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. 3, 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. 3 according to the rate and Item 8.4
Mountain House Page 1465 of 1663
14 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.” 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 2026 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. 3 except tax-exempt parcels as described in the Rate and Method.
Item 8.4
Mountain House Page 1466 of 1663
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. 3 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. 3, 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.
Item 8.4
Mountain House Page 1467 of 1663
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.
The Rate and Method provides that prior to the issuance of the first series of bonds, the Master Developer may reduce the Maximum Special Tax. In January 2026, the Master Developer requested a reduction for Village 1 (from $3,921 to $2,272 per lot) and Village 2 (from $5,079 to $2,761 per lot). Under the revised special tax rates, the 363 developing lots generate $1,831,133 in annual Maximum Special Taxes for Fiscal Year ___________. After applying $35,000 in Priority Administrative Expenses, the net revenue available for debt service on the 2026 Bonds based on Maximum Special Taxes for 363 lots for Fiscal Year _________ is $1,796,133.
For additional details and a diagram showing the villages referred to in the following table, see APPENDIX A. Note that as of February 2, 2026 the land was entitled for 1,312 units, however the Master Developer plans to reduce the lot count to 1,284 units, which will occur after the issuance of the Bonds and result in an amendment to the attachments to the Rate and Method.
Base Facilities Special Tax
Developed and Final Map Property
Land Use Category Village
FY 2026-27
Base Facilities
Special Tax (1)(2)
Single Family Property Village 1 $2,317.44 per Residential Unit Single Family Property Village 2 $2,816.22 per Residential Unit Single Family Property Village 3 $5,489.62 per Residential Unit Single Family Property Village 4 $6,489.28 per Residential Unit Single Family Property Village 5 $7,257.60 per Residential Unit Single Family Property Village 6 $7,518.66 per Residential Unit Single Family Property Village 7 $8,075.80 per Residential Unit Other Property N/A $65,339.64 per Acre
Undeveloped Property
Special Tax Category Village
FY 2026-27
Base Facilities
Special Tax (1)(2)
Undeveloped Property N/A $65,339.64 per Acre
(1) On July 1 each fiscal year, the Maximum Facilities Special Taxes shall be increased by two percent of the amount in effect in the previous 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.
Initial development in Improvement Area No. 3 is expected across 363 lots planned for initial development across Tracts 4200, 4201, 4202, 4194 and 4199, corresponding to Villages 2, 3, 4 and 5 in the Rate and Method. The 2026 Bonds have been sized based on the Special Tax revenues to be generated by the 363 lots.
Item 8.4
Mountain House Page 1468 of 1663
17 Initial Development (Village Classifications)
(Initial 363 Lots)
Village Lot Size Tract(s)
Number of
Lots
2 45x100’ 4201, 4194 127
3 50x100’ 4202 79
4 60x100’ 4200 82
5 70x100’ 4199 75
Totql 363
Source: Master Developer.
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. 3. 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. 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. 3, “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 2064-65.
Prepayment of the Special Tax. The Facilities Special Tax obligation assigned to a particular parcel within Improvement Area No. 3 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 Accounts established within the Reserve Fund for each Series of Bonds, certain delinquencies, administration of the District (including Improvement Area No. 3), 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 Item 8.4
Mountain House Page 1469 of 1663
18 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. 3; 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. 3, 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 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. 3 required for the payment of principal of and interest on any outstanding Bonds of Improvement Area No. 3 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. 3. 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.
Improvement Area No. 3 is currently planned for 1,284 lots. The 2026 Bonds have been sized based on the special tax revenues generated by 363 finished lots.
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.
Item 8.4
Mountain House Page 1470 of 1663
19 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 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. 3 levied in such Fiscal Year, then the City will institute, prosecute and pursue such foreclosure proceedings against each parcel in Improvement Area No. 3 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. 3 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.
Item 8.4
Mountain House Page 1471 of 1663
20 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) and lender of record, if any, 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 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. 3 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 Item 8.4
Mountain House Page 1472 of 1663
21 taxes and special assessments. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 3 – 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 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. 3, but no assurance can be given that it will continue in any or all of the years that the 2026 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. 3, the County’s Teeter Plan may help protect owners of the 2026 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. 3 or particular delinquent parcels from its Teeter Plan in any year while the 2026 Bonds are outstanding.
Item 8.4
Mountain House Page 1473 of 1663
22 2026 Reserve Account of Reserve Fund
The Reserve Fund has been established under the Fiscal Agent Agreement, and a 2026 Reserve Account is established for the benefit of the holders of the 2026 Bonds. For each series of Additional Bonds, the Fiscal Agent shall establish a separate subaccount within the Reserve Fund for such series and moneys in each subaccount shall be held in trust by the Fiscal Agent for the benefit of the Owners of the respective series of Bonds.
Upon delivery of the 2026 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 2026 Bonds; (ii) Maximum Annual Debt Service with respect to the 2026 Bonds; and (iii) 10% of the original principal amount of the 2026 Bonds (or, if the 2026 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 2026 Bonds shall not increase after the date of issuance of the 2026 Bonds;
(b) in no event shall the City be obligated to deposit an amount in any reserve account 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
(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 Item 8.4
Mountain House Page 1474 of 1663
23 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 account within the Reserve Fund exceeds the Reserve Requirement for the applicable series of Bonds covered by such reserve account, 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 account 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 2026 Reserve Account exceeds the amount required to redeem or pay the Outstanding 2026 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 2026 Reserve Account to the Bond Fund to be applied, on the next succeeding Interest Payment Date, to the payment and redemption of all of the 2026 Bonds. If the amount so transferred from the 2026 Reserve Account to the Bond Fund exceeds the amount required to pay and redeem the 2026 Bonds, the balance in the 2026 Reserve Account 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. 3 authorize the issuance of up to $240,200,000 of special tax bonds for Improvement Area No. 3, of which the 2026 Bonds represent the first series of bonds and under the provisions of the Fiscal Item 8.4
Mountain House Page 1475 of 1663
24 Agent Agreement. In addition to the 2026 Bonds, the City may issue one or more additional series of Bonds (a “Series”) in such principal amount as shall be determined by the City, under a Supplemental Fiscal Agent Agreement and secured by a parity lien on the Special Tax Revenues, subject to the following specific conditions precedent:
(1) Compliance. The City shall be in compliance with all covenants set forth hereunder and all Supplemental Fiscal Agent Agreements or shall be in compliance immediately following the issuance of such Series, and issuance of a Series shall not cause the City to exceed Improvement Area No. 3’s limitation on debt (as defined in the Act).
(2) Same Payment Dates. The Supplemental Fiscal Agent Agreement providing for the issuance of such Series shall provide that interest thereon shall be payable on Interest Payment Dates, and principal thereof shall be payable on September 1 in any year in which principal is payable on such Series. (3) The Supplemental Fiscal Agent Agreement shall provide for a separate Reserve Account securing such Series in an amount equal to the Reserve Requirement for such Series. Such deposit shall be made as provided in the Supplemental Fiscal Agent Agreement providing for the issuance of such additional Series and may be made from the proceeds of the sale of such additional Series or from other funds. (4) Aggregate Value-to-Lien. The aggregate value of all Taxable Property shall be at least five (5) times the sum of: (i) the aggregate principal amount of all Bonds then Outstanding, plus (ii) the aggregate principal amount of the additional Series proposed to be issued, plus (iii) the aggregate principal amount of any fixed assessment liens on the parcels in the District subject to the levy of Special Taxes, plus (iv) a portion of the aggregate principal amount of any and all other community facilities district bonds then outstanding and payable at least partially from special taxes to be levied on parcels of land within the District (the “Other District Bonds”) equal to the aggregate outstanding principal amount of the Other District Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other District Bonds on parcels of land within the District subject to the Special Taxes, and the denominator of which is the total amount of special taxes levied for the Other District Bonds on all parcels of land against which such special taxes are levied to pay the Other District Bonds based upon information from the most recent available Fiscal Year.
(5) Aggregate Coverage. For each Fiscal Year after issuance of the proposed Series, the maximum amount of the Special Taxes that may be levied for such Fiscal Year on all parcels then classified as Taxable Property or to be classified as Taxable Property in the subsequent Fiscal Year not then delinquent in the payment of any prior or current years’ Special Taxes, less the Administrative Expense Requirement for each respective Fiscal Year, shall be at least 110% of the total Annual Debt Service of the then Outstanding Bonds and the proposed Series of Bonds for each Bond Year that commences in each such Fiscal Year.
(6) Certificates. The City shall deliver to the Fiscal Agent a Certificate of Authorized Representative of the City certifying that the conditions precedent to the issuance of such Series set forth in paragraphs (1) through (5) above have been satisfied.
Item 8.4
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25 (7) Opinion. An Opinion of Bond Counsel to the effect that execution of the Supplemental Fiscal Agent Agreement has been duly authorized by the City in accordance with the Fiscal Agent Agreement and that such Series, when duly executed by the City and authenticated and delivered by the Fiscal Agent, will be valid and binding obligations of the City.
Notwithstanding the foregoing, the City may issue Bonds to refund all or a portion of one or more Series without the need to satisfy the requirements of paragraphs (4) and (5) above, and, in connection therewith, the Certificate of Authorized Representative of the City in paragraph (6) above need not make reference to paragraphs (4) and (5); provided a certification is made that Maximum Annual Debt Service on all Outstanding Bonds following the issuance of such Refunding Bonds is less than or equal to Maximum Annual Debt Service on all Outstanding Bonds prior to the issuance of such Refunding Bonds.
Nothing in the Fiscal Agent Agreement prohibits the City from issuing any other bonds or otherwise incurring debt secured by a pledge of the Special Tax Revenues subordinate to the pledge thereof under the Fiscal Agent Agreement.
Item 8.4
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26 DEBT SERVICE SCHEDULE
The annual debt service on the 2026 Bonds, assuming no early redemptions other than mandatory sinking fund payments, is set forth below.
Improvement Area No. 3 of
City of Mountain House
Community Facilities District No. 2024-1 (Public Facilities and Services) 2026 Bonds – Annual Debt Service
Year
Ending
(Sept. 1)
2026 Bonds
Principal
2026 Bonds
Interest
2026 Bonds
Total
2026(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
2055
2056
______________
(1) Capitalized Interest is being funded on the 2026 Bonds through September 1, 2026.
Source: Underwriter.
Item 8.4
Mountain House Page 1478 of 1663
27 The table below shows the projected debt service coverage on the 2026 Bonds.
Improvement Area No. 3 of
City of Mountain House
Community Facilities District No. 2024-1 (Public Facilities and Services) Projected Debt Service Coverage – Fiscal Year 2026-27(1) (2) Bond Year
FY 2026-27 Final Map
Status Maximum
Facilities Special Tax (3)
Priority
Administration
(4)
2026 Bonds
Debt
Service*
Debt
Service
Coverage*
2027 $6,641,830 ($46,000) $1,225,463 538.23%
2028 6,774,667 (46,920) 1,253,063 536.90
2029 6,910,160 (47,858) 1,274,463 538.45
2030 7,048,364 (48,816) 1,304,863 536.42
2031 7,189,331 (49,792) 1,328,863 537.27
2032 7,333,117 (50,788) 1,356,663 536.78
2033 7,479,780 (51,803) 1,380,913 537.90
2034 7,629,375 (52,840) 1,408,413 537.95
2035 7,781,963 (53,896) 1,438,913 537.08
2036 7,937,602 (54,974) 1,467,163 537.27
2037 8,096,354 (56,074) 1,498,163 536.68
2038 8,258,281 (57,195) 1,526,663 537.19
2039 8,423,447 (58,339) 1,557,663 537.03
2040 8,591,916 (59,506) 1,585,913 538.01
2041 8,763,754 (60,696) 1,621,413 536.76
2042 8,939,029 (61,910) 1,653,663 536.82
2043 9,117,810 (63,148) 1,682,663 538.12
2044 9,300,166 (64,411) 1,718,413 537.46
2045 9,486,169 (65,699) 1,750,413 538.19
2046 9,675,893 (67,013) 1,788,663 537.21
2047 9,869,411 (68,354) 1,822,663 537.73
2048 10,066,799 (69,721) 1,861,031 537.18
2049 10,268,135 (71,115) 1,899,531 536.82
2050 10,473,498 (72,537) 1,932,906 538.10
2051 10,682,967 (73,988) 1,976,156 536.85
2052 10,896,627 (75,468) 2,013,513 537.43
2053 11,114,559 (76,977) 2,052,938 537.65
2054 11,336,851 (78,517) 2,095,800 537.19
2055 11,563,588 (80,087) 2,136,575 537.47
________
*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 currently recorded final maps. (4) As defined in the Fiscal Agent Agreement. Equals $35,000 in FY 2026-27 and escalates by two percent per year thereafter.
Sources: Piper Sandler & Co.; Goodwin Consulting Group, Inc.
Item 8.4
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28 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.
Maps. Maps showing the region and local area where Improvement Area No. 3 is located, as well as the boundaries of Improvement Area No. 3 follow.
Item 8.4
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29 [Map 1 – Vicinity Map]
Item 8.4
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30 [Map 2 – CFD Boundary Map - Page 1]
Item 8.4
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31 [CFD Boundary Map - Page 2
Item 8.4
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32 [Map 3 – Aerial Photo]
Item 8.4
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33 IMPROVEMENT AREA NO. 3 PLANNED DEVELOPMENT
The information regarding development of the property contained under this caption has been provided by representatives of the Merchant Builders and Master Developer, and has not been independently confirmed or verified by the Underwriter or the City. Neither the Underwriter nor the City makes any representation as to the accuracy or adequacy of the information contained under this caption. There may be material adverse changes in this information after the date of this Official Statement. See “SPECIAL RISK FACTORS” herein.
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 and lower $900,000’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.
Item 8.4
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34 The land within the District begins a significant new development area of the City referred to internally as the area north of Byron Road. North of that major arterial is expected to include approximately 5,000 residential units at buildout.
Development of Improvement Area No. 3
The information provided in this section has been included because it may be considered relevant to an informed evaluation and analysis of the 2026 Bonds and Improvement Area No. 3.
No assurance can be given, however, that the proposed development of the property within Improvement Area No. 3 will occur in a timely manner or in the configuration or to the density described herein, or that the Master Developer), any owners or affiliates thereof, or any other property owner described herein will or will not retain ownership of its respective property within Improvement Area No. 3. Neither the 2026 Bonds nor any of the Special Taxes are personal obligations of any property owner within Improvement Area No. 3. The 2026 Bonds are secured solely by the Special Taxes levied on property within Improvement Area No. 3 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.
Improvement Area No. 3 comprises approximately 436 acres located on the north side of Byron Road, west of Great Valley Parkway, planned for 1,284 detached residential lots. The Master Developer hopes to be developed by multiple homebuilders within various product lines.
As of February 2, 2026 the land was entitled for 1,312 units, however the Master Developer plans to reduce the lot count to 1,284 units, which is expected to occur after the issuance of the Bonds.
The Master Developer currently owns all of the land within Improvement Area No. 3. Rurka Homes, an entity which is a general contractor affiliate of the Master Developer, as described herein, has commenced building model homes on 3 of the 61 lots within Tract 4194. Additionally, the 75 lots of Tract 4199 are committed to Rurka Homes. The Master Developer holds a license agreement with Rurka Homes, who upon completion of the home simultaneously purchases the lot and sells to the homebuyer. Other than the 136 lots which are the subject of the Master Developer/Rurka Homes arrangement, none of the lots in Improvement Area No. 3 are under contract with any merchant builder, however marketing of the remaining 227 finished lots is underway.
Tentative maps have been approved by the City for the 1,284 single-family lots within 7 “villages” with typical lot sizes ranging from 2,000 to 15,000 square feet. As of March 25, 2026, one final maps has been approved by the City. Initial development in Improvement Area No. 3 is expected across the 363 lots within final maps 4194, 4199, 4200, 4201 and 4202, , corresponding to Villages 2, 3, 4 and 5 in the Rate and Method. Final map 4194 was approved by the City on December 10, 2025 (61 Lots). Final maps 4200, 4201, 4202, are anticipated to be approved by the City in April 2026 (227 lots). The Master Developer anticipates final map recordation of final map 4199 in the fourth quarter of 2026 (75 Lots). The 2026 Bonds have been sized based on the Special Tax revenues to be generated by the 363 lots.
Item 8.4
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35 Village Classifications - Initial 363 Lots
Village Lot Size Tract(s)
Number of
Lots
2 45x100’ 4201, 4194 127
3 50x100’ 4202 79
4 60x100’ 4200 82
5 70x100’ 4199 75
Total 363
Source: Master Developer.
The Master Developer intends to carry out all land development activities and (i) sell finished lots to homebuilders and/or (ii) construct and market homes through a related entity (Rurka Homes, LLC). See “The Master Developer” herein for more information about the Master Developer. Rurka Homes will purchase and build homes on tracts 4194 and 4199 (136 lots in Village 2 and Village 5) Tracts 4194, 4200, 4201 and 4202 have been developed to a finished lot condition. An additional 75 lots are partially improved (Tract 4199). The Master Developer reports that Tracts 4200, 4201 and 4202 are currently for sale, and if they do not sell to a merchant builder, they are expected to be sold to Rurka Homes.
Conditions of Approval
The Development Agreement, Conditions of Approval, and other entitlement documents (collectively, the “Entitlement Documents”) require various conditions for the development of the Lakes Project. A summary of those conditions that have not yet been completed are described in the table below. Unless otherwise stated in the table below, reference to “Village I” or “Neighborhood I” means the entirety of Village I, not just the portion that is part of the Lakes Project
Conditions of Approval
(As of February 2, 2026)
Condition Timing Status
Construct Central
Parkway and Great
Valley Parkway
Prior to the first building permit beyond Tract 3926 (per Village K conditions) and within 3 months of completion of railroad overcrossing for Central Parkway and 3
months for Great Valley Parkway (per Village J
conditions).
79% complete; expected
completion by October 2026.
Traffic Signal –
Central Parkway (7
signals total)
When 50% of building permits for Village K (i.e., 397
units), conduct traffic analysis (per Village K conditions) and when 50% of building permits for Tracts 3973,
3974, and 3975 conduct traffic analysis (per Village J
conditions) and complete before final occupancy
permits. Final occupancy permits anticipated to occur in May 2027.
80% Complete on 6 of 7
signals; remaining signal not
started yet.
Byron Road
Widening (from
Alameda County
Line to Wicklund
Road)
Start construction by March 2026 and complete within
24 months (per Village K conditions) and start in May
2026 and complete within 24 months (per Village J
conditions).
Not yet started.
Item 8.4
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36 Condition Timing Status
Byron Road RR
Overcrossing (Byron
Road and Great
Valley)
Within 1 year of permit from CPUC and Union Pacific
Railroad or prior to 1,300th building permit for Villages I, J, K, and L, whichever comes first.
Not yet started; not needed for
IA No. 1 and is not budgeted for
IA No. 1.
Byron Road RR
Overcrossing (Byron
Road and Mountain
House Parkway)
Within 1 year of permit from CPUC and Union Pacific
Railroad or prior to 2,700th building permit for Villages I, J, K, and L, whichever comes first.
Not yet started; not needed for
IA No. 1 and is not budgeted for
IA No. 1.
Fire Station Improvements bonded for and must be complete within 18 months of commencement. Construction on the Fire
Station commenced on February 14, 2024.
Improvements were bonded for
and are under construction.
52% Complete; expected
completion April 2026.
Traffic Signal –
Main/Central
Construct signal before the 880th building permit issued in Neighborhoods J and K.
Not yet started.
Traffic Signal –
Arturo/Central
Construct signal before the 330th building permit in
Village J.
Not yet started.
Traffic Calming
Improvements
Construct improvements prior to the 330th building
permit in Neighborhoods J and K.
Not yet started.
Fiber Optic
Improvements
Construction to be completed with the railroad crossing at Byron Road and Great Valley Parkway or May 2026,
whichever comes first.
Conduits constructed in Great
Valley Parkway; remainder to
be completed in a timely
manner; part of the Central
Parkway/Great Valley Parkway
budget.
Security Cameras Design and construct security cameras prior to issuance of 50% of building permits in Neighborhood K
(per Village K conditions and 50% of building permits in Neighborhood J Tract 3973, 3974, and 3975 (per
Village J conditions).
Not yet started. Waiting for
specifications from City.
Pump Station
Upgrade
Start construction by November 1, 2026 and complete
by November 1, 2026.
Not yet started.
Riparian Water
Rights Infrastructure
and Water Supply
Diversification
Riparian: Start construction of a new non-potable water reservoir at the Water Treatment Plant Site and an
intake pump at Old River Parkway by December 2026
and complete by June 2027.
Diversification: Start construction on new water line and pump station to provide a second source of water to the Water Treatment Plant by July 2026 and complete by
July 2026.
Not yet started.
Two Mini Parks Design and construct parks prior to the issuance of the 50% building permits in Neighborhood J Tracts 3973,
3974, and 3975.
Not yet started.
North Community
Park
Constructed prior to the issuance of the 1,914th building permit in Neighborhoods I, J, and K.
This will not be required until
after buildout of Neighborhoods
J and K, so it is not part of the
IA No. 1 budget.
Entryways Design and construct arterial entries at Central Parkway and Mountain House Parkway prior to issuance of 50%
Not yet started.
Item 8.4
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37 Condition Timing Status
of building permits in Neighborhood J Tracts 3973,
3974, and 3975.
Reservoir Start construction by April 2026 and complete by April 2027.
Not yet started.
Water Treatment
Admin. Building
Start construction by January 1, 2026 and complete by
July 2027.
Not yet started.
Police Station Prior to 1,000th building permit north of Byron Road, pay the City $1.6 million.
Not yet paid.
Source: Master Developer.
Public Infrastructure Improvements Required for Improvement Area No. 3 For the Improvement Area No. 3 as a whole, the Master Developer estimates that at the completion of the Improvement Area No. 3, it will expend approximately $137.9 million in infrastructure, consulting, and financing costs. As of December 31, 2026, the Master Developer has expended approximately $21.1 million.
Table 1 below shows the infrastructure improvements and fees required for the development of Improvement Area No. 3 and the percentage of completion of these costs. All such improvements and fees are payable by the Master Developer.
Table 1
Estimated Improvement Costs
(As of December 31, 2025)
Estimated Costs to be Incurred by Master
Developer
Total
Estimated
Improvement
Area No. 3
Costs
Completed
Improvement
Area No. 3
Costs
Percentage
Complete of
Improvement
Area No. 3
Costs
Remaining
Improvement
Area No. 3
Costs
Local Improvements 89,633,723 15,106,457 17% 74,527,265 Mass Grading 11,090,471 2,832,544 26% 8,257,926
Lake Construction 4,500,000 334,676 7% 4,165,323
Traffic Signal at ‘A’ Ave and Central Parkway 1,800,000 149,200 8% 1,650,800 Sewer Pump Station 5,941,327 358,138 6% 5,583,189
Raw Water Storage Pond 3,225,000 64,880 2% 3,160,119
Dry Creek Crossing 4,000,000 1,214,911 30% 2,785,089
Neighborhood Park 3,250,000 17,802 1% 3,232,198
Greenway Loop Park (1) 14,441,499 21,441 0% 14,420,057
Total 137,882,020 20,100,053 15% 117,781,967
(1) These costs include the costs of the mini parks required to be constructed.
Source: Master Developer.
Subdivision Mapping Status. Tentative maps have been approved by the City for 1,284 single-family lots with typical lot sizes ranging from 2,000 to 15,000 square feet. As of February 2, 2026, one final map has been approved by the City.
Item 8.4
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38 Planned Sales to Merchant Builders
The Master Developer anticipates both selling lots to national homebuilders who will build and market homes. Currently no sales are under contract. The Master Developer intends to develop at least 136 of the lots (within Village 2 and Village 5) in Improvement Area No. 3 through a servicing agreement with Rurka Homes, LLC (herein, “Rurka Homes”).
Marketing by the Master Developer of 277 lots is underway. The Master Developer has received a letter of intent from K Hovnanian Homes for the 82 lots in Tract 4200 and the Purchase and Sales Agreement is currently being negotiated. . If sales to merchant builders are unsuccessful Rurka Homes is expected to construct and sell additional homes.
Master Developer Financing Plan for Improvement Area No. 3 The Master Developer purchased approximately 8,000 lots in 2005 and 2007 from Trimark Communities LLC. Since then, the Master Developer has built and sold over 3,000 residential lots to home builders. The Master Developer has made significant investments of over $100 Million into the backbone infrastructure to service the lots within Improvement Area No. 3 and the surrounding properties, including as of February 2, 2026:
• Completed a $62 million expansion of the wastewater treatment plant which expanded the plant to serve Improvement Area No. 3 and the buildout of the Mountain House project from its current 8,000 residential units to 16,000; • Completed a $7.6 million sewer pump station; and
• 78% of $23.8 million in improvements to Central Parkway and Great Valley Parkway that support access to Improvement Area No. 3.
The property owned by the Master Developer in Improvement Area No. 3 (and in other areas of the Mountain House project) is subject to a deed of trust in favor of MH Lender, LLC (“MH Lender”). MH Lender was created by Avila Real Estate Capital to facilitate a loan of $285 million (the “MH Loan”) to Rurka Capital to acquire the ownership interests in the Master Developer in August 2023. The MH Loan is secured by a deed of trust that was recorded on August 3, 2023. The MH Loan is due and payable in March 2026. Under the terms of the MH Loan, approximately 72% of the proceeds of the sales of land to merchant builders is used to pay the outstanding principal and interest on the MH Loan, and the percentage declines as additional payments are made. Eventually, the MH Lender will be entitled to approximately 52% of the proceeds of the sales of land to merchant builders until the loan is repaid. As of February 5, 2026, the principal balance remaining on the MH Loan is approximately $220.9 million. The MH Loan was a land loan only and is not available to finance infrastructure or home construction costs.
To finance the costs of infrastructure improvements for the project, the Master Developer has an arrangement with the MH Lender whereby the MH Lender holds funds in a working capital account (the “Working Capital Account”) that is available to the Master Developer for development costs. The balance in the Working Capital Account as of February 5, 2026 is approximately $91.78 million. (Note: the Working Capital Account may be used by the Master Developer for development costs in Improvement Area No. 3 and elsewhere in the Mountain House project outside of Improvement Area No. 3; likewise, the Working Capital Account may be used by Rurka Homes for the development of Campelli in Improvement Area No. 3 as well as ongoing projects in other parts of the Mountain House project outside of Improvement Area No.
3.) The Master Developer typically makes bi-monthly draws on the Working Capital Account to finance horizontal development costs for Improvement Area No. 3 and other areas of the Item 8.4
Mountain House Page 1490 of 1663
39 Mountain House project. The Master Developer believes that the Working Capital Account, when combined with lot sales and CFD reimbursements, will be sufficient to finance the remaining costs of development in Improvement Area No. 3 and the construction of homes by Rurka Homes.
The Master Developer’s funds for the development of the property in Improvement Area No. 3 and the construction, marketing and sales of homes by Rurka Homes within Improvement Area No. 3 derives from various sources generated from the sales of land and homes, reimbursements, and the Working Capital Account for the Mountain House Project as a whole.
Likewise, the Master Developer’s anticipated expenses include costs outside of Improvement Area No. 3. The table below shows the anticipated sources and uses of funds for the Mountain House Project as a whole over the next two years. The table below shows only those sources expected to be received after January 15, 2026 and does not include the lot sales made prior to January 15, 2026. Likewise, only the costs anticipated to be incurred for the Mountain House Project as a whole after January 15, 2026 are included in the table below. ____________
1 Includes the Working Capital Account.
2 These sources include revenues from the sale of lots to merchant builders other than Rurka Homes for all improvement areas of the CFD (including Improvement Area No. 3) as well as property within the Mountain House Project but outside of the CFD. This number does not include any land sales that occurred prior to January 15, 2026. 3 Because the Master Developer and Rurka Homes are affiliates and because the costs of constructing homes by Rurka Homes included as a use of funds, the revenue sources include the sales of homes to homebuyers. In the next Item 8.4
Mountain House Page 1491 of 1663
40 two years, it is anticipated that Rurka Homes will build and close on 400 homes throughout the Mountain House Project in 2026 and 2027, including, but not limited to, Improvement Area No. 3. 4 These sources include the net proceeds of Improvement Area No. 3 Bonds in 2026 and proceeds of bonds issued for other improvement areas for 2026.
5 These sources include reimbursements from the Lammersville Union School District for various school facilities and Community Facilities Fees (CFF) reimbursements from the City for various fire, police, and park improvements. 6 These sources include reimbursements from the City for water and wastewater and storm drain improvements. 7 These costs include all of the in-tract improvements for IA No. 1 and other improvements areas in the CFD as well as property outside of the CFD.
Item 8.4
Mountain House Page 1492 of 1663
41 The Master Developer
General. The Master Developer is Mountain House Developers, LLC, a Delaware limited liability company (previously defined as the “Master Developer”), qualified to do business in California. The Master Developer is owned 100% by Rurka Capital, LLC. Rurka Capital is owned by members of the Sandhu family including Karnail Singh Sandhu (Manager) and Pulvy Sandhu (Vice President). Key individuals of the Master Developer include (i) David Sargent (Director of Operations) who has been with the Mountain House project since 2005 and has over 24 years of experience in overseeing and managing real estate projects throughout the State of California, and (ii) Bob Anders (Construction Manager), who has over 30 years of experience in real estate development and construction management industries.
The Master Developer of the District acquired the land in the District between 2005 and 2007 for development and sale of finished lots to merchant builders. The Master Developer was originally a joint venture between Shea Homes and CalPers, and purchased the land from Trimark Homes in 2005 and 2007. In 2008, CalPers became the sole owner of the Master Developer. In 2023, Rurka Capital, LLC, a Delaware limited liability company purchased all of the CalPers interest in the Master Developer and is now the sole owner of the Master Developer.
As of March 1, 2026, the Master Developer owns all of the land within Improvement Area No. 3 hopes to sell lots to homebuilders, including Rurka Homes, an entity which is a general contractor affiliate of the Master Developer, as described herein. The Master Developer holds a license agreement with Rurka Homes, who upon completion of the home simultaneously purchases the lot and sells to the homebuyer. Other than the 61 lots which are the subject of the Master Developer/Rurka Homes arrangement, none of the lots in Improvement Area No. 3 are under contract with any merchant builder.
Rurka Homes
Rurka Homes Development Plan. As shown in Table 3, there are 61 residential lots currently owned by the Master Developer that are expected to be developed by Rurka Homes.
Rurka Homes is a general contractor that will build the 61 homes. Rurka Homes is owned by Rurka Holdings, LLC. Rurka Holdings, LLC is the sole member of the following limited liability company: RH Campelli at Lakeshore LLC, a Delaware limited liability company.
Rurka Homes’ development expectations described above are based on the Master Developer’s and Rurka Homes’ current plans. These plans may change due to changes in economic and market conditions or other factors. No assurance can be given that home construction and sales will be carried out on the schedule and according to the plans described herein, or that the home construction and sale plans or base prices set forth above will not change after the date of this Official Statement. The Master Developer and Rurka Homes reserve the right to change their development plans at any time without notice. Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation by the homebuyer.
Financing Plan. Rurka Homes intends to finance the development of the lots using the Working Capital Account described above, as well as internal sources (which may include funding Item 8.4
Mountain House Page 1493 of 1663
42 from its parent company and home sales proceeds). The balance in the Working Capital Account as of March 1, 2026 is approximately $_______ million. (Note: the Working Capital Account may be used by the Master Developer for development costs in Improvement Area No. 3 and elsewhere in the Mountain House project outside of Improvement Area No. 3; likewise, the Working Capital Account may be used by Rurka Homes for the development of RH Campelli at Lakeshore LLC neighborhood in Improvement Area No. 3 as well as ongoing projects in other parts of the Mountain House project outside of Improvement Area No. 3.) The Master Developer typically makes bi-monthly draws on the Working Capital Account to finance Rurka Homes construction costs. A summary of the costs spent through February 2, 2026 and the costs expected for the development of the property that Rurka Homes will be constructing is set forth below:
Financing Status
Campelli at Lakehaven Village
(Neighborhood I)
(As of February 2, ,2026)
Total Budget
Costs Incurred
Through
February 2, 2026
February 3, 2026
through Buildout
Land 25,193,000 3,428 25,189,572
Site Construction 1,249,905 69,325 1,180,575
Direct Construction 23,564,905 883,195 22,681,710
Sales and Marketing 4,201,573 318,177 3,883,396
Total Projected Costs 54,209,378 1,274,124 52,935,254
__________________
(1) Sales of homes will occur in a double escrow, whereby the completed home will be sold to RH Campelli at Lakeshore LLC and then to the homebuyer. A portion of the purchase price includes a land component that will be delivered to the Master Developer.
These amounts are the estimated land components of the future sales.
No assurance can be given that amounts necessary to fund the planned development by Rurka Homes in Improvement Area No. 3 will be available when needed. Neither Rurka Homes nor any other entity or person is under any legal obligation of any kind to expend funds for the development of the property as planned by Rurka Homes in Improvement Area No. 3. Any contributions by Rurka Homes or any other entity or person to fund the costs of such development are entirely voluntary. Rurka Homes has no legal obligation to Bond holders to make any such funds available for construction or development, or the payment of ad valorem property taxes or the Special Taxes.
If and to the extent that such funding sources, including but not limited to home sales revenues, is inadequate to pay the costs to complete the planned development by Rurka Homes in Improvement Area No. 3 and other financing is not put into place, there could be a shortfall in the funds required to complete the proposed development by Rurka Homes or to pay ad valorem property taxes or Special Taxes related to Rurka Homes’ property in Improvement Area No. 3 and the remaining portions of such development may not be completed. Many factors beyond Rurka Homes’ control, or a decision by Rurka Homes to alter its current plans, may cause the actual sources and uses to differ from the projections.
Item 8.4
Mountain House Page 1494 of 1663
43 VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 3
Assessed Valuation
The value of taxable property within Improvement Area No. 3 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.
The table below shows the assessed valuation for Fiscal Year 2025-26.
Fiscal
Year
Land
Assessed
Value
Improvement
Assessed
Value
Total
Assessed
Value
Number of
Permits
Issued (1)(2)
2025-26 $61,738,560 $0 $61,738,560 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, 2025, no building permits had been issued. (2) As of February 2, 2026, the date of value, 3 building permits had been issued.
Sources: San Joaquin County Assessor's Office; Goodwin Consulting Group, Inc.
The Appraisal
General. In order to obtain a more accurate estimate of the value of land in Improvement Area No. 3, the City ordered preparation of an appraisal report (the “Appraisal”), of the estimated value of certain taxable land within Improvement Area No. 3 as of a February 2, 2026 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. 3 of $302,204,000, as of February 2, 2026. The appraised value assumes completion of the Improvements funded by the 2026 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 November 15, 2024. The total Item 8.4
Mountain House Page 1495 of 1663
44 valuation set forth in the Appraisal is $302,204,000. For information on how the values were allocated among parcels and ownership, see APPENDIX B.
Appraised Values by Ownership
As of February 2, 2026
Market Value by Ownership
Appraised
Value
Mountain House Developers, LLC $302,204,000
Aggregate Market Value, subject to
hypothetical condition $211,130,000
_____________________
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 2026 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.
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 Item 8.4
Mountain House Page 1496 of 1663
45 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. 3; 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 2026 Bonds are outstanding in that the City has no control over the market value of the property within Improvement Area No. 3 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.
Value to Special Tax Burden Ratios
General. In comparing the value of the real property within Improvement Area No. 3 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. 3 cannot be foreclosed upon as a whole to pay delinquent Special Taxes of the owners of such parcels within Improvement Area No. 3 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. 3 could, without the consent of the City and in certain cases without the consent of the owners of the land within Improvement Area No. 3, impose additional taxes or assessment liens on the land within Improvement Area No. 3. See the subheading “Lammersville Joint Unified School District Community Facilities District No. 2024-1” following Table 5 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. 3 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. 3, however, will be subordinate to the lien of the Special Tax.
Item 8.4
Mountain House Page 1497 of 1663
46 Value to Lien Ratios by Appraisal Status. The following tables set forth composite values as of February 2, 2026, maximum Special Taxes for Fiscal Year 2026-27, allocable debt, and value to lien ratios by appraisal status in Improvement Area No. 3, based on the assumptions detailed therein.
Table 4A
Value to Lien Ratios by Development Status
Projected Fiscal Year 2026-27 Special Tax Levy
Improvement Area No. 3 Debt Allocated by Projected Special Tax(1) As of February 2, 2026
Ownership (2)
Appraisal
Status(2) Tract
No. of
Planned
Units
Appraised
Value (3)
Projected
FY 2026-27
Maximum
Facilities
Special Tax
Projected
FY 2026-27
Facilities
Special Tax
Levy (4)
Percent of
Projected
Facilities
Special Tax
Levy
Improvement
Area
No. 3
Bonds (5)*
Overlapping
Debt (6)
Total
Debt
Average
Appraised
Value-toLien*
Mountain House Developers, LLC Improved Lots
Village 2 4194 61 $21,288,770 $171,789 $171,789 13.5% $3,094,058 $1,977,891 $5,071,949 4.2 : 1 Village 2 4201 66 23,033,752 683,452 45,066 3.5 811,675 22,050 833,725 27.6 : 1 Village 3 4202 79 28,043,343 835,041 55,061 4.3 991,698 26,393 1,018,091 27.5 : 1 Village 4 4200 82 30,416,518 1,138,870 75,096 5.9 1,352,529 27,395 1,379,924 22.0 : 1 Subtotal - Improved Lots 288 102,782,383 2,829,153 347,013 27.3 6,249,960 2,053,728 8,303,688 12.4 : 1 Partially Improved Lots
Village 5 4199 75 27,234,630 1,453,807 95,862 7.5 1,726,538 25,056 1,751,595 15.5 : 1 Unimproved Lots Several 921 172,186,987 12,566,119 828,588 65.2 14,923,502 307,693 15,231,195 11.3 : 1 Subtotal - Partially Improved Lots & Unimproved Lots 996 199,421,617 14,019,926 924,450 72.7 16,650,040 332,750 16,982,790 11.7 : 1 Total 1,284 $302,204,000 $16,849,079 $1,271,462 100.0% $22,900,000 $2,386,478 $25,286,478 12.0 : 1
* Preliminary, subject to change.
(1) Includes the special tax levy and all overlapping debt anticipated based on the status of development as of the February 2, 2026 date of value. (2) The ownership and development status is based on the Appraisal Report and as of the February 2, 2026 date of value. (3) 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. (4) Based on 3 building permits issued prior to February 2, 2026, and assumes only the final map for Tract 4194 will be recorded prior to June 30, 2026. Assumes no further development.
Includes debt service due in 2027 on the Series 2026 Special Tax Bonds and estimated administrative expenses in the amount of $46,000. (5) Includes the $22,900,000 par amount of the Series 2026 Special Tax Bonds. Allocated based on the Projected FY 2026-27 Facilities Special Tax Levy. (6) 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 2025-26. Includes the currently outstanding overlapping CFD debt of Lammersville Joint Unified School District CFD No. 2024-1, allocated based on the projected special tax levy for that CFD as of February 2, 2026. The amount of overlapping CFD debt is subject to change as the School District issues more debt.
Sources: Integra Realty Resources, Inc.; Piper Sandler & Co.; California Municipal Statistics, Inc.; Goodwin Consulting Group, Inc.
Item 8.4
Mountain House Page 1498 of 1663
47 Table 4B
Value to Lien Ratios by Development Status
Projected Fiscal Year 2026-27 Special Tax Levy
Improvement Area No. 3 Debt Allocated by Projected Special Tax(1) As of February 2, 2026
Ownership (2) Appraisal Status(2) Tract
No. of
Planned
Units
Appraised
Value (3)
Projected
FY 2026-27
Maximum
Facilities
Special Tax
Projected
FY 2026-27
Facilities
Special Tax
Levy (4)
Percent of
Projected
Facilities
Special Tax
Levy
Improvement
Area
No. 3
Bonds (5)*
Overlapping
Debt (6)
Total
Debt
Average
Appraised
Value-toLien*
Mountain House Developers, LLC Improved Lots
Village 2 4194 61 $21,288,770 $171,789 $119,403 9.4% $2,150,533 $1,387,044 $3,537,577 6.0 : 1 Village 2 4201 66 23,033,752 185,871 126,258 9.9 2,274,003 1,464,317 3,738,320 6.2 : 1 Village 3 4202 79 28,043,343 433,680 294,593 23.2 5,305,838 1,771,612 7,077,450 4.0 : 1 Village 4 4200 82 30,416,518 532,121 361,461 28.4 6,510,188 2,293,576 8,803,764 3.5 : 1 Subtotal - Improved Lots 288 102,782,383 1,323,461 901,714 70.9 16,240,562 6,916,549 23,157,111 4.4 : 1 Partially Improved Lots
Village 5 4199 75 27,234,630 544,320 369,748 29.1 6,659,438 1,866,241 8,525,678 3.2 : 1 Unimproved Lots Several 921 172,186,987 12,566,119 0 0.0 0 307,693 307,693 N/A Subtotal - Partially Improved Lots & Unimproved Lots 996 199,421,617 13,110,439 369,748 29.1 6,659,438 2,173,934 8,833,372 22.6 : 1 Total 1,284 $302,204,000 $14,433,900 $1,271,462 100.0% $22,900,000 $9,090,483 $31,990,483 9.4 : 1
* Preliminary, subject to change.
(1) Includes the special tax levy and all overlapping debt anticipated based on the status of development as of the February 2, 2026 date of value and assuming the recordation of final maps for Tracts 4200, 4201, 4202, and 4199 before June 30, 2026. Also assumes the recordation of final maps for Tracts 4210 and 4211 for purposes of allocation of overlapping debt. (2) The ownership and development status is based on the Appraisal Report and as of the February 2, 2026 date of value. (3) 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. (4) Based on 3 building permits issued prior to February 2, 2026, and assumes final maps for Tracts 4194, 4200, 4201, 4202, and 4199 will all be recorded prior to June 30, 2026. Assumes no further development. Includes debt service due in 2027 on the Series 2026 Special Tax Bonds and estimated administrative expenses in the amount of $46,000. (5) Includes the $22,900,000 par amount of the Series 2026 Special Tax Bonds. Allocated based on the Projected FY 2026-27 Facilities Special Tax Levy. (6) 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 2025-26. Includes the overlapping CFD debt of Lammersville Joint Unified School District CFD No. 2024-1. The amount of overlapping CFD debt is subject to change as the School District issues more debt.
Sources: Integra Realty Resources, Inc.; Piper Sandler & Co.; California Municipal Statistics, Inc.; Goodwin Consulting Group, Inc.
Item 8.4
Mountain House Page 1499 of 1663
48 Stratification of Value to Lien Ratios. The following tables set forth ranges of value to lien ratios, based on appraised values, maximum Special Taxes for Fiscal Year 2026-27, and allocable debt in Improvement Area No. 3, based on the assumptions detailed therein.
Table 5A
Summary Value to Lien Ratios by Range
Projected Fiscal Year 2026-27 Special Tax Levy
Improvement Area No. 3 Debt Allocated by Projected Special Tax(1) Value-to-Lien
Ratio Range *
No. of
Units
Appraised
Value (2)
Projected FY
2026-27
Facilities
Special Tax
Levy (3)
Percent of
Projected
Facilities
Special
Tax Levy
Improvement
Area No. 3 (4)*
Overlapping
Debt (5) Total Debt *
Average
Value-toLien
Ratios *
25:1 to 30:1 145 $51,077,095 $100,128 7.9% $1,803,373 $48,442 $1,851,816 27.6 : 1 20:1 to 25:1 82 30,416,518 75,096 5.9 1,352,529 27,395 1,379,924 22.0 : 1 15:1 to 20:1 232 46,399,335 162,469 12.8 2,926,192 77,508 3,003,700 15.4 : 1 10:1 to 15:1 484 94,315,113 409,426 32.2 7,374,066 161,698 7,535,763 12.5 : 1 5:1 to 10:1 275 57,431,992 335,752 26.4 6,047,153 91,874 6,139,027 9.4 : 1 3:1 to 5:1 66 22,563,947 188,592 14.8 3,396,687 1,979,561 5,376,249 4.2 : 1 Total 1,284 $302,204,000 $1,271,462 100.0% $22,900,000 $2,386,478 $25,286,478 12.0 : 1
* Preliminary, subject to change.
(1) Includes the special tax levy and all overlapping debt anticipated based on the status of development as of the February 2, 2026 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 are not indicative of the market values of the villages or the individual lots. (3) Based on 3 building permits issued prior to February 2, 2026, and assumes only the final map for Tract 4194 will be recorded prior to June 30, 2026. Assumes no further development. Includes debt service due in 2027 on the Series 2026 Special Tax Bonds and estimated administrative expenses in the amount of $46,000. (4) Includes the $22,900,000 par amount of the Series 2026 Special Tax Bonds. Allocated based on the Projected FY 2026-27 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 2025-26. Includes the currently outstanding overlapping CFD debt of Lammersville Joint Unified School District CFD No. 2024-1, allocated based on the projected special tax levy for that CFD as of February 2, 2026. The amount of overlapping CFD debt is subject to change as the School District issues more debt.
Sources: Integra Realty Resources, Inc.; Piper Sandler & Co.; California Municipal Statistics, Inc.; Goodwin Consulting Group, Inc.
Item 8.4
Mountain House Page 1500 of 1663
49 Table 5B
Summary Value to Lien Ratios by Range
Projected Fiscal Year 2026-27 Special Tax Levy
Improvement Area No. 3 Debt Allocated by Projected Special Tax(1) Value-to-Lien
Ratio Range *
No. of
Units
Appraised
Value (2)
Projected FY
2026-27
Facilities
Special Tax
Levy (3)
Percent of
Projected
Facilities
Special
Tax Levy
Improvement
Area No. 3 (4)*
Overlapping
Debt (5) Total Debt *
Average
Value-toLien
Ratios*
5:1 to 10:1 124 $43,275,533 $237,212 18.7% $4,272,370 $2,786,223 $7,058,593 6.1 : 1 3:1 to 5:1 239 86,741,480 1,034,250 81.3 18,627,630 5,996,566 24,624,196 3.5 : 1 Undeveloped 921 172,186,987 0 0.0 0 307,693 307,693 N/A Total 1,284 $302,204,000 $1,271,462 100.0% $22,900,000 $9,090,483 $31,990,483 9.4 : 1
* Preliminary, subject to change.
(1) Includes the special tax levy based on the status of development as of February 2, 2026 and assuming the recordation of final maps for Tracts 4200, 4201, 4202, and 4199 before June 30, 2026. Also assumes the recordation of final maps for Tracts 4210 and 4211 for purposes of allocation of overlapping debt, which are outside of Improvement Area No. 3. (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 are not indicative of the market values of the villages or the individual lots. (3) Based on 3 building permits issued prior to February 2, 2026, and assumes final maps for Tracts 4194, 4200, 4201, 4202, and 4199 will all be recorded prior to June 30, 2026. Assumes no further development. Includes debt service due in 2027 on the Series 2026 Special Tax Bonds and estimated administrative expenses in the amount of $46,000. (4) Includes the $22,900,000 par amount of the Series 2026 Special Tax Bonds. Allocated based on the Projected FY 2026-27 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 2025-26. Includes the currently outstanding overlapping CFD debt of Lammersville Joint Unified School District CFD No. 2024-1, allocated based on the hypothetical special tax levy for that CFD assuming the same final map recordation’s noted above in Footnote 1. The amount of overlapping CFD debt is subject to change as the School District issues more debt.
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. 3 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. Land within that community facilities district is essentially comprised of all of the land within Improvement Area Nos. 1 through 4 of the District and most of Improvement Area No. 5.
For fiscal year 2024-25 the per unit maximum special tax rate in Village 1 of Improvement Area No. 3 is $1,939 and in Village 6 of Improvement Area No. 3 is $2,506; no tax was levied for 2024-25 and maximum rates escalate 2% per year. The annual special tax requirement, which is determined by the school district annually, 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 when bonds will be issued or if the special tax will be levied prior to the issuance of those bonds, nor can it 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. 3 will be subject to future levies for this community facilities district, which will affect future value to lien ratios.]] Item 8.4
Mountain House Page 1501 of 1663
50 Special Tax Collections and Delinquencies
Fiscal Year 2026-27 will be the first year in which the Special Tax was levied in Improvement Area No. 3. The following table sets forth the projected Fiscal Year 2026-27 Facilities Special Tax Levy by Village.
Table 6
Projected Fiscal Year 2026-27
Facilities Special Tax Levy by Village(1)
Projected
Development Status Village
Projected
FY 2026-27 Maximum
Facilities Special Tax
Projected FY
2026-27 Actual
Facilities
Special Tax (2)*
Developed Property Village 2 $8,449 $8,449
Final Map Property Village 2 $163,341 $163,341
Undeveloped Property N/A $16,677,290 $1,099,673
$16,849,079 $1,271,462
______________
*Preliminary, subject to change.
(1) As of February 2, 2026, the date of value, the final map for Tract 4194 had been recorded, and 3 building permits had been issued for construction of new homes. Assumes no additional development. (2) Includes debt service due in 2027 on the Series 2026 Special Tax Bonds and estimated administrative expenses in the amount of $46,000. The Priority Administrative Expense for fiscal year 2026-27 is $46,000 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. 3, and payment of the Special Tax is secured by a lien on certain real property within Improvement Area No. 3. 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. 3. 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. 3.
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. 3. 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.
Item 8.4
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51 Table 8
Summary of Overlapping Debt
As of ______________, 2026
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. 3 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.
Item 8.4
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52 Estimated Overall Tax Burden
The following table shows the estimated overall tax burden for representative single-family residential homes in Improvement Area No. 3 for Fiscal Year 2025-26.
Table 9
Estimated Overall Tax Burden
Village 2 Village 4
Net Taxable Value Amount Amount
Estimated Market Values (1) $1,035,000 $1,250,000
Less: Homeowner's Exemption ($7,000) ($7,000)
Net Taxable Value $1,028,000 $1,243,000
Ad Valorem Property Taxes (2) Rate Amount Amount
Base Property Tax 1.0000% $10,280 $12,430
LAMMERSVL USD 2006 MEASURE E BOND 0.0082% $84 $102
LAMMERSVL USD 2016 MEASURE L BOND 0.0285% $293 $354
SJ DELTA COLL 2004 MEASURE L BOND 0.0110% $113 $137
DELTA COLL SFID1 2024 MEASURE K BOND 0.0146% $150 $181
Total Ad Valorem Property Taxes 1.0623% $10,920 $13,204 Parcel Charges, Assessments, and Special Taxes (2) Amount Amount Mountain House - Parks & Rec (3) $106 $83
Mountain House - Public Safety (3) $604 $469
Mountain House - Public Works (3) $110 $87
Mountain House - Road & Admin (3) $1,191 $919
S Delta Water Agency $2 $2
SJC Mosq & Vctr Contr - Ben Asmt $2 $2
SJC Mosquito Abate $2 $2
Water Zone 2 $1 $1
Lammersville USD CFD 2024-1 (4) $1,978 $2,556
Mountain House CFD No. 2024-1 (Public Facilities and Services) - Services (5) $525 $525 Mountain House CFD No. 2024-1 (Public Facilities and Services) - Facilities (5) $2,761 $6,362 Total Parcel Charges, Assessments, and Special Taxes $7,282 $11,008 Total Taxes $18,202 $24,212
Total Effective Tax Rate 1.76% 1.94%
(1) Represents the base home prices listed for medium density lots and low denisty lots per the Appraisal Report. Assumes a medium density lot for Village 2 and a low density lot for Village 4. (2) Based on fiscal year 2025-26 charges identified on the San Joaquin County-issued property tax bills. Charges subject to change in future years.
(3) Not authorized to issue bonds.
(4) Authorized to issue up to $250 million in bonds. Currently, a total of $42,385,000 in bonds is outstanding for this CFD. (5) Equal to the applicable Maximum Special Tax rate in FY 2025-26.
Sources: San Joaquin County Tax Collector's Office; Integra Realty Resources, Inc.; Goodwin Consulting Group, Inc. .
Item 8.4
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53 SPECIAL RISK FACTORS
The purchase of the 2026 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 that should be considered before making an investment decision.
Limited Obligation of the City to Pay Debt Service
The City has no obligation to pay principal of and interest on the 2026 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 2026 Bonds. The 2026 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 2026 Bonds will be limited to the Special Tax to be collected within Improvement Area No. 3.
Concentration of Ownership
Land in Improvement Area No. 3 is presently entirely owned by the Master Developer. A portion of the land owned by the Master Developer is expected to be developed by Rurka Homes, who is a general contractor affiliate of the Master Developer. Rurka Homes 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. Accordingly, ownership of the lots is maintained in the name of the Master Developer during construction by Rurka Homes.
No assurance can be given that the Merchant Builders will complete homes on the lots that they purchase and sell the lots to individual homeowners on the timeline projected in this Official Statement or at all.
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 2026 Bonds have no recourse against the owner, such as filing a lawsuit to collect money.
Failure of any of the Merchant Builders or any other future owner of significant property subject to the Special Taxes in Improvement Area No. 3 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 2026 Bonds. In that event, there could be a delay or failure in payments on the 2026 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.”
Item 8.4
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54 Appraised Values
The Appraisal summarized in APPENDIX B estimates the market value of certain taxable property within Improvement Area No. 3. 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 2026 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. 3 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. 3 is a critical factor in determining the investment quality of the 2026 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 2026 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. 3 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 Item 8.4
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55 any particular parcel, the City is issuing the 2026 Bonds without regard to any such evaluation. Thus, the issuance of the 2026 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. 3 or the value of property in Improvement Area No. 3.
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 2026 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 2026 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. 3 – Value to Special Tax Burden Ratios.” No assurance can be given that the proposed development within Improvement Area No. 3 will be completed, and in assessing the investment quality of the 2026 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 2026 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. 3 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. 3 may also be affected by development in surrounding areas, which may compete with development in Improvement Area No. 3. 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. 3 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. 3 will not be adversely affected by these risks.
Natural Disasters. The value of the parcels in Improvement Area No. 3 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. 3 and the continued habitability and enjoyment of such private improvements.
For example, the areas in and surrounding Improvement Area No. 3, like those in much of California, may be subject to earthquakes or other unpredictable seismic activity, however, Improvement Area No. 3 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 Item 8.4
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56 improvements of varying seriousness. Although the land in Improvement Area No. 3 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. 3, 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. 3 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. 3 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. 3 following a delinquency in the payment of Special Taxes.
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. 3 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. 3 would affect the marketability and the value of some or all of the property in Improvement Area No. 3. In that event, the owners and operators of a parcel within Improvement Area No. 3 may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws.
California laws with regard to hazardous substances are also applicable to property within Improvement Area No. 3 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. 3 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. 3 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.
Item 8.4
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57 Further, it is possible that liabilities may arise in the future with respect to any of the parcels within Improvement Area No. 3 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. 3 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. 3, 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. 3 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 2026 Bonds is the proceeds of the annual levy and collection of the Special Tax against property within Improvement Area No. 3.
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 2026 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 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 2026 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 2026 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:
Item 8.4
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58 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. 3.
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 2026 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. 3. See “ – FDIC/Federal Government Interests in Properties” below.
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.
Item 8.4
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59 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. 3 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.
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 2026 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 2026 Bonds. To the extent that property in Improvement Area No. 3 continues to be owned by a limited number of property owners, the chances are increased that the Reserve Fund established for the 2026 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 2026 Bonds on a timely basis.
Item 8.4
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60 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 2026 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.
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 Item 8.4
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61 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. 3 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. 3.
Property in Improvement Area No. 3 is currently subject to certain overlapping tax and assessment liens, as shown in the overlapping debt statement, including a special tax lien of the 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. 3 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. 3. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 3 - Value to Special Tax Burden Ratios.” See also “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 3 – 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 2026 Bonds. The principal of and interest on the 2026 Bonds are payable from the Special Tax authorized to be collected within Improvement Area No. 3, and payment of the Special Tax is secured by a lien on certain real property within Improvement Area No. 3. 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. 3. 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. 3. 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.
Item 8.4
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62 There can be no assurance that property owners within Improvement Area No. 3 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. 3, 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. 3. Such loans would increase amounts owed by the owner of such parcel with respect to development of its property in Improvement Area No. 3. 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. 3 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 available to pay debt service on the 2026 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 2026 Bonds. If funds in the Reserve Fund for the 2026 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 2026 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. 3 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.
Item 8.4
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63 No Acceleration Provisions
The 2026 Bonds do not contain a provision allowing for the acceleration of the 2026 Bonds in the event of a payment default or other default under the terms of the 2026 Bonds or the Fiscal Agent Agreement. Under the Fiscal Agent Agreement, a 2026 Bond holder is given the right for the equal benefit and protection of all 2026 Bond holders similarly situated to pursue certain remedies.
So long as the 2026 Bonds are in book-entry form, DTC will be the sole 2026 Bond holder and will be entitled to exercise all rights and remedies of 2026 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 of Improvement Area No. 3. 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 2026 Bonds.
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. 3 were each authorized by not less than a two-thirds vote of the landowners within Improvement Area No. 3 who constituted the qualified electors at the time of such voted authorization. The District believes, therefore, that issuance of the 2026 Bonds does not require the conduct of further proceedings under the Mello-Roos Act, Proposition 218 or Proposition 26.
Item 8.4
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64 Like their antecedents, Proposition 218 and Proposition 26 are likely to undergo both judicial and legislative scrutiny before the impact on Improvement Area No. 3 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 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. 3), there were no registered voters within the District (including Improvement Area No. 3) 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. 3.
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] Item 8.4
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65 … 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. 3 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. 3 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.
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.
Pandemic Diseases
In recent years, public health authorities have warned of threats posed by outbreaks of disease and other public health threats. Pandemic diseases 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 Item 8.4
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66 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 pandemic diseases.
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 2026 Bonds. The City is also reliant on other entities and service providers in connection with the administration of the 2026 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.
Potential Early Redemption of Bonds from Prepayments
Property owners within Improvement Area No. 3, 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.
Item 8.4
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67 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. 3.
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 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 LLP, San Mateo, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the 2026 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 2026 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 Item 8.4
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68 such as the 2026 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 2026 Bonds.
Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public at which a 2026 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 2026 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 2026 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 2026 Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such 2026 Bond. The Tax Code contains certain provisions relating to the accrual of original issue discount in the case of purchasers of the 2026 Bonds who purchase the 2026 Bonds after the initial offering of a substantial amount of such maturity. Owners of such 2026 Bonds should consult their own tax advisors with respect to the tax consequences of ownership of 2026 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 2026 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 2026 Bond (said term being the shorter of the 2026 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 2026 Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a 2026 Bond is amortized each year over the term to maturity of the 2026 Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized 2026 Bond premium is not deductible for federal income tax purposes. Owners of premium 2026 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 2026 Bonds.
California Tax Status. In the further opinion of Bond Counsel, interest on the 2026 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 2026 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 2026 Bonds.
Item 8.4
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69 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 2026 Bonds, or as to the consequences of owning or receiving interest on the 2026 Bonds, as of any future date. Prospective purchasers of the 2026 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 2026 Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the 2026 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 2026 Bonds, the ownership, sale or disposition of the 2026 Bonds, or the amount, accrual or receipt of interest on the 2026 Bonds.
LEGAL OPINION
The validity of the 2026 Bonds and certain other legal matters are subject to the approving opinion of Jones Hall LLP, 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 2026 Bonds at the time of delivery. The fees of Bond Counsel are contingent upon the sale and delivery of the 2026 Bonds.
NO RATINGS
The City has not applied to a rating agency for the assignment of a rating to the 2026 Bonds and does not contemplate applying for a rating.
NO LITIGATION
At the time of delivery of and payment for the 2026 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 2026 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 2026 Bonds, or in any way contesting or affecting the validity or enforceability of the 2026 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 2026 Bonds or any action of the City contemplated by any of said documents.
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70 CONTINUING DISCLOSURE
The City. The City has covenanted for the benefit of owners of the 2026 Bonds to provide certain financial information and operating data relating to Improvement Area No. 3 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 2023-24 (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 2023-24.
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.
[[UPDATE]] During the previous five years, MHCSD has not complied with its prior undertakings under the Rule as follows:
• Various financial and/or operating data was not timely filed with the annual reports for Fiscal Year 2017-18 and Fiscal Year 2018-19.
• 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.
The Master Developer. The Master Developer 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 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.
The Master Developer has advised the City that, based on a review of its prior continuing disclosure obligations, the Master Developer 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.
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71 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 2026 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 2026 Bonds.
UNDERWRITING
The 2026 Bonds were purchased through negotiation by Piper Sandler & Co., as underwriter (the “Underwriter”). The Underwriter agreed to purchase the 2026 Bonds at a price of $_____________ (which is equal to the par amount of the 2026 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 2026 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 2026 Bonds, some or all of the fees or other compensation payable to the City and certain professionals involved with the offering of the 2026 Bonds is contingent upon the issuance and delivery of the 2026 Bonds. Those entities include:
• The City, as the issuer;
• Piper Sandler & Co., as the Underwriter;
• Jones Hall LLP, 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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72 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
Item 8.4
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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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C-1
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 is included only for the purpose of supplying general information regarding the general area surrounding the Mountain House Community. The 2026A 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 Indenture and each Local Obligation 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 City is directly north and northwest of the City of Tracy, located on the western edge of the Central Valley in San Joaquin County. The City 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 28,795 as of January 1, 2025. Population figures for cities in the County, the County and the State for the dates indicated over the last five years are shown in the following table.
COUNTY OF SAN JOAQUIN
Population Estimates
Calendar Years 2021 through 2025
Population Estimates
(As of January 1st)
Area 2021 2022 2023 2024 2025
Escalon 7,429 7,351 7,273 7,337 7,232
Lathrop 29,565 31,390 34,877 37,102 38,596
Lodi 66,061 66,309 66,314 67,262 67,093
Manteca 84,800 86,836 88,882 92,116 93,733
Mountain House -- -- -- -- 28,795
Ripon 16,126 15,940 15,796 15,966 15,753
Stockton 320,574 321,000 318,906 323,355 320,877
Tracy 93,773 94,789 95,507 97,501 98,215
Balance of County 162,892 160,674 160,141 161,689 135,562 Incorporated 618,328 623,615 627,555 640,639 670,294
County Total 781,220 784,289 787,696 802,328 805,856
Source: California Department of Finance (Estimates are as of January 1).
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C-2
Employment and Industry
The unemployment rate in San Joaquin County was 6.4 percent in December 2025, unchanged from a revised 6.4 percent in November 2025, and unchanged the year-ago estimate of 6.4 percent. This compares with an unadjusted unemployment rate of 5.1 percent for California and 4.1 percent for the nation during the same period.
The City 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 2020 to 2024 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 the City.
STOCKTON-LODI MSA
(San Joaquin County)
Annual Average Labor Force and Employment by Industry
Calendar Years 2020 through 2024
(March 2024 Benchmark)
2020 2021 2022 2023 2024
Civilian Labor Force (1) 347,200 349,400 356,700 363,400 368,500 Employment 308,800 320,300 338,200 341,600 344,700
Unemployment 38,400 29,100 18,500 21,700 23,800
Unemployment Rate 11.1% 8.3% 5.2% 6.0% 6.5%
Wage and Salary Employment: (2)
Agriculture 14,600 14,200 13,800 14,500 14,300
Mining and Logging 100 100 0 0 0
Construction 13,000 13,900 14,900 14,000 14,700
Manufacturing 20,100 21,300 23,000 23,500 23,500
Wholesale Trade 10,600 10,800 11,600 12,300 12,400
Retail Trade 24,600 26,200 27,000 27,100 27,000
Transportation, Warehousing and Utilities 38,800 43,000 48,100 47,300 47,600 Information 1,200 1,200 1,200 1,100 1,000
Financial Activities 7,800 8,000 8,200 7,900 7,700
Professional and Business Services 21,300 22,500 24,100 23,100 22,900 Educational and Health Services 37,300 38,000 39,700 42,000 44,800 Leisure and Hospitality 18,500 21,300 24,300 24,500 24,400 Other Services 6,800 7,300 7,900 8,100 8,200
Federal Government 3,300 3,100 3,100 3,000 3,000
State Government 6,800 6,000 5,500 5,100 4,800
Local Government 33,000 32,900 34,000 35,100 37,000
Total All Industries (3) 257,700 269,800 286,200 288,500 293,000
(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 February 2026.
SAN JOAQUIN COUNTY
Major Employers
As of February 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
Chevron Lodi Service Stations-Gasoline & Oil
Dameron Hospital Stockton Hospitals
Foster Care Svc Stockton Foster Care
Leprino Foods Co Tracy Cheese Processors (mfrs)
Lodi Health Home Health Agency Lodi Home Health Service 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 Non-Profit Organizations
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, 2026 1st Edition.
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Commercial Activity
Summaries of historic taxable sales within the City and 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 2025 in the City were reported to be $13,474,345.
CITY OF MOUNTAIN HOUSE
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
2020 -- -- -- --
2021 -- -- -- --
2022 -- -- -- --
2023 -- -- -- --
2024 90 $4,033 141 $4,108
Source: State of California, Board of Equalization.
The total taxable sales during the first three quarters of calendar year 2025 in the County were reported to be $18,541,920,605, a 2.72% increase over the total taxable sales of $18,050,158,443 reported during the comparable three quarters of calendar year 2024.
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
2020 11,188 $10,215,896 18,358 $15,752,225
2021 10,642 15,153,915 17,665 22,306,576
2022 10,884 15,342,203 18,100 23,625,470
2023 10,632 15,584,742 17,666 23,507,449
2024 10,831 16,862,302 18,099 24,682,773
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 City, the County, the State of California, and the United States for the period 2022 through 2026.
CITY OF MOUNTAIN HOUSE, COUNTY OF SAN JOAQUIN,
STATE OF CALIFORNIA AND UNITED STATES
Effective Buying Income
2022 through 2026
Year Area
Total Effective
Buying Income
(000’s Omitted)
Median Household
Effective
Buying Income
2022 City of Mountain House $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 City of Mountain House $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 City of Mountain House $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 City of Mountain House $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
2026 City of Mountain House $1,667,621 $152,413
San Joaquin County 28,892,491 85,982
California 1,730,654,738 90,403
United States 13,932,177,817 75,433
Source: Claritas, LLC.
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Building Activity
The table below summarizes building activity in the County for calendar years 2020 through 2024. Mountain House permit activity is shown in the main body of this Official Statement.
COUNTY OF SAN JOAQUIN
Building Permit Activity
For Calendar Years 2020 through 2024
(Dollars in Thousands)
2020 2021 2022 2023 2024
Permit Valuation
New Single-family $870,859.6 $1,179,358.0 $1,281,631.4 $851,675.9 $1,603,417.4 New Multi-family 38,411.8 69,775.2 88,457.7 75,802.5 26,010.5 Res. Alterations/Additions 40,144.4 108,647.1 182,338.5 55,378.0 59,932.3 Total Residential 949,415.8 1,357,780.3 1,552,427.6 982,856.4 1,689,360.2 New Commercial 255,761.2 272,617.0 641,696.7 199,112.8 147,637.7 New Industrial 534,199.5 43,401.3 249,274.2 13,931.0 0.0 New Other 33,112.3 58,264.9 107,863.0 76,524.2 175,731.2 Com. Alterations/Additions 135,285.4 272,064.7 450,649.8 193,151.2 283,920.5 Total Nonresidential 958,358.4 646,347.9 1,449,483.7 482,719.2 607,289.4 New Dwelling Units
Single Family 2,843 3,665 3,168 2,147 3,620
Multiple Family 245 178 338 605 73
TOTAL 3,088 3,843 3,506 2,752 3,693
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
251 E. Main Street
Mountain House, California 95391
OPINION: $__________ Improvement Area No. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2026
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. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2026 (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 April 1, 2026 (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 ___________, 2026, is executed and delivered by the CITY OF MOUNTAIN HOUSE (the “City”) in connection with the execution and delivery of its Improvement Area No. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2026 (the “Bonds”). The Bonds are being executed and delivered pursuant to a Fiscal Agent Agreement dated as of April 1, 2026 (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, 2027, with the report for Fiscal Year 2025-26, 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, 2027 shall be satisfied by posting the City’s audited financial statements for Fiscal Year 2025-26. 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. 3. (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. 3. (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 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 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. 3 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 __________, 2026, is executed and delivered by ____________ (the “Developer”) connection with the execution and delivery of its Improvement Area No. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2026 (the “Bonds”). The Bonds are being executed and delivered pursuant to a Fiscal Agent Agreement dated as of April 1, 2026 (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. 3 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. 3), whereby such Major Owner or Affiliate agrees to provide Periodic Reports and notices of significant events, setting forth the information described in sections 4 and 5 hereof, respectively, with respect to the portion of the property in Item 8.4
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Improvement Area No. 3 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. 3” means Improvement Area No. 3 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, _____ for the Master Developer. [any merchant builders?] [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. “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.
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“Property” means the real property in Improvement Area No. 3 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. 3 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. 3.
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, 2026, 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 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.
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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.
Section 6. Duration of Reporting Obligation.
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(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 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 Item 8.4
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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]
To the Participating
Underwriter: Piper Sandler & Co.
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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: _____________________________
Item 8.4
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EXHIBIT A
PERIODIC REPORT
Relating to:
IMPROVEMENT AREA NO. 3 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 ________, 2026 executed by _________________ (the “Developer”) with respect to Improvement Area No. 3 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. 3 (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. 3 by the Developer or an Affiliate (if any), or sales of land in Improvement Area No. 3 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. 3 PLANNED DEVELOPMENT – [For Master Developer: -- The ______ Project” and “—Rurka Homes”] that would materially and adversely interfere with the Developer’s ability to develop and sell the Property as described in the Official Statement. ______________________________________________________________________ ______________________________________________________________________ Item 8.4
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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 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 2026 Bonds, payment of principal, interest and other payments on the 2026 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 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 Item 8.4
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G-3
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.
Item 8.4
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Stradling Yocca Carlson & Rauth
Draft of 3/10/26
1 4927-2693-9030v2/024667-0195
$__________
IMPROVEMENT AREA NO. 3 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1 (PUBLIC FACILITIES AND
SERVICES)
SPECIAL TAX BONDS
SERIES 2026
BOND PURCHASE AGREEMENT
_____, 2026
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. 3 of the City of Mountain House Community Facilities No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2026 (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 Item 8.4
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September 1, 2026) 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 April 1, 2026 ( 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 _____, 2026 (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. 3 (“Improvement Area No. 3”) 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”). 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 _____, 2026 (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 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.
Item 8.4
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(e) At 8:00 A.M., Pacific Daylight Time, on _____, 2026, 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 LLP, 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 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 Item 8.4
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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
Item 8.4
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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 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. 3 therein, pursuant to the Resolution of Formation 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 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. 3 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. (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 Item 8.4
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District to approve the levy of the Special Tax within Improvement Area No. 3 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. 3 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 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 Item 8.4
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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. (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 Item 8.4
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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.
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 Item 8.4
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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 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 Item 8.4
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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;
(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. 3 or which order, in the reasonable opinion of the Item 8.4
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Underwriter, otherwise materially and adversely affects proposed development of property within the Improvement Area No. 3;
(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 opinion addressed to the City may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it;
Item 8.4
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(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) 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;
(6) 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 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;
(7) 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 Item 8.4
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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. 3 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; (8) 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. 3 is at least one hundred ten percent (110%) of the total Annual Debt Service for 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; (9) 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; (10) 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; Item 8.4
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(11) A Letter of Representations of Mountain House Developers, LLC, a Delaware limited liability company (the “Master 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 Master Developer dated the Closing Date, substantially in the form attached as Exhibit E;
(12) A continuing disclosure certificate of the Master Developer (the “Master Developer Continuing Disclosure Certificate”), executed by the Master Developer in substantially the form attached as Appendix E to the Official Statement; (13) One or more opinions of counsel to the Master Developer, dated the Closing Date and addressed to the District and the Underwriter, in form and substance acceptable to the Underwriter and Stradling, regarding (i) the Master Developer’s due organization and qualification to do business, (ii) the due authorization and execution of the Master Developer Continuing Disclosure Certificate, (iii) the absence of litigation pending against the Master Developer (with service of process to the Master Developer having been duly given and completed) or overtly threatened against the Master Developer which would materially and adversely affect the validity or enforceability of the Master Developer Continuing Disclosure Certificate executed by the Master Developer or the Master Developer’s ability to pay the Special Taxes when due, and (iv) negative assurance regarding the Preliminary Official Statement and the Official Statement; (14) G-17 letter from the Underwriter acknowledged by the City; (15) A letter of Jones Hall LLP, 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; (16) 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; (17) 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 Item 8.4
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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. 3 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.
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.
Item 8.4
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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.
12. Governing Law. This Purchase Agreement shall be governed by the laws of the State applicable to contracts made and performed in the State.
Item 8.4
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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.
Item 8.4
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A-1
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EXHIBIT A
MATURITY SCHEDULE
$__________
IMPROVEMENT AREA NO. 3 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1 (PUBLIC FACILITIES AND
SERVICES)
SPECIAL TAX BONDS
SERIES 2026
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, 20__ 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:
Item 8.4
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Redemption Dates Redemption Price
September 1, 20__ 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__ 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 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.
Item 8.4
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EXHIBIT B
$__________
IMPROVEMENT AREA NO. 3 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1 (PUBLIC FACILITIES AND
SERVICES)
SPECIAL TAX BONDS
SERIES 2026
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. 3 of the City of Mountain House Community Facilities No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2026 (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 _____, 2026 setting forth information concerning the Bonds and the Improvement Area No. 3 of the City of Mountain House Community Facilities No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2026 (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 _____, 2026.
CITY OF MOUNTAIN HOUSE
By:
Its: City Manager
Item 8.4
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EXHIBIT C
FORM OF ISSUE PRICE CERTIFICATE
$__________
IMPROVEMENT AREA NO. 3 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1 (PUBLIC FACILITIES AND
SERVICES)
SPECIAL TAX BONDS
SERIES 2026
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 April 1, 2026, 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 _____, 2026. (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 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: _____, 2026
Item 8.4
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SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES
(Attached)
Item 8.4
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EXHIBIT D
IMPROVEMENT AREA NO. 3 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1
(PUBLIC FACILITIES AND SERVICES)
SPECIAL TAX BONDS
SERIES 2026
LETTER OF REPRESENTATIONS OF MOUNTAIN HOUSE DEVELOPERS, LLC _____, 2026
In connection with the issuance and sale of the above-captioned bonds (the “Bonds”), and pursuant to Section 4(d)(11) 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”), Mountain House Developers, LLC, a Delaware limited liability company (the “Master 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 Master Developer is duly organized and validly existing under the laws of the State of Delaware and is registered to transact intrastate business in the State of California and has all requisite right, power, and authority to: (i) execute and deliver this Letter of Representations of Mountain House Developers, LLC (the “Letter of Representations”); (ii) to execute and deliver the Continuing Disclosure Certificate (Mountain House Developers, LLC) to be executed by the Master Developer prior to the Closing (the “Master 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, the property within Improvement Area No. 3 of the District is owned by the Master Developer (herein, the “Property”). The undersigned, on behalf of the Master Developer, makes the representations herein with respect to all such Property.
3. The Master Developer has, or will have prior to the Closing, duly authorized the execution and delivery of the Master Developer Continuing Disclosure Certificate at the Closing and the performance by the Master Developer of its obligations thereunder.
4. Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned,1 (a) the Master Developer and its Relevant Entities,2 are not in breach of or in 1 “Actual Knowledge of the Undersigned” means the actual (as opposed to constructive) knowledge that the individual signing on behalf of the Master Developer 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 Master Developer 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 inspections or inquiries as are prudent and customary in connection with the ordinary course of the Item 8.4
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default 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 Master 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 ability of the Master Developer or any of the Merchant Builders 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 Master 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 Master Developer or its Relevant Entities that is secured by an interest in the Property. To the Actual Knowledge of the Undersigned, neither the Master 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 Master 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 Master 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 Master Developer (with proper service of process to the Master Developer having been accomplished) or, to the Actual Knowledge of the Undersigned, is pending against any Relevant Entity of the Master 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 Master Developer or any such Relevant Entity which, if successful, is reasonably likely to materially and adversely affect the ability of the Master Developer or any of the Merchant Builders to develop the Property within Improvement Area No. 3 of the District as described in the Preliminary Official Statement or to pay the Special Tax levied against the Property (to the extent the responsibility of the Master 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 Master Developer, its Relevant Entities, the Master Developer’s development plan for the Property within the Improvement Area No. 3, the Master Developer’s financing plan, the Master Developer’s lenders, if any, and contractual arrangements of the Master Developer or any Relevant Entity of the Master Master Developer’s current business and operations. Officers and employees no longer working for the Master Developer or its Relevant Entities have not been contacted.
2 “Relevant Entity” means, with respect to the Master Developer, any other Person: (i) who directly, or indirectly through one or more intermediaries, is currently controlling, controlled by, or under common control with the Master Developer; 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 Master Developer’s development plans with respect to the Property and ability to pay the Special Tax on the Property prior to delinquency; or (b) such Person’s assets or funds that would materially affect the Master Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Tax on the Property 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.
Item 8.4
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Developer (including, if material to the Master Developer’s development plan or the Master Developer’s financing plan, other loans of such Relevant Entities) as set forth under the captions entitled “IMPROVEMENT AREA NO. 3 PLANNED DEVELOPMENT,” “SPECIAL RISK FACTORS—Property Values and Property Development—Endangered and Threatened Species,” and “CONTINUING DISCLOSURE—The Master Developer” (excluding therefrom, in each case, information which is identified as having been provided by a source other than the Master 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 Master Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Master 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 Improvement Area No. 3 of 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 Master 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 Rate and Method of Apportionment of Special Taxes for Improvement Area No. 3 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 Master Developer or its Relevant Entities, the City, and/or the District or to which the Master 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 in Improvement Area No. 3 of the District exists or is in the process of being authorized that would include any portion of such Property.
10. To the Actual Knowledge of the Undersigned, the Master 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 Master 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 Master Developer.
11. 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 Master Developer, and except as disclosed in the Preliminary Official Statement, including under the caption entitled “IMPROVEMENT AREA NO. 3 PLANNED DEVELOPMENT,” to the Actual Knowledge of the Undersigned, the Master Item 8.4
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Developer currently expects that it will have sufficient funds and/or sources of funds to develop Improvement Area No. 3 of the District as described in the Preliminary Official Statement. The Master Developer reserves the right to change its development plan and financing plan for Improvement Area No. 3 of the District and the District as a whole at any time without notice.
12. Solely as to the limited information described in Paragraph 7 above (and subject to the limitations and exclusions set forth in Paragraph 7), the Master 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 Master 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 Master Developer to state in the Preliminary Official Statement, as of its date, a material fact necessary to make the statements made by the Master 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 Master Developer may otherwise have to any Indemnified Party, provided that in no event shall the Master Developer be obligated for double indemnification. Further, in no event shall the Master 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 Master Developer in writing; provided that the failure to notify the Master 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 Master 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 Master Developer thereof, the Master Developer shall retain counsel reasonably satisfactory to the Indemnified Party (who may be counsel to the Master 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 Master Developer and the Indemnified Party shall have mutually agreed to the contrary; (ii) the Master 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 that are different from or in addition to those available to the Master 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 Master 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 Master 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 Item 8.4
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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 Master Developer shall not be liable for any settlement of any proceeding effected without its written consent. The Master Developer shall not, without the written consent of the Indemnified Party, affect 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.
13. If, between the date hereof and the Closing Date, to the Actual Knowledge of the Undersigned, any event relating to or affecting the Master Developer, its Relevant Entities, ownership of the Property, the Master Developer’s development plan, the Master Developer’s financing plan, the Master Developer’s lenders, if any, and contractual arrangements of the Master Developer or any Relevant Entity of the Master Developer (including, if material to the Master Developer’s development plan or the Master Developer’s financing plan, other loans of such Relevant Entities) shall occur which the undersigned believes would cause the information under the sections 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 Master 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.
14. On behalf of the Master Developer, we have reviewed the contents of this Certificate and have met with counsel to the Master 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 an authorized representative of the Master Developer and he or she will have no personal liability arising from or relating to this Letter of Representations.
MOUNTAIN HOUSE DEVELOPERS, LLC,
a Delaware limited liability company
By: _____________________________
Name: ___________________________
Title: ____________________________
Item 8.4
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EXHIBIT E
$__________
IMPROVEMENT AREA NO. 3 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1
(PUBLIC FACILITIES AND SERVICES)
SPECIAL TAX BONDS
SERIES 2026
CLOSING CERTIFICATE OF MOUNTAIN HOUSE DEVELOPERS, LLC
Dated: _____, 2026
In connection with the issuance and sale of the above-captioned bonds (the “Bonds”), and pursuant to Section 4(d)(11) of the Bond Purchase Agreement (the “Bond Purchase Agreement”) executed by and between City of Mountain House (the “City”), for and on behalf of the Mountain House Community Facilities No. 2024-1 (Public Facilities and Services) (the “District”), and Piper Sandler & Co. (the “Underwriter”), Mountain House Developers, LLC, a Delaware limited liability company (the “Master 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 Mountain House Developers, LLC, dated _____, 2026 (the “Letter of Representations”), delivered by the Master Developer.
1. The undersigned is duly authorized to execute this Closing Certificate of Mountain House Developers, LLC (the “Closing Certificate”) on behalf of the Master Developer.
2. The Master Developer is duly authorized to execute, deliver and perform its obligations under the Master Developer Continuing Disclosure Certificate.
3. The Master Developer has duly executed and delivered the Master Developer Continuing Disclosure Certificate.
4. Except as disclosed in the final Official Statement relating to the Bonds (the “Final 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 business, properties, operations or financial condition of the Master Developer.
5. To the Actual Knowledge of the Undersigned, the representations and warranties made by the Master 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 Final Official Statement.
6. 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 Item 8.4
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Master Developer, its Relevant Entities, the Master Developer’s development plan, the Master Developer’s financing plan, the Master Developer’s lenders, if any, and contractual arrangements of the Master Developer or any Relevant Entities of the Master Developer (including, if material to the Master Developer’s development plan or the Master 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 sections of the 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 Master 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 an authorized representative of the Master Developer and he or she will have no personal liability arising from or relating to this Closing Certificate.
MOUNTAIN HOUSE DEVELOPERS, LLC,
a Delaware limited liability company
By: _____________________________
Name: ___________________________
Title: ____________________________
Item 8.4
Mountain House Page 1589 of 1663
Jones Hall Draft 3.11.26
FISCAL AGENT AGREEMENT
by and between
CITY OF MOUNTAIN HOUSE
and
COMPUTERSHARE TRUST COMPANY, N.A.,
as Fiscal Agent
Dated as of April 1, 2026
Relating to:
$_____________
Improvement Area No. 3 of
City of Mountain House
Community Facilities District No. 2024-1
(Public Facilities and Services)
Special Tax Bonds Series 2026
Item 8.4
Mountain House Page 1590 of 1663
i
TABLE OF CONTENTS
ARTICLE I
STATUTORY AUTHORITY AND DEFINITIONS
Section 1.01. Authority for this Agreement .............................................................................. 3 Section 1.02. Agreement for Benefit of Bondowners............................................................... 3 Section 1.03. Definitions .......................................................................................................... 3
ARTICLE II
THE BONDS
Section 2.01. Principal Amount; Designation......................................................................... 12 Section 2.02. Terms of Bonds................................................................................................ 12 Section 2.03. Redemption...................................................................................................... 13 Section 2.04. Form of Bonds ................................................................................................. 16 Section 2.05. Execution of Bonds.......................................................................................... 16 Section 2.06. Transfer of Bonds ............................................................................................ 16 Section 2.07. Exchange of Bonds.......................................................................................... 17 Section 2.08. Bond Register .................................................................................................. 17 Section 2.09. Temporary Bonds ............................................................................................ 17 Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen..................................................... 17 Section 2.11. Limited Obligation ............................................................................................ 18 Section 2.12. Book-Entry Only System.................................................................................. 18 Section 2.13. No Acceleration................................................................................................ 19
ARTICLE III
ISSUANCE OF BONDS
Section 3.01. Issuance and Delivery of Bonds ...................................................................... 20 Section 3.02. Application of Proceeds of Sale of Bonds and Collection of Special Tax ........ 20 Section 3.03. Special Tax Fund............................................................................................. 20 Section 3.04. [Not Used].......................................................... .
Section 3.05. Improvement Fund........................................................................................... 21 Section 3.06. Costs of Issuance Fund ................................................................................... 22
ARTICLE IV
SPECIAL TAX REVENUES; BOND FUND AND RESERVE FUND
Section 4.01. Pledge of Special Tax Revenues and Other Amounts..................................... 23 Section 4.02. Bond Fund ....................................................................................................... 23 Section 4.03. Reserve Fund .................................................................................................. 24
ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Payment............................................................................................ 27 Section 5.02. Limited Obligation ............................................................................................ 27 Section 5.03. Extension of Time for Payment........................................................................ 27 Section 5.04. Against Encumbrances.................................................................................... 27 Section 5.05. Books and Accounts ........................................................................................ 27 Section 5.06. Protection of Security and Rights of Owners ................................................... 27 Section 5.07. Compliance with Law; Completion of Project................................................... 28 Section 5.08. Private Activity Bond Limitation........................................................................ 28 Section 5.09. Federal Guarantee Prohibition......................................................................... 28 Section 5.10. Collection of Special Tax Revenues ................................................................ 28 Section 5.11. Further Assurances.......................................................................................... 28 Item 8.4
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Section 5.12. No Arbitrage..................................................................................................... 29 Section 5.13. Maintenance of Tax-Exemption ....................................................................... 29 Section 5.14. Annual State Reports....................................................................................... 29 Section 5.15. Covenant to Foreclose..................................................................................... 29 Section 5.16. Continuing Disclosure to Owners..................................................................... 30 Section 5.17. Additional Bonds.............................................................................................. 30 Section 5.18. Yield of the Bonds............................................................................................ 32
ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS; LIABILITY OF THE CITY Section 6.01. Deposit and Investment of Moneys in Funds................................................... 33 Section 6.02. Rebate of Excess Investment Earnings to the United States .......................... 34 Section 6.03. Limited Obligation ............................................................................................ 34
ARTICLE VII
THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Agent............................................................................ 35 Section 7.02. Liability of Fiscal Agent .................................................................................... 35 Section 7.03. Information....................................................................................................... 36 Section 7.04. Notice to Fiscal Agent...................................................................................... 36 Section 7.05. Compensation, Indemnification........................................................................ 37
ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted ................................................................................... 38 Section 8.02. Owners’ Meetings ............................................................................................ 38 Section 8.03. Procedure for Amendment with Written Consent of Owners ........................... 39 Section 8.04. Disqualified Bonds ........................................................................................... 39 Section 8.05. Effect of Supplemental Agreement .................................................................. 39 Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments................ 40 Section 8.07. Amendatory Endorsement of Bonds................................................................ 40 Section 8.08. Opinion of Counsel Regarding Supplemental Agreement ............................... 40
ARTICLE IX
MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties......................................................... 41 Section 9.02. Successor is Deemed Included in All References to Predecessor.................. 41 Section 9.03. Discharge of Agreement .................................................................................. 41 Section 9.04. Execution of Documents and Proof of Ownership by Owners......................... 42 Section 9.05. Waiver of Personal Liability.............................................................................. 42 Section 9.06. Notices to and Demands on City and Fiscal Agent.......................................... 42 Section 9.07. Partial Invalidity................................................................................................ 43 Section 9.08. Unclaimed Moneys .......................................................................................... 43 Section 9.09. Applicable Law................................................................................................. 43 Section 9.10. Conflict with Act ............................................................................................... 43 Section 9.11. Conclusive Evidence of Regularity .................................................................. 43 Section 9.12. Payment on Business Day............................................................................... 43 Section 9.13. Counterparts .................................................................................................... 43 Section 9.15. U.S.A. Patriot Act ............................................................................................. 43
EXHIBIT A FORM OF BOND
Item 8.4
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FISCAL AGENT AGREEMENT
THIS FISCAL AGENT AGREEMENT (the “Agreement”) is made and entered into and dated as of April 1, 2026, by and between the City of Mountain House, a municipal corporation and general law city, organized and existing under and by virtue of the Constitution and laws of the State of California (the “City”) for and on behalf of its City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) (the “District”), and Computershare Trust Company, N.A., a national banking association duly organized and existing under the laws of the United States of America with a corporate trust office located in St. Paul, Minnesota, as fiscal agent (the “Fiscal Agent”).
W I T N E S S E T H :
WHEREAS, prior to the incorporation of the City, the Board of Directors of the Mountain House Community Services District, as the predecessor to the City Council of the City, has conducted proceedings under and pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (the “Act”), to (i) establish the District (ii) designate within the District five initial improvement areas, including “Improvement Area No. 3 of the City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services)” (“Improvement Area No. 3”), and (iii) establish a future annexation area for the District known as “City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) (Future Annexation Area)” for the District (the “Future Annexation Area”); and
WHEREAS, under the Act, the City Council is authorized to issue bonded indebtedness secured by special taxes levied within the District and improvement areas therein for the purpose of providing moneys for the construction and acquisition of improvements, and the payment of certain fees, authorized for the District; and
WHEREAS, on April 10, 2024, the Board of Directors of the Mountain House Community Services District, as the predecessor to the City Council of the City, as legislative body of the CFD, established the bonded indebtedness limit for the District in the principal amount of not to exceed $1,830,700,000 (excluding bonds described in Section 53364.2(e) of the Act), initially allocated to Improvement Area No. 3 in the amount of $240,200,000; and WHEREAS, under the provisions of the Act, on __________, 2026, the City Council of the City adopted its Resolution No. 2026-_____ (the “Resolution”), which resolution authorized the issuance of its Improvement Area No. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2026 to provide moneys for the construction and acquisition of improvements for the District and provided that said issuance would be in accordance with the Act and this Agreement, and authorized the execution hereof; WHEREAS, it is in the public interest and for the benefit of the City, the District, the persons responsible for the payment of special taxes and the Owners of the Bonds that the City enter into this Agreement to provide for the issuance of the Bonds, the disbursement of proceeds of the Bonds, the disposition of the special taxes securing the Bonds authorized to be issued hereunder and the administration and payment of the Bonds; and WHEREAS, the City has determined that all things necessary to cause the Bonds, when authenticated by the City for the District and issued as in the Act, the Resolution and this Agreement provided to be legal, valid and binding and special obligations of the City for the District Item 8.4
Mountain House Page 1593 of 1663
2 in accordance with their terms, and all things necessary to cause the creation, authorization, execution and delivery of this Agreement and the creation, authorization, execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized.
NOW, THEREFORE, in consideration of the covenants and provisions herein set forth and for other valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby agree as follows:
Item 8.4
Mountain House Page 1594 of 1663
3 ARTICLE I
AUTHORITY AND DEFINITIONS STATUTORY AUTHORITY AND
DEFINITIONS
Section 1.01. Authority for this Agreement. This Agreement is entered into pursuant to the provisions of the Act and the Resolution.
Section 1.02. Agreement for Benefit of Bondowners. The provisions, covenants and agreements herein set forth to be performed by or on behalf of the City shall be for the equal benefit, protection and security of the Owners. All of the Bonds, without regard to the time or times of their issuance or maturity, shall be of equal rank without preference, priority or distinction of any of the Bonds over any other thereof, except as expressly provided in or permitted by this Agreement. The Fiscal Agent may become the Owner of any of the Bonds in its own or any other capacity with the same rights it would have if it were not Fiscal Agent.
Section 1.03. Definitions. Unless the context otherwise requires, the terms defined in this Section 1.03 shall, for all purposes of this Agreement, of any Supplemental Agreement, and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Agreement, and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or subdivision hereof. “Acquisition Agreement” means the Acquisition Agreement, dated as of March 1, 2025, 2025, by and between the City and Mountain House Developers, LLC, and any amendments thereto.
“Act” means the Mello-Roos Community Facilities Act of 1982, as amended, being Sections 53311 et seq. of the California Government Code. “Administrative Expense Priority” means (i) for Fiscal Year 2026-27, $35,000, and (ii) for each subsequent fiscal year, an amount equal to the preceding fiscal year’s Administrative Expense Priority plus an additional 2% of such amount.
“Administrative Expenses” means any or all of the following: the fees and expenses of the Fiscal Agent (including any fees or expenses of its counsel), the expenses of the City in carrying out its duties hereunder (including, but not limited to, the levying and collection of the Special Taxes, and the foreclosure of the liens of delinquent Special Taxes) including the fees and expenses of its counsel, an allocable share of the salaries of City staff directly related thereto and a proportionate amount of City general administrative overhead related thereto, any amounts paid by the City from its general funds pursuant to Section 6.02, and all other costs and expenses of the City or the Fiscal Agent incurred in connection with the issuance and administration of the Bonds and/or the discharge of their respective duties hereunder (including, but not limited to, the calculation of the levy of the Special Taxes, foreclosures with respect to delinquent taxes, and the calculation of amounts subject to rebate to the United States) and, in the case of the City, in any way related to the administration of the District and Improvement Area No. 3. Administrative Expenses shall include any such expenses incurred in prior years but not yet paid, and any advances of funds by the City under Section 6.02 hereof.
Item 8.4
Mountain House Page 1595 of 1663
4 “Administrative Services Director” means the Administrative Services Director, including any acting or interim Administrative Services Director, of the City, or a person serving in a similar capacity, or a designee of such person.
“Agreement” means this Fiscal Agent Agreement, as it may be amended or supplemented from time to time by any Supplemental Agreement. “Annual Debt Service” means, for each Bond Year, the sum of (i) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled, and (ii) the principal amount of the Outstanding Bonds, including any mandatory sinking fund payments, due in such Bond Year.
“Authorization” means a principal amount of bonds authorized to be issued for Improvement Area No. 3, not to exceed $240,200,000 (excluding bonds described in Section 53364.2(e) of the Act).
“Authorized Officer” means the City Manager, Finance Director, Administrative Services Director, or any other officer or employee authorized by the City Council of the City or by an Authorized Officer to undertake the action referenced in this Agreement as required to be undertaken by an Authorized Officer.
“Bond Counsel” means (i) Jones Hall LLP or (ii) any other attorney or firm of attorneys acceptable to the City and nationally recognized for expertise in rendering opinions as to the legality and tax-exempt status of securities issued by public entities. “Bond Fund” means the fund by that name established pursuant to Section 4.02(A) hereof.
“Bonds” means the Improvement Area No. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2026. “Bond Year” means each twelve-month period beginning on September 2 in any year and extending to the next succeeding September 1, both dates inclusive; except that the first Bond Year shall begin on the Closing Date and end on September 1, 2026. “Business Day” means any day other than (i) a Saturday or a Sunday or (ii) a day on which banking institutions in the state in which the Principal Office of the Fiscal Agent is located are authorized or obligated by law or executive order to be closed. “Capitalized Interest Account” means the fund by that name established pursuant to Section 4.02(A) hereof.
“CDIAC” means the California Debt and Investment Advisory Commission of the office of the State Treasurer of the State of California or any successor agency or bureau thereto. “City” means the City of Mountain House, California.
“Closing Date” means _________, 2026, being the date upon which there is a physical delivery of the Bonds in exchange for the amount representing the purchase price of the Bonds by the Original Purchaser.
Item 8.4
Mountain House Page 1596 of 1663
5 “Code” means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Bonds, together with applicable temporary and final regulations promulgated, and applicable official public guidance published, under the Code. “Continuing Disclosure Certificate” means the Continuing Disclosure Certificate, dated __________, 2026, by and among the City and Kosmont Financial Services, Inc., in its capacity as Dissemination Agent, as originally executed and as it may be amended from time to time in accordance with the terms thereof.
“Costs of Issuance” means items of expense payable or reimbursable directly or indirectly by the City and related to the authorization, sale and issuance of the Bonds, which items of expense shall include, but not be limited to, printing costs, costs of reproducing and binding documents, closing costs, filing and recording fees, initial fees, expenses and charges of the Fiscal Agent including its first annual administration fee, expenses incurred by the City in connection with the issuance of the Bonds, financial advisor fees, Bond (underwriter’s) discount or underwriting fee, legal fees and charges, including bond counsel, charges for execution, transportation and safekeeping of the Bonds and other costs, charges and fees in connection with the foregoing.
“Costs of Issuance Fund” means the fund by that name established pursuant to Section 3.06(A) hereof.
“Debt Service Account” means the account of the Special Tax Fund by that name established by Section 3.03(A) hereof.
“DTC” means the Depository Trust Company, and its successors and assigns. “Debt Service” means the scheduled amount of interest and amortization of principal payable on the Bonds during the period of computation, excluding amounts scheduled during such period which relate to principal which has been retired before the beginning of such period. “Depository” means (a) initially, DTC, and (b) any other Securities Depository acting as Depository pursuant to Section 2.12.
“District” means the City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services), established pursuant to the Resolution of Formation. “Fair Market Value” means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of Section 1273 of the Code) and, otherwise, the term “Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security—State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the State of California, but only if at Item 8.4
Mountain House Page 1597 of 1663
6 all times during which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States. “Federal Securities” means any of the following which are non-callable and which at the time of investment are legal investments under the laws of the State of California for funds held by the Fiscal Agent (the Fiscal Agent entitled to rely upon investment direction from the City as a certification that such investment constitutes a legal investment). (i) Direct general obligations of the United States of America (including obligations issued or held in book-entry form on the books of the United States Department of the Treasury) and obligations, the payment of principal of and interest on which are directly or indirectly guaranteed by the United States of America, including, without limitation, such of the foregoing which are commonly referred to as “stripped” obligations and coupons; or
(ii) Any of the following obligations of the following agencies of the United States of America: (i) direct obligations of the Export-Import Bank, (ii) certificates of beneficial ownership issued by the Farmers Home Administration, (iii) participation certificates issued by the General Services Administration, (iv) mortgage-backed bonds or pass-through obligations issued and guaranteed by the Government National Mortgage Association, (v) project notes issued by the United States Department of Housing and Urban Development, and (vi) public housing notes and bonds guaranteed by the United States of America.
“Finance Director” means the Finance Director, including any acting or interim Finance Director, of the City, or the Administrative Services Director or a person serving in a similar capacity, or a designee of such person.
“Fiscal Agent” means the Fiscal Agent appointed by the City and acting as an independent fiscal agent with the duties and powers herein provided, its successors and assigns, and any other corporation or association which may at any time be substituted in its place, as provided in Section 7.01.
“Fiscal Year” means the twelve-month period extending from July 1 in a calendar year to June 30 of the succeeding year, both dates inclusive.
“Improvement Area No. 3” means Improvement Area No. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services). “Improvement Fund” means the fund by that name established pursuant to Section 3.05(A) hereof.
“Interest Payment Dates” means March 1 and September 1 of each year, commencing September 1, 2026.
“Maximum Annual Debt Service” means the largest Annual Debt Service for any Bond Year after the calculation is made through the final maturity date of any Outstanding Bonds. “Officer’s Certificate” means a written certificate of the City signed by an Authorized Officer of the City.
Item 8.4
Mountain House Page 1598 of 1663
7 “Ordinance” means any ordinance of the City levying the Special Taxes. “Original Purchaser” means Piper Sandler & Co., as the first purchaser of the Bonds from the City.
“Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 8.04) all Bonds except (i) Bonds theretofore canceled by the Fiscal Agent or surrendered to the Fiscal Agent for cancellation; (ii) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authorized, executed, issued and delivered by the City pursuant to the Agreement or any Supplemental Agreement. “Owner” or “Bondowner” means any person who shall be the registered owner of any Outstanding Bond.
“Participating Underwriter” shall have the meaning ascribed thereto in the Continuing Disclosure Certificate.
“Permitted Investments” means any of the following, to the extent that they are lawful investments for City funds at the time of investment, and are acquired at Fair Market Value (the Fiscal Agent entitled to rely upon investment direction from the City as a certification that such investment constitutes a legal investment):
(i) Federal Securities;
(ii) any of following obligations of federal agencies not guaranteed by the United States of America: (a) debentures issued by the Federal Housing Administration; (b) participation certificates or senior debt obligations of the Federal Home Loan Mortgage Corporation or Farm Credit Banks (consisting of Federal Land Banks, Federal Intermediate Credit Banks or Banks for Cooperatives); (c) bonds or debentures of the Federal Home Loan Bank Board established under the Federal Home Loan Bank Act, bonds of any federal home loan bank established under said act and stocks, bonds, debentures, participations and other obligations of or issued by the Federal National Mortgage Association, the Student Loan Marketing Association, the Government National Mortgage Association and the Federal Home Loan Mortgage Corporation; and bonds, notes or other obligations issued or assumed by the International Bank for Reconstruction and Development;
(iii) interest-bearing demand or time deposits (including certificates of deposit) in federal or State of California chartered banks (including the Fiscal Agent), provided that (a) in the case of a savings and loan association, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such savings and loan association shall be rated in one of the top two rating categories by a nationally recognized rating service, and (b) in the case of a bank, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such bank (or the unsecured obligations of the parent bank holding company of which such bank is the lead bank) shall be rated in one of the top two rating categories by a nationally recognized rating service;
Item 8.4
Mountain House Page 1599 of 1663
8 (iv) repurchase agreements with a registered broker/dealer subject to the Securities Investors Protection Corporation Liquidation in the event of insolvency, or any commercial bank provided that: (a) the unsecured obligations of such bank shall be rated in one of the top two rating categories by a nationally recognized rating service, or such bank shall be the lead bank of a banking holding company whose unsecured obligations are rated in one of the top two rating categories by a nationally recognized rating service; (b) the most recent reported combined capital, surplus an undivided profits of such bank shall be not less than $100 million; (c) the repurchase obligation under any such repurchase obligation shall be required to be performed in not more than 30 days; (d) the entity holding such securities as described in clause (c) shall have a pledged first security interest therein for the benefit of the Fiscal Agent under the California Commercial Code or pursuant to the book-entry procedures described by 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. and are rated in one of the top two rating categories by a nationally recognized rating service;
(v) bankers acceptances endorsed and guaranteed by banks described in clause (iv) above;
(vi) obligations, the interest on which is exempt from federal income taxation under Section 103 of the Code and which are rated in the one of the top two rating categories by a nationally recognized rating service;
(vii) money market funds which invest solely in Federal Securities or in obligations described in the preceding clause (ii) of this definition, or money market funds which are rated in the highest rating category by Standard & Poor’s Ratings Services or Moody’s Investor Service, including funds which are managed or maintained by the Fiscal Agent;
(viii) units of a taxable government money market portfolio comprised solely of obligations listed in (i) and (iv) above;
(ix) any investment which is a legal investment for proceeds of the Bonds at the time of the execution of such agreement, and which investment is made pursuant to an agreement between the City or the Fiscal Agent or any successor Fiscal Agent and a financial institution or governmental body whose long term debt obligations are rated in one of the top two rating categories by a nationally recognized rating service; (x) commercial paper of “prime” quality of the highest ranking or of the highest letter and numerical rating as provided for by Moody’s Investors Service, or Standard and Poor’s Corporation, of issuing corporations that are organized and operating within the United States and having total assets in excess of $500,000,000, and having a rating of at least “AA” (without regard to qualifier) for the issuer’s debentures, other than commercial paper, as provided for by Moody’s Investors Service or Standard and Poor’s Corporation, and provided that purchases of eligible commercial paper may not exceed 180 days maturity nor represent more than 10 percent of the outstanding paper of an issuing corporation;
(xi) any general obligation of a bank or insurance company whose long term debt obligations are rated in one of the two highest rating categories of a national rating service;
Item 8.4
Mountain House Page 1600 of 1663
9 (xii) shares in a common law trust established pursuant to Title 1, Division 7, Charter 5 of the Government Code of the State which invests exclusively in investments permitted by Section 53635 of Title 5, Division 2, Chapter 4 of the Government Code of the State, as it may be amended;
(xiii) shares in the California Asset Management Program; (xiv) the Local Agency Investment Fund established pursuant to Section 16429.1 of the Government Code of the State of California, provided, however, that the Fiscal Agent will be permitted to make investments and withdrawals in its own name and the Fiscal Agent may restrict investments in the such fund if necessary to keep moneys available for the purposes of this Fiscal Agent Agreement; or
(xv) any other lawful investment for City funds.
“Prepayment Account” means the account of the Bond Fund by that name established by Section 4.02(A) hereof.
“Principal Office” means the corporate trust office of the Fiscal Agent set forth in Section 9.06, or such other or additional offices as may be designated by the Fiscal Agent. “Project” means the acquisitions and improvements financed by the Bonds, and described in the Resolution of Formation and pursuant to the Acquisition Agreement and any joint community facilities agreements and actual costs related thereto. “Qualified Reserve Fund Credit Instrument” means an irrevocable standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance company and deposited with the Fiscal Agent pursuant to Section 4.03, provided that all of the following requirements are met: (i) the long-term credit rating of such bank or insurance company is rated in at least the “AA” category (without regard to qualifier) by S&P or Moody’s; (ii) such letter of credit or surety bond has a term of at least twelve (12) months; (c) such letter of credit or surety bond has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released pursuant to Section 4.03; 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 Section 4.03.
“Rate and Method” means the Rate and Method of Apportionment of Special Tax for Improvement Area No. 3, as initially approved and as may be amended. “Record Date” means the 15th day of the month next preceding the month of the applicable Interest Payment Date whether or not such day is a Business Day. “Regulations” means temporary and permanent regulations promulgated under the Code. “Reserve Fund” means the fund by that name established pursuant to Section 4.03(A) hereof.
“Reserve Requirement” means the least of (i) 125% of the average Annual Debt Service on the Bonds; (ii) Maximum Annual Debt Service on the Bonds; and (iii) 10% of the original Item 8.4
Mountain House Page 1601 of 1663
10 principal amount of the Bonds (or, if the Bonds have more than a de minimis amount of original issue discount or premium, 10% of the issue price of such Series of Bonds); provided, that – (a) in no event shall the City be obligated to deposit an amount in the 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;
(b) the City may meet all or a portion of the Reserve Requirement with respect to the Bonds by depositing a Qualified Reserve Fund Credit Instrument in accordance with the Fiscal Agent Agreement; and
(c) the Reserve Requirement shall be set at the time of issuance of the Bonds and shall not increase thereafter but may decrease.
“Resolution” means Resolution No. 2026-____, adopted by the City Council of the City on ____________, 2026, which resolution authorized the issuance of the Bonds. “Resolution of Formation” means Resolution No. R-2024-04, adopted by the Board of Directors of the Mountain House Community Services District, as predecessor to the City, establishing the District, designating Improvement Area No. 3 as an initial improvement area therein, and establishing the Future Annexation Area.
“Securities Depositories” means The Depository Trust Company, and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the City may designate in an Officer’s Certificate delivered to the Fiscal Agent.
“Series” means any series of bonds authorized for Improvement Area No. 3 pursuant to this Fiscal Agent Agreement or any Supplemental Agreement. “Special Tax Fund” means the fund by that name established by Section 3.03(A) hereof. “Special Taxes” means the “Facilities Special Tax” as defined in the Rate and Method, levied within Improvement Area No. 3 pursuant to the Act, the Ordinance and this Agreement. “Special Tax Revenues” means the proceeds of the Special Taxes annually received by the City, excluding any interest and penalties thereon collected in connection with delinquent Special Taxes, less an amount equal to the Administrative Expense Priority, including all scheduled payments and delinquent payments thereof, and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes. “Supplemental Agreement” means an agreement which is amendatory of or supplemental to this Agreement, but only if and to the extent that such agreement is specifically authorized hereunder.
“Surplus Account” means the account of the Special Tax Fund by that name established by Section 3.03(A) hereof.
Item 8.4
Mountain House Page 1602 of 1663
11 “2026 Reserve Account” means the account within the Reserve Fund by that name established pursuant to Section 3.02(a).
“2026 Reserve Requirement” means the Reserve Requirement applicable to the 2026 Bonds.
Item 8.4
Mountain House Page 1603 of 1663
12 ARTICLE II
THE BONDS
Section 2.01. Principal Amount; Designation. Bonds in the aggregate principal amount of $_____________ are hereby authorized to be issued by the City for Improvement Area No. 3 under and subject to the terms of the Authorization, the Resolution and this Agreement, the Act and other applicable laws of the State of California. The Bonds shall be designated the “Improvement Area No. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2026.” Section 2.02. Terms of Bonds.
(A) Form; Denominations. The Bonds shall be issued as fully registered Bonds without coupons in the denomination of $5,000 or any integral multiple of $5,000 in excess thereof. The Bonds shall be lettered and numbered in a customary manner as determined by the Fiscal Agent.
(B) Date of Bonds. The Bonds shall be dated the Closing Date for the Bonds. (C) CUSIP Identification Numbers. “CUSIP” identification numbers shall be imprinted on the Bonds, but such numbers shall not constitute a part of the contract evidenced by the Bonds and any error or omission with respect thereto shall not constitute cause for refusal of any purchaser to accept delivery of and pay for the Bonds. In addition, failure on the part of the City or the Fiscal Agent to use such CUSIP numbers in any notice to Owners shall not constitute an event of default or any violation of the City’s contract with such Owners and shall not impair the effectiveness of any such notice.
(D) Maturities. The Bonds shall be issued as serial bonds and term bonds and shall mature and become payable as follows:
Maturity Date
(September 1)
Principal
Amount
Interest
Rate
CUSIP
(62412K)
(T)
(T) Term Bond.
(E) Interest. The Bonds shall bear interest at the rates set forth above payable on the Interest Payment Dates in each year. Interest shall be calculated on the basis of a 360-day year composed of twelve 30-day months. Each Bond shall 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 shall 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 shall bear interest from such Interest Payment Date, or (iii) it is authenticated prior to the Record Date preceding the first Item 8.4
Mountain House Page 1604 of 1663
13 Interest Payment Date, in which event it shall bear interest from the Closing Date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.
(F) Method of Payment. Interest on the Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check of the Fiscal Agent mailed on the Interest Payment Dates 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 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 Bonds; provided that so long as any Bonds are in book-entry form, payments with respect to such Bonds shall be made by wire transfer or such other method acceptable to the Fiscal Agent to the Depository. The principal of the Bonds and any premium on the Bonds are payable in lawful money of the United States of America upon surrender of the Bonds at the Principal Office of the Fiscal Agent. All Bonds paid by the Fiscal Agent pursuant to this Section shall be cancelled by the Fiscal Agent. The Fiscal Agent shall destroy the cancelled Bonds and issue a certificate of destruction thereof to the City.
Section 2.03. Redemption.
(A) Redemption Dates.
(i) 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, _____ 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, ____ through August 31, ____ 103%
September 1, ____ through August 31, ____ 102
September 1, ____ through August 31, ____ 101
September 1, ____ and any date thereafter 100
(ii) 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 shall be 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:
Redemption Dates
Redemption
Price
September 1, ____ through and including March 1, ____ 103% September 1, ____ and March 1, ____ 102
September 1, ____ and March 1, ____ 101
September 1, ____ and any Interest Payment Date thereafter 100 Item 8.4
Mountain House Page 1605 of 1663
14 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.
Prepayments and amounts released from each Reserve Account in connection with Prepayments will be allocated to the redemption of the 2026 Bonds and any Additional Bonds as nearly as practicable on a proportionate basis based on the outstanding principal amount of the 2026 Bonds and any Additional Bonds and shall be applied to redeem 2026 Bonds and Additional Bonds as nearly as practicable on a pro rata basis among maturities in increments of $5,000; provided, however, that, for Prepayments of less than $50,000, the City may specify in an Officer’s Certificate that Prepayments be applied to one or more maturities of the 2026 Bonds or Additional Bonds so long as there is delivered to the Fiscal Agent a Certificate of the Special Tax Consultant that, following such redemption from Prepayments, the maximum Special Taxes that may be levied in each Fiscal Year is not less than 110% of Maximum Annual Debt Service in the Bond Year that begins with the corresponding Fiscal Year.
(iii) Mandatory Sinking Fund Redemption. The Bonds maturing September 1, _____ and September 1, ____ are subject to mandatory sinking payment redemption in part on September 1, _____ and September 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, _____
Sinking Fund
Redemption Date
(September 1)
Sinking Fund Payment
(maturity)
Term Bonds Maturing September 1, _____
Sinking Fund
Redemption Date
(September 1)
Sinking Fund Payment
(maturity)
The amounts in the foregoing tables shall be reduced pro rata at the direction of the City in an Officer’s Certificate, in order to maintain substantially uniform debt service, as a result of any prior partial redemption of the Bonds pursuant to Section 2.03(A)(i) or (ii) above.
In lieu of redemption under this Section 2.03, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding 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 Item 8.4
Mountain House Page 1606 of 1663
15 may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase. (B) Notice to Fiscal Agent. The City shall give the Fiscal Agent an Officer’s Certificate containing notice of its intention to redeem Bonds pursuant to subsections (A)(i) and (A)(ii) not less than 45 days prior to the applicable redemption date. (C) Redemption Procedure by Fiscal Agent. The Fiscal Agent shall 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 the Municipal Securities Rulemaking Board and to the Securities Depositories, and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal Agent; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such Bonds.
Such notice shall state the redemption date and the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers and Bond numbers of the Bonds to be redeemed by giving the individual CUSIP number and Bond number of each Bond to be redeemed or shall state that all Bonds between two stated Bond numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called in part the principal amount thereof to be redeemed, and shall require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such Bonds will not accrue from and after the redemption date.
The City has the right to rescind any notice of the redemption of Bonds under Section
2.03(A)(i) by written notice to the Fiscal Agent on or prior to two Business Days prior the date fixed for redemption. Any notice of redemption shall 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 Bonds then called for redemption, and such cancellation shall not constitute an event of default. The City and the Fiscal Agent have no liability to the Owners or any other party related to or arising from such rescission of redemption. The Fiscal Agent shall mail notice of such rescission of redemption in the same manner as the original notice of redemption was sent under this Section.
Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and maturity, of the Bonds being redeemed with the proceeds of such check or other transfer.
Whenever provision is made in this Agreement for the redemption of less than all of the Bonds of any maturity, the Fiscal Agent shall select the Bonds to be redeemed, from all Bonds or such given portion thereof of such maturity by lot in any manner which the Fiscal Agent in its sole discretion shall deem appropriate.
Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the registered Owner, at the expense of the City, a new Bond or Bonds, of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds.
Item 8.4
Mountain House Page 1607 of 1663
16 (D) 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 Bonds so called for redemption shall have been deposited in the Bond Fund, such Bonds so called shall cease to be entitled to any benefit under this Agreement other than the right to receive payment of the redemption price, and no interest shall accrue thereon on or after the redemption date specified in such notice.
All Bonds redeemed and purchased by the Fiscal Agent pursuant to this Section shall be canceled by the Fiscal Agent. The Fiscal Agent shall destroy the cancelled Bonds and issue a certificate of destruction thereof to the City.
Section 2.04. Form of Bonds. The Bonds, the form of Fiscal Agent’s certificate of authentication and the form of assignment, to appear thereon, shall be substantially in the forms, respectively, set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Agreement, the Resolution and the Act.
Section 2.05. Execution of Bonds. The Bonds shall be executed on behalf of the City by the Mayor and the City Clerk of the City who are in office on the date of adoption of this Agreement or at any time thereafter, and the seal of the City shall be impressed, imprinted or reproduced by facsimile signature thereon. If any officer whose signature appears on any Bond ceases to be such officer before delivery of the Bonds to the Owner, such signature shall nevertheless be as effective as if the officer had remained in office until the delivery of the Bonds to the Owner. Any Bond may be signed and attested on behalf of the City by such persons as at the actual date of the execution of such Bond shall be the proper officers of the City although at the nominal date of such Bond any such person shall not have been such officer of the City.
Only such Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A, executed and dated by the Fiscal Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Agreement, and such certificate of authentication of the Fiscal Agent shall be conclusive evidence that the Bonds registered hereunder have been duly authenticated, registered and delivered hereunder and are entitled to the benefits of this Agreement.
Section 2.06. Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the books required to be kept pursuant to the provisions of Section 2.08 by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form acceptable to the Fiscal Agent. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer.
Whenever any Bond or Bonds shall be surrendered for transfer, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity.
No transfers of Bonds shall be required to be made (i) within fifteen (15) days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after such Bond has been selected for redemption.
Item 8.4
Mountain House Page 1608 of 1663
17 Section 2.07. Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Fiscal Agent for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. The cost for any services rendered or any expenses incurred by the Fiscal Agent in connection with any such exchange shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such exchange any tax or other governmental charge required to be paid with respect to such exchange.
No exchanges of Bonds shall be required to be made (i) within fifteen (15) days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after such Bond has been selected for redemption.
Section 2.08. Bond Register. The Fiscal Agent will keep or cause to be kept, at its Principal Office, sufficient books for the registration and transfer of the Bonds (the “Bond Register”), which books shall show the series number, date, amount, rate of interest and Owner of each Bond and shall at all times be open to inspection by the City during regular business hours upon reasonable notice; and, upon presentation for such purpose, the Fiscal Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, the ownership of the Bonds as hereinbefore provided.
Section 2.09. Temporary Bonds. The Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the City, and may contain such reference to any of the provisions of this Agreement as may be appropriate.
Every temporary Bond shall be executed by the City upon the same conditions and in substantially the same manner as the definitive Bonds. If the City issues temporary Bonds it will execute and furnish definitive Bonds without delay and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange for the definitive Bonds at the Principal Office of the Fiscal Agent or at such other location as the Fiscal Agent shall designate, and the Fiscal Agent shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary bonds shall be entitled to the same benefits under this Agreement as definitive Bonds authenticated and delivered hereunder.
Section 2.10. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the City shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and principal amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Fiscal Agent of the Bond so mutilated. Every mutilated Bond so surrendered to the Fiscal Agent shall be canceled by it and destroyed by the Fiscal Agent who shall deliver a certificate of destruction thereof to the City. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Fiscal Agent and, if such evidence be satisfactory to it and indemnity for the Fiscal Agent and the City satisfactory to the Fiscal Agent shall be given, the City shall execute, and the Fiscal Agent shall authenticate and deliver, a new Bond of like tenor and principal amount in lieu of and in substitution for the Bond so lost, destroyed or stolen. The City may require payment of a sum not exceeding the actual cost of preparing each new Bond delivered under this Section and of the expenses which may be incurred by the City and the Fiscal Agent for the preparation, execution, authentication and delivery. Any Bond delivered under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the City whether or not the Bond so alleged to be lost, destroyed or stolen is at any time Item 8.4
Mountain House Page 1609 of 1663
18 enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Agreement with all other Bonds issued pursuant to this Agreement.
Section 2.11. Limited Obligation. All obligations of the City under this Agreement and the Bonds shall be special obligations of the City, payable solely from the Special Tax Revenues and the funds pledged therefore hereunder. Neither the full faith and credit nor the taxing power of the City (except to the limited extent set forth herein) or the State of California or any political subdivision thereof is pledged to the payment of the Bonds.
Section 2.12. Book-Entry Only System. DTC shall act as the initial Depository for the Bonds. One Bond for each maturity of the Bonds shall be initially executed, authenticated, and delivered as set forth herein as a separate fully registered certificate (in printed or typewritten form). Upon initial execution, authentication, and delivery, the ownership of the Bonds shall be registered in the Bond Register kept by the Fiscal Agent for the Bonds in the name of Cede & Co, as nominee of DTC or such nominee as DTC shall appoint in writing.
The Authorized Officers and the Fiscal Agent are hereby authorized to take any and all actions as may be necessary and not inconsistent with this Agreement to qualify the Bonds for the Depository’s book-entry system, including the execution of the Depository’s required representation letter.
With respect to Bonds registered in the Bond Register in the name of Cede & Co, as nominee of DTC, the Fiscal Agent shall not have any responsibility or obligation to any broker-dealer, bank, or other financial institution for which DTC holds Bonds as Depository from time to time (the “DTC Participants”) or to any person for which a DTC Participant acquires an interest in the Bonds (the “Beneficial Owners”). Without limiting the immediately preceding sentence, the Fiscal Agent shall not have any responsibility or obligation with respect to (i) the accuracy of the records of DTC, Cede & Co, or any DTC Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC Participant, any Beneficial Owner, or any other person, other than DTC, of any notice with respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository of the beneficial interests in the Bonds to be redeemed in the event the City elects to redeem the Bonds in part, (iv) the payment to any DTC Participant, any Beneficial Owner, or any other person, other than DTC, of any amount with respect to the principal of or interest on the Bonds, or (v) any consent given or other action taken by the Depository as Owner of the Bonds.
The Fiscal Agent may treat as and deem DTC to be the absolute Owner of each Bond for which DTC is acting as Depository for the purpose of payment of the principal of and interest on such Bonds, for the purpose of giving notices of redemption and other matters with respect to such Bonds, for the purpose of registering transfers with respect to such Bonds, and for all purposes whatsoever. The Fiscal Agent shall pay all principal of and interest on the Bonds only to the Owners as shown on the Registration Books, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to the principal of and interest on the Bonds to the extent of the sum or sums so paid.
No person other than an Owner, as shown on the Bond Register, shall receive a physical Bond. Upon delivery by DTC to the Fiscal Agent of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., and subject to the transfer provisions in Section 2.06 hereof, references to “Cede & Co.” in this Section 2.12 shall refer to such new nominee of DTC.
Item 8.4
Mountain House Page 1610 of 1663
19 DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice to the Fiscal Agent and the City during any time that the Bonds are Outstanding, and discharging its responsibilities with respect thereto under applicable law.
The City may terminate the services of DTC with respect to the Bonds if it determines that DTC is unable to discharge its responsibilities with respect to the Bonds or that continuation of the system of book-entry transfers through DTC is not in the best interest of the Beneficial Owners, and the City shall mail notice of such termination to the Fiscal Agent.
Upon the termination of the services of DTC as provided in the previous paragraph, and if no substitute Depository willing to undertake the functions hereunder can be found which is willing and able to undertake such functions upon reasonable or customary terms, or if the City determines that it is in the best interest of the Beneficial Owners of the Bonds that they be able to obtain certificated Bonds, the Bonds shall no longer be restricted to being registered in the Bond Register of the Fiscal Agent in the name of Cede & Co., as nominee of DTC, but may be registered in whatever name or name the Owners shall designate at that time, in accordance with Section 2.06.
To the extent that the Beneficial Owners are designated as the transferee by the Owners, in accordance with Section 2.06, the Bonds will be delivered to such Beneficial Owners as soon as practicable.
Section 2.13. No Acceleration. The principal of the Bonds shall not be subject to acceleration hereunder. Nothing in this Section 2.13 shall in any way prohibit the redemption of Bonds under Section 2.03 hereof, or the defeasance of the Bonds and discharge of this Agreement under Section 9.03 hereof.
Item 8.4
Mountain House Page 1611 of 1663
20 ARTICLE III
ISSUANCE OF BONDS
Section 3.01. Issuance and Delivery of Bonds. At any time after the execution of this Agreement, the City may issue the Bonds in the aggregate principal amount set forth in Section 2.01 and deliver such Bonds to the Original Purchaser. The Authorized Officers of the City are hereby authorized and directed to deliver any and all documents and instruments necessary to cause the issuance of Bonds in accordance with the provisions of the Act, the Resolution and this Agreement, to authorize the payment of Costs of Issuance of the Bonds from the proceeds of the Bonds and to do and cause to be done any and all acts and things necessary or convenient for delivery of the Bonds to the Original Purchaser.
Section 3.02. Application of Proceeds of Sale of Bonds.
The proceeds of the purchase of the Bonds by the Original Purchaser in the amount of $__________, which is the principal amount thereof ($__________) [plus net original issue premium of $__________] and less Underwriter’s discount of $__________, shall be paid to the Fiscal Agent, who shall forthwith deposit such proceeds on the Closing Date as follows:
(i) Deposit in the Improvement Fund $__________
(ii) Deposit in the 2026 Reserve Account of the Reserve Fund $__________; (iii) Deposit $__________ in the Capitalized Interest Account of the Bond Fund; and
(iv) Deposit in the Costs of Issuance Fund $__________.
Section 3.03. Special Tax Fund.
(A) Establishment of Special Tax Fund. There is hereby established as a separate fund to be held by the Finance Director, known as “Improvement Area No. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds, Series 2026, Special Tax Fund”. Within the Special Tax Fund, the Finance Director shall establish and maintain two accounts, (i) the Debt Service Account, to the credit of which the City shall deposit, immediately upon receipt, all Special Tax Revenues received by the City, and any amounts required by Section 3.05(B) to be deposited in the Special Tax Fund, and (ii) the Surplus Account, to the credit of which the City shall deposit surplus Special Tax Revenues described in Section 3.03(B) below. Moneys in the Special Tax Fund shall be held in trust by the City for the benefit of the City and the Owners of the Bonds, shall be disbursed as provided below and, pending any disbursement, shall be subject to a lien in favor of the Owners of the Bonds.
(B) Disbursements. All Special Tax Revenues shall be deposited in the Debt Service Account upon receipt. No later than 10 Business Days prior to each Interest Payment Date, the City shall withdraw from the Debt Service Account 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 Item 8.4
Mountain House Page 1612 of 1663
21 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 as instructed by the City. After the transfers under subsections (i) and (ii) have been made, the City may, on or after September 2 of each year, transfer to the Surplus Account the amount remaining in the Debt Service Account.
From time to time, the City may withdraw from the Surplus Account of the Special Tax Fund amounts needed to pay costs of the Project or incidental expenses of the District authorized under the Act, including Administrative Expenses in excess of the Administrative Expense Priority.
Moneys in the Surplus Account may, at the City’s discretion, also be used to pay the principal of, premium, if any, and interest on the Bonds or to replenish the Reserve Fund to the amount of the Reserve Requirement and if not needed for those purposes shall be available, to the extent required under the Acquisition Agreement, to directly finance the Project (so-called pay-as-yougo funds). (C) Investment. Moneys in the Special Tax Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from such investment and deposit shall be retained in the Special Tax Fund to be used for the purposes thereof.
Section 3.05. Improvement Fund.
(A) Establishment of Improvement Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, known as ,”Improvement Area No. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Improvement Fund” to the credit of which a deposit shall be made as required by Section 3.02 and as required by Section 3.03. Moneys in the Improvement Fund shall be held in trust by the Fiscal Agent and shall be disbursed as provided in subsection (B) of this Section. (B) Procedure for Disbursement. Disbursements from the Improvement Fund shall be made as determined by an Authorized Officer for the payment or reimbursement of the costs of the Project, including for costs of acquisition of portions of the Project in accordance with the Acquisition Agreement, authorized administrative expenses of the City, debt service on the Bonds in the event of default in the payment of Special Taxes by the Developer (as defined in the Acquisition Agreement), and/or otherwise as authorized by the City, by submission of an Officer’s Certificate to the Fiscal Agent requesting disbursement of moneys. The Fiscal Agent need not make any such payment if it has received notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys to be so paid, that has not been released or will not be released simultaneously with such payment. The Fiscal Agent shall not incur any liability for any disbursement from the Improvement Fund made in reliance upon any Officer’s Certificate.
(C) Investment. Moneys in the Improvement Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits from the investment of amounts in the Improvement Fund shall be retained in the Improvement Fund to be used for the purposes of the Improvement Fund.
(D) Closing of Fund. Upon the filing of an Officer’s Certificate stating that the portion of the Project to be financed from the Improvement Fund has been completed and that all costs of such portion of the Project have been paid or are not required to be paid from the Improvement Item 8.4
Mountain House Page 1613 of 1663
22 Fund, the Authorized Officer shall request the Fiscal Agent to 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 Section 4.02 and the Improvement Fund shall be closed.
Section 3.06. Costs of Issuance Fund.
(A) Establishment of Costs of Issuance Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, known as “Improvement Area No. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series Costs of Issuance Fund,” to the credit of which a deposit shall be made as required by Section 3.02. Moneys in the Costs of Issuance Fund shall be held in trust by the Fiscal Agent and shall be disbursed as provided in subsection (B) of this Section for the payment or reimbursement of Costs of Issuance of the Bonds.
(B) Disbursement. Amounts in the Costs of Issuance Fund shall be disbursed from time to time to pay Costs of Issuance, as set forth in an Officer’s Certificate containing respective amounts to be paid to the designated payees, signed by the Finance Director or a designee thereof and delivered to the Fiscal Agent. The Fiscal Agent shall pay all Costs of Issuance of the Bonds upon receipt of an invoice from any such payee which requests payment in an amount which is less than or equal to the amount set forth with respect to such payee in such Officer’s Certificate, or upon receipt of an Officer’s Certificate requesting payment of a Costs of Issuance not listed on the initial Officer’s Certificate delivered to the Fiscal Agent on the Closing Date of the Bonds.
The Fiscal Agent shall maintain the Costs of Issuance Fund for a period of 6 months, from the Closing Date of the Bonds and then shall transfer any moneys remaining therein, including any investment earnings thereon, to the Improvement Fund, and if the Improvement Fund has been closed then to the Special Tax Fund, and the Costs of Issuance Fund shall be closed. Thereafter, every invoice received by the Fiscal Agent shall be submitted to the Finance Director for payment from amounts on deposit in the Special Tax Fund. (C) Investment. Moneys in the Costs of Issuance Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from said investment shall be retained by the Fiscal Agent in the Costs of Issuance Fund to be used for the purposes of such fund.
Item 8.4
Mountain House Page 1614 of 1663
23 ARTICLE IV
SPECIAL TAX REVENUES; BOND FUND AND RESERVE FUND
Section 4.01. Pledge of Special Tax Revenues and Other Amounts. All of the Special Tax Revenues and, until disbursed as provided herein, all moneys deposited in the Special Tax Fund (other than the Surplus Account) and in the Bond Fund are hereby pledged to secure the repayment of the Bonds. Such pledge shall constitute a first lien on the Special Tax Revenues and said amounts. In addition, the 2026 Bonds shall be secured by a pledge and lien on the 2026 Reserve Account of the Special Tax Fund, and each Series of Additional Bonds shall be secured by a separate reserve account established within the Reserve Fund as set forth in a Supplemental Agreement. The separate accounts for each series of Bonds, which accounts are used for purposes of accounting for the use and disposition of the amounts of the proceeds of the Bonds.
Such pledge shall constitute a first lien on the Special Tax Revenues and said amounts.
The Special Tax Revenues and all moneys deposited into such funds (except as otherwise provided herein) are hereby dedicated in their entirety to the payment of the principal of, including any mandatory sinking fund payments, and interest and any premium on, the Bonds as provided herein and in the Act until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with Section 9.03.
The Special Tax Revenues and all moneys deposited into such funds (except as otherwise provided herein) are hereby dedicated in their entirety to the payment of the principal of, including any mandatory sinking fund payments, and interest and any premium on, the Bonds as provided herein and in the Act until all of the Bonds have been paid and retired or until moneys or Federal Securities have been set aside irrevocably for that purpose in accordance with Section 9.03.
Amounts in the Surplus Account, the Improvement Fund and the Costs of Issuance Fund are not pledged to the repayment of the Bonds. The facilities acquired with the proceeds of the Bonds are not in any way pledged to the repayment of the Bonds. Any proceeds of condemnation, destruction or other disposition of any facilities financed with the proceeds of the Bonds are not pledged to the repayment of the Bonds and are free and clear of any lien or obligation imposed hereunder.
Section 4.02. Bond Fund.
(A) Establishment of Bond Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, known as “Improvement Area No. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Bond Fund,” to the credit of which deposits shall be made as required by Section 3.03(B)(ii), Section 4.03 and any other amounts required to be deposited therein by this Agreement or the Act. Within the Bond Fund, the Fiscal Agent shall establish a Prepayment Account and deposit therein moneys received, if any, from prepayments of the Special Tax pursuant to Section
2.03(A)(ii). Moneys in the Bond Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds, shall be disbursed for the payment of the principal of, and interest and any premium on, the Bonds as provided below, and, pending such disbursement, shall be subject to a lien in favor of the Owners of the Bonds.
Item 8.4
Mountain House Page 1615 of 1663
24 There is also hereby created within the Bond Fund a “Capitalized Interest Account” which account is hereby established for purposes of accounting for the disposition of Bonds, a portion of the proceeds of which will be deposited to such Capitalized Interest Account pursuant to Section 3.02. The amount deposited to the Capitalized Interest Account and any investment earnings thereon shall be used solely to make payments on the Bonds through and including September 1, 2026. Any excess amounts therein on September 1, 2026 shall be transferred to the Special Tax Fund, and the Capitalized Interest Account shall thereupon be closed. (B) Disbursements. On each Interest Payment Date, the Fiscal Agent shall withdraw from the Bond Fund and pay to the Owners of the Bonds the principal of, and interest and any premium, then due and payable on the Bonds, including any amounts due on the Bonds by reason of the sinking payments set forth in Section 2.03(A)(iii) or any redemption of the Bonds as provided under Section 2.03(A)(i). Moneys in the Prepayment Account shall be disbursed for redemption of Bonds as instructed by the City.
In the event that amounts in the Bond Fund are insufficient to pay regularly scheduled payments of principal of and interest on the Bonds, the Fiscal Agent shall withdraw from the Reserve Fund to the extent of any funds therein, the amount of such insufficiency, and the Fiscal Agent shall provide written notice to the Finance Director of the amounts so withdrawn from the Reserve Fund. Amounts so withdrawn from the Reserve Fund shall be deposited in the Bond Fund.
If, after the foregoing transfer, there are insufficient funds in the Bond Fund to make the payments provided for to pay regularly scheduled payments of principal of and interest on the Bonds, the Fiscal Agent shall apply the available funds first to the payment of interest on the Bonds, then to the payment of principal due on the Bonds other than by reason of sinking payments, and then to payment of principal due on the Bonds by reason of sinking payments.
Any sinking payment not made as scheduled shall be added to the sinking payment to be made on the next sinking payment date.
(C) Investment. Moneys in the Bond Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from such investment and deposit shall be retained in the Bond Fund to be used for the purposes of such fund. (D) Deficiency. If ten days before any Interest Payment Date it appears to the Fiscal Agent that there is a danger of deficiency in the Bond Fund and that the Fiscal Agent may be unable to pay regularly scheduled debt service on the Bonds in a timely manner, the Fiscal Agent shall report to the Finance Director such fact. The City covenants to increase the levy of the Special Taxes in the next Fiscal Year (subject to the maximum amount authorized by the Resolution of Formation) in accordance with the procedures set forth in the Act for the purpose of curing Bond Fund deficiencies.
If on any Interest Payment Date the Fiscal Agent is unable to pay principal, interest and premium, if any, due on any Interest Payment Date for the Bonds due to insufficient funds in the Bond Fund, or if funds are withdrawn from the Reserve Fund to pay principal and/or interest on the Bonds the Fiscal Agent shall notify the Finance Director in writing of such fact, and the Finance Director shall notify CDIAC of such fact within 10 days of such Interest Payment Date.
The Fiscal Agent has no obligation under this Agreement to provide notice or disclosure to the Bondowners of insufficient funds or anticipation of deficiency in the Bond Fund.
Section 4.03. Reserve Fund.
Item 8.4
Mountain House Page 1616 of 1663
25 (A) Establishment of Fund. There is hereby established as a separate fund to be held by the Fiscal Agent, known as “Improvement Area No. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Reserve Fund,” (the “Reserve Fund”), and within the Reserve Fund a “2026 Reserve Account,” to the credit of which a deposit shall be made as required by Section 3.02, and deposits shall be made as provided in Section 3.03(B). Moneys in the Reserve Fund shall be held in trust by the Fiscal Agent for the benefit of the Owners of the Bonds secured thereby as a reserve for the payment of principal of, and interest on, the Bonds and shall be subject to a lien in favor of the Owners of the Bonds secured thereby. For Additional Bonds the Fiscal Agent shall create separate subaccounts in the Reserve Fund and each subaccount, including the 2026 Reserve Account, is applicable only to the respective Series of Bonds.
The City has the right at any time to cause the Fiscal Agent to release funds from the Reserve Fund, in whole or in part, by tendering to the Fiscal Agent: (1) a Qualified Reserve Fund Credit Instrument, and (2) an opinion of Bond Counsel stating that such release will not, of itself, cause the portion of the interest on the Bonds to become includable in gross income for purposes of federal income taxation. Upon tender of such items to the Fiscal Agent, the Fiscal Agent will transfer such funds from the Reserve Fund to the City.
(B) Use of Fund. Except as otherwise provided in this Section, all amounts deposited in the Reserve Fund shall be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency within five days prior to any Interest Payment Date in the Bond Fund of the amount required for payment of the principal of, and interest on, the respective Series of Bonds secured by the Reserve Fund on such Interest Payment Date. Whenever transfer is made from the Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund, the Fiscal Agent shall provide written notice thereof to the Finance Director.
(C) Transfer of Excess of Reserve Requirement. Whenever, on the Business Day prior to any Interest Payment Date, the amount in the Reserve Fund (or any account therein) exceeds the then applicable Reserve Requirement, the Fiscal Agent shall provide written notice to the Finance Director of the amount of the excess and, following any transfer required pursuant to Section 4.03(D) below, shall transfer an amount equal to the excess from the Reserve Fund 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 Bonds in accordance with Section 4.02. (D) Transfer for Rebate Purposes. Investment earnings on amounts in the Reserve Fund may be withdrawn from the Reserve Fund for purposes of making payment to the federal government to comply with Section 6.02.
(E) Transfer When Balance Exceeds Outstanding Bonds. Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, including interest accrued to the date of payment or redemption and premium, if any, due upon redemption, and after making any transfer required under Section 4.03(D) above and upon receipt of an Officer’s Certificate directing it to do so, the Fiscal Agent shall transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date to the payment and redemption, in accordance with Section 4.02 or 2.03 as applicable, of all of the Outstanding Bonds. In the event that the amount so transferred from the Reserve Fund to the Bond Fund exceeds the amount required to pay and redeem the Outstanding Bonds, the Item 8.4
Mountain House Page 1617 of 1663
26 balance in the Reserve Fund shall be transferred to the City, after payment of any amounts due the Fiscal Agent hereunder, to be used for any lawful purpose of the City.
Notwithstanding the foregoing, no amounts shall be transferred from the Reserve Fund pursuant to this Section 4.03(E) until after the calculation, pursuant to Section 6.02, of any amounts due to the federal government following payment of the Bonds and withdrawal of any such amount under Section 4.03(D) for purposes of making such payment to the federal government, and payment of any fees and expenses due to the Fiscal Agent. (F) Investment. Moneys in the Reserve Fund shall be invested and deposited in accordance with Section 6.01. Interest earnings and profits resulting from the investment of moneys in the Reserve Fund and other moneys in the Reserve Fund will remain therein until the balance exceeds the Reserve Requirement; any amounts in excess of the Reserve Requirement will be transferred to the Improvement Fund, if the Project has not been completed, 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 Bonds secured by the Reserve Fund.
Item 8.4
Mountain House Page 1618 of 1663
27 ARTICLE V
OTHER COVENANTS OF THE CITY
Section 5.01. Punctual Payment. The City will punctually pay or cause to be paid the principal of, and interest and any premium on, the Bonds when and as due in strict conformity with the terms of this Agreement, and it will faithfully observe and perform all of the conditions, covenants and requirements of this Agreement and all Supplemental Agreements and of the Bonds.
Section 5.02. Limited Obligation. The Bonds are limited obligations of the City on behalf of Improvement Area No. 3 of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in certain funds and accounts as described herein.
Section 5.03. Extension of Time for Payment. In order to prevent any accumulation of claims for interest after maturity, the City shall not, directly or indirectly, extend or consent to the extension of the time for the payment of any claim for interest on any of the Bonds and shall not, directly or indirectly, be a party to the approval of any such arrangement by purchasing or funding said claims for interest or in any other manner. In case any such claim for interest shall be extended or funded, whether or not with the consent of the City, such claim for interest so extended or funded shall not be entitled, in case of default hereunder, to the benefits of this Agreement, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest which shall not have been so extended or funded.
Section 5.04. Against Encumbrances. The City will not encumber, pledge or place any charge or lien upon any of the Special Tax Revenues or other amounts pledged to the Bonds superior to or on a parity with the pledge and lien herein created for the benefit of the Bonds, except as permitted by this Agreement.
Section 5.05. Books and Accounts. The City will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the City, in which complete and correct entries shall be made of all transactions relating to the expenditure of amounts disbursed from the Special Tax Fund and to the Special Tax Revenues. Such books of record and accounts shall at all times during business hours be subject to the inspection of the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.
The Fiscal Agent will keep, or cause to be kept, proper books of record and accounts, separate from all other records and accounts of the Fiscal Agent, in which complete and correct entries shall be made of all transactions of the Fiscal Agent relating to the expenditure of amounts disbursed from funds and accounts held by the Fiscal Agent hereunder. Such books of record and accounts shall at all times during business hours and upon reasonable prior notice, be subject to the inspection of the City and the Owners of not less than ten percent (10%) of the principal amount of the Bonds then Outstanding, or their representatives duly authorized in writing.
Section 5.06. Protection of Security and Rights of Owners. The City will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the delivery of any of the Bonds by the City, the Bonds shall be incontestable by the City.
Item 8.4
Mountain House Page 1619 of 1663
28 Section 5.07. Compliance with Law; Completion of Project. The City will comply with all applicable provisions of the Act and the law in completing the acquisition and construction of the Project; provided that the City shall have no obligation to advance any funds to complete the Project in excess of the amounts available therefor in the Improvement Fund.
Section 5.08. Private Activity Bond Limitation. The City shall assure that the proceeds of the Bonds are not so used as to cause the Bonds to satisfy the private business tests of Section 141(b) of the Code or the private loan financing test of Section 141(c) of the Code.
Section 5.09. Federal Guarantee Prohibition. The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code.
Section 5.10. Collection of Special Tax Revenues. The City shall comply with all requirements of the Act so as to assure the timely collection of Special Tax Revenues, including without limitation, the enforcement of delinquent Special Taxes.
On or within five Business Days of each June 1, the Fiscal Agent shall provide the Finance Director with a notice stating the amount then on deposit in the Bond Fund and the Reserve Fund.
The receipt of such notice by the Finance Director shall in no way affect the obligations of the Finance Director under the following two paragraphs. Upon receipt of such notice, the Finance Director shall ascertain the relevant parcels on which the Special Taxes are to be levied, taking into account any parcel splits during the preceding and then current year.
The City shall effect the levy of the Special Taxes each Fiscal Year in accordance with the Ordinance such that the computation of the levy is complete before the final date on which the County Auditor will accept the transmission of the Special Tax amounts for the parcels within Improvement Area No. 3 for inclusion on the next secured real property tax roll. Upon the completion of the computation of the amounts of the levy, the City shall prepare or cause to be prepared, and shall transmit to the Finance Director, such data as the County Auditor requires to include the levy of the Special Taxes on the next secured real property tax roll.
The City shall fix and levy the amount of Special Taxes within Improvement Area No. 3 required for the payment of principal of and interest on any Outstanding Bonds 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 and the Ordinance.
The Special Taxes shall be payable and be collected in the same manner and at the same time and in the same installment as the general taxes on real property are payable, and have the same priority, become delinquent at the same times and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do the general taxes on real property. Notwithstanding the foregoing, the Special Taxes may be collected in such other manner as the City shall prescribe if necessary to pay the debt service on the Bonds.
Section 5.11. Further Assurances. The City will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Agreement, and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Agreement.
Item 8.4
Mountain House Page 1620 of 1663
29 Section 5.12. No Arbitrage. The City shall not take, or permit or suffer to be taken by the Fiscal Agent or otherwise, any action with respect to the gross proceeds of the Bonds which if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the Closing Date would have caused the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code and Regulations.
Section 5.13. Maintenance of Tax-Exemption. The City shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners of the Bonds to the same extent as such interest is permitted to be excluded from gross income under the Code as in effect on the date of issuance of the Bonds.
Section 5.14. Annual State Reports. The following requirements shall apply to the Bonds:
(A) Annual Reporting. Not later than October 30 of each calendar year, beginning with the October 30 first succeeding the date of the Bonds, and in each calendar year thereafter until the October 30 following the final maturity of the Bonds, the Finance Director shall prepare and supply the California Debt and Investment Advisory Commission, by mail, postage prepaid, with the information required under Section 53359.5(c) of the Act. The annual reporting shall be made using such form or forms as may be prescribed by CDIAC. (B) Other Reporting. If within 10 days prior to any Interest Payment Date it appears to the Fiscal Agent that there is a danger of deficiency in the Bond Fund and that the Fiscal Agent may be unable to pay regularly scheduled debt service on the Bonds in a timely manner or if the Fiscal Agent is unable to pay principal, interest and premium, if any, due on any Interest Payment Date for the Bonds due to insufficient funds in the Bond Fund, or if funds are withdrawn from the Reserve Fund to pay principal and/or interest on the Bonds, the Finance Director shall make the reports required under Section 4.02(D) hereof. (C) Amendment. The reporting requirements of this Section 5.14 shall be amended from time to time, without action by the City or the Fiscal Agent, to reflect any amendments to Section 53359.5(b) or Section 53359.5(c) of the Act.
(D) No Liability. None of the City and its officers, agents and employees, the Finance Director or the Fiscal Agent shall be liable for any inadvertent error in reporting the information required by this Section 5.14.
Section 5.15. Covenant to Foreclose. The City hereby covenants 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. 3 levied in such Fiscal Year, then the City will institute, prosecute and pursue such foreclosure proceedings against each parcel in Improvement Area No. 3 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. 3 levied in such Fiscal Year, but property owned Item 8.4
Mountain House Page 1621 of 1663
30 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) and lender of record, if any, 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.
Section 5.16. Continuing Disclosure to Owners. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Certificate.
Notwithstanding any other provision of this Agreement, failure of the City to comply with the Continuing Disclosure Certificate shall not be considered a default hereunder; however, any Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate to compel performance by the City of its obligations thereunder, including seeking mandate or specific performance by court order.
Section 5.17. Additional Bonds.
(a) Issuance of Additional Bonds. In addition to the 2026 Bonds, the City may issue additional Series of Bonds in such principal amount as shall be determined by the City, under a Supplemental Fiscal Agent Agreement entered into by the City and the Fiscal Agent. Any such Series shall constitute Bonds under this Fiscal Agent Agreement and shall be secured by a lien on the Special Tax Revenues, subject to the following specific conditions precedent:
(1) Compliance. The City shall be in compliance with all covenants set forth hereunder and all Supplemental Fiscal Agent Agreements or shall be in compliance immediately following the issuance of such Series, and issuance of a Series shall not cause the City to exceed Improvement Area No. 3’s limitation on debt (as defined in the Act).
(2) Same Payment Dates. The Supplemental Fiscal Agent Agreement providing for the issuance of such Series shall provide that interest thereon shall be payable on Interest Payment Dates, and principal thereof shall be payable on September 1 in any year in which principal is payable on such Series.
Item 8.4
Mountain House Page 1622 of 1663
31 (3) The Supplemental Fiscal Agent Agreement shall provide for a separate Reserve Account securing such Series in an amount equal to the Reserve Requirement for such Series. Such deposit shall be made as provided in the Supplemental Fiscal Agent Agreement providing for the issuance of such additional Series and may be made from the proceeds of the sale of such additional Series or from other funds. (4) Aggregate Value-to-Lien. The aggregate value of all Taxable Property shall be at least five (5) times the sum of: (i) the aggregate principal amount of all Bonds then Outstanding, plus (ii) the aggregate principal amount of the additional Series proposed to be issued, plus (iii) the aggregate principal amount of any fixed assessment liens on the parcels in the District subject to the levy of Special Taxes, plus (iv) a portion of the aggregate principal amount of any and all other community facilities district bonds then outstanding and payable at least partially from special taxes to be levied on parcels of land within the District (the “Other District Bonds”) equal to the aggregate outstanding principal amount of the Other District Bonds multiplied by a fraction, the numerator of which is the amount of special taxes levied for the Other District Bonds on parcels of land within the District subject to the Special Taxes, and the denominator of which is the total amount of special taxes levied for the Other District Bonds on all parcels of land against which such special taxes are levied to pay the Other District Bonds based upon information from the most recent available Fiscal Year.
(5) Aggregate Coverage. For each Fiscal Year after issuance of the proposed Series, the maximum amount of the Special Taxes that may be levied for such Fiscal Year on all parcels then classified as Taxable Property or to be classified as Taxable Property in the subsequent Fiscal Year not then delinquent in the payment of any prior or current years’ Special Taxes, less the Administrative Expense Requirement for each respective Fiscal Year, shall be at least 110% of the total Annual Debt Service of the then Outstanding Bonds and the proposed Series of Bonds for each Bond Year that commences in each such Fiscal Year.
(6) Certificates. The City shall deliver to the Fiscal Agent a Certificate of Authorized Representative of the City certifying that the conditions precedent to the issuance of such Series set forth in paragraphs (1) through (5) above have been satisfied. (7) Opinion. An Opinion of Bond Counsel to the effect that execution of the Supplemental Fiscal Agent Agreement has been duly authorized by the City in accordance with this Fiscal Agent Agreement and that such Series, when duly executed by the City and authenticated and delivered by the Fiscal Agent, will be valid and binding obligations of the City.
Notwithstanding the foregoing, the City may issue Bonds to refund all or a portion of one or more Series without the need to satisfy the requirements of paragraphs (4) and (5) above, and, in connection therewith, the Certificate of Authorized Representative of the City in paragraph (6) above need not make reference to paragraphs (4) and (5); provided a certification is made that Maximum Annual Debt Service on all Outstanding Bonds following the issuance of such Refunding Bonds is less than or equal to Maximum Annual Debt Service on all Outstanding Bonds prior to the issuance of such Refunding Bonds.
Nothing in this Fiscal Agent Agreement prohibits the City from issuing any other bonds or otherwise incurring debt secured by a pledge of the Special Tax Revenues subordinate to the pledge thereof under this Fiscal Agent Agreement.
Item 8.4
Mountain House Page 1623 of 1663
32 Section 5.18. Yield of the Bonds. In determining the yield of the Bonds to comply with Section 5.13 and 6.02 hereof, the City will take into account optional and mandatory prepayment redemption (including premium, if any) in advance of maturity based on the reasonable expectations of the City, as of the Closing, without regard to whether or not redemption moneys are received or Bonds are redeemed.
Item 8.4
Mountain House Page 1624 of 1663
33 ARTICLE VI
INVESTMENTS; DISPOSITION OF INVESTMENT PROCEEDS;
LIABILITY OF THE CITY
Section 6.01. Deposit and Investment of Moneys in Funds. Subject in all respects to the provisions of Section 6.02, moneys in any fund or account created or established by this Agreement and held by the Fiscal Agent, shall be invested by the Fiscal Agent in Permitted Investments, as directed pursuant to an Officer’s Certificate filed with the Fiscal Agent at least two (2) Business Days in advance of the making of such investments. In the absence of any such Officer’s Certificate, the Fiscal Agent shall invest any such moneys in Permitted Investments described in clause (vii) of the definition thereof which by their terms mature prior to the date on which such moneys are required to be paid out hereunder. Subject in all respects to the provisions of Section 6.02, moneys in any fund or account created or established by this Agreement and held by the Finance Director shall be invested by the Finance Director in any lawful investments that the City may make, which by their terms mature prior to the date on which such moneys are required to be paid out hereunder. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account, subject, however, to the requirements of this Agreement for transfer of interest earnings and profits resulting from investment of amounts in funds and accounts.
The Fiscal Agent or Finance Director may act as principal or agent in the acquisition or disposition of any investment. Neither the Fiscal Agent nor the Finance Director shall incur any liability for losses arising from any investments made pursuant to this Section. Any losses arising from any investments made pursuant to this Section shall be offset against interest earnings and profits retained in the same fund.
Except as otherwise provided in the next sentence, all investments of amounts deposited in any fund or account created by or pursuant to this Agreement, or otherwise containing gross proceeds of the Bonds (within the meaning of Section 148 of the Code), shall be acquired, disposed of, and valued (as of the date that valuation is required by this Agreement or the Code) at Fair Market Value. For purposes of any Fair Market Value determination hereunder, the Fiscal Agent shall be entitled to conclusively rely on an Officer’s Certificate of the City and shall be fully protected in relying thereon. Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Code and (unless valuation is undertaken at least annually) investments in the Reserve Fund shall be valued at their present value (within the meaning of Section 148 of the Code).
Investments in any and all funds and accounts may be commingled in a separate fund or funds for purposes of making, holding and disposing of investments, notwithstanding provisions herein for transfer to or holding in or to the credit of particular funds or accounts of amounts received or held by the Fiscal Agent or the Finance Director hereunder, provided that the Fiscal Agent or the Finance Director, as applicable, shall at all times account for such investments strictly in accordance with the funds and accounts to which they are credited and otherwise as provided in this Agreement.
The Fiscal Agent or the Finance Director, as applicable, shall sell or present for redemption, any investment security whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund or account to which such investment security is credited and neither the Fiscal Agent nor the Finance Director shall Item 8.4
Mountain House Page 1625 of 1663
34 be liable or responsible for any loss resulting from the acquisition or disposition of such investment security in accordance herewith.
The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City specifically waives receipt of such confirmations to the extent permitted by law. The Fiscal Agent will furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Fiscal Agent hereunder.
Section 6.02. Rebate of Excess Investment Earnings to the United States. The City covenants to calculate and rebate to the federal government, in accordance with the Regulations, excess investment earnings to the extent required by Section 148(f) of the Code.
The City shall notify the Fiscal Agent of any amounts determined to be due to the federal government, and the Fiscal Agent shall, upon receipt of an Officer’s Certificate of the City, withdraw such amounts from the Reserve Fund pursuant to Section 4.03(D), and pay such amounts to the federal government as required by the Code and the Regulations. In the event of any shortfall in amounts available to make such payments under Section 4.03(D), the Fiscal Agent shall notify the Finance Director in writing of the amount of the shortfall and the Finance Director shall make such payment from any amounts available in the Special Tax Fund. Any fees or expenses incurred by the Fiscal Agent or the City under or pursuant to this Section 6.02 shall be Administrative Expenses.
In order to provide for the administration of this Section 6.02, the City may provide for the employment of independent attorneys, accountants and consultants compensated on such reasonable basis as the City may deem appropriate.
Section 6.03. Limited Obligation. The City’s obligations hereunder are limited obligations of the City on behalf of Improvement Area No. 3 of the District and are payable solely from and secured solely by the Special Tax Revenues and the amounts in the Special Tax Fund, the Bond Fund and the Reserve Fund created hereunder.
Item 8.4
Mountain House Page 1626 of 1663
35 ARTICLE VII
THE FISCAL AGENT
Section 7.01. Appointment of Fiscal Agent. Computershare Trust Company, N.A., at its Principal Office, is hereby appointed Fiscal Agent for the Bonds. The Fiscal Agent undertakes to perform such duties, and only such duties, as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Fiscal Agent.
Any company into which the Fiscal Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Fiscal Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under the following paragraph of this Section, shall be the successor to such Fiscal Agent without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.
The City may remove the Fiscal Agent initially appointed, and any successor thereto, and may appoint a successor or successors thereto, but any such successor shall be a bank or trust company having a combined capital (exclusive of borrowed capital) and surplus of at least $50,000,000, including, for such purpose, the combined capital and surplus of any parent holding company, and subject to supervision or examination by federal or state authority. If such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purposes of this Section 7.01, combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
The Fiscal Agent may at any time resign by giving written notice to the City and by giving to the Owners notice by mail of such resignation. Upon receiving notice of such resignation, the City shall promptly appoint a successor Fiscal Agent by an instrument in writing. Any resignation or removal of the Fiscal Agent shall become effective upon acceptance of appointment by the successor Fiscal Agent.
If no appointment of a successor Fiscal Agent shall be made pursuant to the foregoing provisions of this Section within 30 days after the Fiscal Agent shall have given to the City written notice or after a vacancy in the office of the Fiscal Agent shall have occurred by reason of its inability to act, the Fiscal Agent or any Bondowner may apply to any court of competent jurisdiction to appoint a successor Fiscal Agent. Said court may thereupon, after such notice, if any, as such court may deem proper, appoint a successor Fiscal Agent.
Section 7.02. Liability of Fiscal Agent. The recitals of facts, covenants and agreements herein and in the Bonds contained shall be taken as statements, covenants and agreements of the City, and the Fiscal Agent assumes no responsibility for the correctness of the same, or makes any representations as to the validity or sufficiency of this Agreement or of the Bonds, or shall incur any responsibility in respect thereof, other than in connection with the duties or obligations herein or in the Bonds assigned to or imposed upon it. The Fiscal Agent shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful default. The Fiscal Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. The Fiscal Agent has no liability regarding the use of the proceeds from the purchase of the Bonds deposited in funds held by the City.
Item 8.4
Mountain House Page 1627 of 1663
36 In the absence of bad faith, the Fiscal Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Fiscal Agent and conforming to the requirements of this Agreement, including all Officer’s Certificates of the City meeting such requirements; but in the case of any such certificates or opinions by which any provision hereof are specifically required to be furnished to the Fiscal Agent, the Fiscal Agent shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Agreement. Except as provided above in this paragraph, the Fiscal Agent shall be protected and shall incur no liability in acting or proceeding, or in not acting or not proceeding, in good faith, reasonably and in accordance with the terms of this Agreement, upon any resolution, order, notice, request, consent or waiver, certificate, statement, affidavit, or other paper or document which it shall in good faith reasonably believe to be genuine and to have been adopted or signed by the proper person or to have been prepared and furnished pursuant to any provision of this Agreement, and the Fiscal Agent shall not be under any duty to make any investigation or inquiry as to any statements contained or matters referred to in any such instrument.
The Fiscal Agent shall not be liable for any error of judgment made in good faith by a responsible officer unless it shall be proved that the Fiscal Agent was negligent in ascertaining the pertinent facts.
No provision of this Agreement shall require the Fiscal Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
The Fiscal Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement at the request or direction of any of the Owners pursuant to this Agreement unless such Owners shall have offered to the Fiscal Agent reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
The Fiscal Agent may become the owner of the Bonds with the same rights it would have if it were not the Fiscal Agent.
Section 7.03. Information. The Fiscal Agent shall provide to the City such information relating to the Bonds and the funds and accounts maintained by the Fiscal Agent hereunder as the City shall reasonably request, including but not limited to quarterly statements reporting funds held and transactions by the Fiscal Agent.
Section 7.04. Notice to Fiscal Agent. The Fiscal Agent may rely and shall be protected in acting or refraining from acting upon any Officer’s Certificate, notice, resolution, request, consent, order, certificate, report, warrant, Bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties and given in accordance with the requirements hereof. The Fiscal Agent may execute any of the powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Fiscal Agent shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. The Fiscal Agent may consult with counsel, who may be counsel to the City, with regard to legal questions, and the opinion of such Item 8.4
Mountain House Page 1628 of 1663
37 counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.
The Fiscal Agent shall not be bound to recognize any person as the Owner of a Bond unless and until such Bond is submitted for inspection, if required, and his title thereto satisfactorily established, if disputed.
Whenever in the administration of its duties under this Agreement the Fiscal Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct on the part of the Fiscal Agent, be deemed to be conclusively proved and established by a certificate of the City, and such certificate shall be full warrant to the Fiscal Agent for any action taken or suffered under the provisions of this Agreement or any Supplemental Agreement upon the faith thereof, but in its discretion the Fiscal Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as to it may seem reasonable.
Section 7.05. Compensation, Indemnification. The City shall pay to the Fiscal Agent, but only from Special Tax Revenues, from time to time reasonable compensation for all services rendered as Fiscal Agent under this Agreement, and also all reasonable expenses, charges, counsel fees and other disbursements, including those of their attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Agreement, but the Fiscal Agent shall not have a lien therefor on any funds at any time held by it under this Agreement. The City further agrees, to the extent permitted by applicable law, and only from Special Tax Revenues as the source of funds, to indemnify and save the Fiscal Agent, its officers, employees, directors and agents harmless against any costs, claims, expenses or liabilities, including, without limitation, fees and expenses of its attorneys which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or willful misconduct. The obligation of the City under this Section shall survive resignation or removal of the Fiscal Agent under this Agreement and payment of the Bonds and discharge of this Agreement.
Item 8.4
Mountain House Page 1629 of 1663
38 ARTICLE VIII
MODIFICATION OR AMENDMENT OF THIS AGREEMENT
Section 8.01. Amendments Permitted. This Agreement and the rights and obligations of the City and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Agreement pursuant to the affirmative vote at a meeting of Owners, or with the written consent without a meeting, of the Owners of at least 60% in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 8.04. No such modification or amendment shall (i) extend the maturity of any Bond or reduce the interest rate thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the Owner of such Bond, or (ii) permit the creation by the City of any pledge or lien upon the Special Taxes superior to or on a parity with the pledge and lien created for the benefit of the Bonds (except as otherwise permitted by the Act, the laws of the State of California or this Agreement), or reduce the percentage of Bonds required for the amendment hereof. No such amendment may modify any of the rights or obligations of the Fiscal Agent without its written consent.
This Agreement and the rights and obligations of the City and of the Owners may also be modified or amended at any time by a Supplemental Agreement, without the consent of any Owners, only to the extent permitted by law and only for any one or more of the following purposes:
(A) to add to the covenants and agreements of the City in this Agreement contained, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the City; (B) to make modifications not adversely affecting any outstanding series of Bonds of the City in any material respect;
(C) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Agreement, or in regard to questions arising under this Agreement, as the City and the Fiscal Agent may deem necessary or desirable, and which shall not adversely affect the rights of the Owners of the Bonds; or
(D) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code relating to required rebate of excess investment earnings to the United States or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the Regulations; (E) to facilitate the issuance of additional bonds, to the extent permitted by Section 5.17.
Section 8.02. Owners’ Meetings. The City may at any time call a meeting of the Owners.
In such event the City is authorized to fix the time and place of said meeting and to provide for the giving of notice thereof and to fix and adopt rules and regulations for the conduct of said meeting.
Item 8.4
Mountain House Page 1630 of 1663
39 Section 8.03. Procedure for Amendment with Written Consent of Owners. The City and the Fiscal Agent may at any time enter into a Supplemental Agreement amending the provisions of the Bonds or of this Agreement or any Supplemental Agreement, to the extent that such amendment is permitted by Section 8.01, to take effect when and as provided in this Section. A copy of such Supplemental Agreement, together with a request to Owners for their consent thereto, if such consent is required under Section 8.01, shall be mailed by first class mail, by the Fiscal Agent to each Owner of Bonds Outstanding, but failure to mail copies of such Supplemental Agreement and request shall not affect the validity of the Supplemental Agreement when assented to as in this Section provided.
If consent of the Owners is required under Section 8.01, such Supplemental Agreement shall not become effective unless there shall be filed with the Fiscal Agent the written consents of the Owners of at least 60% in aggregate principal amount of the Bonds then Outstanding (exclusive of Bonds disqualified as provided in Section 8.04) and a notice shall have been mailed as hereinafter in this Section provided. Each such consent shall be effective only if accompanied by proof of ownership of the Bonds for which such consent is given, which proof shall be such as is permitted by Section 9.04. Any such consent shall be binding upon the Owner of the Bonds giving such consent and on any subsequent Owner (whether or not such subsequent Owner has notice thereof) unless such consent is revoked in writing by the Owner giving such consent or a subsequent Owner by filing such revocation with the Fiscal Agent prior to the date when the notice hereinafter in this Section provided for has been mailed.
After the Owners of the required percentage of Bonds shall have filed their consents to the Supplemental Agreement, the City shall mail a notice to the Owners in the manner hereinbefore provided in this Section for the mailing of the Supplemental Agreement, stating in substance that the Supplemental Agreement has been consented to by the Owners of the required percentage of Bonds and will be effective as provided in this Section (but failure to mail copies of said notice shall not affect the validity of the Supplemental Agreement or consents thereto). Proof of the mailing of such notice shall be filed with the Fiscal Agent. A record, consisting of the papers required by this Section 8.03 to be filed with the Fiscal Agent, shall be proof of the matters therein stated until the contrary is proved. The Supplemental Agreement shall become effective upon the filing with the Fiscal Agent of the proof of mailing of such notice, and the Supplemental Agreement shall be deemed conclusively binding (except as otherwise herein above specifically provided in this Article) upon the City and the Owners of all Bonds at the expiration of 60 days after such filing, except in the event of a final decree of a court of competent jurisdiction setting aside such consent in a legal action or equitable proceeding for such purpose commenced within such 60-day period.
Section 8.04. Disqualified Bonds. Bonds owned or held for the account of the City, excepting any pension or retirement fund, shall not be deemed Outstanding for the purpose of any vote, consent or other action or any calculation of Outstanding Bonds provided for in this Article VIII, and shall not be entitled to vote upon, consent to, or take any other action provided for in this Article VIII. Upon request, the City shall provide an Officer’s Certificate to the Fiscal Agent listing those Bonds which are disqualified pursuant to this Section 8.04.
Section 8.05. Effect of Supplemental Agreement. From and after the time any Supplemental Agreement becomes effective pursuant to this Article VIII, this Agreement shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations under this Agreement of the City and all Owners of Bonds Outstanding shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such Supplemental Item 8.4
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40 Agreement shall be deemed to be part of the terms and conditions of this Agreement for any and all purposes.
Section 8.06. Endorsement or Replacement of Bonds Issued After Amendments. The City may determine that Bonds issued and delivered after the effective date of any action taken as provided in this Article VIII shall bear a notation, by endorsement or otherwise, in form approved by the City, as to such action. In that case, upon demand of the Owner of any Bond Outstanding at such effective date and presentation of his Bond for that purpose at the Principal Office of the Fiscal Agent or at such other office as the City may select and designate for that purpose, a suitable notation shall be made on such Bond. The City may determine that new Bonds, so modified as in the opinion of the City is necessary to conform to such Owners’ action, shall be prepared, executed and delivered. In that case, upon demand of the Owner of any Bonds then Outstanding, such new Bonds shall be exchanged at the Principal Office of the Fiscal Agent without cost to any Owner, for Bonds then Outstanding, upon surrender of such Bonds.
Section 8.07. Amendatory Endorsement of Bonds. The provisions of this Article VIII shall not prevent any Owner from accepting any amendment as to the particular Bonds held by him, provided that due notation thereof is made on such Bonds.
Section 8.08. Opinion of Counsel Regarding Supplemental Agreement. The Fiscal Agent shall be furnished an opinion of counsel that any Supplemental Agreement entered into by the City and the Fiscal Agent complies with the provisions of this Article VIII, and the Fiscal Agent may conclusively rely upon such opinion.
Item 8.4
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41 ARTICLE IX
MISCELLANEOUS
Section 9.01. Benefits of Agreement Limited to Parties. Nothing in this Agreement expressed or implied, is intended to give to any person other than the City, the Fiscal Agent and the Owners, any right, remedy, claim under or by reason of this Agreement. Any covenants, stipulations, promises or agreements in this Agreement contained by and on behalf of the City shall be for the sole and exclusive benefit of the Owners and the Fiscal Agent.
Section 9.02. Successor is Deemed Included in All References to Predecessor.
Whenever in this Agreement or any Supplemental Agreement either the City or the Fiscal Agent is named or referred to, such reference shall be deemed to include the successors or assigns thereof, and all the covenants and agreements in this Agreement contained by or on behalf of the City or the Fiscal Agent shall bind and inure to the benefit of the respective successors and assigns thereof whether so expressed or not.
Section 9.03. Discharge of Agreement. If the City shall pay and discharge the entire indebtedness on all or any portion of the Bonds Outstanding in any one or more of the following ways:
(A) by well and truly paying or causing to be paid the principal of, and interest and any premium on, such Bonds Outstanding, as and when the same become due and payable;
(B) by depositing with the Fiscal Agent or other fiduciary, at or before maturity, money which, together with (in the event that all of the Bonds are to be defeased) the amounts then on deposit in the funds and accounts provided for in Sections 4.02 and
4.03, is fully sufficient to pay such Bonds Outstanding, including all principal, interest and redemption premiums; or
(C) by irrevocably depositing with the Fiscal Agent or other fiduciary, cash and Federal Securities in such amount as the City shall determine as confirmed by an independent certified public accountant will, together with the interest to accrue thereon and (in the event that all of the Bonds are to be defeased) moneys then on deposit in the fund and accounts provided for in Sections 4.02 and 4.03, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been given as in this Agreement provided or provision satisfactory to the Fiscal Agent shall have been made for the giving of such notice, then, at the election of the City, and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of the Special Taxes and other funds provided for in this Agreement and all other obligations of the City under this Agreement with respect to such Bonds Outstanding shall cease and terminate, except only the obligations of the City under Section 5.13 and to pay or cause to be paid to the Owners of the Bonds not so surrendered and paid all sums due thereon and all amounts owing to the Fiscal Agent pursuant to Section 7.05; and thereafter Special Taxes shall not be payable to the Fiscal Agent. Notice of such election shall be filed with the Fiscal Agent.
Item 8.4
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42 Any funds thereafter held by the Fiscal Agent upon payments of all fees and expenses of the Fiscal Agent, which are not required for said purpose, shall be paid over to the City.
Section 9.04. Execution of Documents and Proof of Ownership by Owners. Any request, declaration or other instrument which this Agreement may require or permit to be executed by Owners may be in one or more instruments of similar tenor, and shall be executed by Owners in person or by their attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any Owner or his attorney of such request, consent, declaration or other instrument, or of such writing appointing such attorney, may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state in which he purports to act, that the person signing such request, declaration or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such notary public or other officer.
Except as otherwise herein expressly provided, the ownership of registered Bonds and the amount, maturity, number and date of holding the same shall be proved by the registry books.
Any request, consent, declaration or other instrument or writing of the Owner of any Bond shall bind all future Owners of such Bond in respect of anything done or suffered to be done by the City or the Fiscal Agent in good faith and in accordance therewith.
Section 9.05. Waiver of Personal Liability. No member, officer, agent or employee of the City shall be individually or personally liable for the payment of the principal of, or interest or any premium on, the Bonds; but nothing herein contained shall relieve any such member, officer, agent or employee from the performance of any official duty provided by law.
Section 9.06. Notices to and Demands on City and Fiscal Agent. Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the Fiscal Agent to or on the City may be given or served by being deposited postage prepaid in a post office letter box, by overnight courier or by facsimile (with receipt confirmed by telephone) addressed (until another address is filed by the City with the Fiscal Agent) as follows:
City of Mountain House
Attention: Finance Director
251 E Main Street
Mountain House, California 95391
Any notice or demand which by any provision of this Agreement is required or permitted to be given or served by the City to or on the Fiscal Agent may be given or served by being deposited postage prepaid in a post office letter box, by overnight courier or by facsimile (with receipt confirmed by telephone) addressed (until another address is filed by the Fiscal Agent with the City) as follows:
Item 8.4
Mountain House Page 1634 of 1663
43 Computershare Trust Company, N.A.
Attention: Corporate Trust
1505 Energy Park Drive
St. Paul, Minnesota 55108
Section 9.07. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Agreement shall for any reason be held illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Agreement. The City hereby declares that it would have adopted this Agreement and each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences, clauses, or phrases of this Agreement may be held illegal, invalid or unenforceable.
Section 9.08. Unclaimed Moneys. Anything contained herein to the contrary notwithstanding, any moneys held by the Fiscal Agent in trust for the payment and discharge of the principal of, and the interest and any premium on, the Bonds which remains unclaimed for two (2) years after the date when the payments of such principal, interest and premium have become payable, if such moneys was held by the Fiscal Agent at such date, shall be repaid by the Fiscal Agent to the City as its absolute property free from any trust, and the Fiscal Agent shall thereupon be released and discharged with respect thereto and the Bond Owners shall look only to the City for the payment of the principal of, and interest and any premium on, such Bonds.
Section 9.09. Applicable Law. This Agreement shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California.
Section 9.10. Conflict with Act. In the event of a conflict between any provision of this Agreement with any provision of the Act as in effect on the Closing Date, the provision of the Act shall prevail over the conflicting provision of this Agreement.
Section 9.11. Conclusive Evidence of Regularity. Bonds issued pursuant to this Agreement shall constitute conclusive evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes.
Section 9.12. Payment on Business Day. In any case where the date of the maturity of interest or of principal (and premium, if any) of the Bonds or the date fixed for redemption of any Bonds or the date any action is to be taken pursuant to this Agreement is other than a Business Day, the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period from and after such date.
Section 9.13. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original. The exchange of copies of this Agreement and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Agreement as to the parties hereto and may be used in lieu of the original Agreement and signature pages for all purposes.
Section 9.14. U.S.A. Patriot Act. The City and the District acknowledge that in accordance with Section 326 of the U.S.A. Patriot Act, the Fiscal Agent, like all financial Item 8.4
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44 institutions and in order to help fight the funding of terrorism and money laundering, is required to obtain, verify, and record information that identifies each person or legal entity that establishes a relationship or opens an account with the Fiscal Agent. The City and the District agree that they will provide the Fiscal Agent with such information as it may request in order for the Fiscal Agent to satisfy the requirements of the U.S.A. Patriot Act.
[Signature Page Follows]
Item 8.4
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[Signature page to Fiscal Agent Agreement dated as of April 1, 2026] IN WITNESS WHEREOF, the City has caused this Agreement to be executed in its name and the Fiscal Agent has caused this Agreement to be executed in its name, all as of April 1, 2026.
CITY OF MOUNTAIN HOUSE, for itself and on
behalf of its MOUNTAIN HOUSE COMMUNITY
FACILITIES DISTRICT NO. 2024-1 (PUBLIC
FACILITIES AND SERVICES)
By:
City Manager
COMPUTERSHARE TRUST COMPANY, N.A.,
as Fiscal Agent
By:
Authorized Officer
Item 8.4
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A-1
EXHIBIT A
FORM OF BOND
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
No. ___ ***$__________***
IMPROVEMENT AREA NO. 3 OF
CITY OF MOUNTAIN HOUSE
COMMUNITY FACILITIES DISTRICT NO. 2024-1
(PUBLIC FACILITIES AND SERVICES)
SPECIAL TAX BONDS SERIES 2026
INTEREST RATE: MATURITY DATE: BOND DATE: CUSIP:
% September 1, 20__ __________, 2026
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: ***______________ DOLLARS***
The City of Mountain House (the “City”) for and on behalf of its City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) (the “District”) for Improvement Area No. 3 of the District, for value received, hereby promises to pay solely from the Special Tax (as hereinafter defined) or amounts in certain funds and accounts held under the Agreement (as hereinafter defined), to the Registered Owner named above, or registered assigns (the “Owner”), on the Maturity Date set forth above, unless redeemed prior thereto as hereinafter provided, the Principal Amount set forth above, and to pay interest on such principal amount from the Bond Date shown above, or from the most recent Interest Payment Date (as hereinafter defined) to which interest has been paid or duly provided for, semiannually on March 1 and September 1, commencing September 1, 2026 (the “Interest Payment Dates”), at the Interest Rate set forth above, until the principal amount hereof is paid or made available for payment. The principal of this Bond is payable to the Owner hereof in lawful money of the United States of America upon presentation and surrender of this Bond at the principal corporate trust office of Computershare Trust Company, N.A. in St. Paul, Minnesota (the “Fiscal Agent”). Interest on this Bond shall be paid by check of the Fiscal Agent mailed by first class mail on each Interest Payment Date to the Owner hereof as of the close of business on the 15th day of the month preceding the month in which the Interest Payment Date occurs (the “Record Date”) at such Owner’s address as it appears on the registration books maintained by the Fiscal Agent, or by wire transfer made on such Interest Payment Date upon written instructions delivered to the Fiscal Agent by the applicable Record Date of any Owner of $1,000,000 or more in aggregate principal amount of Bonds.
This Bond is one of a duly authorized issue of bonds approved by resolution of the City Council of the City on __________, 2026 (the “Resolution”), pursuant to the Mello-Roos Item 8.4
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A-2
Community Facilities Act of 1982, as amended, Sections 53311, et seq., of the California Government Code (the “Mello-Roos Act”) for the purpose of providing moneys for the construction and acquisition of improvements for the District, and is one of the bonds designated “Improvement Area No. 3 of City of Mountain House Community Facilities District No. 2024-1 (Public Facilities and Services) Special Tax Bonds Series 2026” (the “Bonds”). The issuance of the Bonds and the terms and conditions thereof are provided for by a Fiscal Agent Agreement, dated as of April 1, 2026, by and between the City and the Fiscal Agent (the “Agreement”) and this reference incorporates the Agreement herein, and by acceptance hereof the Owner of this Bond assents to said terms and conditions. The Agreement is authorized under, this Bond is issued under and both are to be construed in accordance with, the laws of the State of California. Capitalized terms used but not defined herein are defined in the Agreement.
Pursuant to the Mello-Roos Act, the Agreement and the Resolution, the principal of and interest on this Bond are payable solely from the “Special Tax Revenues,” being the proceeds of the facilities special taxes annually received by the City for Improvement Area No. 3 (the “Special Taxes”), excluding any interest and penalties thereon collected in connection with delinquent Special Taxes, less an amount equal to the Administrative Expense Priority, including all scheduled payments and delinquent payments thereof, and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes, and certain funds held under the Agreement.
Interest on this Bond shall be payable from the Interest Payment Date next preceding the date of authentication hereof, unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (ii) such date of authentication is after a Record Date but on or prior to an Interest Payment Date, in which event interest will be payable from such Interest Payment Date, or (iii) such date of authentication is prior to the first Record Date, in which event interest will be payable from the Bond Date shown above; provided however, that if at the time of authentication of this Bond, interest is in default hereon, this Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment hereon.
Any tax for the payment hereof shall be limited to the Special Tax, except to the extent that provision for payment has been made by the City as may be permitted by law. The Bonds do not constitute obligations of the City for which the City is obligated to levy or pledge, or has levied or pledged, general or special taxation other than described herein above.
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, _____ 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, ____ through August 31, ____ 103%
September 1, ____ through August 31, ____ 102
September 1, ____ through August 31, ____ 101
September 1, ____ and any date thereafter 100
The Bonds are subject to mandatory redemption from prepayments of the Special Tax by property owners, in whole or in part among maturities as shall be specified by the City and by lot Item 8.4
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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:
Redemption Dates
Redemption
Price
September 1, ____ through and including March 1, ____ 103% September 1, ____ and March 1, ____ 102
September 1, ____ and March 1, ____ 101
September 1, ____ and any Interest Payment Date thereafter 100 The Bonds maturing September 1, _____ and September 1, ____ are subject to mandatory sinking payment redemption in part on September 1, _____ and September 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, _____
Sinking Fund
Redemption Date
(September 1)
Sinking Fund Payment
(maturity)
Term Bonds Maturing September 1, _____
Sinking Fund
Redemption Date
(September 1)
Sinking Fund Payment
(maturity)
The amounts in the foregoing tables shall be reduced pro rata at the direction of the City in an Officer’s Certificate, in order to maintain substantially uniform debt service, as a result of any prior partial redemption of the Bonds.
Notice of redemption with respect to the Bonds to be redeemed shall be given to the Owners thereof, in the manner, to the extent and subject to the provisions of the Agreement.
This Bond shall be registered in the name of the Owner hereof, as to both principal and interest. Each registration and transfer of registration of this Bond shall be entered by the Fiscal Agent in books kept by it for this purpose and authenticated by its manual signature upon the certificate of authentication endorsed hereon.
No transfer or exchange hereof shall be valid for any purpose unless made by the registered owner, by execution of the form of assignment endorsed hereon, and authenticated as Item 8.4
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herein provided, and the principal hereof, interest hereon and any redemption premium shall be payable only to the registered owner or to such Owner’s order. The Fiscal Agent shall require the Owner requesting transfer or exchange to pay any tax or other governmental charge required to be paid with respect to such transfer or exchange. No transfer or exchange hereof shall be required to be made (i) within 15 days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after such Bond has been selected for redemption.
The Agreement and the rights and obligations of the City thereunder may be modified or amended as set forth therein. The principal of the Bonds is not subject to acceleration upon a default under the Agreement or any other document.
This Bond shall not become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been dated and manually signed by the Fiscal Agent.
It is hereby certified, recited and declared that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of this Bond have existed, happened and been performed in due time, form and manner as required by law, and that the amount of this Bond, together with all other indebtedness of the City, does not exceed any debt limit prescribed by the laws or Constitution of the State of California.
Unless this Bond is presented by an authorized representative of The Depository Trust Company to the Fiscal Agent for registration of transfer, exchange or payment, and any Bond issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.
Item 8.4
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IN WITNESS WHEREOF, the City of Mountain House has caused this Bond to be executed in its name by the manual or facsimile signature of its Mayor and attested by the manual or facsimile signature of its City Clerk.
CITY OF MOUNTAIN HOUSE
By:
Mayor
Attested:
By:
City Clerk
FISCAL AGENT’S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the Resolution and the Agreement.
Dated: _____________, 2026
COMPUTERSHARE TRUST COMPANY, N.A.,
as Fiscal Agent
By:
Authorized Officer
Item 8.4
Mountain House Page 1642 of 1663
A-6
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned do(es) hereby sell, assign and transfer unto (Name, address and Tax Identification Number of Assignee) the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney,
to transfer the same on the registration books of the Fiscal Agent with full power of substitution in the premises.
Dated: ________________
Signature Guaranteed:
NOTE: Signature(s) must be guaranteed by an eligible
guarantor institution with membership in an approved
signature guarantee medallion program pursuant to
Securities and Exchange Commission Rule 17A(d)15.
NOTE: The signature(s) on this Assignment must
correspond with the name(s) as written on the face
of the within Bond in every particular without
alteration or enlargement or any change whatsoever.
Item 8.4
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TITLE: Approve Assessment of Pledged Facility Component on Property Tax Bill MEETING DATE: March 25, 2026
PREPARED BY: Thomas Retchless, Finance Director
RECOMMENDATION
Staff recommends that the City Council:
Consider assessing charges for the pledged facility component (debt service fees) currently included in the monthly utility bill on the property tax roll beginning with fiscal year 2026/2027 Direct staff to implement the processes described in this staff report to assess those charges on the property tax roll
Approve liens for connections made during the fiscal year, and Approve hand bills for tax-exempt agencies
BACKGROUND
The Mountain House community was approved for development by the San Joaquin County Board of Supervisors under the Mountain House Master Plan. The Master Plan provides that essential public services, including water, wastewater, and stormwater were to be provided by the Mountain House Community Services District.
Pursuant to a series of Master Acquisition and Reimbursement Agreements (MARAs) between Trimark and other developers and the District, developers agreed to construct water, wastewater and storm drain facilities necessary to develop Mountain House and the District agreed to reimburse those developers for the costs of such facilities from the collection of the debt fee charges on customers’ utility bills. The MARA obligations were assumed by the City upon incorporation.
In accordance with the MARAs, the City bills and collects debt service payments via monthly utility bills.
The amount charged to each account is based on density and escalated each year by a cost of construction index published by the Engineering News Record (ENR).
DISCUSSION
California Health and Safety Code section 5471 provides that cities can collect fees for water, wastewater, and stormwater services. Section 5473 allows cities to collect those fees on the tax roll.
Item 8.5
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A variety of charges are collected on the monthly utility bill: volumetric water charges; base charges for water, wastewater, and stormwater; debt service fees for water, wastewater, and stormwater; and garbage.
The recommended action is to remove the debt service fees from the monthly utility bill and collect them on annual tax bills. Cities with similar capital-related charges typically place these charges on the property tax bill and not the utility bill.
Annual debt services charges for various residential densities for fiscal year 2026/2027 are shown in the table below. The debt service charges are increased by 2.65% over fiscal 2025/2026 - the ENR cost of construction index published in February 2026.
Charges for FY 2026/2027
Charges for
2025/2026
Water Wastewater Stormwater Total Total
Low density $820.99 $617.96 $181.08 1,620.03 $1,578.12
Medium density 621.96 537.36 181.08 1,340.40 1,305.72
High density 236.34 397.65 70.62 704.61 686.40
Placing the debt service fees on the tax roll will facilitate collections. The City would receive funds in December and June, which would coincide with most debt service payment dates.
Some utility accounts are established after the deadline for adding direct assessments to the tax roll has passed. Most residential connections are established by builders and occur throughout the year. When the home is sold, the buyer assumes the utility account. In these cases, staff recommends that the debt fee charges for the remainder of the fiscal year be prorated and a property lien filed in that amount. The lien will either be settled during escrow or, if not satisfied, will be placed on the property as a tax lien for the following fiscal year. Alternatively, the builder could pay the prorated amount when the building permit is issued. This will ensure that the City collects the required fees.
Some utility customers are exempt from payment of property taxes, such as the City, Lammersville Unified School District, and Delta College. As a result, these customers are not on the tax roll and must be hand billed. Staff would calculate the charges and directly hand bill each tax-exempt agency.
The process for assessing the debt service fees on the tax roll are as follows:
1. Adopt a resolution (two-thirds vote). Under section Health and Safety Code § 5473, the City must adopt an ordinance or resolution, approved by a two-thirds vote of the legislative body, electing to have sewer charges collected on the tax roll. The ordinance or resolution can specify a duration or, if silent on duration, remains in effect until repealed or the rates change. As part of this action, the City Item 8.5
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Council will readopt the rates pursuant to Article 4 of Chapter 6 of Part 3 of Division 5 of the Health and Safety Code.
2. Prepare and file the written report. The City must prepare a written report and file it with the City Clerk. The report must describe each parcel receiving services and state the charge for each parcel for the year, computed consistent with the rates set by the Municipal Code. (§ 5473.)
3. Publish notice and mail individual written notices. This is the key distinction for the first time. Section 5473.1 requires two forms of notice:
a. Published Notice. Publication pursuant to Government Code section 6066 (i.e., published once a week for two successive weeks) in a newspaper of general circulation printed and published within the entity if there is one and if not then in such paper printed and published in the county within which the greater part of such district is located, stating the report has been filed and giving the time and place of the hearing.
b. Mailed written notice to each person to whom a parcel in the report is assessed on the last equalized assessment roll, at the address shown on the roll or as known to the City Clerk. This mailed notice requirement applies only the first time the City proposes tax roll collection. Once the legislative body adopts that first report, the mailed notice requirement drops off for subsequent years.
4. Hold the hearing. At the noticed time, the City Council hears and considers all objections or protests. (§ 5473.2.) If the owners of a majority of separate parcels protest, the report cannot be adopted, and the charges must be collected separately (not on the tax roll) and do not constitute a lien.
5. Adopt the report. If there is no majority protest, the legislative body may adopt, revise, change, reduce, or modify any charge, overrule objections, and make its determination, which is final. (§ 5473.3.)
6. File with the county auditor by August 10. On or before August 10, the City Clerk files a copy of the adopted report with the county auditor, endorsed with a statement that it has been finally adopted.
The auditor then enters the charges against the respective parcels on the current assessment roll. (§ 5473.4.)
FISCAL IMPACT
By placing debt service fees on the property tax roll by means of a direct assessment, the City would receive funds in November and May, which would coincide with debt service payment dates.
Collecting fees for volumetric use and base fees for water, wastewater, and stormwater on monthly utility bills provides the revenue stream needed to fund utility operations throughout the year.
STRATEGIC PLAN
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The recommended action will address the strategic objectives of evaluating and implementing different payment options for utility accounts and investigating and developing new revenue generation opportunities.
CEQA
Not applicable.
ACTION FOLLOWING CITY COUNCIL APPROVAL
If so directed by the City Council, staff will implement the steps described above and schedule required meetings for approval.
The annual debt service fee will be added to the tax roll for fiscal year 2026/2027 and subsequent fiscal years.
For utility connections established during the fiscal year after amounts have been added to the tax roll, the debt service charges will be prorated and a property lien in the amount of those charges will be filed on the property. It is anticipated that the charges will be satisfied as part of escrow. If not, the charges will be placed on the property as a tax lien for the following fiscal year. Alternatively, the builder could pay the prorated amount as part of the building permit fee. For utility customers that are property-tax exempt, such as the City, Lammersville Unified School District, and Delta College, the debt service charges will be hand billed.
ATTACHMENTS
None
Item 8.5
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DISCUSSION ITEM | 1
TITLE: City Manager’s Update
MEETING DATE: March 25, 2026
PREPARED BY: Steven J. Pinkerton, City Manager
COMMUNITY CONCERNS & 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 follow-ups can be found at www.mountainhouseca.gov/PublicFollowUp.
None were received.
COMMUNITY DEVELOPMENT UPDATES:
Neighborhood Modifications and Approvals
Mountain House Muslim Association – Tentative Parcel Map A 10-day neighborhood notice was distributed on October 14, 2025. The approval packet was issued on October 28, 2025, and the project has since completed the neighborhood notification process.
Neighborhood A/B (College Park)
Builders continue to advance projects through design and permitting. The Design Consistency Review Committee (DCRC), comprised of City staff and Gerry Kamilos, has approved the following residential designs:
• Richmond American Homes: Five home designs in Neighborhood B • KB Home: Five home designs in Neighborhood B
• Woodside Homes: Four home designs in Neighborhood B
Neighborhoods I (Lakepoint), J (Lakeshore), and K (Lakeview) Builders continue to advance projects through design and permitting. The Design Consistency Review Committee (DCRC), comprised of City staff and Mountain House Developers, has approved the following residential designs:
• Lennar: Four home designs in Neighborhood J
• Taylor Morrison: Two home designs in Neighborhood J
• Richmond American Homes: Housing plans for Neighborhood K • Century Communities: Housing plans for Neighborhoods J and K • Rurka Homes: Two projects in Neighborhood I and one project in Neighborhood J Item 9.1
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2 Lennar Homes – Trimark sites
Lennar Homes purchased the three (3) sites that Trimark / Sunchaser received Council approval in 2024 for proposed land use change from Commercial to Residential. Design review for architecture and landscaping has been completed:
• 13 home designs within two separate sites in Neighborhood F (Tracts 4210 and 4211) • Four home designs in Neighborhood H (Tract 4212)
Infrastructure and Civil Improvements
Neighborhood A7 – Tract 4040 (College Park Area)
The landscape corridor plans have been approved.
Neighborhoods A5 – Tract 3609 and B1 – Tract 3610 (College Park Area) Grading, civil, joint trench, and streetlight improvement plans are approved and under construction. Final maps for Tracts 3609 and 3610 were approved by City Council on October 22, 2025. Staff and consultants are coordinating on the A5 mini-park and corridor landscape plans.
Neighborhood B4 – Tract 4099 (Near Delta College)
Grading and civil improvement plans are approved. The large-lot final map has been approved and recorded.
Joint trench and streetlight plans, along with remaining final map components, are currently under review.
Neighborhoods B6, B7, and B8 – Tract 3619 (College Park Area) Landscape corridor plans are approved and under construction.
Neighborhood B11 – Tract 3618 (South of Byron Road)
The Phase 2 final map has been approved, and improvements are currently under construction.
Neighborhood F – Tracts 4210 and 4211 (South of Town Center and Mountain House Parkway) Grading and civil improvement plans are approved, and construction is underway. Landscape guidelines are under review. Joint trench, streetlight, and final map plans are also currently under review.
Neighborhood H – Tract 4212 (Questa Village Area)
Grading plans are approved. Landscape guidelines, along with civil, joint trench, streetlight, and final map plans, remain under review.
Neighborhood H – Tract 4216 (Questa Village Area)
Grading and Phase 1 civil, joint trench, and streetlight plans are approved. The final map was approved by City Council on October 22, 2025. Phase 2 civil, joint trench, and streetlight plans remain under review.
Neighborhood I (Lakepoint Area)
Rough grading, civil, joint trench, and streetlight plans for Tracts 4194 and 4200-4202 are approved and under construction. Staff is reviewing plans for the Lake I sanitary sewer and storm drain pump station, along with civil and utility plans for Tracts 4191-4193, 4198, 4199, and 4265. Final maps are also under review, and staff is clearing conditions of approval and preparing improvement agreements.
Neighborhood J (Lakeshore Area)
Central Parkway Phase 1 landscape plans, in-tract landscape plans for Tracts 3968 and 3969-3972, and northern pond improvement plans are approved. Phase 1 open space park plans, Neighborhood J park plans, and off-site arterial Phase 2 landscape plans remain under review.
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3 Vertical construction and site development continue, with model homes open to the public. Full buildout is anticipated by spring 2027.
Neighborhood K (Lakeview Area)
Grading and in-tract landscape plans are under review. Civil improvements for Tract 3926 are nearing completion.
Commercial and Community Development
Tulip Kids (Questa Village – Neighborhood Commercial)
Planning approval was granted by San Joaquin County in May 2024. The owner has indicated an intent to sell the property rather than proceed with construction.
Mountain House Shopping Center (Hansen Village – Neighborhood Commercial) All City reviews are complete. The applicant is coordinating with the San Joaquin County Building Division for permit issuance, as the project predates City incorporation. Site development activities commenced in February and are ongoing.
Wicklund Crossing (Wicklund Village – Neighborhood Commercial) Planning approval and Design Consistency Review Committee approval are complete. Civil and landscape plans have been approved, and building plans have been finalized.
Building permit fees and applicable development impact fees, including the Community Facilities Fee (CFF) and Transportation Impact Fee (TIF), have been calculated and provided to the developer; however, these fees have not yet been paid. The developer has requested consideration of a development impact fee deferral.
A Transportation Impact Fee (TIF) deferral program was introduced to the City Council on February 24, with a second reading scheduled for March 25. If approved, the program would become effective 30 days following adoption (April 24).
Mustang Square (Commercial Development)
Construction activities continue at the broader Mustang Square site under San Joaquin County Building Division oversight.
Confirmed tenants include Starbucks, Chipotle, Domino’s Pizza, Nékter Juice Bar, Wingstop, Vijithea Indian Super Market, and ARCO.
Self-Storage Project – Neighborhood H (General-Commercial Zoning) U-Stor-It has proposed a three-story self-storage facility on a site zoned General-Commercial, which allows for a range of commercial and service-oriented uses. Design and entitlement materials are currently under City review, and revisions have been requested prior to completing the review.
Zaytech Academy – 230 S. Sterling Drive
The property owner is seeking Planning approval for the private school that is a primary tenant in the existing building on the site. The proposed project includes outdoor recreation facilities, which are associated with the school operation, on the parcel located immediately to the north that is under the same ownership. The application, submitted in early February, is currently under staff review and being routed for comments.
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4 Key Infrastructure Projects
Grant Line Road
Pulte is constructing Grant Line Road Phase 5 frontage improvements for Neighborhoods B6, B7, and B8 (Tract 3619). Work includes traffic signal modifications at De Anza Boulevard and Prosperity Street.
Central Parkway Bridge and Arterials (North of Byron Road) The bridge and approach roadways are open to the public. Minor punch-list items remain, and construction along Central Parkway continues with intermittent lane closures and traffic restrictions in active work zones.
Work is expected to continue through early 2026.
Traffic Signals – Central Parkway at Main Street and Arturo Boulevard Traffic signal infrastructure was installed in late January. The intersection remains in red flash, with final striping and signal switchover anticipated by the end of March.
Mountain House Parkway (North of Byron Road)
Civil, bridge, joint trench, and streetlight improvement plans are under City review.
Railroad Crossing Improvements – Byron Road at Great Valley Parkway and Mountain House Parkway Union Pacific Railroad has approved the proposed at-grade crossing improvements. A public hearing in support of CPUC approval was held at the November 12, 2025, City Council meeting. Staff and the developer are responding to supplemental documentation requests from the CPUC and Union Pacific Railroad.
Water Quality Basin 1
Improvement plans have been approved.
Byron Highway Rehabilitation Project
City staff is coordinating with the developer on concept plans for rehabilitation and roadway improvements along Byron Road.
Central Community Park – Dog Park
Plans have been approved, and construction is underway. Completion is anticipated in summer 2026.
Central Community Park – Tennis Complex
Plans have been approved, and construction is underway. Court concrete slabs have been poured. Completion is anticipated in summer 2026.
Central Community Park – Amphitheater
City staff is coordinating with project designers and developers through the design review process. Site preparation and construction activities are underway, with overall completion anticipated in the second half of 2026.
Residential Developments Summary
Neighborhoods B9-B10 – Tentative Subdivision Map
A tentative subdivision map has been proposed to subdivide approximately 35 acres into 299 residential lots, zoned R-M and R-MH. City staff is preparing draft conditions of approval and coordinating with the applicant on the annexation process. City Council consideration will occur once the application advances.
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5 Shea Homes – Rivani Site
City staff is assisting Shea Homes with architectural and landscape plan review, which is nearing completion.
Site development activities are underway, with vertical residential construction expected to follow. The project includes 266 residential lots, zoned Medium-Density Residential on an approximately 30-acre site.
Lennar / Trimark Sites (Tracts 4210, 4211, and 4212)
Lennar is developing three (3) residential tracts that were rezoned in September 2024:
• Tract 4210: 106 lots located near Central Parkway and Main Street • Tract 4211: 143 lots located near Mountain House Parkway and Arnaudo Boulevard • Tract 4212: 81 lots located west of Great Valley Parkway and Kelso Road Planning, engineering, and permitting activities are ongoing across the three tracts.
General Plan
A community forum was held on October 2, 2025, to support preparation of the City’s first comprehensive General Plan. The forum included interactive exercises to gather public input on land use, community priorities, and growth considerations.
Project documentation, including the Existing Conditions Report and Public Outreach Summary, will be available on the General Plan webpage on March 20, 2026.
City staff is also working with the project consultant, De Novo Planning Group, to incorporate an Economic Development Element into the General Plan, supported by Kosmont Companies as authorized by the City Council.
Housing Element
The Housing Element consultant, PlaceWorks, will host the first public workshop in Council Chambers on April 2, 2026.
Development Code
The amended Title 9 ordinance will be presented to the City Council for consideration at the March 25, 2026 meeting. Key updates include revisions to sign standards, Accessory Dwelling Unit regulations, Home Occupations, certain residential setbacks, and short-term rental regulations.
DEPARTMENT UPDATES:
Utilities:
An update of the Aquifer Storage and Recovery Project will be provided at the April 8 City Council meeting.
Communications:
During February and March, the Communications Department continued to focus on transparency, community engagement, and strengthening the City’s brand.
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6 Community Engagement & Public Information
The team supported several key initiatives aimed at increasing community awareness and participation.
This included promotion and coordination for community events, public meetings, and the ongoing “It Takes a Village” Community Forum Series.
Digital & Social Media Presence
The City’s social media platforms continued to serve as a primary tool for real-time updates and engagement. Content focused on community events, public safety information, infrastructure updates, and resident resources. The team monitored engagement trends and responded to community questions to maintain an open line of communication.
Internal Coordination & Strategic Support
The Communications Department collaborated closely with all City departments to support project updates, council communications, and organizational priorities. This included assistance with staff reports, presentations, and cross-department messaging to ensure alignment and clarity.
Upcoming focus areas include continued outreach for community forums, event promotion, infrastructure updates, and maintaining clear communication on key service areas.
Human Resources:
The City has extended employment offers for the Maintenance Worker, Recreation Assistant, and Program Manager positions. All three are anticipated to begin employment by the end of March. Staff also recently filled the positions of Accountant and Office Assistant I.
Regional Government Solutions (RGS) has completed the Classification and Compensation Study. Results have been presented to staff and SEIU Local 1021, and the City is currently engaged in the meet-and-confer process.
The study will be brought to the City Council for consideration upon completion of that process.
The City is implementing additional NeoGov modules to improve efficiency within Human Resources, including paperless onboarding, electronic personnel files, and performance evaluation tracking.
HR Consultant Joe Kriskovich is coordinating implementation of the performance evaluation module, which is nearing completion. Final configuration will occur once updated job descriptions are adopted by the City Council.
HR Manager Nicole Adamo is leading implementation of the onboarding module, which is also nearing completion pending full employee data integration. Both initiatives are expected to be finalized following completion of the meet-and-confer process.
Risk Management
All Municipal Pooling Authority programs, including workers’ compensation, liability, and property coverage, have been reviewed as part of the budget process.
Staff continues to review contracts and projects for compliance with City insurance requirements and liability standards, and to investigate damage to City property to recover associated costs.
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7 Public Parks, Facilities, and Recreation Programming:
Prime Time Seniors:
February Launch – In February, the Senior Program introduced several new initiatives designed to expand programming, increase participation, and provide more opportunities for seniors to stay active, social, and engaged in the community. These updates included the launch of a new membership program, expanded fitness classes, and additional social programming.
New Senior Membership Program - The Senior Membership Program was introduced to support the continued growth and sustainability of senior programming. The membership helps offset the cost of supplies, instructors, facility use, and expanded programming while keeping individual class and event fees affordable.
Members receive discounted rates on classes and activities throughout the year. The program offers two flexible payment options: $50 annually or $5 per month, with the annual option providing a $10 savings. The goal of the membership program is to maintain high-quality programming while allowing the senior program to continue growing and offering new opportunities for participants.
Expanded Fitness Programming - To support senior health and wellness, several new fitness classes were added to the schedule including Zumba Gold, Chair Yoga and Tai Chi. These classes focus on improving mobility, balance, strength, and overall well-being. The expanded fitness offerings provide participants with accessible ways to stay active and maintain independence while enjoying group exercise in a supportive environment.
Social and Recreational Programs - Additional programs were also introduced to help seniors connect, build friendships, and stay engaged with the community including BUNCO and BINGO, and the Crafting Studio, Brain Boosters and Social Hub. These activities provide opportunities for social interaction, cultural experiences, and recreational enjoyment. The expanded programming reflects the growing interest and participation within the senior community and helps ensure there are activities available for a variety of interests.
Tennis Court Reservations:
The following graph provides a month-by-month comparison of tennis court reservation revenue collected at Mountain House High School (MHHS) and Central Park over the past twelve months. The data highlights fluctuations in revenue at each location, including periods of growth and decline. Totals reflect net revenue and include refunds issued due to weather-related cancellations or instructor availability.
Monthly Tennis Court Reservation Revenues
Month MHHS Central
Park
Month MHHS Central
Park
%
Change
February 2026 $816.00 $3,300.00 February 2025 $636.00 $3,589.00 (3%) January 2026 $552.00 $2,654.00 January 2025 $452.00 $2,321.50 16% December 2025 $420.00 $1,090.00 December 2024 $224.00 $3,152.00 (55%) November 2025 $688.00 $2,190.00 November 2024 $328.00 $3,924.00 (32%) October 2025 $560.00 *$3,816.00 October 2024 $573.00 $4,508.00 (14%) September 2025 $164.00 $4,336.00 September 2024 $565.00 $2,554.00 44% Item 9.1
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8 August 2025 $504.00 $4,440.00 August 2024 $219.00 $1,680.00 160% July 2025 $424.00 $3,134.50 July 2024 $103.50 $1,500.00 122% June 2025 $520.00 $4,192.00 June 2024 $426.00 $1,984.50 95% May 2025 $352.00 $4,164.50 May 2024 $388.50 $2,058.00 85% April 2025 $464.00 $3,650.00 April 2024 $435.00 $1,299.00 137% March 2025 $372.00 $3,496.00 March 2024 $582.00 $1,432.50 92% Total $5,836.00 $40,463.00 $4,932.00 $30,002.50 33%
Facility Usage:
Indoor Facility Use – The following graph provides an overview of indoor facility usage at the Firehouse Community Room, Town Hall meeting rooms, and the Unity Center for the month of February 2026.
Bookings include both internal reservations for City-sponsored programs and activities, as well as MHMA-sponsored activities held at the Unity Center. The data illustrates overall space utilization across facilities during February 2026.
Location Facility # of Bookings Total Revenue
Firehouse Community Room 9 $160
Town Hall Boardroom 16 $850
Town Hall TH-1 50 $517
Town Hall Town Hall Main Lobby 15 $43.75
Unity Center Unity Center A 27 $583
TOTAL 117 $2,153.75
Park Use – The following graph illustrates park usage for the month of February 2026, including rentals for organized sporting leagues and private use at Altamont Village Park, Central Community Park, Cordes Village Park, Hansen Village Park, and Wicklund Village Park. The data reflects overall park utilization across these facilities during February 2026.
Location Facility # of Bookings Total Revenue
Altamont Village Park Baseball Diamond 22 $570
Altamont Village Park Field A 4 $120
Central Community Park Field D - Cricket Pitch ONLY 18 $160 Central Community Park Field D – Baseball Diamond ONLY 13 $200 Cordes Village Park Softball Diamond 12 $570
Hansen Village Park Softball Diamond 20 $520
Questa Village Park Field A 4 $120
Wicklund Village Park Baseball Diamond 14 $190
TOTAL 107 $2,450
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9 Picnic Use – The following graph shows picnic usage for the month of February 2026, including rentals for private use at Central Community Park, Cordes Village Park, Hansen Village Park, and Wicklund Village Park. The data reflects overall utilization of picnic facilities during February 2026.
Location Facility # of Bookings Total Revenue
Central Community Park
Picnic Area A - Interactive Water
Fountain 0 0
Central Community Park Picnic Area B - Basketball Court 0 0 Cordes Village Park Covered Picnic Area 0 0
Hansen Village Park Covered Picnic Area 0 0
Wicklund Village Park Gazebo 0 0
TOTAL 0 $0
Parks and Recreation Special Recognition:
The Mountain House Parks and Recreation Department received the CPRS District 5 Marketing Excellence Award for the 2025 Multi-Cultural Celebration. The award was presented at the District 5 awards ceremony held at the Lathrop Senior Center.
This recognition highlights the department’s strategic and creative marketing campaign, which was intentionally designed to promote an inclusive event that reflects the diversity and shared values of the Mountain House community. The campaign utilized multiple accessible communication channels to ensure broad community awareness and engagement.
Staff collaborated with Michele Davis of More Than Talk to develop vibrant and culturally representative graphics that enhanced the overall campaign and event visibility.
This award represents regional recognition from peer agencies and reflects the department’s continued commitment to excellence in community engagement, inclusivity, and high-quality event delivery.
Public Works
Red-Light Camera System
The vendor has submitted final design plans and encroachment permits for all 14 approaches, and City review is complete. Installation and system integration are underway.
The City anticipates initiating the required two-month public warning period beginning April 30, 2026, or early May 2026. Following this period, full enforcement is expected to begin July 2026.
On-Call Services – Small and Medium Maintenance & Construction The City has coordinated with regional agencies and the State to ensure compliance with the California Uniform Public Construction Cost Accounting Act (CUPCCAA). Updates have been incorporated into the Financial Management Manual and Purchasing Policy.
This approach is intended to streamline delivery of small- and medium-scale projects while maintaining appropriate controls, transparency, and fiscal accountability. Staff will return to the City Council on April 29, 2026, to confirm compliance and request approval of updated procedures.
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10 On-Call Services – Design, Grants & Geotechnical
Following approval of the Master Consultant Agreement (MCA), staff is developing task orders for priority projects to support efficient implementation.
Traffic Calming and Truck Routes
Staff continues to coordinate with developers to identify least-impactful truck routes and document preconstruction roadway conditions to ensure accountability for any damage.
Wastewater Surveillance Monitoring
Attachment A illustrates normalized pathogen levels detected through the City’s wastewater monitoring program.
Data shows periodic variability with no sustained increases. This program continues to serve as a proactive public health monitoring tool.
Waste & Recycling Utility Rate Increase
Proposed rates for Cambridge Place and Vida apartments (35-gallon cart) will be presented to City Council for consideration on March 25.
ATTACHMENTS:
A. Pathogen Levels for City of Mountain House Wastewater Treatment Plant Item 9.1
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ATTACHMENT A
Item 9.1
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Wednesday, March 25, 2026 - Regular City Council Meeting Board Chambers at 7:00 p.m.
ITEM
Strategic Plan Update
Addition of Waste Services Fees (35 gal)
Approve ratification for Orion endpoints
Approve ratification for catch basin
SJCOG Resolution LTF (Local Transportation Fund)
Adoption of Fee Deferral Ordinance
Development Code First Reading
Digital Signature Policy
Approve Assessment of Pledged Facility Component on Property Tax Bill CFD Financings
Thursday, March 26, 2026 - SJCOG Board of Directors
555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Wednesday, April 8, 2026 - Regular City Council Meeting Board Chambers at 7:00 p.m.
ITEM
CalGREEN Solid Waste Ordinance - Cityhood
Public Hearing - EIR Grant Line Road Roundabouts
Amendment/CCO to Inframark Contract - Maintenance & Repairs CUPCCA Resolution
Adoption of the Development Code Ordinance - 2nd reading Adoption of Caltrans LAPM Chapter 10
Federal and State Legislative Platform - Policy Adoption CMAQ EV Charger Station Project MOU with SJC
Water Update Presentation
Tuesday, April 14, 2026, YAC
Board Chambers at 7:00 p.m.
April 22nd to April 24, 2026, CalCities Leaders Summit
Sacramento, CA
Thursday, April 23, 2026 - SJCOG Board of Directors
555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Wednesday, April 29, 2026 - Regular City Council Meeting Board Chambers at 7:00 p.m.
ITEM
Review 2026 Meeting Dates
Neighborhood F - Tract 4210 Final Map (Lennar)
Neighborhood F - Tract 4211 Final Map (Lennar)
Neighborhood H - Tract 4212 Final Map (Lennar)
Cooperative Agreement for FFE (Furniture, Fixtures, Equipment) Town Hall Improvements Item 10.1
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Transit Feasiblity Study Adoption
Public Hearing CFD IA 13
Tuesday, May 12, 2026 - YAC
Board Chambers at 7:00 p.m.
Thursday, May 14, 2026 - Special Budget Study Session
Board Chambers at 5:00 p.m.
Thursday, May 14, 2026 - Regular City Council Meeting
Board Chambers at 7:00 p.m.
ITEM
Recognition of Senior Health and Wellness Expo Sponsor
Parks Restrooms – Policy and Action Item to Award Contract and appropriate funds Wednesday, May 27, 2026 - Regular City Council Meeting
Board Chambers at 7:00 p.m.
ITEM
Tuesday, June 9, 2026 - YAC
Board Chambers at 7:00 p.m.
Wednesday, June 10, 2026 - Valley Link Board Meeting
2:00 p.m. Board Chambers
Wednesday, June 10, 2026 - Regular City Council Meeting Board Chambers at 7:00 p.m.
ITEM
5:30 PM - Rosenberg Rules of Order Training
Thursday, June 11, 2026 - CalCities Central Division General Membership Meeting Location/Time TBD
Wednesday, June 24, 2026 - Regular City Council Meeting Board Chambers at 7:00 p.m.
ITEM
Thursday, June 25, 2026 - SJCOG Board of Directors
555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Item 10.1
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Wednesday, July 1, 2026 - State of the City
Time/Location TBD
Tuesday, July 7, 2026 - YAC
Board Chambers at 7:00 p.m.
Wednesday, July 8, 2026 - Regular City Council Meeting - Canceled Wednesday, July 22, 2026 - Regular City Council Meeting Board Chambers at 7:00 p.m.
ITEM
Tuesday, August 11, 2026 - YAC
Board Chambers at 7:00 p.m.
Wednesday, August 12, 2026 - Regular City Council Meeting Board Chambers at 7:00 p.m.
Wednesday, August 26, 2026 - Regular City Council Meeting Board Chambers at 7:00 p.m.
ITEM
Thursday, August 27, 2026 - SJCOG Board of Directors
555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Tuesday, September 8, 2026 - YAC
Board Chambers at 7:00 p.m.
Wednesday, September 9, 2026 - Regular City Council Meeting Board Chambers at 7:00 p.m.
ITEM
Item 10.1
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Thursday, September 10, 2026 - CalCities Central Division General Membership Meeting Location/Time TBD
Wednesday, September 23, 2026 - City Council Meeting - Canceled Board Chambers at 7:00 p.m.
ITEM
Wednesday, September 23rd - Friday, September 25, 2026 CalCities Annual Conference Anaheim, CA
Thursday, September 24, 2026 - SJCOG Board of Directors 555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Tuesday, October 13, 2026 - YAC
Board Chambers at 7:00 p.m.
Wednesday, October 14, 2026 - Valley Link Board Meeting 2:00 p.m. Board Chambers
Wednesday, October 14, 2026 - Regular City Council Meeting Board Chambers at 7:00 p.m.
ITEM
Thursday, October 22, 2026 - SJCOG Board of Directors
555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Wednesday, October 28, 2026 - Regular City Council Meeting Board Chambers at 7:00 p.m.
ITEM
Tuesday, November 10, 2026 - YAC
Board Chambers at 7:00 p.m.
Wednesday, November 18, 2026 - Regular City Council Meeting Item 10.1
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Board Chambers at 7:00 p.m.
ITEM
Wednesday, November 25, 2026 - Holiday No Meeting Scheduled Board Chambers at 7:00 p.m.
Thursday, December 3, 2026 - SJCOG Board of Directors
555 E. Weber Avenue, Stockton, CA 95202 at 4:00 p.m.
Tuesday, December 8, 2026 - YAC
Board Chambers at 7:00 p.m.
Wednesday, December 9, 2026 - Regular City Council Meeting Board Chambers at 7:00 p.m.
ITEM
Thursday, December 10, 2026 - CalCities Central Division General Membership Meeting Location/Time TBD
Wednesday, December 23, 2026 - Holiday No Meeting Scheduled Board Chambers at 7:00 p.m.
Item 10.1
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