trustee shall have received all of the following:
(1) A Certificate of an Authorized Representative requesting such extension of the Escrow Closing Date and the Escrow Redemption Date.
(2) Deposit of moneys from any legally available source into the Escrow Interest Account in an amount sufficient so that the amounts then on deposit in the Escrow Interest Account, together with the amounts on deposit in the Escrow Fund, will be sufficient to redeem the Escrow Term Bonds (other than the portion thereof in a principal amount pr eviously transferred to the Acquisition and Construction Fund and/or 2025 Bonds Reserve Subaccount, if any, pursuant to Section 3.10(c)) on September 1, 2027 and pay any accrued interest thereon to September 1, 2027. (3) A Certificate of an Independent Financi al Consultant certifying that the amounts on deposit in the Escrow Fund and the Escrow Interest Account are sufficient to redeem the Escrow Term Bonds (other than the portion thereof in a principal amount previously transferred to the Acquisition and Const ruction Fund and/or 2025 Bonds Reserve Subaccount, if any, pursuant to Section 3.10(c)) on the date specified by the District pursuant to Section 3.10(b) above and pay any accrued interest thereon to September 1, 2027.

Upon receipt of the items required by Section 3.10(e)(1), (2) and (3), the Trustee shall promptly mail, first class, postage prepaid, a written notice to the Owners of the Escrow Term Bonds and the Underwriter that the Escrow Closing Date and the Escrow Redemption Date have been extended to July 15, 2027 and September 1, 2027, respectively, pursuant to this Section 3.10(e). (f) Investment. The Trustee shall invest the moneys in the Escrow Fund, and the accounts therein, in such Authorized Investments, which shall: (1) be rated in one of the highe st two rating categories offered by each Rating Agency (without regard to gradations of plus or minus, or numerical gradations, within such category); (2) mature in an amount at least equal to the purchase price thereof; and (3) be redeemable at the option of the District or mature no later than necessary to make the disbursements under this Indenture, as the District shall direct in a Certificate of the Authorized Representative of the District; provided that if the District does not deliver such certificate, the Trustee shall hold such funds uninvested. Investment earnings shall be retained by the Trustee in the Escrow Fund or the Escrow Interest Account, as applicable, and shall be applied as set forth in this Section

3.10. Section 3.11. Investments. Moneys held in any of the F unds, Accounts and Subaccounts under this Indenture (other than the Escrow Fund and the accounts therein , which moneys shall be invested as described in Section 3.10 ) shall be invested at the written direction (which may include a facsimile transmission) of the District upon at least two (2) Business Days’ notice in accordance with the limitations set forth below and to the extent permitted by law only in Authorized Investments (such direction to specify the particular Authorized Investment to b e made) which shall be deemed at all times to be a part of such Funds, Accounts and Subaccounts. Any loss resulting from such Authorized 266

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Investments shall be credited or charged to the Fund, Account or Subaccount from which such investment was made, and any investment earnings on a Fund, Account or Subaccount shall be applied as follows: (i) investment earnings on all amounts deposited in the Acquisition and Construction Fund (including the Accounts therein), the Special Tax Fund, the Surplus Fund and the Rebate Fund and each Account therein (other than the Subaccounts of the Reserve Account of the Special Tax Fund) shall be deposited in those respective Funds, Accounts and Subaccounts; and (ii) investment earnings on all amounts deposited in the Subaccounts of the Reserve Account shall be deposited therein to be applied as set forth in Section 3.6. Moneys in the Funds, Accounts and Subaccounts held under this Indenture may be invested by the Trustee as directed in writing (which may include a facsimile transmission) by the District, from time to time, in Authorized Investments (such direction to specify the particular Authorized Investment to be made) subject to the following restrictions (provided that the Trustee is not required to verify compliance with such restrictions and may rely on the District’s written instructions as evidence of such compliance):
(a) Moneys in the Acquisition and Construction Fund and the Accounts therein shall be invested in Authorized Investments which will by their terms mature, or in the case of an Investment Agreement are available without penalty, as close as practicable to the date the District estimates the moneys represented by the particular investment will be needed for withdrawal from the Acquisition and Construction Fund or the Accounts therein . Notwithstanding anything herein to the contrary, amounts in the Acquisition and Construction Fund or the Accounts therein three years after the Delivery Date for the Bonds and the proceeds of each issue of Parity Bonds issued on a tax-exempt basis which are remaining on deposit in the Acquisition and Construction Fund on the date which is three years following the date of issuance of such issue of Parity Bonds shall be invested by the District only in Authorized Investments the interest on which is excluded from gross income under Section 103 of the Code (other than bonds the interest on which is a tax preference item for purposes of computing the alternative minimum tax of individuals under the Code) or in Authorized Investments at a yield not in excess of the yield on the issue of Bonds or Parity Bonds from which such proceeds were derived, unless in the opinion of Bond Counsel such restriction is not necessary to prevent interest on the Bonds or any Parity Bonds which were issued o n a tax -exempt basis for federal income tax purposes from being included in gross income for federal income tax purposes. (b) Moneys in the Interest Account, the Principal Account, and the Redemption Account of the Special Tax Fund shall be invested only in Au thorized Investments which will by their terms mature, or in the case of an Investment Agreement are available for withdrawal without penalty, on such dates so as to ensure the payment of principal of, premium, if any, and interest on the Bonds and any Parity Bonds as the same become due.
(c) Moneys in the 2025 Bonds Reserve Subaccount may be invested only in Authorized Investments (other than the Authorized Investment described in clause (2)(i) of the definition thereof) which, taken together, have a weighted average maturity not in excess of five years; provided that such amounts may be invested in an Investment Agreement to the later of the final maturity of the Bonds so long as such amounts may be withdrawn at any time, without penalty, for application in ac cordance with Section 3.6 hereof; and provided that no such Authorized Investment of amounts in the 2025 Bonds Reserve Subaccount shall mature later than the final maturity date of the Bonds.

Moneys in a Subaccount of the Reserve Account established for a series of Parity Bonds may be invested only in Authorized Investments (other than the Authorized Investment described in clause (2)(i) of the definition thereof) which, taken together, have a weighted average maturity not in excess of five years; provided that such amounts may be invested in an Investment Agreement to the later of 267

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the final maturity of such series of Parity Bonds so long as such amounts may be withdrawn at any time, without penalty, for application in accordance with Section 3.6 hereof; and provided that no such Authorized Investment of amounts in such Subaccount of the Reserve Account shall mature later than the respective final maturity date of such Parity Bonds. (d) Moneys in the Rebate Fund shall be invested only in Authorized Investments of the type described in clause (1) of the definition thereof which by their terms will mature, as nearly as practicable, on the dates such amounts are needed to be paid to the United States Government pursuant to Section 3.7 hereof or in Authorized Invest ments of the type described in clause (2)(e) of the definition thereof.
(e) In the absence of written investment directions from the District, the Trustee shall hold such funds shall be uninvested as cash.

The Trustee shall sell, or present for redemption, any Authorized Investment whenever it may be necessary to do so in order to provide moneys to meet any payment or transfer to such funds and accounts or from such funds and accounts. Notwithstanding anything herein to the contrary, the Trustee shall not be responsible for any loss, fee, tax or other charge from investments, reinvestments, liquidations, sales or transfers undertaken in accordance with the provisions of this Indenture. In the event of a loss on the sale of such investments (after giving effect to any interest or other income thereon except to the extent theretofore paid to the District), the Trustee shall have no responsibility in respect of such loss except that the Trustee shall notify the District of the amount of such loss and the District shall promptly pay such amount to the Trustee to be credited as part of the moneys originally invested.

The Trustee may act as principal or agent in the making or disposing of any investment and shall be entitled to its customary fee for making such investm ent. The Trustee may sell at the best market price obtainable, or present for redemption, any Authorized Investment so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such Authorized Investment is credited, and, subject to the provisions of Section 7.4, the Trustee shall not be liable or responsible for any loss resulting from such investment. For investment purposes, the Trustee may commingle t he funds and accounts established hereunder, but shall account for each separately. The Trustee is hereby authorized, in making or disposing of any investment permitted by this Section, to deal with itself (in its individual capacity) or which any one or more of its affiliates, whether it or such affiliate is acting as an agent of the Trustee or for any third person or dealing as principal for its own account. The parties acknowledge that the Trustee is not providing investment supervision, recommendations, or advice.

The District acknowledges that, to the extent that regulations of the Comptroller of the Currency or other applicable regulatory entity grant the District the right to receive brokerage confirmations of security transactions as they occur, th e District specifically waives receipt of such confirmations to the extent permitted by law. The Trustee will furnish the District periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder.
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ARTICLE IV

REDEMPTION OF BONDS AND PARITY BONDS
Section 4.1. Redemption of Bonds.
(a) Optional Redemption. The Bonds may be redeemed at the option of the District from any source of funds on any date on or after September 1, 202_, in whole or in part, from such maturities as are sele cted by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption:

Redemption Date Redemption Price
September 1, 20__ through and including August 31, 20__ 103% September 1, 20__ through and including August 31, 20__ 102 September 1, 20__ through and including August 31, 20__ 101 September 1, 20__ and any date thereafter 100

In the event that the District elects to redeem Bonds as provided above, the District shall give written notice to the Trustee of its election to so redeem, the redemption date and the principal amount of the Bonds of each maturity to be redeemed. The notice to the Trustee shall be given at least 30 but no more than 60 days prior to the redemption date, or by such later date as is acceptable to the Trustee. (b) Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established hereunder, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20 __ Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus ac crued interest to the redemption date, without premium, as follows:

Term Bonds Maturing September 1, 20__
Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

*
_____________
* Maturity.

The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established hereunder, on September 1, 20__, and on each Septe mber 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a 269

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redemption price for each redeem ed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:

Term Bonds Maturing September 1, 20__
Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

*
_____________
* Maturity.

The Escrow Term Bonds shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established hereunder, on September 1, 20__, and on each September 1 thereafter prior to maturity, in ac cordance with the schedule of Sinking Fund Payments set forth below. The Escrow Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed Escrow Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:

Redemption Date
(September 1) Sinking Payments
$

* Maturity.

If the District purchases Term Bonds or Escrow Term Bonds during the Fiscal Year immediately preceding one of the sinking fund redemption dates specified above, the District shall notify the Trustee at least 45 days prior to the redemption date as to the principal amount purchased, and the amount purchased shall be credited at the time of purchase to the next Sinking Fund Payment for the Term Bond or Escrow Term Bond so purchased, to the extent of the full principal amount of the purchase. All Bonds purchased pursuant to this subsection shall be cancelled pursuant to Section 10.1 hereof.

In the event of a partial optional redemption or special mandatory redemption of the Term Bonds or the Escrow Term Bonds, each of the remaining Sinking Fund Payments for such Term Bonds or Escrow Term Bonds shall be reduced, as nearly as practicable, on a pro rata basis. (c) Special Mandatory Redemption . The Bonds are subject to special mandatory redemption as a whole or in part on a pro rata basis among maturities and by lot within a maturity, on any Interest Payment Date on or after March 1, 2026 and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account pursuant to Section 3.2, plus amounts transferred from the 2025 Bonds Reserve Subaccount pursuant to Section 3.6(c), at the following redemption 270

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prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:

Redemption Date Redemption Price
Any Interest Payment Date from March 1, 20__, through March 1, 20__ 103% September 1, 20__, and March 1, 20__, 102
September 1, 20__, and March 1, 20__, 101
September 1, 20__, and any Interest Payment Date thereafter 100

Prepayments will be allocated to the payment at maturity and redemption of Bonds and any Parity Bonds as nearly as practicable on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds and such amounts shall be applied to redeem Bonds and Parity Bonds as nearly as practicab le on a pro rata basis among maturities in increments of $5,000; provided, however, that, for Prepayments of less than $50,000, the District may specify in a Certificate of an Authorized Representative that Prepayments be applied to one or more maturities of the Bonds or Parity Bonds so long as there is delivered to the Trustee a certificate of the Independent Financial Consultant that, following such application of the Prepayments, the maximum Special Taxes that may be levied in each Fiscal Year on Taxable Property is not less than 110% of Annual Debt Service, plus the Administrative Expenses Cap, in the Bond Year that begins in such Fiscal Year. (d) Special Mandatory Redemption from Escrow Fund Transfer . If the requirements for disbursement from the Escrow Fund pursuant to Section 3.10(d) hereof have not been satisfied by the Escrow Closing Date, the Escrow Term Bonds shall be subject to special mandatory redemption on the Escrow Redemption Date (September 1, 20 26, unless extended as provided in Section 3.10(e ) hereof), in whole, from amounts transferred from the Escrow Fund pursuant to Section 3.10(d) hereof, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest thereon to the date of redemption, without premium. (e) The redemption provisions for Parity Bonds shall be set forth in a Supplemental Indenture.

Section 4.2. Selection of Bonds and Parity Bonds for Redemption. If less than all of the Bonds or Parity Bonds Outstanding are to be redeemed, the portion of any Bond or P arity Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or an integral multiple thereof. In selecting portions of such Bonds or Parity Bonds for redemption, the Trustee shall treat such Bonds or Parity Bonds, as applicable, as representing that number of Bonds or Parity Bonds of $5,000 denominations which is obtained by dividing the principal amount of such Bonds or Parity Bonds to be redeemed in part by $5,000. The procedure for the selection of Parity Bonds for redemption may be modified as set forth in the Supplemental Indenture for such Parity Bonds. The Trustee shall promptly notify the District in writing of the Bonds or Parity Bonds, or portions thereof, selected for redemption.

Section 4.3. Notice of Redemption. When Bonds or Parity Bonds are due for redemption under Section 4.1 above or under another redemption provision set forth in a Supplemental Indenture relating to any Parity Bonds, the Trustee shall give notice, in the name and at the expense of the District, of the redemption of such Bonds or Parity Bonds. Such notice of redemption shall: (i) specify the CUSIP numbers (if any), the bond numbers and the maturity date or dates of the Bonds or Parity Bonds selected for redemption, except that where all of the Bonds or all of an issue of Parity Bonds are subject to redemption, or all of the Bonds or Parity Bonds of one maturity are to be redeemed, the bond 271

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numbers of such issue need not be specified; (ii) state the date fixed for redemption and surrender of the Bonds or Parity Bonds to be redeemed; (iii) state the redemption price; (iv) state the place or places where the Bonds or Parity Bonds are to be redeemed; (v) in the case of Bonds or Parity Bonds to be redeemed only in part, state the portion of such Bond or Parity Bond which is to be redeemed; (vi) state the date of issue of the Bonds or Parity Bonds as originally issued; (vii) state the rate of interest borne by each Bond or Parity Bond being redeemed; and (viii) state any other descriptive information needed to identify accurately the Bonds or Parity Bonds being redeemed as shall be specified by the Trustee.

Such notice shall further state that on the date fixed for redemption, there shall become due and payable on each Bond, Parity Bond or portion thereof called for redemption, the principal thereof, together with any premium, and interest accrued to the redemption date, and that from and after such date, interest thereon shall cease to accrue and be payable. At least 30 days but no more than 45 da ys prior to the redemption date, the Trustee shall mail a copy of such notice of redemption, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register, and to the original purchaser of any Bonds or Parity Bonds; provided, however, so long as the Bonds and Parity Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies with the requirements of the Depository. The actual receipt by the Owner of any Bond or Parity Bond of notice of such redemption shall not be a condition precedent to redemption, and neither the failure to receive nor any defect in such notice shall affect the validity of the proceedings for the redemption of such Bonds or Parity Bonds, or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such redemption has been given as herein provided shall be conclusive as against all parties and the Owner shall not be entitled to show that he or she faile d to receive notice of such redemption.

In addition to the foregoing notice, further notice shall be given by the Trustee as set out below, but no defect in said further notice nor any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed.

Each further notice of redemption shall be sent not later than the date that notice of redemption is given to the Owners pursuant to the first paragraph of this Section by first class mail or facsimile to the Depository and to any other registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds and Parity Bonds and to one or more of the national information services that are in the business of disseminating notice of redemption of obligations such as the Bonds and Parity Bonds.

Upon the payment of the redemption price of any Bonds and Parity Bonds being redeemed, each check or other transfer of funds issued for such purpose shall to the extent practicable bear the CUSIP number identifying, by issue and maturity, the Bonds and Parity Bonds being redeemed with the proceeds of such check or other transfer.

With respect to any notice of optional redemption of Bonds or Parity Bonds, such notice may state that such redemption shall be conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, an d interest on such Bonds or Parity Bonds to be redeemed and that, if the District determines that such moneys will not be so received on or prior to the redemption date, said notice shall be of no force and effect and the Trustee shall not be required to redeem such Bonds or Parity Bonds. If any condition stated in the redemption notice for an optional redemption shall not have been satisfied on or prior to the redemption date: (i) the redemption notice shall be of no force and effect, (ii) the District shall not be required to redeem such Bonds or Parity Bonds, (iii) the redemption shall not be made, and (iv) the 272

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Trustee shall within a reasonable time thereafter give notice to the persons in the manner in which the conditional redemption notice was given that such condition or conditions were not met and that the redemption was canceled.

Section 4.4. Partial Redemption of Bonds or Parity Bonds. Upon surrender of any Bond or Parity Bond to be redeemed in part only, the District shall execute and the Trustee shall authenticate and deliver to the Owner, at the expense of the District, a new Bond or Bonds or a new Parity Bond or Parity Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered, with the same int erest rate and the same maturity or, in the case of surrender of a Parity Bond, a new Parity Bond or Parity Bonds subject to the foregoing limitations.

Section 4.5. Effect of Notice and Availability of Redemption Money . Notice of redemption having been duly given, as provided in Section 4.3 hereof, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption:
(a) the Bonds and Parity Bonds, or portions thereof, designated for redemption shall, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in this Indenture or in any Supplemental Indenture with respect to any Parity Bonds, anything in this Indenture or in the Bonds or the Parity Bonds to the contrary notwithstanding; (b) upon presentation and surrender thereof at the Principal O ffice of the Trustee, the redemption price of such Bonds and Parity Bonds shall be paid to the Owners thereof; (c) as of the redemption date the Bonds or the Parity Bonds, or portions thereof so designated for redemption shall be deemed to be no longer Outstanding and such Bonds or Parity Bonds, or portions thereof, shall cease to bear further interest; and (d) as of the date fixed for redemption no Owner of any of the Bonds, Parity Bonds or portions thereof so designated for redemption shall be entitled to any of the benefits of this Indenture or any Supplemental Indenture, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available.

ARTICLE V

COVENANTS AND WARRANTY
Section 5.1. Warranty. The District shall preserve and protect the security pledged hereunder to the Bonds and any Parity Bonds against all claims and demands of all persons.

Section 5.2. Covenants. So long as any of the Bonds or Parity Bonds issued hereunder are Outstanding and unpaid, the District makes the following covenants with the Owners under the provisions of the Act and this Indenture (to be performed by the District or its proper officers, agents or employees), which covenants are necessary and desirable to secure the Bonds and Parity Bonds and tend to make them more marketable; provided, however, that said covenants do not require the District to expend any funds or moneys other than the Special Taxes and other amounts deposited to the Special Tax Fund:
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(a) Punctual Payment; Against Encumbrances. The District covenants that it will receive all Special Taxes in trust for the Owners and will deposit all Special Taxes with the Trustee immediately upon their apportionment to the District, and the District shall have no beneficial right or interest in the amounts so deposited except as provided by this Indenture. All such Special Taxes shall be disbursed, allocated and applied solely to t he uses and purposes set forth herein, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the District.

The District covenants that it will duly and punctually pay or cause to be paid the principal of and interest on every Bond and Parity Bond issued hereunder, together with the premium, if any, thereon on the date, at the place and in the manner set forth in the Bonds and the Parity Bonds and in accordance with this Indenture to the extent that Net T axes and other amounts pledged hereunder are available therefor, and that the payments into the Funds and Accounts created hereunder will be made, all in strict conformity with the terms of the Bonds, any Parity Bonds, and this Indenture, and that it will faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Supplemental Indentures and of the Bonds and any Parity Bonds issued hereunder.

The District will not mortgage or otherwise encumber, pledge or place any charge upon any of the Net Taxes except as provided in this Indenture, and will not issue any obligation or security having a lien or charge upon the Net Taxes superior to or on a parity with the Bonds, other than Parity Bonds.

Nothing herein shall prevent the District from issuing or incurring indebtedness which is payable from a pledge of Net Taxes which is subordinate in all respects to the pledge of Net Taxes to repay the Bonds and the Parity Bonds, subject to compliance with the District’s bonded indebtedness limit. (b) Levy of Special Tax. Beginning in Fiscal Year 2025-26 and so long as any Bonds or Parity Bonds issued under this Indenture are Outstanding, the District covenants to levy the Special Tax in an amount sufficient, together with other am ounts on deposit in the Special Tax Fund, to pay:
(1) the principal of and interest on the Bonds and any Parity Bonds when due; (2) the Administrative Expenses; and (3) any amounts required to replenish the 2025 Bonds Reserve Subaccount to the 2025 Bonds Reserve Requirement and any other Subaccount of the Reserve Account to the applicable Reserve Requirement, including any amounts to pay costs related to a Reserve Policy, if any . The District further covenants that it will take no actions that would discontinue or cause the discontinuance of the Special Tax levy or the District’s authority to levy the Special Tax for so long as the Bonds and any Parity Bonds are Outstanding.
(c) Commence Foreclosure Proceedings . The District covenants for the benefit of the Owners of the Bonds and any Parity Bonds that it will: (i) commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $ 4,000 by the December 1 following the close of each Fiscal Year in which such Special Taxes were due; (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the December 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied; and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the 2025 Bonds Reserve Subaccount is at least equal to the 2025 Bonds Reserve Requirement and the amount in all other Subaccounts of the Reserve Account is at least equal to the applicable Reserve Requirement . The District may, but shall not be obligated to, a dvance funds from any source of legally available funds in order to maintain the Subaccounts of the Reserve Account. The District may treat any delinquent Special Tax sold to an independent third-party or to the City for at least 100% of the delinquent amount as having been paid. 274

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Proceeds of any such sale up to 100% of the delinquent amount will be deposited in the Special Tax Fund.

The District covenants that it will deposit the net proceeds of any foreclosure in the Special Tax Fund and will apply such proceeds remaining after the payment of Administrative Expenses to make current payments of principal and interest on the Bonds and any Parity Bonds, to bring the amount on deposit in the 2025 Bonds Reserve Subaccount up to the 2025 Bonds Reserve Requirement and the amount on deposit in any other Subaccount of the Reserve Account to the applicable Reserve Requirement, and to pay any delinquent installments of principal or interest due on the Bonds and any Parity Bonds.
(d) Payment of Claims. The District will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien or charge upon the Net Taxes or other funds in the Special Tax Fund (other than the Administrative Expense Account therein), or which might impair the security of the Bonds or any Parity Bonds then Outstanding; provided, however, that nothing herein contained shall require the District to make any such payments so long as the District in good faith shall contest the validity of any such claims. (e) Books and Accounts . The District will keep proper books of records and accounts, separate from all other records and accounts of the District, in which complete and correct entries shall be made of all transactions relating to the Project, the levy of th e Special Tax and the deposits to the Special Tax Fund. Such books of records and accounts shall at all times during business hours be subject to the inspection of the Trustee or of the Owners or the Owners of any issue of Parity Bonds then Outstanding or their representatives authorized in writing. (f) Federal Tax Covenants. Notwithstanding any other provision of this Indenture, absent an opinion of Bond Counsel that the exclusion from gross income of interest on the Bonds and any Parity Bonds issued on a ta x-exempt basis for federal income tax purposes will not be adversely affected for federal income tax purposes, the District covenants to comply with all applicable requirements of the Code necessary to preserve such exclusion from gross income and specific ally covenants, without limiting the generality of the foregoing, as follows:
(1) Private Activity. The District will take no action or refrain from taking any action or make any use of the proceeds of the Bonds or any Parity Bonds or of any other monies or property which would cause the Bonds or any Parity Bonds issued on a tax -exempt basis for federal income tax purposes to be “private activity bonds” within the meaning of Section 141 of the Code. (2) Arbitrage. The District will make no use of the proceeds of the Bonds or any Parity Bonds or of any other amounts or property, regardless of the source, or take any action or refrain from taking any action which will cause the Bonds or any Parity Bonds issued on a tax -exempt basis for federal income tax purposes to be “arbitrage bonds” within the meaning of Section 148 of the Code. (3) Federal Guaranty. The District will make no use of the proceeds of the Bonds or any Parity Bonds or take or omit to take any action that would cause the Bonds or any Parity Bonds issued on a tax-exempt basis for federal income tax purposes to be “federally guaranteed” within the meaning of Section 149(b) of the Code.
(4) Information Reporting. The District will take or cause to be taken all necessary action to comply with the informational reporting requirement of Section 149(e) of the Code. 275

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(5) Hedge Bonds. The District will make no use of the proceeds of the Bonds or any Parity Bonds or any other amounts or property, regardless of the source, or take any action or refrain from taking any action that would cause the Bonds or any Parity Bonds issued on a tax-exempt basis for federal income tax purposes to be considered “hedge bonds” within the meaning of Section 149(g) of the Code unless the District takes all necessary action to assure compliance with the requirements of Section 149(g) of the Code to maintain the exclusion from gross income for federal income tax purposes of interest on the Bonds and any applicable Parity Bonds. (6) Miscellaneous. The District will take no action or refrain from ta king any action inconsistent with its expectations stated in the Tax Certificate executed on the Delivery Date by the District in connection with the Bonds and any issue of Parity Bonds and will comply with the covenants and requirements stated therein and incorporated by reference herein. (7) Other Tax -Exempt Issues . The District will not use proceeds of other tax-exempt securities to redeem any Bonds or Parity Bonds without first obtaining the written opinion of Bond Counsel that doing so will not impair the exclusion from gross income for federal income tax purposes of interest on the Bonds and any Parity Bonds issued on a tax-exempt basis. (8) Subsequent Opinions. If the District obtains a subsequent opinion of Bond Counsel other than Stradling Yocca Carlson & Rauth, a Professional Corporation, where such opinion is required in connection with a change or amendment to this Indenture or the procedures set forth in the Tax Certificate, it will obtain an opinion substantially to the effect originally delivered by Stradling Yocca Carlson & Rauth LLP, that interest on the Bonds is excluded from gross income for federal income tax purposes.
(g) Reduction of Maximum Special Taxes. The District hereby finds and determines that, historically, delinquencies in the payment of special taxes authorized pursuant to the Act in community facilities districts in California have from time to time been at levels requiring the levy of special taxes at the maximum authorized rates in order to make timely payment of principal of and inte rest on the outstanding indebtedness of such community facilities districts. For this reason, the District hereby determines that a reduction in the maximum Special Tax rates authorized to be levied on parcels in the District below the levels provided in this Section 5.2(g) would interfere with the timely retirement of the Bonds and Parity Bonds. The District determines it to be necessary in order to preserve the security for the Bonds and Parity Bonds to covenant, and, to the maximum extent that the law permits it to do so, the District hereby does covenant, that it shall not initiate proceedings to reduce the maximum Special Tax rates for the District, unless, in connection therewith, the District receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that: (i) such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the Administrative Expense Cap plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such proposed reduction; and (ii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds. (h) Covenants to Defend . The District covenants that, in the event that any initiative is adopted by the qualified electors in the District which purports to reduce the maximum Special Tax below the levels specified in Section 5.2(g) above or to limit the power of the District to levy the Special Taxes for the purposes set forth in Section 5.2(b) above, it will commence and pursue legal action in order to preserve its ability to comply with such covenants. 276

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(i) Limitation on Right to Tender Bonds. The District hereby covenants that it will not adopt any policy pursuant to Section 53344.1 of the Act permitting the tender of Bonds or Parity Bonds in full payment or partial payment of any Special Taxes unless the District shall have firs t received a certificate from an Independent Financial Consultant that the acceptance of such a tender will not result in the District having insufficient Net Taxes to pay the principal of and interest on the Bonds and Parity Bonds when due.
(j) Continuing Dis closure. The District covenants to comply with the terms of the Continuing Disclosure Certificate and with the terms of any agreement executed by the District with respect to any Parity Bonds to assist the Underwriter in complying with Rule 15c2 -12 adopted by the Securities and Exchange Commission ; provided, however, that a failure to comply shall not be considered an event of default hereunder and the Owners shall be limited to enforcing the terms thereof in accordance with the terms of the Continuing Disclosure Certificate. (k) Further Assurances. The District shall make, execute and deliver any and all such further agreements, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Owners of the Bonds and any Parity Bonds of the rights and benefits provided in this Indenture.

ARTICLE VI

AMENDMENTS TO INDENTURE
Section 6.1. Supplemental Indentures or Orders Not Requiring Owner Consent . The District may from time to time, and at any time, without notice to or consent of any of the Owners, adopt Supplemental Indentures for any of the following purposes:
(a) to cure any ambiguity, to correct or supplement any provisions herein which may be inconsistent with any other provision herein, or to make any other provision with respect to matters or questions arising under this Indenture or in any additional resolution or order, provided that such action is not materially adverse to the interests of the Owners; (b) to add to the covenants and agreements of and the limitations and the restrictions upon the District contained in this Indenture other covenants, agreements, limitations and restrictions to be observed by the District which are not contrary to or inconsistent with this Indenture as theretofore in effect or which further secure Bond or Parity Bond payments; (c) to provide for the issuance of any Parity Bonds, and to provide the terms and conditions under which such Parity Bonds may be issued, subject to and in accordance with the provisions of this Indenture;
(d) to modify, amend or supplement this Indenture in such manner as to permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, or to comply with the Code or regulations issued thereunder, and to add such other terms, conditions and provisions as may be permitted by said act or similar federal statute, and which shall not materially adversely affect the interests of the Owners of the Bonds or any Parity Bonds then Outstanding;
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(e) to modify, alter or amend the RMA in any manner, so long as the Trustee receives a certificate of an Independent Financial Consultant stating that : (i) such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the Administrative Expense Cap plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such amendment and (ii) based on the current development plan for parcels within the District, do not reduce the maximum Special Ta xes which could be levied upon Taxable P roperty within the District to an amount which is less than the Administrative Expense Cap plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such amendment;
(f) to modify, alter, amend or supplement this Indenture in any other respect which is not materially adverse to the Owners; or
(g) to modify, alter, amend or supplement this Indenture in any other respect, as may be required to fund all or a portion of the 2025 Bonds Reserve Requirement or any other Reserve Requirement with respect to Parity Bonds with a Reserve Policy.

Section 6.2. Supplemental Indentures or Orders Requiring Owner Consent. Exclusive of the Supplemental Indentures described in Section 6.1, the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding shall have the right to consent to and approve the adoption by the District of such Supplemental Indentures as shall be deemed necessary or desirable by the District for the purpose of waiving, modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture; provided, however, that nothing herein shall permit, or be construed as permitting: (a) an extension of the maturity date of the principal, o r the payment date of interest on, any Bond or Parity Bond; (b) a reduction in the principal amount of, or redemption premium on, any Bond or Parity Bond or the rate of interest thereon; (c) a preference or priority of any Bond or Parity Bond over any othe r Bond or Parity Bond; or (d) a reduction in the aggregate principal amount of the Bonds and Parity Bonds the Owners of which are required to consent to such Supplemental Indenture, without the consent of the Owners of all Bonds and Parity Bonds then Outstanding.

If at any time the District shall desire to adopt a Supplemental Indenture, which pursuant to the terms of this Section shall require the consent of the Owners, the District shall so notify the Trustee and shall deliver to the Trustee a copy of the proposed Supplemental Indenture. The Trustee shall, at the expense of the District, cause notice prepared by counsel of the District of the proposed Supplemental Indenture to be mailed, by first class mail, postage prepaid, to all Owners at their addresses as they appear in the Bond Register. Such notice shall briefly set forth the nature of the proposed Supplemental Indenture and shall state that a copy thereof is on file at the Principal Office of the Trustee for inspection by all Owners. The failure of any Owners to receive such notice shall not affect the validity of such Supplemental Indenture when consented to and approved by the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds Outstanding as required by this Section. Whenever at any time within one year after the date of the first mailing of such notice, the Trustee shall receive an instrument or instruments purporting to be executed by the Owners of not less than a majority in aggregate principal amou nt of the Bonds and Parity Bonds Outstanding, which instrument or instruments shall refer to the proposed Supplemental Indenture described in such notice, and shall specifically consent to and approve the adoption thereof by the District substantially in the form of the copy referred to in such notice as on file with the Trustee, such proposed Supplemental Indenture, when duly adopted by the District, shall thereafter become a part of 278

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the proceedings for the issuance of the Bonds and any Parity Bonds. In d etermining whether the Owners of a majority of the aggregate principal amount of the Bonds and Parity Bonds have consented to the adoption of any Supplemental Indenture, Bonds or Parity Bonds which are owned by the District or by any person directly or ind irectly controlling or controlled by or under the direct or indirect common control with the District, shall be disregarded and shall be treated as though they were not Outstanding for the purpose of any such determination.

Upon the adoption of any Supplem ental Indenture and the receipt of consent to any such Supplemental Indenture from the Owners of not less than a majority in aggregate principal amount of the Outstanding Bonds and Parity Bonds in instances where such consent is required pursuant to the provisions of this Section, this Indenture shall be, and shall be deemed to be, modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the District and all Owners of Outstanding Bonds and Parit y Bonds shall thereafter be determined, exercised and enforced hereunder, subject in all respects to such modifications and amendments.

Section 6.3. Notation of Bonds or Parity Bonds; Delivery of Amended Bonds or Parity Bonds. After the effective date of any action ta ken as hereinabove provided, the District may determine that the Bonds or any Parity Bonds may bear a notation, by endorsement in form approved by the District, as to such action, and in that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective date and presentation of such Owner’s Bond or Parity Bond for the purpose at the Principal Office of the Trustee or at such additional offices as the Trustee may select and designate for that purpose, a suitable notation as to such a ction shall be made on such Bonds or Parity Bonds at the District’s expense . If the District shall so determine, new Bonds or Parity Bonds so modified as, in the opinion of the District, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Owner of any Outstanding Bond or Parity Bond at such effective date such new Bonds or Parity Bonds shall be exchanged, at the sole cost of the District, at the Principal Office of the Trustee or at such additiona l offices as the Trustee may select and designate for that purpose, without cost to each Owner of Outstanding Bonds or Parity Bonds, upon surrender of such Outstanding Bonds or Parity Bonds.

The Trustee shall have the right to require such opinions of coun sel as it deems necessary concerning: (i) the lack of material adverse effect of the amendment on Owners ; and (ii) the fact that the amendment will not affect the tax status of interest with respect to the Bonds . In executing, or accepting the additional trusts created by, any Supplemental Indenture permitted by this Article or the modification thereby of the trusts created by this Indenture, the Trustee shall receive, and shall be fully protected in relying upon, a Certificate of an Authorized Representati ve and an opinion of counsel to the District stating that the execution of such Supplemental Indenture is authorized or permitted by this Indenture and that such Supplemental Indenture is the legal, valid and binding obligation of the District, enforceable against the District in accordance with its terms. The Trustee may, but shall not be obligated to, enter into any such Supplemental Indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.

ARTICLE VII

TRUSTEE
Section 7.1. Trustee. U.S. Bank Trust Company, National Association shall be the Trustee for the Bonds and any Parity Bonds unless and until another trustee is appointed by the District hereunder. The Trustee represents that it has (or is a member of a bank holding company system whose 279

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bank holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000. The District may, at any time, appoint a successor Trustee satisfying the requirements of Section 7.2 below for the purpose of r eceiving all money which the District is required to deposit with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture.

The Trustee is hereby authorized to and shall mail by first class mail, postage prepaid, or wire transfer in accordance with Section 2.5 above, interest payments to the Owners, to select Bonds and Parity Bonds for redemption, and to maintain the Bond Register. The Trustee is hereby authorized to pay the principal of and premium, if any, on the Bonds and Parity Bonds when the same are duly presented to it for payment at maturity or on call and redemption, to provide for the registration of transfer and exchange of Bonds and Parity Bonds presented to it for such purposes, to provide for the cancellation of Bonds and Parity Bonds all as provided in this Indenture, and to provide for the authentication of Bonds and Parity Bonds, and shall perform all other duties assigned to or imposed on it as provided in this Indenture. The Trustee shall keep accurate r ecords of all funds administered by it and all Bonds and Parity Bonds paid, discharged and cancelled by it.

The Trustee is hereby authorized to pay and redeem the Bonds and Parity Bonds when duly presented for payment at maturity, or on redemption prior to maturity. The Trustee shall cancel all Bonds and Parity Bonds upon payment thereof in accordance with the provisions of Section 10.1 hereof.

The District shall from time to time, (i) subject to any written agreement between the District and the Trustee then in force, pay to the Trustee from time to time compensation for its services rendered by it hereunder (which compensation shall not be limited by a ny provision of law in regard to the compensation of a trustee of an express trust), (ii) reimburse the Trustee for all its advances, disbursements and expenditures incurred or made by the Trustee in accordance with any provisions of this Indenture, including, but not limited to, advances to and fees, costs and expenses and compensation of independent accountants or counsel employed by it in the exercise and performance of its powers and duties hereunder, and (iii) indemnify and save the Trustee, its office rs, directors, employees and agents, harmless against costs, claims, expenses, losses, damages, taxes and liabilities, including, without limitation, fees, costs and expenses of its attorneys (not arising from its own gross negligence or willful misconduct ) which it may incur in the exercise and performance of its powers and duties hereunder including the costs and expenses of enforcing the provisions of this Indenture (including this Section) against the District and defending itself against any claim (whe ther asserted by the District, or any Owner or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall have the right to employ separate counsel in any such action or proceeding and participate in the investigation and defense thereof, and the District shall pay the fees and expenses of such separate counsel. The foregoing obligation of the District to indemnify the Trustee shall survive the removal or resignation of the Tru stee or the discharge of the Bonds and Parity Bonds.

Section 7.2. Removal of Trustee. The District may at any time at its sole discretion, upon 30 days’ notice, remove the Trustee initially appointed, and any successor thereto, by delivering to the Trustee a written notice of its decision to remove the Trustee and may appoint a successor or successors thereto; provided that any such successor shall be a bank or trust company having (or whose parent bank holding company has) a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000, and subject to supervision or examination by federal or state authority. Any removal shall become effective only upon acceptance of appointment by the successor Trustee. If any bank or trust company appointed as a successor publishes a report of condition at least annually, pursuant to 280

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law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. Any removal of the Trustee and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee and notice of the successor Trustee’s identity and address being sent by the successor Trustee to the Owners.

Section 7.3. Resignation of Trustee. The Trustee may at any time resign and be discharged from its duties and obligations hereunder by giving written notice to the District. Upon receiving such notice of resignation, the District shall promptly appoint a successor Trustee satisfying the criteria in Section 7.2 above by an instrument in writing. Any resignation or removal of the Truste e and appointment of a successor Trustee shall become effective only upon acceptance of appointment by the successor Trustee. If no successor Trustee shall have been appointed by the District within thirty (30) days of giving such notice or removal or resignation, then the Trustee, or any Owner may petition, at the sole expense of the District, a court of competent jurisdiction for the appointment of a successor Trustee and other appropriate relief, and such court may thereupon, after such notice (if any) as it may deem proper, appoint a successor Trustee under the Indenture.

Section 7.4. Liability of Trustee . The recitals of fact and all promises, covenants and agreements contained herein and in the Bonds and any Parity Bonds shall be taken as statements, promises, covenants and agreements of the District, and the Trustee assumes no responsibility or liability for the correctness of the same and makes no representations whatsoever as to the validity or sufficiency of this Indenture, the Bonds or any Parity Bonds, and shall incur no responsibility or liability in respect thereof, other than in connection with its express duties or obligations specifically set forth herein, in the Bonds and any Parity Bonds, or in the certificate of authentication assigned to or imposed upon the Trustee. The Trustee shall not have nor be under any responsibility or duty with respect to the issuance of the Bonds or any Parity Bonds for value. The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own gross negligence or willful misconduct. The Trustee shall not be liable for any action taken, suffered or omitted by it or any of its officers, employees or agents and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture . The Trustee shall not be liable for any actions taken o r omitted to be taken, or any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was grossly negligent in ascertaining the pertinent facts.

The Trustee shall be entitled to request and receive written instructions from the District and/or Owners and shall have no responsibility or liability for any losses or damages of any nature that may arise from any action taken or not taken by the Trustee in accordance with the written direction of any such party. The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in accordance with the written direction of the Owners of not less than a majority in aggregate principal amount of the Bonds and Parity Bonds at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture with respect to the Bonds and the Parity Bonds.

The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of an Owner and/or the District, pursuant to the provisions of this Indenture, unless such party shall have offered to the Trustee security or indemnity (satisfactory to the Trustee in its sole and absolute discretion) against the costs, fees, expenses and liabilities (including attorneys’ fees and expenses) which may be incurred by it in compliance with such request or direction.
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In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform, on their face, to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

Neither the Trustee nor any of its directors, officers, employees, agents or affiliates shall be responsible for nor have any duty to monitor the performance of any duties or obligations imposed herein upon the District or any other person or any action of the District or any of its directors, members, officers, agents, affiliates or employees, nor shall it have any liability or responsibility in connection with the malfeasance or nonfeasance or failure to perform by such party any act required of them by this Indenture. The Trustee may assume performance by all such persons of their respective obligations. The Trustee shall have no enforcement or notification obligations relating to breaches of representations or warranties of any other person. The Trustee may conclusively rely and shall be conclusively protected in acting or refraining from acting upon any notice, resolution, request, consent, order, judgement, decree, certificate, report, statement, instrument, opinion, direction, evidence of indebtedness, Bond, Parity Bond or other paper or document believed by it to be genuine and signed or presented by the proper party or parties as provided hereunder, not only as to due execution, validity and effectiveness, but also as to the truth and accuracy of any information contained therein. Whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, at the expense of the District, request, conclusively rely on and act in accordance with officer’s certificates, Certificates of an Authorized Representative and/or opinions of counsel, and shall incur no liability and shall be fully protected in acting or refraining from acting in accordance with such officer’s certificates, Certificates of an Authorized Representative and opinions of counsel, but in its discretion the Trustee may but shall not be obligated to accept other evidence of such matter or may require such additional evidence as to it may seem reasonable. It is understood and agreed that no such act shall broaden or imply the Trustee’s acceptance of a broadening of the scope of the Trustee’s duties and obligations hereunder unless the Trustee shall provide written acceptance thereof.

The Trustee shall not be bound to recognize any person as the Owner of a Bond or Parity Bond unless and until such Bond or Parity Bond is submitted for inspection, if required, and his title thereto is satisfactorily established to the Trustee, if disputed.

The Trustee shall have no duty or obligation whatsoever to enforce the collection of Special Taxes or other funds to be deposited with it hereunder, or as to the correctness of any amounts received, but its liability shall be limited to the proper accounting for such funds as it actually receives. No provision in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of its rights or powers.

The Trustee shall not be deemed to have knowledge of any default or event of default under this Indenture until an officer at the Principal Office of the Trustee responsible for the administration of its duties hereunder shall have actual knowledge thereof o r the Trustee shall have received written notice of any event which is in fact such a default or event of default at the Principal Office of the Trustee, and such notice references the Bonds or the Parity Bonds, as applicable, and this Indenture. 282

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The Trustee shall have no responsibility or liability with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds and any Parity Bonds.

Before taking any action under Article VIII hereof the Trustee may require that indemnity and security satisfactory to the Trustee in its sole and exclusive discretion be furnished to it for and from any expenses and liabilities and to protect it against any liability it may incur hereunder.

The rights, privileges, protections, immunities and benefits extended to the Trustee, including, without limitation, its right to be indemnified, are also extend to, and shall be enforceable by, the Trustee in each of its capacities hereunder and its directors, officers, employees and agents (including its counsel) employed to act hereunder.

The Trustee shall not be liable for any action taken or not taken by it in accordance with the direction of the Owners of 25% (or other percentage provided for herein) in aggregate principal amount of Bonds and Parity Bonds Outstanding relating to the exercise of any right, power or remedy available to the Trustee. In the event of conflicting instructions hereunder, the Trustee shall have the right to decide the appropriate course of action and will be protected in so doing.

The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty or in any way expand or impliedly expand the scope of the Trustee’s duties hereunder.

The Trustee may execute any of the trusts or powers hereof and perform any of its duties hereunder either directly or by or through attorneys, agents and receivers and shall not be answerable or responsible for the acts, omissions, misconduct or negligence of the same if appointed by it with due care hereunder. The Trustee shall be entitled to rely on and shall not be liable for any action taken or omitted to be taken by the Trustee in accordance with the advice of counsel of its selection or other professionals retained or consulted by the Trustee, and the advice of such counsel or any opinion of counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

The Trustee may become the Owner or pledgee of the Bonds and Parity Bonds and may otherwise deal with the District with the same rights it would have if it were not Trustee.

The Trustee shall perform such duties and only such duties as are specifically set forth in this Indenture and no implied duties, covenants or obligations shall be read into this Indenture against the Trustee. These duties shall be deemed purely ministerial in nature, and the Trustee shall not be liable except for the performance of such duties.

If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, a nd use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

Subject to Section 7.1, t he District shall, to the extent permitted by law, indemnify an d save the Trustee and its officers, directors, agents, and employees harmless from and against (whether or not litigated) all claims, losses, costs, expenses, liabilities, taxes and damages, including legal fees and expenses, arising out of: (i) the use, maintenance, condition or management of, or from any work or 283

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thing done on, the Project; (ii) any breach or default on the part of the District in the performance of any of its obligations under this Indenture and any other agreement made and entered into for purposes of the Bonds and Parity Bonds; (iii) any act of the City, the District or of any of its agents, contractors, servants, employees or licensees with respect to the Project; (iv) any act of any assignee of, or purchaser from, the City, the District or of any of its or their agents, contractors, servants, employees or licensees with respect to the Project; (v) the construction or acquisition of the Project or the expenditure of Project Costs; (vi) the exercise and performance by the Trustee of its powers and duties hereunder or any related document; (vii) the sale of the Bonds and Parity Bonds and the carrying out of any of the transactions contemplated by the Bonds and Parity Bonds or this Indenture; or (viii) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made in light of the circumstances in which they were made, not misleading in any official statement or other disclosure document utilized in connection with the sale or marketing of the Bonds and Parity Bonds. The indemnification set forth in this Section shall extend to the Trustee’s officers, agents, employees, successors and assigns. No indemnification will be made under this Secti on or elsewhere in this Indenture or other agreements for willful misconduct or negligence by the Trustee, its officers, agents, employees, successors or assigns. The District’s obligations hereunder shall remain valid and binding notwithstanding maturity and payment of the Bonds and Parity Bonds, or the resignation or removal of the Trustee.

In accepting the trust hereby created, the Trustee acts solely as Trustee for the Owners and not in its individual capacity, and all persons, including, without limit ation, the Owners, the District and the City, having any claim against the Trustee arising from this Indenture shall look only to the funds and Accounts held by the Trustee hereunder for payment, except as otherwise provided herein. Under no circumstances shall the Trustee be liable in its individual capacity for the obligations evidenced by the Bonds and any Parity Bonds.

THE TRUSTEE MAKES NO WARRANTY OR REPRESENTATION, EITHER EXPRESS

OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR FITNESS

FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE CONTEMPLATED BY THE DISTRICT OF THE PROJECT, OR ANY PORTION THEREOF. In no event shall the Trustee be responsible or liable for incidental, indirect, punitive, special or consequential loss or damage o f any kind whatsoever (including, but not limited to, loss of profit), in connection with or arising out of the Project or this Indenture for the existence, furnishing, functioning or use and possession of the Project, irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder.

The Trustee shall not be responsib le or liable to the parties hereto or deemed in breach or default hereunder if and to the extent its performance of its obligations hereunder is prevented by reason of force majeure. The term “force majeure” means an occurrence arising out of or caused by , directly or indirectly, forces beyond its control. Force majeure shall include, but not limited to, any act or provision of any present or future law or regulation or governmental authority; nuclear or natural catastrophes or acts of God; earthquakes; fires; floods; wars or acts of war; terrorism; civil or military disturbances; sabotage; epidemics; pandemics; recognized public emergencies; quarantine restrictions; riots; strikes; work stoppages; accidents; interruptions, loss or malfunctions of utilities , computer (hardware or software) or communications service; hacking, cyberattacks or other use or infiltration of the Trustee’s technological infrastructure exceeding authorized access; accidents; labor disputes; acts of civil or military authority or governmental actions; or the unavailability of the Federal Reserve Bank wire or telex or other wire or communication facility, or other similar occurrences. 284

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The Trustee shall be entitled to request and receive written instructions from the District or other parties and shall have no responsibility or liability for any losses or damages of any nature that may arise from any action taken or not taken by the Trus tee in accordance with the written direction of the District or such other parties. The Trustee shall have the right to accept and act upon directions given pursuant to this Indenture and delivered using unsecured email, facsimile transmission or other similar unsecured electronic notice; provided, however, (i) that the District shall provide to the Trustee an incumbency certificate listing each Authorized Representative of the District with the authority to provide such directions and containing specimen signatures of such authorized officers, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing and (ii) the District, subsequent to such transmission of written instructions, shall provide the originally executed instructions or directions to the Trustee in a timely manner. If the District elects to give the Trustee directions using unsecured email, facsimile transmission or other similar unsecured electronic notice and the Trustee in its discretion elects to act upon such directions, the Trustee’s understanding of such directions shall be deemed controlling. The District understands and agrees that the Trustee cannot determine the identity of the actual sender of such directions and that the Trustee shall conclusively presume that directions that purport to have been sent by an authorized officer listed on the incumbency certificate provided to the Trustee have been sent by such Authorized Representative of the District. The District shall be responsible for ensuring that only an Authorized Representative of the District shall transmit such directions to the Trustee and that each Authorized Representative of the District treat applicable user and authorization codes, passwords and/or authentication keys wi th extreme care. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and a compliance with such directions, notwithstanding such directions conflict or are inconsistent with a subsequent written direction. The District agrees (i) to assume all risks arising out of the use of unsecured email, facsimile transmission or other similar unsecured electronic notice to submit directions to the Trustee, including, without limitation, the risk of the Trustee acting on unauthorized directions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting directions or instructions to the Trustee and that there may be more secure methods of transmitting directions than the method(s) selected by the District; and (iii) that the security procedures (if any) to be followed in connection with its transmission of directions provide to it a c ommercially reasonable degree of protection in light of its particular needs and circumstances.

Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the District.

Section 7.5. Merger or Consolidation. Any organization or entity into which the Trustee may be merged or converted or with which it may be consolidated or any organization or entity resulting from any merger, conversion or consolidation to which it shall be a party or any organization or entity to which the Trustee may sell or transfer all or substantially all of its corporate trust business assets as a whole or substantially as a whole, shall be and become the successor to the Trustee under this Indenture, succeeding to the rights, powers, duties, immunities and privileges as its predecessor without the execution or filing of any paper or further act, anythi ng herein to the contrary notwithstanding.

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ARTICLE VIII

EVENTS OF DEFAULT; REMEDIES
Section 8.1. Events of Default. Any one or more of the following events shall constitute an “Event of Default”:
(a) default in the due and punctual payment of the principal of or redemption premium, if any, on any Bond or Parity Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by declaration or otherwise; (b) default in the due and punctual payment of the interest on any Bond or Parity Bond when and as the same shall become due and payable; or
(c) except as described in subsections (a) or (b), default by the District in the observance of any of the agreements, conditions or covenants on its part contained in this Indenture, the Bonds or any Parity Bonds, which default continues for a period of 30 days after the District has been given notice in writing of such default by the Trustee or the Owners of twenty-five percent (25%) in aggregate principal amount of the Outstanding Bonds and Parity Bonds.

The Trustee agr ees to give notice , at the District’s sole expense, to the Owners as soon as practicable upon the occurrence of an Event of Default under subsections (a) or (b) above and within 30 days of the Trustee’s actual knowledge of an Event of Default under subsection (c) above.

Section 8.2. Remedies of Owners. Upon the occurrence of an Event of Default, any Owner may pursue any available remedy at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Outstanding Bonds and Parity Bonds, and to enforce any rights of the Trustee under or with respect to this Indenture, including:
(a) by mandamus or other suit or proceeding at law or in equity to enforce his or her rights against the District and any of the members, officers and employees of the District, and to compel the District or any such members, officers or employees to perform and carry out their duties under the Act and their agreements with the Owners as provided in this Indenture; (b) by suit in equity to enjoin any actions or things which are unlawful or violate the rights of the Owners; or
(c) by a suit in equity to require the District and its members, officers and employees to account as the trustee of an express trust.

If an Event of Default shall have occurred and be continuing and if requested and directed so to do by the Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds and Parity Bonds and if indemnified to its satisfaction, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Owners of the Bonds and Parity Bonds.

In the event the Trustee receives inconsistent or conflicting requests and indemnity from two or more groups of Owners of the Bonds or Parity Bonds, each representing less than a majority in aggregate principal amount of the Bonds or Parity Bonds outstanding, the Trustee, in its sole discretion, may, and 286

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shall be fully indemnified for refraining from acting in the absence of such written direction, determine what action, if any shall be taken and the Trustee may, in its sole discretion, take other actions.

No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law.

Section 8.3. Application of Revenues and Other Funds After Default . All amounts received by the Trustee pursuant to any right given or action taken by the Owners under the provisions of this Indenture relating to the Bonds and Parity Bonds shall be applied by the Trustee in the following order upon presentation of the several Bonds and Parity Bonds:

First, to the payment of the costs, fees and expenses of the Trustee in declaring such Event of Default and in performing its duties and obligations hereunder, including the fees, expenses and compensation of its agents, attorneys and counsel;
Second, to the payment of the fees, costs and expenses of the Owners in declaring such Event of Default and in carrying out the provisions of this Article VIII, including reasonable compensation to its agents, attorneys and counsel, and to the payment of all other outstanding fees and expenses of the Trustee; and
Third, to the payment of the whole amount of interest on and principal of the Bonds and Parity Bonds then due and unpaid, with interest on overdue installments of principal and interest to the extent permitted by law at the net effective rate of interest then borne by the Outstanding Bonds and Parity Bonds; provided, however, that in the event that such amounts shall be insufficient to pay the full amount of such interest and principal, then such amounts shall be applied in the following order of priority:
(a) first to the payment of all installments of inter est on the Bonds and Parity Bonds then due and unpaid on a pro rata basis based on the total amount then due and owing; (b) second, to the payment of all installments of principal, including Sinking Fund Payments, of the Bonds and Parity Bonds then due and unp aid on a pro rata basis based on the total amount then due and owing; and
(c) third, to the payment of interest on overdue installments of principal and interest on the Bonds and Parity Bonds on a pro rata basis based on the total amount then due and owing.

Section 8.4. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its obligations hereunder, whether upon its own discretion or u pon the request of the Owners of twenty-five percent (25%) in aggregate principal amount of the Bonds and Parity Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds and Parit y Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with 287

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it a written request signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds and Parity Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement or other such litigation. Any suit, action or proceeding which any Owner of Bonds or Parity Bonds shall have the right to bring to enforce any right or remedy hereunder may be brough t by the Trustee for the equal benefit and protection of all Owners of Bonds and Parity Bonds similarly situated and the Trustee is hereby appointed (and the successive respective Owners of the Bonds and Parity Bonds issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney in fact of the respective Owners of the Bonds and Parity Bonds for the purposes of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners of the Bonds and Parity Bonds as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact.

Section 8.5. Appointment of Receivers . Upon the occurrence of an Ev ent of Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights and of the Owners of the Bonds and Parity Bonds under this Indenture, the Trustee shall be entitled, as a matter of right to which the District expressly agrees, to the appointment of a receiver or receivers of the Net Taxes and other amounts pledged hereunder, pending such proceedings, with such powers as the court making such appointment shall confer.

Section 8.6. Non-Waiver. Nothing in this Art icle VIII or in any other provision of this Indenture, or in the Bonds or the Parity Bonds, shall affect or impair the obligation of the District, which is absolute and unconditional, to pay the interest on and principal of the Bonds and Parity Bonds to the respective Owners of the Bonds and Parity Bonds at the respective dates of maturity, as herein provided, or to pay the Trustee its fees and expenses as provided in Section 8.3 hereof, out of the Net Taxes and other moneys herein pledged for such payment.

A waiver of any default or breach of duty or contract by the Trustee or any Owners shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of t he Trustee or any Owner of any of the Bonds or Parity Bonds to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy conferred upon the Trustee or the Owners by the Act or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners, as the case may be.

Section 8.7. Limitations on Rights and Remedies of Owners. No Owner of any Bond or Parity Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless: (a) such Owner shall have previously given to t he Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds and Parity Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity and security acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity and security shall have been made to, the Trustee.

Such notification, request, tender of indemnity and security and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds and Parity 288

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Bonds of any remedy hereunder; it being understood an d intended that no one or more Owners of Bonds and Parity Bonds shall have any right in any manner whatever by his or their action to enforce any right under this Indenture, except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds and Parity Bonds.

The right of any Owner of any Bond and Parity Bond to receive payment of the principal of and interest and premium (if any) on such Bond and Parity Bond as herein provided or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.

Section 8.8. Termination of Proceedings . In case any Owner shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case, the District, the Trustee and the Owners shall be restored to their former positions and rights hereunder, respectively, with regard to the property subject to this Indenture, and all rights, remedies and powers of the Owners shall continue as if no such proceedings had been taken.

ARTICLE IX

DEFEASANCE AND PARITY BONDS
Section 9.1. Defeasance. If the District shall pay or cause t o be paid, or there shall otherwise be paid, to the Owner of an Outstanding Bond or Parity Bond the interest due thereon and the principal thereof, at the times and in the manner stipulated in this Indenture or any Supplemental Indenture, then the Owner of such Bond or Parity Bond shall cease to be entitled to the pledge of Net Taxes, and, other than as set forth below, all covenants, agreements and other obligations of the District to the Owner of such Bond or Parity Bond under this Indenture or any Supplemental Indenture relating to such Parity Bond shall thereupon cease, terminate and become void and be discharged and satisfied.

In the event of a defeasance of all Outstanding Bonds and Parity Bonds pursuant to this Section, the Trustee shall execute and deliver to the District all such instruments as may be desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the District’s general fund all money or securities held by it pursuant to this Indenture which are not required for the payment of the principal of, premium, if any, and interest due on such Bonds and Parity Bonds.

Any Outstanding Bond or Parity Bond shall be deemed to have been paid within the meaning expressed in the first paragraph of this Section if such Bond or Parity Bond is paid in any one or more of the following ways:
(a) by paying or causing to be paid the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same become due and payable; (b) by depositing with the Trustee, in trust, at or before maturity, cash which, together with the amounts then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Account) and available for such purpose, is fully sufficient to pay the principal of, premium, if a ny, and interest on such Bond or Parity Bond, as and when the same shall become due and payable; or 289

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(c) by depositing with the Trustee or another escrow bank appointed by the District, in trust, federal securities described in subparagraph (1) of the definitio n of Authorized Investments, in which the District may lawfully invest its money, in such amount as will be sufficient, together with the interest to accrue thereon and moneys then on deposit in the Special Tax Fund (exclusive of the Administrative Expense Account) and available for such purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium, if any, and interest on such Bond or Parity Bond, as and when the same shall become due and payable.

If paid as provided above, then, at the election of the District, and notwithstanding that any Outstanding Bonds and Parity Bonds shall not have been surrendered for payment, all obligations of the District under this Indenture and any Supplemental Indenture with respect to such Bond or Parity Bond shall cease and terminate, except for the obligation of the Trustee to pay or cause to be paid to the Owners of any such Bond or Parity Bond not so surrendered and paid all sums due thereon, and except for the covenants of the District contained in Section 5.2(f) or any covenants in a Supplemental Indenture relating to compliance with the Code. Notice of such election shall be filed with the Trustee not less than ten days prior to the proposed defeasance date, or such shorter perio d of time as may be acceptable to the Trustee. In connection with a defeasance under (c) above, there shall be provided to the District a verification report from an independent nationally recognized certified public accountant stating its opinion as to the sufficiency of the moneys or securities deposited with the Trustee or the escrow bank to pay and discharge the principal of, premium, if any, and interest on all Outstanding Bonds and Parity Bonds to be defeased in accordance with this Section, as and when the same shall become due and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that the Bonds or Parity Bonds being defeased have been legally defeased in accordance with this Indenture and any applicable Supplemental Indenture.

Upon a defeasance, the Trustee, up on request of the District, shall release the rights of the Owners of such Bonds and Parity Bonds which have been defeased under this Indenture and any Supplemental Indenture and execute and deliver to the District all such instruments as may be desirable to evidence such release, discharge and satisfaction. In the case of a defeasance hereunder of all Outstanding Bonds and Parity Bonds, the Trustee shall pay over or deliver to the District any funds held by the Trustee at the time of a defeasance, which a re not required for the purpose of paying and discharging the principal of or interest on the Bonds and Parity Bonds when due. The Trustee shall, at the written direction and sole expense of the District, mail, first class, postage prepaid, a notice to the Owners whose Bonds or Parity Bonds have been defeased, in the form directed by the District, stating that the defeasance has occurred.

Section 9.2. Conditions for the Issuance of Parity Bonds and Other Additional Indebtedness. The District may at any time after the issuance and delivery of the Bonds hereunder issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expense Account therein) and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds theretofore issued hereunder or under any Supplemental Indenture; provided, however, Parity Bonds may only be issued for the purpose of refunding all or a portion of the Bonds or any Parity Bonds then Outstanding. Parity Bonds may be issued subject to the following additional specific conditions, which are hereby made conditions precedent to the issuance of any such Parity Bonds:
(a) The District shall be in compliance with all covenants set forth in this Indenture and any Supplemental Indenture then in effect and a certificate of the District to that effect shall have been filed with the Trustee; provided, however, that Parity Bonds may be issued notwithstanding that the 290

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District is not in compliance with all such covenants so long as immediately following the issuance of such Parity Bonds the District will be in compliance with all such covenants. (b) The issuance of such Parity Bonds shall have been duly authorized pursuant to the Act and all applicable laws, and the issuance of such Parity Bonds shall have been provided for by a Supplemental Indenture duly authorized, executed and delivered by the District which shall specify the following:
(1) the purpose for which such Parity Bonds are to be issued and the fund or funds into which the proceeds thereof are to be deposited;
(2) the authorized principal amount of such Parity Bonds; (3) the date and the maturity date or dates of such Parity Bonds; provided that:
(i) each maturity date shall fall on a September 1; (ii) all such Parity Bonds of like maturity shall be identical in all respects, except as to number; (iii) fixed serial maturities or Sinking Fund Payments, or any combination thereof, shall be established to provide for the retirement of all such Parity Bonds on or before their respective maturity dates; and (iv) if issued for the purpose of refunding Bonds and/or Parity Bonds, the maturity of the Parity Bonds to be issued shall not exceed the maturity of the Bonds and Parity being refunded;
(4) the description of the Parity Bonds, the place of payment thereof and the procedure for execution and authentication;
(5) the denominations and method of numbering of such Parity Bonds; (6) the amount and due date of each mandatory Sinking Fund Payment, if any, for such Parity Bonds;
(7) the amount, if any, to be deposited from the proceeds of such Parity Bonds in the Subaccount of the Reserve Account established for such Parity Bonds to fund the applicable Reserve Requirement;
(8) the form of such Parity Bonds; and
(9) such other provisions as are necessary or appropriate and not inconsistent with this Indenture.
(c) The District shall have received the following documents or money or securities, all of such documents dated or certified, as the case may be, as of the date of delivery of such Parity Bonds by the Trustee (unless the Trustee shall be directed by the District to accept any of such documents bearing a prior date):
(1) a certified resolution of the City Council, acting as the legislative body of the District, authorizing the issuance of such Parity Bonds; (2) a written request of the District as to the delivery of such Parity Bonds; (3) an opinion of Bond Counsel and/or general counsel to the District to the effect that: (i) the District has the right and power under the Act to execute and deliver the Supplemental 291

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Indenture relating to such Parity Bonds, and such Supplemental Indenture has been duly and lawfully executed by the District, and this Indenture and such Supplemental Indenture are in full force and effect and are valid and binding upon the District and enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors’ rights); (ii) this Indenture creates the valid pledge which it purports to create of the Net Taxes and other amounts as provided in this Indenture, subject to the application thereof to the purposes and on the conditions permitted by this Indenture; and (iii) such Parity Bonds are valid a nd binding limited obligations of the District, enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors’ rights) and the term s of this Indenture and the Supplemental Indenture executed and delivered in connection with such Parity Bonds and are entitled to the benefits of this Indenture and such Supplemental Indenture, and such Parity Bonds have been duly and validly authorized and issued in accordance with the Act (or other applicable laws) and this Indenture and such Supplemental Indenture;
(4) a certificate of the District containing such statements as may be reasonably necessary to show compliance with the requirements of this Indenture; (5) a certificate of an Independent Financial Consultant certifying that in each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding following the issuance of the Parity Bonds proposed to be issued is less than the Annual Debt Service on the Bonds and Parity Bonds Outstanding prior to the issuance of such Parity Bonds; and (6) such further documents, money and securities as are required by the provisions of this Indenture and the Supplemental Indenture providing for the issuance of such Parity Bonds.

ARTICLE X

MISCELLANEOUS
Section 10.1. Cancellation of Bonds and Parity Bonds . All Bonds and Parity Bonds surrendered to the Trustee for payment upon maturity or for redemption shall be upon payment therefor, and any Bond or Parity Bond purchased by the District as authorized herein and delivered to the Trustee for such purpose shall be, cancelled forthwith and shall not be reissued. The Trustee shall dispose of such Bonds and Parity Bonds in accordance with its then-customary procedures, as provided by law, and, upon request of the District, furnish to the District a certificate of such destruction.

Section 10.2. Execution of Documents and Proof of Ownership . Any request, direction, consent, revocation of consent, or other instrument in writing required or per mitted by this Indenture to be signed or executed by Owners may be in any number of concurrent instruments of similar tenor and may be signed or executed by such Owners in person or by their attorneys appointed by an instrument in writing for that purpose, or by the bank, trust company or other depository for such Bonds, and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the District. Proof of the execution of any such instrument, or of any instrument appointing any such attorney, and of the ownership of Bonds or Parity Bonds shall be sufficient for the purposes of this Indenture (except as otherwise herein provided), if made in the following manner:
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(a) The fact and date of the execution by any Owner or his or her attorney of any such instrument, and of any instrument appointing any such attorney, may be proved by a signature guarantee of any bank or trust company located within the United States of America. Where any such instrument is executed by an officer of a corporation or association or a member of a partnership on behalf of such corporation, association or partnership, such signature guarantee shall also cons titute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient.
(b) As to any Bond or Parity Bond, the person in whose name the same shall be registered in the Bond Register shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of any such Bond or Parity Bond, and the inte rest thereon, shall be made only to or upon the order of the registered Owner thereof or his or her legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond or Parity Bond and the interest thereon to the extent of the sum or sums to be paid.

Neither the District nor the Trustee shall be affected by any notice to the contrary.

Nothing contained in this Indenture shall be construed as limiting the Trustee or the District to such proof, it bei ng intended that the Trustee or the District may accept any other evidence of the matters herein stated which the Trustee or the District may deem sufficient. Any request or consent of the Owner of any Bond or Parity Bond shall bind every future Owner of the same Bond or Parity Bond in respect of anything done or suffered to be done by the Trustee or the District in pursuance of such request or consent.

Section 10.3. Unclaimed Moneys . Anything in this Indenture to the contrary notwithstanding, any money held by the Tru stee in trust for the payment and discharge of any of the Outstanding Bonds and Parity Bonds which remain unclaimed for two years after the date when such Outstanding Bonds or Parity Bonds have become due and payable, if such money was held by the Trustee at such date, or for two years after the date of deposit of such money if deposited with the Trustee after the date when such Outstanding Bonds or Parity Bonds become due and payable, shall be repaid by the Trustee to the District, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the District for the payment of such Outstanding Bonds or Parity Bonds; provided, however, that, before being required to make any such payment to the District, the Trustee, at the sole expense of the District, shall cause to be mailed by first -class mail, postage prepaid, to the registered Owners of such Outstanding Bonds or Parity Bonds at their addresses as they appear o n the registration books of the Trustee a notice that said money remains unclaimed and that, after a date named in said notice, which date shall not be less than 30 days after the date of the mailing of such notice, the balance of such money then unclaimed will be returned to the District.

Section 10.4. Provisions Constitute Contract; Governing Law; Venue. The provisions of this Indenture shall constitute a contract between the District and the Owners and the provisions hereof shall be governed by and construed in accordance with the laws of the State of California. The parties hereby (i) irrevocably submit to the exclusive jurisdiction of any federal or state court sitting in the State of California, (ii) waive any objection to laying of venue in any such action or proceeding in such courts, and (iii) waive any objection that such courts are in inconvenient forum or do not have jurisdiction over any party.
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In case any suit, action or proceeding to enforce any right or exercise any remedy shall be brought or taken and, should said suit, action or proceeding be abandoned, or be determined adversely to the Owners or the Trustee, then the District, the Trustee and the Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceedin g had not been brought or taken.

After the issuance and delivery of the Bonds, this Indenture shall be irrepealable, but shall be subject to modifications to the extent and in the manner provided in this Indenture, but to no greater extent and in no other manner.

Section 10.5. Future Contracts. Nothing herein contained shall be deemed to restrict or prohibit the District from making contracts or creating bonded or other indebtedness payable from a pledge of the Net Taxes which is subordinate to the pledge hereunder, or which is payable from the general fund of the District or from taxes or any source other than the Net Taxes and other amounts pledged hereunder.

Section 10.6. Further Assurances. The District will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Bonds or any Parity Bonds the rights and benefits provided in this Indenture.

Section 10.7. Entire Agreement; Severability. This Indenture and the exhibits hereto set forth the entire agreement and understanding of the parties related to this transaction and supersedes all prior agreements and understandings, oral or written. If any covenant, agreement or provision, or any portion thereof, contained in this Indenture, or the application thereof to any person or circumstance, is held to be unconstitutional, invalid or unenforceable, the remainder of this Indentur e and the application of any such covenant, agreement or provision, or portion thereof, to other persons or circumstances, shall be deemed severable and shall not be affected thereby, and this Indenture, the Bonds and any Parity Bonds issued pursuant hereto shall remain valid and the Owners shall retain all valid rights and benefits accorded to them under the laws of the State of California.

Section 10.8. Notices. Any notices required to be given to the District with respect to the Bonds or this Indenture shall be mailed, first class, postage prepaid, or personally delivered to the City Manager of the City of Lincoln, 600 6th Street, Lincoln, California 95648, all notices to the Trustee in its capacity as Trustee shall be mailed, first class, postage prepaid, or personal ly delivered to the Trustee, U.S. Bank Trust Company, National Association , One California Street, Suite 1000, San Francisco, California 94111.

Section 10.9. Execution in Counterparts. This Indenture may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture and signature pages for all purposes.

Section 10.10. U.S.A. Patriot Act. The parties hereto acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Trustee, like all financial institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record 294

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information that identifies each person or legal entity that establishes a relationship or opens an account with the Trustee. The parties to this Indenture agree that they will provide the Trustee with such information as it may request in order for the Trustee to satisfy the requirements of the U.S.A. Patriot Act.
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IN WITNESS WHEREOF, CITY OF LINCOLN COMMUNITY FACILITIES DISTRICT NO. 2025 -1 (JOINER RANCH EAST) has caused this Indenture to be signed by an Authorized Representative of the District and U.S. Bank Trust Company, National Association in token of its acceptance of the trust created hereunder, has caused this Indenture to be signed in its corporate name by its officers identified below, all as of the day and year first above written.

CITY OF LINCOLN COMMUNITY FACILITIES
DISTRICT NO. 2025-1 (JOINER RANCH EAST)

By:

Mayor of the City of Lincoln, acting as the
legislative body of City of Lincoln Community
Facilities District No. 2025-1 (Joiner Ranch East)
ATTEST:

City Clerk of the City of Lincoln, acting as
the legislative body of City of Lincoln
Community Facilities District No. 2025-1
(Joiner Ranch East)
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
By:

Authorized Signatory
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EXHIBIT A

FORM OF SPECIAL TAX BOND

UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE DISTRICT OR TRUSTEE FOR

REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER

ENTITY AS I S REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER,

PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

R-____ $___________

UNITED STATES OF AMERICA

STATE OF CALIFORNIA

COUNTY OF PLACER

CITY OF LINCOLN COMMUNITY FACILITIES DISTRICT NO. 2025-1 (JOINER RANCH EAST)
SPECIAL TAX BOND, SERIES 2025
INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP:
_____% September 1, 20__ _______ _, 2025 ___
REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: __________________ DOLLARS
CITY OF LINCOLN COMMUNITY FACILITIES DISTRICT NO. 2025 -1 (JOINER RANCH EAST) (the “District”) which was formed by the City of Lincoln (the “City”) and is situated in the County of Placer, State of California, FOR VALUE RECEIVED, hereby promises to pay, solely from certain amounts held under the Indenture (as hereinafter defined), to the Registered Owner named above, or registered assigns , on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such Principal Amount from the Interest Payment Date (as hereinafter defined) next preceding the dat e of authentication hereof, unless: (i) the date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication; (ii) the date of authentication is after a Record Date (as hereinafter defined) but p rior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from the Interest Payment Date immediately succeeding the date of authentication; or (iii) the date of authentication is prior to the close of business on th e first Record Date, in which event interest shall be payable from the Dated Date set forth above. 297

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Notwithstanding the foregoing, if at the time of authentication of this Bond interest is in default, interest on this Bond shall be payable from the last In terest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment, interest on this Bond shall be payable from the Dated Date set forth above. Interest will be paid semiannually on March 1, 2026 and each March 1 and September 1 thereafter (each an “Interest Payment Date”), at the Interest Rate set forth above, until the Principal Amount hereof is paid or made available for payment.

The principal of and premium, if any, on this Bond are payable to the Registered Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the Principal Office of the Trustee (as such term is defined in the Indenture), initially U.S. Bank Trust Company, National Association, (the “Trustee”). Interest on this Bond shall be paid by check of the Trustee mailed, by first class mail, postage prepaid, or in certain circumstances described in the Indenture by wire transfer to an account within the United States of America, to the Registered Owner hereof as of the close of business on the fifteenth day of the month preceding the month in which the Interest Payment Date occurs (the “Record Date”) at such Owner’s address as it appears on the registration books maintained by the Trustee.

This Bond is one of a duly authorized issue of “City of Lincoln Community Facilities District No. 2025-1 (Joiner Ranch East) Special Tax Bonds, Series 2025” (the “Bonds”) issued in the aggregate principal amount of $__________ pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, being Section 53311 et seq. of the California Government Code (the “Act”) for the purpose of financing public improvements, funding a reserve subaccount account and paying certain cos ts related to the issuance of the Bonds. The issuance of the Bonds and the terms and conditions thereof are provided for by a resolution adopted by the City Council of the City, acting in its capacity as the legislative body of the District (the “Legislative Body”), on November 11, 2025, and a Bond Indenture executed in connection therewith dated as of December 1, 2025 (the “Indenture”), by and between the District and the Trustee, and this reference incorporates the Indenture herein, and by acceptance hereof the Registered Owner of this Bond assents to said terms and conditions. The Indenture is adopted under and this Bond is issued under, and both are to be construed in accordance with, the laws of the State of California.

Pursuant to the Act and the Ind enture, the principal of, premium, if any, and interest on this Bond are payable solely from the portion of the annual special taxes authorized under the Act to be levied and collected within the District (the “Special Taxes”) and certain other amounts pledged to the repayment of the Bonds as set forth in the Indenture. Any amounts for the payment hereof shall be limited to the Net Taxes pledged and collected or foreclosure proceeds received following a default in payment of the Special Taxes and other amo unts deposited to the Special Tax Fund (other than the Administrative Expense Account therein) established under the Indenture, except to the extent that other provision for payment has been made by the Legislative Body, as may be permitted by law. The District has covenanted for the benefit of the Registered Owner s of the Bonds that under certain circumstances described in the Indenture it will commence and diligently pursue to completion appropriate foreclosure proceedings in the event of delinquencies o f Special Tax installments levied for payment of principal and interest on the Bonds.

Notwithstanding anything to the contrary contained herein or in the Indenture, amounts in the 2025 Bonds Reserve Subaccount shall only secure and be available to pay the principal of, redemption premium, if any, and interest on the Bonds, and amounts in the Subaccount of the Reserve Account 298

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established for a series of Parity Bonds shall secure only and be available to pay the principal of, redemption premium, if any, and interest on, only such series of Parity Bonds.

The Bonds may be redeemed at the option of the District from any source of funds on any date on or after September 1, 202_, in whole or in part, from such maturities as are selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption:

The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) shall be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established hereunder, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption pric e for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:

Term Bonds Maturing September 1, 20__
Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

*
_____________
* Maturity.

The Bonds are subject to special mandatory redemption as a whole, or in part on a pro rata basis among maturities and by lot within a maturity, on any Interest Payment Date on or after March 1, 20__, and shall be redeemed by the Trustee, from Prepayments deposited to the Redemption Account plus amounts transferred from the 2025 Bonds Reserve Subaccount in connection with such transfers, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:

Redemption Date Redemption Price
Any Interest Payment Date from March 1, 20__ through March 1, 20__ 103% September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date thereafter 100

If the requirements for disbursement from the Escrow Fund pursuant to the Indenture have not been satisfied by the Escrow Closing Date, the Escrow Term Bonds shall be subject to special 299

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mandatory redemption on the Escrow Redemption Date (September 1, 20 26, unless extended as provided in the Indenture), in whole, from amounts transferred from the Escrow Fund pursuant to the Indenture, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest thereon to the date of redemption, without premium.

Notice of redemption with respect to the Bonds to be redeemed shall be mailed to the registered owners thereof not less than 30 nor more than 45 days prior to the redemption date by first class mail, postage prepaid, to the addresses set forth in the registration books; provided, however, so long as the Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies with the requirements of the Depository. Neither a failure of the Registered Owner hereof to receive such notice nor any defect therein will affect the validity of the proceedings for redemption. All Bonds or portions thereof so called for redemption will cease to accrue interest on the specified redemption date, provided that funds for the redemption are on deposit with the Trustee on the redemption date.

Thereafter, the Owners of such Bonds shall have no rights except to receive payment of the redemption price upon the surrender of the Bonds.

This Bond shall be registered in the name of the Registered Owner hereof, as to both principal and interest, and the District and the Trustee may treat the Registered Owner hereof as the absolute owner for all purposes and shall not be affected by any notice to the contrary.

The Bonds are issuable only in fully registered form in the denomination of $5,000 or any integral multiple thereof and may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations of the same issue and maturity, all as more fully set forth in the Indenture.

This Bond is transferable by the Registered Owner hereof, in person or by his attorney duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, upon surrender and cancellation of this Bond.

Upon such transfer, a new registered Bond of authorized denomination or denominations for the same aggregate principal amount of the same issue and maturity will be issued to the transferee in exchange therefor.

The Trustee shall not be required to register transfers or make exchanges of: (i) any Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed; or (ii) any Bonds chosen for redemption.

The rights and obligations of the District and of the Owners of the Bonds may be amended at any time, and in certain cases without notice to or the consen t of the Owners, to the extent and upon the terms provided in the Indenture.

THE BONDS DO NOT CONSTITUTE GENERAL OBLIGATIONS OF THE CITY OR OF THE DISTRICT. NEITHER THE CITY NOR THE DISTRICT IS OBLIGATED TO LEVY OR

PLEDGE, OR HAS LEVIED OR PLEDGED, GENERA L OR SPECIAL TAXES, OTHER THAN THE SPECIAL TAXES REFERENCED HEREIN. THE BONDS ARE LIMITED OBLIGATIONS

OF THE DISTRICT PAYABLE FROM THE PORTION OF THE SPECIAL TAXES AND OTHER

AMOUNTS PLEDGED UNDER THE INDENTURE BUT ARE NOT A DEBT OF THE CITY, THE

STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY LIMITATION OR RESTRICTION.

This Bond shall not become valid or obligatory for any purpose until the certificate of authentication and registration hereon endorsed shall have been dated and signed by the Trustee. 300

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IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by law, and that the amount of this Bond, together with all other indebtedness of the District, does not exceed any debt limit prescribed by the laws or Constitution of the State of California.

IN WITNESS WHEREOF, the District has caused this Bond to be dated the Dated Date, to be signed on behalf of the District by the Mayor of the City by his facsimile signature and attested by the facsimile signature of the City Clerk of the City.

Mayor of the City of Lincoln, acting as the legislative body of City of Lincoln Community Facilities District
No. 2025-1 (Joiner Ranch East)

ATTEST:

City Clerk of the City of Lincoln, acting as the
legislative body of City of Lincoln Community
Facilities District No. 2025 -1 (Joiner Ranch
East)
[FORM OF TRUSTEE’S CERTIFICATE
OF AUTHENTICATION AND REGISTRATION]
This is one of the Bonds described in the within-defined Indenture.

Dated: December __, 2025 U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
By:

Authorized Signatory

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[FORM OF LEGAL OPINION]
The following is a true copy of the opinion rendered by Stradling Yocca Carlson & Rauth LLP in connection with the issuance of, and dated as of the date of the original delivery of, the Bonds. A signed copy is on file in my office.

City Clerk of the City

302

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[FORM OF ASSIGNMENT]
For value received the undersigned do(es) hereby sell, assign and transfer unto

whose tax identification number is ,
the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s)

attorney to transfer the same on the books of the Trustee with full power of substitution in the premises.

Dated:

Signature guaranteed:

NOTE: Signature(s) must be guaranteed by an
eligible guarantor institution.

NOTE: The signatures(s) on this Assignment
must correspond with the name(s) as written on
the face of the within B ond in every particular
without alteration or enlargement or any change
whatsoever.

303

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EXHIBIT B-1

FORM OF REQUISITION FOR DISBURSEMENT OF PROJECT COSTS

$________
CITY OF LINCOLN COMMUNITY FACILITIES DISTRICT NO. 2025-1 (JOINER RANCH EAST)
SPECIAL TAX BONDS, SERIES 2025

U.S. Bank Trust Company, National Association (the “Trustee”), is hereby requested to pay from the City of Lincoln Community Facilities District No. 2025 -1 (Joiner Ranch East) Special Tax Bonds, Series 2025 Acquisition and Construction Fund, established by the Bond Indent ure, dated as of December 1, 2025, by and between the Trustee and City of Lincoln Community Facilities District No. 2025-1 (Joiner Ranch East) (the “District”), the amount specified to the payee named below for payment of the Project Costs set forth in Attachment No. 1 hereto.

Payee:

Address:

Purpose:

Amount: $
The amount is due and payable under purchase order, contract or other authorization and has not formed the basis of any prior request for payment. The conditions for the release of this amount from the City Facilities Account, including those conditions in Section 3.9(b) of the Indenture have been satisfied.

With respect to this Requisition , the District (i) certifies that it has reviewed any wire instructions set forth in such Requisition to confirm such wire instructions are accurate, (ii) agrees to indemnify and hold harmless the Trustee from and against any and all claim, demand, loss, liability, or expense sustained, including but not limited to attorneys’ fees and expenses, resulting directly or indirectly as a result of making the requested disbursement, and (iii) agrees that it will not seek recourse from the Trustee as a result of losses incurred by it for making the disbursement in accordance with this Requisition.

There has not been filed with nor served upon the District notice of any lien, right to lien or attachment upon, or stop notice or claim affecting the right to receive payment of the amount specified above which has not been released or will not be released simultaneously with the payment of such amount, other than materialmen’s or mechanic’s liens accruing by mere operation of law.

Dated: CITY OF LINCOLN COMMUNITY FACILITIES
DISTRICT NO. 2025-1 (JOINER RANCH EAST)
By:

Name:

Title: _____________________________________
304
Stradling Yocca Carlson & Rauth
Draft of 11/6/25
4910-4524-4530v7/024161-0013
PRELIMINARY OFFICIAL STATEMENT DATED __________ 2025
NEW ISSUE—BOOK-ENTRY ONLY NO RATING
In the opinion of Stradling Yocca Carlson & Rauth LLP, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, and assuming the accuracy of certain representations and compliance w ith certain covenants and requirements described herein, interest (and original issue discount) on the Bonds described herein is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See the caption “TAX MATTERS” with respect to tax consequences relating to the Bonds, including with respect to the alternative minimum tax imposed on certain large corporations. $11,665,000
CITY OF LINCOLN COMMUNITY FACILITIES DISTRICT NO. 2025 -1 (JOINER RANCH EAST)
SPECIAL TAX BONDS, SERIES 2025
Dated: Delivery Date Due: September 1, as shown on inside cover page The City of Lincoln Community Facilities District No. 2025-1 (Joiner Ranch East) Special Tax Bonds, Series 2025 (the “Bonds”) are being issued by City of Lincoln Community Facilities District No. No. 2025-1 (Joiner Ranch East) (the “District”) to: (i) finance certain public improvements needed with respect to the development of property located within the District to be owned by the City of Lincoln (the “City”); (ii) fund an escrow fund with respect to the Escrow Term Bonds issued in the aggregate principal amount of $ 1,030,000* (as defined herein), which includes amounts for capitalized interest on the Escrow Term Bonds through September 1, 2026, subject to prior release as described her ein, (iii) fund a reserve subaccount for the Bonds; (iv) pay capitalized interest on the Bonds which are not Escrow Term Bonds through September 1, 2026; and (v) pay costs of issuance for the Bonds. The Bonds are authorized to be issued pursuant to the M ello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Act”), and pursuant to that certain Bond Indenture, dated as of December 1, 2025 (the “Indenture”), by and between the Di strict and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

The Bonds are payable from Net Taxes (as defined herein) derived from a certain annual Special Tax (as defined herein) to be levied on taxable parcels within the District and from certain other funds pledged under the Indenture, all as further described herein. The Special Tax is to be levied according to the rate and method of apportionment approved by the City Council of the City and the qualified electors within the District. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes” and Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The Bonds will be issued in fully registered form and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Individual purchases of the Bonds may be made in principal amounts of $5,000 and integral multiples thereof and will be in book -entry form only. Purchasers of the Bonds will not receive certificates representing their beneficial ownership of the Bonds but will receive credit balances on the books of their respective nominees. The Bonds will not be transferable or exchangeable except for transfer t o another nominee of DTC or as otherwise described herein. Interest on the Bonds will be payable on each March 1 and September 1, commencing March 1, 2026. Principal of and interest on the Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants, who will remit such payments to the Beneficial Owners of the Bonds.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY OF PLACER, THE STATE OF CALIFORNIA OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT F OR THE NET TAXES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF

THE CITY OR GENERAL OBLIGATIONS OF THE DISTRICT BUT ARE LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM NET TAXES AND OTHER AMOUNTS HELD UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.

The Bonds are subject to optional redemption, special mandatory redemption and mandatory sinking fund redemption prior to mat urity as set forth herein. See the caption “THE BONDS — Redemption.”
Investment in the Bonds involves risks that are not appropriate for certain investors. Certain events could affect the abili ty of the District to pay the principal of and interest on the Bonds when due. See the caption “SPECIAL RISK FACTORS” for a discussion of certain risk factors that should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the Bonds.

THIS COVER PAGE CONT AINS CERTAIN INFORMA TION FOR GENERAL REF ERENCE ONLY. IT IS NOT INTENDED TO BE A SUMMARY OF THE SECUR ITY OR TERMS OF THIS ISSUE. INVESTORS A RE ADVISED TO READ T HE ENTIRE OFFICIAL S TATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.

MATURITY SCHEDULE
(See Inside Cover Page)

The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Str adling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will be passed on for the City and the District by its City Attorney, and for the District by Stradling Yocca Carlson & Rauth LLP, Disclosure Counsel, for the Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. It is anticipated that the Bonds in book-entry form will be available for delivery on or about December __, 2025. [PIPER SANDLER LOGO]
Dated: ______, 2025

 Preliminary, subject to change.

This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold, nor may offers to buy them be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. 305

4910-4524-4530v7/024161-0013
$11,665,000
CITY OF LINCOLN COMMUNITY FACILITIES DISTRICT NO. 2025-1 (JOINER RANCH EAST)
SPECIAL TAX BONDS, SERIES 2025

MATURITY SCHEDULE
BASE CUSIP®†
$_____ Serial Bonds
Maturity Date
(September 1)
Principal
Amount Interest Rate Yield Price CUSIP No.†
$ % %

Term Bonds
$__________ _____% Term Bonds due September 1, 20__ Yield: _____% Price: ______ CUSIP No.† _____ $__________ _____% Term Bonds due September 1, 20__ Yield: _____% Price: ______ CUSIP No.† _____ Escrow Term Bonds
$1,030,000* _____% Escrow Term Bonds due September 1, 20__ Yield: _____% Price: ______ CUSIP No.† _____

 Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services (CGS), which is managed on behalf of the American Bankers Association by FactSet Research Syst ems, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP numbers have been assigned by an independent company not affiliated with the District or the City and are included solely for the convenience of the registered owners of the applicable Bonds. None of the City, the District, Bond Counsel, Disclosure Counsel, the Underwriter or the Municipal Advisor are responsible for the selection or uses of these CUSIP numbers, and no represe ntation is made as to their correctness on the applicable Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subse quent actions including, but not limited to, a refunding in whole or in part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds. 306

4910-4524-4530v7/024161-0013

CITY OF LINCOLN

COUNTY OF PLACER, CALIFORNIA

CITY COUNCIL
Holly Andreatta Mayor, District 1
Ben Brown, Mayor Pro Tem, District 2
John Reedy, District 3
Richard Pearl, District 4
Whitney Eklund, District 5

CITY ADMINISTRATORS
Sean Scully, City Manager
Nita Wracker, Assistant City Manager/Finance Director
Hope Ithurburn, City Clerk
Kristine L. Mollenkopf, City Attorney

BOND AND DISCLOSURE COUNSEL
Stradling Yocca Carlson & Rauth LLP
Newport Beach, California

MUNICIPAL ADVISOR
PFM Financial Advisors LLC
San Francisco, California

SPECIAL TAX CONSULTANT
Goodwin Consulting Group, Inc.

Sacramento, California

APPRAISER
Integra Realty Resources
Rocklin, California

TRUSTEE
U.S. Bank Trust Company, National Association
San Francisco, California
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Except where otherwise indicated, all information contained in this Official Statement has been provided by the City and the District. No dealer, broker, salesperson or other person has been authorized by the City, the District, the Trustee or the Underwriter to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and, if given or made, such other information or representations must not be relied upon as having be en authorized by the City, the District, the Trustee or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Bonds by a person in a ny jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers or Owners of the Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact.

The Underwriter has provided the following sentence for inclusion in this Official Statement:

The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under a ny circumstances, create any implication that there has been no change in the affairs of the City, the District or any other parties described herein since the date hereof. All summaries of the Indenture or other documents are made subject to the provisio ns of such documents respectively and do not purport to be complete statements of any or all of such provisions. Reference is hereby made to such documents on file with the City for further information in connection therewith.

IN CONNECTION WITH THE OFFER ING OF THE BONDS, THE UNDERWRITER MAY

OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF

SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

Certain statements in cluded or incorporated by reference in this Official Statement constitute “forward -looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 193 4, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as a “plan,” “expect,” “estimate,” “project,” “budget,” or similar words. Such forward -looking statements include, but are not limited to certain statements contained in the information under the captions “THE DISTRICT” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT.”

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH

FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND

OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS

DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD -LOOKING STATEMENTS. THE

DISTRICT DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD -LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT. IN EVALUATING SUCH STATEMENTS,

POTENTIAL INVESTORS SHOULD SPECIFICALLY CONSIDER THE VARIOUS FACTORS WHICH COULD

CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THOSE INDICATED BY SUCH FORWARD-LOOKING STATEMENTS.

The City maintains a website. However, the information presented on such website is not part of this Official Statement and should not be relied upon in making an investment decision with respect to the Bonds. 308

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TABLE OF CONTENTS
Page
INTRODUCTION ................................................................................................................................................ 1 The District ....................................................................................................................................................... 1 Property Ownership and Development Status .................................................................................................. 2 Sources of Payment for the Bonds .................................................................................................................... 3 Appraisal Report ............................................................................................................................................... 4 Description of the Bonds .................................................................................................................................. 4 Tax Exemption.................................................................................................................................................. 5 Professionals Involved in the Offering ............................................................................................................. 5 Continuing Disclosure ...................................................................................................................................... 5 Parity Bonds for Refunding Only ..................................................................................................................... 6 Bond Owners’ Risks ......................................................................................................................................... 6 Other Information ............................................................................................................................................. 6 FINANCING PLAN ............................................................................................................................................. 6 Estimated Sources and Uses of Funds .............................................................................................................. 6 THE BONDS ........................................................................................................................................................ 7 General Provisions ............................................................................................................................................ 7 Debt Service Schedule ...................................................................................................................................... 9 Redemption ....................................................................................................................................................... 9 Registration, Transfer and Exchange .............................................................................................................. 14 SOURCES OF PAYMENT FOR THE BONDS ................................................................................................ 14 Limited Obligations ........................................................................................................................................ 14 Special Taxes .................................................................................................................................................. 15 2025 Bonds Reserve Subaccount of the Reserve Account ............................................................................. 21 Escrow Fund ................................................................................................................................................... 22 County Teeter Plan Not Applicable to the District ......................................................................................... 23 Parity Bonds for Refunding Only ................................................................................................................... 24 THE DISTRICT .................................................................................................................................................. 24 General Description of the District ................................................................................................................. 24 Authorized Uses of Bond Proceeds ................................................................................................................ 25 Appraisal Report ............................................................................................................................................. 25 Estimated Value-to-Lien Ratios ...................................................................................................................... 25 Direct and Overlapping Debt .......................................................................................................................... 27 Delinquency History ....................................................................................................................................... 29 PROPERTY OWNERSHIP AND THE DEVELOPMENT ............................................................................... 29 General ............................................................................................................................................................ 30 The Master Developer .................................................................................................................................... 30 D.R. Horton .................................................................................................................................................... 31 SPECIAL RISK FACTORS ............................................................................................................................... 36 Risks of Real Estate Secured Investments Generally ..................................................................................... 36 Insufficiency of Special Tax Revenues........................................................................................................... 36 Inability to Access Escrow Fund .................................................................................................................... 38 Impact of Economic Conditions on the Development in the District ............................................................. 38 Increasing Mortgage Interest Rates ................................................................................................................ 38 Concentration of Ownership ........................................................................................................................... 39 Failure to Develop Properties ......................................................................................................................... 39 Property Values .............................................................................................................................................. 40 Natural Disasters ............................................................................................................................................. 40 309

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Hazardous Substances .................................................................................................................................... 41 Enforcement Delays – Bankruptcy ................................................................................................................. 42 Special Tax Delinquencies.............................................................................................................................. 42 FDIC/Federal Government Interests in Parcels .............................................................................................. 42 Direct and Overlapping Indebtedness ............................................................................................................. 43 Payment of Special Taxes is not a Personal Obligation of the Property Owners ........................................... 44 No Acceleration Provision .............................................................................................................................. 44 Limited Obligations ........................................................................................................................................ 44 Ballot Initiatives.............................................................................................................................................. 45 Proposition 218 ............................................................................................................................................... 45 Litigation with Respect to Community Facilities Districts ............................................................................. 45 Loss of Tax Exemption ................................................................................................................................... 47 No Ratings – Limited Secondary Market ....................................................................................................... 47 Limitations on Remedies ................................................................................................................................ 47 Potential Early Redemption of Bonds from Prepayments or Community Facilities District Bond Proceeds ................................................................................................................................................... 47 Cybersecurity .................................................................................................................................................. 47 CONTINUING DISCLOSURE .......................................................................................................................... 48 District Continuing Disclosure ....................................................................................................................... 48 Developer Continuing Disclosure ................................................................................................................... 48 TAX EXEMPTION ............................................................................................................................................ 49 LEGAL OPINION .............................................................................................................................................. 50 ABSENCE OF LITIGATION ............................................................................................................................ 50 NO RATING ...................................................................................................................................................... 51 UNDERWRITING ............................................................................................................................................. 51 FINANCIAL INTERESTS ................................................................................................................................. 51 MUNICIPAL ADVISOR ................................................................................................................................... 51 MISCELLANEOUS ........................................................................................................................................... 51

APPENDIX A RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX ......................... A-1 APPENDIX B CERTAIN ECONOMIC AND DEMOGRAPHIC INFORMATION ............................ B-1 APPENDIX C FORM OF OPINION OF BOND COUNSEL ................................................................ C-1 APPENDIX D APPRAISAL REPORT .................................................................................................. D-1 APPENDIX E SUMMARY OF THE INDENTURE ............................................................................. E-1 APPENDIX F FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE .......................F-1 APPENDIX G FORMS OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATES ............ G-1 APPENDIX H BOOK-ENTRY ONLY SYSTEM .................................................................................. H-1 310

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1 4910-4524-4530v7/024161-0013
$11,665,000
CITY OF LINCOLN COMMUNITY FACILITIES DISTRICT NO. 2025-1 (JOINER RANCH EAST)
SPECIAL TAX BONDS, SERIES 2025

INTRODUCTION
The purpose of this Official Statement, which includes the cover page, the table of contents and the attached appendices (collectively, the “Official Statement”), is to provide certain information concerning th e issuance by City of Lincoln Community Facilities District No. 2025-1 (Joiner Ranch East) (the “District”) of its Special Tax Bonds, Series 2025 in the aggregate principal amount of $11,665,000* (the “Bonds”). The proceeds of the Bonds will be used to: (i) finance certain public improvements needed with respect to the development of property located within the District to be owned by the City of Lincoln (the “City”); (ii) fund an escrow fund with respect to the Escrow Term Bonds issued in the aggregate p rincipal amount of $ 1,030,000* (as defined herein), which includes amounts for capitalized interest on the Escrow Term Bonds through September 1, 2026, subject to prior release as described herein ; (iii) fund a reserve subaccount for the Bonds; (iv) pay capitalized interest on the Bonds which are not Escrow Term Bonds through September 1, 2026; and (v) pay costs of issuance for the Bonds.

The Bonds are authorized to be issued pursuant to the Mello -Roos Community Facilities Act of 1982, as amended (Section 53311 et seq. of the Government Code of the State of California) (the “Act”), a resolution adopted on November 18, 2025, by the City Council of the City, acting as the legislative body of the District, and a Bond Indenture, dated as of December 1, 2025 (the “Indenture”), by and between the District and U.S.

Bank Trust Company, National Association , as trustee (the “Trustee”). The Bonds are secured under the Indenture by a pledge of and lien upon Net Taxes (as such term is defined herein) and all moneys in the Special Tax Fund (other than the Administrative Expense Account therein) as described in the Indenture.

This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete an d detailed information contained in the entire Official Statement and the documents summarized or described herein. A full review should be made of the entire Official Statement.

The sale and delivery of Bonds to potential investors is made only by means of the entire Official Statement.

All capitalized terms used in this Official Statement and not defined have the meanings set forth in Appendix E.

The District
General. The City of Lincoln (the “City”) is located in the western portion of the County of Placer (the “County”), California (the “State”), approximately 40 miles northeast of downtown Sacramento. The District is generally located at the southeast corner of Nicolaus Road and Joiner Parkway within the City. Approximately 27 acres of property in the District are expected to be subject to the Special Tax (as defined herein) at build-out.

The property within the District which is not subject to the levy of the Special Tax consists primarily of parks, open space preserves and other public property. The property within the District is expected to be developed by D.R. Horton CA2, Inc., a California corporation (“D.R. Horton”) with 198 single family homes in a community being marketed as “ Jasper.” See the captions “ —Property Ownership and Development Status” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT” for more information regarding the ongoing and planned development within the District.

Formation Proceedings. The District was formed on August 12, 2025 pursuant to the Act. The Act was enacted to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. Any local agency (as defined in the Act) may establish a community facilities district to provide for and finance the cost of eligible public facilities and services. Generally, the legislative

 Preliminary, subject to change.
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body of the local agency which forms a community facilities district acts on behalf of such district as its legislative body. Subject to approval by two-thirds of the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a community facilities district and may levy and collect a special tax within such district to repay such indebtedness.

Pursuant to the Act, on June 24, 2025 the City Council adopted Resolution No. 2025-087 (the “Resolution of Intention”), stating its intention to form the District and to authorize the levy of a special tax on the taxable property within the District, and Resolution No. 2025-088 stating its intention to incur bonded indebtedness in an aggregate principal amount not to exceed $ 23,500,000 for the purpose of financing the purchase, construction, expansion or rehabilitation of certain public facilities to serve the area within the District.

Subsequent to a noticed public hearing on August 12, 2025 , the City Council adopted Resolution Nos. 2025-120 (the “Resolution of Formation”) and 2025-121 which formed the District and deemed it necessary to incur bonded indebtedness within the District. On August 12, 2025, an election was held within the District in which the property owner within the District approved the proposition authorizing the issuance of bonds in an amount not to exceed $23,500,000 and also approved the Rate and Method of Apportionment of Special Tax (the “Rate and Method”) for the District, a copy of which is attached hereto as Appendix A. A Notice of Special Tax Lien for the District was recorded in the offi ce of the County Recorder on August 25, 2025, as Document No. 2025-0045630-00. On August 26, 2025 the City Council adopted Ordinance No. 1098B (the “Ordinance”) which authorizes the levy of a special tax pursuant to the Rate and Method approved at the Aug ust 12, 2025 election.

Property Ownership and Development Status
The master developer within the District is JEN California 24 LLC , a California limited liability company (the “Master Developer”), and the Master Developer is conveying all property within the District planned for residential development to D.R. Horton, either directly or through a land bank, in two phases. The takedown of the 101 lots within Phase 1 occurred in April 2025 and the second takedown of the 97 lots within Phase 2 is anticipated in March 2026, after which the Master Developer is not expected to own any property in the District that is expected to be subject to the Special Tax. The property within the District which is not subject to the levy of the Special Tax consists primarily of parks, open space preserves and other public property. The Master Developer is responsible for constructing all of the major infrastructure (sewer, water, storm drain s, utilities, and arterial roads) necessary to develop the property within the District and for delivering finished lots to D.R. Horton. As of October 1, 2025, the Master Developer owned all of the 97 residential lots within Phase 2 of the District, all of which were in a partially improved condition.

D.R. Horton plans to develop 198 single family homes in a community being marketed as “Jasper.” As of October 1, 2025, of the 101 lots within Phase 1, D.R. Horton had completed construction of 11 homes (on e of which had been conveyed to an individual homeowner), 26 homes were in various stages of construction and 64 lots were in a finished lot condition. D.R. Horton is acquiring property within the District in phased takedowns from either the Master Develo per directly, or from Jasper -Lincoln, L.P., a Delaware limited partnership (the “Hearthstone Landbank”), which is serving as land bank for D.R. Horton pursuant to an option agreement (the “Option Agreement”) . Within Phase 1, 20 lots were initially purchas ed from the Master Developer by D.R. Horton and the remaining 81 lots were purchased from the Master Developer by the Hearthstone Landbank. As of October 1, 2025, D.R. Horton had acquired an additional 18 lots from the Hearthstone Landbank. There is no g uarantee that the Developer will acquire the remaining lots as planned.

During the term of the Option Agreement, D.R. Horton is contractually obligated to pay the Special Tax levied on the property subject to such agreement. However, in the event the Option Agreement is terminated prior to D.R. Horton having acquired all of the lots thereunder, the Special Tax would continue to be levied on the property in District owned by the Hearthstone Landbank. 314

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See the caption “PROPERTY OWNERSHIP AND THE DEVELOPMEN T” for more information regarding the Master Developer, D.R. Horton, the Hearthstone Landbank and the ongoing and planned development within the District.

Sources of Payment for the Bonds
Special Taxes. As used in this Official Statement, the term “Specia l Tax” means the annual Special Tax which has been authorized pursuant to the Act and the Rate and Method to be levied upon taxable property within the District. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes” and Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” See the caption “THE DISTRICT.”
Under the Indenture, the District has pledged to repay the Bonds and any Parity Bonds (as defined herein) from the Special Tax revenues remaining after the payment of certain annual Administrative Expenses of the District (the “Net Taxes”) and from other amounts in the Special Tax Fund (other than the Administrative Expense Account therein) established under the Indenture. The Special Taxes are the primary source of security for the repayment of the Bonds and any Parity Bonds. In the event that the Special Taxes are not paid when due, the only sources of funds available to pay the debt service on the Bonds and any Parity Bonds are amounts held by the Trustee in the Special Tax Fund, including, with respect to the Bonds, amounts held in the 2025 Bonds Reserve Subaccount of the Reserve Account, to the limited extent described in the Indenture. See the caption “SOURCES OF PAYMENT FOR THE BONDS — 2025 Reserve Subaccount of the Reserve Account.” Reserve Account The Indenture establishes a “ 2025 Bonds Reserve Subaccount” within the Reserve Account. The 2025 Bonds Reserve Subaccount only secures and the amounts therein are only available to pay the principal of, redemption premium, if any, and interest on the Bonds. In connection with the issuance of each series of Parity Bonds, if any, the District may establish an additional Subaccount within the Reserve Account which secures such series of Parity Bonds. Such additional Subaccounts within the Reserve Account established for Parity Bonds will not secure the Bonds.

Escrow Fund. The Indenture establishes an escrow fund (the “Escrow Fund”) and an account therein (the “Escrow Interest Account”). On the date of issuance of the Bonds, $__ ________ of the proceeds of the Escrow Term Bonds (as defined below) will be deposited into the Escrow Fund and $_________ will be deposited into the Escrow Interest Account. The amount deposited in the Escrow Interest Account has been sized to be sufficient to pay interest on the Bonds maturing on September 1, 20__, bearing interest at a rate of ____% per annum and to which CUSIP No. ______ has been assigned (the “Escrow Term Bonds”), through September 1, 2026 (the “Escrow Redemption Date”).

Upon satisfaction of the release test set forth in the Indenture, amounts in the Escrow Fund and Escrow Interest Account will be transferred to the Acquisition and Construction Fund to finance additional facilities and to pay interest on the Escrow Term Bonds. In the event that the release test is not satisfied by July 15, 2026 (the “Escrow Closing Date”), the amounts in the Escrow Fund and the Escrow Interest Account will be applied to redeem the Escrow Term Bonds in full on the Escrow Redemption Date (September 1, 2026, unless extended as provided in the Indenture ). See “THE BONDS —Redemption” and “SOURCES OF PAYMENT FOR THE BONDS—Escrow Fund” herein for additional details with respect to the Escrow Term Bonds and the release test under the Indenture for amounts in the Escrow Fund.

Foreclosure Proceeds. The District will covenant in the Indenture for the benefit of the owners of the Bonds and Parity Bonds that it will : (i) commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $4,000 by the December 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the December 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied; and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, notwithstanding the 315

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foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the 2025 Bonds Reserve Subaccount is at least equal to the 2025 Bonds Reserve Requirement and the amount in all other Subaccounts of the Reserve Accoun t is at least equal to the applicable Reserve Requirement . See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.” There is no assurance that the property within the District can be sold for the appraised or assessed values described herein, or for a price sufficient to pay the principal of and interest on the Bonds in the event of a default in payment of Special Taxes by the current or future landowners within the District. See the caption “SPECIAL RISK FACTORS —Property Values.”

EXCEPT FOR THE NET TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY

OR GENERAL OBLIGATIONS OF THE DISTRICT, BUT ARE LIMITED OBLIGATIONS OF THE

DISTRICT PAYAB LE SOLELY FROM NET TAXES AND AMOUNTS HELD UNDER THE INDENTURE, AS MORE FULLY DESCRIBED HEREIN.

Appraisal Report
Integra Realty Resources (the “Appraiser”) has conducted an Appraisal dated October 13, 2025 (the “Appraisal Report”) of certain land and existing improvements within the District to provide an estimate of the market value of the fee simple interest of such land and improvements. The Appraisal Report provides an estimate of the approximate market value of the property in the District subject to the levy of Special Taxes, assuming that development of the property as currently planned will consist of 198 residential units. Based on the contingencies, assumptions and limiting conditions in the Appraisal Report, the Appraiser concluded that the market value of all of the parcels within the District subject to the Special Tax was $42,554,000 as of October 1, 2025 (the “Date of Value”).

The Appraisal Report is based upon a variety of contingencies, assumptions and limiting conditions that are described in Appendix D. Neither the District nor the Underwriter makes any representation as to the accuracy of the Appraisal Report. See “THE DISTRICT — Appraisal Report” and “— Estimated Value-to-Lien Ratios.” There is no assurance that property within the District can be sold for the prices set forth in the Appraisal Report or that any parcel can be sold for a price sufficient to pay the Special Tax for that parcel in the event of a default in payment of Special Taxes by a property owner. See “THE DISTRICT,” “SPECIAL RISK FACTORS — Property Values” herein and Appendix D.

Description of the Bonds
The Bonds will be issued and delivered as fully registered Bonds, registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to actual purchasers of the Bonds (the “Beneficial Owners”) in the denominations of $5,000 or any integral multiple thereof, under the book -entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described herein. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. In the event that the book-entry only system described herein is no longer used with respect to the Bonds, the Bonds will be regis tered and transferred in accordance wit h the Indenture. See Appendix H — “BOOK-ENTRY ONLY SYSTEM.”
Principal of, premium, if any, and interest on the Bonds is payable by the Trustee to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of D TC Participants. See Appendix H — “BOOK-ENTRY ONLY SYSTEM.”
The Bonds are subject to optional redemption, special mandatory redemption and mandatory sinking fund redemption prior to maturity as described herein. See the caption “THE BONDS — Redemption.” For a 316

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more complete description of the Bonds and the basic documentation pursuant to which they are being sold and delivered, see the caption “THE BONDS” and Appendix E — “SUMMARY OF THE INDENTURE.” Tax Exemption
In the opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California (“Bond Counsel”), under existing statutes, regulations, rulings and judicial decisions, and assuming certain r epresentations 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 of calculating the federal alternative minimum tax imposed on individuals. In the further opinion of Bond Counsel, interest (and original issue discount) on the Bonds is exempt from State of California personal income tax. See the caption “TAX MATTERS” with respect to tax consequences relating to the Bonds, including with respect to the alternative minimum tax imposed on certain large corporations.

Set forth in Appendix C is the form of opinion of Bond Counsel expected to be delivered in connection with the issuance of the Bonds. For a more complete discussion of such opinion and certain tax consequences incident to the ownership of the Bonds, see the caption “TAX EXEMPTION.” Professionals Involved in the Offering
U.S. Bank Trust Company, National Association, San Francisco, California, will act as Trustee under the Indenture. Piper Sandler & Co. (the “Underwriter”) is the Underwriter of the Bonds. Certain proceedings in connection with the issuance and delivery of the Bonds are subject to the approval of St radling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel and Disclosure Counsel to the District in connection with the issuance of the Bonds. Certain legal matters will be passed on for the City and the District by its City Attorney, for the Underwriter by Kutak Rock LLP, Irvine, California, and for the Trustee by its counsel. Other professional services have been performed by Goodwin Consulting Group, Inc. , Sacramento, California, as Special Tax Consultant (the “Special Tax Consultant”) and by Integra Realty Resources, Rocklin, California, as Appraiser.

For information concerning circumstances in which certain of the above -mentioned professionals, advisors, counsel and consultants may have a financial or other interest in the offering of the Bonds, see the caption “FINANCIAL INTERESTS.”
Continuing Disclosure
Pursuant to a Continuing Disclosure Certificate to be executed by the District (the “District Continuing Disclosure Certificate”), the District will agree to provide, or cause to be p rovided, to the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access system (“EMMA”), maintained on the Internet at http://emma.msrb.org, certain annual financial information and operating data and notices of certain enumerated events. These covenants are being made in order to assist the Underwriter in complying with subsection (b)(5) of Rule 15c2-12 adopted by the Securities and Exchange Commission (“Rule 15c2-12”).

The Underwriter does not consider either the Master Developer or D.R. Horton to be an “obligated person” with respect to the Bonds for purposes of Rule 15c2-12. Notwithstanding the foregoing, to assist in the marketing of the Bonds, the Master Developer and D.R. Horton will agree to provide, or cause to be provided to EMMA, certain updates with respect to the development within the District and notices of certain enumerated events. See Appendix G for a description of the specific nature of the semiannual reports and enumerated event notices to be filed by the Master Developer and D.R. Horton.

See “CONTINUING DISCLOSURE,” Appendix F — “FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE” and Appendix G — “FORMS OF DEVELOPER CONTINUING DISCLOSURE CERTIFICATES.”
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Parity Bonds for Refunding Only
Under the Indenture, the District may issue additional indebtedness secured by the Net Taxes on a parity with the Bonds (“Parity Bonds”) only for the purposes of refunding all or a portion of the Bonds or Parity Bonds.

See the caption “SOURCES OF PAYMENT FOR THE BONDS — Parity Bonds for Refunding Only.” Other taxes and/or special assessments with liens equal in priority to the continuing lien of the Special Taxes may be levied in the future on the property within the District, which could adversely affect the willingness of the landowners to pay the Special Taxes when due. See the captions “THE DISTRICT — Direct and Overlapping Debt” and “SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness.” Bond Owners’ Risks
Certain events could affect the ability of the District to pay the principal of and interest on the Bonds when due. See the caption “SPECIAL RISK FACTORS” for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an investment in the Bonds. The purchase of the Bonds involves risks, and the Bonds may not be appropriate investments for some types of investors.

Other Information
This Official Statement speaks only as of its date, and the information contained herein is subject to change.

Brief descriptions of the Bonds and the Indenture are included in this Official Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture, the Bonds and the Constitution and laws of the State, as well as the proceedings of the City Council, acting as the legislative body of the District, are qualified in their entirety by references to such documents, laws and proceedings, and with respect to the Bonds, by reference to the Indenture. Capitalized terms not otherwise defined in this Official Statement have the meanings set forth in Appendix E.

Copies of the Indenture and other documents and information are available for inspection and copies may be obtained from the City, 600 6th Street, Lincoln, California, 95648, Attention: Finance Director.

FINANCING PLAN
Estimated Sources and Uses of Funds
The following table sets forth the expected sources and uses of Bond proceeds. The District expects to apply the Bond proceeds deposited in the Acquisition and Construction Fund to acquire public infrastructure completed by the Master Developer which benefits the property in the District. Such public infrastructure include roadways, landscaping and bridge improvements.
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Sources of Funds
Principal Amount of Bonds
[Plus/Less] [Net] Original Issue [Premium/Discount]
Total Sources

Uses of Funds:

Acquisition and Construction Fund
Interest Account(1)
Costs of Issuance(2)
2025 Bonds Reserve Subaccount(3)
Escrow Fund(4)
Escrow Interest Account of the Escrow Fund(5)
Total Uses

(1) To pay capitalized interest on the Bonds which are not Escrow Term Bonds through September 1, 2026. (2) To pay costs of issuance of the Bonds, including legal fees, underwriter’s discount, printing costs, Appraiser, Special Tax Consultant and Trustee fees.
(3) Equal to the initial 2025 Reserve Requirement for the Bonds. See the caption “SOURCES OF PAYMENT FOR THE BONDS—2025 Bonds Reserve Subaccount of the Reserve Fund.” (4) Amounts in the Escrow Fund may be released to the Acquisition and Construction Fund upon satisfaction of certain conditions or will be used redeem Escrow Term Bonds in full on the Escrow Redemption Date (September 1, 2026, unless extended as provided in the Indenture). See “THE BONDS—Redemption—Special Mandatory Redemption from Escrow Fund Transfer” and “SOURCES OF PAYMENT FOR THE BONDS—Escrow Fund.”
(5) Amounts in the Escrow Interest Account have been sized to be sufficient to pay interest on the Escrow Term Bonds through September 1, 2026. “SOURCES OF PAYMENT FOR THE BONDS—Escrow Fund.”

THE BONDS
General Provisions
The Bonds will be dated their date of delivery and will bear interest at the rates per annum set forth on the inside cover page hereof, payable semiannually on each March 1 and September 1, commencing March 1, 2026 (each, an “Interest Payment Date”), and will mature in the amounts and on the dates set forth on the inside cover page of this Official Statement . Interest will be calculated on the basis of a 360 -day year comprised of twelve 30-day months. The Bonds will be issued in fully registered form in d enominations of $5,000 or any integral multiple thereof.

Interest on any Bond will be payable from the Interest Payment Date next preceding the date of authentication of such Bond, unless: (i) such date of authentication is an Interest Payment Date, in which event interest will be payable from such date of authentication; (ii) the date of authentication is after the fifteenth day of the month preceding an Interest Payment Date, regardless of whether such day is a Business Day (each, a “Record Date”) but prior to the immediately succeeding Interest Payment Date, in which event interest will be payable from the Interest Payment Date immediately succeeding the date of authentication; or (iii ) the date of authentication is prior to the close of business on the first Record Date occurring after the issuance of such Bond, in which event interest will be payable from the dated date of such Bond, as applicable; provided, however, that if at the time of authentication of such Bond, interest is in default, interest on such Bond will be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or, if no interest has been paid or made available for payment on such Bond, interest on such Bond will be payable from its dated date.

Interest on any Bond will be paid to the person whose name appears as its owner in the registration books held by the Trustee on the close of business on the Record Date. Principal of, and premium, if any, due upon redemption is payable upon presentation and surrender of the Bonds at the designated principal corporate trust office of the Trustee in San Francisco, California. 319

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The Bonds will be issued as fully registered bonds and will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository of the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only in denominations of $5,000 and any integral multiple thereof . So long as DTC is the securities depository all payments of principal and interest on the Bonds will be made to DTC and will be paid to the Beneficial Owners in accordance with DTC’s procedures and the procedures of DTC ’s Participants. See APPENDIX H — “BOOK-ENTRY ONLY SYSTEM.” In the event the Bonds are not held in book -entry form, interest will be paid by check of the Trustee mailed by first class mail, postage prepaid, to the Bondowner at its address on the registration books kept by the Trustee. Pursuant to a written request prior to the Record Date of a Bondowner of a t least $1,000,000 in aggregate principal amount of Bonds or of any issue of Parity Bonds, payment will be made by wire transfer in immediately available funds to a designated account in the United States. 320

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Debt Service Schedule
The following table presents the annual debt service on the Bonds (including sinking fund redemptions), assuming that there are no optional or special mandatory redemptions. The following also assumes the Escrow Term Bonds are released prior to the Escrow Closing Date (July 15, 2026, unless extended as provided in the Indenture) and that the Escrow Term Bonds are not redeemed on the Escrow Redemption Date (September 1, 2026, unless extended as provided in the Indenture) See the caption “—Redemption” below.

Year Ending
September 1 Principal Interest Total Debt Service
2026(1)
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) Interest on the Bonds which are not Escrow Term Bonds has been capitalized through September 1, 2026. (2) Interest on the Escrow Term Bonds has been capitalized through September 1, 2026.

Source: Piper Sandler & Co.

Redemption
Optional Redemption. The Bonds may be redeemed at the option of the District from any source of funds on any date on or after September 1, 20__, in whole or in part, from such maturities as are selected by the District and by lot within a maturity, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the date of redemption:
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Redemption Date Redemption Price
September 1, 20__ through and including August 31, 20__ 103% September 1, 20__ through and including August 31, 20__ 102 September 1, 20__ through and including August 31, 20__ 101 September 1, 20__ and any date thereafter 100
In the event that the District elects to redeem Bonds as provided above, the District will give written notice to the Trustee of its election to so redeem, the redemption date and the principal amount of the Bonds of each maturity to be redeemed. The notice to the Trustee will be given at least 30 but no more than 60 days prior to the redemption date, or by such later date as is acceptable to the Trustee.

Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) will be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established under the Indenture, on September 1, 20__, and on each September 1 thereafter prior to mat urity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption will be selected by the Trustee by lot and will be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:

Term Bonds Maturing September 1, 20__
Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

* Maturity.

The Bonds maturing on September 1, 20__ (the “20__ Term Bonds”) will be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established under the Indenture, on September 1, 20__, and on each September 1 thereafter prior to maturity, in accordance with the schedule of Sinking Fund Payments set forth below. The 20__ Term Bonds so called for redemption will be selected by the Trustee by lot and will be redeemed at a redemption price for each redeemed 20__ Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:

Term Bonds Maturing September 1, 20__
Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

* Maturity.

The Escrow Term Bonds will be called before maturity and redeemed, from the Sinking Fund Payments that have been deposited into the Redemption Account established hereunder, on September 1, 20__, and on 322

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each September 1 thereafter prior to maturi ty, in accordance with the schedule of Sinking Fund Payments set forth below. The Escrow Term Bonds so called for redemption shall be selected by the Trustee by lot and shall be redeemed at a redemption price for each redeemed Escrow Term Bond equal to the principal amount thereof, plus accrued interest to the redemption date, without premium, as follows:

Escrow Term Bonds
Redemption Date
(September 1) Sinking Payments
$

* Maturity.

If the District purchases Term Bonds or Escrow Term Bonds during the Fiscal Year immediately preceding one of the sinking fund redemption dates specified above, the District will notify the Trustee at least 45 days prior to the redemption date as to the principal amount purchased, and the amount purchased will be credited at the time of purchase to the next Sinking Fund Payment for the Term Bond or Escrow Term Bond so purchased, to the extent of the full principal amount of the purchase. All Bond s purchased pursuant to this subsection will be cancelled pursuant to the Indenture.

Special Mandatory Redemption from Special Tax Prepayments . The Bonds are subject to special mandatory redemption as a whole or in part on a pro rata basis among maturities and by lot within a maturity, on any Interest Payment Date on or after March 1, 2026, and will be redeemed by the Trustee, from any amounts paid by the District to the Trustee and designated by the District as a prepayment of Special Taxes for one or more parcels in the District made in accordance with the Rate and Method (the “Prepayments”) deposited to the Redemption Account pursuant to the Indenture, plus amounts transferred from the 2025 Bonds Reserve Account 323

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pursuant to the Indenture, at the following redemption prices, expressed as a percentage of the principal amount to be redeemed, together with accrued interest to the redemption date:

Redemption Date Redemption Price
Any Interest Payment Date from March 1, 2026 through March 1, 20__ 103% September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ _ and any Interest Payment Date thereafter 100 Prepayments will be allocated to the payment at maturity and redemption of Bonds and any Parity Bonds as nearly as practicable on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds and such amounts shall be applied to redeem Bonds and Parity Bonds as nearly as practicable on a pro rata basis among maturities in increments of $5,000; provided, however, that, for Prepayments of less than $50,000, the District may specify in a Certificate of an Authorized Representative that Prepayments be applied to one or more maturities of the Bonds or Parity Bonds so long as there is delivered to the Trustee a certificate of the Independent Financial Consultant that, following such application of the Prepayments, the maximum Special Taxes that may be levied in each Fiscal Year on Taxable Property is not less than 110% of Annual Debt Service, plus the Administrative Expenses Cap, in the Bond Year that begins in such Fiscal Year.

See the caption “SPECIAL RISK FACTORS — Potential E arly Redemption of Bonds from Prepayments or Community Facilities District Bond Proceeds” for a discussion of the potential for a lower than expected yield on the Bonds as a result of a special mandatory redemption from prepayment of Special Taxes or proceeds of bonds of other community facilities districts.

Special Mandatory Redemption from Escrow Fund Transfer . If the requirements for disbursement from the Escrow Fund pursuant to the Indenture, and described under the caption “SOURCES OF PAYMENT FOR THE BONDS—Escrow Fund,” have not been satisfied by the Escrow Closing Date (July 15, 2026) the Escrow Term Bonds will be subject to special mandatory redemption on the Escr ow Redemption Date (September 1, 2026, unless extended as provided in the Indenture), in whole, from amounts transferred from the Escrow Fund pursuant to the Indenture, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest thereon to the date of redemption, without premium.

Notice of Redemption. So long as the Bonds are held in book-entry form, notice of redemption will be sent by the Trustee to DTC and not to the Beneficial Owners of the Bonds under the DTC book-entry only system. Neither the District nor the Trustee is responsible for notifying the Beneficial Owners, who are to be notified in accordance with the procedures in effect for the DTC bo ok-entry system. See Appendix H — “BOOK-ENTRY ONLY SYSTEM.”
The Trustee will give notice, in the name and at the expense of the District, of the redemption of Bonds.

Such notice of redemption will: (i) specify the CUSIP numbers (if any), the bond numbers and the maturity date or dates of the Bonds selected for redemption, except that where all of the Bonds are subject to redemption, or all of the Bonds of one maturity are to be redeemed, the bond numbers of such issue need not be specified; (ii) state the date fixed for redemption and surrender of the Bonds to be redeemed; (iii) state the redemption price; (iv) state the place or places where the Bonds are to be redeemed; (v) in the case of Bonds to be redeemed only in part, state the portion of such Bond which is to be redeemed; (vi) state the date of issue of the Bonds as originally issued; (vii) state the rate of interest borne by each Bond being redeemed; and (viii) state any other descriptive information needed to identify accurately the Bonds being redeemed as specified by the Trustee.

Such notice will further state that on the date fixed for redemption, there will become due and payable on each Bond, or portion thereof called for redemption, the principal thereof, together with any premium, and interest accrued to the redemption date, and that from and after such date, interest thereon will cease to accrue and be payable. At least 30 days but no more than 45 days prior to the redemption date, the Trustee will mail a copy of such notice of redemption, by first class mail, postage prepaid, to the respective Owners thereof at their addresses appearing on the Bond Register, and to the original purchaser of any Bonds; provided, however, so long as the 324

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Bonds are registered in the name of the Nominee, such notice shall be given in such manner as complies with the requirements of the Depository. The actual receipt by the Owner of any Bond of notice of such redemption is not a condition precedent to redemption, and neither the failure to receive nor any defect in such notice will affect the validity of the procee dings for the redemption of such Bonds, or the cessation of interest on the redemption date. A certificate by the Trustee that notice of such redemption has been given as provided in the Indenture will be conclusive as against all parties and the Owner is not entitled to show that he or she failed to receive notice of such redemption.

In addition to the foregoing notice, further notice will be given by the Trustee as set out below, but no defect in said further notice nor any failure to give all or any por tion of such further notice will in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed.

Each further notice of redemption will be sent not later than the date that notice of redemption is given to the Owners pursuant to the Indenture by first class mail or facsimile to the Depository and to any other registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds and to one or more of the national information services that are in the business of disseminating notice of redemption of obligations such as the Bonds.

Upon the payment of the redemption price of any Bonds being redeemed, each check or other transfer of funds issued for such purpose will to the extent practicable bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.

With respect to any notice of optional redemption of Bonds, such notice may state that such redemption is conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of moneys sufficient to pay the principal of, premium, if any, and interest on such Bonds to be redeemed and that, if the District determines that such moneys will not be so received on or prior to the redemption date, said notice shall be of no force and effect and the Trustee shall not be required to redeem such Bonds. If any condition stated in the redemption notice for an optional redemption shall not have been satisfied on or prior to the redemption date:
(i) the redemption notice shall be of no force and effect, (ii) the District shall not be required to redeem such Bonds, (iii) the redemption shall not be made, and (iv) the Trustee shall within a reasonable time thereafter give notice to the persons in the manner in which the conditional redemption notice was given that such condition or conditions were not met and that the redemption was canceled.

Selection of Bonds for Redemption. If less than all of the Bonds Outstanding are to be redeemed, the portion of any Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or an integral multiple thereof. In selecting portions of such Bonds for redemption, the Trustee will treat such Bonds, as applicable, as representing that number of Bonds of $5,000 denominations which is obtained by dividing the principal amount of such Bonds to be redeemed in part by $5,000. The procedure for the selection of Parity Bonds for redemption may be modified as set forth in the Supplemental Indenture for such Parity Bonds. The Trustee will promptly notify the District in writing of the Bonds, or portions thereof, selected for redemption.

Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the District will execute and the Trustee will authenticate and deliver to the Owner, at the expense of the District, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bonds surrendered, with the same interest rate and the same maturity.

Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in the Indenture, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption : (i) the Bonds, or portions thereof, designated for redemption will, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in the Indenture, anything in the Indenture or in the Bonds to the contrary notwithstanding; (ii ) upon presentation and surrender thereof at the designated office of the Trustee, the 325

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redemption price of such Bonds will be paid to the Owners thereof; (iii) as of the redemption date the Bonds, or portions thereof so designated for redemption will be deemed to be no longer Outstanding and such Bonds, or portions thereof, will cease to bear further interest; and (iv) as of the date fixed for redemption no Owner of any of the Bonds, or portions thereof so designated for redemption will be entitled to any of the benefits of the Indenture, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available.

Registration, Transfer and Exchange
Registration. The Trustee will keep sufficient books for the registration and transfer of the Bonds. The ownership of the Bonds will be established by the Bond registration books held by the Trustee.

Transfer or Exchange. Subject to the limitations set forth in the following paragraph, the registration of any Bond may, in accordance with its terms, be transferred upon the Bond Register by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond for cancellation at the office of the Trustee, accompanied by delivery of written instrument of transfer in a form acceptable to the Trustee and duly executed by the Owner or his or her duly authorized attorney.

Bonds may be exchanged at the office of the Trustee for a like aggregate principal amount of Bonds for other authorized denominations of the same maturity and issue. The Tr ustee may not collect from the Owner any charge for any new Bond issued upon any exchange or transfer, but will require the Owner requesting such exchange or transfer to pay any tax or other governmental charge required to be paid with respect to such exchange or transfer. Whenever any Bonds are surrendered for registration of transfer or exchange, the District will execute and the Trustee will authenticate and deliver a new Bond or Bonds, as applicable, of the same issue and maturity, for a like aggregate principal amount; provided that the Trustee is not required to register transfers or make exchanges of : (i) Bonds for a period of 15 days next preceding any selection of the Bonds to be redeemed; or (ii) any Bonds chosen for redemption.

SOURCES OF PAYMENT FOR THE BONDS
Limited Obligations
The Bonds are special, limited obligations of the District payable only from amounts pledged under the Indenture and from no other sources.

The Special Taxes are the primary source of security for the repayment of the Bonds. Under the Indenture, the District has pledged to repay the Bonds from the Net Taxes (which are Special Tax revenues remaining after the payment of the annual Administrative Expenses in an amount not to exceed the Administrative Expenses Cap (as defined in the Indenture)) and from amounts held in the Special Tax Fund (other than amounts held in the Administrative Expense Account therein). Special Tax revenues include the proceeds of the annual Special Tax levy received by the District, including any scheduled payments and Prepayments thereof, and the net proceeds of the redemption of delinquent Special Taxes or sale of property sold as a result of foreclosure of the lien of delinquent Special Taxes to the amount of said lien, and penalties and interest thereon; provided that any delinquent Special Tax sold to an independent third -party or to the City for 100% of the delinquent amount will no longer be pledged under the Indenture to the payment of the Bonds or Parity Bonds.

In the event that the Special Tax revenues are not received when due, the only sources of funds available to pay the debt service on the Bonds are amounts held by the Trustee in the Special Tax Fund (other than the Administrative Expense Account therein), including amounts held in the 2025 Bonds Reserve Subaccount of the Reserve Account, to the limited extent described in the Indenture, for the exclusive benefit of the Owners of the Bonds.
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The Bonds are also secured by amounts on deposit in the Escrow Fund and the Escrow Interest Account therein, to the extent set forth in the Indenture.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY, THE COUNTY,

THE STATE OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET TAXES, NO OTHER TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OR SPECIAL OBLIGATIONS OF THE CITY BUT ARE

LIMITED OBLIGATIONS OF THE DISTRICT PAYABLE SOLELY FROM THE NET TAXES AND OTHER AMOUNTS PLEDGED UNDER THE INDENTURE AS MORE FULLY DESCRIBED HEREIN.

Special Taxes
Authorization and Pledge . In accordance with the provisions of the Act, the City established the District on August 12, 2025 for the purpose of financing of various public improvements required in connection with the proposed development within the District. At a special election held on August 12, 2025, the qualified elector within the District authorized the District to incur indebtedness in an amount not to exceed $23,500,000 for the District and the levy of the Special Taxes on property within the District to repay such bonds and to finance the Facilities (as defined below). At the August 12, 2025 election , the qualified electors within the District also voted to approve the Rate and Method, pursuant to which the Special Tax is and will be levied to repay indebtedness of the District, including the Bonds.

The Bonds will be repaid only from annual Net Taxes derived from the levy and collection of Special Taxes pursuant to the Rate and Method. The Rate and Method permits the partial prepayment of Special Taxes for an Assessor’s Parcel, and any such Prepayments will be applied to redeem Bonds and Parity Bonds, if any.

The Net Taxes collected from the annual Special Tax levy and the proceeds of any Prepayment have been pledged under the Indenture to the repayment of the Bonds and Parity Bonds.

The Special Taxes levied in any Fiscal Year may not exceed the maximum rates authorized pursuant to the Rate and Method. See “— Rate and Method of Apportionment of Special Tax” and Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” There is no assurance that the Net Taxes will, in all circumstances, be adequate to pay the principal of and interest on the Bonds when due. See the caption “SPECIAL RISK FACTORS — Insufficiency of Special Tax Revenues.” Rate and Method of Apportionment of Special Tax. The Rate and Method applicable to the District is contained in Appendix A — “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The meaning of the defined terms used in this section are as set forth in Appendix A.

In general, the Rate and Method imposes a different Maximum Special Tax on Taxable Property within the District depending upon whether such Taxable Property is classified as: (i) “Developed Property” (generally, all Taxable Property for which a B uilding Permit was issued prior to June 1 of the preceding Fiscal Year), (ii) “Final Map Property” (generally, all Single Family Lots created within Final Maps that had recorded prior to June 1 of the preceding Fiscal Year and which have not yet become Developed Property), or (iii) “Undeveloped Property” ( generally, all Parcels of Taxable Property that are not Final Map Property, Developed Property, Taxable Owners Association Property, Taxable Public Property, or Taxable Welfare Exemption Property).

Pursuant to the Rate and Method the District is required to determine the “Special Tax Requirement” for each Fiscal Year. The Special Tax Requirement for the District is the amount necessary in any Fiscal Year to: (i) pay principal and interest on Bonds that are due in the calendar year that begins in such Fiscal Year; (ii) pay periodic costs on the Bonds, including but not limited to, credit enhancement, liquidity support, and rebate payments on the Bonds; (iii) replenish reserve funds created for the Bo nds under the Indenture to the extent such replenishment has not been included in the computation of the Special Tax Requirement in a previous Fiscal Year; (iv) cure any delinquencies in the payment of principal or interest on Bonds which have occurred in the prior Fiscal Year; (v) pay Administrative Expenses; and (vi) pay directly for Authorized Facilities, so long 327

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as such levy under this clause (vi) does not increase the Special Tax levied on Final Map Property or Undeveloped Property. The amounts referr ed to in clauses (i) and (ii) of the definition of Special Tax Requirement may be reduced in any Fiscal Year by: (a) interest earnings on or surplus balances in funds and accounts for the Bonds to the extent that such earnings or balances are available to apply against such costs pursuant to the Indenture; (b) in the sole and absolute discretion of the City, proceeds received by the CFD from the collection of penalties associated with delinquent Special Taxes; and (c) any other revenues available to pay such costs, each as determined in the sole discretion of the City.

The Special Tax Requirement for the District is to be satisfied by levying the Special Tax in accordance with the following priority:

Step 1: The Special Tax shall be levied Proportionately on each Parcel of Developed Property up to 100% of the Maximum Special Tax for each Parcel of Developed Property until the amount levied is equal to the Special Tax Requirement prior to applying any Capitalized Interest that is available in the CFD accounts.

Step 2: If additional revenue is needed after Step 1 in order to meet the Special Tax Requirement after Capitalized Interest has been applied to reduce the Special Tax Requirement, the Special Tax shall be levied Proportionately on each Parcel of Final Map Property up to 100% of the Maximum Special Tax for each Parcel of Final Map Property until the amount levied is equal to the Special Tax Requirement.

Step 3: If additional revenue is needed after Step 2, the Special Tax shall be levied Proportionately on each Parcel of Undeveloped Property up to 100% of the Maximum Special Tax for each Parcel of Undeveloped Property until the amount levied is equal to the Special Tax Requirement.

Step 4: If additional revenue is needed after Step 3, the Special Tax shall be levied Proportionately on each Parcel of Taxable Welfare Exemption Property, up to 100% of the Maximum Special Tax for each Parcel of Taxable Welfare Exemption Property for such Fiscal Year until the amount levied is equal to the Special Tax Requirement.

Step 5: If additional revenue is needed after Step 4, the Special Tax shall be levied Proportionately on each Parcel of Taxable Owners Association Property, up to 100% of the Maximum Special Tax for each Parcel of Taxable Owners Association Property until the amount levied is equal to the Special Tax Requirement.

Step 6: If additional revenue is needed after Step 5, the Special Tax shall be levied Proportionately on each Parcel of Taxable Public Property, up to 100% of the Maximum Special Tax for each P arcel of Taxable Public Property until the amount levied is equal to the Special Tax Requirement.

Notwithstanding the above , the Special Tax levied against any Assessor’s Parcel for which an occupancy permit for private residential use has been issued will not be increased as a consequence of delinquency or default by the owner of any other Assessor’s Parcel within the District by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. As a result, it is possible that the District may not be able to increase the tax levy to the Assigned Special Tax in all years.

The Maximum Special Tax for a Parcel of Developed Property is the greater of: (i) the Base Special Tax set forth in Ta ble 1 in Section C of the Rate and Method, or (ii) the Maximum Special Tax determined pursuant to Section D of the Rate and Method based on a Land Use Change. On July 1, 2026, and on each July 1 thereafter, the Base Special Tax for Developed Property and the Maximum Special Tax for Final Map Property, Undeveloped Property, Taxable Owners Association Property, Taxable Public Property and Taxable Welfare Exemption Property, shall be increased by an amount equal to 2.0% of the amount in effect for the prior Fiscal Year.
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The Base Special Tax rates for Developed Property and Other Property for Fiscal Year 2026-27, as well as the Maximum Special Tax for Final Map Property and Undeveloped Property for Fiscal Year 2026 -27, are set forth in Table 1 below.

TABLE 1

CITY OF LINCOLN
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(JOINER RANCH EAST)

SPECIAL TAX RATES

DEVELOPED PROPERTY
Land Use Category
Fiscal Year 2026-27
Base Special Tax(1)
Single Family Property
Greater than 2,000 sq ft $4,096 per Residential Unit
1,726 to 2,000 sq ft $3,721 per Residential Unit
1,625 to 1,725 sq ft $3,615 per Residential Unit
Less than 1,625 sq ft $3,533 per Residential Unit

Other Property $62,342 per Acre

FINAL MAP AND UNDEVELOPED PROPERTY
Special Tax Category
Fiscal Year 2026-27
Maximum Special Tax(1)
Final Map Property $4,096 per SFD Lot
Undeveloped Property $62,342 per Acre

(1) On July 1 each fiscal year, the figures shown in the table above shall be increased by two percent of the amount in effect for the prior fiscal year.

Source: Goodwin Consulting Group, Inc.

Table 2 below sets forth the Expected Maximum Special Tax Revenues for Fiscal Year 2026-27 based on the expected land uses within the District as of October 14, 2025 and assuming all 198 parcels wi thin the District are classified as Developed Property for Fiscal Year 2026 -27. Based on development status as of October 14, 2025, 37 parcels within the District are expected to be classified as Developed Property and 161 parcels are expected to be classified as Final Map Property for the projected Fiscal Year 2026 -27 Special Tax levy.
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TABLE 2

CITY OF LINCOLN
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(JOINER RANCH EAST)

EXPECTED MAXIMUM SPECIAL TAX REVENUES
Land Use Category
Expected
Residential
Units / Acres (1)
Fiscal Year 2026-27
Base Special Tax
Expected
Maximum Special
Tax Revenues
Single Family Property
Greater than 2,000 sq ft 41 Residential Units $4,096 per Residential Unit $167,949 1,726 to 2,000 sq ft 63 Residential Units $3,721 per Residential Unit $234,420 1,625 to 1,725 sq ft 57 Residential Units $3,615 per Residential Unit $206,048 Less than 1,625 sq ft 37 Residential Units $3,533 per Residential Unit $130,731

Other Property 0.0 Acres $62,342 per Acre $0

Expected Maximum Special Tax Revenues (Fiscal Year 2026-27 $) $739,149

(1) Based on the Expected Land Uses as of October 14, 2025, per D.R. Horton.

Source: Goodwin Consulting Group, Inc.

Prepayment of Special Taxes. The Special Tax obligation applicable to a Parcel in the CFD may be prepaid in whole or in part and the obligation of the Parcel to pay the Special Tax permanently satisfied as described herein, provided that a prepayment may be made only if there are no delinquent Special Taxes with respect to such Parcel at the time of prepayment. The Prepayment Amount is calculated based on the sum of the Bond Redemption Amount, the Remaining Facilities Amount, the Redemption Premium, the Defeasance Requirement, the Administrative Fees and Expenses, less the Reserve Fund Credit, all as specified in Section H of the Rate and Method attached as Appendix A. Prepayments of Special Taxes will be applied to effect an extraordinary redemption of Bonds and Parity Bonds. See “THE BONDS — Redemption — Special Mandatory Redemption from Special Tax Prepayments.”
Estimated Debt Service Coverage . In connection with the issuance of the Bonds, the Special Tax Consultant will certify that the Maximum Special Tax that may be levied in each Fiscal Year on Assessor’s Parcels, based on development status as of October 1, 2025, less the Administrative Expenses Cap, will be at least equal to 110% of Debt Service on the Bonds in each Fiscal Year . Actual collections of the Special Tax will depend on the amount of Special Tax delinquencies.

Limitation on Special Tax Levy and Potential Impact on Coverage. Pursuant to Section 53321(d) of the Government Code, the special tax levied against any assessor’s parcel for which an occupancy permit for private residential use has been issued will not be increased as a consequence of delinquency or default by the owner of any other assessor’s parcel within the District by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. As a result, it is possible that the District may not be able to increase the tax levy to the Assigned Special Tax in all years.

Levy, Collection and Application of Special Taxes. The Special Taxes are levied and collected by the Treasurer-Tax Collector of the County in the same manner and at the same time as ad valorem property taxes, although it is possible that the District could elect to provide handbills to property owners within the District.

The District will covenant in the Indenture that each year it will levy Special Taxes up to the maximum rates permitted under the Rate and Method in an amount sufficient, together with other amounts on deposit in the Special Tax Fund, to pay the principal of and interest on any Outstanding Bonds and Parity Bonds, to replenish the 2025 Bonds Reserve Subaccount to the 2025 Bonds Reserve Requirement and any other Subaccount of the Reserve Account to the applicable Reserve Requirement, and to pay Administrative Expenses. 330

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The District will make certain covenants in the Indenture which are intended to ensure that the current maximum Special Tax rates and method of collection of the Special Taxes are not altered in a manner that would impair the District’s ability to col lect sufficient Special Taxes to pay debt service on the Bonds, Parity Bonds and Administrative Expenses when due.

First, the District will covenant in the Indenture that it will take no actions that would discontinue or cause the discontinuance of the Special Tax levy or the District’s authority to levy the Special Tax for so long as the Bonds and any Parity Bonds are Outstanding.

Second, the District will covenant in the Indenture, to the maximum extent that the law permits it to do so, not to initiate pr oceedings to reduce the maximum Special Tax rates for the District, unless, in connection therewith, the District receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that: (i) such changes do not r educe the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the Administrative Expenses Cap plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such proposed reduction; and (ii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds.

Third, the District will covenant in the Indenture that, in the event that any initiative is adopted by the qualified electors within the District which purports to reduce the maximum Special Tax below the levels specified in the preceding paragraph or to limit the power of the District to levy the Special Taxes for the purposes set forth in the Indenture, it will commence and pursue legal action in order to preserve its ability to comply with such covenants. The District can provide no assurance that any such legal action will be successful. See the caption “SPECIAL RISK FACTORS — Proposition 218.”
Fourth, the District will covenant in the Indenture that it will not adopt any policy pursuant to the Act permitting the tender of Bonds or Parity Bonds in full payment or partial payment of any Special Taxes unl ess the District has first received a certificate from an Independent Financial Consultant that the acceptance of such a tender will not result in the District having insufficient Net Taxes to pay the principal of and interest on the Bonds and Parity Bonds when due.

See Appendix E under the caption “COVENANTS AND WARRANTY.” Although the Special Taxes constitute liens on taxed parcels within the District, they do not constitute a personal indebtedness of the owners of property within the District. Moreover, other liens for taxes and assessments already exist on the property located within the District and others could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners in the District. See the captions “THE DISTRICT — Direct and Overlapping Debt” and “SPECIAL RISK FACTORS — Direct and Overlapping Indebtedness.” There is no assurance that property owners will be financially able to pay the annual Special Taxes or that they will pay such taxes even if financially able to do so, all as more fully described under the caption “SPECIAL RISK FACTORS.”
Proceeds of Foreclosure Sales . The net proceeds received following a judicial foreclosure sale of property within the District resulting from a prope rty owner’s failure to pay the Special Taxes when due are included within the Net Taxes pledged to the payment of principal of and interest on the Bonds and any Parity Bonds under the Indenture.

Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of any Special Tax or receipt by the District of Special Taxes in an amount which is less than the Special Taxes levied, the City Council, as the legislative body of the District, may order that Special Taxes be collected by a Su perior Court action to foreclose the lien within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Under the Act, the commencement of judicial foreclosure following the no npayment of a Special Tax is not mandatory. However, the District will covenant in the 331

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Indenture for the benefit of the owners of the Bonds and any Parity Bonds that it will : (i) commence judicial foreclosure proceedings against parcels with delinquent Special Taxes in excess of $ 4,000 by the December 1 following the close of each Fiscal Year in which such Special Taxes were due; and (ii) commence judicial foreclosure proceedings against all parcels with delinquent Special Taxes by the December 1 following the close of each Fiscal Year in which it receives Special Taxes in an amount which is less than 95% of the total Special Tax levied; and (iii) diligently pursue such foreclosure proceedings until the delinquent Special Taxes are paid; provided that, no twithstanding the foregoing, the District may elect to defer foreclosure proceedings on any parcel so long as the amount in the 2025 Bonds Reserve Subaccount is at least equal to the 2025 Bonds Reserve Requirement and the amounts in all other Subaccounts of the Reserve Account is at least equal to the applicable Reserve Requirement.

The District will covenant in the Indenture that it will deposit the net proceeds of any foreclosure in the Special Tax Fund and will apply such proceeds remaining after the payment of Administrative Expenses to make current payments of principal and interest on the Bonds and any Parity Bonds, to bring the amount on deposit in the 2025 Bonds Reserve Subaccount up to the 2025 Bonds Reserve Requirement and the amount on deposit in any other Subaccount of the Reserve Account up to the applicable Reserve Requirement, and to pay any delinquent installments of principal or interest due on the Bonds and any Parity Bonds. See APPENDIX E — “SUMMARY OF THE INDENTURE — COVENANTS AND WARRANTY — Covenants” herein.

If foreclosure is necessary and other funds (including amounts in the 2025 Bonds Reserve Subaccount) have been exhausted, debt service payments on the Bonds could be delayed unless the foreclosure proceedings produce sufficient net f oreclosure sale proceeds. Judicial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions, involvement by agencies of the federal government and other factors beyond the control of the City and the District. See the caption “SPECIAL RISK FACTORS — Enforcement Delays – Bankruptcy.” Moreover, no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the net proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See the caption “SPECIAL RISK FACTORS — Property Values.” Although the Act authorizes the District to cause such an action to be commenced and diligently pur sued to completion, the Act does not impose on the District or the City any obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. The Act provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem taxes.

Collection of Special Taxes and Flow of Funds. The Special Taxes will be levied and collected by the Treasurer-Tax Collector of the County in the same manner a nd at the same time as ad valorem property taxes, although it is possible that the District could elect to provide handbills to property owners within the District.

When the County apportions Special Taxes to the District, the District will transmit the S pecial Taxes to the Trustee for deposit in the Special Tax Fund established by the Indenture.

Except for Prepayments, which will be deposited to the Redemption Account of the Special Tax Fund, the Trustee will, on each date on which the Special Taxes are r eceived from the District, deposit the Special Taxes in the Special Tax Fund to be held in trust for the Owners. The Trustee will transfer the Special Taxes on deposit in the Special Tax Fund on the dates, in the amounts and in the following order of priority, to:

First: To the Administrative Expense Account in an amount up to the Administrative Expenses Cap.

Second: To the Interest Account, an amount such that the balance in the Interest Account one Business Day prior to each Interest Payment Date is equal to the installment of interest due on the Bonds and any Parity Bonds on said Interest Payment Date and any installment of interest due on a previous Interest Payment Date which remains unpaid. Moneys in the Interest Account will be used for the payment of interest on the Bonds and any Parity Bonds as the same become due.
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Third: To the Principal Account, an amount such that the balance in the Principal Account one Business Day prior to September 1 of each year, commencing September 1, 2023, is equal the p rincipal payment due on the Bonds and any Parity Bonds maturing on such September 1 and any principal payment due on a previous September 1 which remains unpaid. Moneys in the Principal Account shall be used for the payment of the principal of such Bonds and any Parity Bonds as the same become due at maturity.

Fourth: To the Redemption Account, the amount needed to make the balance in the Redemption Account one Business Day prior to each September 1 on which a Sinking Fund Payment is due equal to the Sinking Fund Payment due on any Outstanding Bonds and Parity Bonds on such September 1; provided, however, that, if amounts in the Special Tax Fund are inadequate to make the foregoing transfers, then any deficiency with respect to the Bonds shall be made up by an immediate transfer from the 2025 Bonds Reserve Subaccount and any deficiency with respect to a series of Parity Bonds shall be made up by an immediate transfer from the Subaccount of the Reserve Account for such series of Parity Bonds , if funded, pursuant to the Indenture; and thereafter, to pay the principal and premium, if any, due in connection with an optional redemption of Bonds or Parity Bonds.

Fifth: To the Subaccounts of the Reserve Account of the Special Tax Fund, on a proportionate basis based on the outstanding principal amount of the Bonds and any Parity Bonds, to the extent necessary to replenish the 2025 Bonds Reserve Subaccount to the 2025 Bonds Reserve Requirement and the Reserve Requirement with respect to Parity Bonds, if any.

Sixth: To the Administrative Expense Account of the Special Tax Fund the amount of any Administrative Expenses for the current Bond Year in excess of the Administrative Expenses Cap as directed by the City.

Seventh: To the Rebate Fund established by the Indenture to the extent directed by the City pursuant to the Indenture.

Eighth: To the Surplus Fund established by the Indenture such remaining amounts in the Special Tax Fund after making the foregoing transfers on September 1. 2025 Bonds Reserve Subaccount of the Reserve Account
In order to secure further the payment of principal of and interest on the Bonds, the District is required, upon delivery of the Bonds, to deposit in the 2025 Bonds Reserve Subaccount and thereafter to maintain in the 2025 Bonds Reserve Subaccount an amount equal to the 2025 Bonds Reserve Requirement. The term “ 2025 Bonds Reserve Requirement” is defined in the Indenture to mean, that amount as of any date of calculation, equal to the lesser of: (i) 10% of the initial principal amount of the Bonds; (ii) Maximum Annual Debt Service on the then Outstanding Bonds; (iii) 125% of average Annual Debt Service on the then Outstanding Bonds; provided, however, that the 2025 Bonds Reserve Subaccount shall not exceed $ ___________ except upon a release from the Escrow Fund as set forth in the Indenture and as described under the caption “—Escrow Fund,” below; and provided further that, in calculating the amounts referred to in the preceding clauses (i), (ii) and (iii), there will be excluded the debt service on, or the principal amount of, as applicable, the Escrow Term Bonds as of such date of calculation unless amounts are released from the Escrow Fund in accordance with the Indenture and as described under the caption “—Escrow Fund.”
The Reserve Requirement may be satisfied in whole or in part by cash, a Reserve Policy (as defined in the Indenture), or a combination thereof . On the date of issuance of the Bonds, the District will deposit $___________ from proceeds of the Bonds into the 2025 Bonds Reserve Subaccount to satisfy the initial 2025 Bonds Reserve Requirement. The 2025 Bonds Reserve Subaccount only secures and the amounts therein are only available to pay the principal of, redemption premium, if any, and interest on the Bonds. In connection 333

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with the issuance of a series of Parity Bonds, if any, the District may establish an additional Subaccount within the Reserve Account which secures such series of Parity Bonds. Such additional Subaccounts within the Reserve Account established for Parity Bonds will not secure the Bonds.

Subject to the limits on the maximum annual Special Tax levy set forth in the Rate and Method and in the Indenture, the District will covenant in the Indenture to levy Special Taxes in an amount sufficient, in light of the other intended uses of the Special Tax proceeds, to maintain the balance in the 2025 Bonds Reserve Subaccount at the 2025 Bonds Reserve Requirement and any other Subaccount of the Reserve Account at the applicable Reserve Requirement. Amounts in the 2025 Bonds Reserve Subaccount are to be applied: (i) to pay debt service on the Bonds, including Sinking Fund Payments, to the ext ent that other monies are not available therefor; (ii) to redeem Bonds in the event of prepayment of Special Taxes, to optionally redeem Bonds or in connection with a partial defeasance of Bonds, in accordance with the Indenture; and (iii) to pay any rebat e requirements with respect to the Bonds . See Appendix E under the caption “ CREATION OF FUNDS AN D APPLICATION OF PROCEEDS — Reserve Account of the Special Tax Fund.” Escrow Fund
The Indenture establishes a separate fund to be known as the “Escrow Fund”, w hich shall be held by the Fiscal Agent in trust, and an Escrow Interest Account therein. Moneys in the Escrow Fund (and the Escrow Interest Account therein) will be held in trust by the Trustee and, pending disbursement as provided in the Indenture, will be subject to a lien in favor of the Owners of the Bonds and administered as provided in the Indenture.

On the date of issuance of the Bonds, $________ of the proceeds of the $1,030,000* aggregate principal amount of the Escrow Term Bonds will be deposited into the Escrow Fund and $________ will be deposited into the Escrow Interest Account. The foregoing amount deposited in the Escrow Interest Account has been calculated to be sufficient to pay interest on the principal amount of the Escrow Term Bonds to the Escrow Redemption Date (September 1, 2026, unless extended as provided in the Indenture).

Prior to the Escrow Closing Date (July 15, 2026, unless extended as provided in the Indenture) and the Escrow Disbursement Date (as defined below)), the Trustee will transfer from the Escrow Interest Account to the Interest Account of the Special Tax Fund on the Business Day prior to each Interest Payment Date prior to the Escrow Redemption Date or the Escrow Disbursement Date, an amount that is equal to the interest payable on the Escrow Term Bonds on such Interest Payment Date. The District may extend the Escrow Closing Date to July 15, 2027, and the Escrow Redemption Date to September 1, 2027, as permitted under the Indenture, provided that moneys from any legally available source have been deposited into the Escrow Interest Account in an amount sufficient so that the amounts then on deposit in the Escrow Interest Account, together with the amounts on deposit in the Escrow Fund, will be sufficient to redeem the Escrow Term Bonds on September 1, 2027 and pay any accrued interest thereon to September 1, 2027.

Assuming the conditions to the release of amounts in the Escrow Fund to the Acquisition and Construction Fund (the “Release Test”) are satisfied (as described below) prior to the Escrow Closing Date, the Trustee will also make disbursements from the Escrow Fund and the Escrow Interest Account to the Acquisition and Construction Fund, in such amounts as directed in writing by the District, on any date other than an Interest Payment Date (each an “Escrow Disbursement Date”), provided that an Escrow Disbursement Date may not occur in the five days preceding an Interest Payment Date. The “Release Test” set forth in the Indenture is as follows:

At least 10 Business Days prior to an Escrow Disbursement Date, the District and the Trustee receive a certificate of an Independent Financial Consultant certifying that the Value of Dis trict Property is at least four

* Preliminary, subject to change.
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times the sum of the principal amount of the Outstanding Bonds and Parity Bonds and the Overlapping Debt, including within such calculation the principal amount of the Escrow Term Bonds. “Value of District Property” means fo r all parcels of property in the District which are subject to the levy of the Special Taxes, either (i) the fair market value, as of the date of the appraisal provided for below of such parcels, including with respect to such parcels the value of the then existing improvements thereon, as estimated by an appraiser, who shall be a State of California certified general real estate appraiser selected and employed by the District, in an appraisal performed within 90 days preceding the date of such determinatio n based upon a methodology of valuation consistent with the City’s policy for appraisals, provided that a mass appraisal methodology may be applied when valuing Developed Property (as defined in the Rate and Method); (ii) the full cash value of any or all of such parcels, including with respect to such parcels the value of the improvements thereon, as set forth on the last equalized assessment roll of the County Assessor of the County of Placer; or (iii) a combination of the value derived from the foregoing paragraphs (i) and (ii). “Overlapping Debt” means with respect to any property within the District, the sum of (a) the aggregate amount of all unpaid assessments which are a lien on such property and which are pledged to secure the repayment of bonds, plus (b) a portion of the principal amount of any outstanding bonds of other community facilities districts which are payable at least partially from special taxes to be levied on such property (the “Other CFD Bonds”) determined by multiplying the aggregate principal amount of the Other CFD Bonds by a fraction, the numerator of which is the amount of special taxes levied for the Other CFD Bonds on such property and the denominator of which is the total amount of special taxes levied for the Other CFD Bonds on all parcels of property which are subject to the levy of such special taxes, based upon information which is available for the then current Fiscal Year.

If the Release Test as described above is satisfied prior to the Escrow Closing Date, the Trustee is required to transfer the amounts then on deposit in the Escrow Fund and the Escrow Interest Account as follows:

First, the Trustee will transfer from the Escrow Interest Account to the Interest Account of the Special Tax Fund an amount sufficient to pay i nterest on the Escrow Term Bonds on each Interest Payment Date that will occur before Special Taxes can be levied and collected in an amount sufficient to pay such interest; Second, the Trustee will transfer from the Escrow Fund to the 2025 Bonds Reserve Subaccount, an amount sufficient to cause the amount on deposit in the 2025 Bonds Reserve Subaccount to be at least equal to the 2025 Bonds Reserve Requirement (calculated as if the disbursement to the Acquisition and Construction Fund has already occurred); and
Third, the Trustee will transfer from the remaining amounts in the Escrow Fund and the Escrow Interest Account, to the Acquisition and Construction Fund, as directed in writing by the Authorized Representative of the District on the Escrow Disbursement Date.

The Trustee will not disburse any funds from the Escrow Fund or the Escrow Interest Account as described above if the Release Test is not satisfied prior to the Escrow Closing Date except that on the Escrow Redemption Date the Trustee will transfer the amounts on deposit in the Escrow Fund and the Escrow Interest Account to the Redemption Account of the Special Tax Fund, to be applied to the redemption of Escrow Term Bonds on the Escrow Redemption Date at the redemption price described under the c aption “THE BONDS— Redemption—Special Mandatory Redemption from Escrow Fund Transfer,” with any excess not required to pay such redemption price transferred to the Interest Account of the Special Tax Fund. After the foregoing transfers, the Escrow Fund and the Escrow Interest Account will be closed.

County Teeter Plan Not Applicable to the District
Although the Placer County Board of Supervisors has adopted the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “T eeter Plan”) which allows each entity levying 335

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secured property taxes in the County to draw on the amount of property taxes levied rather than the amount actually collected, as provided for in Section 4701 et seq. of the California Revenue and Taxation Code , the District is not included in the County Teeter Plan. Consequently, the District may not draw on the County Tax Loss Reserve Fund in the event of delinquencies in Special Tax payments within the District.

Parity Bonds for Refunding Only
The Indenture provides that, upon satisfaction of certain conditions, the District may issue Parity Bonds payable from the Net Taxes and other amounts deposited in the Special Tax Fund (other than in the Administrative Expenses Account therein) and secured by a lien and charge upon such amounts equal to the lien and charge securing the Outstanding Bonds and any other Parity Bonds theretofore issued; provided, however, Parity Bonds may only be issued for the purpose of refunding all or a portion of the Bonds or any Parity Bonds then Outstanding. Among other conditions, in order to issue Parity Bonds to refund all or a portion of the Bonds or any Parity Bonds, the District shall have received a certificate of the Special Tax Administrator certifying that in each Bond Year the Annual Debt Service on the Bonds and Parity Bonds to remain Outstanding following the issuance of the Parity Bonds proposed to be issued is less than the Annual Debt Service on the Bonds and Parity Bonds Outstanding p rior to the issuance of such Parity Bonds . See Appendix E under the caption “DEFEASANCE AND PARITY BONDS.”

THE DISTRICT
General Description of the District
The District is generally located at the southeast corner of Nicolaus Road and Joiner Parkway withi n the City. Approximately 27 acres of property in the District are expected to be subject to the Special Tax (as defined herein) at build-out. The property within the District which is not subject to the levy of the Special Tax consists primarily of parks, open space preserves and other public property.

D.R. Horton plans to develop 198 single family homes in a community being marketed as “Jasper.” As of October 1, 2025, of the 101 lots within Phase 1, D.R. Horton had completed construction of 11 homes (one of which had been conveyed to an individual homeowner), 26 homes were in various stages of construction and 64 lots were in a finished lot condition. The Master Developer is conveying all property within the District planned for residential development to D.R. Horton, either directly or through a land bank, in two phases, after which the Master Developer is not expected to own any property in the District that is expected to be subject to the Special Tax. Within Phase 1, 20 lots were initially purcha sed from the Master Developer by D.R. Horton and the remaining 81 lots were purchased from the Master Developer by the Hearthstone Landbank. As of October 1, 2025, D.R. Horton had acquired an additional 18 lots from the Hearthstone Landbank. There is no guarantee that the Developer will acquire the remaining lots as planned. During the term of the Option Agreement, D.R. Horton is contractually obligated to pay the Special Tax levied on the property subject to such agreement. However, in the event the Option Agreement is terminated prior to D.R. Horton having acquired all of the lots thereunder, the Special Tax would continue to be levied on the property in District owned by the Hearthstone Landbank.

The property within the District is not located in a Fault-Rupture Hazard Zone (formerly referred to as an Alquist-Priolo Earthquake Study Zone) and is not located within one-half mile of an active earthquake fault.

Additionally, the District is not located in a flood plain area . The District is not located in an area which the Department of Forestry and Fire Protection of the State of California (“CalFire”) has classified as an area of concern and is not in an area classified by CalFire as a Very High Fire Hazard Severity Zone. Notwithstanding the foregoing, the property in the District may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. See “SPECIAL RISK FACTORS — Natural Disasters.” A map showing the location of the District and an aerial photograph thereof appear following the Table of Contents. See the caption “PROPERTY OWNERSHIP AND THE DEVELOPMENT” for more information 336

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regarding the Master Developer, D.R. Horton, the Hearthstone Landbank and the ongoing and planned development within the District.

Authorized Uses of Bond Proceeds
Proceeds of the Bonds are authorized to be used to pay for the costs of construction of City facilities, including certain water, sewer, storm drain and street improvements to be owned by the City. See the caption “FINANCING PL AN” and “PROPERTY OWNERSHIP AND THE DEVELOPMENT —The Master Developer.”
Appraisal Report
The estimated assessed value of the property within the District, as shown on the County’s assessment roll for Fiscal Year 2025-26 is approximately $ 12,521,520. A property’s assessed value is not necessarily indicative of its market value. In order to provide information with respect to the value of the taxable property within the District, the City engaged the Appraiser to prepare the Appraisal Report. The Appraiser has an “MAI” designation from the Appraisal Institute and has prepared numerous appraisals for the sale of land -secured municipal bonds. The Appraiser was selected by the City and has no material relationships with the City or the owners of the land within the District other than the relationship represented by the engagement to prepare the Appraisal Report. The City instructed the Appraiser to prepare its analysis and report in conformity with City- approved guidelines and the Appraisal Standards for Land Secured Financings published in 1994 and revised in 2004 by the California Debt and Investment Advisory Commission. A copy of the Appraisal Report is included as Appendix D — “APPRAISAL REPORT” to this Official Statement.

The purpose of the Appraisal Report was to estimate the market value of the property within the District subject to the lien of the Special Taxes. The estimate of market value takes into consideration and is based on the hypothetical condition that certain proceeds from the Bonds will be used to reimburse the Master Developer for public infrastructure improvements completed. The Appraisal Report also takes into account the impact of the Special Tax lien on the property in the District.

Subject to the contingencies, assumptions and limiting conditions set forth in the Appraisal Report, the Appraiser concluded that, as of the October 1, 2025, Date of Value, the market value of the Taxable Property within the District was $42,554,000. In valuing the 198 parcels for which appraisal value was assigned, in order to reach the overall concluded value, the Appraiser used a sales comparison approach and, with respect to the finished lots, applied a land residual analysis. In applying the land residual analysis, the Appraiser deducted the direct and indirect costs from an estimate of the anticipated gross sales price of the improved product and the resultant net sales proceeds are then discounted to present value at an anticipated rate over the development and absorption period.

The Appraisal Report is based upon a variety of assumptions and limiting conditions that are described in Appendix D. The City, the Underwriter and the District make no representation as to the accuracy of the Appraisal Report. There is no assurance that the property within the District can be sold for the prices set forth in the Appraisal Report or that any parcel can be sold for a price sufficient to pay the Special Tax for that parcel in the event of a default in payment of Special Taxes by the land owner. See “SPECIAL RISK FACTORS — Property Values” and Appendix D — “APPRAISAL REPORT.”
Estimated Value-to-Lien Ratios
The appraised value of property within the District is $42,554,000. Dividing the aggregate estimate of value by the principal amount of the Bonds (excluding the principal amount of the Escrow Term Bonds) results in a value to lien ratio of 4.00-to-1 for the District. See “SPECIAL RISK FACTORS — Direct and Overlapping

 Preliminary, subject to change.
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Indebtedness.” The assessed value of the property within the District, as shown on the County’s assessment roll for Fiscal Year 2025-26 is approximately $12,521,520 .

Table 3 below sets the appraised value-to-lien ratio of the Taxable Property within the District based on the appraised values set forth in the Appraisal Report and the principal amount of the Bonds (excluding the principal amount of the Escrow Term Bonds, and allocated based on the projected Fiscal Year 206-27 Special Tax levy). Ownership and development status shown in Table 3 below is as o f October 1 , 2025. Based on ownership status as of October 1, 2025 and assuming no further development activity, individual homeowners, the Master Developer and D.R. Horton are expected to be responsible for approximately 0.59%, 46.75% and

52.67%, respectively, of the projected Fiscal Year 2026-27 Special Tax levy.

Table 4 below sets forth the a summary of the appraised value-to-lien ratios for Taxable Property within the District, by various ranges, based upon development status as of October 1, 2025 and the principal amount of the Bonds (excluding the principal amount of the Escrow Term Bonds).

TABLE 3

CITY OF LINCOLN
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(JOINER RANCH EAST)
PROJECTED FISCAL YEAR 2026-27 SPECIAL TAX LEVY AND V ALUE-TO-LIEN RATIOS Development Status and
Property Ownership (1)
Expected
Residential
Units
Appraised
V alue (2)
Maximum
Fiscal Year
2026-27
Special Tax
Projected
Fiscal Year
2026-27
Special Tax
Levy (3)
Allocated
CFD
Bonds (4)*
V alue-to-
Lien*
Developed Property
Individual Homeowner 1 $ 480,000 $ 3,615 $ 3,615 $ 62,506 7.68 DR Horton CA2 Inc.

Completed Homes 10 4,800,000 36,622 36,622 633,243 7.58 Homes Under Construction 26 6,425,000 97,610 97,610 1,687,800 3.81 Subtotal 37 $ 11,705,000 $ 137,847 $ 137,847 $ 2,383,549 4.91

Final Map Property
DR Horton CA2 Inc. 64 $ 12,480,000 $ 262,164 $ 189,696 $ 3,280,080 3.80 JEN California 24 LLC 97 18,369,000 397,343 287,507 4,971,371 3.69

Total 198 $ 42,554,000 $ 797,354 $ 615,050 $ 10,635,000 4.00

* Preliminary, subject to change.
(1) Based on building permits issued as of October 1, 2025. Ownership information per the Appraisal Report, as of the October 1, 2025, date of value of the Appraisal Report.
(2) Based on the October 1, 2025, date of value of the Appraisal Report. (3) The projected Fiscal Year 2026-27 Special Tax levy is subject to change if additional building permits are issued before June 1, 2026. (4) Allocated based on the projected Fiscal Year 2026-27 Special Tax levy. Excludes the principal amount of the Escrow Term Bonds. See the caption “SOURCES OF PAYMENT FOR THE BONDS—Escrow Fund.” Sources: Piper Sandler & Co.; Integra Realty Resources, Inc.; Goodwin Consulting Group, Inc. 338

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TABLE 4

CITY OF LINCOLN
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(JOINER RANCH EAST)

SUMMARY OF V ALUE-TO-LIEN RATIOS
V alue-to-Lien
Expected
Residential
Units
Appraised
V alue (1)
Maximum
Fiscal Year
2026-27
Special Tax
Projected
Fiscal Year
2026-27
Special Tax
Levy (2)
Percent of
Projected
Special Tax
Levy
Allocated
CFD
Bonds (3)*
Average
V alue-to-
Lien*
Greater than 5:1 11 $ 5,280,000 $ 40,237 $ 40,237 6.5% $ 695,748 7.59 4:1 to 5:1 4 988,462 14,133 14,133 2.3 244,380 4.04
3:1 to 4:1 183 36,285,538 742,984 560,680 91.2 9,694,872 3.74 Less than 3:1 0 0 0 0 0.0 0 n/a
Total 198 $ 42,554,000 $797,354 $615,050 100.0% $ 10,635,000 4.00

* Preliminary, subject to change.
(1) Based on the October 1, 2025, date of value of the Appraisal Report. (2) The projected Fiscal Year 2026-27 Special Tax levy is subject to change if additional building permits are issued before June 1, 2026. (3) Allocated based on the projected Fiscal Year 2026-27 Special Tax levy. Excludes the principal amount of the Escrow Term Bonds. See the caption “SOURCES OF PAYMENT FOR THE BONDS—Escrow Fund.” Sources: Piper Sandler & Co.; Integra Realty Resources, Inc.; Goodwin Consulting Group, Inc.

Direct and Overlapping Debt
The District is included within the boundaries of overlapp ing local agencies providing governmental services. Some of these local agencies have outstanding bonds, and/or the authority to issue bonds, payable from taxes or assessments. The existing and authorized indebtedness payable from taxes and assessments t hat may be levied upon the property within the District is shown in Table 5 below, excluding the Bonds. In addition to current debt, new community facilities districts and/or special assessment districts could be formed in the future encompassing all or a portion of the property within the District; and such districts or the agencies that formed them could issue more bonds and levy additional special taxes or assessments. 339

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TABLE 5

CITY OF LINCOLN
COMMUNITY FACILITIES DISTRICT NO. 2025-1 (JOINER RANCH EAST)

DIRECT AND OVERLAPPING DEBT
AS OF SEPTEMBER 1, 2025
2025-26 Local Secured Assessed Valuation: $12,521,520 (Land and Improvements)

DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 10/1/25 Sierra Joint Community College District School Facilities Improvement District No. 4 0.012% $ 22,489 Western Placer Unified School District 0.083 80,623
City of Lincoln Community Facilities District No. 2025-1 100.000 0 (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $ 103,112

OVERLAPPING GENERAL FUND DEBT:

Placer County Certificates of Participation 0.011% $ 7,791 Western Placer Unified School District Certificates of Participation 0.083 113,626 City of Lincoln General Fund Obligations 0.097 19,945
Placer County Mosquito and Vector Control Certificates of Participation 0.011 103 TOTAL OVERLAPPING GENERAL FUND DEBT $ 141,465

COMBINED TOTAL DEBT $ 244,577 (2)

Ratios to 2025-26 Assessed Valuation:

Direct Debt ($0) ............................................................................... 0.00% Total Direct and Overlapping Tax and Assessment Debt ................... 0.82% Combined Total Debt ......................................................................... 1.95%

(1) Excludes the Bonds.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.

Table 6 below describes the estimated Fiscal Year 2025-26 effective tax burden for the development in the District based on the average appraised value of homes within each plan type shown in the Appraisal Report, the Fiscal Year 2025-26 Special Tax levy on Developed Property at the Assigned Special Tax rates and Fiscal Year 2025-26 actual levies for all other overlapping taxing jurisdictions. Based on the foregoing, the projected effective tax rates to be levied on Developed Property in the District ranges from approximately 1.86 % to 1.92% of such average appraised value . See “PROPERTY O WNERSHIP AND THE DEVELOPMENT” and Appendix D — “APPRAISAL REPORT” for more information regarding the plan types shown in the Appraisal Report.
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TABLE 6

CITY OF LINCOLN
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(JOINER RANCH EAST)

ILLUSTRATIVE TAX BILL
Assumptions Plan 1547 Plan 1678 Plan 1811 Plan 2311
Base Price (1) $ 497,990 $ 531,990 $ 552,990 $ 595,815 Homeowner’s Exemption (7,000) (7,000) (7,000) (7,000) Net Assessed Value $ 490,990 $ 524,990 $ 545,990 $ 588,815

Ad V alorem Tax Rate (2) Rate
Base Property Tax 1.000000% $ 4,910 $ 5,250 $ 5,460 $ 5,888 Sierra Coll SFID #4 B&I 2018 Series A 0.002190 11 11 12 13 Sierra Coll SFID #4 B&I 2018 Series B 0.002723 13 14 15 16 Sierra Coll SFID #4 B&I 2018 Series C 0.000403 2 2 2 2
W Placer Unif B&I 2014 Series 2015 0.006841 34 36 37 40 W Placer Unif B&I 2014 Series 2017B 0.007573 37 40 41 45 W Placer Unif B&I 2014 Series 2018C 0.005424 27 28 30 32 W Placer Unif B&I 2016 Series 2017A 0.008895 44 47 49 52 W Placer Unif B&I 2016 Series 2018B 0.006152 30 32 34 36 Total Ad V alorem Taxes 1.040201% $ 5,107 $ 5,461 $ 5,679 $ 6,125

Direct Charges (3)
Placer Mosquito & Vector Control $ 21 $ 21 $ 21 $ 21 Placer Mosquito & Vector Control Measure H Zone 7 15 15 15 15 City of Lincoln CFD No. 2018-1 MR (4) 850 850 850 850
City of Lincoln CFD No. 2018-2 MR (4) 83 83 83 83
City of Lincoln CFD No. 2025-1 (Joiner Ranch East) (5) 3,464 3,544 3,648 4,016 Total Direct Charges $ 4,432 $ 4,512 $ 4,616 $ 4,984

Total Taxes and Direct Charges $ 9,540 $ 9,973 $ 10,296 $ 11,109 Percentage of Average Base Price 1.92% 1.87% 1.86% 1.86%

(1) Represents the base price for each plan type included in the Appraisal Report. (2) Based on the Fiscal Year 2025-26 ad valorem tax rates for the tax rate area within the District. Ad valorem tax rates are subject to change in future years.
(3) Based on the Fiscal Year 2025-26 charges identified on the Placer County issued property tax bills. Charges subject to change in future years. (4) Represents the Maximum Special Tax rate for Developed Property for fiscal year 2025-26, as provided by the CFD Administrator, Francisco and Associates.
(5) Represents the Maximum Special Tax rate for Developed Property for Fiscal Year 2025-26. Special Taxes will be levied for the first time in Fiscal Year 2026-27.

Sources: Integra Realty Resources; Placer County Tax Collector’s Office; Goodwin Consulting Group, Inc.

Delinquency History
Fiscal Year 2026-27 will be the first year in which Special Taxes are levied within the District.

PROPERTY OWNERSHIP AND THE DEVELOPMENT
The information about the property in the District contained in this Official Statement has been provided by representatives of the Master Developer and D.R. Horton and has not been independently confirmed or verified by the Underwriter, the City or the District. The Underwriter, the City, and the District make no representation as to the accuracy or adequacy of the information co ntained in this caption. There may be material adverse changes in this information after the date of this Official Statement. Neither the Bonds nor the Net Taxes securing the Bonds and any Parity Bonds are personal obligations of the Master Developer or D.R.

Horton or any affiliate thereof or any other property owner and, in the event that any property owner defaults in the payment of its Special Taxes, the District may proceed with judicial foreclosure but has no direct recourse to the assets of any property owner or any affiliate thereof. See the caption “SPECIAL RISK FACTORS.” Notwithstanding the belief of the Master Developer or D.R. Horton that they will have sufficient funds to complete their respective planned development in the District, n o assura nce can be given that amounts 341

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necessary to fund the remaining planned development in the District will be available when needed. None of the Master Developer, D.R. Horton or any other entity or person, is under any legal obligation of any kind to expend funds for the development of the property as planned in the District. Any contributions by the Master Developer or D.R. Horton or any other entity or person to fund the costs of its development are entirely voluntary. If and to the extent the aforemention ed sources are inadequate to pay the costs to complete the planned development by the Master Developer or D.R. Horton within the District, the remaining portions of such development may not be completed. The Master Developer and D.R. Horton have no legal obligation to Bondholders to make any such funds available for construction or development, or the payment of ad valorem property taxes or the Special Taxes. See the caption “SPECIAL RISK FACTORS.” General
D.R. Horton plans to develop 198 single family ho mes in a community being marketed as “Jasper.” D.R. Horton is acquiring property within the District in phased takedowns from either the Master Developer directly, or from the Hearthstone Landbank. As described further below under the caption “D.R. Horton—The Hearthstone Landbank Structure,” within Phase 1, 20 lots were initially purchased from the Master Developer by D.R. Horton and the remaining 81 lots were purchased from the Master Developer by the Hearthstone Landbank. As of October 1, 2025, D.R. Ho rton had acquired an additional 18 lots from the Hearthstone Landbank. As of October 1, 2025, the Master Developer owned all of the 97 residential lots within Phase 2 of the District, all of which were in a partially improved condition.

The Master Developer
General. JEN California 24 LLC, a California limited liability company (previously defined as the “Master Developer”) is affiliated with JEN Partners LLC, a Delaware limited liability company (“JEN”). Clifton Taylor is Vice President of the Master Dev eloper, and President of Taylor Builders LLC, a California limited liability company (“Taylor Builders”), which is responsible for the day -to-day management of Master Developer’s development activities within the District, including overseeing entitlement, development and sales activities for the project.

JEN was founded by Reuben Leibowitz in 2005. Prior to JEN, Mr. Leibowitz founded Warburg Pincus’ Real Estate group in 1984, which he led through 2004. While at Warburg Pincus, he was directly responsibl e for the investment of equity across four homebuilders, a residential land developer and other real estate opportunities. Mr. Leibowitz has served as a Director of four NYSE listed real estate companies, including Lennar Homes, and is a current board member of Simon Property Group, the largest global mall REIT.

Taylor Builders, based in Roseville California, was founded in 2017 to invest in, entitle and develop primarily residential real estate in the Sacramento region, San Joaquin Valley, Bay Area, and Northern Nevada markets. Taylor Builders operates under a mutually exclusive regional partnership agreement with JEN. JEN specializes in residential real estate with longstanding relationships in the residential land, homebuilding, and workforce housing ar enas. Additionally, JEN is actively engaged in land banking and specialty finance transactions for public and private homebuilding operations throughout the United States.

Since initiating the partnership JEN and Taylor Builders have collaborated on 29 se parate real estate investments. Five of the real estate projects have been added in the preceding twelve -month period with investment from JEN’s current Fund 8 reflecting a growing partnership. Through 162 dispositions, Taylor Builders has delivered 9,842 units to market for total consideration exceeding $1.15 billion from JEN-supported activities. The partnership has a pipeline of approximately 7,000 units either owned or controlled under option agreements.

Master Developer Development Plan . The Master Developer originally owned all of the property within the District. The Master Developer conveyed the 101 lots within Phase 1 to D.R. Horton in April 2025, and is under contract to convey the remaining 97 lots within Phase 2 to D.R. Horton, which is expected to occur 342

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in March 2026, after which the Master Developer is not expected to own any property in the District that is expected to be subject to the Special Tax. The property within the District which is not subject to the levy of the Special Tax consists primarily of parks, open space preserves and other public property.

The Master Developer is responsible for constructing all of the major infrastructure (sewer, water, storm drains, utilities, and arterial roads) necessary to develop the property within the District and for delivering finished lots to D.R. Horton. The maj or infrastructure (sewer, water, storm drains, utilities, and arterial roads) necessary to develop the property within the District was substantially completed as of the Date of Value and has since been completed. The in -tract infrastructure within the Di strict was complete as of the date of value and has since been completed. The Master Developer has spent approximately $19.1 million on backbone and in-tract infrastructure costs within the Distric t, all of which has been funded from internal sources. As of November 1, 2025, all of the lots within Phase 2 were in a finished condition.

D.R. Horton
General. As previously defined in this Official Statement “D.R. Horton” is D.R. Horton CA2, Inc., a California corporation. D.R. Horton is a wholly-owned subsidiary of D.R. Horton, Inc., a Delaware corporation (“D.R. Horton, Inc.”). D.R. Horton, Inc. is a public company whose common stock is traded on the New York Stock Exchange under the symbol “DHI.” Founded in 1978 and headquartered in Arlington, Texas, D.R. Horton, Inc. constructs and sells homes through its operating divisions in 126 markets in 36 states under the names of D.R. Horton, America’s Builder, Emerald Homes, Express Homes and Freedom Homes.

D.R. Horton, Inc. is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in accordance therewith files reports, proxy statements and other information, including financial statements, with the Securities and Exchange Commission (the “SEC”). Such filings, particularly, D.R. Horton, Inc.’s Annual Report on Form 10 -K for the fiscal year ended September 30, 2024, as filed with the SEC on November 19, 2024, and D.R. Horton’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 as f iled with the SEC on July 23, 2025, set forth certain data relative to the consolidated results of operations and financial position of D.R. Horton, Inc. and its subsidiaries, including D.R.

Horton, as of such dates.

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

Copies of D.R. Horton, Inc.’s Annual Report and each of its other quarter ly and current reports, including any amendments, are available from D.R. Horton, Inc.’s website at www.drhorton.com.

The foregoing websites are and references to filings with the SEC are given for reference and convenience only, and the information on suc h websites and on file with the SEC does not form a part of this Official Statement and is not incorporated by reference herein. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such websites. Neither D.R. Horton nor any other entity or person is obligated to advance funds for construction or development or to pay ad valorem property taxes or the Special Taxes and investors should not rely on the information and financial statements contained on such websites in evaluating whether to buy, hold or sell the Bonds. The information contained on such websites may be incomplete or inaccurate and has not been reviewed by the School District, the District or the Underwriter.

D.R. Horton PSA. The Master Developer and D.R. Horton entered into a Purchase and Sale Agreement and Joint Escrow Instructions, dated July 28, 2023 (as amended, the “D.R. Horton Purchase Agreement”) for the 101 lots in Phase 1 (the “Phase 1 Lots”) and the 97 lots in Phase 2 (the “Phase 2 Lots”). 343

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Prior to the close of escrow on the Phase 1 Lots, D.R. Horton partially assigned its rights under the D.R. Horton Purchase Agreement to the Hearthstone Landbank, pursuant to a certain Partial Assignment and Assumption Agreement (the “Partial Assignment Agreement”), entered into by and between D.R. Horton and the Hearthstone Landbank, dated for reference April 8, 2025, including the right to acquire 81 of the Phase 1 Lots and the right of first offer to acquire the Phase 2 Lots if D. R. Horton elects to landbank the Phase 2 Lots, in D.R. Horton ’s sole and absolute discretion. Pursuant to the D.R. Horton Purchase Agreement, D.R. Horton agrees to close escrow on the Phase 2 Lots eleven months after the closing of the Phase 1 Lots, or on March 10, 2026, provided such lots are in finished lot condition, and subject to extension to May 31, 2027 (the “Outside Closing Date”).

If the Phase 2 Lots are not in finished lot condition by the Outside Closing Date, D.R. Horton can elect to either (i) waive the condition and complete the transaction with either a holdback or a reduction in the purchase price pursuant to the D.R. Horton Purchase Agreement, (ii) terminate the D.R. Horton Purchase Agreement and receive a return of its deposit, or (iii) extend the closing for up to six months. If the Phase 2 Lots are not in finished lot condition by the end of the six -month extension period, D.R. Horton may elect either option (i) or option (ii).

Under the D.R. Horton Purchase Agreement, D.R. Horton has made a deposit for the Phase 2 Lots to the Master Developer of approximately 15% of the purchase price of the Phase 2 Lots.

D.R. Horton Development Plan. D.R. Horton plans to develop 198 single family homes in a community being marketed as “Jasper.” As o f October 1, 2025, of the 101 Phase 1 Lots, D.R. Horton had completed construction of 11 homes (one of which had been conveyed to an individual homeowner), 26 homes were in various stages of construction and 64 lots were in a finished lot condition. As of October 1, 2025, the Master Developer owned all 97 Phase 2 Lots, all of which were in a partially improved condition. Pursuant to the D.R.

Horton Purchase Agreement, the Master Developer is responsible for developing the Phase 2 Lots to create finished lots as a condition to D.R. Horton acquiring such lots.

The homes within Jasper are being constructed across four different floor plans, ranging from 1,547 square feet to 2,311 square feet, and with base prices as of October 1, 2025 ranging from approximately $497,990 to approximately $595,815. Except as described in this Official Statement and except for those consents, permits, authorizations, certifications and approvals of governmental entities required in the ordinary course of development, D.R. Horton believes that there is no impediment to construction or obtaining land use entitlements which could be reasonably expected to have a material adverse effect on its ability to complete the planned development of its property within the District as described in the Official Statement.

D.R. Horton currently expects to complete construction of the homes within Phase 1 of Jasper by April 2027. D.R. Horton currently expects to acquire the Phase 2 Lots in March 2026, begin home construction within Phase 2 soon thereafter, and complete construction of homes within Phase 2 by October 2028. There is no guarantee that D.R. Horton will acquire the Phase 2 lots as planned. 344

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The following table summarizes the homes planned within Jasper and development status as of October 1, 2025.

TABLE 7

CITY OF LINCOLN
COMMUNITY FACILITIES DISTRICT NO. 2025-1
(JOINER RANCH EAST)
DEVELOPMENT STATUS—JASPER BY D.R. HORTON
(As of October 1, 2025)
Plan
Total
Units
Planned(1) Closings
Completed
Homes/Homes
Under
Construction(2)
Finished
Lots(3)
Partially
Improved
Lots(4)
Base Home
Prices(5)
1547 37 0 8 12 17 $497,990
1678 57 1 8 18 30 531,990
1811 63 0 13 17 33 552,990
2311 41 0 7 17 17 595,815
Total 198 1 36 64 97

(1) Includes 97 partially improved lots owned by the Master Developer and under contract with D.R. Horton, 63 finished lots owned by the Hearthstone Landbank, 37 lots/homes owned by D.R. Horton, and one home owned by an individual homeowner.
(2) Includes ten completed homes (including two model homes) an d 26 homes in various stages of construction, three of which were in escrow to individual homeowners as of October 1, 2025. (3) 63 of such finished lots were owned by the Hearthstone Landbank as of October 1, 2025, and one was owned by D.R. Horton.

See the caption “—The Hearthstone Landbank.”
(4) Represents the 97 Phase 2 Lots owned by the Master Developer as of October 1, 2025. (5) Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives, and any selling concessions, mortgage rate buydowns or price reductions currently being offered.

Source: D.R. Horton.

Although the information in this Official Statement reflects the current development expectations of D.R.

Horton, no assurance can be given that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans or base prices set forth above will not change after the date of this Off icial Statement. D.R. Horton reserves the right to change its development plans at any time without notice. Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation by the homebuyer. See “SPECIAL RISK FACTORS — Risks of Real Estate Secured Investments Generally.”
D.R. Horton Financing Plan. To date, D.R. Horton has financed its land acquisition and various site development and home construction costs related to its Jasper project in the District through internally generated funds (which may include home sales revenue and funding from its parent company) . D.R. Horton expects to use internal funding (which may include homes sales revenue and funding from its parent company) to complete the development of D.R. Horton’s project in the District. However, home sales revenues from the D.R. Horton’s activities in the District are not segregated and set aside for completing its development activities in the District.

As of October 1, 2025, D.R. Horton has expended approximately $12.1 million on its Jasper project in the District, including land acquisition costs, site development costs, permit and impact fees, direct and indirect homebuilding costs, and marketing and sales costs (exclusive of in ternal financing repayment, corporate overhead and other carry costs) . D.R. Horton expects to incur an additional approximately $72.5 million in remaining land acquisition costs, site development costs, permits and impact, direct and indirect homebuilding costs, and marketing and sales costs to incur approximately on remaining land acquisition costs, site development costs, permit and impact fees, direct and indirect homebuilding costs, and marketing and sales costs 345

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(exclusive of internal financing repayment, corporate overhead and other carry costs) between October 1, 2025 and full build-out of the 198 homes proposed to be constructed by D.R. Horton in the District.

Although D.R. Horton expects to have sufficient funds available to complete its developm ent in the District as described in this Official Statement, there can be no assurance that D.R. Horton will have timely access to the sources of funds which will be necessary to complete the remaining proposed development in the District. Neither D.R. Ho rton nor any of its related entities has any legal obligation to Bondholders to make such funds available to fund the remaining development costs or to pay ad valorem property taxes or Special Taxes related to its property in the District. Any contributions by D.R. Horton or D.R. Horton, Inc., to fund the costs of such development are entirely voluntary. Many factors beyond D.R. Horton’s control, or a decision by D.R. Horton to alter its current plans, may cause the actual sources and uses to differ from the projections.

If and to the extent that internal funding, including but not limited to home sales revenues and corporate financing by D.R. Horton, Inc. is inadequate to pay the costs to complete the planned development by D.R.

Horton within the District and other financing by D.R. Horton is not put into place, there could be a shortfall in the funds required to complete the proposed dev elopment by D.R. Horton in the District and the remaining portions of D.R. Horton’s project in the District may not be developed. See the caption “SPECIAL RISK FACTORS.”
The Hearthstone Landbank Structure. On April 4, 2025 (the “Phase 1 Closing”), pursuant to the D.R.

Horton Purchase Agreement and Partial Assignment Agreement, D.R. Horton acquired 20 Phase 1 Lots from the Master Developer. At the same time, in connection with a land banking transaction, the Hearthstone Landbank acquired the remaining 81 lots in Phase 1 from the Master Developer and entered into an Option and Development Agreement (the “Option Agreement”) with D.R. Horton whereby D.R. Horton has the option, but not the obligation, to purchase the 81 lots owned by the Hearthstone Landbank pursuant to a takedown schedule.

Assuming D.R. Horton acquires the Phase 2 Lots as planned, D.R. Horton may elect to either acquire the Phase 2 Lots directly from the Master Developer or landbank such lots. If D.R. Horton elects to landbank the Phase 2 Lots, which it may do so in its sole and absolute discretion, the Hearthstone Landbank has the right of first offer to acquire and be the landbanker for the Phase 2 Lots. There is no guarantee that D.R. Horton will acquire the Phase 2 Lots or, if it acquires the Phase 2 Lots, that the Hearthstone Landbank will landbank such lots.

As of October 1, 2025, D.R. Horton had completed the first takedown comprising 18 lots from the Hearthstone Landbank. [On October __, 2025, D.R. Horton requested a three -month extension of the second takedown scheduled for October 18, 2025, comprising 18 lots. No assurance can be given that [the Hearthstone Landbank will approve the three -month extension or that] D.R. Horton will acquire the remaining 63 lots in Phase 1 from the Hearthstone Landbank as planned.
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The following table reflects D.R. Horton’s expected schedule for acquiring the 81 lots from the Hearthstone Landbank:

Projected Lot Takedown Schedule – Hearthstone Landbank
(As of October 1, 2025)

Phase/Takedown
No.

Scheduled
Acquisition Date (1)
No. Lots
Scheduled
to be Acquired
Cumulative No.

Lots to be
Acquired (2)

1 Jul 2025 18 18
2 Oct 2025 18 36
3 Jan 2026 18 54
4 Apr 2026 18 72
5 Jul 2026 9 81
81 (1) Takedown date is the 18th day of the month.
(2) As of October 1, 2025, D.R. Horton has acquired the first takedown comprising 18 lots. [On October __, 2025, D.R. Horton requested a three-month extension of the second takedown comprising 18 lots. No assurance, however, can be given that [the three-month extension will be granted or] the acquisition of the remaining 63 lots will be acquired as planned.

Source: D.R. Horton.

To D.R. Horton’s actual knowledge, it is not in default under the Option Agreement. However, there is no gua rantee that D.R. Horton will acquire the remaining Phase 1 Lots from the Hearthstone Landbank as planned.

Under the terms of the Option Agreement, the Hearthstone Landbank agreed to provide D.R. Horton the exclusive right and option to purchase all 81 Phase 1 Lots acquired by the Hearthstone Landbank in consideration for (a) an initial option payment, which payment has been made to the Hearthstone Landbank; (b) the covenants of D.R. Horton to timely pay the option payments under the Option Agreement on a monthly basis in arrears; and (c) upon exercise of the option, the payment of the purchase price for each set of units acquired.

In addition, pursuant to the Option Agreement and with some limitations, the Hearthstone Landbank has granted D.R. Horton a license to enter upon the property subject to the Option Agreement to construct homes before it acquires the lots from the Hearthstone Landbank.

The option under the Option Agreement expires on the earlier of (i) the last date permitted for the final takedown specified on the takedown schedule (July 18, 2026) and the expiration of any applicable cure period, or (ii) the date D.R. Horton has acquired all 81 lots in accordance with the Option Agreement. The failure to timely acquire lots could result in the termination of the option and D.R. Horton will no longer have a right to purchase any of the remaining lots under the Option Agreement. The Option Agreement does provide D.R.

Horton a one-time option to acquire all of the lots at once. In the event th at D.R. Horton does not exercise its option, the Hearthstone Landbank being an investor only and not a homebuilder, would likely attempt to sell such units to another merchant builder. See the caption “—The Hearthstone Landbank” below.

During the term of the Option Agreement, D.R. Horton is obligated to pay all property taxes and carry- costs related to the lots owned by the Land Bank.

The Hearthstone Landbank. According to the Hearthstone Landbank, t he Hearthstone Landbank is ultimately controlled by Hearthstone, Inc., a California corporation (“ Hearthstone”). Hearthstone is devoted exclusively to investing in residential housing developments on behalf of institutional capital. Hearthstone’s investments include single -family subdivisions, condominium and townhouse developments, master planned 347

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communities, land development projects and mixed -use communities. Hearthstone was the first, and is today among the largest institutional investment managers in the country that is dedicated to the residential bu ilding industry. At the time Hearthstone was organized in 1992, homebuilders across the United States were suffering from a shortage of capital resulting from changes in federal laws affecting the banking industry and from a loss of investor confidence in real estate. Hearthstone was organized in 1992 in response to changes in federal laws affecting the banking industry that greatly diminished the availability of investment capital for the homebuilding industry and in recognition of the long -term investment opportunity that residential homebuilding presents for institutional investors. Hearthstone manages funds for numerous public and private pension plans, university endowments, Fortune 100 companies, Wall Street investment banks and family offices. Hea rthstone invests these funds on behalf of its investors in homebuilding and residential lot development projects with public and private homebuilders in select target markets throughout the United States. Hearthstone has funded and managed over $16.5 bill ion in investments to construct over 140,000 homes and lots in 22 states since its inception.

Hearthstone’s principal office is located in Calabasas, California.

SPECIAL RISK FACTORS
The Bonds have not been rated by any rating agency, and the purchase of the Bonds involves significant risks that are not appropriate for certain investors. The following is a discussion of certain risk factors which should be considered, in addition to other matters set forth herein, in evaluating the investment quality of t he Bonds. This discussion does not purport to be comprehensive or definitive and does not purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the Bonds. The occurrence of one or more of t he events discussed herein could adversely affect the ability or willingness of property owners in the District to pay their Special Taxes when due. Such failures to pay Special Taxes could result in the inability of the District to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District. See “— Property Values” below.

Risks of Real Estate Secured Investments Generally
The Bond Owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation : (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for competitive properties in such area, and the market value of residential property or buildings and/or sites in the event of sale or foreclosure; (ii) changes in real estate tax rates and other operating ex penses, governmental rules (including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; (iii) natural disasters (including, without limitation, earthquakes, wildfires and floods), which m ay result in uninsured losses; (iv) adverse changes in local market conditions; and (v) increased delinquencies due to rising mortgage costs and other factors.

No assurance can be given that the property owners within the District will pay Special Taxes in the future or that they will be able to pay such Special Taxes on a timely basis. See the caption “ — Enforcement Delays — Bankruptcy” for a discussion of certain limitations on the District’s ability to pursue judicial proceedings with respect to delinquent parcels.

Insufficiency of Special Tax Revenues
As discussed below, the Special Taxes may not produce revenues sufficient to pay the debt service on the Bonds due to nonpayment of the amounts levied.

In order to pay debt service on the Bonds, it is gene rally necessary that the Special Taxes be paid in a timely manner. Should the Special Taxes not be paid on time, the District has established the 2025 Bonds Reserve Subaccount under the Indenture to be maintained in an amount equal to the 2025 Bonds Reserve Requirement to pay debt service on the Bonds to the extent other funds are not available. See “SOURCES OF 348

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PAYMENT FOR THE BONDS — Reserve Account of the Special Tax Fund.” The District will covenant in the Indenture to maintain in the 2025 Bonds Reserve Subaccount an amount equal to the 2025 Bonds Reserve Requirement, subject, however, to the availability of Net Taxes in amounts sufficient to do so and to the limitation that the District may not levy the Special Tax in any Fiscal Year at a rate in exce ss of the maximum amounts permitted under the Rate and Method . See Appendix A and Appendix E hereto. As a result, if a significant number of Special Tax delinquencies occurs within the District, the District could be unable to replenish the 2025 Bonds Reserve Subaccount to the 2025 Bonds Reserve Requirement due to the limitations on the amount of the Special Tax that may be levied. If such defaults were to continue in successive years, the 2025 Bonds Reserve Subaccount could be depleted and a default on the Bonds could occur.

The 2025 Bonds Reserve Subaccount only secures and the amounts therein are only available to pay the principal of, redemption premium, if any, and interest on the Bonds. In connection with the issuance of a series of Parity Bonds, if any, the District may establish additional Subaccounts within the Reserve Account which secures such series of Parity Bonds. Such additional Subaccounts within the Reserve Account established for Parity Bonds will not secure the Bonds.

The Act provides that, if any property within the District not otherwise exempt from the Special Tax is acquired by a public entity through a negotiated transaction, or by gift or devise, the Special Tax will continue to be levied on and enforceable against the public entity that acquired the property. In addition, the Act provides that, if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be treated as if it were a special assessment and be paid from the eminent domain award. The constitutionality and operation of these provisions of the Act have not been tested in the courts, but it is doubtful that they would be upheld as to, for example, property owned by the federal government. If for any reason property within the District becomes exempt from taxation by reason of ownership by a non-taxable entity such as the federal government or another public agency, subject to the limitation of the Maximum Special Tax, the Special Tax will be reallocated to the remaining taxable parcels within the District. This would result in the owners of such property paying a greater amount of the Special Tax and could have an adverse impact upon their willingness a nd/or ability to pay the Special Tax. Moreover, if a substantial portion of additional land within the District became exempt from the Special Tax because of public ownership, or otherwise, the Maximum Special Tax which could be levied upon the remaining acreage might not be sufficient to pay principal of and interest on the Bonds when due and a default will occur with respect to the payment of such principal and interest.

The District will covenant in the Indenture that, under certain circumstances, it will institute foreclosure proceedings to sell any property with delinquent Special Taxes in order to obtain funds to pay debt service on the Bonds. If foreclosure proceedings were ever instituted, any mortgage or deed of trust holder could, but would not b e required to, advance the amount of the delinquent Special Tax to protect its security interest. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales ” for provisions which apply in the event of such foreclosure and which the District is required to follow in the event of delinquencies in the payment of the Special Tax.

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 2025 Bonds Reserve Subaccount has been depleted) pending such sales or the prosecution of such foreclosure proceedings and receipt by the City on behalf of the District of the proceeds of sale. The District may adjust the future Special Tax levied on taxable parcels in the District, subject to limitations described above under the caption “THE DISTRICT — Rate and Method of Apportionment of Special Tax,” to provide an amount required to pay interest on and principal of the Bonds, and the amount, if any, necessary to replenish the 2025 Bonds Reserve Subaccount to an amount equal to the 2025 Bonds Reserve Requirement, and to pay all current expenses. There is, however, no assurance that the total amount of the Special Tax that could be levied and collected against taxable parcels in the District will be at all times sufficient to pay the amounts required to be paid by the Indenture, even if the Special Tax is levied at the Maximum Special Tax rates. See “— Enforcement Delays — Bankruptcy.”
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No assurance can be given that the real pr operty subject to sale or foreclosure will be sold, or if sold, that the proceeds of sale will be sufficient to pay any delinquent installments of the Special Tax. The Act does not require the City to purchase or otherwise acquire any lot or parcel of pro perty to be sold at foreclosure if there is no other purchaser at such sale. The Act and the Indenture do specify that the Special Tax will have the same lien priority as for ad valorem property taxes in the case of delinquency. Section 53356.6 of the Ac t requires that property sold pursuant to foreclosure under the Act be sold for not less than the amount of judgment in the foreclosure action, plus post judgment interest and authorized costs, unless the consent of the owners of 75% of the Outstanding Bonds and any Parity Bonds is obtained.

Prior to July 1, 1983, the right of redemption from foreclosure sales was limited to a period of one year from the date of sale. Under legislation effective July 1, 1983, the statutory right of redemption from such foreclosure sales has been repealed. However, a period of 20 days must elapse after the date on which the notice of levy of the interest in real property was served on the judgment debtor before the sale of such lot or parcel can be made. Furthermore, if the purchaser at the sale is the judgment creditor (e.g., the District), an action may be commenced by the delinquent property owner within 90 days after the date of sale to set aside such sale. The constitutionality of the aforementioned legislation, which repeals the one year redemption period, has not been tested and there can be no assurance that, if tested, such legislation will be upheld. (Section 701.680 of the Code of Civil Procedure of the State.)
Inability to Access Escrow Fund
As described above under the caption “SOURCES OF PAYMENT FOR THE BONDS—Escrow Fund,” certain conditions must be satisfied prior to the transfer of any money from the Escrow Fund to the Acquisition and Construction Fund (where it would be available to pay for facilities). Th e failure to satisfy all of these conditions would mean that no additional money could be transferred from the Escrow Fund to the Acquisition and Construction Fund, and such funds will be applied to effect an early redemption of the Escrow Term Bonds, without premium. See “THE BONDS—Redemption.” There can be no assurance that the conditions precedent contained in the Indenture will be satisfied prior to the Escrow Closing Date of July 15, 2026 in order for the funds to be released from the Escrow Fund to the Acquisition and Construction Fund.

If and to the extent that the conditions precedent in the Indenture have not been satisfied prior to the Escrow Closing Date, the amount then on deposit in the Escrow Fund will never be available for transfer to the Acquisition and Construction Fund, and such amount will never be available for the acquisition or construction of facilities, effectively increasing the cost of development in the District to the Master Developer.

Impact of Economic Conditions on the Development in the District Certain events and factors which negatively affect the regional, State and national economies could have an adverse effect on the pace at which D.R. Horton is able to complete and sell homes and demand by and the ability of individuals to purchase homes within the District. Such events and factors could include rising inflation and interest rates, persistent supply chain issues, and global market instability caused by geopolitical events.

Any adverse impact of the foregoing and other economic factors on the projects in the District and the real estate market in general cannot be predicted.

Increasing Mortgage Interest Rates
Increases in mortgage interest rates could have a negative impact on the estimated absorption rates of the planned for-sale residential units in the District described herein. With respect to entry -level households, increased mortgage interest rates may adversely impact the affordability of homes and may increase mortgage payment levels for owning a lower-priced home relative to renting a residence, thereby making purchasing less attractive. With respect to move-up households, higher mortgage interest rates may impact the desire of current homeowners to move from their present home due to the fact that their present home likely has a relatively low mortgage interest rate. In addition, in such instances, a new home would likely have a higher interest rate on a 350

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new mortgage loan as well as a higher purchase price and property taxes. Such considerations may decrease the desire for move-up households to purchase a new home. The foregoing factors could reduce demand for and/or the ability to achieve the sales prices of the planned for-sale homes within the District as described herein.

Concentration of Ownership
Based on development and ownership status as of October 1, 2025, and assuming no further development activity, individual homeowners , the Master Developer and D.R. Horto n are expected to be responsible for approximately 0.59%, 46.75% and 52.67%, respectively, of the projected Fiscal Year 2026-27 Special Tax levy. The timely payment of principal of and interest on the Bonds depends upon the willingness and ability of the current and future property owners in the District to pay the Special Taxes prior to delinquency.

General and local economic conditions and governmental requirements or restrictions may affect the willingness of the current property owners, or any successor property owners, to pay the Special Taxes, and there is no assurance that the current property owners, or any successor property owners, will pay such Special Taxes even if financially able to do so. Due to the concentration of ownership of the property within the District, a failure by D.R. Horton or subsequent home builders in the District or any successor property owner thereto to pay the Special Taxes may result in a default in the payment of debt service on the Bonds. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT.”
Failure to Develop Properties
Development of property within the District may be subject to unexpected delays, disruptions and changes which may affect the willingness and ability of the Master Developer, D.R. Horton , any future developers, or any property owner to pay the Special Tax when due. Land development is subject to comprehensive federal, State and local regulations. Approval is required from various agencies in connection with the layout and design of developments, the nature and extent of improvements, construction activity, land use, zoning, school and health requirements, as well as numerous other matters. There is always the possibility that such approvals will not be obtained or, if obtained, will not be obtained on a timely basis. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT.” Failure to obtain any such agency approval or satisfy such governmental requirements would adversely affect planned land development. Development of land in the District is also subject to the availability of water. Finally, development of land is subject to economic considerations.

As of the date of this Official Statement, the property owned by the Master Developer and D.R. Horton ranged from completed homes to partially improved lots. No assurance can be given that the remaining proposed development will be partially or fully complet ed; and for purposes of evaluating the investment quality of the Bonds, prospective purchasers should consider the possibility that such parcels will remain unimproved.

Undeveloped or partially developed land is inherently less valuable than developed land and provides less security to the Holders should it be necessary for the District to foreclose on the property due to the nonpayment of the Special Tax. The failure to complete development in the District as planned, or substantial delays in the completion of the development due to litigation or other causes may reduce the value of the property within the District and increase the length of time during which the Special Tax will be payable from undeveloped property, and may affect the willingness and abil ity of the owners of property within the District to pay the Special Tax when due.

There can be no assurance that land development within the District will not be adversely affected by future deterioration of the real estate market and economic conditions or future local, State and federal governmental policies relating to real estate development, an increase in mortgage interest rates, the income tax treatment of real property ownership, or the national economy. A slowdown of the development process and the absorption rate could adversely affect land values and reduce the ability or desire of the property owners to pay the Special Tax. In that event, there could be a default in the payment of principal of, and interest on, the Bonds when due.
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Holders of Bonds should assume that any event that significantly impacts the ability to develop land in the District would cause the property values within the District to decrease substantially from those estimated by the Appraiser and could affect the willingness and ability of the owners of land within the District to pay the Special Tax when due.

The District expects to levy the Special Tax on Developed Property and Final Map Property beginning in Fiscal Year 2026-27 and in future fiscal years until the Special Tax levied on Developed Property is sufficient to fund the Special Tax Requirement. Undeveloped property is less valuable per unit of area than property with improvements thereon, especially if there are no plans to develop such land or if there are severe restrictions on the development of such land. Undeveloped property also provides less security to the Holders should it be necessary for the District to foreclose on such undeveloped property due to the nonpayment of the Special Tax.

Furthermore, an inability to develop the land within the District as currently proposed will make the Holders dependent upon timely payment of the Special Tax levied on undeveloped property. A slowdown or stoppage in the continued development of the District could reduce the willingness and ability of the Master Developer and D.R. Horton to make Special Tax payments on undeveloped property that they own and could greatly reduce the value of such property in the event it has to be foreclosed upon. See “— Property Values.” Property Values
The value of the property within the District is a critical factor in determining the investment quality of the Bonds. If a property owner is delinquent in the payment of Special Taxes, the District’s only remedy is to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to pay the Special Taxes. Reductions in property values due to a downturn in the economy, physical events such as earthquakes, fires or floods, stricter land use regulations, delays in d evelopment or other events will adversely impact the security underlying the Special Taxes. See “THE DISTRICT — Appraisal Report” and Appendix D — “APPRAISAL REPORT.”
The Appraiser has estimated, on the basis of certain assumptions and limiting conditions contained in the Appraisal Report, that as of the Date of Value, the market value of the land and improvements within the District was approximately $ 42,554,000. See “THE DISTRICT — Appraisal Report” The Appraisal Report indicates the Appraiser’s opinion as to the market value of the properties referred to therein as of the date and under the conditions specified therein. The Appraiser’s opinion reflects conditions prevailing in the applicable market as of the Date of Value. The Appraiser’s opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not change adversely in the future.

Prospective purchasers of the Bonds should not assume that the taxable land within the District could be sold for the appraised amount or for the assessed values at a foreclosure sale for delinquent Special Taxes. In arriving at the estimate of market value of the property in the District, the Appraiser assumes that any sale will be unaffected by undue stimulus and will occur following a reasonable marketing period, which is not always present in a foreclosure sale. See Appendix D for a description of other assumptions made by the Appraiser and for the definitions and limiting conditions used by the Appraiser. Any event which causes one of the Appraiser’s assumptions to be untrue could result in a reduction of the value of the taxable land and improvements within the District from the market value estimated by the Appraiser.

No assurance can be given that any bid will be received for a parcel with delinquent Special Taxes offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all delinquent Special Taxes. See “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.”
Natural Disasters
The District, like all California communities, may be subject to unpredictable seismic activity, fires, flood, or other natural disasters. Northern California is a seismically active area. Seismic activity represents a 352

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potential risk for damage to buildings, roads, bridges and property within the District. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. The property within the District is not located in an Alquist-Priolo Earthquake Study Zone and is not located within one-half mile of an active earthquake fault. Additionally, the District is not located in a flood plain area.

In recent years, wildfires have caused extensive damage throughout the State, including within the County. Certain of these fires have burned thousands of acres and destroyed hundreds and in some cases thousands of homes. In some instances entire neighborhoods have been destroyed. Several fires in recent years damaged or destroyed property in areas that were not previously considered to be at risk from such events. In 2023, as in several prior years, for example, devastating wildfires burned in various com munities in the State, causing wide-spread damage. In 2025, communities in Los Angeles County, including Pacific Palisades, Malibu and Altadena, experienced widespread devastation from wildfires causing losses of life, thousands of burned homes, and billions of dollars in property damage. Areas affected by wildfires are more prone to flooding and mudslides that can lead to the destruction of homes. Property damage due to wildfire could result in a significant decrease in the market value of property within the affected areas.

On January 16, 2025, Governor Gavin Newsom issued Executive Order N -10-25 (the “Governor’s Order) which canceled penalties, costs and interest on overdue property taxes (including special taxes) within certain zip codes affected by the Palisades and Eaton Fires during calendar year 2025. This will likely cause a delay in the payment of special taxes by certain property owners in any community facilities districts affected by Governor’s Order. Unless the majority of property owners within any such community facilities districts pay their special taxes voluntarily or have mortgage impound accounts, it is likely that the community facilities districts will need to draw upon a reserve fund to make debt service payments on outstanding bonds prior to the expiration of the Governor’s Order and it is possible that outstanding bonds will experience a payment default.

In the event of a major fire or other natural disaster affecting the District, a similar order affecting the District could impact the debt service payment for the 2025 Bonds.

The District is not located in an area which CalFire has classified as an area of concern and is not in an area classified by CalFire as a Very High Fire Hazard Severity Zone . However, there is a risk of residential property within the District being destroyed by wildfires and no assurance can be given as to the severity or frequency of wildfires within the vicinity of the District. Additionally, property located adjacent to burn areas can be subject to mudslides and flooding, which can cause significant damage and destruction to property.

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

Hazardous Substances
While government taxes, assessments and charges are a common claim against the value of a parcel, other less common claims may also be relevant. One of the most serious in terms of the potential reduction in the value of a parcel is a claim with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or thr eatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Super Fund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether or not the owner (or operator) had a nything to do with creating or handling the hazardous substance.

The effect, therefore, should any of the parcels within the District be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition. 353

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The District is not aware of the presence of any federally or state classified hazardous substances in violation of any environmental laws, located on the property within the District. However, it is possible that such materials do currently exist and that the District is not aware of them.

It is possible that property in the District may be liable for hazardous substances in the future as a result of the existence, currently, of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or the existence, currently, on the property of a substance not presently classified as hazardous but which may in the future be so classified. Additionally, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling such substance.

All of these possibilities could have the effect of reducing the value of the applicable property.

Enforcement Delays – Bankruptcy
In the event of a delinquency in the payment of the Special Taxes, the District is required to commence enforcement proceedings under the circumstances described under the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.” However, prosecution of such proceedings could be delayed due to crowded local court calendars or by bankruptcy, insolvency and other laws generally affecting creditors’ rights (such as the Soldiers’ and Sailors’ Relief Act of 1940) and by the laws of the State relating to judicial and non-judicial foreclosure. Although bankruptcy proceedings would not cause the liens of the Special Taxes to become extinguished, bankruptcy of a person or entity with an interest in the applicable property could result in a delay in the enforcement proceedings because federal bankruptcy laws provide for an automatic stay of foreclosure and tax sale proceedings. Any such delay could increase the likelihood of delay or default in payment of the principal of and interest on the applicable Bonds. The various legal opinions to be delivered in connection with the issuance of the Bonds, including Bond Counsel’s approving legal opinion, are qualified as to the enforceability of the Bonds and the Indenture by reference to bankruptcy, reorganization, moratorium, insolvency and other laws affecting the rights of creditors generally or against public entities such as the District.

Special Tax Delinquencies
Under provisions of the Act, the Special Taxes, from which funds necessary for the payment of principal of, and interest on, the Bonds are derived, will be billed to the properties within the District on the regular ad valorem property tax bills sent to owners of such properties by the County Tax Collector. The Act currently provides that such Special Tax installm ents are due and payable, and bear the same penalties and interest for non-payment, as do ad valorem property tax installments.

See APPENDIX E — “SUMMARY OF THE INDENTURE — COVENANTS AND WARRANTY — Covenants” for a discussion of the provisions which apply, and procedures which the District is obligated to follow under the Indenture, in the event of delinquencies in the payment of Special Taxes. See “— FDIC/Federal Government Interests in Parcels” for a discussion of the policy of the Federal Deposit Insura nce Corporation regarding the payment of special taxes and assessment and limitations on the D istrict’s ability to foreclose on the lien of the Special Taxes in certain circumstances.

FDIC/Federal Government Interests in Parcels
The ability of the District to collect interest and penalties specified by the Act and to foreclose the lien of delinquent Special Taxes may be limited in certain respects with regard to parcels in which the Federal Deposit Insurance Corporation (the “FDIC”), or other federal government entities such as Fannie Mae or Freddie Mac, has or obtains an interest.

In the case of the FDIC, in the event that any financial institution making a loan which is secured by parcels is taken over by the FDIC and the applicable Special Tax is not paid, the remedies available to the District may be constrained. The FDIC’s policy statement regarding the payment of state and local real property taxes 354

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(the “Policy Statement”) provides that taxes other than ad valorem taxes which are secured by a valid lie n in effect before the FDIC acquired an interest in a property will be paid unless the FDIC determines that abandonment of its interests is appropriate. The Policy Statement provides that the FDIC generally will not pay installments of non-ad valorem taxes which are levied after the time the FDIC acquires its fee interest, nor will the FDIC recognize the validity of any lien to secure payment except in certain cases where the Resolution Trust Corporation had an interest in property on or prior to December 31, 1995. Moreover, the Policy Statement provides that, with respect to parcels on which the FDIC holds a mortgage lien, the FDIC will not permit its lien to be foreclosed out by a taxing authority without its specific consent, nor will the FDIC pay or recognize liens for any penalties, fines or similar claims imposed for the nonpayment of taxes.

The FDIC has taken a position similar to that expressed in the Policy Statement in legal proceedings brought against Orange County in United States Bankruptcy Cou rt and in Federal District Court. The Bankruptcy Court issued a ruling in favor of the FDIC on certain of such claims. Orange County appealed that ruling, and the FDIC cross-appealed. On August 28, 2001, the Ninth Circuit Court of Appeals issued a rulin g favorable to the FDIC except with respect to the payment of pre -receivership liens based upon delinquent property tax.

The District is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency with respect to parcels in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sale would prevent or delay the foreclosure sale.

In the case of Fannie Mae and Freddie Mac, in the event a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, or a private deed of trust secured by a parcel of taxable property is owned by a federal government entity or federal government sponsored entity, such as Fannie Mae or Freddie Mac, the ability to foreclose on the parcel or to collect delinquent Special Taxes may be limited. Federal courts have held that, based on the supremacy clause of the United States Constitution “this Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every Stat e shall be bound thereby, anything in the Constitution or Laws of any State to the contrary notwithstanding.” In the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if fo reclosure would impair the federal government interest. This means that, unless Congress has otherwise provided, if a federal government entity owns a parcel of taxable property but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.

Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the District wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government’s mortgage interest. For a discussion of risks associated with taxable parcels within the District becoming owned by the federal government, federal government entities or federal government sponsored entities, see “ —Insufficiency of Special Tax Revenues.”
The District’s remedies may also be limited in the case of delinquent Special Taxes with respect to parcels in which other federal agencies (such as the Internal Revenue Service and the Drug Enforcement Administration) have or obtain an interest.

Direct and Overlapping Indebtedness
The ability of an owner of property within the District to pay the applicable Special Taxes could be affected by the existence of other taxes and assessments imposed upon taxable parcels. See “THE DISTRICT 355

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— Direct and Overlapping Debt” herein. The City and other public agencies whose boundaries overlap those of the District could impose additional taxes or assessment liens on the property within the District in order to finance public improvements or services to be located or provided inside of or outside of such area. The lien created on the property within the District through the levy of such additional taxes may be on a parity with the lien of the Special Taxes applicable to the property within the District.

The imposition of additional liens on a parity with the Special Taxes may reduce the ability or willingness of property owners to pay the Special Taxes and increase the possibility that foreclosure proceeds will not be adequate to pay delinquent Special Taxes.

Payment of Special Taxes is not a Personal Obligation of the Property Owners An owner of a taxable parcel is not personally obligated to pay Special Taxes. Rather, Special Taxes are an obligation which is secured only by a lien against the taxable parcel. If the value of a taxable parcel is not sufficient, taking into account other liens imposed by public agencies, to secure fully Special Taxes, the District has no recourse against the property owner.

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

Limited Obligations
The Bonds and interest thereon are not payable from the general funds of the City. Except with respect to the Net Taxes, neither the credit nor the taxing power of the District or the City is pledged for the payment of the Bonds or the interest thereon, and, except as provided in the Indenture, no Owner of the Bonds may compel the exercise of any taxing power by the District or the City or force the forfeiture of any City or District property.

The principal of, premium, if any, and interest on the Bonds are not a debt of the City or a legal or equitable pledge, charge, lien or encumbrance upon any of the City’s or the District’s property or upon any of the City’s or the District’s income, receipts or revenues, except the Net Taxes and other amounts pledged under the Indenture.

The District’s legal obligations with respect to any delinquent Special Taxes are limited to: (i) payments from the Subaccounts of the Reserve Account to the extent of funds on deposit therein; and (ii) the institution of judicial foreclosure proceedings under certain circumstances with respect to any parcels for which Special Taxes are delinquent. See the caption “SOURCES OF PAYMENT FOR THE BONDS — Special Taxes — Proceeds of Foreclosure Sales.” The Bonds cannot be accelerated in the event of any default.

The obligation to pay Special Taxes does not constitute a personal obligation of the current or subsequent owners of the respective parcels which are subject to such liens. See the caption “— Payment of the Special Tax is Not a Personal Obligation of the Property Owners.” Enforcemen t of Special Tax payment obligations by the District is limited to judicial foreclosure in the Superior Court of California, County of Placer.

There is no assurance that any current or subsequent owner of a parcel subject to a Special Tax lien will be able to pay the amounts due or that such owner will choose to pay such amounts even though financially able to do so.

Failure by owners of the parcels to pay Special Tax installments when due, delay in foreclosure proceedings, or the inability of the District to sell parcels that have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent installments of Special Taxes levied against such parcels may result in the inability of the District to make full or timely payments of debt service on the Bonds, which may in turn result in the depletion of the 2025 Bonds Reserve Subaccount. See the caption “ — Enforcement Delays — Bankruptcy.”
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Ballot Initiatives
Articles XIII A, XIII B, XIII C, and XIII D of the California Constitution were a dopted pursuant to measures qualified for the ballot pursuant to the State’s constitutional initiative process. From time to time, other initiative measures could be adopted by California voters. The adoption of any such initiative might place limitations on the ability of the State, the City, or other local agencies to increase revenues or to increase appropriations.

Proposition 218
An initiative measure entitled “The Right to Vote on Taxes Act” (“Proposition 218”) was approved by the voters at the November 5, 1996 statewide general election. Among other things, Proposition 218 added a new Article XIII C to the California Constitution which states that “. . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge.” The Act provides for a procedure which includes notice, hearing, protest and voting requirements to alter the rate and method of apportionment of an existing special tax. However, the Act prohibits a legislative body from adopting any resolution to reduce the rate of any special tax or terminate the levy of any special tax pledged to repay any debt incurred pursuant to the Act unless such legislative body determines that the reduction or termination of the special tax would not interfere with the timely retirement of that debt. While the application of Proposition 218 in this context has not yet been interpreted by the courts and the matter is not completely free from doubt, it is not likely that Proposition 218 has conferred on the voters the power to effect a repeal or reduction of the Special Tax if the result thereof would be to impair the security of the Bonds.

It may be possible, however, for voters or the City Council, acting as the legislative body of the District, to reduce the Special Taxes in a manner which does not interfere with the timely repayment of the Bonds, but which does reduce the maximum amount of Special Taxes that may be levied in any year below the existing levels. Therefore, no assurance can be given with respect to the future levy of Special Taxes in amounts greater than the amount necessary for the timely retirement of the Bonds. Nevertheless, to the maximum extent that the law permits it to do so, the District will covenant that it will not initiate proceedings under the Act to reduce the maximum Special Tax rates for the District, unless, in connection therewith, the District receives a certificate from one or more Independent Financial Consultants which, when taken together, certify that: (i) such changes do not reduce the maximum Special Taxes that may be levied in each year on property within the District to an amount which is less than the Administrative Expenses Cap plus 110% of the Annual Debt Service due in each corresponding future Bond Year with respect to the Bonds and Parity Bonds Outstanding as of the date of such proposed reduction; and (ii) the District is not delinquent in the payment of the principal of or interest on the Bonds or any Parity Bonds. The Distric t also will covenant that, in the event an initiative is adopted which purports to reduce or otherwise alter the Rate and Method, it will commence and pursue legal action in order to preserve its ability to comply with the foregoing covenant. However, no assurance can be given as to the enforceability of the foregoing covenants.

Litigation with Respect to Community Facilities Districts Shapiro. The California Court of Appeal, Fourth Appellate District, Division One, issued its opinion in City of San Diego v. Melvin Shapiro (2014) 228 Cal.App.4th 756 (the “San Diego Decision”). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego (“San Diego”). The CCFD is a financing district much like a community fa cilities district established under the provisions of the Act. The CCFD is comprised of all of the real property in San Diego. However, the special tax to be levied within the CCFD was to be levied only on hotel properties located within the CCFD.

The election authorizing the special tax was limited to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel is located. Thus, the election was not a registered voter election. Such approach to determining who would constitute the qualified electors of the CCFD was modeled after Section 53326(c) of the Act, which generally provides that, if a special tax will not be apportioned 357

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in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed district whose property would be subject to the special tax. The Court held that the CCFD special tax election was invalid under the California Constitution because Article XIIIA, Section 4 thereof and Article XIIIC, Section 2 thereof require that the electors in such an election be the registered voters within the district.

Horizon. The Sacramento County Superior Court had issued a tentative ruling in Horizon Capital Investments, LLC v. City of Sacramento et al. (Case No. 34-2017-80002661). That ruling subsequently became the court’s final order. As described below, this case involved an election to approve the levy of a special tax within a community facilities district (“CFD”) formed under the Act.

In 2017, the City of Sacramento initiated proceedings to form a CFD to finance certain costs to operate and maintain a streetcar line. As permitted by the Act, the proposed district included non-contiguous parcels of non-residential property. Because there were fewer than 12 registered voters residing within the territory of the proposed CFD, the City Council submitted the special tax proposed to be levied within the proposed CFD to the owners of land within the proposed CFD, as required by the Act. The proposed special tax received the requisite two-thirds vote in the landowner election.

Petitioners Horizon Capital Investments, LLC et al. filed a writ of mandate and complaint for reverse validation and declaratory relief. Petitioners argued, and the superior court agreed in its final ruling, that under section 4(a) of article XIII A of the California Constitution (which provides that “Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district [sic], may impose special taxes on such district…”) the phrase “qualified electors” means the registered voters of the entire City of Sacramento and not just the owners of the property within the boundaries of the proposed CFD. Citing the San Diego Decision, the tentative ruling states that the phrase “qualified electors of the district” refers to the registered voters of the entity imposing the special tax, which in this case was the City of Sacramento. Because the vote within the proposed CFD was by landowners only and not by all registered voters in the City of Sacramento, the final ruling states that the special tax is invalid.

The superior court’s final ruling is not binding upon other courts within the State and does not directly apply to the District, the Special Taxes, or the Bonds. The City of Sacramento did not appeal the superior court’s ruling.

The Special Tax Election in the District . With respect to the San Diego Decision, the facts of such case show that there were thousands of registered voters within the CCFD (viz., all of the registered voters in San Diego). The elections held in the District had less than 12 registered voters at the time of the election to authorize the Special Taxes. In the San Diego Decision, the court expressly stated that it was not addressing the validity of landowner voting to impose special taxes pursuant to the Act in situations where there are fewer than 12 registered voters. Thus, by its terms, the court’s holding in the San Diego Decision does not apply to the Special Tax election in the District. Moreover, Section 53341 of the Act provides that any “action or proceeding to attack, review, set aside, void or annul the levy of a special tax…shall be commenced within 30 days after the special tax is approved by the voters.” Similarly, Section 53359 of the Act provides that any action to determine the validity of bonds issued pursuant to the Act be brought within 30 days of the voters approving the issuance of such bonds. The petitioners in Horizon filed the writ of mandate within 30 days of the landowner election.

Voters in the District approved the levy of the Special Tax in accordance with the Rate and Method on August 12, 2025. Based on Sections 53341 and 53359 of the Act and analysis of existing laws, regulations, ruling s and court decisions, the District believes that no successful challenge to the Special Tax being levied in accordance with the Rate and Method may now be brought. In connection with the issuance of the Bonds, Bond Counsel expects to deliver its opinion in the proposed form attached hereto as Appendix C. 358

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Loss of Tax Exemption
As discussed under the heading “TAX MATTERS,” interest on the Bonds could cease to be excluded from gross income for purposes of federal income taxation, retroactive to the date the Bonds were issued, as a result of future acts or omissions of the District or the City . In addition, it is possible that future changes in applicable federal tax laws could cause interest on the Bonds to be included in gross income for federal income taxation or could otherwise reduce the equivalent taxable yield of such interest and thereby reduce the value of the Bonds.

No Ratings – Limited Secondary Market
The District has not applied to have the Bonds rated by any nationally recognized bond rating company, and it does not expect to do so in the future.

There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. Although the District has committed t o provide certain financial and operating information, there can be no assurance that such information will be available to Bond owners on a timely basis. The failure to provide the required annual financial information does not give rise to monetary dama ges but merely an action for specific performance. Occasionally, because of general market conditions, lack of current information, the absence of a credit rating for the Bonds or because of adverse history or economic prospects connected with a particula r issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially d ifferent from the original purchase price.

Limitations on Remedies
Remedies available to the Owners of the Bonds may be limited by a variety of factors and may be inadequate to assure the timely payment of principal of and interest on the Bonds or to preserve the tax-exempt status of interest on the Bonds.

Bond Counsel has limited its opinion as to the enforceability of the Bonds and of the Indenture to the extent that enforceability may be limited by bankruptcy, insolvency , reorganization, fraudulent conveyance or transfer, moratorium or other similar laws affecting generally the enforcement of creditor’s rights, by equitable principles and by the exercise of judicial discretion and by limitations on remedies against public agencies in the State of California. The lack of availability of certain remedies or the limitation of remedies may entail risks of delay, limitation or modification of the rights of the Owners.

Potential Early Redemption of Bonds from Prepayments or Community Facilities District Bond Proceeds
Property owners within the District are permitted to partially 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 community facilities district. Such prepayments will result in a redemption of the Bonds on the Interest Payment Date for which timely notice may be given under the Indenture following the receipt of the prepayment. The resulting redemption of Bonds that were purchased at a price greater than par could reduce the otherwise expected yield on such Bonds. See the caption “THE BONDS — Redemption — Special Mandatory Redemption from Special Tax Prepayments.”
Cybersecurity
The City, like many other public and private entities, rely on computer and other digital networks and systems to conduct their operations. The City is potentially subject to multiple cyber threats, including without 359

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limitation hacking, viruses, ransomware, malware and other attacks. No assurance can be given that the efforts of the City to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City, or the administration of the Bonds. The City is also reliant on other entities and se rvice providers in connection with the administration of the Bonds, including without limitation, the County tax collector for the levy and collection of Special Taxes and the Trustee. No assurance can be given that the City and these other entities will not be affected by cyber threats and attacks in a manner that may affect the levy and collection of Special Taxes or the payment of debt service on the Bonds.

CONTINUING DISCLOSURE
District Continuing Disclosure
Pursuant to a Continuing Disclosure Certificate, dated as of December 1, 2025 (the “Disclosure Certificate”), to be executed and delivered by the District at the time of issuance of the Bonds, the District will covenant for the benefit of the holders and B eneficial Owners of the Bonds to provide certain financial information and operating data relating to the District by March 31 following the end of the District’s Fiscal Year (currently its Fiscal Year ends on June 30) (the “Annual Report”), commencing wit h the Annual Report for the Fiscal Year ending June 30, 2025, and to provide notices of the occurrence of certain enumerated events.

The Annual Report and the notices of enumerated events will be filed by the District with EMMA. The specific nature of the information to be contained in the Annual Report and the notice of enumerated events is set forth in Appendix F — “FORM OF DISTRICT CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the Underwriter in complying with subsection (b)(5) of Rule 15c2-12.

The City and its related entities have entered into prior continuing disclosure obligations pursuant to Rule 15c2-12. Within the last five years, the City and its related entities failed to comply in certain respects with such continuing disclosure obligations. The failures to comply include a failure to file an annual report and an annual report which did not include all required information, audited financial statements which were filed past the required filing date or not initially linked to all necessary CUSIPs, and notices of rating changes which were filed past the required due date. The City and its related entities have made additional filings to provide the previously omitted information and filings.

Developer Continuing Disclosure
General. The Underwriter does not consider either the Master Developer or D.R. Horton to be an “obligated person” with respect to the Bonds for purposes of Rule 15c2-12. Notwithstanding the foregoing, to assist in the marketing of the Bonds, the Master Developer and D.R. Horton will each execute a continuing disclosure certificate ( each a “Developer Continuing Disclosure Certificate”) pursuant to which they will covenant to provide semiannual reports until satisfaction of certain conditions set forth in their respective Developer Continuing Disclosure Certificates. The semiannual reports to be provided by the Master Developer and D.R. Horton will contain updates regarding their respective developments within the District as outlined in Section 4 of the applicable Developer Continuing Disclosure Certificate attached hereto as APPENDIX G. In addition to semiannual reports, the Master Developer and D.R. Horton will each agree to provide notices of certain events set forth in their respective Developer Continuing Disclosure Certificate.

D.R. Horton’s Prior Continuing Disclosure Compliance.

Master Developer’s Prior Continuing Disclosure Compliance. To the actual knowledge of the Master Developer, in the last five years, it has not failed to comply in any material respects with its previous continuing disclosure undertakings, specifically regarding its requirement to provide developer periodic reports or to provide notice of occurrence of enumerated events with respect to community facilities districts or assessment districts in California.
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TAX EXEMPTION
In the opinion of Stradling Yocca Carlson & Rauth LLP, Newport Beach, California, Bond Counsel, under existing statutes, regulations, rulings and j udicial decisions, and assuming the accuracy of certain representations and compliance with certain covenants and requirements described herein, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of 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 Code 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 in 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 on the Bonds is exempt from State of California personal income tax.

Lincoln City CouncilNovember 18, 2025

Lincoln City Council
November 18, 2025