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5 The estimated value of taxable property in Improvement Area No. 8 ($165,906,000) is ___* times the $_______* aggregate principal amount of direct and overlapping bonded indebtedness in Improvement Area No. 8 (consisting of $_______* for the 2025 Bonds). This is based on the entirety of Improvement Area No. 8, the value to lien ratio for individual parcels will vary from the average. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 8 – Value to Special Tax Burden Ratios.”
Future Parity Bonds. The maximum authorized indebtedness for Improvement Area No. 8 is $29,400,000, and the 2025 Bonds represent the first series of special tax bonds issued under this authorization. Additional Bonds secured on parity with the 2025 Bonds may be issued under certain conditions. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Additional Bonds.”
Risks of Investment. See the section of this Official Statement entitled “SPECIAL RISK FACTORS” for a discussion of special factors that should be considered, in addition to the other matters set forth herein, in considering the investment quality of the 2025 Bonds. In particular, no assurance can be given that the timing of construction of homes and/or sale of homes projected by the Merchant Builders in this Official Statement will be accomplished. See “SPECIAL RISK FACTORS.”
Limited Obligation of the City. The general fund of the City is not liable and the full faith and credit of the City is not pledged for the payment of the interest on, or principal of or redemption premiums, if any, on the 2025 Bonds. The 2025 Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the City or any of its income or receipts, except the money in the funds established and pledged to the 2025 Bonds under the Fiscal Agent Agreement, and neither the payment of the interest on nor principal of or redemption premiums, if any, on the 2025 Bonds is a general debt, liability or obligation of the City. The 2025 Bonds do not constitute an indebtedness of the City within the meaning of any constitutional or statutory debt limitation or restrictions, and neither the City Council, the City nor any officer or employee thereof are liable for the payment of the interest on or principal of or redemption premiums, if any, on the 2025 Bonds other than from the proceeds of the Special Taxes and the money in the funds established and pledged to the 2025 Bonds, as provided in the Fiscal Agent Agreement.
Summary of Information. Brief descriptions of certain provisions of the Fiscal Agent Agreement, the Bonds and certain other documents are included herein. The descriptions and summaries of documents herein do not purport to be comprehensive or definitive, and reference is made to each such document for the complete details of all its respective terms and conditions, copies of which are available for inspection at the office of the Chief Financial Officer of the City.
All statements herein with respect to certain rights and remedies are qualified by reference to laws and principles of equity relating to or affecting creditors’ rights generally. Capitalized terms used in this Official Statement and not otherwise defined herein have the meanings ascribed to such terms in the Fiscal Agent Agreement. The information and expressions of opinion herein speak only as of the date of this Official Statement and are subject to change without notice.
Neither delivery of this Official Statement, any sale made hereunder, nor any future use of this Official Statement shall, under any circumstances, create any implication that there have been no changes to the City or the land in Improvement Area No. 8 since the date hereof. Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so __________
* Preliminary; subject to change.
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6 expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized.
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7 SOURCES AND USES OF FUNDS
A summary of the estimated sources and uses of funds associated with the sale of the 2025 Bonds follows:
Estimated Sources of Funds:
Principal Amount of 2025 Bonds $
Plus/Less: [Net] Original Issue Premium/Discount
Total $
Estimated Uses of Funds:
Deposit to Improvement Fund $
Deposit to Bond Fund(1)
Deposit to Reserve Fund(2)
Costs of Issuance(3)
Total $
(1) To pay capitalized interest on the 2025 Bonds through and including September 1, 2025. (2) Equal to the initial Reserve Requirement for the 2025 Bonds. (3) Includes fees of bond and disclosure counsel, fees, expenses and charges of the Fiscal Agent and its counsel, printing costs, fees of the special tax consultant and administrator, Appraiser, and Municipal Advisor, Underwriter’s discount, and other costs of issuance.
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8 THE BONDS
Authority for Issuance
On February 14, 2024, the Board of Directors of the Mountain House Community Services District, as the then-legislative body for the District, adopted a Resolution of Intention to form the District, and designate five improvement areas therein, including Improvement Area No. 8, under the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), to levy a special tax (the “Facilities Special Tax,” also referred to herein as the “Special Tax”) and to incur bonded indebtedness for the purpose of financing certain authorized public facilities. After conducting a noticed public hearing, on April 10, 2024, the Board also adopted a Resolution of Formation (the “Resolution of Formation”), which established the District, designated Improvement Area Nos. 1-5 as improvement areas therein, and formed a future annexation area for the District (the “Future Annexation Area”) and authorized indebtedness in an amount not to exceed $1,830,700,000, initially allocated as follows: (i) for Improvement Area No. 1, $74,200,000, (ii) for Improvement Area No. 2, $122,000,000, (iii) for Improvement Area No. 3, $240,200,000, (iv) for Improvement Area No. 4, $264,500,000, (v) for Improvement Area No. 5, $63,400,000, and (vi) for the portion of the CFD that is not in Improvement Areas No. 1 through 5, $1,066,400,000.
Effective January 6, 2025, Lennar Homes and its land bank, as the qualified landownerelectors of a portion of the property within the Future Annexation Area, submitted unanimous approval forms to the City to officially establish Improvement Area No. 8 and to establish a bonded indebtedness limit for Improvement Area No. 8 of $29,400,000 (excluding bonds described in Section 53364.2(e) of the Act). The 2025 Bonds are the first series of bonds to be issued for Improvement Area No. 8.
Upon incorporation of the City in July 2024, the District officially became a community facilities district of the City with the City Council of the City as its legislative body.
The 2025 Bonds are issued pursuant to the Act, a resolution adopted by the City Council on May 14, 2025 (the “Resolution of Issuance”) and the Fiscal Agent Agreement.
Description of the Bonds
Bond Terms. The 2025 Bonds will be dated as of and bear interest from the date of delivery thereof at the rates and mature in the amounts and years, as set forth on the cover page hereof. The 2025 Bonds are being issued in the denomination of $5,000 or any integral multiple thereof.
Interest on the 2025 Bonds will be payable semiannually on March 1 and September 1 of each year (each an “Interest Payment Date”), commencing September 1, 2025. The principal of the 2025 Bonds and premiums due upon the redemption thereof, if any, will be payable in lawful money of the United States of America at the designated principal corporate trust office of the Fiscal Agent in Los Angeles, California, or such other place as designated by the Fiscal Agent, upon presentation and surrender of the 2025 Bonds; provided that so long as any 2025 Bonds are in book-entry form, payments with respect to such 2025 Bonds will be made by wire transfer, or such other method acceptable to the Fiscal Agent, to DTC.
Book-Entry Only System. The 2025 Bonds are being issued as fully registered bonds, registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), and will be available to ultimate purchasers under the book-entry system maintained by DTC.
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9 Ultimate purchasers of 2025 Bonds will not receive physical certificates representing their interest in the 2025 Bonds. So long as the 2025 Bonds are registered in the name of Cede & Co., as nominee of DTC, references herein to the Owners will mean Cede & Co., and will not mean the ultimate purchasers of the 2025 Bonds. The Fiscal Agent will make payments of the principal, premium, if any, and interest on the 2025 Bonds directly to DTC, or its nominee, Cede & Co., so long as DTC or Cede & Co. is the registered owner of the 2025 Bonds. Disbursements of such payments to DTC’s Participants are the responsibility of DTC and disbursements of such payments to the Beneficial Owners are the responsibility of DTC’s Participants and Indirect Participants, as more fully described herein. See “APPENDIX G – DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Calculation and Payment of Interest. Interest on the 2025 Bonds will be computed on the basis of a 360-day year consisting of twelve 30-day months. Interest on the 2025 Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check of the Fiscal Agent mailed on each Interest Payment Date by first class mail to the registered Owner thereof at such registered Owner’s address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the 15th day of the month preceding the month in which the Interest Payment Date occurs whether or not such day is a Business Day (the “Record Date”) preceding the Interest Payment Date, or by wire transfer made on such Interest Payment Date upon written instructions received by the Fiscal Agent on or before the Record Date preceding the Interest Payment Date, of any Owner of $1,000,000 or more in aggregate principal amount of 2025 Bonds; provided that so long as any 2025 Bonds are in book-entry form, payments with respect to such 2025 Bonds will be made by wire transfer, or such other method acceptable to the Fiscal Agent, to DTC. See “APPENDIX G – DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Each 2025 Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in which event it will bear interest from such date of authentication, or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it will bear interest from such Interest Payment Date, or (iii) it is authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it will bear interest from the Dated Date; provided, however, that if at the time of authentication of a 2025 Bond, interest is in default thereon, such 2025 Bond will bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.
So long as the 2025 Bonds are registered in the name of Cede & Co., as nominee of DTC, payments of the principal, premium, if any, and interest on the 2025 Bonds will be made directly to DTC, or its nominee, Cede & Co. Disbursements of such payments to DTC’s Participants are the responsibility of DTC and disbursements of such payments to the Beneficial Owners are the responsibility of DTC’s Participants and Indirect Participants, as more fully described herein. See “APPENDIX G – DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Redemption*
Optional Redemption. The 2025 Bonds are subject to optional redemption from any source of available funds (other than Prepayments of the Special Tax by property owners), in whole or in part among maturities as specified by the City and by lot within a maturity, on any date on and after September 1, 20__ at the following respective redemption prices (expressed as __________
* Preliminary; subject to change.
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10 percentages of the principal amount of the 2025 Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates
Redemption
Price
September 1, 20__ through August 31, 20__ 103%
September 1, 20__ through August 31, 20__ 102
September 1, 20__ through August 31, 20__ 101
September 1, 20__ and any date thereafter 100
Mandatory Redemption From Prepayments. The 2025 Bonds are subject to mandatory redemption from Prepayments of the Special Tax by property owners, in whole or in part among maturities of the 2025 Bonds and any Additional Bonds, as specified by the City, and by lot within a maturity, on any Interest Payment Date at the following respective redemption prices (expressed as percentages of the principal amount of the 2025 Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates
Redemption
Price
Interest Payment Dates through and including March 1, ____ 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 The proceeds of any such prepayment shall be deposited in the Prepayment Account of the Bond Fund and applied by the Fiscal Agent to pay the redemption price of the Bonds.
See “SPECIAL RISK FACTORS – Potential Early Redemption of Bonds from Prepayments” for a discussion of the potential for the 2025 Bonds to be priced with original issue premium and then be redeemed from Special Tax prepayments prior to maturity.
Mandatory Sinking Fund Redemption. The Term 2025 Bonds maturing September 1, 20__ and September 1, 20__ are subject to mandatory sinking payment redemption in part on September 1, 20__ and September 1, 20__, respectively, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts as set forth in the following tables:
Term 2025 Bonds Maturing September 1, 20__
Mandatory
Redemption Date
(Sept. 1)
Sinking Fund
Payment
(maturity)
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11 Term 2025 Bonds Maturing September 1, 20__
Mandatory
Redemption Date
(Sept. 1)
Sinking Fund
Payment
(maturity)
The amounts in the foregoing tables will be reduced pro rata, in order to maintain substantially uniform debt service, as a result of any prior partial optional redemption or mandatory redemption of the 2025 Bonds.
Purchase In Lieu of Redemption. In lieu of redemption, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding 2025 Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event may 2025 Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase.
Redemption Procedure by Fiscal Agent. The Fiscal Agent will cause notice of any redemption to be mailed by first class mail, postage prepaid, at least 20 days but not more than 60 days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services, and to the respective registered Owners of any 2025 Bonds designated for redemption, at their addresses appearing on the registration books in the Principal Office of the Fiscal Agent; but such mailing is not a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, will not affect the validity of the proceedings for the redemption of such 2025 Bonds.
Such notice will state the redemption date and the redemption price and, if less than all of the then Outstanding 2025 Bonds are to be called for redemption, will designate the CUSIP numbers and bond numbers of the 2025 Bonds to be redeemed by giving the individual CUSIP number and bond number of each 2025 Bond to be redeemed or will state that all 2025 Bonds between two stated bond numbers, both inclusive, are to be redeemed or that all of the 2025 Bonds of one or more maturities have been called for redemption, will state as to any 2025 Bond called in part the principal amount thereof to be redeemed, and will require that such 2025 Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and will state that further interest on such 2025 Bonds will not accrue from and after the redemption date.
The City has the right to rescind any notice of the optional redemption of 2025 Bonds and such notice may be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the 2025 Bonds then called for redemption.
Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the 2025 Bonds of any maturity, the City will select the 2025 Bonds to be redeemed, from all 2025 Bonds or such given portion thereof of such maturity by lot in any manner which the City in its sole discretion deems appropriate. Upon surrender of 2025 Bonds redeemed in part POLICY AND ACTION ITEM 8.4
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12 only, the City will execute and the Fiscal Agent will authenticate and deliver to the registered Owner, at the expense of the City, a new 2025 Bond or 2025 Bonds, of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the 2025 Bond or 2025 Bonds.
Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the 2025 Bonds so called for redemption are deposited in the Bond Fund, such 2025 Bonds so called will cease to be entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment of the redemption price, and no interest will accrue thereon on or after the redemption date specified in such notice.
Transfer or Exchange of Bonds
So long as the 2025 Bonds are registered in the name of Cede & Co., as nominee of DTC, transfers and exchanges of 2025 Bonds will be made in accordance with DTC procedures. See “APPENDIX G – DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Any 2025 Bond may, in accordance with its terms, be transferred or exchanged by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such 2025 Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form approved by the Fiscal Agent. Whenever any 2025 Bond or 2025 Bonds are surrendered for transfer or exchange, the City will execute and the Fiscal Agent will authenticate and deliver a new 2025 Bond or 2025 Bonds, for a like aggregate principal amount of 2025 Bonds of authorized denominations and of the same maturity. The cost for any services rendered or any fees or expenses incurred by the Fiscal Agent in connection with any such transfer or exchange will be paid by the City. The Fiscal Agent will collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer or exchange. No transfers or exchanges of 2025 Bonds will be required to be made (i) within 15 days prior to the date established by the Fiscal Agent for selection of 2025 Bonds for redemption or (ii) with respect to a 2025 Bond after such 2025 Bond has been selected for redemption.
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13 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
Special Taxes
The Bonds (consisting of the and any Additional Bonds that may be issued in the future) are payable from and secured by proceeds of the Special Taxes received by the City, including all scheduled payments and delinquent payments thereof, interest and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes (but excluding any interest in excess of the interest due on the Bonds or any penalties collected in connection with any such foreclosure), and net of an administration charge of the County (lesser of 1% or $3 per parcel) (the “Special Tax Revenues”). All of the Special Tax Revenues and all monies deposited in the Bond Fund and, until disbursed as provided herein, in the Special Tax Fund are pledged to secure the repayment of the Bonds. In addition all moneys in the Reserve Fund for such Series of Bonds is pledged to secure the repayment of the 2025 Bonds. The Special Tax Revenues and all moneys deposited into such funds (except as otherwise provided in the Fiscal Agent Agreement) are dedicated to the payment of the principal of, including any mandatory sinking fund payments, and interest and any premium on, the Bonds as provided in the Fiscal Agent Agreement and in the Act until all of the Bonds have been paid and retired or defeased in accordance with the Fiscal Agent Agreement.
A Special Tax applicable to each taxable parcel in Improvement Area No. 8 will be levied and collected according to the tax amount determined by application of the Rate and Method administered by Goodwin Consulting Group, Inc., Sacramento, California (the “Special Tax Administrator”) and set forth in APPENDIX A hereto for all taxable properties in Improvement Area No. 8. Prior to remittance of the Special Tax collections to the City, the County deducts and retains a 1% County administration fee, as noted above. Interest and principal on the Bonds is payable from the annual Special Tax Revenues to be paid to the City from Special Tax levies and collections on taxable property within Improvement Area No. 8, from amounts held in certain funds and accounts established under the Fiscal Agent Agreement and from the proceeds, if any, from the sale of such property for delinquency of such Special Taxes.
The Special Taxes are exempt from the property tax limitation of Article XIIIA of the California Constitution, pursuant to Section 4 thereof as a “special tax” authorized by a two-thirds vote of the qualified electors. The levy of the Special Taxes was authorized by the City Council, as legislative body of the District, pursuant to the Act in an amount determined according to the Rate and Method. See “– Special Tax Methodology” below and APPENDIX A.
The amount of Special Taxes that the City may levy in any year, and from which principal and interest on the Bonds is to be paid, is strictly limited by the maximum rates approved by the qualified electors within Improvement Area No. 8, which is set forth in the Rate and Method.
Under the Rate and Method, Special Taxes for the purpose of making payments on the Bonds will be levied annually in an amount not in excess of the maximum approved amount. The Special Taxes and any interest earned on the Special Taxes constitute a trust fund for the principal of and interest on the Bonds pursuant to the Fiscal Agent Agreement and, so long as the principal of and interest on these obligations remains unpaid, the Special Taxes and investment earnings thereon will not be used for any other purpose, except as permitted by the Fiscal Agent Agreement, and will be held in trust for the benefit of the owners thereof and will be applied pursuant to the Fiscal Agent Agreement. The Rate and Method apportions the Facilities Special Taxes among the taxable parcels of real property within Improvement Area No. 8 according to the rate and methodology set forth in the Rate and Method. See “– Special Tax Methodology” below. See also “APPENDIX A – RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” POLICY AND ACTION ITEM 8.4
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14 The City may levy the Special Tax up to the amount of the Maximum Facilities Special Tax set forth in the Rate and Method, if conditions so require. The City has covenanted to annually levy the Special Taxes in an amount at least sufficient to pay the Facilities Special Tax Requirement (as defined below). Because each Special Tax levy is limited to the Maximum Facilities Special Tax rates authorized as set forth in the Rate and Method, no assurance can be given that, in the event of Special Tax delinquencies, the amount of the Facilities Special Tax Requirement will in fact be collected in any given year. In addition, Section 53321(d) of the Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. See “SPECIAL RISK FACTORS – Tax Delinquencies” herein. The Special Taxes are collected for the City by the County in the same manner and at the same time as ad valorem property taxes.
Special Tax Methodology
Pursuant to the Rate and Method, a “Facilities Special Tax” will be levied and collected until the earlier of (i) the Transition Year (defined herein) or (ii) Fiscal Year 2064-65, and a “Services Special Tax” will be levied and collected in perpetuity. Only the “Facilities Special Tax” is pledged to the payment of the 2025 Bonds, and the definition of Special Taxes used in the Fiscal Agent Agreement and this Official Statement refers only to the “Facilities Special Tax” levied in accordance with the Rate and Method. Capitalized terms set forth in this section and not otherwise defined have the meanings set forth in the Rate and Method.
Determination of Facilities Special Tax Requirement. Each year, the City will determine the Facilities Special Tax Requirement for the upcoming fiscal year. The “Facilities Special Tax Requirement” is defined in the Rate and Method as 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 Bonds under the Indenture to the extent such replenishment has not been included in the computation of the Facilities 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 as such levy under this clause (vi) does not increase the Facilities Special Tax levied on Final Map Property or Undeveloped Property. The amounts referred to in clauses (i) and (ii) above 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 Agency, proceeds received by the CFD from the collection of penalties associated with delinquent Facilities Special Taxes; and (c) any other revenues available to pay such costs, each as determined in the discretion of the Special Tax Administrator.
Parcels Subject to the Special Tax. The City will prepare a list of the parcels subject to the Special Tax using the records of the City and the County Assessor. The City has the authorization to tax all parcels within Improvement Area No. 8 except tax-exempt parcels as described in the Rate and Method.
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15 Each Fiscal Year, the Administrator shall: (i) assign each Parcel of Taxable Property to the appropriate Development Class; (ii) for Developed Property, categorize each Parcel as Single Family Property or Other Property; (iii) for Single Family Property, determine within which Village each Parcel is located and the number of Residential Units on each Parcel; (iv) for Other Property, determine within which Village each Parcel is located and determine the Acreage of each Parcel; (v) determine the Facilities Special Tax Requirement and Services Special Tax Requirement for the Fiscal Year; and (vi) determine whether the Transition Event has occurred in a prior Fiscal Year. In addition, the Administrator shall, on an ongoing basis, monitor the Tentative Map, Final Maps, and Building Permits to determine if there are any proposed Land Use Changes that would change the Expected Maximum Facilities Special Tax Revenues. If the Expected Maximum Facilities Special Tax Revenues will be revised pursuant to a proposed Land Use Change, the Administrator shall apply the steps set forth in Rate and Method.
In any Fiscal Year, if it is determined that: (i) a parcel map for property in Improvement Area No. 8 was recorded after January 1 of the prior Fiscal Year ( or any other date after which the Assessor will not incorporate the newly-created Parcels into the then current tax roll); (ii) because of the date the parcel map was recorded, the Assessor does not yet recognize the new Parcels created by the parcel map; and (iii) one or more of the newly-created Parcels is in a different Development Class than other Parcels created by the subdivision, the Administrator shall calculate the Special Taxes for the property affected by recordation of the parcel map by determining the Special Taxes that apply separately to the property within each Development Class, then applying the sum of the individual Special Taxes to the Parcel that was subdivided by recordation of the parcel map.
Assignment of Maximum Special Tax. The Rate and Method describes in detail the precise method for assigning the Maximum Special Tax to parcels within Improvement Area No. 8, which generally provides that each year the City will use the definitions contained in the Rate and Method to classify each parcel as tax-exempt or taxable. Changes to maximum special tax rates due to Land Use Changes are handled per Section D of the Rate and Method. See APPENDIX A.
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16 Maximum Special Tax Rates. The Maximum Special Tax for a Parcel of Developed Property or Final Map Property is the greater of (i) the Base Special Tax set forth in Table 1 to the Rate and Method which is reproduced below, or, (ii) the Maximum Special Tax determined pursuant to Section D of the Rate and Method. For additional details and a diagram showing the villages referred to in the following table, see APPENDIX A.
Base Facilities Special Tax
Developed Property
Land Use Category
Base Facilities Special Tax
Before Transition Year
(in Fiscal Year 2024-25 $) *
Base Facilities Special Tax In
and After Transition Year
(in Fiscal Year 2024-25 $) *
Single Family Property
Village 1 $1,206 per Residential Unit $0 per Residential Unit Village 2 $1,660 per Residential Unit $0 per Residential Unit Village 3 $1,832 per Residential Unit $0 per Residential Unit Village 4 $2,309 per Residential Unit $0 per Residential Unit Other Property $15,715 per Acre $0 per Acre
* On July 1, 2025, and on each July 1 thereafter, all figures shown shall be increased by an amount equal to two percent (2%) of the amount in effect for the prior Fiscal Year.
Source: Goodwin Consulting Group, Inc.
Base Facilities Special Tax Rates
Projected Special Tax
Developed and Final Map Property
Land Use Category Village
FY 2025-26
Base Facilities
Special Tax (1)(2)
Single Family Property Village 1 $1,230.12 per Residential Unit Village 2 $1,693.20 per Residential Unit
Village 3 $1,868.64 per Residential Unit
Village 4 $2,355.18 per Residential Unit
Other Property N/A $16,029.30 per Acre
Undeveloped Property
Special Tax Category Village
FY 2025-26
Base Facilities
Special Tax (1)(2)
Undeveloped Property N/A $16,029.30 per Acre
_______________________
(1) On July 1, 2025, and on each July 1 thereafter, all figures shown shall be increased by an amount equal to two percent (2%) of the amount in effect for the prior Fiscal Year. (2) Represents the Maximum Facilities Special Tax rates based on currently-expected land uses in the Improvement Area. Subject to change pursuant to Section D of the RMA.
Source: Goodwin Consulting Group, Inc.
Limitation on Increases in Levy of Facilities Special Tax. If owners are delinquent in the payment of Facilities Special Taxes, the City may not increase Facilities Special Tax levies to make up for delinquencies for prior Fiscal Years above the Maximum Facilities Special Tax rates specified for each category of property within Improvement Area No. 8. In addition, Section 53321(d) of the Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such Fiscal Year had there POLICY AND ACTION ITEM 8.4
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17 never been any such delinquencies or defaults. In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the Bonds. See “SPECIAL RISK FACTORS.”
Duration of the Facilities Special Tax; Transition Year. The Facilities Special Tax will be levied and collected (up to maximum allowable amount) until the earlier of (i) the Transition Year or (ii) Fiscal Year 2064-65. For purposes of Improvement Area No. 8, “Transition Year” means the first Fiscal Year following the Fiscal Year in which the Transition Event occurred, and “Transition Event” is deemed to have occurred when the Administrator determines that the following events have occurred: (i) all Bonds secured by the levy and collection of Facilities Special Taxes in the Improvement Area have been fully repaid; (ii) all Administrative Expenses from prior Fiscal Years have been paid or reimbursed to the City; and (iii) there are no other Authorized Facilities that the City intends to fund with Bonds or Facilities Special Taxes.
Termination of the Special Tax. The Special Tax will be levied until all Bonds have been repaid and all authorized facilities have been funded; however, Special Taxes cannot be levied under any circumstance after fiscal year 2074-75.
Prepayment of the Special Tax. The Facilities Special Tax obligation assigned to a particular parcel within Improvement Area No. 8 can be partially prepaid, which will reduce the Facilities Special Tax for the parcel in future fiscal years. Up to 75% of the Facilities Special Tax obligation may be prepaid for a given parcel. Section H of the Rate and Method sets forth a detailed formula by which the prepayment for a parcel can be calculated. Proceeds of such prepayment will be used to redeem a portion of the Bonds.
Levy of Annual Special Tax; Maximum Special Tax
General. The annual Special Tax will be calculated by the City and levied to provide money for debt service on the Bonds, replenishment of Reserve funds established within the Reserve Fund for each Series of Bonds, certain delinquencies, administration of the District (including Improvement Area No. 8), and for payment of pay-as-you-go expenditures (to the extent permitted by the Rate and Method) of the authorized public capital facilities not funded from Bond proceeds. In no event may the City levy a Special Tax in any year above the maximum identified for each taxable parcel in the Rate and Method.
Annual Special Tax Levy. The Special Tax will be levied each year by calculating the amount needed to be generated by all Taxable Parcels in Improvement Area No. 8; the Special Tax (up to the maximum allowable amount) will be levied against each Taxable Parcel until the Special Tax revenue equals such amount; however, the Rate and Method establishes a priority for which properties will be levied a Special Tax. In the first fifteen (15) Fiscal Years in which a Facilities Special Tax is levied within Improvement Area No. 8, the Maximum Facilities Special Tax shall be levied on all Parcels of Developed Property. Any Facilities Special Tax proceeds collected that are determined by the Administrator to be Remainder Taxes shall be deposited into the Improvement Fund to pay any costs associated with the acquisition of Authorized Facilities that were not paid with Bond proceeds or Facilities Special Taxes levied in prior Fiscal Years.
Beginning in the sixteenth (16th) Fiscal Year in which a Facilities Special Tax is levied within the Improvement Area and continuing until the Transition Year, the Facilities Special Tax shall be levied Proportionately on each Parcel of Developed Property up to 100% of the Maximum Facilities Special Tax for each Parcel of Developed Property until the amount levied is equal to POLICY AND ACTION ITEM 8.4
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18 the Facilities Special Tax Requirement prior to applying any Capitalized Interest that is available in the CFD accounts for the respective Improvement Area.
If additional revenue is needed after the above first taxing tier in order to meet the Facilities Special Tax the next tier to be levied is Final Map Property, then Undeveloped Property, and so on as detailed in the Rate and Method.
The City covenants in the Fiscal Agent Agreement to fix and levy the amount of Special Taxes within Improvement Area No. 8 required for the payment of principal of and interest on any outstanding Bonds of Improvement Area No. 8 becoming due and payable during the ensuing year, including any necessary replenishment or expenditure of the Reserve Fund for the Bonds and an amount estimated to be sufficient to pay the Administrative Expenses during such year, all in accordance with the Rate and Method. The Special Tax is authorized to be levied in an amount not to exceed the Maximum Special Tax levy as described in the Rate and Method notwithstanding that a lower amount is sufficient to pay debt service on the Bonds. The Rate and Method provides a mechanism whereby the City may utilize the pay-as-you-go component to pay for and/or reimburse developers for a portion of the cost of Improvements not funded by proceeds of the bonds issued for Improvement Area No. 8. Proceeds of the annual Special Tax levy will first be used to pay the “Facilities Special Tax Requirement (which include debt service payments on the Bonds) other than pay-as-you-go expenditures, and the City contemplates that the levy will include a pay-as-you-go component for deposit into the Improvement Fund for authorized costs not funded from Bond proceeds. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Special Tax Methodology” above. See “APPENDIX A – RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX” for a copy of the Rate and Method.
Annual Escalation of Facilities Special Tax. The Facilities Special Tax escalates by 2% per fiscal year until the Transition Event, and thereafter will no longer be levied. See “APPENDIX A – RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX” and for a table showing the expected land uses and assigned Maximum Special Taxes, see “Attachment 2” in such Appendix.
Special Tax Fund
When received, the Special Tax Revenues are required under the Fiscal Agent Agreement to be deposited into a Special Tax Fund to be held by the City in trust for the benefit of the City and the Owners of the Bonds to the credit of which the City shall deposit, immediately upon receipt, all Special Tax Revenues received by the City. Moneys in the Special Tax Fund will be disbursed as provided below and, pending any disbursement, will be subject to a lien in favor of the Owners of the Bonds.
No later than 10 Business Days prior to each Interest Payment Date, the City shall withdraw from the Special Tax Fund and transfer (i) to the Fiscal Agent for deposit in the Reserve Fund an amount such that the amount then on deposit therein is equal to the Reserve Requirement, and (ii) to the Fiscal Agent for deposit in the Bond Fund an amount, taking into account any amounts then on deposit in the Bond Fund such that the amount in the Bond Fund equals the principal, including any mandatory sinking fund payments, premium, if any, and interest due on the Bonds on the next Interest Payment Date, provided, however, that as soon as practicable after the receipt by the City of any prepayments of Special Taxes, but no later than 30 Business Days after such receipt, the City shall transfer such prepayments to the Fiscal Agent for deposit into the Prepayment Account of the Bond Fund to be used for the redemption of bonds.
After the transfers under subsections (i) and (ii) have been made, the City may, on or after POLICY AND ACTION ITEM 8.4
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19 September 2 of each year, transfer to the Surplus Fund the amount remaining in the Special Tax Fund.
Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure The Special Tax will be collected in the same manner and the same time as ad valorem property taxes, except at the City’s option, the Special Taxes may be billed directly to property owners or collected at a different time to meet the City’s financial obligations. In the event of a delinquency in the payment of any installment of Special Taxes, the City is authorized by the Act to order institution of an action in superior court to foreclose the lien therefor.
The City has covenanted in the Fiscal Agent Agreement with and for the benefit of the Owners of the Bonds that it will annually on or before September 1 of each year review the public records of the County related to the collection of the Special Tax in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and if the City determines on the basis of such review that:
(a) the amount so collected is deficient by more than 5% of the total amount of the Special Tax for Improvement Area No. 8 levied in such Fiscal Year, then the City will institute, prosecute and pursue such foreclosure proceedings against each parcel in Improvement Area No. 8 for which any installment of the Special Tax is delinquent in the time and manner provided below; or
(b) the amount so collected is deficient by less than 5% of the total amount of the Special Tax for Improvement Area No. 8 levied in such Fiscal Year, but property owned by any single property owner is delinquent cumulatively by an amount equal to three installment payments with respect to the current and past Special Tax due, then the City will institute, prosecute and pursue such foreclosure proceedings against each such property owner in the time and manner provided below.
The Finance Director of the City shall within 60 days thereafter send or cause to be sent a written demand letter to the delinquent parcel(s) as the first step in instituting foreclosure proceedings as authorized by the Mello-Roos Act in order to enforce the lien of the delinquent installment of the Special Tax on each such parcel, and shall thereafter diligently prosecute and pursue such foreclosure proceedings to judgment and sale in such manner and upon such timing as advised by legal counsel, taking into account the amounts delinquent, the estimate cost of legal proceedings, the status of Special Tax collections and available debt service reserves; provided, that the City shall not be obligated to commence proceedings against any delinquent parcels in any Fiscal Year in which the City has received or expects to receive one hundred percent (100%) of the amount of such installment from a so-called “Teeter Plan.” Notwithstanding the foregoing, in certain instances the amount of a Special Tax delinquency on a particular parcel in relation to the cost of appropriate foreclosure proceedings may be such that the costs do not warrant the foreclosure proceedings costs. In such cases, foreclosure proceedings may be delayed by the City until there are sufficient Special Tax delinquencies accruing to such parcel (including interest and penalties thereon) to warrant the cost of such foreclosure proceedings.
Under the Act, foreclosure proceedings are instituted by the bringing of an action in the superior court of the county in which the parcel lies, naming the owner and other interested persons as defendants. The action is prosecuted in the same manner as other civil actions. In POLICY AND ACTION ITEM 8.4
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20 such action, the real property subject to the special taxes may be sold at a judicial foreclosure sale for a minimum price that will be sufficient to pay or reimburse the delinquent special taxes.
The owners of the Bonds benefit from the Reserve Fund established pursuant to the Fiscal Agent Agreement; however, if delinquencies in the payment of the Special Taxes with respect to the Bonds are significant enough to completely deplete the Reserve Fund, there could be a default or a delay in payments of principal and interest to the owners of the Bonds pending prosecution of foreclosure proceedings and receipt by the City of the proceeds of foreclosure sales. Provided that it is not levying the Special Tax at the Maximum Facilities Special Tax rates set forth in the Rate and Method, the City may adjust the Special Taxes levied on all property within Improvement Area No. 8 subject to the Special Tax to provide an amount required to pay debt service on the Bonds and to replenish the Reserve Fund. However, such adjustment is subject to the Maximum Facilities Special Tax and to the limitation described under the caption “–Special Tax Methodology” above.
Under current law, a judgment debtor (property owner) has at least 120 days from the date of service of the notice of levy to redeem the property to be sold. If a judgment debtor fails to redeem and the property is sold, his or her only remedy is an action to set aside the sale, which must be brought within 90 days of the date of sale. If, as a result of such an action a foreclosure sale is set aside, the judgment is revived and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made (California Code of Civil Procedure Section 701.680).
Foreclosure by court action is subject to normal litigation delays, the nature and extent of which are largely dependent upon the nature of the defense, if any, put forth by the debtor and the condition of the calendar of the superior court of the county. Such foreclosure actions can be stayed by the superior court on generally accepted equitable grounds or as the result of the debtor’s filing for relief under the Federal bankruptcy laws. The Act provides that, upon foreclosure, the Special Tax lien will have the same lien priority as is provided for ad valorem taxes and special assessments. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 8 – Priority of Lien.”
No assurances can be given that the real property subject to a judicial foreclosure sale will be sold or, if sold, that the proceeds of sale will be sufficient to pay any delinquent Special Tax installment. The Act does not require the City to purchase or otherwise acquire any lot or parcel of property foreclosed upon if there is no other purchaser at such sale.
Section 53356.6 of the Act 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 at least 75% of the outstanding Bonds is obtained. However, under Section 53356.6 of the Act, the City, as judgment creditor, is entitled to purchase any property sold at foreclosure using a “credit bid,” where the City could submit a bid crediting all or part of the amount required to satisfy the judgment for the delinquent amount of the Special Tax. If the City becomes the purchaser under a credit bid, the City must pay the amount of its credit bid into the redemption fund established for the Bonds, but this payment may be made up to 24 months after the date of the foreclosure sale.
Teeter Plan. In 1949, the California Legislature enacted an alternative method for the distribution of property taxes to local agencies. This method, known as the “Teeter Plan,” is found in Sections 4701-4717 of the California Revenue and Taxation Code. Upon adoption and implementation of this method by a county board of supervisors, local agencies for which the POLICY AND ACTION ITEM 8.4
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21 county collects property taxes and certain other public agencies and taxing areas located in the county receive annually the full amount of their shares of property taxes and other impositions collected on the secured roll, including delinquent property taxes which have yet to be collected.
While the county bears the risk of loss on unpaid delinquent taxes, it retains the penalties associated with delinquent taxes when they are paid. In turn, the Teeter Plan provides participating local agencies with stable cash flow and the elimination of collection risk.
Once adopted, a county’s Teeter Plan will remain in effect in perpetuity unless the board of supervisors orders its discontinuance or unless, prior to the commencement of a fiscal year, a petition for discontinuance is received and joined in by resolutions of the governing bodies of not less than two-thirds of the participating districts in the county. An electing county may, however, decide to discontinue the Teeter Plan with respect to any levying agency in the county if the board of supervisors, by action taken not later than July 15 of a fiscal year, elects to discontinue the procedure with respect to such levying agency and the rate of secured tax delinquencies in that agency in any year exceeds 3% of the total of all taxes and assessments levied on the secured roll by that agency.
The Board of Supervisors of San Joaquin County has adopted the Teeter Plan, and the County elects to apply its Teeter Plan to the collection of the Special Taxes annually. As such, the City anticipates that the Teeter Plan will be applicable to the Special Tax levied in Improvement Area No. 8, but no assurance can be given that it will continue in any or all of the years that the 2025 Bonds are outstanding. To the extent that the County’s Teeter Plan continues in existence and is carried out as adopted, and to the extent the County does not discontinue the Teeter Plan with respect to the City or Improvement Area No. 8, the County’s Teeter Plan may help protect owners of the 2025 Bonds from the risk of delinquencies in the payment of Special Taxes. However, there can be no assurance that the County will not modify or eliminate its Teeter Plan, or choose to remove Improvement Area No. 8 or particular delinquent parcels from its Teeter Plan in any year while the 2025 Bonds are outstanding.
Reserve Fund
The Reserve Fund has been established under the Fiscal Agent Agreement for the benefit of the holders of the 2025 Bonds.
Upon delivery of the 2025 Bonds, the Fiscal Agent will deposit an amount of the proceeds into the Reserve Fund so that the amount therein equals the “Reserve Requirement,” which means, with respect to any series of Bonds, the least of (i) 125% of the average Annual Debt Service with respect to the 2025 Bonds; (ii) Maximum Annual Debt Service with respect to the 2025 Bonds; and (iii) 10% of the original principal amount of the 2025 Bonds (or, if the 2025 Bonds have more than a de minimis amount of original issue discount or premium, 10% of the issue price of such Bonds); provided, that—
(a) the Reserve Requirement for the 2025 Bonds shall not increase after the date of issuance of the 2025 Bonds;
(b) in no event shall the City be obligated to deposit an amount in any reserve fund in excess of the amount permitted by the applicable provisions of the Code to be so deposited from the proceeds of tax-exempt bonds without having to restrict the yield of any investment purchased with any portion of such deposit and, if the amount of any such deposit is so limited, the Reserve Requirement shall be only the amount of such deposit as permitted by the Code; and
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22 (c) the City may meet all or a portion of the Reserve Requirement with respect to any series of Bonds by depositing a Qualified Reserve Fund Credit Instrument.
The City has the right to either meet the Reserve Requirement at the time of issuance of a series of Bonds or at any time thereafter to cause the Fiscal Agent to release cash from an account within the Reserve Fund, in whole or in part, by tendering to the Fiscal Agent: (1) a Qualified Reserve Fund Credit Instrument, and (2) in the case of a release, an opinion of Bond Counsel stating that such release will not, of itself, cause the portion of the interest on the Bonds secured thereby to become includable in gross income for purposes of federal income taxation.
Upon tender of such items to the Fiscal Agent in connection with a release of cash, the Fiscal Agent will transfer such funds to the City. Prior to the expiration of any Qualified Reserve Fund Credit Instrument, if applicable, the City is obligated either to replace such Qualified Reserve Fund Credit Instrument with a new Qualified Reserve Fund Credit Instrument, or to deposit or cause to be deposited with the Fiscal Agent an amount of funds such that the funds on deposit in an account within the Reserve Fund together with all Qualified Reserve Fund Credit Instruments held by the Fiscal Agent is at least equal to the Reserve Requirement (which funds may come from a draw by the Fiscal Agent on the Qualified Reserve Fund Credit Instrument prior to its expiration).
“Qualified Reserve Fund Credit Instrument” means an irrevocable standby or directpay letter of credit or surety bond issued by a commercial bank or insurance company and deposited with the Fiscal Agent, provided that all of the following requirements are met: (a) the long-term credit rating of such bank or insurance company is rated in the top two categories (without regard to modifier) by S&P Global Ratings, a business unit of Standard & Poor’s Financial Services LLC or Moody’s Investors Service, Inc. at the time of issuance; (b) such letter of credit or surety bond has a term of at least 12 months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement being met by such instrument or with respect to which funds are proposed to be released pursuant to the Fiscal Agent Agreement; and (d) the Fiscal Agent is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist from time to time in the Bond Fund for the purpose of making payments required pursuant to the Fiscal Agent Agreement.
Whenever, on the Business Day prior to any Interest Payment Date, the amount in any reserve fund within the Reserve Fund exceeds the Reserve Requirement for the applicable series of Bonds covered by such reserve fund, the Fiscal Agent shall provide written notice to the Chief Financial Officer of the amount of the excess. The Chief Financial Officer shall advise the Fiscal Agent in writing of the amount, if any, of any transfer required pursuant to the Fiscal Agent Agreement, and otherwise direct the Fiscal Agent to transfer an amount equal to the excess to the Improvement Fund, if the Project has not been completed as of the date of such transfer, or if the Project has been completed, to the Bond Fund to be used for the payment of the principal of and interest on the Outstanding Bonds covered by the applicable reserve fund in accordance with the Fiscal Agent Agreement; provided, that to the extent that such excess results from the prepayment of Special Taxes and redemption of Bonds, such amount shall be transferred to the Prepayment Account and applied to the corresponding redemption of Bonds.
Whenever the balance in the reserve fund exceeds the amount required to redeem or pay the Outstanding 2025 Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, and make any other transfer required under the Fiscal Agent Agreement, the Fiscal Agent will transfer the amount in the reserve fund to the Bond Fund POLICY AND ACTION ITEM 8.4
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23 to be applied, on the next succeeding Interest Payment Date, to the payment and redemption of all of the 2025 Bonds. If the amount so transferred from the reserve fund to the Bond Fund exceeds the amount required to pay and redeem the 2025 Bonds, the balance in the reserve fund will be transferred to the City, after payment of any amounts due the Fiscal Agent, to be used for any lawful purpose of the City.
Improvement Fund
Under the Fiscal Agent Agreement, there is established an Improvement Fund, which is to be held in trust by the Fiscal Agent and will be disbursed as provided in the Fiscal Agent Agreement for the payment or reimbursement of the costs of the construction and acquisition of the Improvements in accordance with the Acquisition Agreement (as described herein). Interest earnings from the investment of amounts in the Improvement Fund will be retained in the Improvement Fund to be used for the purposes of the Improvement Fund.
Upon completion of the Improvements and payment to the Master Developer or other entities that are due reimbursement for Improvements, the Fiscal Agent will transfer the amount, if any, remaining in the Improvement Fund to the Bond Fund for application to the payment of principal of and interest on the Bonds in accordance with the Fiscal Agent Agreement, and the Improvement Fund will be closed.
Additional Bonds
The proceedings conducted under the Act for the District and Improvement Area No. 8 authorize the issuance of up to $29,400,000 of special tax bonds for Improvement Area No. 8, of which the 2025 Bonds represent the first series of bonds. In addition to the 2025 Bonds, the City may authorize the issuance of one or more additional series of special tax bonds (the “Additional Bonds”), payable from Special Taxes and secured by the Special Tax Revenues equally and ratably with the 2025 Bonds, subject to the following specific conditions, which are made conditions precedent to the issuance of any such Additional Bonds:
(i) No default in the Bonds Outstanding shall have occurred and then be continuing.
(ii) The issuance of the Additional Bonds shall have been duly authorized by the Authority, and not exceed the maximum bonded indebtedness authorized for the CFD, which is $29,400,000.
(iii) There shall be deposited into the Reserve Fund, or separate reserve fund established for such Additional Bonds, an amount sufficient so that following issuance of the Additional Bonds, the amount therein shall equal the Reserve Requirement. The supplement to the Fiscal Agent Agreement pursuant to which the Additional Bonds are issued shall specify whether a parity reserve fund or a separate reserve fund is being established.
(iv) For each Bond Year that the Additional Bonds will be Outstanding, projected net maximum Special Tax Revenues (maximum Special Taxes authorized to be levied, net of Priority Administrative Expenses) in each Fiscal Year are equal to or greater than 110% of Debt Service due in the Bond Year that begins in the corresponding Fiscal Year.
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24 (v) After giving effect to the issuance of the Additional Bonds, the aggregate value of all parcels in the CFD subject to the Special Tax, which value shall include the then existing improvements and any facilities to be constructed or acquired with the proceeds of the Additional Bonds, as determined by an MAI appraisal or the assessed value of such parcels as shown on the then current County tax roll, or by a combination of both methods, is at least 4.00 times the sum of (A) the aggregate principal amount of the Additional Bonds proposed to be issued and the Bonds then outstanding plus (B) the aggregate principal amount of any bonds then outstanding and payable from assessments which are a lien against property in the CFD, plus (C) a portion of the aggregate principal amount of all bonds issued under the Mello-Roos Act then outstanding, and payable at least partially from special taxes to be levied on parcels of land subject to the Special Tax within the CFD (the “Other Mello-Roos Bonds”) equal to the aggregate principal amount of the Other Mello-Roos Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other Mello-Roos Bonds on parcels of land within the CFD subject to the Special Tax, and the denominator of which is the total amount of special taxes levied for the Other Mello-Roos Bonds on all parcels of land subject to the Special Tax within the CFD against which the special taxes are levied to pay the Other Mello-Roos Bonds (such fraction to be determined based upon the special taxes which could be levied the year in which the change is to occur), based upon information from the most recent available fiscal year.
Additional Bonds may be issued for the purpose of refunding any outstanding Bonds without meeting the foregoing clauses (a)(iv) and (a)(v), so long as debt service on the refunding Bonds in each Bond Year is less than debt service on the Bonds refunded. Additional Bonds issued for refunding purposes shall not count against the maximum bonded indebtedness authorized for the CFD.
The City may issue bonds for Improvement Area No. 8 secured by Special Taxes on a subordinate basis to the pledge of Special Taxes for payment of the 2025 Bonds.
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25 DEBT SERVICE SCHEDULE
The annual debt service on the 2025 Bonds, assuming no early redemptions other than mandatory sinking fund payments, is set forth below.
Improvement Area No. 8 of
City of Mountain House
Community Facilities District No. 2024-1
(Public Facilities and Services)
2025 Bonds – Annual Debt Service
Year
Ending
(Sept. 1)
2025 Bonds
Principal
2025 Bonds
Interest
2025 Bonds
Total
2025(1)
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
2048
2049
2050
2051
2052
2053
2054
______________
(1) Capitalized Interest is being funded on the 2025 Bonds through September 1, 2025.
Source: Underwriter.
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26 The table below shows the projected debt service coverage on the 2025 Bonds.
Improvement Area No. 8 of
City of Mountain House
Community Facilities District No. 2024-1
(Public Facilities and Services)
Projected Debt Service Coverage(1) (2)
Bond Year
Buildout
Maximum
Facilities
Special Tax (3)
Priority
Administration (4)
2025 Bonds
Debt
Service*
Debt
Service
Coverage*
2026 $897,790 ($35,000) $315,250 273.68%
2027 915,746 (35,700) 325,250 270.58
2028 934,060 (36,414) 329,775 272.20
2029 952,742 (37,142) 334,063 274.08
2030 971,796 (37,885) 343,113 272.19
2031 991,232 (38,643) 351,688 270.86
2032 1,011,057 (39,416) 354,788 273.87
2033 1,031,278 (40,204) 362,650 273.29
2034 1,051,904 (41,008) 370,038 273.19
2035 1,072,942 (41,828) 376,950 273.54
2036 1,094,401 (42,665) 387,825 271.19
2037 1,116,289 (43,518) 392,875 273.06
2038 1,138,614 (44,388) 402,375 271.94
2039 1,161,387 (45,276) 411,050 271.53
2040 1,184,614 (46,182) 418,900 271.77
2041 1,208,307 (47,105) 425,925 272.63
2042 1,232,473 (48,047) 437,125 270.96
2043 1,257,122 (49,008) 442,225 273.19
2044 1,282,265 (49,989) 451,500 272.93
2045 1,307,910 (50,988) 459,675 273.44
2046 1,334,068 (52,008) 471,750 271.77
2047 1,360,750 (53,048) 482,450 271.05
2048 1,387,965 (54,109) 486,775 274.02
2049 1,415,724 (55,191) 500,000 272.11
2050 1,444,038 (56,295) 506,575 273.95
2051 1,472,919 (57,421) 516,775 273.91
2052 1,502,378 (58,570) 530,325 272.25
2053 1,532,425 (59,741) 541,950 271.74
2054 1,563,074 (60,936) 551,650 272.30
2055 1,594,335 (62,155) 564,425 271.46
________
*Preliminary, subject to change.
(1) 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 shall 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 the fiscal year had there never been any such delinquencies or defaults. (2) Based on currently-expected land uses in the Improvement Area. Subject to change pursuant to Section D of the RMA.
(3) Includes Maximum Facilities Special Tax revenues based on the recorded final maps. (4) As defined in the Fiscal Agent Agreement. Equals $35,000 in FY 2025-26 and escalates by two percent per year thereafter.
Sources: Piper Sandler & Co.; Goodwin Consulting Group, Inc.
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27 THE CITY
Incorporation in 2024. The City was incorporated by vote of its citizens at an election held on March 5, 2024, becoming the 483rd incorporated city admitted to the State of California in July 2024. As part of the incorporation process, the District, which had been formed by the City’s predecessor, Mountain House Community Services District, officially became a community facilities district of the City with the City Council as its legislative body, and the Mountain House Community Services District became a subsidiary district of the City.
The City is located in San Joaquin County, north of Interstate 205, south of Old River, east of the Alameda County line and west of Mountain House Parkway directly north and northwest t of the City of Tracy. Regional access to the community is from Interstate 205, along the southern boundary. Local access is via Grant Line Road and Byron Road, which traverse the community and Mountain House Parkway along the eastern boundary. The population of the City as of January 1, 2024 was 28,063.
Origins of the Mountain House Community. In 1996, the County established the Mountain House Community Services District (“MHCSD”), which provided many, but not all, of the same services and received many, but not all, of the same revenues as an incorporated city in the State. Upon formation of the MHCSD, it was contemplated the territory in Mountain House community would someday incorporate.
The Mountain House community, as conceived by the original developer, Trimark Communities, LLC was approved for development under the Mountain House Master Plan (the “Master Plan”) for the community, and three specific plans thereunder. The Master Plan was adopted as an amendment to the County General Plan in 1993 and further amended in 1994.
The County certified a final environmental impact report (“EIR”) on the amendment to the County General Plan in 1992, a supplemental EIR in 1993 and a master EIR on the Master Plan and Specific Plan 1 in 1994. The Master Plan provided that essential public services, including streets, storm drain, water and sewer, were to be provided by MHCSD. Home development by merchant builders commenced pursuant to the Master Plan and as of the end of 2024 approximately 8,000 homes have been built in what is now the City.
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28 IMPROVEMENT AREA NO. 8
Development of the Mountain House Community
The City was established in July 2024 as an incorporation of a previously unincorporated area of San Joaquin County. In 1996 the master planned community was approved and in 2000 infrastructure development started. The first homes were started in 2003. The community covers approximately 4,784 acres approximately directly north and northwest of the city of Tracy. As of the end of 2024, approximately 8,000 homes are within the City. In March 2020 a modern Town Hall and Community Library were completed.
Primary access to the area is provided by Mountain House Parkway, a major north/south arterial along the eastern portion of the City. Byron Road is another major arterial in a northwest/southeast direction that provides access to Highway 205 and the nearby community of Tracy and employment opportunities in the greater San Francisco Bay Area. Public transportation is provided by San Joaquin Transit District and provides access within the City and to nearby areas in San Joaquin County, however, the primary mode of transportation in this area is the automobile. The Stockton Metro Airport is located about 26 miles north and the Oakland International Airport is approximately 45 miles to the west.
Land uses in the City are predominantly single-family residential, with farmland largely surrounding the City. In late 2022 Safeway completed its full service grocery store and gas station at the corner of Mountain House Parkway and Byron Road as part of the larger 86,000 square foot Market at Mountain House retail center. Larger retail supportive services are located in Tracy, including Costco, Home Depot, auto dealers and other services typical of a larger city, with similar services in nearby Lathrop, Stockton and Livermore.
Active sales of homes in the City are ongoing, with homes currently offered by Lennar Homes in its Bradbury Park neighborhood in the Creekside master planned community, with home prices ranging in the upper $800,000’s to lower $1,000,000’s, as well as homes similarly priced and offered by Shea Homes in its Langston duet home project.
One of the major employers in the area is Amazon, who operates two fulfillment centers in Tracy. Other major employers include Safeway, Tracy Unified School District, Defense Distribution Depot San Joaquin, and Deuel Vocational Institute. These are located within five to eight miles of the City and represent significant concentrations in the distribution and government industries.
The nearest fire and police stations are within two miles of the City. The closest elementary/middle school is within one mile and the local high school is approximately two miles away. San Joaquin Delta College has a satellite campus in the City.
The land within the District begins a significant new development area of the City referred to internally as the area north of Byron Road. Improvement Area Nos. 1 through 9 are planned for residential development and expected to collectively comprise approximately 5,471 lots, with land suitable for approximately 1,577 more lots in the Future Annexation Area. Units in the currently formed improvement areas in the District are expected to be developed for residential uses as shown in the following table. Only the land in Improvement Area No. 8 is and will be security for the 2025 Bonds.
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29 Area Expected Homebuilder
Expected
Number of
Homes
Improvement Area No. 1 (1)
Century Communities, Taylor
Morrison, Richmond American,
Rurka Homes (2) 596
Improvement Area Nos. 2-5 TBD TBD (3)
Improvement Area No. 6 Pulte Homes 188 (4)
Improvement Area No. 7 Tri Pointe Homes 143
Improvement Area No. 8 Lennar Homes 503
Improvement Area No. 9 Richmond American 96
TOTAL 5,471
(1) Bonds were issued for Improvement Area No. 1 on March 13, 2025 in the principal amount of $40,130,000. No additional bonds are contemplated for Improvement Area No. 1. (2) Rurka Homes is a general contractor affiliate of the Master Developer that will build the homes and handle all development, construction, purchasing, sales, marketing and warranty activities, however the Master Developer will own the lots until conveyance to individual homebuyers.
(3) Currently owned by Master Developer and not yet mapped for development. Present zoning includes residential and other land uses. Residential lot count could be approximately 1,500- 1,600 but subject to mapping, entitlements and zoning changes; residential use currently projected by the Master Developer for home construction by Rurka Homes. (4) Seven of these lots are under contract to be deeded back to the Master Developer for home construction.
Development in Improvement Area No. 8
Effective January 6, 2025, Lennar Homes of California, LLC and its land bank, as the qualified landowner-electors of a portion of the property within the Future Annexation Area, submitted unanimous approval forms to the City to officially establish Improvement Area No. 8 and to establish a bonded indebtedness limit for Improvement Area No. 8 of $29,400,000 (excluding bonds described in Section 53364.2(e) of the Act). The 2025 Bonds are the first series of bonds to be issued for Improvement Area No. 8.
Lennar Homes has provided the following information with respect to development within Improvement Area No. 8. No assurance can be given that all information is complete. No assurance can be given, however, that the proposed development of the property within Improvement Area No. 8 will occur in a timely manner or in the configuration or to the density described herein. Since the ownership of the parcels is subject to change, the development plans outlined below may not be continued by the subsequent owner if the parcels are sold, although development by any subsequent owner will be subject to the Development Agreement and the policies and requirements of the City. No assurance can be given that the plans or projections detailed below will actually occur. Neither the 2025 Bonds nor any of the Special Taxes are personal obligations of any property owner within Improvement Area No. 8. The 2025 Bonds are secured solely by the Special Taxes levied on property within Improvement Area No. 8 and amounts on deposit in certain of the funds and accounts maintained by the Fiscal Agent under the Fiscal Agent Agreement as described in this Official Statement. Neither the City nor the Underwriter can provide any assurances as to the accuracy of the information in this section.
Overview. The development ongoing in Improvement Area No. 8 is comprised of 503 single family residential lots on approximately ____ acres marketed as four residential communities: “Lugano,” “Mezzano,” “Turano,” and “Maggiore.” The project is generally located on POLICY AND ACTION ITEM 8.4
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30 north side of Byron Road at N. Central Parkway. The 503 lots were within the Future Annexation Area established for the District at the time it was formed, and were annexed to the District in January 2025. Only the land within Improvement Area No. 6 constitutes security for the Bonds.
Maps. Maps showing the region and local area where Improvement Area No. 8 is located, as well as the boundaries of Improvement Area No. 8 follow.
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31 [Map 1 – Vicinity Map]
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32 [Map 2 – CFD Boundary Map - Page 1]
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33 [CFD Boundary Map - Page 2
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34 [Map 3 – Aerial Photo]
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35 No Affordable Units. There are no affordable unit requirements within Improvement Area No. 8, other than a fee paid at building permit.
Flood Hazard Map Information. Improvement Area No. 8 is located in an area of minimal flooding according to the Federal Emergency Management Association (“FEMA”). In particular, Improvement Area No. 8 is located in an area designated by FEMA as being within Zone X, outside of the 500-year floodplain.
Seismic Conditions. Like other areas of Northern California, the property in Improvement Area No. 8 is subject to the risk of earthquake damage. Based on the Earthquake Zones of Required Investigation map published by the State of California Department of Conservation, none of the property expected to be developed in Improvement Area No. 8 is located within a seismic special studies zone, designated by the California State Division of Mines and Geology, in accordance with the Alquist-Priolo Special Study Zone Act of 1972.
Fire Hazard Risk. The CalFire Local Responsibility Area (“LRA”) Fire Hazard Severity Zone as identified by the State Fire Marshal in the newly revised map dated January 22, 2025 places the entire City within “Unzoned.” See “RISK FACTORS – Property Values and Property Development – Wildfires.”
Entitlements. The entitlements for the project permit a development proposal related to a particular parcel to proceed through tentative map subdivision and design-review permitting processes to final mapping provided the development application is in accord with the entitlements and the final map conditions. Lennar Homes has received all necessary approvals to develop the 503 lots within Improvement Area No. 8.
Final small-lot subdivision maps have been received for all 503 residential units in Improvement Area No. 8 and all lots within Improvement Area No. 8 are now in “finished lot” condition, although Lennar Homes is still completing some landscaping and other perimeter work related thereto.
Home Development. Lennar Homes is developing the land in Improvement Area No. 8 as its “Lakeshore” neighborhood comprising 503 single-family, detached homes in four product lines: “Lugano,” “Maggiore,” “Mezzano,” and “Turano.” As of March 15, 2025, 405 lots were in “finished lot” condition and 98 were partially improved, in addition to 8 lots with completed model homes. Construction of production homes began in October 2024. Model homes in Improvement Area No. 8 opened in March 2025. As of March 15, 2025, 22 homes were under contract and initial home closings are projected for mid-April 2025 [update]. Additional information regarding lot status, building permits issued, units under construction, sales and pricing for each product line follows:
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36 Table 1A
Improvement Area No. 8 of City of Mountain House
Community Facilities District No. 2024-1 (Public Facilities and Services) Status of Development in Improvement Area No. 8
As of March 15, 2025
Community
No. of
Lots(1)
Building
Permits
Issued
Partially
Completed
Homes
Homes
Under
Contract
Homes
Sold
and
Closed
Lugano 134 29 27 5 0
Maggiore 113 29 27 7 0
Mezzano 126 30 22 1 0
Turano 130 27 22 13 0
Total 503 115 98 26 0
(1) 8 lots have been improved with a model home which are counted as partially completed homes.
Source: Lennar Homes.
Table 1B
Improvement Area No. 8 of City of Mountain House
Community Facilities District No. 2024-1 (Public Facilities and Services) Base Pricing in Improvement Area No. 8
As of March 15, 2025
Community
No. of
Lots
Floor
Plan
Range
Base
Price
Range(1)
Lugano 134 1829 - 2289 $905,880 - $1,028,880
Maggiore 113 2356 - 2772 $1,048,880 - $1,153,880
Mezzano 126 2258 - 3324 $1,028,880 - $1,323,880
Turano 130 2710 - 3711 $1,158,880 - $1,418,880
(1) Base Pricing as of March 15, 2025. Excludes upgrades, concessions, and other offsets in pricing such as mortgage rate buy-downs.
Source: Lennar Homes.
Backbone and In-Tract Infrastructure. The conditions of development for the project require the construction of various improvements at various times. As of March 15, 2025 all required backbone and in-tract infrastructure was in place for the development and sale of the 503 planned single-family homes in Improvement Area No. 8.
Land-Banking Arrangement. In connection with a land banking transaction, Lennar Homes transferred all 503 lots in Improvement Area No. 8 (the “Land Bank Lots”) to AG EHC II (LEN) CA 2, L.P., a Delaware limited partnership and AG EHC II (LEN) CA 4B, L.P., a Delaware limited partnership (together, the “Land Bank Owner”). In connection therewith, Lennar Homes and the Land Bank Owner entered into two Option Agreements (together, the “Option Agreement”) whereby Lennar Homes has the option, but not the obligation, to purchase the Land Bank Lots from the Land Bank Owner, which began in September 2023 and extends through December 2026.
Lennar Homes is responsible for making special tax payments while the Option Agreement is in place. In the event that Lennar Homes does not exercise its option or the right to purchase the lots expires or is terminated, the Land Bank Owner being an investor only and POLICY AND ACTION ITEM 8.4
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37 not a homebuilder, would likely attempt to sell such lots to another merchant builder. Under the Option Agreement, Lennar has the option to take-down lots in accordance with a specified takedown schedule. In addition, Lennar Homes can accelerate the takedown of lots and, Lennar Homes can, and does, pull building permits and begin house construction on lots held by the Land Bank Owner before those lots are taken down. As of March 15, 2025, Lennar Homes had taken down 120 lots. Lennar Homes additionally is allowed to pull building permits and build on lots still owned by the Land Bank Owner and has done so. The remaining take-down schedule is as follows:
Lennar Option Agreement – Take-Down Schedule
As of March 15, 2025
AG EHC II
CA 2 LLP
Option
Period
Date Option
Period
Expires
Lugano Maggiore Turano Mezzano
Cumulative
Total (1)
1-18 Prior to 3/20/25 64
19 3/20/25 2 2 34 34 72
20 4/20/25 2 2 38 38 80
21 5/20/25 2 2 42 42 88
22 6/20/25 2 2 46 46 96
23 7/20/25 2 2 50 50 104
24 8/20/25 2 2 52 54 110
25 9/20/25 2 2 52 58 114
26 10/20/25 2 2 52 62 118
27 11/20/25 2 2 52 66 122
28 12/20/25 2 2 52 70 126
29 1/20/26 2 2 52 74 130
30 2/20/26 2 2 52 78 134
31 3/20/26 2 2 52 82 138
32 4/20/26 2 2 56 86 146
33 5/20/26 2 2 60 90 154
34 6/20/26 2 2 64 94 162
35 7/20/26 2 2 68 98 170
36 8/20/26 2 2 72 102 178
37 9/20/26 2 2 76 106 186
38 10/20/26 2 2 80 110 194
39 11/20/26 2 2 84 114 202
40 12/20/26 2 2 97 130 231
AG EHC II
CA 4B LLP
Option
Period
Date Option
Period
Expires
Lugano Maggiore Turano
Cumulative
Total (1)
1-18 Prior to 3/20/25 56
19 3/20/25 32 32 0 64
20 4/20/25 36 36 0 72
21 5/20/25 40 40 0 80
22 6/20/25 44 44 0 88
23 7/20/25 48 48 0 96
24 8/20/25 52 52 2 106
25 9/20/25 56 56 6 118
26 10/20/25 60 60 10 130
27 11/20/25 64 64 14 142
28 12/20/25 68 68 18 154
29 1/20/26 72 72 22 166
30 2/20/26 76 76 26 178
_____________
(1) As of March 15, 2025 all scheduled lots have been taken down as of the dates indicated.
Source: Lennar Homes.
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38 Infrastructure Budget and Status. Although Lennar Homes expects to have sufficient funds available to complete its development in Improvement Area No. 8 as described in this Official Statement, there can be no assurance that amounts necessary to finance the development costs will be available from Lennar Homes or any other source when needed.
Neither Lennar Homes, nor any of its related entities are under any legal obligation of any kind to expend funds for the development of and construction of homes on its property in Improvement Area No. 8. Any contributions by Lennar Homes or any related parties to fund the costs of such development are entirely voluntary.
If and to the extent that internal funding is inadequate to pay the costs to complete the planned development by Lennar Homes within Improvement Area No. 8 and other financing is not put into place, there could be a shortfall in the funds required to complete the planned development by Lennar Homes in Improvement Area No. 8.
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, Lennar Homes has no actual knowledge of any 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 Improvement Area No. 8 as described in the Official Statement. Although the information in this Official Statement reflects the current development expectations of the Developer, no assurance can be given that lot acquisition from the Land Bank Owner or home construction and sales will be carried out on the schedule and according to the plans described herein, or that the lot acquisition from the Land Bank Owner or home construction and sale plans or base prices set forth herein will not change after the date of this Official Statement. The Developer reserves the right to change its development 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.
Acquisition Agreement. In connection with the annexation into the District, the City and the Master Developer entered into an Acquisition Agreement (the “Acquisition Agreement”) which provides that certain impact fees will be eligible for financing through bonds issued by the City on behalf of Improvement Area No. 8. Although public facilities constructed by Lennar Homes are eligible to be financed by bonds, none are currently expected to be bond financed.
The Rate and Method provides that the funding of Improvement costs can also be made from collections of the Special Tax available as the “pay-as-you-go” component of Special Taxes.
The pay-as-you-go funding component is expected to provide for funding of the cost of a portion of the Improvements in excess of the amount provided from Bond proceeds (if such proceeds are not sufficient) through annual Special Tax collections in excess of the amount needed to pay the debt service. The City allows utilizing this funding mechanism during the initial 15 years that the Bonds are outstanding.
Utilities
Utility services to the property within Improvement Area No. 8 will be supplied by the following:
• Water: City of Mountain House
• Sewer: City of Mountain House
• Storm drain: City of Mountain House
• Electricity and gas: Modesto Irrigation District
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39 • Telephone: AT&T
• Cable TV: Comcast
• Refuse collection: West Valley Disposal
OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 8
Unpaid Special Taxes do not constitute a personal indebtedness of the owners of the parcels within Improvement Area No. 8. There is no assurance that an owner or any subsequent owners have the ability to pay the Special Taxes or that, even if they have the ability, they will choose to pay such taxes. An owner may elect to not pay the Special Taxes when due and cannot be legally compelled to do so. Neither the City nor any Bondowner will have the ability at any time to seek payment directly from the owners of property within Improvement Area No. 8 of the Special Tax or the principal or interest on the Bonds, or the ability to control who becomes a subsequent owner of any property within Improvement Area No. 8.
Lennar Homes has provided the respective information set forth under the heading “OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 8” below. No assurance can be given that all information is complete. No assurance can be given that development of the property will be completed, or that it will be completed in a timely manner. The Special Taxes are not personal obligations of Lennar Homes or of any subsequent landowners; the Bonds are secured only by the Special Taxes and moneys available under the Fiscal Agent Agreement. See “SECURITY FOR THE BONDS” and “BOND OWNERS’ RISKS” herein.
Current Ownership. As noted above, Lennar Homes has been and continues to facilitate lot development in the Improvement Area No. 8 through a land-banking arrangement with the Land Bank Owner. As of April 21, 2025, 216 lots had been taken down by Lennar within Improvement Area No. 8, with the 287 remaining lots anticipated to be taken down by Lennar Homes according to or in excess of the negotiated take-down option schedule described above.
See “– IMPROVEMENT AREA NO. 8 – Development in Improvement Area No. 8 - Land-Banking Arrangement.”
Land Bank Owner. The Land Bank Owner is an affiliate of, and managed by, Angelo Gordon & Co., L.P. (“Angelo Gordon”). Angelo Gordon is a privately-held alternative investment firm founded in 1988 and headquartered in New York, with associated offices across the United States, Europe and Asia. Angelo Gordon manages approximately $52 billion across a broad range of credit and real estate strategies. Affiliates of the Land Bank Owner have entered into land banking arrangements with Lennar Corporation and its affiliated entities on more than 200 residential development projects. Neither the Land Bank Owner nor Angelo Gordon is a developer or a merchant builder.
Lennar Homes. Lennar Homes is based in Irvine, California. Lennar Homes has been in the business of developing residential real estate communities in California since 1996. On February 1, 2022, Lennar Homes of California, Inc., a California corporation, was converted to a California limited liability company and is now (on and after February 1, 2022) known as Lennar Homes of California, LLC, a California limited liability company (“Lennar Homes”). Under the land-banking arrangement Lennar Homes is responsible for paying the Special Taxes.
Lennar Homes is wholly-owned by U.S. Home, LLC, a Delaware limited liability company (“U.S. Home”). U.S. Home is wholly-owned by Lennar Corporation, which is based in Miami, Florida. Founded in 1954, Lennar Corporation completed its initial public offering in 1971 and POLICY AND ACTION ITEM 8.4
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40 listed its common stock on the New York Stock Exchange in 1972. Lennar Corporation’s Class A and Class B common stock are listed on the New York Stock Exchange under the symbols “LEN” and “LEN.B.” respectively. Lennar Corporation is one of the largest homebuilders in the United States based on home sales revenues and net earnings, and operates under a number of brand names, including Lennar Homes and U.S. Home. Lennar Homes primarily develops residential communities both within the Lennar family of builders and through consolidated and unconsolidated partnerships in which Lennar Homes maintains an interest.
Lennar Corporation is subject to the informational requirements of the Exchange Act and in accordance therewith files reports, proxy statements and other information with the SEC. Such filings, particularly the Annual Report on Form 10-K and its most recent Quarterly Report on Form 10-Q, set forth, among other things, certain data relative to the consolidated results of operations and financial position of Lennar Corporation and its consolidated subsidiaries, including Lennar Homes, as of such dates.
The SEC maintains a website that contains reports, proxy and other information statements and other information regarding registrants that file electronically with the SEC, including Lennar Corporation. The address of such website is www.sec.gov. All documents filed by Lennar Corporation pursuant to the requirements of the Exchange Act after the date of this Periodic Report will be available for inspection in such manner as the SEC prescribes.
Copies of Lennar Corporation’s Annual Report and related financial statements, prepared in accordance with generally accepted accounting standards, are available from Lennar Corporation’s website at www.lennar.com. The foregoing website addresses and references to filings with the SEC are given for reference and convenience only, and the information on such websites and on file with the SEC does not form a part of this Official Statement and is not incorporated by reference herein. No representation is made in this Official Statement as to the accuracy or adequacy of the information contained on such websites. Lennar Corporation and Lennar Homes are not obligated to advance funds for construction or development or to pay ad valorem property taxes or the Special Taxes and investors should not rely on the information and financial statements contained on such websites in evaluating whether to buy, hold or sell the Bonds. The information contained on such websites may be incomplete or inaccurate and has not been reviewed by the City or the Underwriter.
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41 VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 8
Assessed Valuation
The value of taxable property within Improvement Area No. 8 is a critical factor in determining the investment quality of the Bonds. The remedy for non-payment of the Special Tax is potential foreclosure of the delinquent real property.
Assessed Valuation Generally. As provided by Article XIII A of the California Constitution, county assessors’ assessed values are to reflect market value as of the date the property was last assessed (or 1975, whichever is more recent), increased by a maximum of 2% per year. Properties may be reassessed by the County only upon a change of at least 51% ownership of existing property or upon new construction. The assessed values of parcels in the District thus reflect the estimate of the County Assessor (the “Assessor”) of market value when acquired (or 1975, whichever is later), possibly increased by up to 2% per year, and for parcels on which construction has occurred since their date of acquisition, the Assessor’s estimate of market value as of the time of construction, possibly increased by up to 2% per year.
Assessed Valuation History. The following table shows the Fiscal Year 2024-25 County assessed valuations of taxable property in Improvement Area No. 8.
Assessed Valuation of Taxable Property
in Improvement Area No. 8
Fiscal
Year
Land Assessed
Value
Improvement
Assessed
Value
Total Assessed
Value
Number of
Permits
Issued (1)(2)
2024-25 $61,402,980 $0 $61,402,980 0
(1) Represents the number of parcels for which a building permit for new construction was issued prior to June 30 of the prior fiscal year. As of June 30, 2024, no building permits had been pulled. (2) As of March 15, 2025, the date of value, 106 building permits had been pulled.
Sources: San Joaquin County Assessor's Office; California Municipal Statistics, Inc.; Goodwin Consulting Group, Inc.
The actual market value of land in Improvement Area No. 8, if sold at foreclosure, may be higher or lower than the Assessor’s assessed values, depending upon the date of the Assessor’s most recent assessment. The actual fair market value of any parcel may be more accurately established through an arms-length sale or an appraisal by an independent appraiser.
The Appraisal
General. In order to obtain a more accurate estimate of the value of land in Improvement Area No. 8, the City ordered preparation of an appraisal report (the “Appraisal”), of the estimated value of certain taxable land within Improvement Area No. 8 as of a March 15, 2025 date of value.
The Appraisal was prepared by Integra Realty Resources, Sacramento, California (the “Appraiser”). The Appraisal is set forth in APPENDIX B hereto. The description herein of the Appraisal is intended for limited purposes only; the Appraisal should be read in its entirety. The conclusions reached in the Appraisal are subject to certain assumptions, conditions and qualifications which are set forth in the Appraisal.
Composite Value Estimate. The Appraisal sets forth an aggregate value of taxable property currently in Improvement Area No. 8 of $165,906,000, as of March 15, 2025. The appraised value POLICY AND ACTION ITEM 8.4
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42 assumes completion of the Improvements funded by the 2025 Bonds (but not any Additional Bonds that may be issued in the future) and accounts for the impact of the lien of the Special Tax on the value of the property. In considering the estimates of value evidenced by the Appraisal, it should be noted that the Appraisal is based upon a number of standard and special assumptions, which affect the estimates as to value.
Appraised Valuation by Ownership. The following table sets forth the appraised valuation by ownership and development status for parcels owned by individual homeowners, the Master Developer and Merchant Builders (and their land banks) as of March 15, 2025. The total valuation set forth in the Appraisal is $165,906,000. For information on how the values were allocated among parcels and ownership, see APPENDIX B.
Table 3
Appraised Values by Ownership
As of March 15, 2025
Market Value by Ownership Appraised Value
Lennar Homes of California, LLC 47,178,000
AG EHC II (LEN) CA 2, L.P., Delaware limited partnership 53,820,000 AG EHC II (LEN) CA 4B, L.P., Delaware limited partnership 64,908,100 Aggregate Market Value $165,906,000
_____________________
Source: Appraisal.
Hypothetical Condition. The estimate of appraised value is subject to a hypothetical condition, defined as that which is contrary to what exists but is supposed for the purposes of analysis. For purposes of the hypothetical condition, the Appraiser assumed that certain proceeds of the 2025 Bonds are available to reimburse for certain improvements already completed.
Assumptions and Limiting Conditions. In considering the estimate of value evidenced by the Appraisal, the Appraisal is based upon a number of standard and special assumptions which affect the estimates as to value. For example, the Appraiser has assumed that there is no adverse soil conditions, toxic substances or other environmental hazards that would interfere or inhibit development of the appraised property. Should future conditions and events reduce the level of permitted development or delay the completion of any projected development, the value of the undeveloped land would likely be reduced from that estimated by the Appraiser. See “APPENDIX B – THE APPRAISAL.”
Accordingly, because the Appraiser arrived at an estimate of current market value based upon certain assumptions which may or may not be fulfilled, no assurance can be given that should the parcels become delinquent due to unpaid Special Taxes, and be foreclosed upon and offered for sale for the amount of the delinquency, that any bid would be received for such property or, if a bid is received, that such bid would be sufficient to pay such delinquent Special Taxes.
Exposure Time. Exposure time is the length of time the subject property would have been exposed for sale in the market had it sold on the effective valuation date at the concluded market value. Exposure time is always presumed to precede the effective date of the Appraisal. Based on the Appraiser’s review of recent sales transactions for similar properties and its analysis of supply and demand in the local land market, the Appraiser’s opinion was that the probable exposure time for the appraised property at the concluded market value stated previously is 12 months.
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43 Marketing Time. Marketing time is an estimate of the amount of time it might take to sell a property at the concluded market value immediately following the effective date of value. As the Appraiser foresees no significant changes in market conditions in the near term, the Appraiser’s opinion was that a reasonable marketing period for the appraised property in bulk is likely to be the same as the exposure time. Accordingly, the Appraiser estimated the marketing period at 12 months or less.
No assurance can be given that a sale of the property in bulk through foreclosure could be achieved or attained over an extended period of time; real estate is cyclical in nature, and it is impossible to accurately forecast and project specific demand over a particular period. See “SPECIAL RISK FACTORS – Property Values and Property Development.” Limitations of Appraisal Valuation. Property values may not be evenly distributed throughout Improvement Area No. 8; thus, certain parcels may have a greater value than others.
This disparity is significant because in the event of nonpayment of the Special Tax, the only remedy is to foreclose against the delinquent parcel.
No assurance can be given that the foregoing valuation can or will be maintained during the period of time that the 2025 Bonds are outstanding in that the City has no control over the market value of the property within Improvement Area No. 8 or the amount of additional indebtedness that may be issued in the future by other public agencies, the payment of which, through the levy of a tax or an assessment, may be on a parity with the Special Taxes. See “–Overlapping Liens and Priority of Lien” below.
For a description of certain risks that might affect the assumptions made in the Appraisal, see “SPECIAL RISK FACTORS” herein.
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44 Value to Special Tax Burden Ratios
General. In comparing the value of the real property within Improvement Area No. 8 and the principal amount of the Bonds, it should be noted that only the real property upon which there is a delinquent Special Tax can be foreclosed upon, and the real property within Improvement Area No. 8 cannot be foreclosed upon as a whole to pay delinquent Special Taxes of the owners of such parcels within Improvement Area No. 8 unless all of the property is subject to a delinquent Special Tax. In any event, individual parcels may be foreclosed upon separately to pay delinquent Special Taxes levied against such parcels.
Other public agencies whose boundaries overlap those of Improvement Area No. 8 could, without the consent of the City and in certain cases without the consent of the owners of the land within Improvement Area No. 8, impose additional taxes or assessment liens on the land within Improvement Area No. 8. See the subheading “Lammersville Joint Unified School District Community Facilities District No. 2024-1” following Table 6 regarding an overlapping district which has not yet levied taxes.
Property owners can also voluntarily add Property Assessed Clean Energy (PACE) assessment liens on their property to finance energy efficiency improvements. The lien created on the land within Improvement Area No. 8 through the levy of such additional taxes or assessments may be on a parity with the lien of the Special Tax. In addition, construction loans may be obtained by the Master Developer and subsequent merchant homebuilders, and home loans may be obtained by ultimate homeowners. The deeds of trust securing such debt on property within Improvement Area No. 8, however, will be subordinate to the lien of the Special Tax.
POLICY AND ACTION ITEM 8.4
ATTACHMENT F
EXHIBIT 2
Item 8.4
45 Value to Lien Ratios by Appraisal Status. The following table sets forth composite values as of March 15, 2025, maximum Special Taxes for Fiscal Year 2025-26, allocable debt, and value to lien ratios by appraisal status in Improvement Area No. 8, based on the assumptions detailed therein.
Table 4
Value to Lien Ratios by Development Status
Projected Fiscal Year 2025-26 Special Tax Levy
Improvement Area No. 8 Debt Allocated by Projected Special Tax As of March 15, 2025
Ownership (1) Appraisal Status (1)
No. of
Units
Appraised
Value (2)
Projected
FY 2025-26
Maximum
Facilities
Special Tax
Projected
FY 2025-26
Facilities
Special Tax
Levy (3)
Percent of
Projected
Facilities
Special Tax
Levy
Series 2025
Bonds (4)*
Overlapping
Debt (5)*
Total
Debt
Average
Appraised
Value-toLien
Lennar Homes of California
Inc. Completed Homes
Village 1 2 $1,467,000 $2,460 $2,460 0.7% $40,530 $4,170 $44,700 32.8 : 1 Village 2 2 $1,719,000 $3,386 $3,386 1.0% $55,787 $4,886 $60,674 28.3 : 1 Village 3 2 $1,683,000 $3,737 $3,737 1.1% $61,568 $4,784 $66,352 25.4 : 1 Village 4 2 $1,908,000 $4,710 $4,710 1.3% $77,598 $5,423 $83,022 23.0 : 1 Partially Completed
Homes
Village 1 27 $9,045,000 $33,213 $33,213 9.5% $547,154 $25,710 $572,863 15.8 : 1 Village 2 27 $10,035,000 $45,716 $45,716 13.1% $753,130 $28,524 $781,654 12.8 : 1 Village 3 22 $8,343,000 $41,110 $41,110 11.7% $677,246 $23,714 $700,960 11.9 : 1 Village 4 22 $8,514,000 $51,814 $51,814 14.8% $853,581 $24,200 $877,782 9.7 : 1 Finished SFR Lots
Village 1 1 $288,000 $1,230 $284 0.1% $4,673 $819 $5,492 52.4 : 1 Village 2 1 $315,000 $1,693 $390 0.1% $6,432 $895 $7,327 43.0 : 1 Village 3 6 $1,908,000 $11,212 $2,585 0.7% $42,592 $5,423 $48,015 39.7 : 1 Village 4 6 $1,953,000 $14,131 $3,259 0.9% $53,682 $5,551 $59,233 33.0 : 1
Subtotal 120 $47,178,000 $214,414 $192,666 55.0% $3,173,974 $134,099 $3,308,073 14.3 : 1 AG EHC II (LEN) CA 2, L. P. Finished SFR Lots
Village 3 67 $21,321,000 $125,199 $28,870 8.2% $475,608 $60,603 $536,211 39.8 : 1 Village 4 100 $32,499,000 $235,518 $54,310 15.5% $894,701 $92,376 $987,077 32.9 : 1
Subtotal 167 $53,820,000 $360,717 $83,180 23.7% $1,370,309 $152,979 $1,523,288 35.3 : 1 AG EHC II (LEN) CA 4B, L. P. Finished SFR Lots
Village 1 104 $29,826,000 $127,932 $29,501 8.4% $485,993 $84,778 $570,770 52.3 : 1 Village 2 83 $25,857,000 $140,536 $32,407 9.3% $533,864 $73,496 $607,360 42.6 : 1 Village 3 29 $9,225,000 $54,191 $12,496 3.6% $205,860 $26,221 $232,082 39.7 : 1
Subtotal 216 $64,908,000 $322,659 $74,403 21.2% $1,225,717 $184,495 $1,410,212 46.0 : 1
Total 503 $165,906,000 $897,790 $350,250 100.0% $5,770,000 $471,573 $6,241,573 26.6 : 1 (Footnotes continued on following page.)
POLICY AND ACTION ITEM 8.4
ATTACHMENT F
EXHIBIT 2
Item 8.4
46 * Preliminary, subject to change.
(1) The ownership and development status is based on the Appraisal Report and as of the March 15, 2025 date of value. (2) Appraised values were allocated to the individual lots based on the expected development and lot status for each, as reported in the Appraisal. The allocated appraised values may not be indicative of the market values of the villages or the individual lots. (3) Based on 106 building permits issued prior to March 15, 2025, and assumes no further development. Includes debt service due in 2026 on the Series 2025 Special Tax Bonds and estimated administrative expenses in the amount of $35,000.
(4) Includes the $5,770,000 par amount of the Series 2025 Special Tax Bonds. Allocated based on the Projected FY 2025-26 Facilities Special Tax Levy. (5) Includes the overlapping debt liens listed under Direct and Overlapping Tax and Assessment Debt in the overlapping debt report prepared by California Municipal Statistics, Inc. The overlapping debt report is based on the parcels and assessed values as of FY 2024-25.
Sources: Integra Realty Resources, Inc.; Piper Sandler & Co.; California Municipal Statistics, Inc.; Goodwin Consulting Group, Inc.
POLICY AND ACTION ITEM 8.4
ATTACHMENT F
EXHIBIT 2
Item 8.4
47 Stratification of Value to Lien Ratios. The following table sets forth ranges of value to lien ratios, based on appraised values, maximum Special Taxes for Fiscal Year 2025-26, and allocable debt in Improvement Area No. 8, based on the assumptions detailed therein.
Table 5
Summary Value to Lien Ratios by Range
Projected Fiscal Year 2025-26 Special Tax Levy
Improvement Area No. 8 Debt Allocated by Projected Special Tax Value-to-Lien
Ratio Range *
No. of
Units
Appraised
Value (1)
Projected FY
2025-26
Facilities
Special Tax
Levy (2)
Percent of
Projected
Facilities
Special
Tax Levy 2025 Bonds (3)*
Overlapping
Debt (4) Total Debt *
Average
Value-toLien
Ratios*
Greater than 20:1 405 $129,969,000 $178,396 50.9% $2,938,888 $369,425 $3,308,314 39.3 : 1 10:1 to 20:1 76 $27,423,000 $120,040 34.3% $1,977,530 $77,947 $2,055,478 13.3 : 1 5:1 to 10:1 22 $8,514,000 $51,814 14.8% $853,581 $24,200 $877,782 9.7 : 1 Total 503 $165,906,000 $350,250 100.0% $5,770,000 $471,573 $6,241,573 26.6 : 1 * Preliminary, subject to change.
(1) Appraised values were allocated to the individual lots based on the expected development and lot status for each, as reported in the Appraisal. The allocated appraised values are not indicative of the market values of the villages or the individual lots. (2) Based on 106 building permits issued prior to March 15, 2025, and assumes no further development. Includes debt service due in 2026 on the Series 2025 Special Tax Bonds and estimated administrative expenses in the amount of $35,000. (3) Includes the $5,770,000 par amount of the Series 2025 Special Tax Bonds. Allocated based on the Projected FY 2025-26 Facilities Special Tax Levy. (4) Includes the overlapping debt liens listed under Direct and Overlapping Tax and Assessment Debt in the overlapping debt report prepared by California Municipal Statistics, Inc. The overlapping debt report is based on the parcels and assessed values as of FY 2024-25.
Sources: Integra Realty Resources, Inc.; Piper Sandler & Co.; California Municipal Statistics, Inc.; Goodwin Consulting Group, Inc.
Lammersville Joint Unified School District Community Facilities District No. 2024-1. Land in Improvement Area No. 8 is located within the Lammersville Joint Unified School District, which formed its Community Facilities District No. 2024-1 (the “Lammersville JUSD CFD”) in December 2024 with a bond authorization of $250 million and an initial series of bonds is expected to be issued in summer of 2025. No tax was levied for 2024-25 and maximum rates escalate 2% per year. The fiscal year 2024-25 authorized maximum special tax rate for Improvement Area 8 is, on average, $1,939 per unit in Village 1 and $2,506 per unit in Village 6. The annual special tax requirement, which is determined by the school district each year, will first be met with a levy on property for which a building permit for new construction was issued prior to June 30th of the prior fiscal year, and secondly be met, if needed, by a levy on land that has been final mapped for single family dwellings.
Bonds have not yet been issued for the Lammersville JUSD CFD. The City cannot project the amount of future special tax bond issuances, however it is likely that bond issuances will be considered for the Lammersville JUSD CFD as home construction within the Improvement Areas of the District reaches certain volume. Land within Improvement Area No. 8 will be subject to future levies for this community facilities district, which will affect future value to lien ratios.
POLICY AND ACTION ITEM 8.4
ATTACHMENT F
EXHIBIT 2
Item 8.4
48 Special Tax Collections and Delinquencies
Fiscal Year 2025-26 will be the first year in which the Special Tax was levied in Improvement Area No. 8. The following table sets forth the projected Fiscal Year 2025-26 Facilities Special Tax Levy by Village.
Table 6
Projected Fiscal Year 2025-26
Facilities Special Tax Levy by Village(1)
Projected
Development Status Village
Projected
FY 2025-26
Maximum
Facilities
Special Tax
Projected
FY 2025-26
Actual
Facilities
Special Tax (2)*
Developed Property Village 1 $35,673 $35,673
Village 2 49,103 49,103
Village 3 44,847 44,847
Village 4 56,524 56,524
Final Map Property Village 1 129,163 29,784
Village 2 142,229 32,797
Village 3 190,601 43,952
Village 4 249,649 57,569
$897,790 $350,250
______________
*Preliminary, subject to change.
(1) As of March 15, 2025, the date of value, final maps had been recorded for all villages, and 106 building permits had been issued for construction of new homes. Assumes no additional development. (2) Includes debt service due in 2026 on the Series 2025 Special Tax Bonds and estimated administrative expenses in the amount of $35,000. The Priority Administrative Expense for fiscal year 2025-26 is $35,000 and escalates by two percent per year.
Source: Goodwin Consulting Group, Inc.
Overlapping Liens and Priority of Lien
The principal of and interest on the Bonds are payable from the Special Tax authorized to be collected within Improvement Area No. 8, and payment of the Special Tax is secured by a lien on certain real property within Improvement Area No. 8. Such lien is co-equal to and independent of the lien for general taxes and any other liens imposed under the Act, regardless of when they are imposed on the property in Improvement Area No. 8. The imposition of additional special taxes, assessments and general property taxes will increase the amount of independent and co-equal liens which must be satisfied in foreclosure. The City, the County and certain other public agencies are authorized by the Act to form other community facilities districts and improvement areas and, under other provisions of State law, to form special assessment districts, either or both of which could include all or a portion of the land within Improvement Area No. 8.
Set forth below is an overlapping debt table showing the existing direct and overlapping tax and assessment debt payable with respect to property within Improvement Area No. 8. This table is taken from information prepared by California Municipal Statistics Inc. as of the date indicated, and is included for general information purposes only. The City has not reviewed the data for completeness or accuracy and makes no representations in connection therewith.
POLICY AND ACTION ITEM 8.4
ATTACHMENT F
EXHIBIT 2
Item 8.4
49 Table 7
Summary of Overlapping Debt
As of April 1, 2025
2024-25 Assessed Valuation: $61,402,980
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 4/1/25 San Joaquin Delta Community College District 0.049% $ 72,579 Lammersville Joint Unified School District 0.721 398,994 City of Mountain House Community Facilities District No. 2024-1, I.A. 8 100.000 -- (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $471,573
OVERLAPPING GENERAL FUND DEBT:
San Joaquin County Certificates of Participation 0.053% $ 22,772 Lammersville Joint Unified School District General Fund Obligations 0.721 100,415 Mountain House Community Services District 1.112 522,134 TOTAL OVERLAPPING GENERAL FUND DEBT $645,321
COMBINED TOTAL DEBT $1,116,894 (2)
Ratios to 2024-25 Assessed Valuation:
Total Direct Debt ($0)............................................................0.00% Total Overlapping Tax and Assessment Debt ........................0.77% Combined Total Debt..............................................................1.82% ____________________ (1) Excludes issue to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Sources: California Municipal Statistics, Inc.
There can be no assurance that the Master Developer, its affiliates or any subsequent owner will not petition for the formation of other community facilities districts and improvement areas or for a special assessment district or districts and that parity special taxes or special assessments will not be levied by the County or some other public agency to finance additional public facilities; however, no other special districts are currently contemplated by the City or the Master Developer.
Private liens, such as deeds of trust securing loans obtained by the Master Developer or Merchant Builders, may be placed upon property in Improvement Area No. 8 at any time. Under California law, the Special Taxes have priority over all existing and future private liens imposed on property subject to the lien of the Special Taxes.
POLICY AND ACTION ITEM 8.4
ATTACHMENT F
EXHIBIT 2
Item 8.4
50 Estimated Overall Tax Burden
The following table shows the estimated overall tax burden for representative single-family residential homes in Improvement Area No. 8 for Fiscal Year 2024-25.
Table 8
Estimated Overall Tax Burden
Village 1 Village 2 Village 3 Village 4
Net Taxable Value Amount Amount Amount Amount
Estimated Market Values (1) $968,110 $1,125,630 $1,226,380 $1,311,380 Less: Homeowner's Exemption ($7,000) ($7,000) ($7,000) ($7,000) Net Taxable Value $961,110 $1,118,630 $1,219,380 $1,304,380 Ad Valorem Property Taxes (2) Rate Amount Amount Amount Amount Base Property Tax 1.0000% $9,611 $11,186 $12,194 $13,044 LAMMERSVL USD 2006 MEASURE E BOND 0.0092% $88 $103 $112 $120 LAMMERSVL USD 2016 MEASURE L BOND 0.0317% $305 $355 $387 $413 SJ DELTA COLL 2004 MEASURE L BOND 0.0122% $117 $136 $149 $159 Total Ad Valorem Property Taxes 1.0531% $10,121 $11,780 $12,841 $13,736 Parcel Charges, Assessments, and Special Taxes (2) Amount Amount Amount Amount Mountain House - Parks & Rec (3) $101 $120 $121 $124
Mountain House - Public Safety (3) $576 $688 $695 $722
Mountain House - Public Works (3) $105 $125 $126 $132
Mountain House - Road & Admin (3) $1,136 $1,354 $1,368 $1,409 CSA No. 53 - Haz Waste $4 $4 $4 $4
SJC Mosq & Vctr Contr - Ben Asmt $10 $10 $10 $10
SJC Mosquito Abate $1 $1 $1 $1
Water Zone 2 $2 $2 $2 $2
Lammersville USD CFD 2024-1 (4) $1,939 $1,939 $2,506 $2,506 Mountain House CFD No. 2024-1 (Public Facilities and Services) - Services (5) $519 $519 $519 $519
Mountain House CFD No. 2024-1 (Public Facilities and Services) - Facilities (5) $1,206 $1,660 $1,832 $2,309
Total Parcel Charges, Assessments, and Special Taxes $5,599 $6,421 $7,184 $7,739 Total Taxes $15,721 $18,201 $20,025 $21,475
Total Effective Tax Rate 1.62% 1.62% 1.63% 1.64%
(1) Represents the average estimated home prices per village provided by the developer. (2) Based on fiscal year 2024-25 charges identified on the San Joaquin County-issued property tax bills. Charges subject to change in future years. In November 2024 San Joaquin Delta College passes a tax measure authorizing $598,000,000 in bonds wtih levies of $16 per $100,000 assessed valuation, no bonds have been issued yet. (3) Not authorized to issue bonds.
(4) Authorized to issue up to $250 million in bonds.
(5) Equal to the applicable Maximum Special Tax rate in FY 2024-25.
Sources: San Joaquin County Tax Collector's Office; Lennar Homes of California Inc.; Goodwin Consulting Group, Inc. .
POLICY AND ACTION ITEM 8.4
ATTACHMENT F
EXHIBIT 2
Item 8.4
51 SPECIAL RISK FACTORS
The purchase of the 2025 Bonds described in this Official Statement involves a degree of risk that may not be appropriate for some investors. The following includes a discussion of some of the risks which should be considered before making an investment decision. 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 2025 Bonds.
Limited Obligation of the City to Pay Debt Service
The City has no obligation to pay principal of and interest on the 2025 Bonds in the event Special Tax collections are delinquent, other than from amounts, if any, on deposit in the Reserve Fund or funds derived from the tax sale or foreclosure and sale of parcels on which levies of the Special Tax are delinquent, nor is the City obligated to advance funds to pay such debt service on the 2025 Bonds. The 2025 Bonds are not general obligations of the City but are limited obligations of the City, payable solely from the proceeds of the Special Tax and certain funds held under the Fiscal Agent Agreement, including amounts deposited in the Reserve Fund and investment income thereon, and the proceeds, if any, from the sale of property in the event of a foreclosure. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.” Any tax for the payment of the 2025 Bonds will be limited to the Special Tax to be collected within Improvement Area No. 8.
Payment of Special Taxes is not a Personal Obligation of the Property Owners Owners of property are not personally obligated to pay the Special Tax attributable to their property. Rather, the Special Tax is an obligation only against the parcel of property, secured by the amount which could be realized in a foreclosure proceeding against the property, and not by any promise of the owner to pay. If the value of the property is not sufficient, taking into account other obligations also constituting a lien against the property, the City, Fiscal Agent and owners of the 2025 Bonds have no recourse against the owner, such as filing a lawsuit to collect money.
Concentration of Ownership
Ownership of land in Improvement Area No. 8 is presently held by the homebuilder and a land bank which has granted the homebuilder an option to acquire the land. The homebuilder will build the homes and handle all development, construction, purchasing, sales, marketing and warranty activities and it will own the lots until conveyance to individual homebuyers. Accordingly, the ownership of land in Improvement Area No. 8 is concentrated until such time as homes are sold.
No assurance can be given that the homebuilder will complete homes and sell homes to individual homeowners on the timeline projected in this Official Statement or at all.
Failure of the homebuilder or any other future owner of significant property subject to the Special Taxes in Improvement Area No. 8 to pay installments of Special Taxes when due could cause the depletion of amounts in the Reserve Fund prior to reimbursement from the resale of foreclosed property or payment of the delinquent Special Tax and, consequently, result in the delinquency rate reaching a level that would cause an insufficiency in collection of the Special Tax to timely pay debt service on the 2025 Bonds. In that event, there could be a delay or failure in payments on the 2025 Bonds. See “– Bankruptcy and Foreclosure Delays” below and “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure.”
POLICY AND ACTION ITEM 8.4
ATTACHMENT F
EXHIBIT 2
Item 8.4
52 Appraised Values
The Appraisal summarized in APPENDIX B estimates the market value of certain taxable property within Improvement Area No. 8. This market value is merely the present opinion of the Appraiser, and is subject to the assumptions and limiting conditions stated in the Appraisal. The City has not sought the present opinion of any other appraiser of the value of the taxed parcels. A different present opinion of value might be rendered by a different appraiser.
The opinion of value relates to sale by a willing seller to a willing buyer as of the date of valuation, each having similar information and neither being forced by other circumstances to sell or to buy. Consequently, the opinion is of limited use in predicting the selling price at a foreclosure sale, because the sale is forced and the buyer may not have the benefit of full information.
In considering the estimates of value evidenced by the appraisal, it should be noted that the appraisal is based upon a number of standard and special assumptions which affect the estimates as to value, in addition to hypothetical conditions, as set forth in the Appraisal (see APPENDIX B hereto). Some of the improvements to be financed by the 2025 Bonds were not in place as of the date of inspection; thus, the value estimate is subject to a hypothetical condition (of such improvements being in place)
In addition, the opinion is a present opinion of the Appraiser as of the indicated date of value.
It is based upon present facts and circumstances. Differing facts and circumstances may lead to differing opinions of value. The appraised market value is not evidence of future value because future facts and circumstances may differ significantly from the present.
No assurance can be given that any of the appraised property in Improvement Area No. 8 could be sold in a foreclosure for the estimated market value contained in the Appraisal. Such sale is the primary remedy available to Bondowners if that property should become delinquent in the payment of Special Taxes.
Property Values and Property Development
The value of the taxable property within Improvement Area No. 8 is a critical factor in determining the investment quality of the 2025 Bonds. If a property owner defaults in the payment of the Special Tax, the City may bring an action to foreclose on the delinquent property in an attempt to obtain funds with which to pay debt service on the 2025 Bonds. Land development and land values could be adversely affected by economic and other factors beyond the City’s control, such as: a general economic downturn; adverse judgments in future litigation that could affect the scope, timing or viability of development; relocation of employers out of the area; stricter land use regulations; shortages of water, electricity, natural gas or other utilities; destruction of property caused by earthquake, flood or other natural disasters; environmental pollution or contamination.
The Appraisal information included as APPENDIX B sets forth certain assumptions of the Appraiser in estimating the market value of the property within Improvement Area No. 8 as of the date indicated. No assurance can be given that the land values are accurate if these assumptions are incorrect or that the values will not decline in the future if one or more events, such as natural disasters or adverse economic conditions, occur. See “Appraised Values” above.
Neither the City nor the Underwriter has evaluated development risks. Since these are largely business risks of the type that property owners customarily evaluate individually, and inasmuch as changes in land ownership may well mean changes in the evaluation with respect to POLICY AND ACTION ITEM 8.4
ATTACHMENT F
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Item 8.4
53 any particular parcel, the City is issuing the 2025 Bonds without regard to any such evaluation. Thus, the issuance of the 2025 Bonds in no way implies that the City or the Underwriter has evaluated these risks or the reasonableness of these risks. The following is a discussion of specific risk factors that could affect the timing or scope of property development in Improvement Area No. 8 or the value of property in Improvement Area No. 8.
Land Development. Land values are influenced by the level of development in the area in many respects.
First, undeveloped or partially developed land is generally less valuable than developed land and provides less security to the owners of the 2025 Bonds should it be necessary for the City to foreclose on undeveloped or partially developed property due to the nonpayment of Special Taxes.
Second, failure to complete development on a timely basis could adversely affect the land values of those parcels that have been completed. Lower land values would result in less security for the payment of principal of and interest on the 2025 Bonds and lower proceeds from any foreclosure sale necessitated by delinquencies in the payment of the Special Tax. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 8 – Value to Special Tax Burden Ratios.” No assurance can be given that the proposed development within Improvement Area No. 8 will be completed, and in assessing the investment quality of the 2025 Bonds, prospective purchasers should evaluate the risks of noncompletion.
Neither the Master Developer nor the Merchant Builders provide any assurances to the City that the project will be developed or that sources of financing that will actually be available will be sufficient to complete the currently projected development. Neither the Master Developer nor the Merchant Builders have any obligation to the City or to owners of the 2025 Bonds to complete the project overall or their particular developments therein.
Risks of Real Estate Investment Generally. Continuing development of land within Improvement Area No. 8 may be adversely affected by changes in general or local economic conditions, fluctuations in the real estate market, increased construction costs, development, financing and marketing capabilities of individual property owners, water or electricity shortages, and other similar factors. Development in Improvement Area No. 8 may also be affected by development in surrounding areas, which may compete with development in Improvement Area No. 8. In addition, land development operations are subject to comprehensive federal, state and local regulations, including environmental, land use, zoning and building requirements. There can be no assurance that proposed land development operations within Improvement Area No. 8 will not be adversely affected by future government policies, including, but not limited to, governmental policies to restrict or control development, or future growth control initiatives. There can be no assurance that land development operations within Improvement Area No. 8 will not be adversely affected by these risks.
Natural Disasters. The value of the parcels in Improvement Area No. 8 in the future can be adversely affected by a variety of natural occurrences, particularly those that may affect infrastructure and other public improvements and private improvements on the parcels in Improvement Area No. 8 and the continued habitability and enjoyment of such private improvements.
For example, the areas in and surrounding Improvement Area No. 8, like those in much of California, may be subject to earthquakes or other unpredictable seismic activity, however, Improvement Area No. 8 is not located in a seismic special studies zone.
Other natural disasters could include, without limitation, landslides, floods, droughts, wildfires or tornadoes. One or more natural disasters could occur and could result in damage to POLICY AND ACTION ITEM 8.4
ATTACHMENT F
EXHIBIT 2
Item 8.4
54 improvements of varying seriousness. Although the land in Improvement Area No. 8 is not in a highrisk area (or a special fire hazard severity zone) for wildfires, landslides, floods, or tornadoes, natural disasters such as these are unpredictable and may occur anywhere throughout the State, with devastating consequences. The damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost, or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances there could be significant delinquencies in the payment of Special Taxes, and the value of the parcels may well depreciate.
Drought. California has been subject to droughts from time-to-time in the past. Although the City does not believe any future drought would impact development in Improvement Area No. 8, no assurances can be given in this regard.
The City indicates it has adequate surface water and groundwater supplies to satisfy the planned development of property in Improvement Area No. 8 in accordance with applicable law and regulations. However, in the event that the City’s water supply is severely limited or cut off by virtue of future actions beyond its control resulting from ongoing or future drought conditions, development within Improvement Area No. 8 may be delayed or even stopped. Any reduction or interruption in the water supply would also likely cause a reduction in the land value and thus a reduction in the security in the event of a need to foreclose on land within Improvement Area No. 8 following a delinquency in the payment of Special Taxes.
Wildfires. In recent years, drought conditions in the State (see “– Drought above”) have led to increased risk of wildfire. In particular, certain electrical operators in the State have seen their distribution/transmission lines cause billions of dollars in property damage and the loss of lives. In 2023, as in several prior years, for example, devastating wildfires burned in various communities in California, 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. Although not located in a very high fire hazard severity zone, no assurance can be given that wildfires will not erupt in the developments being undertaken in the District and negatively impact development of property in the District in the future.
Various insurance companies in the State have restricted the availability of fire insurance.
Should homeowners within the District be unable to obtain fire insurance, they may not be able to qualify for a mortgage, which in turn may affect the rate of home sales within the District. The City can provide no assurance going forward that fire insurance will be readily available to homeowners within the District.
Legal Requirements. Other events that may affect the value of a parcel include changes in the law or application of the law. Such changes may include, without limitation, local growth control initiatives, local utility connection moratoriums and local application of statewide tax and governmental spending limitation measures. Development in Improvement Area No. 8 may also be adversely affected by the application of laws protecting endangered or threatened species.
Hazardous Substances. Any discovery of a hazardous substance detected on property within Improvement Area No. 8 would affect the marketability and the value of some or all of the property in Improvement Area No. 8. In that event, the owners and operators of a parcel within Improvement Area No. 8 may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as POLICY AND ACTION ITEM 8.4
ATTACHMENT F
EXHIBIT 2
Item 8.4
55 “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws.
California laws with regard to hazardous substances are also applicable to property within Improvement Area No. 8 and are as stringent as the federal laws. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance.
The effect, therefore, should any of the parcels be contaminated by a hazardous substance is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.
The values set forth in the Appraisal do not take into account the possible reduction in marketability and value of any of the parcels within Improvement Area No. 8 by reason of the possible liability of the owner (or operator) for the remedy of a hazardous substance condition on a parcel.
Although the City is not aware that the owner (or operator) of any of the property within Improvement Area No. 8 has a current liability for a hazardous substance with respect to any of the parcels, it is possible that such liabilities do currently exist and that the City is not aware of them.
Further, it is possible that liabilities may arise in the future with respect to any of the parcels within Improvement Area No. 8 resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified.
Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of a parcel within Improvement Area No. 8 that is realizable upon a foreclosure sale.
Endangered and Threatened Species. It is illegal to harm or disturb any plants or animals in their habitat that have been listed as endangered species by the United States Fish & Wildlife Service under the Federal Endangered Species Act or by the California Fish & Game Commission under the California Endangered Species Act without a permit. Although the Master Developer believes that no federally listed endangered or threatened species would be affected by the proposed development within Improvement Area No. 8, other than any that are permitted by the entitlements already received (which allow for the impact of development and specify the mitigation required), the discovery of an endangered plant or animal could delay development of vacant property in Improvement Area No. 8 or reduce the value of undeveloped property.
Levy and Collection of Special Taxes
General. The principal source of payment of principal of and interest on the 2025 Bonds is the proceeds of the annual levy and collection of the Special Tax against property within Improvement Area No. 8.
Limitation on Maximum Special Tax Rate. The annual levy of the Special Tax is subject to the Maximum Facilities Special Tax rate authorized in the Rate and Method. The levy cannot be made at a higher rate even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the 2025 Bonds.
In addition to the Maximum Facilities Special Tax rate limitation in the Rate and Method, Section 53321(d) of the Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a POLICY AND ACTION ITEM 8.4
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56 consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such Fiscal Year had there never been any such delinquencies or defaults. In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the 2025 Bonds.
No Relationship Between Property Value and Special Tax Levy. Because the Rate and Method is not based on property value, the levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular parcels of Taxable Property and the amount of the levy of the Special Tax against those parcels. Thus, there will rarely, if ever, be a uniform relationship between the value of the parcels of Taxable Property and their proportionate share of debt service on the 2025 Bonds, and certainly not a direct relationship.
Factors that Could Lead to Special Tax Deficiencies. The following are some of the factors that might cause the levy of the Special Tax on any particular parcel of Taxable Property to vary from the Special Tax that might otherwise be expected:
Transfers to Governmental Entities. The number of parcels of Taxable Property could be reduced through the acquisition of Taxable Property by a governmental entity and failure of the government to pay the Special Tax based upon a claim of exemption or, in the case of the federal government or an agency thereof, immunity from taxation, thereby resulting in an increased tax burden on the remaining taxed parcels.
Property Tax Delinquencies. Failure of the owners of Taxable Property to pay property taxes (and, consequently, the Special Tax), or delays in the collection of or inability to collect the Special Tax by tax sale or foreclosure and sale of the delinquent parcels, could result in a deficiency in the collection of Special Tax revenues. See “– Tax Delinquencies” below. There is currently no history of tax levies in Improvement Area No. 8.
Delays Following Special Tax Delinquencies and Foreclosure Sales. The Fiscal Agent Agreement generally provides that the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described in “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure” and in the Act, is subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ordinary ad valorem property taxes.
Under these procedures, if taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the County.
If sales or foreclosures of property are necessary, there could be a delay in payments to owners of the 2025 Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the City of the proceeds of sale if the Reserve Fund is depleted.
See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure.” The ability of the City to collect interest and penalties specified by State law and to foreclose against properties having delinquent Special Tax installments may be limited in certain respects with regard to properties in which the Federal Deposit Insurance Corporation (the “FDIC”) has or obtains an interest. The FDIC would obtain such an interest by taking over a financial institution that has made a loan that is secured by property within Improvement Area No. 8. See “ – FDIC/Federal Government Interests in Properties” below.
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57 Other laws generally affecting creditors’ rights or relating to judicial foreclosure may affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, a six-month period after termination of military service to redeem property sold to enforce the collection of a tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military service if the court concludes the ability to pay such taxes or assessments is materially affected by reason of such service.
FDIC/Federal Government Interests in Properties
General. The ability of the City to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the Federal Deposit Insurance Corporation (the “FDIC”), the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.
Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest.
The supremacy clause of the United States Constitution reads as follows: “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 State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding.”
This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes within Improvement Area No. 8 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 City wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on parity with the Special Taxes and preserve the federal government’s mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association (“FNMA”) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.
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58 Bankruptcy and Foreclosure Delays
The payment of the Special Tax and the ability of the City to foreclose the lien of a delinquent unpaid tax, as discussed in “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure,” may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State of California relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of the 2025 Bonds (including Bond Counsel’s approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.
Although bankruptcy proceedings would not cause the Special Taxes to become extinguished, bankruptcy of a property owner could result in a delay in prosecuting superior court foreclosure proceedings and could result in the possibility of delinquent Special Tax installments not being paid in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the 2025 Bonds. To the extent that property in Improvement Area No. 8 continues to be owned by a limited number of property owners, the chances are increased that the Reserve Fund established for the 2025 Bonds could be fully depleted during any such delay in obtaining payment of delinquent Special Taxes. As a result, sufficient moneys would not be available in the Reserve Fund for transfer to the Bond Fund to make up shortfalls resulting from delinquent payments of the Special Tax and thereby to pay principal of and interest on the 2025 Bonds on a timely basis.
To the extent that bankruptcy or similar proceedings were to involve a large property owner, the chances would increase the likelihood that the Reserve Fund could be fully depleted during any resulting delay in receiving payment of delinquent Special Taxes. As a result, sufficient moneys would not be available in the Reserve Fund for transfer to the Bond Fund to make up any shortfalls resulting from delinquent payments of the Special Tax and thereby to pay principal of and interest on the 2025 Bonds on a timely basis.
On July 30, 1992, the United States Court of Appeals for the Ninth Circuit issued its opinion in a bankruptcy case entitled In re Glasply Marine Industries. In that case, the court held that ad valorem property taxes levied by Snohomish County in the State of Washington after the date that the property owner filed a petition for bankruptcy were not entitled to priority over a secured creditor with a prior lien on that property. The court upheld the priority of unpaid ad valorem taxes imposed before the bankruptcy petition (the “pre-petition taxes”), but unpaid taxes imposed after the filing of the bankruptcy petition (“post-petition taxes”) were declared to be unsecured “administrative expenses” of the bankruptcy estate, and were therefore held to be payable from the bankruptcy estate only after payment of all secured creditors. As a result, the secured creditor of the property was able to foreclose on the property and retain all of the proceeds of the sale except for the amount of the pre-petition taxes.
According to the court’s ruling, as administrative expenses, post-petition taxes would have to be paid, but only if the debtor had sufficient assets not subject to other perfected security interests to do so. In certain circumstances, payment of such administrative expenses may also be allowed to be deferred. Once the property is transferred out of the bankruptcy estate (through foreclosure or otherwise) it would at that time again become subject to and would secure liens for then current and future ad valorem taxes.
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59 Glasply was controlling precedent on bankruptcy courts in the State of California for several years subsequent to the date of the Ninth Circuit’s holding. Pursuant to state law, the lien date for general ad valorem property taxes levied in the State of California is the January 1 preceding the fiscal year for which the taxes are levied. Under the Glasply holding, a bankruptcy petition filing would have prevented the lien for general ad valorem property taxes levied in fiscal years subsequent to the filing of a bankruptcy petition from attaching and becoming a lien so long as the property was a part of the estate in bankruptcy. However, the Glasply holding was for the most part subsequently rendered inoperative with respect to the imposition of a lien for and the collection of ad valorem taxes by amendments to the federal Bankruptcy Code (Title 11 U.S.C.) which were part of the Bankruptcy Reform Act of 1994 (the “Bankruptcy Reform Act”) passed by Congress during the later part of 1994. The Bankruptcy Reform Act added a provision to the automatic stay section of the Bankruptcy Code which, pursuant to Section 362(b)(18) thereof, excepts from the Bankruptcy Code’s automatic stay provisions, “the creation of a statutory lien for an ad valorem property tax imposed by . . . a political subdivision of a state, if such tax comes due after the filing of the petition” by a debtor in bankruptcy court. The effect of this provision is to continue the secured interest of ad valorem taxes on real property (i.e., post-petition taxes) in effect during the period following the filing of a bankruptcy petition, including during the period bankruptcy proceedings are pending.
Without further clarification by the courts or Congress, the original rationale of the Glasply holding could, however, still result in the treatment of post-petition special taxes as “administrative expenses,” rather than as tax liens secured by real property, at least during the pendency of bankruptcy proceedings. This treatment might result from the fact that, although the lien of special taxes is of record from the date of the filing of a Notice of Special Tax Lien, the actual special tax is levied annually. As noted above, special taxes have a different lien date than the lien date for general ad valorem taxes in the State of California noted above. The lien of a Mello-Roos special tax attaches upon recordation of the notice of the special tax lien, as provided for in Section 53328.3 of the Act, as opposed to the annual January 1 lien date for general ad valorem taxes. Thus, in deciding whether the original Glasply ruling is applicable to a bankruptcy proceeding involving special taxes rather than general ad valorem property taxes, a court might consider the differences in the statutory provisions for creation of the applicable tax lien (general ad valorem or special tax) in determining whether there is a basis for post-petition special taxes to be entitled to a lien on the property during pending bankruptcy proceedings. If a court were to apply Glasply to eliminate the priority of the special tax lien as a secured claim against property with respect to post-petition levies of the Special Taxes made against property owners within Improvement Area No. 8 who file for bankruptcy, collections of the Special Taxes from such property owners could be reduced as the result of being treated as “administrative expenses” of the bankruptcy estate. Also, and most importantly, is the fact that the original holding in Glasply and the mitigation of that holding by the Bankruptcy Reform Act of 1994 both appear to be applicable only to general ad valorem taxes, and, therefore, the exemption from the automatic stay in Section 362(b)(18) discussed above may not be applicable to special taxes since they were not expressly mentioned or provided for in this section, nor defined to be included within the term “ad valorem taxes.”
Parity Taxes and Special Assessments; Private Debt
The City, the County and certain other public agencies are authorized by the Act to form other community facilities districts and improvement areas and, under other provisions of State law, to form special assessment districts, either or both of which could include all or a portion of the land within Improvement Area No. 8.
Property in Improvement Area No. 8 is currently subject to certain overlapping tax and assessment liens, as shown in the overlapping debt statement, including a special tax lien of the POLICY AND ACTION ITEM 8.4
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60 Lammersville Joint Unified School District for its Community Facilities District No. 2024-1 formed in late 2024 with a bond authorization of $250 million. Land within Improvement Area No. 8 has not yet been levied for that district and bonds have not yet been issued, however levies will occur in the future and affect value to lien ratios of parcels within Improvement Area No. 8. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 8 - Value to Special Tax Burden Ratios.” See also “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 8 – Estimated Tax Burden on Single Family Home.”
In addition, other governmental obligations may be authorized and undertaken or issued in the future, the tax, assessment or charge for which may become an obligation of one or more of the parcels of taxable property and may be secured by a lien on a parity with the lien of the Special Tax securing the 2025 Bonds. The principal of and interest on the 2025 Bonds are payable from the Special Tax authorized to be collected within Improvement Area No. 8, and payment of the Special Tax is secured by a lien on certain real property within Improvement Area No. 8. Such lien is coequal to and independent of the lien for general taxes and any other liens imposed under the Act, regardless of when they are imposed on the property in Improvement Area No. 8. The imposition of additional special taxes, assessments and general property taxes will increase the amount of independent and co-equal liens which must be satisfied in foreclosure if unpaid. The City, the County and certain other public agencies are authorized by the Act to form other community facilities districts and improvement areas and, under other provisions of State law, to form special assessment districts, either or both of which could include all or a portion of the land within Improvement Area No. 8. Although the Special Taxes will generally have priority over non-governmental liens on a parcel of taxable property, regardless of whether the non-governmental liens were in existence at the time of the levy of the Special Tax or not, this result may not apply in the case of bankruptcy.
See “– Bankruptcy and Foreclosure Delays” above.
There can be no assurance that property owners within Improvement Area No. 8 will not petition for the formation of other community facilities districts and improvement areas or for a special assessment district or districts and that parity special taxes or special assessments will not be levied by the County or some other public agency to finance additional public facilities. This includes PACE assessments which homeowners can request be placed on their home for financing energy improvements. In addition to liens for special taxes or assessments to finance public improvements of benefit to land within Improvement Area No. 8, owners of property may obtain loans from banks or other private sources which loans may be secured by a lien on the parcels in Improvement Area No. 8. Such loans would increase amounts owed by the owner of such parcel with respect to development of its property in Improvement Area No. 8. However, the lien of such private loans would be subordinate to the lien of the Special Taxes.
Tax Delinquencies
Under provisions of the Act, the Special Taxes will be billed to the properties within Improvement Area No. 8 on the regular property tax bills sent to owners of such properties. Such Special Tax installments are due and payable, and bear the same penalties and interest for nonpayment, as do regular property tax installments. Special Tax installment payments cannot be made separately from property tax payments. Therefore, the unwillingness or inability of a property owner to pay regular property tax bills as evidenced by property tax delinquencies may also indicate an unwillingness or inability to make regular property tax payments and Special Tax payments in the future.
The annual Special Tax will be billed and collected in two installments payable without penalty by December 10 and April 10. In the event such Special Taxes are not timely paid, moneys POLICY AND ACTION ITEM 8.4
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61 available to pay debt service on the 2025 Bonds becoming due on the subsequent respective March 1 and September 1 may be insufficient, except to the extent moneys are available in the Reserve Fund.
In the event of non-payment of Special Taxes, funds in the Reserve Fund, if available, may be used to pay principal of and interest on the 2025 Bonds. If funds in the Reserve Fund for the 2025 Bonds are depleted, the funds can be replenished from the proceeds of the levy and collection of the Special Tax that are in excess of the amount required to pay all amounts to be paid to the 2025 Bond holders pursuant to the Fiscal Agent Agreement. However, no replenishment from the proceeds of a Special Tax levy can occur as long as the proceeds that are collected from the levy of the Special Tax against property within Improvement Area No. 8 at the maximum Special Tax rates, together with other available funds, remains insufficient to pay all such amounts. Thus it is possible that the Reserve Fund will be depleted and not be replenished by the levy of the Special Tax.
See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure” for a discussion of the provisions which apply, and procedures which the City is obligated to follow, in the event of delinquency in the payment of Special Taxes. See also “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Special Tax Methodology” for a discussion of a limitation imposed by the Act applicable to Special Tax increases on residential property.
No Acceleration Provisions
The 2025 Bonds do not contain a provision allowing for the acceleration of the 2025 Bonds in the event of a payment default or other default under the terms of the 2025 Bonds or the Fiscal Agent Agreement. Under the Fiscal Agent Agreement, a 2025 Bond holder is given the right for the equal benefit and protection of all 2025 Bond holders similarly situated to pursue certain remedies.
So long as the 2025 Bonds are in book-entry form, DTC will be the sole 2025 Bond holder and will be entitled to exercise all rights and remedies of 2025 Bond holders.
Ballot Initiatives
From time to time, initiative measures qualify for the State ballot pursuant to the State’s constitutional initiative process, and those measures could be adopted by California voters. The adoption of any such initiative might place limitations on the ability of the State, the City, the County or other local districts to increase revenues or to increase appropriations or on the ability of the landowners to complete the Development in Improvement Area No. 8. See “–Property Values and Property Development – Land Development” above. See also “–Voter Initiatives” below.
Voter Initiatives
Under the California Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutional amendments. Since 1978, the voters have exercised this power through the adoption of Proposition 13 and similar measures, including Proposition 218, which was approved in the general election held on November 5, 1996, and Proposition 26, which was approved on November 2, 2010.
Any such initiative may affect the collection of fees, taxes and other types of revenue by local agencies such as the City. Subject to overriding federal constitutional principles, such collection may be materially and adversely affected by voter-approved initiatives, possibly to the extent of creating cash-flow problems in the payment of outstanding obligations such as the 2025 Bonds.
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62 Proposition 218—Voter Approval for Local Government Taxes—Limitation on Fees, Assessments, and Charges—Initiative Constitutional Amendment, added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges.
On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act”. Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a twothirds vote of the Legislature. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes (“special taxes”) require a two-thirds vote.
The levy of the Special Taxes and the issuance of special tax bonds of the City for Improvement Area No. 8 were each authorized by not less than a two-thirds vote of the landowners within Improvement Area No. 8 who constituted the qualified electors at the time of such voted authorization. The District believes, therefore, that issuance of the 2025 Bonds does not require the conduct of further proceedings under the Mello-Roos Act, Proposition 218 or Proposition 26.
Like their antecedents, Proposition 218 and Proposition 26 are likely to undergo both judicial and legislative scrutiny before the impact on Improvement Area No. 8 can be determined. Certain provisions of Proposition 218 and Proposition 26 may be examined by the courts for their constitutionality under both State and federal constitutional law, the outcome of which cannot be predicted.
Case Law Related to the Mello-Roos Act
On August 1, 2014, the California Court of Appeal, Fourth Appellate District, issued its opinion in City of San Diego v. Melvin Shapiro, et al. (D063997). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego. The CCFD is a financing district established under the City’s charter (the “Charter”) and was intended to function much like a community facilities district established under the Mello-Roos Act. The CCFD was comprised of all of the real property in the entire City. However, the CCFD special tax was to be levied only on properties in the CCFD that were improved with a hotel.
At the election to authorize the CCFD special tax, the CCFD proceedings limited the electorate to owners of hotel properties and lessees of real property owned by a governmental entity on which a hotel was located. Registered voters in the City of San Diego were not permitted to vote.
This definition of the qualified electors of the CCFD was based on Section 53326(c) of the MelloRoos Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed community facilities district whose property would be subject to the special tax.
The San Diego Court held that the CCFD special tax election did not comply with the City’s Charter and with applicable provisions of the California Constitution -- specifically Article XIIIA, section 4 (“Cities, Counties and special districts, by a two-thirds vote of the qualified electors of such district, may impose special taxes on such district….”) and Article XIIIC, section 2(d) (“No local government may impose, extend, or increase any special tax unless and until that tax is submitted POLICY AND ACTION ITEM 8.4
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63 to the electorate and approved by a two-thirds vote.”) -- because the electors in the CCFD election should have been the registered voters residing within the CCFD (the boundaries of which were coterminous with the boundaries of the City of San Diego).
As to the District (including Improvement Area No. 8), there were no registered voters within the District (including Improvement Area No. 8) at the time of the election to authorize the Special Taxes. Significantly, the San Diego Court expressly stated that it was not addressing the validity of a landowner election to impose special taxes on residential property pursuant to the Mello-Roos Act in situations where there are fewer than 12 registered voters. Therefore, by its terms, the San Diego Court’s holding does not apply to the special tax election held for Improvement Area No. 8.
Moreover, Sections 53341 and 53359 of the Act establish a limited period of time in which special taxes levied under the Mello-Roos Act may be challenged by a third party:
53341. Any action or proceeding to attack, review, set aside, void, or annul the levy of a special tax or an increase in a special tax pursuant to [the Mello-Roos Act] shall be commenced within 30 days after the special tax is approved by the voters…. 53359. An action to determine the validity of bonds issued pursuant to [the MelloRoos Act] or the validity of any special taxes levied pursuant to [the Mello-Roos Act] … shall …. be commenced within 30 days after the voters approve the issuance of the bonds or the special tax …
Section 53326(b) of the Mello-Roos Act defines the authorized voters for an election in which the special taxes will be levied on residential property: “Except as otherwise provided in subdivision (c), if at least 12 persons, who need not necessarily be the same 12 persons, have been registered to vote within the territory of the proposed community facilities district for each of the 90 days preceding the close of the protest hearing, the vote shall be by the registered voters of the proposed district, with each voter having one vote. Otherwise, the vote shall be by the landowners of the proposed district and each person who is the owner of land at the close of the protest hearing, or the authorized representative thereof, shall have one vote for each acre or portion of an acre of land that he or she owns within the proposed community facilities district not exempt from the special tax….”
Landowner voters approved the Special Taxes and the issuance of bonds for Improvement Area No. 8 in compliance with all applicable requirements of the Mello-Roos Act in 2018. Therefore, pursuant to Sections 53341 and 53359 of the Mello-Roos Act, the statute of limitations period to challenge the validity of the special tax has expired. Because the San Diego Court expressly stated that it did not consider the facts presented by Improvement Area No. 8 and because the period for challenging the Special Taxes has passed, the City believes the Special Taxes are valid and cannot be challenged.
Exempt Properties
Certain properties are exempt from the Special Tax in accordance with the Rate and Method and the Act, which provides that properties or entities of the state, federal or local government are exempt from the Special Tax; provided, however, that property within the District acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax.
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64 In addition, although 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, the constitutionality and operation of these provisions of the Act have not been tested, meaning that such property could become exempt from the Special Tax. The Act further provides that no other properties or entities are exempt from the Special Tax unless the properties or entities are expressly exempted in a resolution of consideration to levy a new special tax or to alter the rate or method of apportionment of an existing special tax.
Public Health Emergencies
In recent years, public health authorities have warned of threats posed by outbreaks of disease and other public health threats. Public Health Emergencies arising in the future could have significant adverse health and financial impacts throughout the world, leading to loss of jobs and personal financial hardships, and/or actions by federal, State and local governmental authorities to contain or mitigate the effects of an outbreak.
Taxpayer assistance measures may include deferral of due dates of property taxes, which was an assistance program during the COVID-19 pandemic, and with or without a deferral some taxpayers may be unable to make their property and Special Tax payments. No assurance can be given that the property tax payment dates will not be deferred in the future, which may cause a delay in the receipt of Special Taxes. In addition, home values may be affected by a reduction in demand stemming from personal finances, or general widespread economic circumstances resulting from Public Health Emergencies.
Cyber Security
The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. No assurance can be given that the City’s efforts 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 2025 Bonds. The City is also reliant on other entities and service providers in connection with the administration of the 2025 Bonds, including without limitation the County tax collector for the levy and collection of Special Taxes, the Fiscal Agent, and the dissemination agent.
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 Bond owners.
Secondary Market for Bonds
There can be no guarantee that there will be a secondary market for the 2025 Bonds or, if a secondary market exists, that any 2025 Bonds can be sold for any particular price. Prices of bond issues for which a market is being made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price. No assurance can be given that the market price for the 2025 Bonds will not be affected by the introduction or enactment of any future legislation (including without limitation amendments to the Internal Revenue Code), or changes in interpretation of the Internal Revenue Code, or any action of the Internal Revenue Service, including but not limited to the publication of proposed or final regulations, the issuance of rulings, the selection of the 2025 Bonds for audit examination, or the course or result of any Internal POLICY AND ACTION ITEM 8.4
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65 Revenue Service audit or examination of the 2025 Bonds or obligations that present similar tax issues as the 2025 Bonds.
Potential Early Redemption of Bonds from Prepayments
Property owners within Improvement Area No. 8, including the Master Developer, the Merchant Builders and individual homeowners, are permitted to prepay their Special Tax obligation at any time. Such prepayments could also be made from the proceeds of bonds issued by or on behalf of an overlapping special assessment district or community facilities district. Such prepayments will result in a redemption of the Bonds on the interest payment date for which timely notice may be given under the Fiscal Agent Agreement 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.
CONSTITUTIONAL LIMITATIONS ON TAXATION AND APPROPRIATIONS Article XIIIA of the California Constitution, commonly known as “Proposition 13,” provides that each county will levy the maximum ad valorem property tax permitted by Proposition 13 and will distribute the proceeds to local agencies in accordance with an allocation formula based in part on pre-Proposition 13 ad valorem property tax rates levied by local agencies.
Article XIIIA limits the maximum ad valorem tax on real property to 1% of “full cash value,” which is defined as the County Assessor’s valuation of real property as shown on the 1975-76 tax bill under full cash value, or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. The full cash value may be adjusted annually to reflect increases of no more than 2% per year or decreases in the consumer price index or comparable local data, or declining property value caused by damage, destruction or other factors.
Article XIIIA exempts from the 1% tax limitation any taxes to repay indebtedness approved by the voters prior to July 1, 1978, and requires a vote of two-thirds of the qualified electorate to impose Special Taxes or any additional ad valorem, sales, or transaction taxes on real property. In addition, Article XIIIA requires the approval of two-thirds of all members of the State Legislature to change any State laws resulting in increased tax revenues. On June 3, 1986, California voters approved an amendment to Article XIIIA of the California Constitution to allow local governments and school districts to raise their property tax rates above the constitutionally mandated 1% ceiling for the purpose of paying off certain new general obligation debt issued for the acquisition or improvement of real property and approved by two-thirds of the votes cast by the qualified electorate.
If any such voter-approved debt is issued, it may be on a parity with the lien of the Special Tax on the parcels within Improvement Area No. 8.
State and local government agencies in the State, and the State itself are subject to annual appropriation limits, imposed by Article XIIIB of the State Constitution. Article XIIIB prohibits government agencies and the State from spending “appropriations subject to limitation” in excess of the appropriations limits imposed. “Appropriations subject to limitation” are authorizations to spend “proceeds of taxes,” which consist of tax revenues, certain state subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed the cost reasonably borne by such entity in providing the regulation, product or service. No limit is imposed on appropriations of funds which are not “proceeds of taxes” such as POLICY AND ACTION ITEM 8.4
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66 debt service on indebtedness existing or authorized before January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, reasonable user charges or fees and certain other non-tax funds.
TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the 2025 Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. Interest on the 2025 Bonds may be subject to the corporate alternative minimum tax.
The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Tax Code”) relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the 2025 Bonds. The City has made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the 2025 Bonds.
Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public at which a 2025 Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public at which a 2025 Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “original issue premium” for purposes of federal income taxes and State of California personal income taxes.
De minimis original issue discount and original issue premium are disregarded.
Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in the first paragraph of this section. The original issue discount accrues over the term to maturity of the 2025 Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such 2025 Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such 2025 Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the 2025 Bonds who purchase the 2025 Bonds after the initial offering of a substantial amount of such maturity. Owners of such 2025 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of 2025 Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering, the allowance of a deduction for any loss on a sale or other disposition, and the treatment of accrued original issue discount on such 2025 Bonds under federal individual alternative minimum taxes.
Under the Tax Code, original issue premium is amortized on an annual basis over the term of the 2025 Bond (said term being the shorter of the 2025 Bond’s maturity date or its call date). The amount of original issue premium amortized each year reduces the adjusted basis of the owner of the 2025 Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a 2025 Bond is amortized each year over the term to maturity of the 2025 Bond on the basis of a constant interest rate compounded on each interest or principal payment date POLICY AND ACTION ITEM 8.4
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67 (with straight-line interpolations between compounding dates). Amortized 2025 Bond premium is not deductible for federal income tax purposes. Owners of premium 2025 Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to State of California personal income tax and federal income tax consequences of owning such 2025 Bonds.
California Tax Status. In the further opinion of Bond Counsel, interest on the 2025 Bonds is exempt from California personal income taxes.
Other Tax Considerations. Current and future legislative proposals, if enacted into law, clarification of the Tax Code or court decisions may cause interest on the 2025 Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Tax Code or court decisions may also affect the market price for, or marketability of, the 2025 Bonds.
It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to enactment.
The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of such opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the 2025 Bonds, or as to the consequences of owning or receiving interest on the 2025 Bonds, as of any future date. Prospective purchasers of the 2025 Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
Owners of the 2025 Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the 2025 Bonds may have federal or state tax consequences other than as described above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the 2025 Bonds, the ownership, sale or disposition of the 2025 Bonds, or the amount, accrual or receipt of interest on the 2025 Bonds.
LEGAL OPINION
The validity of the 2025 Bonds and certain other legal matters are subject to the approving opinion of Jones Hall, a Professional Law Corporation, Bond Counsel. A complete copy of the proposed form of Bond Counsel opinion is contained in APPENDIX D to this Official Statement, and the final opinion will be made available to registered owners of the 2025 Bonds at the time of delivery.
The fees of Bond Counsel are contingent upon the sale and delivery of the 2025 Bonds.
NO RATINGS
The City has not applied to a rating agency for the assignment of a rating to the 2025 Bonds and does not contemplate applying for a rating.
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68 NO LITIGATION
At the time of delivery of and payment for the 2025 Bonds, the City Attorney will deliver his opinion that to the best of its knowledge there is no action, suit, proceeding, inquiry or investigation at law or in equity before or by any court or regulatory agency pending against the City affecting its existence or the titles of its officers to office or seeking to restrain or to enjoin the issuance, sale or delivery of the 2025 Bonds, the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, or the collection or application of the Special Tax to pay the principal of and interest on the 2025 Bonds, or in any way contesting or affecting the validity or enforceability of the 2025 Bonds, the Fiscal Agent Agreement or any action of the City contemplated by any of said documents, or in any way contesting the completeness or accuracy of this Official Statement or any amendment or supplement thereto, or contesting the powers of the City or its authority with respect to the 2025 Bonds or any action of the City contemplated by any of said documents.
CONTINUING DISCLOSURE
The City. The City has covenanted for the benefit of owners of the 2025 Bonds to provide certain financial information and operating data relating to Improvement Area No. 8 by not later than nine months after the end of the City’s fiscal year (presently June 30) in each year (the “City Annual Report”) commencing with its report for Fiscal Year 2024-25 (due April 1, 2026) and to provide notices of the occurrence of certain enumerated events; provided, the first annual report due April 1, 2026 shall be satisfied by posting the City’s audited financial statements for Fiscal Year 2024-25.
The City Annual Report and notices of listed events will be filed with the Municipal Securities Rulemaking Board. The covenants of the City have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2-12(b)(5) (the “Rule”). The specific nature of the information to be contained in the Annual Report or the notices of listed events by the City is summarized in “APPENDIX E – FORM OF CONTINUING DISCLOSURE CERTIFICATE.” The City was incorporated on July 1, 2024, having previously encompassed all of the land within the Mountain House Community Services District (“MHCSD”) and much of the staff of MHCSD now holds staff positions at the City. MHCSD has previously entered into continuing disclosure undertakings under the Rule in connection with the issuance of other long-term obligations for which it is an obligated person. During the previous five years, MHCSD has not complied with its prior undertakings under the Rule as follows:
• For Fiscal Year 2020-21 one table was inadvertently left out of the annual report; the table was included in the Fiscal Year 2021-22 annual report and thus was filed 362 days late with respect to the Fiscal Year 2020-21 obligation. • MHCSD did not file any notices of late filings with respect to the annual reports that were not timely filed.
The City has retained Kosmont Financial Services to monitor and disseminate its filing requirements under the Continuing Disclosure Certificate.
Lennar Homes. Lennar Homes is not an obligated party under the Rule but has voluntarily agreed to provide semi-annual continuing disclosure for the benefit of Bondowners and will enter into a Continuing Disclosure Certificate (Developer) covenanting to provide certain information POLICY AND ACTION ITEM 8.4
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69 regarding the development of its property and notice of certain material events as they occur until such time as the respective termination date in each certificate occurs.
Prior Continuing Disclosure Compliance – Lennar Homes. Lennar Homes has advised the City that, based on a review of its prior continuing disclosure obligations, the Pulte Homes has not failed to comply in any material respect with any previous undertaking by it to provide periodic continuing disclosure reports or notice of listed events with respect to community facilities district or assessment district financings in California within the past five years.
MUNICIPAL ADVISOR
The City has retained Kosmont Financial Services, El Segundo, California, as registered municipal advisor (the “Municipal Advisor”) in connection with the issuance of the 2025 Bonds.
The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. The fees of the Municipal Advisor are contingent upon the sale and delivery of the 2025 Bonds.
UNDERWRITING
The 2025 Bonds were purchased through negotiation by Piper Sandler & Co., as underwriter (the “Underwriter”). The Underwriter agreed to purchase the 2025 Bonds at a price of $_____________ (which is equal to the par amount of the 2025 Bonds, plus/less an original issue premium/discount of $_____________ and less the Underwriter’s discount of $_____________).
The initial public offering prices set forth on the cover page hereof may be changed by the Underwriter. The Underwriter may offer and sell the 2025 Bonds to certain dealers and others at a price lower than the public offering prices set forth on the cover page hereof.
CONTINGENT FEES
In connection with the issuance of the 2025 Bonds, some or all of the fees or other compensation payable to the City and certain professionals involved with the offering of the 2025 Bonds is contingent upon the issuance and delivery of the 2025 Bonds. Those entities include:
• The City, as the issuer;
• Piper Sandler & Co., as the Underwriter;
• Jones Hall, A Professional Law Corporation, as Bond Counsel and Disclosure Counsel; • Stradling Yocca Carlson & Rauth, LLP, as Underwriter’s Counsel; • Goodwin Consulting Group, Inc., as Special Tax Consultant; • Kosmont Financial Services, as Municipal Advisor; and • Computershare Trust Company, N.A., as Fiscal Agent.
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70 EXECUTION
The execution and delivery of this Official Statement by the City has been duly authorized by the City Council of the City, as the legislative body of the District.
CITY OF MOUNTAIN HOUSE
By:
Steve Pinkerton
City Manager
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APPENDIX A
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
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APPENDIX B
THE APPRAISAL
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APPENDIX C
GENERAL DEMOGRAPHIC INFORMATION ABOUT THE MOUNTAIN HOUSE AREA The District is located in the City of Mountain House (the “City”), which is located in southwestern San Joaquin County (the “County”), California (the “State”). The following information concerning the San Joaquin County (the “County”) is included only for the purpose of supplying general information regarding the general area surrounding the Mountain House Community. The 2025 Bonds are not a debt or obligation of the City, County or State, but are a limited obligation of the City, secured solely by the Special Tax Revenues and other amounts pledged under the Fiscal Agent Agreement, all as described in more detail in this Official Statement.
The City was incorporated by vote of its citizens at an election held on March 5, 2024, becoming the 483rd incorporated city admitted to the State of California in July 2024.
The area encompassed by the District is directly north and northwest of the City of Tracy, located on the western edge of the Central Valley in San Joaquin County. The District is 60 miles east of San Francisco and 70 miles south of Sacramento, covering approximately 14.3 square miles.
Population
The population of the Mountain House community was estimated by the Department of Finance at 28,063 as of January 1, 2024. The City is the second largest city in the County.
Population figures for cities in the County, the County and the State for the last five years are shown in the following table.
COUNTY OF SAN JOAQUIN
Population Estimates
Calendar Years 2020 through 2024
Population Estimates
(As of January 1st)
Area 2020 2021 2022 2023 2024
Escalon 7,444 7,416 7,333 7,244 7,249
Lathrop 28,681 29,728 31,689 35,138 37,033
Lodi 66,128 65,917 66,309 66,164 66,492
Manteca 83,529 84,895 86,714 88,552 90,917
Ripon 15,988 16,106 15,908 15,726 15,741
Stockton 320,290 319,882 318,477 315,685 317,204
Tracy 92,959 93,774 94,774 95,341 96,609
Balance of County 164,214 162,602 160,959 160,053 160,163 Incorporated 615,019 617,718 621,204 623,850 631,245
County Total 779,233 780,320 782,163 783,903 791,408
Source: California Department of Finance (Estimates are as of January 1).
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Employment and Industry
The unemployment rate in San Joaquin County was 6.9 percent in January 2025, up from a revised 6.4 percent in December 2024, and unchanged from the year-ago estimate of 6.9 percent. This compares with an unadjusted unemployment rate of 5.5 percent for California and
4.4 percent for the nation during the same period.
Mountain House is included in the Stockton Metropolitan Statistical Area (“MSA”), which includes all of the County. Set forth on the following page is data from calendar years 2019 to 2023 reflecting the County’s industry employment and labor force, including the civilian labor force, employment and unemployment statistics. These figures are county-wide statistics and may not necessarily accurately reflect employment trends in Mountain House.
STOCKTON-LODI MSA
(San Joaquin County)
Annual Average Labor Force and Employment by Industry
Calendar Years 2019 through 2023
(March 2023 Benchmark)
2019 2020 2021 2022 2023
Civilian Labor Force (1) 326,600 334,800 336,100 342,200 346,800 Employment 307,100 296,300 307,300 323,900 325,100
Unemployment 19,500 38,400 28,900 18,300 21,600
Unemployment Rate 6.0% 11.5% 8.6% 5.3% 6.2%
Wage and Salary Employment: (2)
Agriculture 15,400 14,600 14,200 13,800 14,100
Mining and Logging 100 100 100 0 0
Construction 13,100 13,000 13,900 14,900 13,900
Manufacturing 20,500 20,100 21,300 23,000 23,500
Wholesale Trade 11,700 10,600 10,800 11,600 12,300
Retail Trade 26,200 24,600 26,200 27,000 27,200
Transportation, Warehousing and Utilities 31,300 38,800 43,000 48,100 46,800 Information 1,600 1,200 1,200 1,200 1,100
Financial Activities 7,900 7,800 8,000 8,200 8,000
Professional and Business Services 20,200 21,300 22,500 24,100 23,700 Educational and Health Services 39,100 37,300 38,000 39,800 42,200 Leisure and Hospitality 22,600 18,500 21,300 24,300 24,600 Other Services 7,800 6,800 7,300 7,900 8,200
Federal Government 3,200 3,300 3,100 3,100 3,000
State Government 6,800 6,800 6,000 5,500 5,100
Local Government 34,900 33,000 32,900 34,000 35,200
Total All Industries (3) 262,400 257,700 269,800 286,300 288,900 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(3) Totals may not add due to rounding.
Source: State of California Employment Development Department. .
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The following table lists the major public and private employers within the County, as of January 2025.
SAN JOAQUIN COUNTY
Major Employers
As of March 2025
Employer Name Location Industry
Amazon Fulfillment Ctr Stockton Mail Order Fulfillment Service Ashley Lane LP Stockton Real Estate
Blue Shield of California Lodi Insurance
Dameron Hospital Stockton Hospitals
Foster Care Svc Stockton Government Offices-County
Leprino Foods Co Tracy Cheese Processors (mfrs)
Lodi Health Home Health Agency Lodi Home Health Service M & R Co Lodi Fruits & Vegetables-Growers & Shippers
Medline Tracy Physicians & Surgeons Equip & Supls-Whls
NA Chaderjian Youth Stockton State Govt-Correctional Institutions O-G Packing & Cold Storage Co Stockton Fruits & Vegetables-Growers & Shippers Prima Frutta Packing Inc Linden Fruit & Produce Packers Safeway Distribution Ctr Tracy Distribution Centers (whls) San Joaquin County CA Pubc Stockton Government Offices-County San Joaquin County Human Svc Stockton Government Offices-County San Joaquin County Sch Stockton School Districts
San Joaquin General Hospital French Camp Hospitals
San Joaquin Sheriff's Office French Camp Government Offices-County Sjgov Stockton Government Offices-County
St Joseph's Regional Health Stockton Health Services
Stockton Police Dept Stockton Police Departments
Stockton Unified Sch Dist Stockton Facilities Management Stockton Unified School Dist Stockton Schools
Walmart Supercenter Stockton Department Stores
Waste Management-Lodi Transfer Lodi Solid Waste Collection
Source: State of California Employment Development Department, extracted from The America's Labor Market Information System (ALMIS) Employer Database, 2025 1st Edition.
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Commercial Activity
Summaries of historic taxable sales within the County during the past five years in which data is available are shown in the following table.
The total taxable sales during the first, three quarters of calendar year 2024 in the County were reported to be $18,016,498,619, a 5.43% increase over the total taxable sales of $17,089,319,825 reported during the comparable three quarters of calendar year 2023.
SAN JOAQUIN COUNTY
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions (Dollars in Thousands)
Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2019 9,978 $9,073,238 16,144 $14,383,854
2020 11,188 10,215,896 18,358 15,752,225
2021 10,642 15,100,195 17,665 22,306,576
2022 10,884 15,321,466 18,100 23,424,941
2023 10,632 15,486,406 17,666 23,169,139
Source: State of California, Board of Equalization.
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Median Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance).
Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.”
The following table summarizes the total effective buying income for the Mountain House Census Designated Place (CDP), the County, the State of California, and the United States for the period 2021 through 2025.
COUNTY OF SAN JOAQUIN
Effective Buying Income
2021 through 2025
Year Area
Total Effective
Buying Income
(000’s Omitted)
Median Household
Effective
Buying Income
2021 Mountain House CDP $733,653 $111,954
San Joaquin County 18,493,713 59,914
California 1,290,894,604 67,956
United States 9,809,944,764 56,790
2022 Mountain House CDP $911,305 $134,611
San Joaquin County 21,672,926 68,971
California 1,452,426,153 77,058
United States 11,208,582,541 64,448
2023 Mountain House CDP $1,330,321 $144,614
San Joaquin County 22,168,255 68,912
California 1,461,799,662 77,175
United States 11,454,846,397 65,326
2024 Mountain House CDP $1,370,183 $143,573
San Joaquin County 24,445,200 76,847
California 1,510,708,521 80,973
United States 11,987,185,826 67,876
2025 Mountain House CDP $1,411,554 $141,311
San Joaquin County 24,833,658 77,622
California 1,557,429,767 82,725
United States 12,525,577,707 69,687
Source: Claritas, LLC.
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Building Activity
The table below summarizes building activity in the County for calendar years 2019 through 2023. Mountain House permit activity is shown in the main body of this Official Statement.
COUNTY OF SAN JOAQUIN
Building Permit Activity
For Calendar Years 2019 through 2023
(Dollars in Thousands)
2019 2020 2021 2022 2023
Permit Valuation
New Single-family $843,700.9 $870,859.6 $1,179,358.0 $1,281,631.4 $851,675.9 New Multi-family 57,271.1 38,411.8 69,775.2 88,457.7 75,802.5 Res. Alterations/Additions 98,681.9 40,144.4 108,647.1 182,338.5 55,378.0 Total Residential 999,653.9 949,415.8 1,357,780.3 1,552,427.6 982,856.4 New Commercial 380,383.3 255,761.2 272,617.0 641,696.7 199,112.8 New Industrial 120,003.8 534,199.5 43,401.3 249,274.2 13,931.0 New Other 61,991.7 33,112.3 58,264.9 107,863.0 76,524.2 Com. Alterations/Additions 363,841.0 135,285.4 272,064.7 450,649.8 193,151.2 Total Nonresidential 926,219.8 958,358.4 646,347.9 1,449,483.7 482,719.2 New Dwelling Units
Single Family 2,564 2,843 3,665 3,168 2,147
Multiple Family 461 245 178 338 605
TOTAL 3,025 3,088 3,843 3,506 2,752
Source: Construction Industry Research Board, Building Permit Summary.
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Education
The County has fourteen school districts within its boundaries, one County Office of Education and one California Youth Authority District. Lammersville Unified School District provides K-12 education for residents of Mountain House.
Community colleges in California are locally operated and administered two-year institutions of higher education. They offer Associate in Arts and Associate in Science degrees and have extensive vocational curricula. There is one community college district in the County, San Joaquin Delta Community College, with an enrollment of more than 17,500 students. In addition to the main Campus in Stockton, San Joaquin Delta Community College offers courses offsite in the cities of Lodi, Manteca, and Mountain House.
The primary institution of higher education offering bachelors and graduate programs in the County is the University of the Pacific, a private four-year institution. Approximately 5,000 students are enrolled at the university’s Stockton campus. Part-time students have options of attending California State University, Stanislaus, which has an enrollment of approximately 1,200 students at its center in Stockton, as well as programs offered locally by Chapman University, Humphrey’s College and School of Law, National University and the University of San Francisco.
Transportation
County residents and businesses are served by surface, sea, and air transportation facilities. Three interstate and eight state highways provide trucking access to major markets of the West. Additional ground transportation is provided by three long-haul and four short-haul railroads. The County has enjoyed commuter rail service since mid-1998. The Altamont Commuter Express (“ACE”) currently operates with three trains and provides commuter rail service between Stockton and San Jose.
The Tri-Valley/San Joaquin Valley Regional Rail Authority was created in 2018 to plan and deliver cost-effective and responsive transit connectivity between the BART system in the Tri-Valley and the ACE that meets the goals of the communities it will serve. The authority is the planning stages for Valley Link, a new 42-mile, 7-station passenger rail project that will establish rail connectivity between BART’s rapid transit system and ACE commuter service in San Joaquin County-linking nearly 500 miles of commuter and intercity rail with more than 130 stations in the Northern California megaregion. The Authority, at its April 12, 2023 meeting, selected a location at the southeast corner of the Mountain House Community as the preferred alternative location for its first station and layover facility in San Joaquin County. The station is contemplated to include 3000 parking spaces and a station platform that could accommodate 1000-passenger trains every fifteen minutes.
Stockton’s Metropolitan Airport is located approximately four miles south of the downtown area and provides passenger and freight jet service to the County. The facilities are owned and maintained by the County, which leases them to commercial airlines and other tenants. In addition, the County is in close proximity to the Oakland, San Francisco, and Sacramento airports.
The Port of Stockton is a deep-water port that provides inland access to shipping lines serving West Coast and world markets. The approximate 2,000 acres of the Port of Stockton includes over 7.7 million square feet of warehouse space and serves as a port of entry for steel and ammonia fertilizer shipments.
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APPENDIX D
FORM OF OPINION OF BOND COUNSEL
[Closing Date]
City Council
City of Mountain House
311 Vernon Street
Mountain House, California 95678
OPINION: $__________ Improvement Area No. 8 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2025
Members of the City Council:
We have acted as bond counsel to the City of Mountain House (the “City”) in connection with the issuance by the City of the $__________ Improvement Area No. 8 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2025 (the “Bonds”), pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, constituting Section 53311, et seq. of the California Government Code (the “Act”) and a Fiscal Agent Agreement dated as of June 1, 2025 (the “Fiscal Agent Agreement”), by and between the City, on behalf of the City of Mountain House Community Facilities District No. 2024- 1 (Public Facilities and Services) , and Computershare Trust Company, N.A., as fiscal agent. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion.
As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Fiscal Agent Agreement, and in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.
Based upon the foregoing, we are of the opinion, under existing law, as follows:
1. The City is duly created and validly existing as a public body, corporate and politic, with the power to adopt the resolution authorizing the issuance of the Bonds, enter into the Fiscal Agent Agreement and perform the agreements on its part contained therein, and to issue the Bonds.
2. The Bonds have been duly authorized, executed and delivered by the City and are valid and binding limited obligations of the City, payable solely from the sources provided therefor in the Fiscal Agent Agreement.
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3. The Fiscal Agent Agreement has been duly entered into by the City and constitutes a valid and binding obligation of the City enforceable upon the City.
4. Pursuant to the Act, the Fiscal Agent Agreement creates a valid lien on the funds pledged by the Fiscal Agent Agreement.
5. The 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 the federal alternative minimum tax.
Interest on the Bonds may be subject to the corporate alternative minimum tax. The opinions set forth in the preceding sentence are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended, relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The City has made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the Bonds.
6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California.
We express no opinion regarding any other tax consequences arising with respect to the ownership, sale or disposition of, or the amount, accrual or receipt of interest on, the Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds are limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights generally, and by equitable principles, whether considered at law or in equity.
This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Our engagement with respect to this matter has terminated as of the date hereof.
Respectfully submitted,
A Professional Law Corporation
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
CONTINUING DISCLOSURE CERTIFICATE
(City)
This CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”) dated as of ___________, 2025, is executed and delivered by the City Of Mountain House (the “City”) in connection with the execution and delivery of its Improvement Area No. 8 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2025 (the “Bonds”). The Bonds are being executed and delivered pursuant to a Fiscal Agent Agreement dated as of June 1, 2025 (the “Fiscal Agent Agreement”), by and between the City and Computershare Trust Company, N.A., as fiscal agent (the “Fiscal Agent”).
The District covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2- 12(b)(5).
Section 2. Definitions. In addition to the definitions set forth above and in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Annual Report Date” means the date that is nine months after the end of the City’s fiscal year (currently April 1 based on the City’s fiscal year end of June 30). “Dissemination Agent” means Kosmont Financial Services, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.
“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. “Official Statement” means the final official statement executed by the City in connection with the issuance of the Bonds.
“Participating Underwriter” shall mean the original underwriter of the Bonds.
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“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time.
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing April 1, 2026, with the report for Fiscal Year 2024-25, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate; provided, the first annual report due April 1, 2026 shall be satisfied by posting the City’s audited financial statements for Fiscal Year 2024-25. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) in a timely manner to the MSRB a notice to such effect, in an electronic format as prescribed by the MSRB.
(c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine prior to each Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.
Section 4. Content of Annual Reports. The City’s Annual Report shall contain or incorporate by reference the following:
(a) The City’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
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(b) The following information, unless otherwise specified, as of September 30 of the preceding year:
(i) Principal amount of all outstanding bonds of Improvement Area No. 8. (ii) Balance in the Improvement Fund.
(iii) Balance in Reserve Fund, and statement of the Reserve Requirement for the Bonds. Statement of projected draws on the Reserve Fund, if any. (iv) Balance in other funds and accounts held by the City or fiscal agent related to the Bonds.
(v) Additional debt authorized by the City and payable from or secured by assessments or special taxes with respect to property within Improvement Area No. 8. (vi) The Special Tax levy, the delinquency rate, total amount of delinquencies, number of parcels delinquent in payment for the five most recent fiscal years. (vii) Notwithstanding the September 30 reporting date, the following information shall be reported as of the last day of the month immediately preceding the date of the Annual Report rather than as of September 30. Identity of each delinquent taxpayer responsible for 5 percent or more of total Special Tax levied, and the following information:
assessor parcel number, assessed value of applicable properties, amount of Special Tax levied, amount delinquent by parcel number and status of foreclosure proceedings. If any foreclosure has been completed, summary of results of foreclosure sales or transfers. (viii) Most recently available total assessed value of all parcels subject to the Special Tax.
(c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
(d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties.
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(4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security.
(7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (14) Appointment of a successor or additional fiscal agent or the change of name of a fiscal agent, if material.
(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material (for the definition of “financial obligation,” see clause (e)). (16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties (for the definition of “financial obligation,” see clause (e)).
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given POLICY AND ACTION ITEM 8.4
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under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Fiscal Agent Agreement.
(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), (a)(14) and (a)(15) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(6) also contains the qualifier “material” with respect to certain notices, determinations or other events affecting the tax status of the Bonds.
The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event’s occurrence is material for purposes of U.S. federal securities law. Whenever the City obtains knowledge of the occurrence of any of these Listed Events, the City will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the City will cause a notice to be filed as set forth in paragraph (b) above. The Dissemination Agent shall not be responsible for determining whether an event is material. (d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City. (e) For purposes of Section 5(a)(15) and (16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB pursuant to this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.
Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
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(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first Annual Report filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to this Disclosure Certificate modifying the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.
A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Listed Event under Section 5(b).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the POLICY AND ACTION ITEM 8.4
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event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders, or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. (b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Certificate as of the date first above written.
CITY OF MOUNTAIN HOUSE, for and on
behalf of City of Mountain House Community
Facilities District No. 2024-1 (Public Facilities
and Services)
By:
Name:
Title:
AGREED AND ACCEPTED:
KOSMONT FINANCIAL SERVICES
as Dissemination Agent
By:
Name:
Title:
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CONTINUING DISCLOSURE CERTIFICATE
(Developer)
Relating to:
IMPROVEMENT AREA NO. 8 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1
(PUBLIC FACILITIES AND SERVICES)
SPECIAL TAX BONDS
THIS CONTINUING DISCLOSURE CERTIFICATE (Developer) (the “Disclosure Certificate”) dated as of __________, 2025, is executed and delivered by ____________ (the “Developer”) connection with the execution and delivery of its Improvement Area No. 8 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2025 (the “Bonds”). The Bonds are being executed and delivered pursuant to a Fiscal Agent Agreement dated as of June 1, 2025 (the “Fiscal Agent Agreement”), by and between the City and Computershare Trust Company, N.A., as fiscal agent (the “Fiscal Agent”).
The Developer covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Developer for the benefit of the holders and beneficial owners of the Bonds.
Section 2. Definitions. In addition to the definitions set forth herein and in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Disclosure Certificate, the following capitalized terms shall have the following meanings:
“Affiliate” means with respect to the Developer, means any other Person (i) who directly, or indirectly through one or more intermediaries, is currently controlling, controlled by or under common control with the Developer, and (ii) for whom information, including financial information or operating data, concerning such Person is material to potential investors in their evaluation of Improvement Area No. 8 and investment decision regarding the Bonds (i.e., information regarding such Person’s assets or funds that would materially affect the Developer’s ability to develop the Property as described in the Official Statement or to pay its Special Taxes on the Property (to the extent the responsibility of the Developer) prior to delinquency). For purposes hereof, the term “control” (including the terms “controlling,” “controlled by” or “under common control with”) means the present possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. The __________ Land Bank is not an Affiliate of the Developer. ["___________ Land Bank" means ______________, the land bank for the Developer pursuant to the Option Agreement.]
“Assumption Agreement” means an undertaking of a Major Owner, or an Affiliate thereof, for the benefit of the holders and beneficial owners of the Bonds containing terms substantially similar to this Disclosure Certificate (as modified for such Major Owner’s development and financing plans with respect to Improvement Area No. 8), whereby such Major Owner or Affiliate agrees to provide Periodic Reports and notices of significant events, setting forth the information POLICY AND ACTION ITEM 8.4
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described in sections 4 and 5 hereof, respectively, with respect to the portion of the property in Improvement Area No. 8 owned by such Major Owner and its Affiliates and, at the option of the Developer or such Major Owner, agrees to indemnify the Dissemination Agent (if any) pursuant to a provision substantially in the form of Section 11 hereof. As set forth in Section 6(b), the sale of property to a Major Owner shall not require the execution of an Assumption Agreement if such Major Owner is already a party to a continuing disclosure certificate in form and substance similar to this Disclosure Certificate with respect to the Bonds, and under which the property conveyed to such Major Owner will become subject to future Semi-Annual Reports. [In addition, the conveyance of property from the __________ Land Bank to the Developer under the Option Agreement is subject to this Disclosure Certificate and shall not require the Developer to enter into an Assumption Agreement.] [In addition, the conveyance of property to a related entity in a double escrow with a homeowner shall not require the related entity to execute an Assumption Agreement.]
“Dissemination Agent” means the entity acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Developer and which has filed with the Developer, the City, and the Participating Underwriter a written acceptance of such designation, and which is experienced in providing dissemination agent services such as those required under this Disclosure Certificate. The Initial Dissemination Agent is the Developer.
“District” means the City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) .
“EMMA” shall mean the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/.
“Improvement Area No. 8” means Improvement Area No. 8 of the District. “Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. “Major Owner” means, as of any date of determination, a Person that, together with the Person’s Affiliates, owns, or has under option, _____ or more taxable parcels in Improvement Area No. 8. [During the term of the Option Agreement, the __________ Land Bank shall not be considered a Major Owner.] [The conveyance of property to a related entity in a double escrow with a homeowner shall not cause the related entity to be considered a Major Owner.] “Official Statement” means the final official statement executed by the City in connection with the issuance of the Bonds.
["Option Agreement" means that certain Option Agreement dated _________, between _________ and the __________ Land Bank, as it may be amended from time to time.] “Participating Underwriter” means Piper Sandler & Co., the original underwriter of the Bonds.
“Periodic Report” means any Periodic Report provided by the Developer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
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“Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof.
“Property” means the real property in Improvement Area No. 8 that is owned by (i) the Developer, (ii) any Affiliate of the Developer, (iii) the __________ Land Bank (during the term of the Option Agreement), and (iv) the property in Improvement Area No. 8 that the Developer sold to a Major Owner who has not assumed the undertakings of this Disclosure Certificate under Section 6(b) that is owned by such Major Owner. For avoidance of doubt, any parcel that is exempt from the Special Taxes shall not be considered Property for purposes of this Disclosure Certificate.
“Report Date” means April 1 and October 1 of any fiscal year. If, in any year, the Report Date falls on a Saturday, Sunday, or a holiday, such Report Date shall be extended to the next following day that is not a Saturday, Sunday, or holiday. “Special Taxes” means the special taxes levied on taxable property in Improvement Area No. 8.
Section 3. Provision of Periodic Reports.
(a) The Developer shall, or, upon written direction of the Developer the Dissemination Agent shall, not later than the Report Date, commencing October 1, 2025, file or cause to be filed with EMMA a Periodic Report which is consistent with the requirements of Section 4 of this Disclosure Certificate with a copy to the Participating Underwriter and the City. Not later than 15 calendar days prior to the Report Date, the Developer shall provide the Periodic Report to the Dissemination Agent (if different from the Developer). The Developer shall provide a written certification with (or included as a part of) each Periodic Report furnished to the Dissemination Agent (if different from the Developer), the Participating Underwriter and the City to the effect that such Periodic Report constitutes the Periodic Report required to be furnished by it under this Disclosure Certificate. The Dissemination Agent, the Participating Underwriter and the City may conclusively rely upon such certification of the Developer and shall have no duty or obligation to review the Periodic Report. The Periodic Report may be submitted as a single document or as separate documents comprising a package and may incorporate by reference other information as provided in Section 4 of this Disclosure Certificate. (b) If the Dissemination Agent does not receive a Periodic Report by 15 calendar days prior to the Report Date, the Dissemination Agent shall send a reminder notice to the Developer that the Periodic Report has not been provided as required under Section 3(a) above. The reminder notice shall instruct the Developer to determine whether its obligations under this Disclosure Certificate have terminated (pursuant to Section 6 below) and, if so, to provide the Dissemination Agent with a notice of such termination in the same manner as for a Listed Event (pursuant to Section 5 below). If the Developer does not provide, or cause the Dissemination Agent to provide, a Periodic Report to EMMA by the Report Date as required in subsection (a) above, the Dissemination Agent shall send a notice to EMMA in the format prescribed by the MSRB, with a copy to City and the Participating Underwriter. (c) With respect to the Periodic Report, the Dissemination Agent shall, to the extent the Periodic Report has been furnished to it, file the Periodic Report with EMMA and file a report with the Developer (if the Dissemination Agent is other than the Developer), the City and the POLICY AND ACTION ITEM 8.4
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Participating Underwriter certifying that the Periodic Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to and filed with EMMA.
Section 4. Content of Periodic Reports. The Developer’s Periodic Report shall contain or incorporate by reference the information set forth in Exhibit A relating to the Developer, any or all of which may be included by specific reference to other documents, including official statements of debt issues of the Developer or related public entities, which have been submitted to EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from EMMA. The Developer shall clearly identify each such other document so included by reference.
In addition to any of the information expressly required to be provided in Exhibit A, the Developer’s Periodic Report shall include such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
Section 5. Reporting of Significant Events.
(a) The Developer shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to itself or the Property, if material:
(i) bankruptcy or insolvency proceedings commenced by or against the Developer and, if known, any bankruptcy or insolvency proceedings commenced by or against any Affiliate of the Developer that is reasonably likely to have a significant impact on the Developer’s ability to pay Special Taxes on the Property or to sell or develop the Property;
(ii) failure to pay any taxes, special taxes (including the Special Taxes) or assessments due with respect to the Property on or prior to the delinquency date to the extent such failure is not promptly cured by the Developer upon discovery thereof; (iii) filing of a lawsuit of which the Developer is aware against the Developer or an Affiliate seeking damages, which is reasonably likely to have a significant impact on the Developer’s ability to pay Special Taxes on the Property or to sell or develop the Property;
(iv) material damage to or destruction of any of the improvements on the Property; and
(v) any payment default or other material default by the Developer on the Option Agreement or any loan with respect to the construction of improvements on the Property.
(b) Whenever the Developer obtains knowledge of the occurrence of a Listed Event, the Developer shall as soon as possible determine if such event would be material under applicable Federal securities law.
(c) If the Developer determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Developer shall, or shall cause the Dissemination Agent to, promptly file a notice of such occurrence with EMMA, with a copy to the City and the Participating Underwriter.
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Section 6. Duration of Reporting Obligation.
(a) All the Developer’s obligations hereunder shall commence on the date hereof and terminate (except as provided in Section 11) on the earliest to occur of the following:
(i) upon the legal defeasance, prior redemption or payment in full of all the Bonds, or
(ii) at such time as the Developer is no longer a Major Owner, or (iii) the date on which the Developer prepays in full all of the Special Taxes attributable to the Property.
The Developer shall give notice of the termination of its obligations under this Disclosure Certificate in the same manner as for a Listed Event under Section 5. (b) The Developer’s obligations hereunder shall terminate with respect to any portion of the Property on the date such portion of the Property is sold to a Person that is not a Major Owner. If any portion of the Property is sold to a Major Owner or if the Option Agreement is terminated and the __________ Land Bank would be a Major Owner, the Developer shall remain obligated hereunder with respect to such Property unless the obligations have been assumed by the Major Owner or the __________ Land Bank (if the __________ Land Bank is then a Major Owner), as applicable, pursuant to an Assumption Agreement. The Developer’s obligations under this Disclosure Certificate with respect to a Major Owner or the __________ Land Bank (in the event the Option Agreement is terminated and the __________ Land Banks is then a Major Owner) that has not executed an Assumption Agreement shall terminate upon the earlier to occur of (i) the date on which the Developer’s obligations with respect to such Major Owner or the __________ Land Bank are assumed under an Assumption Agreement entered into pursuant to this Section 6(b), or (ii) the date on which the Major Owner or the __________ Land Bank is no longer considered a Major Owner. The Developer shall provide a copy of the executed Assumption Agreement to the City and the Participating Underwriter. However, a Major Owner shall not be required to enter into an Assumption Agreement if such Major Owner is already a party to a continuing disclosure certificate in form and substance similar to this Disclosure Certificate with respect to the Bonds, and under which the property conveyed to such Major Owner will become subject to future Semi-Annual Reports. In addition, the conveyance of property from the __________ Land Bank to the Developer under the Option Agreement is subject to this Disclosure Certificate and shall not require the Developer to enter into an Assumption Agreement.
Section 7. Dissemination Agent. The Developer may, from time to time, appoint or engage a Dissemination Agent to assist the Developer in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be the Developer. The Dissemination Agent may resign by providing thirty days’ written notice to the City, the Participating Underwriter and the Developer. The acquisition of any portion of the Property by the Developer pursuant to the Option Agreement shall not require any assumption by the Developer.
Section 8. No Amendment. The Developer may not amend this Disclosure Certificate.
Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Developer from disseminating any other information, using the means of POLICY AND ACTION ITEM 8.4
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dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Periodic Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Developer chooses to include any information in any Periodic Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Developer shall have no obligation under this Disclosure Certificate to update such information or include it in any future Periodic Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the Developer to comply with any provision of this Disclosure Certificate, the Participating Underwriter and any holder or beneficial owner of the Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developer to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole and exclusive remedy under this Disclosure Certificate in the event of any failure of the Developer to comply with this Disclosure Certificate shall be an action to compel performance. Neither the Developer nor the Dissemination Agent shall have any liability to any holder or beneficial owner of the Bonds or any other party for monetary damages or financial liability of any kind whatsoever arising from or relating to this Disclosure Certificate.
Section 11. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Developer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents (each, an “Indemnified Party”), harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the reasonable costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding loss, liabilities, costs and expenses due to an Indemnified Party’s negligence or willful misconduct or failure to perform its duties hereunder.
The Dissemination Agent shall be paid compensation for its services provided hereunder in accordance with its schedule of fees as amended from time to time, which schedule, as amended, shall be reasonably acceptable, and all reasonable expenses, reasonable legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Developer, the Fiscal Agent, the Bond owners, or any other party. The obligations of the Developer under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
Section 12. Notices. Any notice or communications to be among any of the parties to this Disclosure Certificate may be given by regular, overnight or electronic mail as follows:
To the Developer
Email:
To the City: City of Mountain House
Attn: CFD Administrator
251 E. Main Street
Mountain House, CA 95391
Email: [email protected]
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To the Participating
Underwriter: Piper Sandler & Co.
3626 Fair Oaks Boulevard, Suite 100
Sacramento, CA 95864
Email: [email protected]
Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Developer (its successors and assigns), the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds and shall create no rights in any other person or entity. All obligations of the Developer hereunder shall be assumed by any legal successor to the obligations of the Developer as a result of a sale, merger, consolidation or other reorganization.
Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the Developer has executed this Disclosure Certificate as of the date first above written.
[DEVELOPER]
By: ______________________________
Name: ___________________________
Title: _____________________________
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EXHIBIT A
PERIODIC REPORT
Relating to:
IMPROVEMENT AREA NO. 8 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1
(PUBLIC FACILITIES AND SERVICES)
SPECIAL TAX BONDS
This Periodic Report is hereby submitted under Section 4 of the Continuing Disclosure Certificate (Developer) (the “Disclosure Certificate”) dated ________, 2025 executed by _________________ (the “Developer”) with respect to Improvement Area No. 8 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) (the “District”).
Capitalized terms used in this Periodic Report but not otherwise defined have the meanings given to them in the Disclosure Certificate.
I. Property Ownership and Development
The information in this section is provided as of ____________________ (this date must be not more than 60 days before the date of this Periodic Report).
A. Property currently owned by the Developer or its Affiliates (if any) and the ______________ Land Bank (during the term of the Option Agreement) in Improvement Area No. 8 (the “Property”):
Development name:
Number of lots (acreage if not subdivided):
B. Status of land development or construction activities:
______________________________________________________________________ ______________________________________________________________________ C. Number of building permits pulled during the reporting period and the aggregate number of building permits for the Property developed by the Developer or an Affiliate (if any), and any significant amendments to land use or development entitlements:
______________________________________________________________________ ______________________________________________________________________ D. Aggregate property sold, optioned or leased by the Developer or an Affiliate (if any) to end users or merchant builders:
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Since the Reported Date of
Information in the Official
Statement
Since the Last Periodic
Report
Lots ____ Lots ____
E. Any updates to ownership of the Property by the Developer or an Affiliate (if any), as stated in the Official Statement, and any other changes in ownership, whether acquisition of land in Improvement Area No. 8 by the Developer or an Affiliate (if any), or sales of land in Improvement Area No. 8 to other property owners, distinguishing between (i) end users (e.g., single family homeowners), (ii) developers and (iii) merchant builders. ______________________________________________________________________ ______________________________________________________________________ II. Legal and Financial Status of Developer
Unless such information has previously been included or incorporated by reference in a Periodic Report, describe any change in the legal structure of the Developer or the financial condition and financing plan of the Developer that would materially and adversely interfere with its ability to complete its development plan described in the Official Statement. ______________________________________________________________________ ______________________________________________________________________ III. Change in Development or Financing Plans
Unless such information has previously been included or incorporated by reference in a Periodic Report, describe any development plans or financing plans relating to the Property that are materially different from the proposed development and financing plan described in the Official Statement.
______________________________________________________________________ ______________________________________________________________________ IV. Official Statement Updates
Unless such information has previously been included or incorporated by reference in a Periodic Report, describe any other significant changes in the information relating to the Developer or the Property contained in the Official Statement under the heading “IMPROVEMENT AREA NO. 8 – [For Master Developer: -- Improvement Area No. 8” that would materially and adversely interfere with the Developer’s ability to develop and sell the Property as described in the Official Statement.
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______________________________________________________________________ V. Other Material Information
In addition to any of the information expressly required above, provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. _____________________________________________________________________ ______________________________________________________________________ Certification
The undersigned Developer hereby certifies that this Periodic Report constitutes the Periodic Report required to be furnished by the Developer under the Disclosure Certificate.
ANY STATEMENTS REGARDING THE DEVELOPER, THE DEVELOPMENT OF THE PROPERTY, THE DEVELOPER’S FINANCING PLAN OR FINANCIAL CONDITION, OR THE
BONDS, OTHER THAN STATEMENTS MADE BY THE DEVELOPER IN AN OFFICIAL
RELEASE, OR FILED WITH THE MUNICIPAL SECURITIES RULEMAKING BOARD, ARE NOT AUTHORIZED BY THE DEVELOPER. THE DEVELOPER IS NOT RESPONSIBLE FOR THE
ACCURACY, COMPLETENESS OR FAIRNESS OF ANY SUCH UNAUTHORIZED STATEMENTS.
THE DEVELOPER HAS NO OBLIGATION TO UPDATE THIS PERIODIC REPORT OTHER THAN AS EXPRESSLY PROVIDED IN THE DISCLOSURE CERTIFICATE.
Dated:
[DEVELOPER]
By: ______________________________
Name: ___________________________
Title: _____________________________
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APPENDIX F
SUMMARY OF CERTAIN PROVISIONS OF FISCAL AGENT AGREEMENT POLICY AND ACTION ITEM 8.4
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APPENDIX G
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the 2025 Bonds, payment of principal, interest and other payments on the 2025 Bonds (herein, the “Securities”) to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Securities and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.
Neither the issuer of the Securities (the “Issuer”) nor the fiscal agent appointed with respect to the Securities (the “Agent”) takes any responsibility for the information contained in this Appendix.
No assurances can be given that DTC, DTC Direct Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Securities, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Securities, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Securities, or that they will so do on a timely basis, or that DTC, DTC Direct Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company (“DTC”) will act as securities depository for the securities (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.
2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates.
Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding POLICY AND ACTION ITEM 8.4
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company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information contained on this Internet site is not incorporated herein by reference.
3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting POLICY AND ACTION ITEM 8.4
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rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.
10. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer and Agent believe to be reliable, but neither Issuer nor Agent takes no responsibility for the accuracy thereof.
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$__________
IMPROVEMENT AREA NO. 8 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1 (PUBLIC FACILITIES AND
SERVICES)
SPECIAL TAX BONDS
SERIES 2025
BOND PURCHASE AGREEMENT
_____, 2025
City of Mountain House
251 E Main Street
Mountain House, California 95391
Ladies and Gentlemen:
Piper Sandler & Co. (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (the “Purchase Agreement”) with the City of Mountain House, California (the “City”) acting on behalf of Mountain House Community Facilities No. 2024-1 (Public Facilities and Services) (the “District”) which, upon acceptance, will be binding upon the City and upon the Underwriter. This offer is made subject to acceptance of it by the City on the date hereof, and if not accepted will be subject to withdrawal by the Underwriter upon notice delivered to the City at any time prior to the acceptance hereof by the City.
The City acknowledges and agrees that: (i) the purchase and sale of the Bonds (defined below) pursuant to this Purchase Agreement is an arm’s-length commercial transaction between the City and the Underwriter; (ii) in connection therewith and with the discussions, undertakings and procedures leading up to the consummation of such transaction, the Underwriter is and has been acting solely as principal and is not acting as a Municipal Advisor (as defined in Section 15B of the Securities Exchange Act of 1934, as amended); (iii) the Underwriter has not assumed an advisory or fiduciary responsibility in favor of the City with respect to the offering contemplated hereby or the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriter has provided other services or is currently providing other services to the City on other matters); and (iv) the City has consulted its own legal, financial and other advisors to the extent it has deemed appropriate for this transaction.
1. Purchase, Sale and Delivery of the Bonds.
(a) Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter agrees to purchase from the City, and the City agrees to sell to the Underwriter, all (but not less than all) of the Improvement Area No. 8 of the City of Mountain House Community Facilities No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2025 (the “Bonds”) in the aggregate principal amount specified in Exhibit A hereto. The Bonds shall be dated the Closing Date (hereinafter defined), and bear interest from said date (payable semiannually on March 1 and September 1 in each year, commencing POLICY AND ACTION ITEM 8.4
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September 1, 2025) at the rates per annum and maturing on the dates and in the amounts set forth in Exhibit A hereto. The purchase price for the Bonds shall be the amount specified as such in Exhibit A hereto.
(b) The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable and subject to redemption as provided in, the Fiscal Agent Agreement dated as of June 1, 2025 ( the “Fiscal Agent Agreement”), by and between the City and Computershare Trust Company, N.A., as fiscal agent (the “Fiscal Agent”), and approved by a resolution adopted by the City Council of the City (the “City Council”), acting as the legislative body of the District, on _____, 2025 (the “Resolution of Issuance”). The Bonds and interest thereon will be payable from a special tax (the “Special Tax”) levied and collected on the taxable land within Improvement Area No. 8 (“Improvement Area No. 8”) of the District in accordance with a Resolution of Intention adopted by the City Council and a Resolution of Formation adopted by the City Council on April 10, 2024 (together with the Resolution of Intention, the “Resolution of Formation”) and the unanimous approval forms (collectively, the “Unanimous Consents”) executed by the Developer and the Land Banks (as such terms are defined herein) allowing for the annexation of Improvement Area No. 8 to the District. Proceeds of the sale of the Bonds will be used in accordance with the Fiscal Agent Agreement and the Mello-Roos Community Facilities Act of 1982, as amended (Sections 53311 et seq. of the Government Code of the State of California) (the “Law”), to (i) construct and/or acquire certain authorized public facilities, (ii) provide for a deposit to a debt service reserve account for the Bonds, and (iii) pay costs of issuance of the Bonds. The Resolution of Issuance, the Resolution of Formation and the Ordinance levying the Special Tax, adopted by the City Council, are collectively referred to herein as the “District Resolutions.”
(c) At or prior to the acceptance hereof by the City, the City shall cause to be delivered to the Underwriter a 15c2-12 Certificate of the City, dated as of the date of this Purchase Agreement (the “City Certificate”), in substantially the form attached hereto as Exhibit B, with only such changes therein as shall have been accepted by the Underwriter. (d) Subsequent to its receipt of the City Certificate deeming the Preliminary Official Statement for the Bonds, dated ______, 2025 (which Preliminary Official Statement, together with the cover page and all appendices thereto, is herein collectively referred to as the “Preliminary Official Statement”), final for purposes of Rule 15c2-12 of the Securities and Exchange Commission (“Rule 15c2-12”), the Underwriter has distributed copies of the Preliminary Official Statement. The City hereby ratifies the use by the Underwriter of the Preliminary Official Statement and authorizes the Underwriter to use and distribute the final Official Statement dated the date hereof (including all information previously permitted to have been omitted by Rule 15c2-12, and any supplements and amendments thereto as have been approved by the City as evidenced by the execution and delivery of such document by an officer of the City (the “Official Statement”), the Fiscal Agent Agreement, the Continuing Disclosure Certificate of the City (the “City Disclosure Certificate”), this Purchase Agreement and any other documents or contracts to which the City or the District is a party related to the Bonds, and all information contained therein, and all other documents, certificates and statements furnished by the City to the Underwriter in connection with the transactions contemplated by this Purchase Agreement, in connection with the offer and sale of the Bonds by the Underwriter. The Underwriter hereby agrees to deliver a copy of the Official Statement to the Municipal Securities Rulemaking City Council (the “MSRB”) through the Electronic Municipal Marketplace Access website of the MSRB on or before the Closing Date and POLICY AND ACTION ITEM 8.4
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otherwise to comply with all applicable statutes and regulations in connection with the offering and sale of the Bonds, including, without limitation, MSRB Rule G-32 and Rule 15c2-12. (e) At 8:00 A.M., Pacific Daylight Time, on _____, 2025, or at such earlier time or date as shall be agreed upon by the Underwriter and the City (such time and date being herein referred to as the “Closing Date”), the City will deliver (i) to the Depository Trust Company in New York, New York, the Bonds in definitive form (all Bonds being in book-entry form registered in the name of Cede & Co. and having the CUSIP numbers assigned to them printed thereon), duly executed by the officers of the City, as provided in the Fiscal Agent Agreement, and (ii) to the Underwriter, at the offices of Jones Hall, A Professional Law Corporation, as bond counsel to the City (“Bond Counsel”), or at such other place as shall be mutually agreed upon by the City and the Underwriter, the other documents herein mentioned; and the Underwriter shall accept such delivery and pay the purchase price of the Bonds in immediately available funds (such delivery and payment being herein referred to as the “Closing”). Notwithstanding the foregoing, the Underwriter may, in their discretion, accept delivery of the Bonds in temporary form upon making arrangements with the City which are satisfactory to the Underwriter relating to the delivery of the Bonds in definitive form.
2. Public Offering and Establishment of Issue Price.
(a) The Underwriter agrees to make a bona fide public offering of the Bonds at the initial public offering price or prices set forth on the inside cover page of the Final Official Statement (as defined herein) and in Exhibit A hereto and subject to Section 2(c) and 2(d) hereof, the Underwriter reserves the right to change such initial public offering prices as the Underwriter deems necessary or desirable, in its sole discretion, in connection with the marketing of the Bonds, and to sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) and others at prices lower than the initial offering prices set forth in the Final Official Statement. A “bona fide public offering” shall include an offering to institutional investors or registered investment companies, regardless of the number of such investors to which the Bonds are sold. (b) The Underwriter agrees to assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City at Closing (defined below) an “issue price” or similar certificate, together with copies of supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit C, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the City and Bond Counsel to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. All actions to be taken by the City under this section to establish the issue price of the Bonds may be taken on behalf of the City by the City’s municipal advisor, Kosmont Financial Services, Inc. (the “Municipal Advisor”) and any notice or report to be provided to the City may be provided to the City’s Municipal Advisor.
(c) Except as otherwise set forth in Exhibit A attached hereto, the City will treat the first price at which 10% of each maturity of the Bonds (the “10% test”), identified under the column “10% Test Used” in Exhibit A, is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the City the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the City the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been satisfied as to the Bonds POLICY AND ACTION ITEM 8.4
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of that maturity, provided that, the Underwriter’s reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the City or Bond Counsel. For purposes of this section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds.
The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit A also sets forth, identified under the column “Hold the Offering Price Rule Used,” as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the 10% test has not been satisfied and for which the City and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the City to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-theoffering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following.
(1) the close of the fifth (5th) business day after the sale date; or (2) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
The Underwriter will advise the City promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. (d) The Underwriter confirms that:
(1) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such thirdparty distribution agreement, as applicable:
(A) (i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter, and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter, (B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and
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(C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(2) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker-dealer that is a party to such third-party distribution agreement to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires. (e) The City acknowledges that, in making the representations set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The City further acknowledges that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a third-party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds.
(f) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section.
Further, for purposes of this section:
(1) “public” means any person other than an underwriter or a related party;
(2) “underwriter” means (A) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public POLICY AND ACTION ITEM 8.4
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(including a member of a selling group or a party to a third-party distribution agreement participating in the initial sale of the Bonds to the public); (3) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and
(4) “sale date” means the date of execution of this Purchase Agreement by the City and the Underwriter.
3. Representations, Warranties and Agreements of the City. The City represents, warrants and covenants to and agrees with the Underwriter that:
(a) The City is a municipal corporation and charter city duly organized and existing under the laws of the State of California (the “State”) and has duly authorized the formation of the District and the designation of Improvement Area No. 8 therein, pursuant to the Resolution of Formation, the Unanimous Consents and the Law. The City Council, as the legislative body of the District, has duly adopted the District Resolutions, and has caused to be recorded in the real property records of San Joaquin County a Notice of Special Tax Lien (the “Notice of Special Tax Lien”) (such District Resolutions, Unanimous Consents and Notice of Special Tax Lien being collectively referred to herein as the “Formation Documents”). Each of the Formation Documents remains in full force and effect as of the date hereof and has not been amended. The District is duly organized and validly existing as a community facilities district under the laws of the State of California and Improvement Area No. 8 therein has been properly designated. The City has, and at the Closing Date will have, as the case may be, full legal right, power and authority (i) to execute, deliver and perform its obligations under this Purchase Agreement and the City Disclosure Certificate, and to carry out all transactions on its part contemplated by each of such agreements, (ii) to issue, sell and deliver the Bonds to the Underwriter pursuant to the Resolution of Issuance and the Fiscal Agent Agreement as provided herein, and (iii) to carry out, give effect to and consummate the transactions on its part contemplated by the Formation Documents and by the Fiscal Agent Agreement, this Purchase Agreement, and the City Disclosure Certificate (collectively, the “District Documents”) and the Official Statement.
(b) The City has complied, and will at the Closing Date be in compliance, in all material respects, with the Formation Documents and the District Documents, and any immaterial compliance by the City, if any, will not impair the ability of the City to carry out, give effect to or consummate the transactions on its part contemplated by the foregoing. From and after the date of issuance of the Bonds, the City will continue to comply with the covenants of the City contained in the District Documents that are applicable to such time period.
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(c) The City Council has duly and validly: (i) adopted the District Resolutions, (ii) called, held and conducted in accordance with all requirements of the Law, elections within the District to approve the levy of the Special Tax within Improvement Area No. 8 of the District and the issuance of the Bonds and recorded the Notice of Special Tax Lien which established a continuing lien on the land within Improvement Area No. 8 of the District securing the payment of the Special Tax, (iii) authorized and approved the execution, delivery and due performance by the City for the District of the Bonds and the District Documents, (iv) authorized the preparation, delivery and distribution of the Preliminary Official Statement and the Official Statement, and (v) authorized and approved the performance by the City of its obligations contained in, and the taking of any and all action as may be necessary to carry out, give effect to and consummate the transactions on its part contemplated by, each of the District Documents (including, without limitation, the collection of the Special Tax), the Bonds and the Official Statement and at the Closing Date, the Formation Documents will be in full force and effect and the District Documents and the Bonds will constitute the valid, legal and binding obligations of the City for the District and (assuming due authorization, execution and delivery by other parties thereto, where necessary) will be enforceable upon the City in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights in general and to the application of equitable principles if equitable remedies are sought. (d) To the best of the City’s knowledge, neither the District nor the City is in breach of or default under any applicable law or administrative rule or regulation of the State or the United States, or of any department, division, agency or instrumentality thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, trust agreement, contract, agreement or other instrument to which the District or the City is a party or is otherwise subject or bound, a consequence of which would be to materially and adversely affect the performance by the District or the City of their obligations under the Bonds, the Formation Documents or the District Documents, and compliance with the provisions of each thereof will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State or the United States, or of any department, division, agency or instrumentality thereof, or under any applicable court or administrative decree or order, or a material breach of or default under any loan agreement, note, resolution, trust agreement, contract, agreement or other instrument to which the District or the City, as the case may be, is a party or is otherwise subject or bound.
(e) Except for compliance with the blue sky or other states securities law filings, as to which the City makes no representations, all approvals, consents, authorizations, elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the City of its obligations hereunder, or under the Formation Documents or the District Documents, have been obtained and are in full force and effect.
(f) The Special Tax constituting the security for the Bonds has been duly and lawfully authorized and may be levied under the Law, the State Constitution and the applicable laws of the State, and the Special Tax, when levied, will constitute a valid and legally binding continuing lien on the properties on which it has been levied.
(g) The City shall not supplement or amend the Official Statement or cause the Official Statement to be supplemented or amended without the prior written consent of the POLICY AND ACTION ITEM 8.4
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Underwriter. Until the date which is twenty-five (25) days after the “end of the underwriting period” (as hereinafter defined), if any event shall occur of which the City is aware, as a result of which it may be necessary to supplement the Official Statement in order to make the statements in the Official Statement, in light of the circumstances existing at such time, not misleading, the City shall forthwith notify the Underwriter of any such event of which it has knowledge and shall cooperate fully in furnishing any information available to it for any supplement to the Official Statement necessary, in the Underwriter’s opinion, so that the statements therein as so supplemented will not be misleading in light of the circumstances existing at such time and the City shall promptly furnish to the Underwriter a reasonable number of copies of such supplement. As used herein, the term “end of the underwriting period” means the later of such time as (i) the City delivers the Bonds to the Underwriter, or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the “end of the underwriting period” shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the City at or prior to the Closing Date, and shall specify a date (other than the Closing Date) to be deemed the “end of the underwriting period.”
(h) The Fiscal Agent Agreement creates a valid pledge of the Special Tax Revenues (as defined in the Fiscal Agent Agreement) and the moneys deposited in the Bond Fund and the Reserve Fund established pursuant to the Fiscal Agent Agreement, including the investments thereof, subject in all cases to the provisions of the Fiscal Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein. Until such time as moneys have been set aside in an amount sufficient to pay all then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity, plus unpaid interest thereon to maturity or to the date of redemption if redeemed prior to maturity, and premium, if any, the City will faithfully perform and abide by all of its covenants and undertakings, and the provisions contained in the Fiscal Agent Agreement.
(i) Except as disclosed in the Preliminary Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending with respect to which the City has been served with process or, to the best knowledge of the City, threatened (i) which would materially adversely affect the ability of either the City or the District to perform their obligations under the Bonds, the Formation Documents or the District Documents, or (ii) seeking to restrain or to enjoin the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, or the collection or application of the Special Tax pledged or to be pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Bonds, the Formation Documents, the District Documents, or any action contemplated by any of said documents, or (iii) in any way contesting the completeness or accuracy of the Official Statement or the powers or authority of the City or the District with respect to the Bonds, the Formation Documents, the District Documents, or any action of the City or the District contemplated by any of said documents; nor is there any action pending with respect to which the City has been served with process or, to the best knowledge of the City, threatened against the City or the District which alleges that interest on the Bonds is not excludable from gross income for federal income tax purposes or is not exempt from California personal income taxation, or (iv) which would affect or restrain the ability of the owners of property within the District to develop their property as described in the Preliminary Official Statement.
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(j) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order for the Underwriter to qualify the Bonds for offer and sale under the “Blue Sky” or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate; provided, however, the City shall not be required to register as a dealer or a broker of securities or to consent to service of process in connection with any blue sky filing. (k) Any certificate signed by any official of the City authorized to do so and delivered to the Underwriter in connection with the Bonds or this Purchase Agreement shall be deemed a representation and warranty to the Underwriter as to the statements made therein. (l) The City will apply the proceeds of the Bonds in accordance with the Fiscal Agent Agreement as described in the Official Statement. (m) The information contained in the Preliminary Official Statement was as of the date thereof, and the information contained in the Official Statement as of its date and on the Closing Date shall be, true and correct in all material respects and such information does not and shall not contain any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(n) The Preliminary Official Statement heretofore delivered to the Underwriter has been deemed final by the City as of its date, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of Rule 15c2-12. The City hereby covenants and agrees that, within seven (7) business days from the date hereof, the City shall cause a final printed form of the Official Statement to be delivered to the Underwriter in a quantity mutually agreed upon by the Underwriter and the City so that the Underwriter may comply with paragraph (b)(4) of Rule 15c2-12 and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board.
(o) Except as otherwise disclosed in the Preliminary Official Statement, the City is, and has always been, in material compliance with respect to all reporting obligations in the last five years that it has undertaken under Rule 15c2-12 for all indebtedness issued by the City. (p) Except as otherwise disclosed in the Preliminary Official Statement, the Formation Documents have not been amended, terminated, rescinded or modified. (q) The City shall not voluntarily undertake any course of action inconsistent with satisfaction of the requirements applicable to the City as set forth in this Purchase Agreement. (r) The City shall cooperate with the Underwriter in the qualification of the Bonds for offering and sale and the determination of their eligibility for investment under the laws of such jurisdictions as the Underwriter may designate.
(s) The City shall not knowingly take or omit to take any action that, under existing law, may adversely affect the exemption from state income taxation or the exclusion from gross income for federal income tax purposes of the interest on the Bonds.
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4. Conditions to the Obligations of the Underwriter. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties of the City contained herein, as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the City made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the City of its obligations to be performed hereunder at or prior to the Closing Date and to the following additional conditions:
(a) At the Closing Date, the Formation Documents and the District Documents shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds and with the transactions contemplated thereby and by this Purchase Agreement, all such actions as, in the opinion of Bond Counsel, and Stradling Yocca Carlson & Rauth LLP (“Stradling”), counsel to the Underwriter, shall be necessary and appropriate;
(b) The information contained in the Official Statement will, as of the Closing Date and as of the date of any supplement or amendment thereto pursuant to Section 3(g) hereof, be true and correct in all material respects and will not, as of the Closing Date or as of the date of any supplement or amendment thereto pursuant to Section 3(g) hereof, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (c) Between the date hereof and the Closing Date, the market price or marketability of the Bonds at the initial offering prices set forth in the Official Statement shall not have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following:
(1) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department or the Internal Revenue Service of the United States of America, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon the interest that would be received by the owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; (2) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America, or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission (the “SEC”), or any other governmental POLICY AND ACTION ITEM 8.4
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agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, or the Bonds are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Fiscal Agent Agreement is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, or of the Bonds, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws, rules or regulations as amended and then in effect; (3) any amendment to the federal or California Constitution or action by any federal or California court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the City or the District, their property, income or securities (or interest thereon), the validity or enforceability of the Special Tax as contemplated by the Formation Documents, the District Documents or the Official Statement;
(4) any event occurring, or information becoming known, which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Preliminary Official Statement or the Official Statement, or results in the Preliminary Official Statement or the Official Statement containing any untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (5) the declaration of war or the escalation of, or engagement in, military hostilities by the United States or the occurrence of any other national or international emergency or calamity relating to the effective operation of the government of, or the financial community in, the United States which, in the judgment of the Underwriter, makes it impracticable or inadvisable to proceed with the offering or the delivery of the Bonds on the terms and in the manner contemplated in the Preliminary Official Statement or the Official Statement;
(6) the declaration of a general banking moratorium by federal, State of New York or State of California authorities, or the general suspension of trading on any national securities exchange or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on the New York Stock Exchange or other national securities exchange, whether by virtue of determination by that exchange or by order of the SEC or any other governmental authority having jurisdiction that, in the Underwriter’s reasonable judgment, makes it impracticable for the Underwriter to market the Bonds or enforce contracts for the sale of the Bonds; (7) the imposition by the New York Stock Exchange or other national securities exchange, or any governmental authority, of any material restrictions not now in force with respect to the Bonds or obligations of the general character of the Bonds or securities generally, or the material increase of any such restrictions now in force, including those relating to the extension of credit by, or the charge to the net capital requirements of, the Underwriter;
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(8) the entry of an order by a court of competent jurisdiction which enjoins or restrains the City from issuing permits, licenses or entitlements within Improvement Area No. 8 or which order, in the reasonable opinion of the Underwriter, otherwise materially and adversely affects proposed development of property within the Improvement Area No. 8;
(9) a material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred;
(10) there shall have been any material adverse change in the affairs of the City that in the Underwriter’s reasonable judgment will materially adversely affect the market for the Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds;
(11) there shall be established any new restriction on transactions in securities materially affecting the free market for securities (including the imposition of any limitation on interest rates) or the extension of credit by, or a change to the net capital requirements of, underwriters established by the New York Stock Exchange, the SEC, any other federal or State agency or the Congress of the United States, or by Executive Order;
(12) a stop order, release, regulation, or no-action letter by or on behalf of the SEC or any other governmental agency having jurisdiction of the subject matter shall have been issued or made to the effect that the issuance, offering, or sale of the Bonds, including all the underlying obligations as contemplated hereby or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act, the Exchange Act, and the Trust Indenture Act of 1939, as amended; or
(13) filing of or threat of litigation of the type described in Section 3(i) hereof.
(d) On the Closing Date, the Underwriter shall have received counterpart originals or certified copies of the following documents, in each case satisfactory in form and substance to the Underwriter:
(1) The Formation Documents and the District Documents, together with a certificate dated as of the Closing Date of the City Clerk of the City to the effect that each Formation Document is a true, correct and complete copy of the one duly adopted by the City Council;
(2) The Official Statement;
(3) An approving opinion for the Bonds, dated the Closing Date and addressed to the City, of Bond Counsel, in the form attached to the Preliminary Official Statement as Appendix D, and an unqualified letter of such counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such approving POLICY AND ACTION ITEM 8.4
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opinion addressed to the City may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it;
(4) A supplemental opinion, dated the Closing Date and addressed to the Underwriter, of Bond Counsel, to the effect that (i) this Purchase Agreement and the City Disclosure Certificate have been duly authorized, executed and delivered by the City, and, assuming such agreements constitute a valid and binding obligation of the other respective parties thereto, constitute the legally valid and binding agreements of the City for the District enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, moratorium, insolvency or other laws affecting creditor’s rights or remedies and may be subject to general principles of equity (regardless of whether such enforceability is considered in equity or at law); (ii) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Fiscal Agent Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended; and (iii) the information contained in the Official Statement on the cover and under the captions “INTRODUCTION,” “THE BONDS” (other than information relating to DTC and its Book-Entry Only System), “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS,” “TAX MATTERS” and Appendices D and F thereof is accurate, insofar as such information purports to summarize or replicate certain provisions of the Law, the Bonds and the Fiscal Agent Agreement and the exclusion from gross income for federal income tax purposes and exemption from State of California personal income taxes of interest on the Bonds;
(5) A letter of Jones Hall, A Professional Law Corporation, as disclosure counsel to the City (“Disclosure Counsel”), addressed to the Underwriter and the City, to the effect that nothing has come to such counsel’s attention that would lead them to believe that the Preliminary Official Statement, as of its date, and the Official Statement, as of its date and as of the Closing Date (but excluding therefrom the appendices thereto, financial statements and statistical data, and information regarding The Depository Trust Company and its book-entry system, as to which no opinion need be expressed), contained or contains an untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(6) An opinion, dated the Closing Date and addressed to the Underwriter, of Stradling, as counsel for the Underwriter, in form and substance acceptable to the Underwriter;
(7) A certificate or certificates, dated the Closing Date and signed by an authorized officer of the City, ratifying the use and distribution by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offering and sale of the Bonds; and certifying that (i) the representations and warranties of the City contained in Section 3 hereof are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best of his or her knowledge, no event has occurred since the date of the Official Statement affecting the matters contained therein which should be disclosed in the Official Statement for the purposes for which it is to be used in order POLICY AND ACTION ITEM 8.4
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to make the statements and information contained in the Official Statement not misleading in any material respect, and the Bonds, the Formation Documents and the District Documents conform as to form and tenor to the descriptions thereof contained in the Official Statement; and (iii) the City has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under the Formation Documents, the District Documents and the Official Statement at or prior to the Closing Date;
(8) An opinion, dated the Closing Date and addressed to the Underwriter, of the City Attorney, to the effect that (i) to its current actual knowledge and except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending with respect to which the City has been served with process or is known to such counsel to be threatened, as to which the City is or would be a party, which would materially adversely affect the ability of the City or the District to perform their obligations under the Bonds, the Formation Documents or the District Documents, or which seeks to restrain or enjoin the issuance, sale and delivery of the Bonds or exclusion from gross income for federal income tax purposes or State of California personal income taxes of interest on the Bonds, or the application of the proceeds thereof in accordance with the Fiscal Agent Agreement, or the collection or application of the Special Tax to pay the principal of and interest on the Bonds, or which in any way contests or affects the validity or enforceability of the Bonds, the Formation Documents or the District Documents or the accuracy of the Official Statement, or any action of the City contemplated by any of said documents or the development of property within the District; (ii) the City is duly organized and validly existing as a public entity under the laws of the State of California, the District is duly organized and validly existing as a community facilities district under the laws of the State of California and Improvement Area No. 8 has been properly designated therein; (iii) the City has full legal right, power and authority to issue the Bonds and to perform all of its obligations under the Formation Documents and the District Documents; (iv) the City has obtained all approvals, consents, authorizations, elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which constitute a condition precedent to the levy of the Special Tax, the issuance of the Bonds or the performance by the City of its obligations thereunder or under the Fiscal Agent Agreement, except that no opinion need be expressed regarding compliance with blue sky or other securities laws or regulations, whatsoever; (v) the City Council has duly and validly adopted the Formation Documents at meetings of the City Council which were called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout, and the Formation Documents are now in full force and effect and have not been amended; and (vi) the City has duly authorized, executed and delivered the District Documents and the Bonds and has duly authorized the preparation and delivery of the Official Statement; (9) One or more certificates dated the Closing Date from Goodwin Consulting Group, Inc. (the “Special Tax Consultant”) addressed to the City and the Underwriter to the effect that (i) the amount of the Special Tax Revenues that could be levied in each Fiscal Year on all parcels of taxable property in Improvement Area No. 8 is at least one hundred ten percent (110%) of the total Annual Debt Service for POLICY AND ACTION ITEM 8.4
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each such Bond Year that begins in such Fiscal Year on the Bonds, and (ii) all information supplied by the Special Tax Consultant for use in the Official Statement is true and correct as of the date of the Official Statement and as of the Closing Date; (10) A certificate of the City dated the Closing Date, in a form acceptable to Bond Counsel, to the effect that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended; (11) A certificate of the Fiscal Agent and an opinion of counsel to the Fiscal Agent dated the Closing Date and addressed to the City and the Underwriter to the effect that the Fiscal Agent has authorized the execution and delivery of the Fiscal Agent Agreement and that the Fiscal Agent Agreement is a valid and binding obligation of the Fiscal Agent enforceable in accordance with its terms; (12) A Letter of Representations of Lennar Homes of California, LLC, a California limited liability company (the “Developer”), dated the date of the Preliminary Official Statement, substantially in the form attached as Exhibit D hereto or as such certificate may be modified with the approval of the Underwriter and Stradling, and a closing certificate of the Developer dated the Closing Date, substantially in the form attached as Exhibit E;
(13) A continuing disclosure certificate of the Developer (the “Developer Continuing Disclosure Certificate”), executed by the Developer in substantially the form attached as Appendix E to the Official Statement;
(14) One or more opinions of counsel to the Developer addressed to the District and the Underwriter, in form and substance acceptable to the Underwriter and Stradling, regarding (i) the Developer’s due organization and qualification to do business, (ii) the due authorization and execution of the Developer Continuing Disclosure Certificate executed by the Developer, (iii) the absence of litigation pending against such Developer (with service of process to such Developer having been duly given and completed) or overtly threatened in writing against such Developer which would materially and adversely affect the validity or enforceability of the Developer Continuing Disclosure Certificate executed by the Developer, as applicable, or the ability of the Developer to complete the development of its property as described in the Preliminary Official Statement and the Official Statement, or the Developer’s ability to pay the Special Taxes due with respect to the development of its property (to the extent the responsibility of the Developer) prior to delinquency, and (iv) negative assurance regarding the Preliminary Official Statement and the Official Statement;
(15) A certificate of from each of AG EHC II (LEN CA 2, L.P., a Delaware limited partnership, and AG EHC II (LEN CA 4B, L.P., a Delaware limited partnership (collectively, the “Land Banks”) dated the date of the Preliminary Official Statement, substantially in the form attached as Exhibit F hereto (the “Land Bank Certificates”) or as such certificates may be modified with the approval of the Underwriter and Stradling, and a closing certificate of each of the Land Banks dated the Closing Date, to the effect that the representations in the applicable Land Bank Certificate are true and correct as of the Closing Date (except that all references to the POLICY AND ACTION ITEM 8.4
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Preliminary Official Statement in the Land Bank Certificates shall be deemed references to the final Official Statement);
(16) G-17 letter from the Underwriter acknowledged by the City; (17) A certificate from Integra Realty Resources (the “Appraiser”) consenting to the inclusion of their appraisal report (the “Appraisal”) in the Preliminary Official Statement and the final Official Statement and certifying that (i) the information in the Official Statement relating to the Appraisal does not contain an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading and (ii) since the date of the Appraisal they are not aware of any facts that would materially affect the conclusions of value set forth therein; (18) Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the statements and information contained in the Preliminary Official Statement and the Official Statement, of the City’s representations and warranties contained herein and the due performance or satisfaction by the City at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the City and the District in connection with the transactions contemplated hereby and by the Official Statement.
If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement, or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall terminate and neither the Underwriter nor the City shall be under any further obligation hereunder, except that the respective obligations of the City and the Underwriter set forth in Section 5, Section 6 and Section 8 hereof shall continue in full force and effect.
5. Conditions of the City’s Obligations. The City’s obligations hereunder are subject to the Underwriter’s performance of its obligations hereunder, and are also subject to the following conditions:
(a) As of the Closing Date, no litigation shall be pending or, to the knowledge of the duly authorized officer of the City executing the certificate referred to in Section 4(d)(6) hereof, threatened, to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any authority for or the validity of the Bonds, the Formation Documents, the District Documents or the existence or powers of the City or the District, including Improvement Area No. 8 therein; and (b) As of the Closing Date, the City shall receive the approving opinion of Bond Counsel referred to in Section 4(d)(3) hereof, dated as of the Closing Date.
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6. Expenses. Whether or not the Bonds are delivered to the Underwriter as set forth herein:
(a) The Underwriter shall be under no obligation to pay, and the City shall pay or cause to be paid (out of any legally available funds of the District) all expenses incident to the performance of the City’s obligations hereunder, including, but not limited to, the cost of printing, engraving and delivering the Bonds to the Underwriter, the cost of preparation, printing, distribution and delivery of the Fiscal Agent Agreement, the Preliminary Official Statement, the Official Statement and all other agreements and documents contemplated hereby (and drafts of any thereof) in such reasonable quantities as requested by the Underwriter; and the fees and disbursements of the Municipal Advisor, the Special Tax Consultant, the Fiscal Agent, Bond Counsel, Disclosure Counsel and any accountants, engineers or any other experts or consultants the City has retained in connection with the Bonds; and
(b) The City shall be under no obligation to pay, and the Underwriter shall pay, any fees of the California Debt and Investment Advisory Commission, the cost of preparation of any “blue sky” or legal investment memoranda and this Purchase Agreement; expenses to qualify the Bonds for sale under any “blue sky” or other state securities laws; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds (except those specifically enumerated in paragraph (a) of this section), including the fees and disbursements of its counsel and any advertising expenses.
7. Notices. Any notice or other communication to be given to the City under this Purchase Agreement may be given by delivering the same in writing to the City at 251 E Main Street, Mountain House, California 95391, Attention: City Manager; and any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Piper Sandler & Co., 50 California Street, Suite 3100, San Francisco, CA 94111, Attention: Ralph Holmes.
8. Parties in Interest. This Purchase Agreement is made solely for the benefit of the City, the District and the Underwriter (including their successors or assigns), and no other person shall acquire or have any right hereunder or by virtue hereof.
9. Survival of Representations and Warranties. The representations and warranties of the City set forth in or made pursuant to this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Purchase Agreement and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the City and regardless of delivery of and payment for the Bonds.
10. Effective. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the City and shall be valid and enforceable as of the time of such acceptance.
11. No Prior Agreements. This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understandings between the parties hereto in relation to the sale of Bonds for the City.
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12. Governing Law. This Purchase Agreement shall be governed by the laws of the State applicable to contracts made and performed in the State.
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13. Counterparts. This Purchase Agreement may be executed simultaneously in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument.
Very truly yours,
PIPER SANDLER & CO., as Underwriter
By:
Authorized Officer
ACCEPTED:
CITY OF MOUNTAIN HOUSE, for and on
behalf of the City of Mountain House Community
Facilities District No. 2024-1 (Public Facilities
and Services)
By:
City Manager
Time: ____p.m.
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EXHIBIT A
MATURITY SCHEDULE
$___________
IMPROVEMENT AREA NO. 8 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1 (PUBLIC FACILITIES AND
SERVICES)
SPECIAL TAX BONDS
SERIES 2025
Maturity Date
(September 1)
Principal
Amount
Interest
Rate Yield Price
10%
Test
Used
Hold the
Offering
Price Used
C Priced to the optional call date of September 1, 20__ at _____%.
T Term Bond.
The purchase price of the Bonds shall be $___________, which is the principal amount thereof ($__________) [plus/less] [net] original issue [premium/discount] of $__________ and less Underwriter’s discount of $__________.
Optional Redemption. The Bonds are subject to optional redemption from any source of available funds (other than Prepayments of the Special Tax by property owners), in whole or in part among maturities as specified by the City and by lot within a maturity, on any date on and after September 1, 20__ at the following respective redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates
Redemption
Price
September 1, 20__ through August 31, 20__ 103%
September 1, 20__ through August 31, 20__ 102
September 1, 20__ through August 31, 203__ 101
September 1, 20__ and any date thereafter 100
Mandatory Redemption from Prepayments. The Bonds are subject to mandatory redemption from Prepayments of the Special Tax by property owners, in whole or in part among maturities as specified by the City and by lot within a maturity, on any Interest Payment Date at the following respective redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
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Redemption Dates Redemption Price
September 1, 2025 through and including 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 Mandatory Sinking Fund Redemption. The Term Bonds maturing September 1, 20__ and September 1, 20__5 are subject to mandatory sinking payment redemption in part on September 1,20__ and September 1, 20__1, respectively, and on each September 1 thereafter to maturity, by lot, at a redemption price equal to 100% of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts as set forth in the following tables:
Term Bonds Maturing September 1, 20__
Sinking Fund
Redemption Date
(September 1)
Sinking Fund
Payment
Term Bonds Maturing September 1, 20__
Sinking Fund
Redemption Date
(September 1)
Sinking Fund
Payment
The amounts in the foregoing tables will be reduced pro rata, in order to maintain substantially uniform debt service, as a result of any prior partial optional redemption or mandatory redemption of the Bonds.
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EXHIBIT B
$__________∗
IMPROVEMENT AREA NO. 8 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1 (PUBLIC FACILITIES AND
SERVICES)
SPECIAL TAX BONDS
SERIES 2025
RULE 15c2-12 CERTIFICATE
The undersigned hereby certifies and represents that he is the City Manager of the City of Mountain House, California (the “City”), and, as such, is duly authorized to execute and deliver this certificate and further hereby certifies that:
(1) this certificate is being delivered in connection with the sale and issuance of Improvement Area No. 8 of the City of Mountain House Community Facilities No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2025 (the “Bonds”) in order to enable the underwriter of the Bonds to comply with Rule 15c2-12 promulgated under the Securities Exchange Act of 1934, as amended (the “Rule”);
(2) in connection with the sale and issuance of the Bonds, there has been prepared a Preliminary Official Statement dated ______, 2025 setting forth information concerning the Bonds and the Improvement Area No. 8 of the City of Mountain House Community Facilities No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2025 (the “Preliminary Official Statement”); and
(3) except for the Permitted Omissions, the Preliminary Official Statement is deemed final within the meaning of the Rule. As used herein, the term “Permitted Omissions” refers to the offering price(s), interest rates(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters, all as set forth in the Rule.
IN WITNESS WHEREOF, I have hereunto set my hand as of _____, 2025.
CITY OF MOUNTAIN HOUSE
By:
Its: City Manager
∗ Preliminary, subject to change.
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EXHIBIT C
FORM OF ISSUE PRICE CERTIFICATE
$___________
IMPROVEMENT AREA NO. 8 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1 (PUBLIC FACILITIES AND
SERVICES)
SPECIAL TAX BONDS
SERIES 2025
The undersigned, on behalf of Piper Sandler & Co. (“Piper”) hereby certifies as set forth below with respect to the sale and issuance of the above-captioned bonds (the “Bonds”).
1. Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.
2. Reserve Fund.
The establishment of the Reserve Fund in the amount of the Reserve Requirement (as such terms are defined in the Fiscal Agent Agreement dated as of June 1, 2025, by and between the City and Computershare Trust Company, N.A., as fiscal agent, pursuant to which the Bonds are being issued) was vital to the marketing of the Bonds and reasonably required to assure payment of debt service on the Bonds.
3. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b) Issuer means the City of Mountain House.
(c) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.
(d) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (e) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is ______, 2025. (f) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial POLICY AND ACTION ITEM 8.4
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sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Piper’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder.
The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in a Certificate as to Arbitrage and Tax Compliance Procedures for the Bonds and with respect to compliance with the federal income tax rules affecting the Bonds, and by Jones Hall, A Professional Law Corporation in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
PIPER SANDLER & CO.
By:
Name:
Dated: _____, 2025
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SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES
(Attached)
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EXHIBIT D
IMPROVEMENT AREA NO. 8 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1 (PUBLIC FACILITIES AND
SERVICES)
SPECIAL TAX BONDS
SERIES 2025
LETTER OF REPRESENTATIONS OF
LENNAR HOMES OF CALIFORNIA, LLC
______, 2025
In connection with the issuance and sale of the above-captioned bonds (the “Bonds”), and pursuant to Section 4(d)(12) of the Bond Purchase Agreement (the “Bond Purchase Agreement”) to be executed by and between City of Mountain House (the “City”), for and on behalf of the City of Mountain House Community Facilities No. 2024-1 (Public Facilities and Services) (the “District”), and Piper Sandler & Co. (the “Underwriter”), Lennar Homes of California, LLC, a California limited liability company (the “Developer”), hereby represents, warrants and covenants to the City, the District and the Underwriter as of the date hereof as set forth herein. Unless otherwise indicated, capitalized terms used herein and not defined have the meaning given to them in the Bond Purchase Agreement.
1. The Developer is duly organized and validly existing under the laws of the State of California and has all requisite right, power, and authority to: (i) execute and deliver this Letter of Representations of Lennar Homes of California, LLC. (the “Letter of Representations”); (ii) to execute and deliver the Continuing Disclosure Certificate (Developer) to be executed by the Developer prior to the Closing (the “Developer Continuing Disclosure Certificate”) and (iii) undertake all of the transactions on its part described in the Preliminary Official Statement.
2. As set forth in the Preliminary Official Statement, certain of the property within Improvement Area No. 8 of the District is owned by, or under option to, the Developer (herein, the “Property”). The undersigned, on behalf of the Developer, make the representations herein with respect to all such Property.
3. The Developer has, or will have prior to the Closing, duly authorized the execution and delivery of the Developer Continuing Disclosure Certificate at the Closing and the performance by the Developer of its obligations thereunder.
4. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned,1 (a) the Developer and its Relevant Entities2 are not in breach of or in default 1 “Actual Knowledge of the Undersigned” means the actual (as opposed to constructive) knowledge that the individual signing on behalf of the Builder currently has as of the date of this Letter of Representations or has obtained through: (i) interviews with such current officers and responsible employees of the Builder and its Relevant Entities as the undersigned has determined are reasonably likely, in the ordinary course of their respective duties, to have knowledge of the matters that are set forth in this Letter of Representations; and/or (ii) review of documents that were reasonably available to the undersigned and which the undersigned has reasonably deemed necessary in order for the undersigned to obtain knowledge of the matters that are set forth in this Letter of Representations. The undersigned has not conducted any extraordinary inspection or inquiry other than such POLICY AND ACTION ITEM 8.4
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under any applicable judgment or decree or any loan agreement, option agreement, development agreement, indenture, bond, or note (collectively, the “Material Agreements”) to which the Developer or its Relevant Entities are a party or otherwise subject, which breach or default could reasonably be expected to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Tax levied against the Property (to the extent the responsibility of the Developer) prior to delinquency and (b) no event has occurred and is continuing that with the passage of time or giving of notice, or both, would constitute such a breach or default.
5. Except as described in the Preliminary Official Statement, there is no material indebtedness of the Developer or its Relevant Entities that is secured by an interest in the Property.
To the Actual Knowledge of the Undersigned, neither the Developer nor any of its Relevant Entities is in default on any obligation to repay borrowed money, which default is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Tax levied against the Property (to the extent the responsibility of the Developer) prior to delinquency.
6. Except as set forth in the Preliminary Official Statement, no action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending against the Developer (with proper service of process to the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned, is pending against any Relevant Entity of the Developer (with proper service of process to such Relevant Entity having been accomplished) or to the Actual Knowledge of the Undersigned is overtly threatened in writing against the Developer or any such Relevant Entity which, if successful, is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Tax levied against the Property (to the extent the responsibility of the Developer) prior to delinquency.
7. As of the date thereof, to the Actual Knowledge of the Undersigned, the Preliminary Official Statement, solely with respect to information contained therein with respect to the Developer, its Relevant Entities, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Relevant Entity of the Developer (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Relevant Entities) as set forth under the captions entitled “IMPROVEMENT AREA NO. 8—Development of Improvement inspections or inquiries as are prudent and customary in connection with the ordinary course of the Builder’s current business and operations. Officers and employees no longer working for the Builder or its Relevant Entities have not been contacted. 2 “Relevant Entities” means, with respect to the Builder, any other Person: (i) who directly, or indirectly through one or more intermediaries, is currently controlling, controlled by, or under common control with the Builder; and (ii) for whom information, including financial information or operating data, concerning such Person is material to potential investors in their evaluation of the Property and investment decision regarding the Bonds (i.e., information relevant to: (a) the Builder’s development plans with respect to the Property and ability to pay the Special Tax levied against the Property (to the extent the responsibility of the Builder) prior to delinquency; or (b) such Person’s assets or funds that would materially affect the Builder’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Tax levied against the Property (to the extent the responsibility of the Builder) prior to delinquency). “Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization, or a government or political subdivision thereof. For purposes hereof, the term “control” (including the terms “controlling,” “controlled by” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
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Area No. 8” and “OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 8” (excluding therefrom, in each case, information which is identified as having been provided by a source other than the Developer), is true and correct in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
8. The Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and its Relevant Entities which it controls will not bring any action, suit, proceeding, inquiry or investigation, at law or in equity, before any court, regulatory agency, public board or body that in any way seeks to challenge or overturn the formation of the District, to challenge the adoption of the ordinance of the City levying the Special Tax within the District, to invalidate the District or any of the Bonds or any refunding bonds related thereto, or to invalidate the special tax liens imposed under Section 3115.5 of the Streets and Highways Code based on recordation of the notice of special tax lien relating thereto. The foregoing covenant shall not prevent the Developer or any Relevant Entity in any way from bringing any other action, suit, proceeding, inquiry or investigation, at law or in equity, before any court, regulatory agency, public board or body including, without limitation, (a) an action or suit contending that the Special Tax has not been levied in accordance with the methodologies contained in the District’s Rate, Method of Apportionment, and Manner of Collection of Special Tax pursuant to which the Special Tax is levied, (b) an action or suit with respect to the application or use of the Special Tax levied and collected, (c) an action or suit to enforce the obligations of the City and/or the District under the Formation Documents, the District Documents, or any other agreements among the Developer or its Relevant Entities, the City, and/or the District or to which the Developer or its Relevant Entities is a party or beneficiary (including, but not limited to, the Fiscal Agent Agreement).
9. Except as disclosed in the Preliminary Official Statement or as a matter of public record (including, without limitation, liens for ad valorem tax obligations), to the Actual Knowledge of the Undersigned, no public debt secured by a tax or assessment on the Property exists or is in the process of being authorized that would include any portion of the Property.
10. To the Actual Knowledge of the Undersigned, the Developer has not been delinquent to any material extent in the payment of any ad valorem property tax, special assessment or special tax on property owned by the Developer during the period of its ownership included within the boundaries of a community facilities district or an assessment district within California within the last five (5) years that (a) caused a draw on a reserve fund relating to such assessment district or community facilities district financing or (b) resulted in a foreclosure action being commenced in a court of law against the Developer.
11. The Developer intends to comply with the provision of the Mello-Roos Community Facilities District Act of 1982, as amended relating to the Notice of Special Tax described in Government Code Section 53341.5 in connection with the sale of the Property, or portions thereof.
12. To the Actual Knowledge of the Undersigned, the Developer is able to pay its bills as they become due and no legal proceedings are pending against the Developer (with proper service of process to the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned, overtly threatened in writing in which the Developer may be adjudicated as bankrupt or discharged from any and all of its debts or obligations, or granted an extension of time to pay its debts or obligations, or be allowed to reorganize or readjust its debts, or be subject to control or supervision of the Federal Deposit Insurance Corporation.
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13. Based upon its current development plans, including, without limitation, its current budget, and subject to economic conditions and risks generally inherent in the development of real property, many of which are beyond the control of the Developer, and except as disclosed in the Preliminary Official Statement, including under the captions “IMPROVEMENT AREA NO. 8— Development of Improvement Area No. 8” and “OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 8” the Developer currently expects that it will have sufficient funds and/or sources of funds to develop the Property as described in the Preliminary Official Statement and to pay the Special Tax levied against the Property (to the extent the responsibility of the Developer) prior to delinquency. However, neither the Developer nor its Relevant Entities are obligated to make any additional capital contribution or loan to the Developer at any time, and the Developer reserves the right to change its development plan and financing plan for the Property at any time without notice, and there is no recourse against the Developer for failure to pay Special Taxes other than the filing of a foreclosure action against the delinquent Property.
14. Solely as to the limited information described in Paragraph 7 above (and subject to the limitations and exclusions set forth in Paragraph 7), the Developer agrees to indemnify and hold harmless, to the extent permitted by law, the City, the District, and their officials and employees, and each Person, if any (each, an “Indemnified Party” and together, the “Indemnified Parties”), who controls any of the foregoing within the meaning of Section 15 of the Securities Act of 1933, as amended, or of Section 20 of the Securities Exchange Act of 1934, as amended, against all claims, damages, or liabilities (collectively, “Claims”) incurred by an Indemnified Party under any statute or at law or in equity, to the extent that such Claims arise from an untrue statement by the Developer of a material fact contained in the information described in Paragraph 7 above (and subject to the limitations and exclusions set forth in Paragraph 7), as of the date of the Preliminary Official Statement, or the omission by the Developer to state in the Preliminary Official Statement, as of its date, a material fact necessary to make the statements made by the Developer contained therein, in light of the circumstances under which they were made not misleading. This indemnity provision shall not be construed as a limitation on any other liability which the Developer may otherwise have to any Indemnified Party, provided that in no event shall the Developer be obligated for double indemnification. Further, in no event shall the Developer’s liability under this indemnification provision extend to any claims, damages, liability, losses or costs arising out of or related to the negligence or willful misconduct of an Indemnified Party.
In the event that a covered Claim is brought against any Indemnified Party, such Indemnified Party shall promptly notify the Developer in writing; provided that the failure to notify the Developer shall not relieve it from any liability that it may have hereunder except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Developer shall not relieve it from any liability that it may have to an Indemnified Party otherwise than under the above paragraph unless such liability was also conditioned upon such notice. If any proceeding shall be brought or asserted against an Indemnified Party upon a covered Claim, and it shall have notified the Developer thereof, the Developer shall retain counsel reasonably satisfactory to the Indemnified Party (who may be counsel to the Developer) to represent the Indemnified Party in such proceeding regarding the covered Claim and shall pay the fees and expenses of such counsel solely with respect to such proceeding, as incurred. Any Indemnified Party shall have the right to retain its own counsel in such proceeding, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Developer and the Indemnified Party shall have mutually agreed to the contrary; (ii) the Developer has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Party; (iii) the Indemnified Party shall have reasonably concluded that there may be legal defenses available to it POLICY AND ACTION ITEM 8.4
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that are different from or in addition to those available to the Developer such that a material conflict of interest exists for such counsel; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Developer and the Indemnified Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interest between them. It is understood and agreed that the Developer shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Parties, and that all such fees and expenses, to the extent reasonable, shall be paid or reimbursed as they are incurred.
Any such separate firm shall be designated in writing by such Indemnified Parties. The Developer shall not be liable for any settlement of any proceeding effected without its written consent. The Developer shall not, without the written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding upon a covered Claim in respect of which any Indemnified Party is a party, unless such settlement (x) includes an unconditional release of such Indemnified Party, in form and substance reasonably satisfactory to such Indemnified Party, from all liability on claims that are the subject matter of such proceeding and (y) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Party.
15. If, between the date hereof and the Closing Date, to the Actual Knowledge of the Undersigned, any event relating to or affecting the Developer, its Relevant Entities, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Relevant Entity of the Developer (including, if material to the Developer’s development plan or the Developer’s financing plan, loans of such Relevant Entities) shall occur which the undersigned believes would cause the information under the section[s] of the Preliminary Official Statement indicated in Paragraph 7 hereof (and subject to the limitations and exclusions set forth in Paragraph 7), to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the undersigned shall notify the City and the Underwriter and if in the opinion of counsel to the City or the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Preliminary Official Statement, the Developer shall reasonably cooperate with the City in the preparation of an amendment or supplement to the Preliminary Official Statement in form and substance reasonably satisfactory to counsel to the City and to the Underwriter.
16. On behalf of the Developer, the undersigned has reviewed the contents of this Certificate and has met with counsel to the Developer for the purpose of discussing the meaning of its contents.
The undersigned has executed this Letter of Representations solely in his or her capacity as authorized officer or representative of the Developer and he or she will have no personal liability arising from or relating to this Letter of Representations.
LENNAR HOMES OF CALIFORNIA, LLC
a California limited liability company
By: ___________________________________
___________
___________
POLICY AND ACTION ITEM 8.4
ATTACHMENT F
EXHIBIT 3
Item 8.4
EXHIBIT E
$__________
IMPROVEMENT AREA NO. 8 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1 (PUBLIC FACILITIES AND
SERVICES)
SPECIAL TAX BONDS
SERIES 2025
CLOSING CERTIFICATE OF LENNAR HOMES OF CALIFORNIA, LLC
Dated: ______, 2025
In connection with the issuance and sale of the above-captioned bonds (the “Bonds”), and pursuant to Section 4(d)(12) of the Bond Purchase Agreement (the “Bond Purchase Agreement”) to be executed by and between City of Mountain House (the “City”), for and on behalf of the City of Mountain House Community Facilities No. 2024-1 (Public Facilities and Services) (the “District”), and Piper Sandler & Co. (the “Underwriter”), Lennar Homes of California, LLC, a California limited liability company (the “Developer”), hereby represents, warrants and covenants to the City, the District and the Underwriter as of the date hereof. Capitalized terms used herein that are not defined herein shall have the meanings ascribed to such terms in the Letter of Representations of Lennar Homes of California, LLC, executed by the Developer and dated _____, 2025 (the “Letter of Representations”), delivered by the Developer.
1. The undersigned is duly authorized to execute this Closing Certificate (the “Closing Certificate”) on behalf of the Developer.
2. The Developer is duly authorized to execute, deliver and perform its obligations under a Developer Continuing Disclosure Certificate.
3. The Developer has duly executed and delivered the Developer Continuing Disclosure Certificate.
4. The Developer has received the final Official Statement relating to the Bonds, dated _____, 2025 (the “Official Statement”). To the Actual Knowledge of the Undersigned, no event has occurred since the date of the Preliminary Official Statement which has materially and adversely affected or is reasonably expected to materially and adversely affect the statements and information described in Paragraph 7 of the Letter of Representations (and subject to the limitations and exclusions set forth in Paragraph 7 of the Letter of Representations) relating to the Developer, its Relevant Entities, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Relevant Entities (including, if material to the Developer’s development plan or the Developer’s financing plan, loans of such Relevant Entities) that, if not disclosed in the Official Statement for the purposes for which it is to be used , would make such statements and information contained in the Official Statement materially misleading.
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i. To the Actual Knowledge of the Undersigned, the representations and warranties made by the Developer in the Letter of Representations are true and correct in all material respects on and as of the date hereof, with the same effect as if made on the date hereof, except that all references to the Preliminary Official Statement in the Letter of Representations shall be deemed references to the Official Statement.
5. For the period through 25 days after the “end of the underwriting period” as defined in the Bond Purchase Agreement to mean the Closing Date, if any event relating to or affecting the Developer, its Relevant Entities, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, and contractual arrangements of the Developer or any Affiliates of the Relevant Entities (including, if material to the Developer’s development plan or the Developer’s financing plan, other loans of such Relevant Entities) shall occur as a result of which it is necessary, in the opinion of the Underwriter or counsel to the City, to amend or supplement the Official Statement in order to make the information under the section[s] of the Preliminary Official Statement indicated in Paragraph 7 of the Letter of Representations (and subject to the limitations and exclusions set forth in Paragraph 7 of the Letter of Representations) not misleading in the light of the circumstances under which they were made, the Developer shall reasonably cooperate with the City and the Underwriter in the preparation of an amendment or supplement to the Official Statement in form and substance reasonably satisfactory to the Underwriter and Disclosure Counsel which will amend or supplement the Official Statement so that it will not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
The undersigned has executed this Closing Certificate solely in his or her capacity as authorized representatives of the Developer and he or she will have no personal liability arising from or relating to this Closing Certificate.
LENNAR HOMES OF CALIFORNIA, LLC
a California limited liability company
By: ___________________________________
___________
___________
POLICY AND ACTION ITEM 8.4
ATTACHMENT F
EXHIBIT 3
Item 8.4
EXHIBIT F
$__________
IMPROVEMENT AREA NO. 8 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1 (PUBLIC FACILITIES AND
SERVICES)
SPECIAL TAX BONDS
SERIES 2025
CERTIFICATE OF [AG EHC II (LEN) CA 2, L.P.] [AG EHC II (LEN) CA 4B, L.P.] ______, 2025
In connection with the issuance and sale of the above-captioned bonds (the “Bonds”), and pursuant to Section 4(d)(15) of the Bond Purchase Agreement (the “Bond Purchase Agreement”) to be executed by and between City of Mountain House (the “City”), for and on behalf of the City of Mountain House Community Facilities No. 2024-1 (Public Facilities and Services) (the “District”), and Piper Sandler & Co. (the “Underwriter”), [AG EHC II (LEN CA 2, L.P.] [AG EHC II (LEN CA 4B, L.P.], a Delaware limited partnership (the “Landowner”), hereby represents, warrants and covenants to the City, the District and the Underwriter as of the date hereof that:
1. The Landowner is a limited partnership validly existing and in good standing under the laws of the State of Delaware, and is registered to transact intrastate business in the State of California, and has all requisite limited liability company right, power and authority: (i) to execute and deliver this Certificate of ”), [AG EHC II (LEN CA 2, L.P.] [AG EHC II (LEN CA 4B, L.P.] (the “Certificate”); and (ii) to undertake all of the transactions on its part described in the Preliminary Official Statement.
2. As set forth in the Preliminary Official Statement, certain property within Improvement Area No. 8 of the District is held in the name of the Landowner (herein the “Property”). The undersigned, on behalf of the Landowner, makes the representations herein with respect to all such Property owned by Landowner.
3. As of the date thereof, the Preliminary Official Statement, solely with respect to information contained therein with respect to the Landowner and ownership of the Property by Landowner as set forth under the caption “OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 8—Land Bank Owner” is true and correct in all material respects and did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
4. The Landowner covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Landowner will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, that in any way seeks to challenge or overturn the formation of the District, to challenge the adoption of any ordinance of the City levying Special Taxes within the District, to invalidate the District or any of the Bonds or any refunding bonds related thereto, or to invalidate the special tax liens imposed under POLICY AND ACTION ITEM 8.4
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Section 3115.5 of the Streets and Highways Code based on recordation of the notice of special tax lien relating thereto. The foregoing covenant shall not prevent the Landowner in any way from bringing any other action, suit or proceeding including, without limitation, (a) an action or suit contending that the Special Taxes have not been levied in accordance with the methodologies contained in the District’s Rate and Method of Apportionment of Special Taxes pursuant to which the Special Taxes are levied, or (b) an action or suit with respect to the application or use of the Special Taxes levied and collected.
5. Except as disclosed in the Preliminary Official Statement, the Landowner is not aware that any other public debt secured by a tax or assessment on the Property exists or is in the process of being authorized or any assessment districts or community facilities districts have been or are in the process of being formed that include any portion of the Property.
6. To the undersigned’s actual knowledge, the Landowner has not been delinquent to any material extent in the payment of any ad valorem property tax, special assessment or special tax on property owned by the Landowner within the boundaries of a community facilities district or an assessment district within California that (a) would have caused a draw on a reserve fund relating to such assessment district or community facilities district financing or (b) resulted in a foreclosure action being commenced against the Landowner by a court of law.
The undersigned has executed this Certificate solely in his or her capacity as the manager of the authorized agent of the Landowner and he or she will have no personal liability arising from or relating to this Certificate.
[AG EHC II (LEN CA 2, L.P.] [AG EHC II
(LEN CA 4B, L.P.]
a Delaware limited partnership
By: _____________________________
Name: ___________________________
Title: ____________________________
POLICY AND ACTION ITEM 8.4
ATTACHMENT F
EXHIBIT 3
Item 8.4
ACQUISITION AGREEMENT
Relating to:
Improvement Area No. 8 of
City of Mountain House
Community Facilities District No. 2024-1
(Public Facilities and Services)
[Lennar Homes LLC – 503 units]
Effective Date: _______, 2025
THIS ACQUISITION AGREEMENT (this “Agreement”), dated as of ________, 2025, is by and between the City of Mountain House, California (the “City”), for itself and on behalf of City of Mountain House Community Services District Community Facilities District No. 2024-1 (Public Facilities and Services) (“CFD No. 2024-1”), and Lennar Homes LLC, a California limited liability company (the “Developer”). Capitalized terms used in this Agreement, in addition to those defined in this preamble and in the Recitals to this Agreement, shall have the meanings given such terms in “DEFINITIONS” herein.
RECITALS
A. CFD No. 2024-1 was formed by the Board of Directors of the Mountain House Community Services District (“MHCSD”) prior to incorporation of the City, pursuant to the Mello-Roos Community Facilities Act of 1982, as amended, Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the California Government Code (the “Act”) for the financing, among other things, of the public facilities (and services) described in the MHCSD’s Resolution No. 2024-07 adopted by the Board of Directors of MHCSD on April 10, 2024 (the “Resolution of Formation”). Upon incorporation of the City in July 2024, the District officially became a community facilities district of the City. The Facilities authorized to be financed by CFD No. 2024-1 that are eligible to be financed pursuant to this Agreement are listed on Exhibit A.1 hereto, as supplemented from time to time.
B. CFD No. 2024-1 was formed with five improvement areas: Improvement Area No. 1, Improvement Area No. 2, Improvement Area No. 3, Improvement Area No. 4, and Improvement Area No. 5 (collectively, “Improvement Area Nos. 1-5”).
C. MHCSD also designated additional property as future annexation area for CFD No. 2024-1 (the “Future Annexation Area”), from which some or all of the property identified as Future Annexation Area may from time to time, annex into CFD No. 2024-1 as part of one of the then-existing improvement areas or as a new improvement area.
D. Developer is under option to acquire certain property in the Future Annexation Area (the “Option Property”) from its land bank entity, AG EHC II (LEN) CA 2 L.P., a Delaware limited partnership or AG EHC II (LEN) CA 4B L.P., a Delaware limited partnership (the “Land Bank”) in scheduled takedowns pursuant to an Option POLICY AND ACTION ITEM 8.4
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Agreement, dated _______________, entered into by and between Developer and Land Bank (as amended, the “Option Agreement”).
E. As of the date hereof, the Developer and Land Bank have annexed property from the Future Annexation Area into CFD No. 2024-1 as “Improvement Area No. 8” (“Improvement Area No. 8”). This Agreement applies to the financing of Facilities only through Improvement Area No. 8, unless this Agreement is amended by mutual agreement of the City and the Developer (or a permitted assignee of Developer) to include other improvement area(s) created in the future.
F. The Rate and Method for Improvement Area No. 8 provides for the levy of a Special Tax.
G. CFD No. 2024-1 is authorized to issue Bonds under the Act in one or more series for Improvement Area No. 8 in the maximum principal amount of $29,400,000.
Indebtedness subject to the foregoing bond authorization may be adjusted from time to time and shall only include indebtedness evidenced by bonds or notes and shall not include bonds described in Section 53364.2(e) of the Act.
H. The Facilities are necessary to develop Improvement Area No. 8.
DEFINITIONS
“Accept,” “Acceptance,” and “Accepted” mean, with respect to a Facility or Land Interest, acceptance by the City of the proffered Facility or Land Interest. “Act” is defined in Recital A.
“Actual Cost” means, with respect to a Facility, an amount equal to the sum of (a) the actual cost of constructing such Facility, including labor, material and equipment costs, (b) the actual cost of preparing the Plans for such Facility, (c) the actual cost of environmental evaluations required in the City’s reasonable determination specifically for such Facility, (d) the amount of the fees and charges actually paid to governmental agencies in order to obtain permits, licenses, inspections, connections, or other necessary governmental approvals for such Facility, (e) the actual cost for professional services directly related to the construction of such Facility, including engineering, inspection, construction staking, materials testing and similar professional services, (f) the costs incurred for construction management and supervision, which cost shall not exceed 5% of the cost of constructing such Facility, as determined pursuant to clause (a) of this definition, (g) the actual cost of any title insurance required hereby for such Facility, (h) the actual cost of any payment and performance bonds required to construct the Facility, (i) any construction management and program management fees charged by and paid to the City for the construction of the Facility, (j) the actual cost of compiling, reviewing, and preparing payment requests and the materials required to submit payment requests, paid by the Developer to both companies that the Developer has engaged (such as DPFG) and companies retained by the City to evaluate the payment requests, (k) any administration and oversight charges paid to the City for the implementation of this Agreement, (l) the fair market value of any Land Interests in or to which the Facility is permanently affixed and are conveyed by the owner thereof to the City, (m) the actual cost of any other Land Interest which is either necessary for the construction of such Facility (e.g., temporary construction easements, haul roads, etc.) or is required to be conveyed with such Facility in order to facilitate its operation and maintenance, and (n) the actual cost of insurance including but not limited to builders all risk POLICY AND ACTION ITEM 8.4
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insurance and bonds required during construction of a Facility; provided, however, that no item of cost relating to a Facility shall be included in more than one category of cost under this definition; and provided further, however, that each item of cost shall be chargeable to the capital account for the Facility under generally accepted accounting principles. “Agreed-Upon Allocation” has the meaning given such term in Section 5.f. herein. “Agreement” means this Acquisition Agreement, dated as of _______, 2025, by and between the City, on behalf of itself and CFD No. 2024-1, and the Developer. "Approved Assignment" means an assignment and assumption of this Agreement pursuant to an Assignment and Assumption Agreement with either (i) a Builder that is an affiliate of the Developer or (ii) a Builder that is an entity that is, or is affiliated with, a publicly-traded company, or (iii) the Land Bank.
"Assignment and Assumption Agreement" means an agreement by which a full or partial assignment of the Developer's rights and obligations under this Agreement may be made by the Developer to a Builder or the Land Bank, and an assumption of all or a portion of the Developer's rights and obligations under this Agreement may be made by the Builder, or the Land Bank.
“Authorize” or “Authorization” means either of the following, as the context requires: (i) where payment of a requisition is to be made from CFD Sources held and maintained by the Fiscal Agent, the terms mean that the City provides whatever documentation and written authorization under the Fiscal Agent Agreement as is necessary for the Fiscal Agent to make payment on the requisition from the applicable CFD Sources; and (ii) where payment of a requisition is to be made from CFD Sources held and maintained by the City, the terms mean that the City authorizes and pays the applicable amount to the Developer pursuant to the requisition. The payment or requisition may be authorized by a City Officer without requiring approval of the City Council.
"Authorized Fees" means fees that are authorized to be financed by CFD No. 2024-1 and that are to be used to acquire or construct capital facilities, as further described in Exhibit A.1 attached hereto.
“Bonds” means bonds or other debt (as defined in the Act) secured by Special Taxes of Improvement Area No. 8 issued by the City in one or more series for Improvement Area No. 8, excluding refunding bonds described in Section 53364.2 of the Act to the extent the City elects to utilize any savings achieved to reduce Special Taxes. “Builder” means a person or entity to whom the Developer conveys a portion of Improvement Area No. 8, which may be an affiliated or unaffiliated entity of the Developer. “CFD Goals” means the Statement of Goals and Policies Regarding Use of the MelloRoos Community Facilities Act of 1982 adopted by the Board of MHCSD on February 14, 2024 by Resolution No. R-2024-03 and now a policy of the City. “CFD Sources” means, collectively, with respect to all of Improvement Area No. 8 (i) the proceeds of Bonds, (ii) prepayments of Special Taxes under a Rate and Method prior to the issuance of the first series of Bonds for Improvement Area No. 8, and (iii) prepayments of Special Taxes under a Rate and Method after the issuance of the first series of Bonds in POLICY AND ACTION ITEM 8.4
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Improvement Area No. 8 to the extent that such prepayments are allocated to the costs of Facilities and Authorized Fees pursuant to such Rate and Method, all as further described in Section 3 herein.
“City” means the City of Mountain House.
“City Council” means the City Council of the City.
“City Officer” means the City Manager, Finance Director, City Engineer, or other officer of the City or such other official of the City acting in such capacity, or the designee of such official.
“Deposit” has the meaning given such term in Section 7.f. herein. “Developer” means Lennar Homes LLC, a California limited liability company, and its successors and assigns.
“Developer Allocation” has the meaning given such term in Section 5.f. herein. “Discrete Portion” means a portion or phase of a partially constructed Facility where the purchase value of the Facility (of which the Discrete Portion is a part) will exceed $1,000,000 (which may be vertical or horizontal components, percentage of completion, or some combination thereof). Discrete Portions may, as provided herein, be the subject of a payment request under Section 5.b. of this Agreement. Discrete Portions do not have to be Accepted by the City as a condition precedent to the payment of the Purchase Price therefor, but any such payment shall not be made until the Discrete Portion has been constructed in accordance with the Plans therefor. Final test or connection to a system is not required, and the Discrete Portion does not have to be capable of serviceable use in order to be financed. “Eligible Improvements” means those improvements that are authorized to be financed by CFD No. 2024-1 in the Resolution of Formation.
“Exhibit A.2 Facilities” has the meaning given such term in Section 4.k. herein. “Facilities” means, collectively, each and every Facility, as identified in Exhibit A.1. “Facility” means an infrastructure facility, as identified in Exhibit A.1. “Fiscal Agent” means the fiscal agent, trustee, or other paying agent under a Fiscal Agent Agreement.
“Fiscal Agent Agreement” means an indenture, fiscal agent agreement, resolution, or other agreement under which one or more series of Bonds are issued, as such Fiscal Agent Agreement may be supplemented from time to time to accommodate additional bond issuances or as it may be amended from time to time.
“Future Annexation Area” has the meaning given such term in Recital C. “Improvement Area No. 8” has the meaning given such term in Recital E. “Improvement Fund” has the meaning given such term in Section 3.b. herein.
POLICY AND ACTION ITEM 8.4
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EXHIBIT 4
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“Indemnified Parties” has the meaning given such term in Section 8 herein. “Land Bank” means AG EHC II (LEN) CA 2, L.P., a Delaware limited partnership and/or AG EHC II (LEN) CA 4B, L.P., a Delaware limited partnership, and successors and assigns. “Land Interests” means with respect to any land (i) fee simple title or (ii) such lesser interests (including easement and/or rights of way) as are required and approved by the City, in each case which are included in the description of the Facilities to be acquired. “MHCSD” means the Mountain House Community Services District. “Non-Developer Facilities” has the meaning given such term in Section 4.j. herein. “Option Agreement” means that certain Option Agreement, dated January 12, 2024, entered into by and between Developer and Land Bank, as it may be amended from time to time.
“Option Property” means the real property in Improvement Area No. 8 that the Developer is under option to acquire from the Land Bank in scheduled takedowns pursuant to the Option Agreement.
“Plans” means the plans, specifications, schedules, and related construction contracts for the Facilities and/or any Discrete Portions thereof approved by, and pursuant to the applicable standards of, the City.
“Prepayment Fund” has the meaning given such term in Section 3.a. herein. “Principal Payment Date” means, with respect to Bonds issued with respect to Improvement Area No. 8, the semi-annual payment date on which principal or sinking fund payments on such Bonds are, in any year, payable. For example, if the principal amount of Bonds is payable on September 1, the Principal Payment Date shall be September 1, regardless of whether principal payments are actually due in any particular year. “Purchase Price” means the amount paid by the City for a Facility and/or any Discrete Portions thereof, which shall be the lesser of the Actual Cost or the Value of the Facility or Discrete Portion acquired, as determined in accordance with this Agreement. “Rate and Method” means the rate and method of apportionment of special tax for Improvement Area No. 8.
“Resolution of Formation” has the meaning given such term in Recital A. “Special Tax” or “Special Taxes” means the “Facilities Special Tax” as defined in and levied under the Rate and Method. As used in this Agreement, the term Special Tax specifically excludes the “Services Special Tax” as defined in and levied under the Rate and Method or any other special taxes as defined in and levied under any other improvement area of CFD 2024-1. “Value” means the market value of the Facility (or Discrete Portion), including any Land Interest, at the time that such Facility or Discrete Portion is acquired by the City. The Value of a POLICY AND ACTION ITEM 8.4
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Facility or Discrete Portion shall be the Actual Cost of such Facility or Discrete Portion absent other factors that indicate that the value may be less than the Actual Cost.
AGREEMENT
In consideration of the mutual promises and covenants set forth herein, and for other valuable consideration, the sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Recitals; Applicability.
a. Recitals. The City and the Developer represent and warrant, each to the other, that the above Recitals, as applicable to each, are true and correct. b. Applicability. This Agreement is applicable to the acquisition of the Facilities (and Discrete Portions thereof) and the funding of the Authorized Fees from the CFD Sources generated from Improvement Area No. 8.
c. Assignment to Builders. The Developer intends to, over time, develop all or part of Improvement Area No. 8 through one or more of the following:
(i) by developing Improvement Area No. 8 itself; or
(ii) by conveying portions of Improvement Area No. 8 to one or more Builders, but agreeing to construct the Facilities and depositing the Authorized Fees and seeking the payment of the Purchase Prices of the Facilities and the return of the Deposits hereunder from the CFD Sources without assigning this Agreement to the Builder; or (iii) by conveying portions of Improvement Area No. 8 to one or more Builders, assigning this Agreement in part to the Builder whereby the Builder agrees to construct certain identified Facilities and deposit certain identified Authorized Fees on behalf of the Developer, but reserving the right of the Developer to receive the payment of the Purchase Prices of the Facilities and the return of the Deposits from CFD Sources; or (iv) by conveying portions of Improvement Area No. 8 to one or more Builders and assigning this Agreement in part to the Builder whereby the Builder agrees to construct certain identified Facilities and deposit certain identified Authorized Fees and the Builder shall be entitled to receive the payment of the Purchase Prices of the Facilities and the return of the Deposits from the CFD Sources; or
(v) by some combination of the foregoing.
As set forth in Section 16, the execution of an Assignment and Assumption Agreement, subject to the prior written consent of the City if required below, will relieve the Developer of any further obligations under this Agreement with respect to the Facilities and Authorized Fees identified in the Assignment and Assumption Agreement. Notwithstanding the foregoing or anything else in this Agreement to the contrary, the Developer and the Builder may in the Assignment and Assumption Agreement identify Facilities and Authorized Fees that were paid for by the Developer but that benefit the property of the Builder and set forth that the Developer shall be paid for those Facilities and Authorized Fees by the applicable CFD POLICY AND ACTION ITEM 8.4
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Sources, in the amounts and in the priority set forth in the Assignment and Assumption Agreement.
An Approved Assignment does not require the consent of the City. Any assignment or assumption of this Agreement that is not an Approved Assignment must be consented to by the City or the proposed assignment or assumption shall be null, void and without effect.
The City may withhold its reasonable consent to any proposed assignment that is not an Approved Assignment if the City reasonably determines, based upon information requested by the City and provided by the Developer, that the proposed assignee has not provided evidence that it has the experience and the financial capacity to satisfy the obligations to be assigned to it and assumed by it under the Assignment and Assumption Agreement. The City will provide or withhold its consent pursuant to this paragraph within twenty (20) business days after submission of the information requested by the City.
All obligations of the Developer set forth in this Agreement may be performed by the Developer itself, by contractors employed by the Developer, or by a third-party (including a Builder or contractor) that constructs the Facilities or deposits the Authorized Fees on behalf of, the Developer. For example, Section 4.c. requires that the Developer follow certain bid procedures to allow Facilities to be acquired under this Agreement. If the Developer contracts with a third-party to perform the construction and the third-party follows the bid procedures in Section 4.c., then the Developer shall be deemed to have followed the bid procedures under this Agreement.
2. Sale of Bonds.
a. City Proceedings. The City intends to issue one or more series of Bonds with respect to Improvement Area No. 8 to finance the Facilities and Authorized Fees. The City shall authorize and issue Bonds only upon mutual agreement in writing of the City and the Developer and upon approval by the City Council. The City shall not act on any petition or request by a Builder or any other person, entity, or agency to issue Bonds without the written consent of the Developer, and the City shall not issue Bonds or use any CFD Sources to finance Facilities or Authorized Fees without the written consent of the Developer. The Developer may submit written requests that City issue Bonds, specifying requested issuance dates, amounts, and main financing terms. Following the Developer’s request, the Developer and the City will meet with City’s public financing consultants to determine reasonable and appropriate issuance dates, amounts, and main financing terms that are consistent with this Agreement and the CFD Goals, however the City shall have the sole discretion as to such issuance dates, amounts, and main financing terms. Although the City intends to issue Bonds as contemplated herein, nothing herein shall be construed as requiring the City Council to authorize the issuance of Bonds or the City to issue Bonds in the manner or upon the terms requested by the Developer.
3. CFD Sources of Funds.
a. Prepayments. To the extent authorized under the Rate and Method, any prepayments of Special Tax obligations with respect to Improvement Area No. 8 before the issuance of the first series of Bonds for Improvement Area No. 8 shall be placed in a special fund to be held by the City (the “Prepayment Fund”). A separate Prepayment Fund will be created and maintained for Improvement Area No. 8. In addition, after the issuance of the first series of Bonds for Improvement Area No. 8, but only to the extent that a portion of such POLICY AND ACTION ITEM 8.4
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prepayments are required by the Rate and Method to be allocated to the costs of Facilities and Authorized Fees and not needed to prepay Bonds, such portion of the prepayments of Special Tax obligations with respect to Improvement Area No. 8 shall be deposited in the Prepayment Fund for Improvement Area No. 8. Moneys in the Prepayment Fund shall be a source for the payment of the costs of the acquisition of the Facilities and the Discrete Portions, and for the payment of Authorized Fees and shall be applied in the same manner as the proceeds of Bonds.
b. Bond Proceeds.
(i) The proceeds of each series of Bonds for Improvement Area No. 8 shall be deposited, held, invested, reinvested, and disbursed as provided in the applicable Fiscal Agent Agreement. The net proceeds of the Bonds shall be set aside under the applicable Fiscal Agent Agreement in a separate improvement fund (the “Improvement Fund”). A separate Improvement Fund will be created and maintained for Improvement Area No. 8. Moneys in any Improvement Fund shall be withdrawn therefrom, in accordance with the provisions of the applicable Fiscal Agent Agreement, for payment of all or a portion of the costs of acquisition of the Facilities and the payment for Discrete Portions, and for the payment of Authorized Fees, all as herein provided. (ii) The City has the sole authority to direct the investment of the funds on deposit in the funds and accounts established by or pursuant to each Fiscal Agent Agreement, including the Improvement Fund, and the Developer has no right whatsoever to direct investments under a Fiscal Agent Agreement. Any fund required to be created by this Agreement shall mean a fund or account that is accounted for separately from other City funds or accounts, but nothing in this Agreement shall require the creation of a separate bank account.
(iii) The City shall have no responsibility whatsoever to the Developer with respect to any investment of funds under a Fiscal Agent Agreement, including any loss of all or a portion of the principal invested or any penalty for liquidation of an investment.
Any such loss may diminish the amounts available in an Improvement Fund to pay the Purchase Price of Facilities and Discrete Portions hereunder, and to pay Authorized Fees. The Developer further acknowledges that the obligation of any owner of real property in Improvement Area No. 8, including the Developer to the extent they own any real property in Improvement Area No. 8, to pay Special Taxes levied in Improvement Area No. 8 is not in any way dependent on (i) the availability of amounts in any Improvement Fund to pay for all or any portion of the Facilities or Discrete Portions hereunder or to pay any Authorized Fees, or (ii) the alleged or actual misconduct of the City in the performance of its obligations under this Agreement, the Fiscal Agent Agreement, or any other agreement to which the Developer and the City are signatories. d. Limitation. The City shall not be obligated pursuant to this Agreement to pay the Purchase Price of the Facilities or any Discrete Portions thereof, or for the Authorized Fees, except from amounts on deposit in the Prepayment Fund and the Improvement Fund (however such funds are denominated). The City makes no warranty, express or implied, that amounts on deposit in any Prepayment Fund and any Improvement Fund will be sufficient for payment of the Purchase Price of the Facilities or any Discrete Portions thereof or the Authorized Fees. Nothing in this Agreement obligates the Developer to construct or contribute any Facilities or pay Authorized Fees; but if the Developer constructs or contributes any Facilities or pays Authorized POLICY AND ACTION ITEM 8.4
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Fees and seeks payment of the Purchase Price of such Facilities or Authorized Fees from the CFD Sources, then the provisions of this Agreement are applicable. In no event shall CFD Sources be used to pay Special Taxes.
4. Construction of Facilities. If a Developer constructs or causes the construction of Facilities and seeks payment of the Purchase Price of such Facilities from the CFD Sources, the provisions of this Section 4 apply with respect thereto, subject to the priority for payment of Community Facilities Fees as set forth in Section 7.
a. Plans and Specifications. The Developer shall obtain approval of the Plans for all or a portion of the Facilities from all appropriate departments of the City. Copies of all Plans for Facilities shall be provided by the Developer to the applicable City Officer. The Developer and the applicable City Officer may agree to obtain bids, let contracts for, and begin the construction of Facilities or Discrete Portions based upon preliminary Plans. b. Construction. The Developer shall arrange for all prime construction contracts to require the Facilities (or portion thereof covered by each such contract) to be acquired hereunder to be constructed in accordance with the approved Plans in a good, workmanlike and commercially reasonable manner, with the standard of diligence and care normally employed by duly qualified persons and in accordance with generally accepted practices appropriate to the activities undertaken. The Developer shall employ, or cause to be employed (e.g., through a general contractor), at all times adequate staff or consultants with the requisite experience necessary to administer and coordinate all work related to the design, engineering, acquisition, construction, and installation of any Facilities to be acquired by the City from the Developer hereunder. This Agreement does not represent an independent obligation to construct the Facilities, but serves only as a mechanism for the City purchasing and financing the purchase of the Facilities through the CFD Sources.
The Developer shall use its own funds (or the funds of other parties with whom the Developer has contracted) or CFD Sources to the extent then available, to pay all costs associated with such construction and conveyance(s), except as may be otherwise expressly provided herein or in another agreement with the City, and assign to the City, without any obligations being imposed on the City, all warranties and guarantees provided to Developer in connection with the construction of such Facilities (including Discrete Portions thereof), subject to the Developer’s right to enforce such warranties and guarantees if claims are asserted against the Developer within the scope of such warranties and guarantees.
The Developer shall not be relieved of its obligations, if any, pursuant to this Section 4 even if the total CFD Sources available over time are insufficient to pay the Purchase Price thereof for any reason, including those described and specifically waived in Section 3.b.(iii) herein. Without limiting the generality of the foregoing, the Developer acknowledges that any lack of availability of amounts in the Prepayment Fund and the Improvement Funds to pay the Purchase Price of Facilities or Discrete Portions thereof shall in no way diminish any obligation of the Developer pursuant to this Section 4.b. to the extent the Developer is so obligated. c. Bid Procedures. This Section 4.c. applies to all direct contracts entered into by the Developer under this Section 4, other than contracts with construction or development managers (which are not subject hereto). These bid procedures do not apply to materials or professional services (e.g., architects, engineers, attorneys, etc.) and do not apply to the Exhibit A.2 Facilities. Further, at the Developer’s option, this Section 4.c. may be satisfied by a general POLICY AND ACTION ITEM 8.4
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contractor with respect to all first-tier subcontracts, in which case the letting of the general contract is not subject to this Section 4.c.:
(i) The Developer shall solicit not less than three qualified bids (unless the nature of the Facility, the construction timeline, or other relevant factors, makes soliciting three bids unrealistic, in which case the minimum number of bids shall be one). (ii) Bids shall be submitted to the Developer or the Developer’s representative either via hard copy or email. The bids shall be received and opened by the Developer and there shall be no requirement for a public bid opening. After the bids are received and opened by the Developer, the Developer may contact one or more of the bidders and request clarification of any bid or adjustments to the bid to comply with the specifications of the proposed project so that all bids may be evaluated on a comparable basis.
(iii) The contract for the construction of a Facility shall be awarded to the responsible bidder submitting the lowest responsive bid (as adjusted pursuant to Section
4.c.(ii), if applicable) for the construction of such Facility. (iv) Notwithstanding the foregoing provisions, contract letting procedures that differ from the procedures in this Section 4.c. shall be deemed to satisfy this Agreement if the Developer and the applicable City Officer agree in writing on such other contract letting procedures.
d. Prevailing Wages. The Developer covenants that, with respect to any contracts or subcontracts for the construction of the Facilities that it determines to finance through the CFD Sources, it will assure complete compliance with any applicable law or regulation for the payment of prevailing wages for such construction, including that no contractor or subcontractor may be listed on a bid proposal for the Facilities unless registered with the Department of Industrial Relations pursuant to Labor Code Section 1725.5 and that no contractor or subcontractor may work on the Facilities unless registered with the Department of Industrial Relations pursuant to Labor Code Section 1725.5. The Developer shall be responsible for ensuring that these contractor registration requirements are adhered to since construction of the Facilities is subject to compliance monitoring and enforcement by the Department of Industrial Relations.
e. Relationship to Public Works. This Agreement is for the acquisition of the Facilities or Discrete Portions thereof by the City from the Developer and is not intended to be a public works contract. The City and Developer agree that this Agreement and the provisions thereof for, among other things, bidding and awarding contracts, shall exclusively govern the construction of the Facilities.
f. Contracts and Change Orders. The Developer shall be responsible for entering into all contracts and any change orders required for the construction of the Facilities. Except as provided in the next sentence, all such contracts and change orders shall be submitted to the applicable City Officer for review. Change orders shall not be required to be submitted to the applicable City Officer for review provided both of the following are satisfied: (i) the amount of such change order is the lesser of 10% of the contract price or $100,000, and (ii) the cumulative dollar amount of change orders for the applicable Discrete Portion or Facility implemented without the review of the applicable City Officer does not exceed the lesser of 10% of the total contract value for the Discrete Portion or Facility or $250,000.
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g. Performance by Contractors, Etc. All obligations of the Developer set forth in this Section 4 may be performed by the Developer itself or by contractors or other third parties engaged by the Developer. If the Developer elects to construct any such Facilities and then contracts with a third-party to perform the construction and the third-party follows the bid procedures in Section 4.c., then the Developer shall be deemed to have followed the bid procedures under this Agreement.
h. Independent Contractor. In performing this Section 4, the Developer is an independent contractor and not the agent or employee of the City or CFD No. 2024-1. Neither the City nor CFD No. 2024-1 shall be responsible for making any payments to any contractor, subcontractor, agent, employee, or supplier of the Developer, unless both the City and the Developer agree otherwise in writing.
i. Periodic Meetings. From time to time and at the request of the applicable City Officer, representatives of the Developer shall meet and confer with City staff, consultants and contractors regarding matters arising hereunder with respect to the Facilities and the progress in constructing and acquiring the same, and as to any other matters related to the Facilities or this Agreement. The Developer shall advise the applicable City Officer in advance of any coordination and scheduling meetings to be held with contractors relating to the Facilities, in the ordinary course of performance of an individual contract. The applicable City Officer or its designated representative shall have the right to be present at such meetings, and to meet and confer with individual contractors, if deemed advisable by the applicable City Officer to resolve disputes and/or ensure the proper completion of the Facilities. j. Reimbursement for Costs of Facilities on Property Not Owned by Developer. In some cases, the Facilities and/or the underlying Land Interest may be owned by an affiliate of the Developer or a Builder (herein, the “Non-Developer Facilities”). The City agrees that so long as the Non-Developer Facilities are listed on Exhibit A.1 and are constructed in accordance with the provisions of this Agreement, the Non-Developer Facilities may be financed by available CFD Sources notwithstanding that the Non-Developer Facilities being acquired hereunder will be purchased from a non-Developer entity and that the non-Developer entity bid and entered into, and paid the costs under, the contracts for the constructed Non-Developer Facilities. Unless this Agreement is assigned to a non-Developer affiliate, the Developer agrees that, notwithstanding its use of a non-Developer affiliate for the described purposes, the Developer shall remain liable to the City for all aspects of the Non-Developer Facilities’ compliance with the terms of this Section 4, in the same manner and to the same extent as if the Non-Developer Facilities were constructed on Developer’s property. k. Exhibit A.2 Facilities. Notwithstanding anything herein to the contrary, prior to the execution of this Agreement, the Developer has solicited bids and may have begun or completed construction for the Facilities listed in Exhibit A.2 attached hereto (the “Exhibit A.2 Facilities”). The Developer certifies as to the following with respect to the Exhibit A.2 Facilities:
Exhibit A.2 Facilities were bid consistently with the following: (i) the contract was competitively bid and the construction contract was awarded to the responsible bidder submitting the lowest responsive bid, (ii) the contractors listed in Exhibit A.2 are reputable, licensed contractors registered with the California Contractors State License Board, (iii) the bid was received in an arms-length transaction with the Developer, and (iv) the Facilities are subject to the payment of prevailing wages.
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5. Payment for the Facilities. The Developer hereby agrees to sell the Facilities to the City, and the City hereby agrees to use the CFD Sources to pay all or part of the Purchase Price thereof to the Developer, subject to the terms and conditions hereof. Notwithstanding the purchase and sale references herein, the Developer understands and agrees that the Developer is required to construct the Facilities in accordance with City entitlements, conditions and approvals whether or not there are sufficient CFD Sources from which to pay the Developer for such Facilities, and the City shall have no liability to Developer for payment of any shortfall between the Developer’s cost of Facilities and the CFD Sources available from time to time. a. Inspection. No payment hereunder shall be made by the City to the Developer for a Facility or Discrete Portion thereof until the Facility or Discrete Portion thereof has been inspected by the City and found to be constructed in accordance with the Plans approved by the City. The Developer shall request inspection using applicable City procedures. The Developer agrees to pay all inspection, permit and other fees of the City applicable to construction of the Facilities, which fees may be subject to reimbursement under this Agreement as part of the Actual Cost of the Facilities.
b. Request for Payment. Any request for payment hereunder by the Developer shall be in a form acceptable to the City and shall include such supporting documentation to substantiate such request as the City may require. The Developer shall not submit a payment requisition for Facilities or Discrete Portions more frequently than once a month. For any request for payment, the following shall apply:
(i) Payment Request and Supporting Materials. In order to receive the Purchase Price for a Discrete Portion, inspection thereof under Section 5.a. shall have been made and the Developer shall deliver to the City a payment request for such Discrete Portion, together with all supporting documentation required by this Agreement to be included therewith. In order to receive the Purchase Price for a completed Facility (which includes the final Discrete Portion of such Facility), inspection thereof under Section 5.a. shall have been made and the Developer shall deliver to the City: (i) a payment request for such Facility, together with all supporting documentation required by this Agreement to be included therewith and each of the following: (A) if the property on which the Facility is located is not owned by the City at the time of the request, a copy of the recorded or to be concurrently recorded documents conveying to the City title or an appropriate easement encumbering to the real property on, in or over which such Facility is located, as described in Section 6 hereof, and (B) a copy of the recorded notice of completion of such Facility (or the final Discrete Portion only, if applicable). c. Conditions for Payment. The City shall not be obligated to pay the Purchase Price of any Facility or Discrete Portion until the Facility or Discrete Portion is constructed and the processing requirements of this Section 5 for such Facility or Discrete Portion have occurred. The Developer and the City acknowledge that Discrete Portions are identified for payment purposes only, and that the City shall not Accept a Facility of which a Discrete Portion is a part until the Facility has been completed. The City acknowledges that the Discrete Portions (or the Facility of which the Discrete Portion is a part) do not have to be Accepted by the City as a condition precedent to the payment of the Purchase Price for such Discrete Portion, but any such payment shall not be made until the Discrete Portion has been constructed in accordance with the Plans therefor. In any event, the City shall not be obligated pursuant to this Agreement to pay the Purchase Price for any Facility or Discrete Portion except from the CFD Sources.
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The City may suspend the processing of payment requests and the payment of the Purchase Price of any Facility or Discrete Portion during any period in which the Developer is delinquent in the payment of Special Taxes due on any parcels owned by the Developer. Once any delinquencies are paid by the Developer, the City will resume processing payment requests and payment of the Purchase Price of any Facility or Discrete Portion. d. Purchase Price. The Purchase Price shall be determined by the applicable City Officer as described in paragraph (e) below and the criteria of Sections 4 and Subsections 5.a. through 5.c. above. The Purchase Price paid under this Agreement for any Facility or Discrete Portion thereof may be paid in any number of installments as CFD Sources become available. e. Payments to the Developer. The Developer may request in writing a payment of the Purchase Price of any Facility or Discrete Portion thereof as described in Exhibits A.1 and A.2 hereto subject to the following:
(i) Compliance with Conditions. The Developer shall first comply with Subsections 5.a. through 5.c. above, all to the satisfaction of the applicable City Officer. (ii) Amounts of Payments. The Purchase Price shall in no event exceed Actual Costs of the Facility or Discrete Portion thereof.
(iii) City Response to Requests for Payment. Any request for payment by the Developer shall be made to the applicable City Officer in a form acceptable to the City and include the supporting documentation herein specified.
The applicable City Officer shall promptly review such request to: (A) determine that it is complete; or (B) determine that the request is incomplete and to request in writing additional information and documentation reasonably necessary for the applicable City Officer to complete the review. If the applicable City Officer notifies the Developer that the request is incomplete, the Developer shall provide the additional information and documentation requested by the City.
Within thirty (30) calendar days after the date a request is complete, the applicable City Officer will review the request to confirm that all conditions in this Agreement have been satisfied, to the extent applicable, and provide notice to the Developer either that: (A) the request is approved (which will be confirmed by countersigning the request); or (B) the request is disapproved in whole or in part, specifying in the notice the portion of the request that is disapproved and the reason(s) for disapproval. If the request is disapproved in part, the applicable City Officer will process the portion of the request that was not disapproved for partial payment under Section 5.e.(iv) below. The Developer may resubmit any request disapproved in whole or in part with additional supporting documentation, which resubmission shall be processed by the City in the same manner as an original request for payment under this Section 5.e.(iii). The process for review of all payment requests made pursuant to this Section 5 is subject to Section 5.e.(v) below.
(iv) Payment by the City from the CFD Sources. Within fifteen (15) calendar days after approving a request (in whole or in part), the City shall Authorize payment to be made to the Developer from available CFD Sources pursuant to the applicable provisions of the Fiscal Agent Agreement or otherwise. The City may Authorize any payment jointly to the Developer and any mortgagee or trust deed beneficiary, POLICY AND ACTION ITEM 8.4
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contractor, or supplier of materials, as their interests may appear, or solely to any such third party, if the Developer so requests the same in writing or as the City otherwise determines such joint or third-party payment is necessary to obtain lien releases. If there are insufficient CFD Sources to pay the full amount of a payment request, then the City shall Authorize payment of as much of the amount on the payment request as there are CFD Sources available, and the payment of the balance of the payment request shall be deferred until there are sufficient CFD Sources available to pay the remaining balance of the payment request. Promptly following the availability of CFD Sources, the City shall, from time to time and in as many installments as necessary, Authorize payment of the remaining balance of the payment request.
Payment requests may be paid (A) in any number of installments as CFD Sources become available and (B) irrespective of the length of time of such deferral of payment. In no event shall the City be required to Authorize or make payments for Facilities or Discrete Portions under this Agreement from any funding sources other than the CFD Sources. The City shall pay the payment requisitions in the priority of their approval by the City, with the Purchase Price in an approved payment request of higher priority being satisfied in full before the Purchase Price in an approved payment request of lower priority, unless the Developer directs the City otherwise. (v) General Cooperation. In connection with processing any payment request under this Agreement, the City and the applicable City Officer will use good faith efforts to request any additional information required to process the request as soon as practicable following the submission of the original materials, and to make each additional information request comprehensive and thorough to minimize the number of requests delivered, and the Developer will use its good faith efforts to provide a thorough, organized, and complete response to each request. The Developer is authorized to communicate directly with the City, any City Officer, and their designees, agents, and contractors to facilitate any additional information request, to facilitate the prompt resolution of any technical issues, and to minimize the amount of time it takes to resolve outstanding issues. In addition to the foregoing, and except as otherwise is provided for herein, the City agrees that if a payment request includes more than one Discrete Portion or Facility, it will not withhold payment Authorization on any Discrete Portion or Facility that has been approved and will withhold payment Authorization only on such Discrete Portions and Facilities that have not been approved. The City shall not unreasonably delay, condition, or withhold approval of payment requests that satisfy the requirements of this Section 5.
f. Allocation of Costs. If the Developer incurs costs that (1) apply to more than one Facility or Discrete Portion (e.g., soft costs) or (2) apply to both Facilities or Discrete Portions and improvements other than the Facilities or Discrete Portions (e.g., grading), the Developer shall allocate, or cause the contractor to reasonably allocate, such costs between the Facilities or Discrete Portions (in the case of clause (1)) or between the Facilities or Discrete Portions and the improvements other than the Facilities or Discrete Portions (in the case of clause (2)) (the “Developer Allocation”). The Developer Allocation shall be presumed to be reasonable and shall be accepted for all purposes of this Agreement unless the City notifies the Developer of its good-faith reasonable disapproval of the allocation as part of the City’s written response to the applicable payment request under Section 5.e.(iv) above. If the City has so disapproved the Developer Allocation, then the City and the Developer shall promptly allocate such costs, on a reasonable basis, between the Facilities or Discrete Portions (in the case of clause (1)) or between the Facilities or Discrete Portions and the improvements other than the Facilities or POLICY AND ACTION ITEM 8.4
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Discrete Portions (in the case of clause (2)) (the “Agreed-Upon Allocation”). Based on the Developer Allocation or the Agreed-Upon Allocation, as applicable, the City shall include the costs allocated to a specific Facility or Discrete Portion as part of the Actual Costs of such Facility or Discrete Portion when such Facility or Discrete Portion is subject to a payment request.
g. Expectations of the Parties. The City understands and agrees that (i) the Developer may be constructing Facilities or Discrete Portions prior to the availability of CFD Sources that will be used to pay for such Facilities or Discrete Portions, (ii) the City may be inspecting such Facilities or Discrete Portions and processing and completing payment requests for the payment on such Facilities or Discrete Portions with knowledge that there may be insufficient CFD Sources available at such time, (iii) the Facilities or Discrete Portions may be conveyed to and Accepted by the City when there are insufficient CFD Sources to pay the Purchase Prices of such Facilities or Discrete Portions, and (iv) in any such case, the payment of any approved payment requests for the Purchase Prices of such Facilities or Discrete Portions will be deferred until there are sufficient CFD Sources available to pay the Purchase Prices of such Facilities or Discrete Portions, at which time the City will make such payments in accordance with this Agreement. At all times, the Developer will be constructing such Facilities or Discrete Portions with the expectation that the Purchase Prices for such Facilities or Discrete Portions will be paid from the CFD Sources. The conveyance of Facilities or Discrete Portions to the City prior to receipt of the Purchase Prices for such Facilities or Discrete Portions shall not be construed as a dedication or gift, or a waiver of the payment of the Purchase Prices, or any part thereof, for such Facilities or Discrete Portions, provided however, the City shall have no liability to Developer for payment of any shortfall between the Developer’s cost of Facilities and the CFD Sources available from time to time.
6. Condition of Title; Ownership and Transfer of the Facilities; Maintenance; Warranties.
a. Condition of Title. The Developer agrees to cause the owners of (i) Land Interests in or on which the Facilities have been affixed, as well as (ii) other Land Interests owned by the Developer or its affiliates that are required for the operation and maintenance of the Facilities, to execute and deliver to the City such documents as are required to complete the transfer of such Land Interests, as improved by the Facilities where applicable, free and clear of all liens, taxes, assessments, easements, leases, or other encumbrances (whether recorded or not), except for those encumbrances which the applicable City Officer agrees to accept. If any Land Interest to be acquired by the City hereunder is within the boundaries of any existing community facilities district (including CFD No. 2024-1), an assessment district, or other financing district, then the lien of the special taxes or assessments shall be a permitted exception, so long as the property owned by the City is exempt from the special tax or assessments to be levied by the community facilities district, assessment district, or other financing district. Completion of the foregoing transfers shall be evidenced by recordation of the Land Interest with a Certificate of Acceptance by the City. b. Facilities Constructed on Private Lands. If any Facility to be acquired is located on a privately-owned Land Interest, the owner thereof shall retain title to the Land Interest and the completed Facility until Acceptance of the Facility and all associated Land Interests under Subsection 6.a. above. Pending the completion of such transfer, the private owner shall be responsible for maintaining the Land Interest and any Facilities in good and safe condition.
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c. Facilities Constructed on City Land. If the Facilities to be acquired are on land owned by the City, the Developer shall request the City to grant to the Developer a license to enter upon such land for purposes related to the construction (and maintenance pending acquisition) of the Facilities. The provisions for inspection and Acceptance of such Facilities otherwise provided herein shall apply.
d. Warranties. The Developer shall maintain each Facility and Discrete Portion in a good and safe condition until the date of Acceptance of the Facility or Discrete Portion .
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7. Payment of Authorized Fees.
a. Authorization. The CFD Sources shall be used to pay for the Community Facilities Fees prior to use of the CFD Sources to pay for Facilities and/or Transportation Improvement Fees. Upon receipt by the City of Community Facilities Fees applicable to all units to be constructed in Improvement Area No. 6 the Developer may request payment for Facilities and/or Transportation Improvement Fees.
b. Request for Payment of Authorized Fees. The Developer shall request payment of Authorized Fees from the CFD Sources by executing and submitting to the applicable City Officer a request for payment in a form acceptable to the City and shall include such supporting documentation to substantiate such request as the City may require. Upon issuance of Bonds and funding of the Improvement Fund, or a separate subaccount within the Improvement Fund established to fund the Community Facilities Fees, the Developer shall request payment from CFD Sources of the Community Facilities Fees for all units to be constructed in Improvement Area No. 8, in an amount equal to the sum of: (i) the total of the Community Facilities Fees for all units for which Deposits (as defined in subsection 7.f.) have been made based on the Community Facilities Fees in effect at the time such Deposits were made; and (ii) the then current Community Facilities Fee amount for all remaining units to be constructed in Improvement Area No. 8 (i.e. units for which Deposits have not been made), thus granting Developer a credit against the Community Facilities Fees that the Developer is obligated to pay in the future. The foregoing payment from CFD Sources shall constitute full satisfaction of all Community Facilities Fees applicable to the number of units to be constructed in Improvement Area No. 8.
Authorized Fees paid by the Developer prior to the issuance of Bonds in the form of Deposits shall likewise be payable as a reimbursement to Developer in accordance with subsections 7.f, 7.g, 7.h, 7.i and 7.j. Upon receipt of such payment request, the City shall pay, or cause to be paid, the Authorized Fees requested in such payment request in accordance with this Agreement and to the extent of such CFD Sources.
c. City Response to Request for Payment of Authorized Fees. Any request for payment by the Developer for Authorized Fees shall be made to the applicable City Officer in a form acceptable to the City and include the supporting documentation herein specified. The applicable City Officer shall promptly review such request to determine that disbursement thereunder would not violate tax-exemption requirements applicable to the Bond proceeds to be used for payment. If tax-exemption requirements can be met, the applicable City Officer shall promptly review such request to: (i) determine that it is complete; or (ii) determine that the request is incomplete and to request in writing additional information and documentation reasonably necessary for the applicable City Officer to complete the review. Within thirty (30) calendar days after the date a request is determined to be complete, the applicable City Officer will review the request to confirm that all conditions in this Agreement for the payment of Authorized Fees have been satisfied, to the extent applicable, and provide notice to Developer either that: (i) the request is approved (which will be confirmed by counter-signing the request); or (ii) the request is disapproved in whole or in part, specifying in the notice the portion of the request that is disapproved and the reason(s) for disapproval. If the request is disapproved in part, the applicable City Officer will process the request for partial payment under subsection
7.d. below. Developer may resubmit any request disapproved in whole or in part with additional supporting documentation, which resubmission shall be processed by the City in the same manner as an original request for payment under this Section 7.c.
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d. Payment of Authorized Fees. Within fifteen (15) calendar days after approving a request for Authorized Fees (in whole or in part), the City shall Authorize payment of such Authorized Fees to be made exclusively from one or more of the CFD Sources pursuant to the applicable provisions of the Fiscal Agent Agreement or otherwise. If there are insufficient CFD Sources to pay the full amount of a payment request, then the City shall Authorize payment of as much of the amount on the payment request for Authorized Fees as there are CFD Sources available, and the payment of the balance of the payment request for such Authorized Fees shall be deferred until there are sufficient CFD Sources available to pay the remaining balance of the payment request, provided however, in the event and to the extent there are or will be insufficient CFD Sources to provide payment in full the City shall have no obligation to fund the shortfall from any other sources.
Promptly following the availability of CFD Sources, the City shall, from time to time and in as many installments as necessary, Authorize payment of the remaining balance of the payment request for Authorized Fees. Any provision in this Agreement to the contrary notwithstanding, in response to any request for payment under this Section 7, the City shall not be required to make any payments from CFD Sources held and maintained by the City if the CFD Sources held and maintained by the Fiscal Agent may not be applied to pay for the Authorized Fees that is the subject of the payment request under federal tax law or otherwise.
Payment requests may be paid (i) in any number of installments as CFD Sources become available and (ii) irrespective of the length of time of such deferral of payment. In no event shall the City be required to Authorize or make payments for Authorized Fees from any funding CFD Sources other than the CFD Sources.
e. General Cooperation. In connection with processing any payment request for Authorized Fees under this Agreement, the City and the applicable City Officer will use good faith efforts to request any additional information required to process the request as soon as practicable following the submission of the original materials, and to make each additional information request comprehensive and thorough to minimize the number of requests delivered, and Developer will use its good faith efforts to provide a thorough, organized, and complete response to each request. Developer is authorized to communicate directly with the City, the applicable City Officer, and their designees, agents, and contractors to facilitate any additional information request, to facilitate the prompt resolution of any technical issues, and to minimize the amount of time it takes to resolve outstanding issues. In addition to the foregoing, and except as otherwise is provided for herein, the City agrees that if a payment request includes more than one Authorized Fee, it will not withhold payment Authorization on any Authorized Fee that has been approved and will withhold payment Authorization only on such Authorized Fee that has not been approved.
f. Payment of Authorized Fees in Advance of Availability of CFD Sources. The Developer or a merchant builder may be required pursuant to the conditions of approval or the fee ordinance to pay the Authorized Fees for Improvement Area No. 8 prior to the availability of the CFD Sources to pay such Authorized Fees. In the event such Authorized Fees are paid prior to the availability of such CFD Sources, the amounts paid to the City shall be deemed to be deposits (each a "Deposit") that are subject to refund by the City to Developer (and the Developer only, regardless of the entity that paid the Deposits) in the manner set forth in subsection 7.g. Any Deposits made to the City shall be deposited in a separate capital facilities account(s) created for Improvement Area No. 8 and may be expended by the City in the ordinary course of business. The Developer acknowledges that the City may finance Authorized Fees with proceeds of tax-exempt bonds only if the City can meet certain requirements of federal tax law.
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g. Return of Deposits. If the Developer or a merchant builder has made any Deposits, then following deposit of CFD Sources with the City for the corresponding Authorized Fees, the City shall return to the Developer (and the Developer only, regardless of the entity that paid the Deposit) from the capital account in which the Deposits were deposited an amount equal to the Deposits paid by the Developer or merchant builder, without interest or other earnings thereon.
The City shall be so obligated to return an amount equal to such Deposits to the Developer only to the extent that an amount equivalent to the amount of the Deposits made by the Developer or merchant builder is deposited with the City from the CFD Sources. An amount equal to such Deposits may be returned to the Developer from time to time as additional CFD Sources become available.
h. Deposits Allocated First. CFD Sources used to pay Authorized Fees shall be allocated first for return of all Deposits prior to being allocated to the payment of Authorized Fees not previously deposited by the Developer or a merchant builder. For example, if the Developer has paid $10,000 in Deposits, and CFD Sources become available in the amount of $15,000, the City shall apply the first $10,000 of the CFD Sources to the payment of the Authorized Fees that were paid by the Deposits (and, thereafter, return the Deposits to the Developer) and use the remaining $5,000 of the CFD Sources to the payment of Authorized Fees not previously paid by the Deposits and identified in the payment request.
i. Application of Deposits. Any Deposits that have not been returned to the Developer at the time it is determined that there will be no further CFD Sources available (now or in the future) shall be retained by the City and may be used (to the extent it has not already been so used) for the purposes for which the Authorized Fee was required, and the unrefunded Deposits shall constitute full and final payment for such Authorized Fees, without any increase of any kind.
j. Expectations. The Developer or merchant builder may pay Authorized Fees (as Deposits) prior to the availability of CFD Sources to pay such Authorized Fees. Any Authorized Fees paid (as Deposits) by the Developer or a merchant builder for Improvement Area No. 8 shall be made with the understanding that such Deposits will be returned from the CFD Sources if, and when, such CFD Sources become available. The payment of Deposits prior to the availability of the CFD Sources shall not be construed as a dedication or gift of the Authorized Fees, or a waiver of the return of the Deposits, it being the intention that the Authorized Fees be paid by the CFD Sources to the extent of the CFD Sources. k. Credits. The City and Developer agree that the repayment of impact fees that were originally paid by the Developer or a Builder that were subsequently satisfied by the construction of Facilities shall not prevent the financing of the Facilities through the CFD Sources (i.e., the repayment of the impact fees and the funding of the Facilities is not “double-dipping”).
8. Indemnification and Hold Harmless. Separately, with respect to the Facilities and Discrete Portions constructed by the Developer, the Developer shall, to the fullest extent permitted by law, assume the defense of and indemnify and save harmless the City, CFD No. 2024-1 and the City’s council members, officers, employees, agents, and assigns (the “Indemnified Parties”), from and against any and all claims, damage, expenses and liability of every kind, nature, and description, arising or resulting from a breach of this Agreement, the Developer’s non-payment under contracts between the Developer and its consultants, engineer’s, advisors, contractors, subcontractors and suppliers in the provision of the Facilities, or any claims of persons employed by the Developer or its agents to construct the Facilities for POLICY AND ACTION ITEM 8.4
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injuries allegedly suffered during such construction. Notwithstanding the foregoing, the Developer shall not be required to indemnify or hold harmless any Indemnified Party for any claim, loss, damage, expense or liability due to (a) the negligence or willful misconduct of an Indemnified Party, (b) the failure of the City to properly maintain or repair (other than repairs required due to construction defect(s) any portion of the Facilities following acceptance and transfer of the applicable Facilities to the City, (c) the Indemnified Parties failing to comply with or enforce any warranty rights or other requirements or conditions to any third-party claims, or (d) the Indemnified Parties failing to comply with recommendations of a manufacturer, supplier, contractor, subcontractor, or engineer. In addition, the Developer shall not be liable for double indemnity due to the inclusion of indemnity obligations in this Agreement and in another agreement with the City.
9. Representations and Covenants of the Developer.
a. Representations of the Developer. The Developer represents and warrants for itself for the benefit of the City and CFD No. 2024-1 as follows:
(i) Organization. The Developer is a limited liability company duly organized and validly existing under the laws of its state of organization, is in compliance with all applicable laws of the State of California, and has the power and authority to own its properties and assets and to carry on its business as now being conducted and as now contemplated.
(ii) Authority. The Developer has the power and authority to enter into this Agreement, and has taken all action necessary to cause this Agreement to be executed and delivered, and this Agreement has been duly and validly executed and delivered by the Developer.
(iii) Binding Obligation. This Agreement is a legal, valid, and binding obligation of the Developer, enforceable against the Developer in accordance with its terms, subject to bankruptcy and other equitable principles.
b. Covenants of the Developer. The Developer covenants for the benefit of the City and CFD No. 2024-1 as follows:
(i) Compliance with Laws. The Developer shall comply with all federal, state and local laws, ordinances and policies as may be applicable to the construction of the Facilities, provided that the City has determined that the provisions of this Agreement satisfy Section 53313.5 of the California Government Code which provides that a community facilities district may finance the purchase of public facilities if the facilities have been constructed as if they had been constructed under the direction and supervision, or under the authority of, the local agency whose governing body established the City.
(ii) Initial Disclosure; Continuing Disclosure. The Developer agrees to provide such information about its development and its financing plan as may reasonably be requested by the City, the City’s bond counsel or disclosure counsel or a bond underwriter, in the initial offering for any Bonds. In addition, if required, the Developer agrees to enter into a customary continuing disclosure agreement in connection with the offering and sale of any of the Bonds.
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10. Events of Default.
a. Grounds for Termination. Subject to the notice and opportunity to cure as set forth in Section 10.b., the following events shall constitute grounds for the City, at its option, to terminate this Agreement, without the consent of the Developer, which termination shall not affect the City’s obligations with respect to amounts already owed hereunder or payment for Facilities or Discrete Portions for which bids were previously requested in compliance herewith upon satisfaction of the requirements for payment hereunder:
(i) The Developer voluntarily files for reorganization or other relief under any Federal or State bankruptcy or insolvency law.
(ii) The Developer has any involuntary bankruptcy or insolvency action filed against it, or suffers a trustee in bankruptcy or insolvency or receiver to take possession of the assets of the Developer, or suffers an attachment or levy of execution made against the property it owns within CFD No. 2024-1 unless, in any of such cases, such circumstance shall have been terminated or released within ninety (90) days thereafter. b. Notice and Opportunity to Cure. If any such event described in Section 10.a. occurs or the Developer breaches any material obligation under this Agreement, the City shall give notice of its knowledge thereof to both Developer, and the Developer shall agree to meet and confer with the applicable City Officer and other appropriate City staff and consultants as to options available to cure the breach. If the matter under consideration is not thereby resolved to the City’s reasonable satisfaction, and if the City then elects to terminate this Agreement or pursue any other remedy, the City shall first further notify the Developer (and any mortgagee or trust deed beneficiary specified in writing by the Developer to the City to receive such notice) in writing of the grounds for such termination and allow the Developer sixty (60) days to eliminate or mitigate to the reasonable satisfaction of the applicable City Officer the grounds therefor; provided that if the Developer are proceeding with diligence to eliminate or mitigate such grounds but reasonably demonstrates that the elimination or mitigation of the default will take longer than 60 days, then such 60-day period shall be extended to the date on which it is necessary to eliminate or mitigate the default. If at the end of such period (and any extension thereof), as determined reasonably by the City, the Developer have not eliminated or completely mitigated such grounds, to the reasonable satisfaction of the City, the City may then terminate this Agreement or pursue any other available remedy. c. Breach by the City. In the event that the City breaches its obligations under this Agreement, the Developer shall give notice of its knowledge thereof to the City. For defaults other than the failure to Authorize payment of a requisition, the City shall have, from the date of the Developer’s notice, the greater of (i) the same number of days for which the City has an obligation to complete the defaulted obligation under this Agreement or (ii) sixty (60) calendar days, to eliminate or mitigate the breach to the satisfaction of the Developer. For a default for the failure to Authorize payment of a requisition, the City shall have, from the date of the Developer’s notice, ten (10) calendar days, to eliminate or mitigate the breach to the satisfaction of the Developer. Such period may be extended, at the sole discretion of the Developer, if the City, to the satisfaction of the Developer, is proceeding with diligence to eliminate or mitigate such breach. If at the end of such period (and any extension thereof), as determined reasonably by the Developer, the City has not eliminated or completely mitigated such breach, to the reasonable satisfaction of the Developer, the Developer may exercise its available remedies. The City shall not be in breach of this Agreement for failing to pay the POLICY AND ACTION ITEM 8.4
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Developer for the Purchase Price of the Facilities when the CFD Sources are not available, as described in Section 3.b.(iii) or Section 3.d. herein.
d. Unapproved Payment Requests. Notwithstanding the foregoing, so long as any event listed in Section 10.a. has occurred, notice of which has been given by the City to the Developer, and such event has not been cured or otherwise eliminated by the Developer, the City may in its discretion cease approval of any previously submitted but unapproved payment requests; provided that the Developer shall receive payment of the Purchase Price of any Facility or Discrete Component or the payment of Authorized Fees that the City previously determined was completed at the time of the occurrence of an event listed in Section 10.a. upon submission of the documents and compliance with the other applicable requirements of this Agreement. All such payment requests shall continue to be paid in the manner set forth in this Agreement.
e. Force Majeure. No party shall be deemed to be in default where failure or delay in the performance of any of its non-monetary obligations under this Agreement is caused by floods, earthquakes, other acts of God, fires, wars, terrorism, riots or similar hostilities, strikes and other labor difficulties beyond a party’s control, shortage of materials (exclusive of prefab/modular building products), governmental or administrative delays, prohibitory court actions (such as restraining orders or injunctions) or other causes beyond a party’s control. If any such events shall occur, the time for performance by any party of its obligations hereunder shall be extended for the period of time that such events prevented such performance. This force majeure clause does not apply with respect to an obligation to pay money. f. Assignment. To the extent that all or any part of this Agreement is assigned, the provisions of this Section 10 shall apply separately to the assignee for that portion of this Agreement that was assigned, and a default by the assignee shall not be deemed a default by the Developer.
11. Time is of the Essence. Time is of the essence in the performance of every obligation under this Agreement.
12. Payment of Advances. Any reasonable costs associated with the formation of CFD No. 2024-1, the negotiation of this Agreement, or other CFD-related purposes advanced or paid by the Developer (“Formation Costs”) shall be reimbursable to the Developer out of the first available CFD Sources in an amount not to exceed $250,000, and in addition to reimbursement of Formation Costs, up to $40,000 in costs advanced or incurred by the Developer in connection with the issuance of each series of Bonds, including costs of the Developer’s consultants, shall be financed as part of the costs of issuance of such series of the Bonds.
13. Attorney’s Fees. In the event of the bringing of any action or suit by either party against the other arising out of this Agreement, the party in whose favor final judgment shall be entered shall be entitled to recover from the other party all costs and expenses of suit, including reasonable attorneys’ fees. This provision shall apply separately to the Developer and to any assignee of all or any part of this Agreement with respect to the obligations assumed by the assignee. The Developer shall not be liable for attorney’s fees resulting from an action or suit against an assignee.
14. Notices. Any notice, payment or instrument required or permitted by this Agreement to be given or delivered to either party shall be deemed to have been received when personally POLICY AND ACTION ITEM 8.4
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delivered or one week following deposit of the same in any United States Post Office, registered or certified mail, postage prepaid, addressed as follows:
Developer: Lennar Homes of California
1420 Rocky Ridge Drive, Suite 330
Roseville, CA 95661
Attention: _____________
City or CFD: City of Mountain House
Attention: City Manager
241 E. Main Street
Mountain House, CA 95391
Each party may change its address or addresses for delivery of notice by delivering written notice of such change of address to the other party.
15. Severability. If any part of this Agreement is held to be illegal or unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall be given effect to the fullest extent reasonably possible.
16. Successors and Assigns of Developer. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Developer. This Agreement may be assigned in whole or in part by the Developer, subject to the prior written consent of the City if required by Section 1. Any Assignment and Assumption Agreement executed shall be delivered to the City. This Agreement remains binding upon and inures to the benefit of the Developer with respect to all of the Facilities and Authorized Fees that are not subject to an executed Assignment and Assumption Agreement. Unless otherwise provided in an Assignment and Assumption Agreement, the Developer shall be relieved of any obligation and benefit of this Agreement with respect to the Facilities and Authorized Fees indicated in an executed Assignment and Assumption Agreement.
Notwithstanding the foregoing or anything else in this Agreement to the contrary, if the Option Agreement terminates prior to transfer of all of the Option Property to the Developer, the Developer’s rights under this Agreement solely with respect to the portion of the Option Property then owned by the Land Bank (the “Retained Option Property”), may be assigned to the Land Bank absent an Assignment and Assumption Agreement. In order to effect such an assignment, the Land Bank shall provide to the City and the Developer written notice of termination of the Option Agreement, including the grounds for such termination and a description of the Retained Option Property, and written acknowledgement of the terms of this Agreement and expressly agreeing to the application of the terms and assumption of the obligations hereof with respect to the Retained Option Property, all to the satisfaction of the City, which shall not be unreasonably withheld, delayed or denied, after which the Developer shall be relieved of any obligation under this Agreement with respect to the Retained Option Property owned by the Land Bank.
17. Successors and Assigns of the City. This Agreement shall be binding upon and inure to the benefit of the successors of the City.
18. Limitation of Liability. The Developer agrees that any and all obligations of the City arising out of or related to this Agreement are special and limited obligations of the City and the City’s obligations are restricted entirely to CFD Sources, and from no other source. No City POLICY AND ACTION ITEM 8.4
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Council member, City staff member, employee or agent shall incur any liability hereunder to the Developer or any other party in their individual capacities by reason of their actions hereunder or execution hereof.
19. Waiver. Failure by a party to insist upon the strict performance of any of the provisions of this Agreement by the other party, or the failure by a party to exercise its rights upon the default of the other party, shall not constitute a waiver of such party’s right to insist and demand strict compliance by the other party with the terms of this Agreement thereafter.
20. Merger. No other agreement, statement or promise made by any party or any employee, officer, or agent of any party with respect to any matters covered hereby that is not in writing and signed by the City and the Developer shall be binding. This Agreement shall not impact or amend any other agreements between the Developer and the City, nor shall it impact the ability of the City to levy connection or other fees pursuant to law and its agreements to pay for expenses and obligations under any such other agreements. This Agreement may assist in the implementation of other agreements between the Developer and the City, but does not supplant or limit such other agreements in any way.
21. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original.
22. Amendments. Amendments to this Agreement shall be made only by written instrument executed by each and every party hereto.
23. Governing Law. The provisions of this Agreement shall be governed by the laws of the State of California applicable to contracts made and performed in the State of California.
24. No Third Party Beneficiaries. No person or entity other than CFD No. 2024-1 and the Land Bank (with respect to its right to assignment of this Agreement under Section 16), shall be deemed to be a third party beneficiary hereof, and nothing in this Agreement (either express or implied) is intended to confer upon any person or entity, other than the City, CFD No. 2024-1, the Developer and the Land Bank (and their respective successors and assigns, exclusive of individual homebuyers), any rights, remedies, obligations or liabilities under or by reason of this Agreement.
25. Construction of Agreement. The words “herein,” “hereof,” “hereunder,” and other words of similar import refer to this Agreement as a whole and not to any particular Section, unless specifically designated otherwise. Unless otherwise specifically referring to another instrument or document, references to “Sections” refer to the indicated portion of this Agreement. References to a Section or subsection hereof includes all of its subsections and sub-subsections. Non-exclusive terms such as “including,” “such as,” “for example,” and “e.g.,” list examples only, and do not indicate an exhaustive list of situations in which a clause applies. Such terms have the same meaning as the phrase “including, without limitation.” Whenever used in this Agreement, the singular shall include the plural and vice versa, and gender-specific pronouns and references shall apply to all genders and trusts or entities, all as the context and meaning of this Agreement requires. Any reference to any statute, regulation, rule, ordinance, law, or recorded document includes any amendment, replacement, restatement, or recodification thereof, and all subsections of the referenced section or clause.
Any deletion of language from this Agreement prior to its execution shall not be construed to raise any presumption, canon of construction or implication, including, without limitation, any implication that the parties intended thereby to state the converse of the deleted language. Each POLICY AND ACTION ITEM 8.4
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party acknowledges that it is freely and voluntarily entering into this Agreement, uncoerced by any other person and that it has been represented by legal counsel of its choice with regard to this Agreement in its entirety and understands the same. Each party and attorneys for each party have participated in the negotiation and drafting of this Agreement and any documents or certificates executed pursuant hereto. Therefore, the provisions of this Agreement and such other documents or certificates shall not be construed in favor of or against either party, but shall be construed as if both parties equally prepared this Agreement. The section headings herein are used only for the purpose of convenience only and shall not be deemed to limit the subject of the sections or paragraphs of this Agreement or to be considered in their construction. All appendices, schedules, exhibits and other attachments to this Agreement are incorporated herein by this reference and constitute part of this Agreement. [signatures follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first-above written.
CITY OF MOUNTAIN HOUSE, for itself and on behalf of
MOUNTAIN HOUSE COMMUNITY SERVICES DISTRICT
COMMUNITY FACILITIES DISTRICT NO. 2024-1 (PUBLIC
FACILITIES AND SERVICES)
By:________________________________
Its:________________________________
LENNAR HOMES OF CALIFORNIA, LLC,
a California limited liability company
By:________________________________
Its:________________________________
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EXHIBIT A.1
ELIGIBLE IMPROVEMENTS
CFD No. 2024-1 and each Improvement Area initially designated or created in the future from property in the Future Annexation Area shall be authorized to finance any facilities and improvements, costs and incidental expenses authorized under the Mello-Roos Community Facilities Act of 1982, as amended, including, but not limited to, those Facilities and Fees described below:
The CFD is authorized to finance the purchase, construction, expansion, improvement, or rehabilitation of any real or other tangible property with an estimated useful life of five years or longer authorized now or hereafter under the Act, together with the planning and design work that is directly related to the purchase, construction, expansion, or rehabilitation of any such real or tangible property (collectively, the “Facilities”), including, but not be limited to, transportation facilities, water, sewer and storm drain facilities, parks, parkways, and open space.
Fees Financing Improvements
Facilities include development impact fees for facilities (“Fees”), whether MHCSD (or its successor), County, or other local agency fees, including but not limited to the following:
• Community Facilities Fees
• Transportation Improvement Fees
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EXHIBIT A.2
EXHIBIT A.2 FACILITIES
# Contract Description Estimated
Amount*
1 2
3 4
5 6
7 * These costs are for reference only and shall not limit the payment of the Actual Cost of the Facilities
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CITY COUNCIL AGENDA ITEM NO. 9.2
Discussion Item
TITLE: City Manager Update – Community Development and Public Works MEETING DATE: May 14, 2025
PREPARED BY: Steven J. Pinkerton, City Manager
COMMUNITY CONCERNS AND CITY RESPONSE
This section provides responses to public comments and concerns raised during City meetings or through official communication channels. Staff reviews inquiries, addresses key issues, and provides updates or next steps to ensure transparency and community engagement. More details about followups can be found at www.mountainhouseca.gov/PublicFollowUp.
Council Member Comment: During the presentation of Item 9.1 regarding the Veterans Liberty Garden Project at the April 24, 2025, Council meeting, Council Member Disko inquired about the vague sponsorship opportunities for project elements such as the statue and flagpoles. In response, the AdHoc Committee met on April 28 and recommended a limit of up to three sponsorship recognitions per enhanced feature. For example, each of the two proposed flagpoles in the conceptual design may have up to three individual sponsors.
Council Member Disko also asked about potential mobilization costs, particularly given that this project may be constructed prior to Phase 3 of Central Community Park. Staff anticipates that if funding is secured for the Veterans Liberty Garden Project, construction will be scheduled concurrently with existing Phase 2 improvements. This approach will leverage shared contractors and work scopes to optimize mobilization and improve cost efficiency, especially considering current long lead times for material deliveries and tariff-related constraints.
COMMUNITY DEVELOPMENT UPDATES:
Neighborhood Modifications and Approvals
Neighborhoods J (Lakeshore) and K (Lakeview)
Builders are actively progressing through design and permit stages. The Design Consistency Review Committee, comprised of staff and Mountain House Developers (DCRC), approved the following:
• Lennar - four products
• Taylor Morrison - two products
• Richmond American Homes and Century Communities - for their respective Neighborhood K projects
• Rurka Homes - both of their projects in Neighborhood J Neighborhood H2-H3 Tract 4216 (Central Parkway and West Byron Road) New Home Co. received DCRC approval for their medium-high density residential projects, consisting of single-family detached units and attached “duets” in April.
Item 9.2
CITY COUNCIL AGENDA ITEM 9.2
DISCUSSION ITEM
Neighborhood B7 (South of Byron Rd.)
Richmond American Homes is working to complete the DCRC review-approval process which is expected to be complete in May. Woodside Homes will build approximately half of this neighborhood, so there will also be a design review process for their architecture.
Neighborhood B9 & B10 Tract 4163 (South of Byron Rd.)
The tentative map for Tract 4163 is in the review process. The applicant has resubmitted their application for annexation and staff sent a comment letter regarding the tentative map application on April 3, 2025.
Neighborhood B11 (South of Byron Rd.)
KB Home has submitted their architecture package for DCRC review. Planning staff met with the applicant on March 24, 2025, and then delivered written comments for revisions.
Infrastructure and Civil Improvements
Neighborhood A7 Tract 4040 (College Park Area)
Civil improvement plans are approved and construction is ongoing. Landscaping plans for the Central Parkway and Nasergholi Avenue traffic signal are currently under review.
Neighborhood A5 Tract 3609 and B1 Tract 3610 (North of Byron Rd.) Grading plans have been approved. Civil improvement plans and street light improvement plans are currently in the plan review process.
Neighborhood B4 Tract 4099 (Near Delta College)
The grading plans, civil improvement plans, and street light improvement plans are currently in the plan review process.
Neighborhood B6, B7, and B8 Tract 3619 (Grant Line Rd.) De Anza Boulevard landscape and in-tract landscape plans have been approved.
Neighborhood B11 (South of Byron Rd.)
Staff has been clearing conditions of approval and drafting improvement agreements.
Neighborhood F Tracts 4210 and 4211 (South of Town Center and Mountain House Pkwy) Grading and civil improvement plans are currently in the plan review process.
Neighborhood H Tract 4212 (Questa Village Area)
Grading and civil improvement plans are currently in the plan review process.
Neighborhood H Tract 4216
Grading plans have been approved. Civil, joint trench, and streetlight plans are currently under review.
Neighborhood I (Lakepoint Area)
Grading and civil improvement plans have been approved for Tract 4199 and Tracts 4200-4202 and construction is ongoing. Joint trench, streetlight, and lake plans are currently under review.
Item 9.2
CITY COUNCIL AGENDA ITEM 9.2
DISCUSSION ITEM
Neighborhood J (Lakeshore Area)
The Central Parkway Phase 1 landscape plans, open space park plans, neighborhood park plans, and intract landscape plans are currently in the plan review process.
Neighborhood K (Lakeview Area)
The neighborhood K grading plans and in-tract landscape plans are currently in the plan review process.
Utility Corridor and Landscaping Projects
College Park/Mountain House Investors (MHI) – Pedestrian/Bike Path College Park Landscaping work is nearing completion. Punch-list items for other sections are being addressed, and hydroseeding is planned for spring 2025.
Commercial and Community Development
Mountain House Shopping Center (Hansen Village Neighborhood Commercial Site) All City review processes are complete, and the project applicant is working with the San Joaquin County Building Division for permit issuance. The building permit application process was initiated with the County prior to city incorporation.
Tulip Kids Daycare (Questa Village)
The project received planning approval from San Joaquin County on May 21, 2024, and Design Consistency Review Committee (DCRC) approval on April 9, 2025. Civil and grading improvement plans are fully approved, and all engineering issues have been resolved. The applicant is finalizing building plan revisions, and the building permit is anticipated to be issued by late May 2025.
Wicklund Crossing
Planning approval for the site approval application was issued January 2025. DCRC approval was issued on April 14, 2025. The building permit is expected to be issued in late May. The improvement plans for this project are currently in the review process.
Safari Kid (Bethany Village)
The grand opening of this business was held April 13, 2025.
Mustang Square (Commercial Development)
Underground utilities are mostly complete. Building construction and inspection by the County’s Building Department is ongoing.
Singh Shopping Center (Southwest Corner of Grant Line Road and Mountain House Pkwy) The proposed project includes a General Plan Amendment, Master Plan Amendment, Specific Plan III Amendment, Zoning Reclassification, Tentative Parcel Map, and Site Plan approval to develop a vacant
16.7± acre site as a commercial/retail shopping center with a grocery store and gas station. Staff has reviewed the initial application and provided comments to the applicant.
Key Infrastructure Projects
Fire Station (North of Byron)
Construction is ongoing with completion expected in June 2025.
Item 9.2
CITY COUNCIL AGENDA ITEM 9.2
DISCUSSION ITEM
Grant Line Road
Pulte is currently constructing Grant Line Road Phase 5 improvements along with modifications to the traffic signals at De Anza Boulevard and Prosperity Street as part of their frontage improvements for B6, B7, and B8 (Tract 3619).
Central Parkway Bridge and Arterials (North of Byron Rd) Mountain House Developers (MHD) is working through minor punch list construction items for the completion of the Central Parkway approach and bridge. These areas are currently open to the public.
MHD continues construction operations on Central Parkway along with other major roads north of Bryon Road. They also continue to maintain and allow public access from the bridge to the first intersection at Central and Calabria providing access to the model homes within Neighborhood J.
Construction along Central Parkway is expected to continue into the fall of 2025 and remains closed to the traveling public.
Traffic Signals at Central Pkwy and Main St and Central Pkwy and Arturo Blvd Improvement plans for this project have been approved.
Mountain House Parkway (North of Byron Rd)
Civil improvement plans are currently in the plan review process.
Railroad Crossing Plans at Byron Rd/Great Valley Pkwy and Byron Rd/Mountain House Pkwy Union Pacific Railroad has approved the project. The application for this project is being sent to the state public utilities commission for review and approval.
Water Quality Basin 1
The designers are currently revising the plans.
Byron Highway Rehabilitation Project
On April 1, 2025, staff met with a roadway engineering consultant to discuss pavement rehabilitation strategies. Shortly after, the City issued a Request for Proposals, due April 7, for an independent geotechnical assessment of Byron Highway. The consultant will use the findings to provide multiple, tailored rehabilitation options. This phased approach ensures a durable, cost-effective solution with minimal future maintenance. The developer and designer are now preparing a submittal for staff review.
Ongoing Construction Management and Inspection Services Town Center Projects
Aviara Apartments are complete. The city accepted the improvements and took over the maintenance of the traffic signal at Arnaudo and Providence and the Providence Street extension between the apartments on March 15, 2025.
Vida Apartments
Final construction punch list items are nearing completion. The traffic signal at Arnaudo and Tradition is installed and fully operational. A grand opening is expected soon.
Item 9.2
CITY COUNCIL AGENDA ITEM 9.2
DISCUSSION ITEM
Neighborhood Developments
Neighborhood A7 (College Park Area) - Tri Pointe continues construction underground and on the joint trench.
Neighborhood A5/B1/B2/B3 (College Park Area) – Grading operations continue in these tracts and underground work is slated to begin by the end of April.
Neighborhood B6, B7 and B8 Tract 3619 (Near Grant Line Road) – Model homes are now open in B6 and B7. Pulte is nearing completion in B8 with paving scheduled to start the first week of April. Model home construction for this tract is expected in spring of 2025.
Neighborhood B11 Tract 3618 (College Park Area) – KB Homes is expecting to begin civil construction in April of 2025.
Neighborhood C/D (Hansen and Cordes Villages) - Langston Phase 2 building construction is ongoing.
Shea Homes will return to Langston Phase 1 to complete the reminder of on-site construction actives after Phase 2 is completed. Both projects are expected to be completed at the end of 2025.
Neighborhood G (Creekside Area) - Building operation continues, and project completion is expected at the end of 2026.
Neighborhood H Tract 4216 (Central Parkway & West Byron Road) – New Home Company has begun excavation and removal operations. Grading is expected to start by the end of April 2025.
Neighborhood I (Lakepoint Area) - MHD continues to work on underground utilities. Grading is anticipated to start during summer of 2025.
Neighborhood J (Lakeshore Area) - Lennar and MHD continue construction and building operations.
Model homes are completed and open to the public. The first resident is expected to take occupancy in early May 2025. The project is expected to be completed by spring of 2027.
Neighborhood K (Lakeview Area) - Civil improvements in Tract 3926 are almost complete.
General Plan and Development Code Updates
Responses from the General Plan Request for Proposals in February have been collected, evaluated, and scored. Awarding the contract is on hold pending further direction from management.
Development code updates are in progress with a City Council hearing likely this spring. Discussions on freeway and community sign ordinances continue.
Pending Items and Other Updates
GIS development planning for zoning and General Plan content is expected in mid-2025. A preapplication concept design is in progress for the College Park Grupe MX site.
Municipal Services Review
Staff has initiated analysis of an update of the Municipal Services Review. The draft is planned to go to the City Council for review and approval in late spring.
Item 9.2
CITY COUNCIL AGENDA ITEM 9.2
DISCUSSION ITEM
PUBLIC WORKS DEPARTMENT UPDATES:
Utilities:
Wastewater Treatment Plant
Staff continues to monitor public health trends through wastewater surveillance. Recent SARS-CoV-2 testing from the City’s Wastewater Treatment Plant as of May 1, 2025, shows a decline in detected virus levels following the increase observed in late December 2024. Data points indicate fluctuations in viral presence, but overall trends suggest a downward movement compared to peak levels in early January.
Staff remains committed to tracking wastewater pathogen levels as part of our ongoing public health monitoring efforts. These findings help provide early indicators of community health trends, allowing for proactive communication and response planning. See Attachment A for more information.
BBID Infrastructure Update – Wicklund Cut Pump Station
On April 30, 2025, the Byron-Bethany Irrigation District (BBID) declared an emergency due to a critical electrical failure at the Wicklund Cut Pump Station — a century-old facility that supports water deliveries to BBID’s West Side Service Area. Temporary measures, including a backup generator, are currently sustaining partial operations.
While this issue primarily affects agricultural users, the pump station has also been evaluated as a potential emergency backup water source for the City of Mountain House during periods of curtailment. BBID and the City began planning a joint replacement project in 2023 and the BBID is now actively pursuing state and federal funding to expedite that effort.
Staff will continue monitoring the situation and will provide updates as BBID’s long-term infrastructure planning progresses.
Department of Water and Resources
The Department of Water Resources has completed drilling a monitoring well at the City’s water treatment plant. This will allow the department to monitor and report water levels quarterly to the Tracy Groundwater Sustainability Agency.
Engineering:
Mountain House Traffic Calming Program (MHTCP)
The final Mountain House Traffic Calming Program (MHTCP) Manual was approved by the City Council on April 23, 2025. It incorporates feedback from both the Council and the public meeting held on April 17, following its initial presentation to City Council on March 26. With adoption, the City will now begin accepting pilot project applications. The GOGov platform will be used to support application intake as part of the City's broader digital service enhancements.
Daylighting Law (AB 413)
Following the February 25 City Council update, staff has implemented a multi-pronged outreach and enforcement strategy. This includes message board alerts at Main Street and Central Parkway, website and social media updates, and identification of high-priority areas near schools and parks. In partnership with Lammersville Unified School District, a Daylighting Law Fact Sheet was distributed to Item 9.2
CITY COUNCIL AGENDA ITEM 9.2
DISCUSSION ITEM
parents and students, and schools now display notices on their message boards. An enforcement process has also been established, with warnings and citations issued at designated hot spots.
Unmet Transit Needs Assessment & Local Transportation Fund (LTF) Allocation Update The Request for Proposals for the City’s Unmet Transit Needs Assessment was issued on April 1, 2025, with contract award anticipated later in May.
At its April 24 meeting, the SJCOG Board adopted the FY 2025-26 LTF Estimated Revenue and Apportionment Schedule, which includes a $950,590 set-aside for Mountain House to be used exclusively for transit purposes. These funds will support the development of future transit plans and projects.
Urgent Measure K Needs Assessment Process
Measure K is San Joaquin County’s voter-approved, half-cent sales tax dedicated to funding transportation improvements. At its March 27, 2025 meeting, the SJCOG Board adopted the updated Measure K Strategic Plan and directed staff to assess urgent project needs countywide. In response, the City submitted six projects for consideration under the Urgent Measure K Needs funding program.
An informational update on the regional needs assessment was presented to the SJCOG Board on April 24, with further evaluation of submitted projects to follow.
Tennis Projects Collaboration
Staff met with the U.S. Tennis Association to discuss potential grants for the Mountain House community. Grant applications will be prepared using Parks and Recreation programs and implementation plans.
Town Hall Parking Ingress and Egress Improvements
Construction is complete and residents can now exit onto Main Street from the Town Hall parking lot.
ATTACHMENTS:
A. COVID-19 and Influenza A and B results from wastewater treatment plant as of April 30, 2025 B. April 2025 drone photos for Neighborhood J (Tracts 3968–3975) Item 9.2
CITY COUNCIL AGENDA ITEM 9.2
DISCUSSION ITEM
ATTACHMENT A:
COVID-19, Influenza A, & Influenza B, results from our wastewater treatment plant as of May 1, 2025.
Item 9.2
CITY COUNCIL AGENDA ITEM 9.2
DISCUSSION ITEM
Item 9.2
CITY COUNCIL AGENDA ITEM 9.2
DISCUSSION ITEM
ATTACHMENT B:
April 2025 - Neighborhood J (Tracts 3968–3975)
Item 9.2
2025 Long Range Calendar Page 1 of 8
Wednesday, May 14, 2025 - Special City Council Meeting
Board Chambers at 5:00 p.m.
ITEM
Budget Study Session
Wednesday, May 14, 2025 - Regular City Council Meeting
Board Chambers at 7:00 p.m.
ITEM
Proclamations- Public Works Week, Building Safety Month Fee Waiver policy
Parks Policies
Veteran's Recognition Design discussion
2nd reading tree ordinance
PACE Program
Establish CFD Improvement Areas 6,7,8
Code Enforcement Fees
Saturday, May 17, 2025 - City Event - Music in the Park 7:00 PM - 9:00 PM Central Community Park - High Energy Dance Music - Power Play Monday, May 19th to May 21st (One Voice Advocacy Trip with SJCOG) Washington, DC
Thursday, May 22, 2025 - SJCOG Board of Directors - CANCELED DUE TO ONE VOICE TRIP 555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Tuesday, May 27, 2025 - Regular City Council Meeting
Board Chambers at 7:00 p.m.
ITEM
Award contract – unmet transit needs consult (from RFP) Award contract – Landscape Maintenance Services (from RFPs) Item 10.1
2025 Long Range Calendar Page 2 of 8
GoRequest update discussion
Tree Program discussion
Landscape Maintenance District (LMAD) Reports
French Camp Fire Agreement
State Fire Hazard Mapping
City Council Policy & Procedures
Logo
Award contract – Aquifer Storage and Recovery Well (from RFP) Thursday, May 29, 2025 - Ribbon cutting of Tracy's new Multipurpose Training Facility 1:00 p.m. - Tracy
Friday, May 30, 2025, Mountain House High School Graduation 7:00 p.m. - Mountain House High School
Saturday, June 7, 2025 - City Event - Kite Festival
10:00 a.m - 1:00 p.m. - Central Community Park
Tuesday, June 10, 2025 - YAC
Board Chambers at 7:00 p.m.
Wednesday, June 11, 2025 - Regular City Council Meeting Board Chambers at 7:00 p.m.
ITEM
Budget adoption (MHCSD/City)
Public Hearing - LMAD Adoption
Adopt FY 25-26 SB 1 Project List for Road Maint Rehab Account Friday, June 13, 2025 - City Event - Central Park Cinema 8:30 p.m. to 10:30 p.m. - Central Community Park
Item 10.1
2025 Long Range Calendar Page 3 of 8
Saturday, June 21, 2025 - City Event - Music in the Park Celebrates Juneteenth 3:00 p.m. to 9:00 p.m. - Central Community Park - Top Shelf Wednesday, June 25, 2025 - Ribbon Cutting Fire Station #2 4:30 - 5:00 PM
ITEM
Thursday, June 26, 2025 - SJCOG Board of Directors
555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Tuesday, July 1, 2025 - City Event - State of the City
Location TBD
City Event 4th of July/Founders Day
Parade - Central Parkway/Independence Day Celebration Central Community Park Tuesday, July 8, 2025 - YAC
Board Chambers at 7:00 p.m.
Board Chambers at 7:00 p.m.
ITEM
Property Collections
Wednesday, July 9, 2025 - Regular City Council Meeting
Wednesday, June 25, 2025 - Regular City Council Meeting Board Chambers at 7:00 p.m.
Item 10.1
2025 Long Range Calendar Page 4 of 8
Award contract - Government Relations and Lobbying Services (from RFP) Award contract - Urban Water Management Consultant (from RFP) Friday, July 11, 2025 - City Event - Central Park Cinema 8:30 p.m. to 10:30 p.m. - Central Community Park
Saturday, July 19, 2025 - City Event -Music in the Park 7:00 p.m. to 9:30 p.m. - Central Community Park - Classic Rock Anthems - Take 2 ITEM
Strategic Plan Update
Thursday, July 24, 2025 - SJCOG Board of Directors
555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Tuesday, August 5, 2025 - City Event - National Night Out 5:00 p.m. to 8:00 p.m. - Central Community Park
Friday, August 8, 2025 - City Event - Central Park Cinema 8:30 p.m. to 10:30 p.m. - Central Community Park
Wednesday August 13, 2025 - Valley Link Board Meeting
Board Chambers at 7:00 p.m.
Board Chambers at 7:00 p.m.
ITEM
Board Chambers at 7:00 p.m.
Wednesday, July 23, 2025 - Regular City Council Meeting Wednesday, August 13, 2025 - Regular City Council Meeting Item 10.1
2025 Long Range Calendar Page 5 of 8
Saturday, August 16, 2025 - City Event - Music in the Park 7:00 p.m. to 9:30 p.m. - Central Community Park - Dance Hits - Apple Z Board Chambers at 7:00 p.m.
ITEM
Closed Session 6:00 PM
Thursday, August 28, 2025 - SJCOG Board of Directors
555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Tuesday, September 9, 2025 - YAC
Board Chambers at 7:00 p.m.
ITEM
Saturday, September 20, 2025 - City Event - Music in the Park Cultural Celebration Time: 3:00 PM - 9:00 PM - Central Community Park - Cultural Celebration - Maya Board Chambers at 7:00 p.m.
ITEM
Wednesday, September 10, 2025 - Regular City Council Meeting Board Chambers at 7:00 p.m.
Wednesday, September 24, 2025 - Regular City Council Meeting Wednesday, August 27, 2025 - Regular City Council Meeting Item 10.1
2025 Long Range Calendar Page 6 of 8
Thursday, September 25, 2025 - SJCOG Board of Directors 555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Saturday, September 27, 2025 - City Event - Senior Health & Wellness Expo 10:00 AM - 2:00 PM - Unity Center
Board Chambers at 7:00 p.m.
ITEM
Wednesday, October 8 to Friday October 10th 2025 - Conference League of California Cities - Long Beach
Tuesday, October 14, 2025 - YAC
Board Chambers at 7:00 p.m.
ITEM
Strategic Plan Update
Thursday, October 23, 2025 - SJCOG Board of Directors
555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Friday, October 31, 2025 - City Event - Spooky Safety Stroll 2:00 p.m. - 5:00 p.m. - Town Hall Lobby
Wednesday, October 22, 2025 - Regular City Council Meeting Wednesday, October 8, 2025 - Cancelled
Board Chambers at 7:00 p.m.
Item 10.1
2025 Long Range Calendar Page 7 of 8
Saturday, November 8, 2025 - City Event - Veteran's Day Luncheon 11:00 a.m. - 2:00 p.m. - Town Hall Lobby
ITEM
ACFR - City
Thursday, November 27, 2025 - SJCOG Board of Directors
555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Saturday, December 6, 2025 - City Event - Light Up Main Street & Tree Lighting 6:00 p.m. - 9:00 p.m. - Main Street/Central Community Park Tuesday, December 9, 2025 - YAC
Board Chambers at 7:00 p.m.
Wednesday December 10, 2025 - Valley Link Board Meeting Board Chambers at 7:00 p.m.
Board Chambers at 7:00 p.m.
Wednesday, November 12, 2025 - Regular City Council Meeting Board Chambers at 7:00 p.m.
Wednesday, November 26, 2025 - Holday No Meeting Scheduled Item 10.1
2025 Long Range Calendar Page 8 of 8
ITEM
AB 1600 Report - City
Saturday, December 13, 2025 - City Event - Breakfast with Santa 8:00 a.m. - 12:00 p.m. - Unity Center
Wednesday, December 10, 2025 - Regular City Council Meeting Board Chambers at 7:00 p.m.
Wednesday, December 24, 2025 - Holday No Meeting Scheduled Board Chambers at 7:00 p.m.
Item 10.1