Agenda packet — Paso Robles City Council, August 18, 2026 (part 3 of 4)

Cannabis business regulation is a highly specialized and continually evolving field requiring expertise in state licensing requirements, Department of Cannabis Control regulations, security standards, ownership structures, operational procedures, and applicable state and local laws. The City does not currently employ staff with this specialized expertise, and developing and maintaining it internally would require significant investment in training, continuing education, and ongoing regulatory monitoring. Given the anticipated permit volume, maintaining this level of expertise solely with City staff would not be an efficient use of resources.

The hybrid model provides immediate access to experienced cannabis regulatory professionals while allowing consultant services to be scaled based on application and renewal activity. This approach provides flexibility, reduces operational risk, and enables the City to utilize specialized expertise only when necessary while maintaining local control and accountability.

Table 1 summarizes the service delivery responsibilities and proposed fees under Option A, the hybrid delivery service model.

Table 1 - Option A Service Delivery Responsibilities and Proposed Fees Function City Staff Consultant

INITIAL APPLICATION
Application Intake and Administration X
Application Review X X
Background Checks X
Site and Security Plan Evaluation X
Pre-Permit Site Visit X X
Permit Issuance X

ANNUAL RENEWAL APPLICATION
Renewal Application Intake and Administration X
Renewal Application Review X X
Renewal Background Checks X
Annual Compliance Inspection X X
Renewal Issuance X

ADDITIONAL FUNCTIONS
Triennial Financial Audit X

OPTION A - PROPOSED FEES
Initial Application $ 5,500.00
Annual Renewal $ 4,600.00
Triennial Financial Audit $ 11,000.00
Option B - Fully In-House Administration
Staff also evaluated performing all permitting and compliance functions with City staff. While this approach would provide complete internal administration of the program, it would require the City to dedicate or hire personnel with specialized cannabis regulatory expertise, invest in ongoing training to

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remain current with evolving state regulations, and maintain staffing capacity sufficient to accommodate fluctuating application volumes.

These additional staffing, training, and administrative costs would increase the overall cost of the program while providing limited operational benefit beyond the recommended hybrid model. By contrast, the hybrid approach allows the City to focus internal resources on core administrative functions while utilizing consultant services only for specialized technical reviews, resulting in a more cost-effective and scalable program.

Table 2 summarizes the service delivery responsibilities and proposed fees under Option B, the fully inhouse delivery service model.

Table 2 - Option B Service Delivery Responsibilities and Proposed Fees Function City Staff Consultant

INITIAL APPLICATION
Application Intake and Administration X
Application Review X
Background Checks* X
Site and Security Plan Evaluation X
Pre-Permit Site Inspection X
Permit Issuance X

ANNUAL RENEWAL APPLICATION
Renewal Application Intake and Administration X
Renewal Application Review X
Renewal Background Checks* X
Annual Compliance Inspection X
Renewal Issuance X

ADDITIONAL FUNCTIONS
Triennial Financial Audit X

OPTION B - PROPOSED FEES
Initial Application $ 7,900.00
Annual Renewal $ 6,700.00
Triennial Financial Audit $ 12,000.00
Option C - Fully Outsourced Administration (Not Feasible) Staff also evaluated outsourcing the cannabis business permitting program entirely to a qualified thirdparty consultant. While consultants provide valuable technical expertise, the program cannot be fully outsourced because several permitting functions require direct City involvement. These include statutory permitting responsibilities, coordination with the Police Department and other City departments, integration with existing municipal review and approval processes, permit issuance, inspections, and ongoing program oversight.

Accordingly, City staff must remain actively involved throughout the permitting process to ensure compliance with local regulations, maintain accountability, and preserve the City's authority over permitting decisions.

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Proposed Fees
The recommended permitting fees have been developed based on the recommended hybrid service delivery model (Option A). Fees reflect the actual services provided by both City staff and the consultant and are intended to recover the reasonable costs associated with administering the City's cannabis business permitting program. Applicants pay only for those services necessary to process, evaluate, and administer their permits. Attachment 2 to the staff report contains the detailed fee calculations supporting the proposed fee schedule, including the estimated staff and consultant time, associated costs, and cost recovery methodology used to establish each proposed fee.

For comparison, staff reviewed cannabis regulatory permit fees from comparable neighboring jurisdictions. Permit application fees ranged from approximately $10,000 to $27,500, with a median fee of approximately $15,000, while annual renewal fees ranged from approximately $10,000 to $54,150, with a median fee of approximately $17,000. The proposed application fee under Option A of $5,500 and annual renewal fee of $4,600 are both below those of comparable jurisdictions while remaining sufficient to recover the City's anticipated costs for permit administration, compliance monitoring, inspections, and enforcement. Staff notes that these fees may require future reevaluation if the City authorizes retail storefront cannabis businesses, as those operations would likely require additional monitoring and regulatory oversight.

Staff also recommends establishing the required triennial financial audit fee as a separate fee assessed only when the audit is conducted rather than incorporating the cost into the application or annual renewal fee. This approach ensures businesses are charged only when the service is provided. By comparison, several neighboring jurisdictions include periodic audit costs within their application or renewal fees.

Table 3 compares the City's proposed cannabis regulatory permit fees with those of neighboring jurisdictions.

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In addition to the fees listed above, staff proposes two additional administrative fees associated with potential regulatory permit transfer requests and appeals/revocation of permits. The proposed fees are listed below in Table 4.

Table 4 - Additional Fees to be considered
Function Proposed Fee
Appeals and Revocation Actual Time and Materials
Permit Transfer Request Same as Initial Application Fee In addition to the new cannabis permitting fees, cannabis businesses will remain subject to existing City permitting processes and associated fees that are already established. These existing requirements are included to provide transparency regarding the overall permitting process.

Table 5 - Summary of Existing Services/Fee Components
Frequency Function Estimated Costs Notes
One-Time* Conditional Use Permit $2,645.00-$5,275.00
*One-time unless change
of location
AS Needed Building Permit See BLDG Permit Fees
Annual
Business License Tax
Certificate
Based on Gross Receipts/Flat Fee
$80.00-NoFixed Place of Business
Quarterly
Cannabis Business Tax
Collection
Based on Gross Receipts- Quarterly
Reporting
As Needed
Livescan Fingerprint
Service $50.00
The proposed fee schedule was developed by evaluating the anticipated level of effort required for each component of the permitting and renewal process, including both City staff and consultant services. Fees have been calculated based on the estimated reasonable cost of providing each service and are intended to recover only those costs directly associated with administering the City's cannabis business permitting program. The methodology allocates costs proportionately to the services provided and does not include costs unrelated to permit processing, compliance review, inspections, or program administration.

Fiscal Impact
The proposed cannabis business permitting fees have been developed using a full cost recovery methodology based on the estimated City staff time, specialized consultant services, and applicable administrative overhead required to administer the program. Consistent with California Government Code Section 66016, the proposed fees are based on the estimated reasonable cost of providing the regulatory services, are intended to recover only those costs, and are not intended to generate revenue beyond the cost of service. Staff prepared a detailed fee analysis establishing the required nexus between the proposed fees and the services provided, demonstrating that the fees do not exceed the reasonable cost of administering the program. Because cannabis business permitting is a discretionary regulatory program that primarily benefits permit applicants and permit holders, staff believes these costs should be

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borne by the recipients of the service rather than the City's General Fund. Attachment 2 provides the detailed fee calculations and supporting methodology used to develop the proposed fee schedule.

Allowing non-storefront cannabis delivery businesses to establish a physical location within the City has the potential to generate additional cannabis business tax revenue if new businesses choose to locate within the City. These businesses may also contribute to the local economy through commercial occupancy, employment opportunities, and the purchase of local goods and services.

However, staff does not anticipate a significant increase in cannabis business tax revenue solely as a result of permitting non-storefront delivery businesses to establish operations within the City. Under the City's existing Cannabis Business Tax Ordinance, the City already collects cannabis business tax on taxable sales delivered to customers within the City regardless of whether the delivery business is physically located inside or outside City limits. As a result, much of the tax revenue generated from sales to City residents is already being captured.

Any additional fiscal benefit would therefore be associated primarily with attracting new cannabis businesses to establish operations within the City and any incremental taxable business activity not currently occurring locally. Because the number of businesses that may choose to locate within the City is unknown, the magnitude of any additional cannabis business tax revenue cannot be reliably estimated at this time. The proposed regulatory permit fees are established solely to recover the City's costs of administering the cannabis permitting program and are not intended to generate additional revenue.

Table 6 presents a comparison of historical cannabis business tax revenues for the City and neighboring jurisdictions. The information is provided for comparative purposes to illustrate regional trends and provide context regarding the relative size and maturity of local cannabis markets. Because cannabis business tax revenues are influenced by a variety of factors, including the number and type of licensed businesses, local tax rates, market demand, and regulatory frameworks, these comparisons should not be interpreted as a direct indicator of the revenue the City may realize if additional cannabis business types are permitted.

Table 6 - Historical Cannabis Business Tax Revenues
FY 2020-21 FY 2021-22 FY 2022-23 FY 2023-24 FY 2024-25
Paso Robles $ 5,860 $ 16,600 $ 30,297 $ 66,647 $ 66,073 San Luis Obispo $ - $ 998,875 $ 1,127,744 $ 1,116,495 $ 1,450,000 Grover Beach $ 2,424,914 $ 1,515,590 $ 1,198,037 $ 1,066,489 $ 1,224,000 Morro Bay $ 220,000 $ 512,944 $ 502,149 $ 469,133 $ 448,678 CEQA
The proposed Ordinance and resolution revocation is not subject to the California Environmental Quality Act (CEQA) because it does not qualify as a “project” under CEQA. State CEQA Guidelines §15060(c) provides that “[a]n activity is not subject to CEQA if … the activity is not a project as defined in Section 15378.” Here, the proposed ordinance does not qualify as a “project” as defined in State CEQA Guidelines section 15378 for at least two different reasons.

First, Section 15378 defines a project as an activity that “has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment.” (State CEQA Guidelines, § 15378(a).) Here, the proposed Ordinance will not result in any

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construction or development, and it will not have any effect that would physically change the environment. Accordingly, it is not a “project” subject to CEQA. (State CEQA Guidelines, § 15060(c).) Second, Section 15378 explicitly excludes from its definition of “project” the following: “organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.” (State CEQA Guidelines, § 15378(b)(5).) The proposed Ordinance consists of administrative and organizational amendments to the El Paso de Robles Municipal Code and the Uptown/Town Centre Specific Plan that will not result in direct or indirect physical changes in the environment. Accordingly, it is not a project subject to CEQA.

Even if the proposed ordinance is considered a “project” subject to CEQA, it is categorically exempt pursuant to State CEQA Guidelines Section 15320 (Class 20). Class 20 consists of “changes in the organization or reorganization of local governmental agencies where the changes do not change the geographical area in which previously existing powers are exercised.” The proposed Ordinance is limited to amending Table 21.32-1 and Chapter 21.60 of Title 21 of the Municipal Code, and Table 5.3-1 Uptown/Town Centre Specific Plan; and the addition of Chapter 5.55 to establish and clarify an administrative process used by the City. Further, the Text Amendment is exempt from CEQA under the “common sense exemption” set forth in State CEQA Guidelines section 15061(b)(3), which provides that an activity is not subject to CEQA “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.” As explained above, the ordinance merely clarifies and maintains existing regulations and adds additional oversight, but does not allow any new types or intensities of cannabis activity. Lastly, none of the exceptions to the use of categorical exemptions identified in State CEQA Guidelines section 15300.2 apply: there is no potential for cumulative impacts; there are no unusual circumstances that would have a significant impact on the environment due to the adoption of the Ordinance; the Ordinance would not negatively impact scenic resources within a duly designated scenic highway; there is no record of hazardous waste and the Ordinance has no potential to impact historic resources.

Recommendation (Option 2)
It is recommended that City Council take the following actions:

1. Approve Resolution 26-XXX, rescinding Resolution No. 22-144 to eliminate the numerical limit on nonstorefront retail cannabis businesses permitted to operate in the city; and

2. Introduce for first reading by Title Only, Ordinance XXXX N.S. to allow non-storefront retail cannabis businesses in the Riverside Corridor (RSC) and Commercial/Light Industrial (C-3) zoning districts and to establish a cannabis regulatory permit by:
a. Adding Paso Robles Municipal Code Chapter 5.55 (Cannabis Regulatory Permits), b. Amending Paso Robles Municipal Code Table 21.32-1 (Zoning District Use Regulations), c. Amending Paso Robles Municipal Code Chapter 21.60 (Cannabis), and d. Amending Uptown/Town Centre Specific Plan Table 5.3-1 (Allowed Land Uses and Permit Requirements); and

3. Direct staff to bring the proposed fees included in Option A to City Council for adoption.

Attachments

1. Map of the RSC and C-3 Zoning Districts

2. Proposed Permitting Fee Calculations

3. Flow Chart of the Cannabis Business Permitting process

4. Resolution 26-XXX – Rescinding Resolution 22-144

5. Ordinance XXXX N.S. – Non-Storefront Retail Cannabis

6. Legal Notice Affidavit

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Cannabis Location Analysis
Sensitive Properties Buffer Map
r.:.,; City Limits c:J Sensitive Properties 600ft Buffer Zones Allowing Cannabis D Sensitive Properties - C3: Commercial/Light Industry
- RSC: Riverside Corridor
Project Name: CannabisRiversideC.oeff'1ap
Date Saved: 8/8/2022 10:01 AM
•
Attachment 1

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Option Service Delivery Model Services provided by City Staff Services Provided by Consultant Staff Costs Consultant Costs Estimated Total
Costs
Proposed Cost
Recovery
A
Hybrid
(Staff Recommendation)
Application Intake and Administration $ 642.00 $ - $ 642.00 100% Application Review Application Review $ 308.00 $ 900.00 $ 1,208.00 100% Background Checks* $ - $ 125.00-300.00 * 100%
Site and Security Plan Evaluation $ - $ 1,200.00 $ 1,200.00 100% Pre-Permit Site Inspection Pre-Permit Site Visit $ 308.00 $ 2,000.00 $ 2,308.00 100% Permit Issuance $ 86.00 $ - $ 86.00 100%
$ 1,344.00 $ 4,100.00 $ 5,444.00
Administration $ 86.00 $ - $ 86.00 100%
Renewal Application Review Renewal Application Review $ 308.00 $ 900.00 $ 1,208.00 100% Renewal Background Checks* $ - $ 100.00-125.00 * 100%
Annual Compliance Inspection Annual Compliance Inspection $ 522.00 $ 2,600.00 $ 3,122.00 100% Renewal Issuance $ 86.00 $ - $ 86.00 100%
$ 1,002.00 $ 3,500.00 $ 4,502.00
$ - $ 11,000.00 $ 11,000.00 100%
$ - $ 11,000.00 $ 11,000.00
Initial Application $ 5,500.00 *Background checks are billed directly to Annual Renewal $ 4,600.00
Triennial Financial Audit $ 11,000.00
* Background Checks will be billed directly to applicant and are dependent on number of owners and employees

OPTION A - PROPOSED FEES
Triennial Financial Audit

INITIAL APPLICATION COSTS

ANNUAL RENEWAL APPLICATION COSTS
Attachment 2 - Summary of Fee Components/Service and Delivery Options - (Per Application)

ADDITIONAL COSTS
Attachment 2

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Option Service Delivery Model Services provided by City Staff Services Provided by Consultant Staff Costs Consultant Costs Estimated Total
Costs
Proposed Cost
Recovery
B In-House
Application Intake and Administration $ 642.00 $ - $ 642.00 100% Application Review $ 924.00 $ - $ 924.00 100%
Background Checks* $ 924.00 $ - $ 924.00 100%
Site and Security Plan Evaluation $ 2,168.00 $ - $ 2,168.00 100% Pre-Permit Site Inspection $ 3,140.00 $ - $ 3,140.00 100% Permit Issuance $ 86.00 $ - $ 86.00 100%
$ 7,884.00 $ - $ 7,884.00

Administration $ 86.00 $ - $ 86.00 100%
Renewal Application Review $ 924.00 $ - $ 924.00 100%
Renewal Background Checks* $ 924.00 $ - $ 924.00 100%
Annual Compliance Inspection $ 4,586.00 $ - $ 4,586.00 100% Renewal Issuance $ 86.00 $ - $ 86.00 100%
$ 6,606.00 $ - $ 6,606.00
$ 12,000.00 $ - $ 12,000.00 100%
$ 12,000.00 $ - $ 12,000.00
Initial Application*** $ 7,900.00
Annual Renewal*** $ 6,700.00
Triennial Financial Audit $ 12,000.00
* Background Checks will be billed directly to applicant and are dependent on number of owners and employees

OPTION B - PROPOSED FEES
Triennial Financial Audit

ADDITIONAL COSTS
Attachment 2 cont. - Summary of Fee Components/Service and Delivery Options - (Per Application)

INITIAL APPLICATION COSTS

ANNUAL RENEWAL APPLICATION COSTS
Attachment 2

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Attachment 4
RESOLUTION 26-XXX

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EL PASO DE ROBLES RESCINDING RESOLUTION NO. 22-144 TO ELIMINATE THE MAXIMUM NUMBER OF COMMERCIAL

CANNABIS BUSINESSES PERMITTED TO OPERATE IN THE CITY
WHEREAS, on October 4, 2022, the City Council held a public hearing and voted to introduce for first reading by title only Ordinance 1126 to repeal and replace Chapter 21.33 of the Zoning Code to temporarily allow adult-use cannabis non-storefront retailers in the Riverside Corridor (RSC) and Commercial/Light Industrial (C-3) zoning districts and to make other clarifying amendments; and WHEREAS, during the October 4, 2022 meeting, the City Council directed staff to prepare a resolution placing a cap on the number of cannabis businesses allowed to operate within the City if the Ordinance went into effect; and
WHEREAS, on October 18, 2022, the City Council adopted Ordinance 1126, which became effective November 17, 2022; and
WHEREAS, during the October 18, 2022 meeting, the City Council adopted Resolution 22-144, which limits the maximum number of commercial cannabis businesses allowed to operate within the City to three (3); and
WHEREAS, Resolution 22-144 also specified by name the three (3) cannabis businesses allowed to have premises within city limits. The three (3) businesses authorized under the ordinance were recognized as occupying the full allotment of available permits.; and WHEREAS, two (2) of the three (3) businesses named in Resolution 22-144 do not currently operate a cannabis business from a premises within the City; and
WHEREAS, the provisions of Ordinance 1126 that temporarily allowed adult-use cannabis non-storefront retailers expired on November 17, 2023; and
WHEREAS, on October 1, 2024, the City Council adopted Ordinance 1144, a comprehensive update to the Zoning Code that renumbered the zoning regulations for cannabis from Chapter 21.33 to Chapter 21.60, but made no substantive changes to the regulations; and WHEREAS, the City Council no longer desires to limit the maximum number of commercial cannabis businesses permitted to operate within the City; and
WHEREAS, on August 18, 2026, the City Council held a public hearing and voted to introduce for first reading by title only an ordinance to amend the Paso Robles Municipal Code and Uptown/Town Centre Specific Plan to permanently allow cannabis non-storefront retailers and to establish a Cannabis Regulatory Permit; and
WHEREAS, also on August 18, 2026, the City Council held a duly noticed public hearing to consider rescinding Resolution 22-144.
.

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Attachment 4

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF EL PASO DE ROBLES DOES HEREBY RESOLVE AS FOLLOWS:

Section 1. All of the above recitals are true and correct and incorporated herein by reference.

Section 2. Rescinding Resolution 22-144, which would eliminate the numeric cap on the number of commercial cannabis businesses, is exempt under California Environmental Quality Act (CEQA) and the CEQA Guidelines Section 15061 (3)(b) and 15378. CEQA only applies to an activity with the potential for causing a significant effect on the environment. It can be seen that there is no possibility that this activity will have a significant effect on the environment and is therefore exempt from CEQA.

Section 3. Resolution 22-144 is hereby rescinded and shall no longer be in effect.

Section 4. This Resolution will take effect immediately upon approval.

APPROVED this 18
th day of August 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

John R. Hamon, Jr., Mayor
ATTEST:

Melissa Martin, City Clerk

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Attachment 5
ORDINANCE NO. XXXX N.S.

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF EL PASO DE ROBLES AMENDING TABLE 21.32-1 AND CHAPTER 21.60 OF THE EL PASO DE ROBLES MUNICIPAL CODE AND TABLE 5.3-1 OF THE UPTOWN /TOWN CENTRE SPECIFIC PLAN, AND ADDING CHAPTER 5.55 TO THE EL PASO DE ROBLES MUNICIPAL CODE RELATING TO CANNABIS

REGULATION AND FINDING THE ACTION TO BE EXEMPT FROM CEQA WHEREAS, Chapter 21.60 of the El Paso de Robles Municipal Code was adopted to regulate personal, medical, and limited commercial cannabis activity within the City consistent with the California Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA); and WHEREAS, the City Council has determined that certain revisions to Titles 5 and 21 of the El Paso de Robles Municipal Code and the Uptown/Town Centre Specific Plan are necessary to improve clarity, ensure continued compliance with state law, strengthen public health and safety protections, and implement specific policy objectives of the City Council; and
WHEREAS, the proposed amendments, Rezone 25-08 and Specific Plan Amendment 26-03 (P25-0077), would update and simplify definitions for consistency with state law and other chapters of the municipal code, clarify and consolidate regulations for non-storefront (delivery-only) retail serving both medicinal and adult-use customers, extend the 600-foot separation requirement to include public parks and Cityowned parks, establish the requirement for a cannabis regulatory permit, strengthen operational and enforcement provisions, and make technical and organizational improvements; and WHEREAS, the proposed amendments clarify and maintain the City’s existing prohibitions on storefront retail, cultivation, manufacturing, testing laboratories, distribution, microbusinesses, and temporary cannabis events; and
WHEREAS, the proposed amendments continue to allow delivery of cannabis into the City by operators located outside the City, subject to local business licensing and operational requirements; and WHEREAS, on July 14, 2026, the Planning Commission held a duly noticed public hearing at which it received a staff report, considered all public testimony, and reviewed the proposed ordinance. On a vote of 5-0 (Christensen and Covarubbias absent), the Planning Commission adopted Resolution No. PC 26-027 recommending that the City Council adopt this ordinance. The Planning Commission also recommended holders of Cannabis Regulatory Permits be required to renew every 2 years; and WHEREAS, on August 18, 2026, the City Council held a duly noticed public hearing on the proposed amendments, at which it received a staff report, considered the recommendation of the Planning Commission, considered all public testimony, and introduced the proposed ordinance for first reading by title only; and
WHEREAS, all legal prerequisites to the adoption of this Ordinance have occurred.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF EL PASO DE ROBLES DOES HEREBY ORDAIN AS FOLLOWS:

Section 1. All of the above recitals are true and correct and are incorporated herein by reference.

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Attachment 5
Section 2. Based upon the facts and analysis presented in the staff report, Planning Commission recommendation, public testimony received, and the record, the City Council makes the following findings.

1. The amendments are consistent with the general plan and the Uptown/Town Centre Specific Plan.

The amendments continue to restrict commercial cannabis activity to non-storefront (deliveryonly) retailers located only in designated commercial and light-industrial zones. The proposed ordinance implements Land Use Element policies that encourage economic development and infill uses in appropriate commercial and industrial districts (Policy LU-2B, LU-2I). The proposed nonstorefront retail use in the C-3 (Commercial/Light Industrial) or RSC (Riverside Corridor) zoning districts is compatible with surrounding commercial and industrial uses, supports economic vitality, and constitutes an allowed commercial activity under the limited exceptions provided in the Land Use Element for regulated cannabis businesses. The proposed ordinance is also consistent with Safety Element Goal S-1 (Minimize exposure to natural and manmade hazards) and Policy S-1D (Structural Safety). The use will be required to meet all current building, fire, and life-safety codes, including odor control, secure storage, and surveillance requirements that reduce fire, crime, and public nuisance risks identified in the Safety Element.

2. The amendments will not be detrimental to the public interest, health, safety, convenience, or welfare because cannabis activity will continue to be severely restricted. The use will be required to meet all current building, fire, and life-safety codes, including odor control, secure storage, and surveillance requirements that reduce fire, crime, and public nuisance risks. Additionally, the Ordinance will extend the 600-foot separation requirement between cannabis businesses to include public parks and City-owned parks, and strengthen operational and enforcement provisions.

3. The proposed amendment is internally consistent with other applicable provisions of this zoning code because it adds ‘Cannabis, Non-storefront Retail’ to the applicable land use table (Table

21.32-1 or Table 5.3-1 of the Uptown/Town Centre Specific Plan and utilizes and references conditional use permit requirements (Chapter 21.19) and sign regulations (Chapter 21.52).

4. The amendment to the Uptown/Town Centre Specific Plan includes provisions that ensure that adequate public facilities will be available to serve the range of development described in the plan because the amendment does not expand the boundaries of the plan nor the types of development permitted by the plan, it only specifies one type of business conditionally allowed to operate within one zoning district of the specific plan.

5. The properties in the Uptown/Town Centre Specific Plan have unique characteristics that are enhanced by special land use and development standards because it covers the historic downtown and original neighborhoods of the city. The amendment does not annex additional properties into the specific plan.

6. The amendment to the specific plan results in the development of desirable character and use types that will be compatible with the surrounding area, provides effective buffering from adjacent uses, and includes policies for the protection of prominent ridgelines, oak trees, and other natural resources.

Section 3. because it does not qualify as a “project” under CEQA. State CEQA Guidelines §15060(c) provides that “[a]n activity is not subject to CEQA if … the activity is not a project as defined in Section

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Attachment 5
15378.” Here, the proposed ordinance does not qualify as a “project” as defined in State CEQA Guidelines section 15378 for at least two different reasons.

Accordingly, it is not a “project” subject to CEQA. (State CEQA Guidelines, § 15060(c).) Second, Section 15378 explicitly excludes from its definition of “project” the following:
“organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment.” (State CEQA Guidelines, § 15378(b)(5).) The proposed Ordinance consists of administrative and organizational amendments to the El Paso de Robles Municipal Code and the Uptown/Town Centre Specific Plan that will not result in direct or indirect physical changes in the environment. Accordingly, it is not a project subject to CEQA.

Section 4. The City Council directs staff to file a Notice of Exemption for this Ordinance with the County Clerk and the State Clearinghouse in accordance with State CEQA Guidelines.

Section 5. Chapter 5.55, “Cannabis Regulatory Permits,” of Title 5 of the Paso Robles Municipal Code is hereby adopted to read as set forth in Exhibit A, attached hereto and incorporated by reference.

Section 6. Table 21.32-1 and Chapter 21.60 of the Paso Robles Municipal Code and Table 5.3-1 of the Uptown/Town Centre Specific Plan are hereby amended to read as set forth in Exhibit A, attached hereto and incorporated herein by reference.

Section 7. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each section, subsection, sentence, clause, and phrase

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Attachment 5
thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses, or phrases may be declared invalid or unconstitutional.

Section 8. This Ordinance shall be in full force and effect thirty (30) days after its final passage and adoption.

Section 9. The City Clerk shall certify as to the adoption of this Ordinance and shall cause a summary thereof to be published at least five (5) days prior to the meeting at which the proposed Ordinance is to be adopted and shall post a certified copy of the proposed Ordinance in the Office of the City Clerk. Within fifteen (15) days of the adoption of the Ordinance, the City Clerk shall cause a summary of the Ordinance to be published, including the vote for and against the same, in accordance with Government Code Section 36937.

INTRODUCED at a regular meeting of the City Council held on August 18, 2026, for first reading by the City Council of the City of El Paso de Robles, and adopted on the ___ day of ______, 2026, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

John R. Hamon, Jr., Mayor
ATTEST:

Melissa Martin, City Clerk
Exhibit A – Paso Robles Municipal Code Chapter 5.55 (Cannabis Regulatory Permits), Amended Table

21.32-1 (Zoning District Use Regulations), and Amended Chapter 21.60 (Cannabis), and Amended Table

5.3-1 (Allowed Land Uses and Permit Requirements) of the Uptown/Town Centre Specific Plan

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Exhibit A

EL PASO DE ROBLES MUNICIPAL CODE
Section 1. Title 5 of the Paso Robles Municipal Code is amended to include Chapter 5.55 as follows:

CHAPTER 5.55 CANNABIS REGULATORY PERMITS
§ 5.55.010 Purpose and Intent.

A. It is the purpose and intent of this Chapter to regulate Cannabis Businesses in a manner that protects the public health, safety, and welfare of the residents of the City of El Paso de Robles and that enforces rules and regulations consistent with state law. In furtherance of these objectives, an annual Cannabis Regulatory Permit shall be required to operate a Cannabis Business at a premises within the City. Nothing in this Chapter is intended to authorize the possession, use, or provision of cannabis for purposes that violate state or federal law.

B. The provisions of this Chapter are in addition to any other permits, licenses, and approvals required to conduct business in the City, including, without limitation, land use entitlements required pursuant to Chapter 21.60 (Cannabis) and business licenses pursuant to Chapter 3.28 (Business License Tax) of this code, and all applicable State Licenses.

C. It is the stated intent of this Chapter to regulate authorized Cannabis Business activity in the City concurrently with the State of California, within the limits imposed by Chapter

21.60 (Cannabis) of this code.
§ 5.55.020 Definitions. The following definitions shall apply to this Chapter. Any reference to California statutes includes any regulations promulgated thereunder and is deemed to include any successor or amended version of the referenced statute or regulatory provision. Terms defined in Chapter 3.22 (Cannabis Business Tax) and Chapter 21.60 (Cannabis) have the same meaning when used in this Chapter unless otherwise defined herein. Any term used but not defined in this Chapter that is defined in the California Business and Professions Code or the California Health and Safety Code shall have the meaning set forth in the applicable state statute.

A. “Applicant” means a person 21 years of age or older who has submitted an Application for a Cannabis Regulatory Permit or renewal of a permit issued pursuant to this Chapter. If the Applicant is an entity and not a natural person, “Applicant” includes all persons having a 20% or more financial interest in the entity.

B. “Application” means the forms and required supporting documentation provided by the City Manager in accordance with this Chapter for the purpose of seeking a Cannabis Regulatory Permit.

C. “Cannabis Regulatory Permit” means a regulatory permit issued by the City pursuant to this Chapter to a Cannabis Business, required before any authorized cannabis activity may be conducted in the City. The initial Cannabis Regulatory Permit and annual renewal are expressly conditioned upon ongoing compliance with all requirements of this Chapter, Chapter 3.22 (Cannabis Business Tax), Chapter 3.28 (Business License Tax), and Chapter

21.60 (Cannabis).

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Exhibit A
D. “Enforcement Officer” means a code compliance officer, police officer, building inspector, or any other City employee designated by the City Manager to enforce the provisions of this code, and granted authority to issue notices, orders, citations, or initiate any other administrative remedy pursuant to this code.

E. “Financial Interest” means an investment into a Cannabis Business, a loan provided to a Cannabis Business, or any other equity interest in a Cannabis Business.

F. “Good Standing” means that an operation is regarded as having complied with all explicit obligations, while not being subject to any form of sanction, suspension, or disciplinary censure by the City, the California Department of Cannabis Control, or any other state licensing authority.

G. “Owner” means: (1) any person with an aggregate ownership interest of 20% or more in the Cannabis Business, unless the interest is solely a security, lien, or encumbrance; (2) the chief executive officer of a business entity; (3) a member of the board of directors; and (4) any person who participates in the direction, control, or management of the Cannabis Business.

H. “Permittee” means a person who holds a valid Cannabis Regulatory Permit issued under this Chapter.

I. “Person” means an individual, firm, partnership, joint venture, association, corporation, limited liability company, estate, trust, business trust, receiver, syndicate, or any other group or combination acting as a unit.

J. “Premises” means the building and all areas, including accessory structures and appurtenant areas, in which authorized cannabis activities are operated.

K. “State License” means a license issued by the California Department of Cannabis Control or another state agency with licensing jurisdiction to engage in authorized cannabis activity pursuant to California Business and Professions Code Division 10 (Section 26000 et seq., as amended from time to time) or other applicable state law.

L. “Track-and-Trace System” means the system described in California Business and Professions Code Section 26067 that reports the movement of cannabis products throughout the distribution chain using a unique identifier, as required by state law. § 5.55.030 Cannabis Regulatory Permit Required.

A. A Cannabis Business is permitted to operate in the City only as allowed pursuant to Chapter 21.60 (Cannabis).

B. It is unlawful for any person to conduct or engage in commercial cannabis activity at a Premises within the corporate limits of the City unless they have been issued:

1. All entitlements required by Chapter 21.60 (Cannabis);

2. A Cannabis Regulatory Permit pursuant to this Chapter;

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Exhibit A

3. A valid City business license pursuant to Chapter 3.28 (Business License Tax);

4. A valid State License issued by the California Department of Cannabis Control; and

5. All other required permits, entitlements, and State License(s).

C. A Cannabis Regulatory Permit does not provide immunity from applicable local, state, or federal law.

D. A Cannabis Business that delivers cannabis products to customers in the City but maintains its physical premises outside the City shall comply with the requirements of Chapter 3.22 (Cannabis Business Tax), Chapter 3.28 (Business License Tax), Subsection

5.55.140(C) (Deliveries from Outside the City), and Section 21.60.070 (Commercial Cannabis Delivery Activity from Outside the City); and all applicable state laws.

E. A Cannabis Regulatory Permit is issued to and covers only the Permittee identified on the Permit. Cannabis Regulatory Permits do not run with the land and may not be transferred except as provided in Section 5.55.100 (Permit Transfers).

F. Persons with a valid Cannabis Regulatory Permit shall only operate under the name and “doing business as” (DBA) designation provided in the Application. § 5.55.040 Application Process.

A. All Applications shall be filed with the City Manager on forms prescribed by the City Manager.

B. All Applications shall be for a single business at a single location only.

C. All Applications shall include the application forms and permit fees as established by resolution of the City Council.

D. No refunds shall be given for incomplete or abandoned Applications.

E. A Cannabis Regulatory Permit constitutes a revocable privilege. The burden of proving an Applicant’s qualifications for a Cannabis Regulatory Permit rests at all times with the Applicant.

F. In all cases, the Application shall be complete in every material detail and shall contain, without limitation, the following information and documentation:

1. Full legal name, mailing address, and email address of all Applicants;

2. If the Applicant is a business entity, information regarding the entity including its name and address, legal status, and proof of registration with or a certificate of good standing from the California Secretary of State, as applicable;

3. The full name, date of birth, present address, email address, and telephone number for all Owners, supervisors, employees, and persons having a financial

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Exhibit A
interest in the Cannabis Business. For entity applicants, each entity shall disclose its Owners or financial interest holders until individual persons are identified;

4. All Applicants, supervisors, employees, Owners, and other persons having a 20% or more financial interest shall submit fingerprints and other necessary information for a background check;

5. Proof that all Applicants, property owners (if the property owner has a financial interest in the business), supervisors, Owners, and employees are 21 years of age or older;

6. The physical address and assessor’s parcel number(s) of the property upon which the proposed Cannabis Business Premises will be located;

7. Proof of legal right to occupy the Premises (deed of ownership or lease and notarized written permission from the property owner authorizing cannabis activity at the site);

8. A to-scale diagram of the Premises showing the site plan, floor plans, all entryways and exits, loading zones, and all areas in which cannabis products will be stored or prepared for sale and delivery;

9. The names and addresses of any other cannabis business previously or currently operated by the Applicant and all Owners, and a statement of whether any authorization held by the Applicant or any Owners to operate was revoked or suspended by a city, county, or state, and the reason(s) therefor;

10. A full description of the proposed cannabis activities and products;

11. A description of the type of State License(s) required for the proposed operations;

12. Procedures for verifying customer age and identity;

13. Proposed hours of operation;

14. A security plan complying with Section 5.55.120 (Operating Requirements - Security Measures);

15. A vehicle security plan complying with Section 5.55.140 (Operating Requirements — Non-Storefront Retail).

16. Proposed robbery response procedures;

17. Employee training plan;

18. Proposed cash handling procedures

19. A waste disposal plan;

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Exhibit A

20. Documentation demonstrating use of a seed-to-sale or equivalent statecompliant Track-and-Trace software system;

21. A 24-hour contact telephone number and email address of a designated responsible managing person;

22. The name, telephone number, email address, and other contact information for a designated security liaison to the City as described in Subsection 5.55.120.C;

23. The name, telephone number, email address, and other contact information for a designated community relations contact;

24. For Non-Storefront Retail operations, a detailed description of the delivery operations, including:
a. Number of delivery vehicles;
b. Make, model, and license plate of each vehicle;
c. Location of vehicle storage; and
d. The geographic scope of delivery area.

25. A statement by the Applicant that it has the ability to comply with all laws regulating businesses in the State of California and that it will maintain compliance during the term of the Cannabis Regulatory Permit;

26. Authorization for the City, its agents and employees, to seek verification of the information contained in the Application; and

27. Certification under penalty of perjury that all information contained in the Application is true and correct.

G. The City Manager may request additional information deemed necessary or relevant to determining an Applicant’s suitability for a Cannabis Regulatory Permit. Such additional information shall be provided no later than seven (7) calendar days after the request, unless otherwise specified. Failure to provide requested information by the deadline may result in denial of the Application or revocation or suspension of a Cannabis Regulatory Permit in the case of a renewal.

H. All application forms and associated documents shall be accessible by the City Manager and any state or local law enforcement agency for a purpose authorized by this Chapter. § 5.55.050 Review of Application.

A. Review. The City Manager shall review the Application and associated documents and may require additional information to complete the Application. An Application shall not be deemed complete unless all required fees have been paid.

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Exhibit A
B. Approval. Upon review of a complete Application, the City Manager may grant the Application if:

1. The proposed cannabis activities comply with all requirements of state law and the El Paso de Robles Municipal Code;

2. The Application does not meet any criteria listed as grounds for denial in Subsection 5.55.050.C (Denial);

3. The Applicant has received, or will receive prior to commencement of operations, all required land use entitlements pursuant to Chapter 21.60 (Cannabis); and

4. The findings of Section 5.55.060 (Required Findings) have been made by the City Manager.

C. Denial.

1. The City Manager shall deny any Application that meets any of the following criteria:
a. The Applicant has knowingly made a false statement of material fact or has knowingly omitted a material fact from the Application; b. The Applicant made intentional or purposeful misstatements, omissions, misrepresentations, or untruths;
c. Any Applicant, supervisor, employee, Owner, or person having a 20% or more financial interest has been convicted of any crime that would disqualify the Applicant from holding a State License;
d. The Applicant’s suitability to operate a Cannabis Business is insufficient as determined by the City Manager based on the Applicant’s previous civil, administrative, or legal judgments or other activities of a fraudulent nature;
e. Any person listed on the Application is under 21 years of age; f. The proposed Cannabis Business does not comply with the provisions of this Chapter, Chapter 3.22 (Cannabis Business Tax), Chapter 3.28 (Business License Tax), Chapter 21.60 (Cannabis), or state law; or g. An authorization, permit, or license held by Applicant or any Owner to operate any commercial cannabis activity was revoked or suspended by a city, county, state, or other licensing entity in the previous five (5) years; h. The Applicant has not received all required land use entitlements and cannot demonstrate that a complete application for all required land use entitlements pursuant to Chapter 21.60 (Cannabis) has been filed with the City.

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Exhibit A

2. In the event the City Manager denies any Application, the City Manager shall specify in writing the reasons for the denial and notify the Applicant that the decision shall become final unless the Applicant appeals within fifteen (15) calendar days of service of the decision.

D. Appeal. Any aggrieved party may appeal the decision of the City Manager to the City Council by filing a written notice of appeal with the City Clerk and paying a fee in an amount established by the City Council by resolution, within fifteen (15) calendar days from the issuance of the decision of the City Manager. The Council shall fix a time and place for hearing such appeal and the City Clerk shall give written notice of the time and place thereof in accordance with Section 21.26.020 (Public Hearing Procedures). The City Council may affirm, modify, or reverse the decision of the City Manager or take other action as appropriate. The decision of the City Council shall be final and conclusive. § 5.55.060 Required Findings. A Cannabis Regulatory Permit for any Cannabis Business shall not be granted by the City Manager unless all of the following findings are made based on substantial evidence:

A. The Cannabis Business, as proposed, has demonstrated that it can and will comply with all requirements of state law and the City to operate such a business.

B. The Cannabis Business, as approved and conditioned, will not result in significant unavoidable adverse impacts on the environment, and any environmental review required by the California Environmental Quality Act (Public Resources Code Sections 21000 et seq.) has been completed in connection with the land use entitlements required by Chapter 21.60 (Cannabis).

C. The Cannabis Business includes adequate protocols, including age verification at point of sale, secure storage, and chain-of-custody records.

D. The Cannabis Business will prevent youth access to cannabis.

E. The Cannabis Business will minimize adverse effects on neighboring properties and communities.
§ 5.55.070 Required Conditions. In addition to any other required conditions approved by the City Manager, all of the following conditions shall apply to all Cannabis Regulatory Permits for a Cannabis Business:

A. The Permittee shall comply with all requirements of Sections 5.55.110 (Operating Requirements — General), 5.55.120 (Operating Requirements – Security Measures), and

5.55.130 (Operating Requirements – Recordkeeping).

B. The Permittee shall consent to, and shall allow access by the City, its officers, and agents to its Premises and to the operations, records, and documents of the Cannabis Business upon request and shall submit to inspections by the City to verify compliance with this Chapter, the conditions of the Cannabis Regulatory Permit, and all applicable rules, regulations, and laws.

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Exhibit A
C. The Permittee shall be responsible for ensuring that the Cannabis Business operates in good standing with all permits and licenses required by the City and State.

D. The Cannabis Business shall operate only in accordance with the operating requirements and security measures reviewed and approved by the City Manager.

E. Prior to issuance of the Cannabis Regulatory Permit, the Applicant, and where the Applicant is not the owner of the real property on which the Premises is located, the property owner shall execute a written indemnification and insurance agreement in a form approved by the City Attorney. Execution and continued compliance with the agreement shall be a condition precedent to issuance of the Permit and to continued operation. The agreement shall include, at a minimum, the following obligations:

1. The Permittee shall indemnify, defend (at Permittee’s sole cost and expense with counsel reasonably acceptable to the City), and hold the City, and its officers, officials, employees, representatives, and agents harmless from any and all claims, losses, damages, injuries, liabilities, or losses arising out of or related to:
a. The City’s issuance of the Cannabis Regulatory Permit and any related entitlement or approval,
b. The City’s approval of, or the conduct of, the cannabis activity, c. Any claim for damage to property or injury to persons arising from the operations of the Cannabis Business, including delivery operations, or from the acts or omissions of the Cannabis Business or its Owners, officers, employees, agents, or contractors, or
d. Any alleged violation of any federal, state, or local law by the Cannabis Business or any of its officers, employees, agents, or contractors.

2. The Permittee shall maintain insurance at coverage limits determined necessary and appropriate by the City Manager, with no less than $2,000,000 in aggregate coverage and no less than $1,000,000 per occurrence; and

3. The Permittee shall reimburse the City for all costs and expenses, including attorney fees and court costs, incurred by the City as a result of any legal action related to the Permittee’s Cannabis Regulatory Permit or cannabis activity. § 5.55.080 Requirements Before Commencement of Operations. Prior to commencing operations at a physical location within the City, a Cannabis Business shall complete all of the following:

A. Obtain all required permits and approvals pursuant to Chapter 21.60 (Cannabis), all required building permits pursuant to Title 17 (Buildings and Construction), Fire Department approvals, and other zoning and land use permits and approvals; B. Provide the City sufficient evidence of the legal right to occupy and use the proposed location for the proposed Cannabis Business. In the event the proposed location will be leased, the Applicant shall provide a signed and notarized statement from the property

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Exhibit A
owner acknowledging that the property owner has read this Chapter and Chapter 21.60 (Cannabis) and consents to the operation of the Cannabis Business on the owner’s property. Any change in property ownership during the permit term shall be reported to the City Manager within seven (7) calendar days of the change, and the Permittee shall provide a new notarized consent statement from the new property owner within thirty (30) calendar days;
C. Provide the City with satisfactory proof that the Permittee holds a valid State License issued by the California Department of Cannabis Control, authorizing the specific cannabis activity to be undertaken; and
D. Obtain a City business license pursuant to Chapter 3.28 (Business License Tax). § 5.55.090 Permit Renewal.

A. Approved Cannabis Regulatory Permits shall have a term of no more than one (1) year and shall expire on June 30 of each year.

B. An application for Cannabis Regulatory Permit renewal shall be submitted to the City Manager at least sixty (60) calendar days prior to the expiration of the current Cannabis Regulatory Permit, but no more than one hundred and twenty (120) calendar days prior to expiration. In no event shall a renewal application be accepted after the permit expiration date.

C. A Cannabis Business that has submitted a timely and complete renewal application pursuant to Subsection 5.55.090.B may continue commercial cannabis activity while the renewal application is pending, unless the City Manager has suspended or revoked the Cannabis Regulatory Permit pursuant to Section 5.55.160 (Suspension or Revocation of Permit). A Cannabis Business that fails to submit a timely and complete renewal application by the expiration date shall discontinue all commercial cannabis activity until a new Cannabis Regulatory Permit is issued.

D. The Cannabis Regulatory Permit renewal process shall include, but shall not be limited to:

1. Review of the security plan, robbery response procedures, employee training plan, cash handling procedures, and vehicle security requirements;

2. New background checks for all Permittees, Applicants, Owners, supervisors, employees, and other persons having a 20% or more financial interest;

3. An audit of the current financial ownership of the cannabis business;

4. Confirmation the Permittee’s State Cannabis License is in good standing;

5. An audit of cannabis product inventory tracking;

6. A physical inspection of the entirety of the Premises by the Paso Robles Police Department;

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Exhibit A

7. Inspection of the exterior of the Premises by the Community Development Department for conformance with applicable sections of the Zoning Code (Title 21), the Uptown/Town Centre Specific Plan, and applicable land use entitlements and conditions of approval.

E. Any application for renewal shall be denied if:

1. The Permittee fails to conform to the criteria set forth in this Chapter;

2. The Paso Robles Police Department reports, and the City Manager finds, that the Permittee or any Owner of the Cannabis Business has been cited for, convicted of, or is otherwise substantially in violation of any local or state law governing the operation of the Cannabis Business;

3. The City’s Administrative Services Department reports, and the City Manager finds, that the Permittee has failed to maintain books and records as required by Subsection 5.55.110.B (Books and Records) and Section 5.55.130 (Operating Requirements - Recordkeeping), has failed to produce required books and records within the time required after a City request, or that such books and records contain a material inaccuracy or omission, or reveal a material discrepancy or a failure to remit taxes due;

4. The Permittee is delinquent in payment of any City taxes on commercial cannabis activity;

5. The Cannabis Regulatory Permit is suspended or revoked at the time of the renewal application;

6. The Cannabis Business is not operational, evidenced by lack of tax filing for two (2) consecutive quarters, or as determined by the City Manager;

7. The Permittee has failed to maintain a valid State License;

8. The Cannabis Business is not in compliance with the Zoning Code (Title 21) or the Uptown/Town Centre Specific Plan; or

9. A land use entitlement required pursuant to Chapter 21.60 (Cannabis) has been revoked, expired, or is not in good standing.

F. In the event the City Manager denies a renewal application, the City Manager shall specify in writing the reasons for the denial and notify the Permittee of the right to appeal the decision to the City Council pursuant to Subsection 5.55.050(D) (Appeal). The Permittee shall cease all commercial cannabis activity upon receipt of a final denial.

G. A renewal application is not complete until all fees have been paid. § 5.55.100 Permit Transfers. No Cannabis Regulatory Permit may be transferred, assigned, or conveyed without prior written approval of the City Manager. Any transfer, conveyance, or sale of any ownership interest in a Cannabis Business or of any Cannabis Regulatory Permit may only be made to a person who

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Exhibit A
has applied for and been approved for a Cannabis Regulatory Permit under this Chapter, or, with prior City Manager approval, to a person whose permit application is pending, provided that the Applicant is otherwise qualified to hold a permit under this Chapter. Any transfer in violation of this Section shall render the Cannabis Regulatory Permit void.
§ 5.55.110 Operating Requirements — General. Throughout the term of the Cannabis Regulatory Permit, each Permittee shall comply with all of the following:

A. Age Restrictions. It is a violation of this Chapter to sell, deliver, or provide cannabis products to any person under 21 years of age, except as authorized by state law for medicinal cannabis patients 18 years of age or older. Prior to each sale or delivery, the Cannabis Business shall verify that the purchaser is 21 years of age or older (or 18 years of age or older for medicinal patients) using government-issued identification. Sale of cannabis products shall not be made to any person who fails to present valid identification confirming age eligibility.

B. Tax Payment. All Cannabis Businesses shall pay all applicable taxes and fees under federal law, state law, Chapter 3.22 (Cannabis Business Tax), and Chapter 3.28 (Business License Tax) of this code. No Owner and/or operator shall be delinquent in the payment of such taxes and fees.

C. Books and Records. Each Permittee shall maintain accurate books and records detailing all revenues, expenses, assets, and liabilities of the business. On no less than an annual basis and at a minimum concurrent with permit renewal, each Cannabis Business shall file a sworn statement detailing the number of sales, gross sales for each month, and all applicable taxes paid or due.

D. Financial Audit Requirement.
i. As a condition of maintaining a Cannabis Regulatory Permit, the Permittee shall be subject to periodic financial audits conducted by the City's Administrative Services Department or its authorized designee, including a qualified third-party audit firm. The audit shall include, but not be limited to, an examination of the Cannabis Business's financial books and records, including all revenues, expenses, assets, liabilities, and any other financial records deemed necessary by the City to verify compliance with applicable laws, regulations, permit conditions, and tax obligations.
ii. The City shall require a routine financial audit at least once every three (3) years.

The routine triennial audit shall be conducted as part of the City's ongoing regulatory oversight of permitted Cannabis Businesses.
iii. The City reserves the right to require a financial audit at any time, including more frequently than every three (3) years, whenever it determines that such an audit is warranted. Circumstances that may result in an earlier or more frequent audit include, but are not limited to:

1. Unsatisfactory compliance with Cannabis Business Tax reporting or payment requirements;

2. Delinquency in payment or renewal of the City's business license or other required fees;

3. Unsatisfactory findings during compliance inspections, operational audits, or other regulatory reviews;

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Exhibit A

4. Suspension, revocation, expiration, modification, or any other material change in the status of the Permittee's state cannabis license;

5. Evidence or reasonable suspicion of financial irregularities, inaccurate reporting, fraud, or other violations of applicable laws or permit conditions; or

6. Any other circumstance in which the City determines that a financial audit is necessary to protect the public interest or ensure compliance with applicable federal, state, or local laws, regulations, or permit conditions. iv. The Permittee shall fully cooperate with any financial audit and shall provide timely access to all requested financial books and records, supporting documentation, electronic records, and any other information requested by the City or its authorized auditor. Failure to cooperate with an audit or to provide requested records shall constitute a violation of the terms and conditions of the Cannabis Regulatory Permit and may result in administrative enforcement, suspension, or revocation of the Permit.
v. If a financial audit identifies underreported or unpaid Cannabis Business Tax, the Permittee shall be responsible for the immediate payment of all taxes determined to be due, together with all applicable interest, penalties, and other charges authorized by the City's Municipal Code or other applicable law. Payment of such amounts shall not preclude the City from pursuing any additional administrative, civil, or other enforcement remedies authorized by law. vi. The routine triennial financial audit is separate from and is not a component of the Cannabis Regulatory Permit annual renewal process. However, the results of any financial audit may be considered by the City when evaluating future permit renewals, determining the Permittee's continued eligibility to hold a Cannabis Regulatory Permit, and/or considering revocation of the Permit in accordance with applicable laws, ordinances, and due process requirements. vii. If the City determines that one or more additional financial audits or enhanced financial monitoring are necessary due to the Permittee's noncompliance with this Permit, the City's Municipal Code, or other applicable laws or regulations, the Permittee shall reimburse the City for the actual and reasonable costs incurred in conducting such additional audits or monitoring, including the costs of any qualified third-party auditor retained by the City. The Permittee may also be responsible for reasonable administrative costs incurred by the City in coordinating and administering such additional audits, to the extent authorized by the City's adopted fee schedule, resolution, or other applicable law.

Reimbursement of such costs shall be in addition to any taxes, interest, penalties, or other amounts owed by the Permittee and shall not limit the City's authority to pursue any other remedy authorized by law.

E. Register of Owners and Employees. Each Permittee shall maintain a current register of the names and contact information of all Owners and persons having a financial interest in the Cannabis Business, and separately of all officers, managers, supervisors, employees, and volunteers. All changes to the register (including fingerprints and other information for a background check) shall be reported to the Paso Robles Police Department within ten (10) calendar days of the change and the entire register shall be provided to the City Manager upon request.

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Exhibit A
F. Posting of Permits and Licenses. The Permittee shall post or cause to be posted at the Premises all required City and State permits and licenses in a central location visible to the City and its Enforcement Officers. All delivery vehicles shall carry copies of required permits and licenses.

G. No On-Site Consumption. On-site smoking, ingestion, or consumption of cannabis is prohibited on the physical Premises of any Cannabis Business. The business entrance shall be clearly and legibly posted with a notice indicating that smoking, ingesting, or consuming cannabis on the Premises is prohibited.

H. Signage. All exterior signage shall comply with Chapter 21.60 of this code, the limitations of any applicable land use entitlement, Chapter 21.52 (Signs), Uptown/Town Centre Specific Plan Section 5.6 (Sign Standards), and all other applicable sign regulations.

I. Compliance with All Laws. All cannabis Premises and operations shall fully comply with all applicable rules, regulations, and laws, including without limitation, zoning and building codes, the City’s business license requirements, City cannabis tax requirements, the Revenue and Taxation Code, and California Business and Professions Code Division 10 (Section 26000 et seq., as amended from time to time).

J. Community Relations Contact. Each Permittee shall provide the City Manager with the name, telephone number, and email address of a community relations contact to whom the public can provide notice of problems. The Permittee shall make a good faith effort to resolve problems without City intervention. The community relations contact information and the 24-hour contact information for the designated responsible managing person required by Subsection 55.55.040(F), shall be updated with the City Manager within ten (10) calendar days of any change.

K. Convictions. No Permittee, supervisor, employee, Owner, or other person engaged in the Cannabis Business may have been convicted of any crime that would disqualify the Permittee from holding a State License.

L. State Licenses. The Permittee shall at all times maintain all required State Licenses in good standing.

M. Department of Cannabis Control Violations and Incidents. The Permittee shall notify the City Manager and the Paso Robles Police Department within twenty-four (24) hours of any State inspection, notice of violation, administrative action, license suspension, license revocation, or product recall affecting the Cannabis Business.

N. No Misleading Advertising. No Permittee shall use, publish, or permit to be published any sign, advertisement, or display using misleading, deceptive, or false advertising regarding the Cannabis Business.

O. Cannabis Storage. All cannabis products shall be stored in compliance with Section

5.55.120 (Operational Requirements - Security Measures).

P. Track-and-Trace. The Permittee shall employ a state-compliant Track-and-Trace System. All transactions, expenses, and operations shall be tracked in compliance with California Department of Cannabis Control regulations. The system shall integrate with the California Department of Cannabis Control’s track-and-trace system and shall provide point-of-sale documentation and records for all cannabis retail transactions from source to sale.

Q. Packaging and Labeling. Prior to sale or delivery of cannabis products, all cannabis products shall be labeled and placed in tamper-evident packaging in compliance with all applicable state laws and regulations.
§ 5.55.120 Operating Requirements – Security Measures.

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A. Each Cannabis Business shall implement sufficient security measures to deter and prevent unauthorized access to areas containing cannabis products, and to deter and prevent theft of cannabis products. Security measures shall include, without limitation, all of the following:

1. Preventing individuals from loitering on the premises if they are not engaging in an activity directly related to the permitted operations;

2. Establishing limited access areas accessible only to authorized Cannabis Business personnel;

3. Storing all cannabis products in a secured and locked room, safe, or vault in a manner to prevent diversion, theft, and loss;

4. Installing 24-hour security surveillance cameras providing at least HD-quality recordings of all entrances and exits, all interior areas accessible to any person, and all areas where cannabis or currency is stored. Cameras shall be kept in good working order to California Department of Cannabis Control standard. Recordings shall be maintained for a minimum of 90 days and shall be made available to the City Manager or Enforcement Officers upon verbal or written request within twenty-four (24) hours of said request. During an investigation, immediate access to recordings shall be made available immediately upon request. No search warrant or subpoena shall be required to view recorded materials. Any disruption in camera coverage shall be remedied expeditiously;

5. Installing a commercial alarm system operated and monitored by a reputable security company; and

6. Any other security measure deemed necessary by the Police Department at the time of issuance or renewal of the Cannabis Regulatory Permit, which shall be incorporated into the Cannabis Regulatory Permit as conditions of approval.

B. Each Cannabis Business shall ensure adequate lighting at all entrances (in compliance with Chapter 21.82 (Lighting and Illumination)) and throughout the facility.

C. Each Cannabis Business shall designate a security representative or liaison to the City, who shall respond to the premises within sixty (60) minutes when requested by law enforcement and shall be reasonably available to meet with the City Manager regarding security measures and operational issues. The name, telephone number, and email address of the security liaison shall be provided to the City Manager and updated within ten (10) calendar days of any change.

D. Each Cannabis Business shall maintain a storage and transportation plan describing procedures for safely and securely storing and transporting all cannabis products and any currency.

E. A Cannabis Business shall notify the Paso Robles Police Department within 24 hours after discovering any of the following:

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1. Robberies;

2. Burglaries;

3. Employee Theft or other conduct by an employee that may constitute a violation of state or local cannabis laws or this Chapter;

4. Armed Subjects;

5. Violent Incidents;

6. Inventory Loss;

7. Significant discrepancies identified during inventory;

8. Diversion, theft, loss, or any criminal activity involving the Cannabis Business or any agent or employee of the Cannabis Business;

9. Loss or unauthorized alteration of records; or

10. Any other breach of security.
§ 5.55.130 Operating Requirements - Recordkeeping.

A. Cannabis Businesses shall comply with all recordkeeping requirements set forth in this Chapter, California Business and Professions Code Division 10 (Section 26000 et seq., as amended from time to time), and all applicable state regulations.

B. Every Cannabis Business shall maintain legible, clear, and accurate books, records, and documentation demonstrating that all cannabis products have been obtained from, and are provided to, other licensees, and shall detail all revenues and expenses of the business, and all assets and liabilities, on the Premises.

C. Inventory Control. Each Permittee shall maintain an inventory control and reporting system that accurately documents the present location, amounts, and descriptions of all cannabis products.

D. City Access to Records. Each Cannabis Business shall allow City officials access to the business’s books, records, accounts, and other data relevant to its permitted cannabis activities for audit or examination. Books, records, and data shall be produced no later than twenty-four (24) hours after receipt of the City’s request, unless otherwise stipulated.

E. All required records shall be stored, preserved, and maintained on the Premises for a minimum of seven (7) years. Records shall be stored in a secured area protected from damage and unauthorized access. Electronic records shall be backed up in a manner that prevents unauthorized access and maintains record integrity.

F. Retail Cannabis Businesses shall maintain Point-of-Sale Inventory Control and Reporting Systems capable of: (1) providing inventory management and point-of-sale documentation for

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all transactions; (2) generating monthly sales reports showing total gross monthly sales and tax liabilities; and (3) submitting monthly reports with monthly tax remittance. § 5.55.140 Operating Requirements — Non-Storefront Retail. In addition to the operating requirements of Sections 5.55.110 (Operating Requirements — General), 5.55.120 (Operating Requirements – Security Measures), and 5.55.130 (Operating Requirements – Recordkeeping), the following requirements apply to all Cannabis Businesses operating as Non-Storefront Retailers:

A. Physical Location. The Premises of a Non-Storefront Retail Business shall be closed to public access. No customers shall be permitted at any physical business location or Premises.

B. Delivery Operations.

1. Hours of Delivery. All delivery of cannabis products shall occur only between 8:00 a.m. and 10:00 p.m. No delivery shall be made outside of these hours.

2. Customer Pre-Registration. No delivery of cannabis products shall be made to any location within the City unless, prior to the delivery, the customer has been preregistered with the Cannabis Business and the customer’s age and identity have been verified in accordance with state law and for Permittees, Subsection

5.55.110.A (Age Restrictions). The delivery request receipt or manifest carried by the delivery employee shall include the retailer-assigned customer number evidencing such registration.

3. Delivery Manifest. Prior to each delivery, the driver shall generate and carry a physical or electronic copy of the delivery manifest, including the unique identifier information from the source. The manifest shall be made available upon request to Enforcement Officers.

4. Vehicle Signage. No signage on the exterior of any delivery vehicle shall identify the vehicle as a cannabis delivery vehicle.

5. Register of Delivery Vehicles. Each Permittee shall maintain a current register of the make, model, and license plate of each vehicle making deliveries of cannabis products in the City. All changes to the register shall be reported to the Paso Robles Police Department within ten (10) calendar days of the change and the entire register shall be provided to the City Manager upon request.

6. GPS Tracking. The Permittee shall install real-time GPS tracking devices in all delivery vehicles. Tracking devices shall be kept in good working order. Tracking data records shall be maintained for a minimum of 90 days and shall be made available to the City Manager or Enforcement Officers upon verbal or written request within twenty-four (24) hours of said request. During an investigation, immediate access to real-time tracking data shall be made available immediately upon verbal or written request. No search warrant or subpoena shall be required to view tracking data.

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7. Compliance with State Law. The amount of cannabis allowed in each delivery vehicle shall comply with all applicable state laws.

8. Driver Requirements. All cannabis delivery drivers shall be at least 21 years of age and shall at all times during delivery:
a. Carry a copy of all required permits and licenses;
b. Carry a valid government-issued driver’s license that identifies and authorizes the driver to operate a vehicle in California; c. Carry the delivery manifest; and
d. Wear company-issued identification that is visible on their person.

C. Deliveries from Outside the City. A Cannabis Business that is licensed by the California Department of Cannabis Control, maintains its licensed premises outside the City, and delivers cannabis or cannabis products to any location within the City shall:

1. Obtain and maintain a City business license pursuant to Chapter 3.28 (Business License Tax);

2. Pay all taxes due under Chapter 3.22 (Cannabis Business Tax);

3. Hold and maintain in good standing all State Licenses required for the delivery activity conducted;

4. Comply with Subsections 5.55.140.B.1 Hours of Delivery), 5.55.140.B.2 (Customer Pre-Registration), 5.55.140.B.3 (Delivery Manifest), 5.55.140.B.4 (Vehicle Signage), and 5.55.140.B.8 (Driver Requirements) with respect to all deliveries within the City;

5. Maintain a current register of the make, model, and license plate of each vehicle used to make deliveries of cannabis products within the City, and provide the register to the City Manager or the Paso Robles Police Department upon request;

6. Ensure that each vehicle used to make deliveries within the City is equipped and operated in compliance with Title 4, California Code of Regulations, Section 15417, including its GPS requirements, and that the cannabis goods carried in each vehicle comply with all applicable state law limits; and

7. Comply with all other applicable State laws, policies, and procedures. § 5.55.150 General Authority of City Manager.

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Exhibit A
A. The City Manager may delegate any act required to be performed pursuant to this Chapter to any Enforcement Officer, Chief of Police, Fire Chief, Building Official, Finance Director, City Attorney, or any authorized designee.

B. The City Manager and authorized designees shall have all powers necessary and appropriate to administer and enforce this Chapter, including without limitation the authority to:

1. Investigate violations or suspected violations of this Chapter and any regulations pertaining to cannabis in the City;

2. View, duplicate, and take possession of security camera recordings, which shall be made available upon verbal or written request without a search warrant or subpoena;

3. Enter a Cannabis Business or facility from time to time, unannounced, for the purpose of making reasonable inspections;

4. Serve all warrants, summonses, subpoenas, administrative citations, and other processes relating to the enforcement of this Chapter, Chapter 3.22 (Cannabis Business Tax), Chapter 3.28 (Business License Tax), and Chapter 21.60 (Cannabis);

5. Inspect, examine, or investigate any Cannabis Business and any books and records connected with any cannabis activity;

6. Require any Permittee to permit inspection of the Cannabis Business during business hours, including cannabis products, equipment, and records;

7. Require Applicants to submit complete applications, fees, and other information necessary to make permitting decisions;

8. Conduct investigations into the character, criminal history, and all other relevant factors related to the suitability of Applicants, Permittees, and employees; and

9. Promulgate administrative regulations consistent with this Chapter and applicable state law.

C. Applicants and Permittees shall cooperate with City employees and investigators conducting inspections or investigations. No Applicant, Permittee, or their employee shall obstruct, impede, or interfere with the City Manager or any authorized employee, including by: threatening force or violence; denying access during business hours; providing false or misleading statements or documents; or failing to timely produce required records.
§ 5.55.160 Suspension or Revocation of Permit.

A. No commercial cannabis activity may be conducted:

1. By a person who does not hold a valid Cannabis Regulatory Permit;

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2. After a permit has been denied, revoked, or has expired without a timely renewal application on file; or

3. While a Cannabis Regulatory Permit is suspended. A person with a timely and complete renewal application pending pursuant to Subsection 5.55.090.B may continue commercial cannabis activity while the renewal is under review, unless the City Manager has suspended or revoked the permit.

B. The City Manager may revoke or suspend any Cannabis Regulatory Permit on the following grounds:

1. Failure to comply with any provision of this Chapter;

2. Failure to comply with any term or condition of the Cannabis Regulatory Permit;

3. Failure to comply with any term or condition of any applicable land use entitlement approved pursuant to Chapter 21.60 (Cannabis);

4. Any act or omission that violates the requirements of this code, including any rule, regulation, condition, or standard adopted under this Chapter, or any applicable state or local law or regulation;

5. Any act or omission resulting in the denial, revocation, suspension, or expiration of the Permittee’s State License;

6. Failure to renew the Permittee’s State License;

7. The Cannabis Regulatory Permit was granted based in whole or in part on any written or oral misrepresentation or omission of a material fact in the application;

8. Conducting a Cannabis Business in a manner that constitutes a nuisance, where the Permittee has failed to comply with reasonable conditions to abate the nuisance;

9. Conviction for any felony by an Owner after a Permit has been issued;

10. Failure to maintain the Cannabis Business in active operation for six (6) consecutive months, as evidenced by tax filings, or as determined by the City Manager;

11. A deliberate or willful violation of any applicable law or regulation related to cannabis activity; or

12. Repeated nuisance or criminal activity associated with the cannabis business that adversely affects public health, safety, or welfare.

C. Suspension and Revocation Procedures.

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1. Before suspending or revoking a Permit, the City Manager shall provide the Permittee with written notice of the intended action, the grounds therefor, and the right to request a hearing before the City Manager or designee. The notice shall be served in accordance with Section 5.55.170 (Notice and Service).

2. The Permittee shall have fifteen (15) calendar days from service of the notice to request a hearing in writing. If no hearing is requested within that period, the suspension or revocation shall become effective on the date specified in the notice.

3. If a hearing is timely requested, the City Manager shall schedule a hearing within thirty (30) calendar days of receipt of the request and shall provide the Permittee with at least ten (10) calendar days’ written notice of the hearing date, time, and location.

4. At the hearing, the Permittee shall have the opportunity to present evidence and argument. The City Manager shall issue a written decision within fifteen (15) calendar days of the conclusion of the hearing.

5. The City Manager’s decision following a hearing may be appealed to the City Council pursuant to Subsection 5.55.050.D (Appeal).

6. Notwithstanding the foregoing, the City Manager may order an immediate summary suspension of a Cannabis Regulatory Permit, without prior notice or hearing, upon a finding that the Cannabis Business poses an immediate threat to public health, safety, or welfare. In such case, the Permittee shall be provided written notice of the summary suspension and the grounds therefor concurrently with or immediately following the suspension, and the Permittee shall have the right to request an expedited hearing within five (5) calendar days of service of the notice.

D. In deciding whether to suspend or revoke a Permit, the City Manager may consider: any corrective action taken; prior violations and effectiveness of prior corrective action; previous sanctions imposed; number and variety of violations; likelihood of recurrence; circumstances surrounding the violation; whether the violation was willful; actual or potential harm to the public; and any other factor that makes the situation of unique concern.
§ 5.55.170 Notice and Service. Wherever this Chapter requires the City to serve notice to an Applicant, Permittee, or property owner, such notice shall be given by the City Manager in writing and shall be delivered either by personal delivery or by certified U.S. mail, postage prepaid, return receipt requested, to the mailing address provided in the Application or as subsequently updated by the Permittee in writing.

Service by certified mail shall be deemed complete upon deposit in the U.S. mail. In addition, any such notice may be posted at the physical address of the Premises on the date of mailing. § 5.55.180 Voluntary Surrender of Permit. A Permittee may voluntarily surrender a Cannabis Regulatory Permit by delivering written notice of surrender to the City Manager. A voluntary surrender shall be effective upon receipt by the City Manager. Voluntary surrender shall not preclude the City from investigating or pursuing any violation of this Chapter that occurred prior to the date of surrender, nor

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shall it affect any tax obligations accrued prior to surrender. Voluntary surrender shall not, by itself, be deemed an admission of any violation.
§ 5.55.190 Violations and Penalties. Each and every violation of this Chapter shall constitute a separate violation and shall be subject to all remedies and enforcement measures authorized by this Code.

Additionally, as a nuisance per se, any violation of this Chapter shall be subject to injunctive relief, revocation of the Cannabis Regulatory Permit, revocation of any land use entitlement for the location, disgorgement and payment to the City of any and all monies unlawfully obtained, costs of abatement, costs of investigation, attorney fees, and any other relief or remedy available at law or equity. The City may also pursue any and all remedies and actions available and applicable under local and State laws for any violations committed by the cannabis business and persons related or associated with the business. § 5.55.200 Remedies Cumulative. The remedies provided in this Chapter are not mutually exclusive.

Pursuit of any one remedy does not preclude the City from availing itself of any or all available administrative, civil, or criminal remedies at law or equity. The remedies provided by this Chapter are cumulative and in addition to any other remedies available at law or in equity, including but not limited to remedies available for cannabis business tax violations under Chapter 3.22 of this code. § 5.55.210 Liability of Employees, Agents, and Property Owners.

A. The act, omission, or failure of an agent, officer, representative, or other person acting for or employed by a Cannabis Business, within the scope of their employment or office, shall in every case be deemed the act, omission, or failure of the Cannabis Business.

B. No property owner in charge of or in possession of any real property within the City shall cause, permit, maintain, conduct, or otherwise suffer or allow a public nuisance to exist.

It is the duty of every property owner to remove, abate, and prevent the reoccurrence of any such public nuisance upon the property, regardless of whether the property owner is in actual possession, and including an obligation to act to evict or otherwise remove an unlawful cannabis operation from the property.

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Section 2. Table 21.32-1 of Title 21, Chapter 21.32 of the Paso Robles Municipal Code is amended to include Cannabis, Non-Storefront Retail, as follows:

Table 21.32-1: Zoning District Use Regulations (portion) Land Uses R-A R-1 R-2 R-3 R-4 R-5 OP CP C-1 C-2 C-3 RC RL M PM AP AG POS OS PF Specific Use Regulations
Commercial—Retail and Restaurant Uses
Cannabis,
NonStorefront
Retail
- - - - - - - - - - C - - - - - - - - - See Chapter

21.60 (Cannabis)
Certified
farmers
market and
year-round
roadside
produce
stands
— — — — — — — — — C C C C C C C C C — —
Section 3. Table 5.3-1 of the Uptown/Town Centre Specific Plan is amended to include Cannabis, NonStorefront Retail, to read as follows:

Table 5.3-1: Allowed Land Uses and Permit Requirements (portion) Land Use Type PERMIT REQUIREMENTS BY ZONE Specific Use
Regulations
T3-N T3-F T4-N T4-F T4-NC TC-1 TC-2 RSC OS
Business, Trade
Schools
- - - - - P P P -
Cannabis, NonStorefront Retail- - - - - - - CUP - See Paso Robles
Municipal
Code Chapter

21.60 (Cannabis)
Card rooms - - - - - CUP CUP CUP -
Section 4. Chapter 21.60 of the Paso Robles Municipal Code is hereby repealed in its entirety and replaced to read as follows:

CHAPTER 21.60 CANNABIS
§ 21.60.010 Purpose and Applicability.

A. The purpose of this Chapter is to protect public health, safety, and welfare by regulating personal, medicinal, and commercial cannabis uses consistent with Article 2 of Chapter 6 of Division 10 of the California Health and Safety Code (Sections 11357-11362.9, as amended), Division 10 of the California Business and Professions Code (Section 26000 et seq., as amended), and all regulations promulgated thereunder.

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B. It is the intent of the City Council to:

1. Allow personal cultivation of cannabis pursuant to this Chapter and state law;

2. Allow Non-Storefront Retail of cannabis operating under a Conditional Use Permit in limited zoning districts; and

3. Prohibit all other commercial cannabis activities including, but not limited to storefront retail, temporary cannabis events, cultivation, manufacturing, testing laboratories, distribution facilities, and microbusinesses.

C. Nothing in this Chapter shall preempt or make inapplicable any provision of state or federal law.

D. This Chapter shall be read and applied in conjunction with Chapter 3.22 (Cannabis Business Tax) and Chapter 5.55 (Cannabis Regulatory Permits) of this code. § 21.60.020 Definitions. The following definitions shall apply to this Chapter. Any reference to California statutes includes any regulations promulgated thereunder and is deemed to include any successor or amended version of the referenced statute or regulatory provision. Terms defined in Chapter 3.22 (Cannabis Business Tax) and Chapter 5.55 (Cannabis Regulatory Permits) have the same meaning when used in this Chapter unless otherwise defined herein. Any term used but not defined in this Chapter that is defined in the California Business and Professions Code or the California Health and Safety Code shall have the meaning set forth in the applicable state statute, unless the context requires otherwise.

A. “Adult-use cannabis” means cannabis or cannabis products intended for adults who are 21 years of age or older and who do not possess a physician’s recommendation, as defined in California Business and Professions Code Section 26001.

B. “Applicant” means a person 21 years of age or older who has submitted an Application for a Conditional Use Permit pursuant to Chapter 21.19 (Conditional Use Permits and Administrative Use Permits). If the Applicant is an entity and not a natural person, “Applicant” includes all persons having a 20% or more financial interest in the entity.

C. “Application” means the forms and required supporting documents provided by the Director in accordance with this Chapter for the purpose of seeking a Conditional Use Permit For a Cannabis Business.

D. “Cannabis Regulatory Permit” means a regulatory permit issued by the City to a Cannabis Business pursuant to Chapter 5.55 (Cannabis Regulatory Permit), required before any authorized commercial cannabis activity may be conducted in the City.

E. “Commercial cannabis activity” shall have the same definition as set forth in California Business and Professions Code Section 26001 and means the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery, or sale of cannabis and cannabis products.

F. “Delivery” means the commercial transfer of cannabis or cannabis products to a customer, and includes the use by a retailer of any technology platform owned and controlled by the

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retailer, or independently licensed under California law, that enables customers to arrange for or facilitate the commercial transfer by a licensed retailer of cannabis or cannabis products.

G. “Licensee” means the holder of any state-issued license related to cannabis activities, including licenses issued under Division 10 of the California Business and Professions Code.

H. “Medicinal cannabis” shall have the same definition as set forth in California Business and Professions Code Section 26001 and means cannabis or cannabis products intended to be sold or donated for use pursuant to the California Compassionate Use Act of 1996 by a medicinal cannabis patient who possesses a physician’s recommendation, or in compliance with California Health and Safety Code Section 11362.1.

I. “Non-Storefront Retail” or “Non-Storefront Retailer” means a cannabis business that is closed to public access and conducts sales exclusively by delivery as defined in California Business and Professions Code Section 26070(a)(2), and requires a Type 9 (Non-Storefront Retailer) license (or successor license type) from the California Department of Cannabis Control.

J. “Permittee” means a person issued a Conditional Use Permit for a cannabis NonStorefront Retail use.

K. “Private residence” means a house, an apartment unit, a townhouse, a condominium, a mobile home, or other similar dwelling that is lawfully used as a residence.

L. “Storefront retail” means a cannabis business that has a physical location from which commercial cannabis activities are conducted and cannabis goods are offered for retail sale, and requires a Type 10 (Retailer) license from the California Department of Cannabis Control.

M. “Youth center” has the same meaning as in California Health and Safety Code Section 11353.1 and means any public or private facility primarily used to host recreational or social activities for minors, including private youth membership organizations or clubs, social service teenage club facilities, video arcades, or similar amusement park facilities. § 21.60.030 Personal Recreational Use.

A. General. For purposes of this Section, personal recreational use, possession, purchase, transport, or dissemination of cannabis shall be considered unlawful in all areas of the City to the extent it is unlawful under state law.

B. Outdoor Cultivation Prohibited. A person may not plant, cultivate, harvest, dry, or process cannabis plants outdoors in any zoning district of the City. No use permit, building permit, variance, or any other permit or entitlement, whether administrative or discretionary, shall be approved or issued for any such use or activity.

C. Indoor Cultivation Permit and Requirements.

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1. General. A person 21 years of age or older may cultivate up to six (6) live cannabis plants for personal use only inside a private residence, or inside a fully enclosed and secure accessory structure to a private residence located upon the grounds of a private residence, that is not visible from a public place and complies with California Health and Safety Code Sections 11362.1 and 11362.2, provided the cultivation is for personal use only and does not constitute commercial cannabis activity.

2. Permit. The cultivator shall obtain and maintain a ministerial Indoor Cultivation Permit from the Community Development Department confirming compliance with the following requirements:
a. Cultivation shall be limited to one (1) room or area not exceeding 150 square feet, securely locked and accessible only to residents 21 years or older, with no external evidence of cultivation, including odors, visible plants, lighting not in compliance with Chapter 21.82 (Lighting and Illumination) of this code, or noise not in compliance with Chapter 21.83 (Noise) of this code.
b. Cultivation shall comply with all applicable building, fire, electrical, and plumbing codes; no gas products (e.g., CO2, butane) may be used for cultivation.
c. The cultivator shall reside full-time at the residence and, if not the owner, shall obtain written consent from the property owner.
d. Cultivation shall not create nuisances affecting the health or safety of residents or neighbors and shall comply with Chapter 21.85 (Performance Standards – General) of this code.

3. Guidelines and Fee. The Community Development Department may issue ministerial guidelines for verification of compliance with this Section. The City Council may adopt a fee for the Indoor Cultivation Permit by resolution. § 21.60.040 Medicinal Cannabis.

A. Personal Cultivation. Cultivation of medicinal cannabis pursuant to California Health and Safety Code Section 11362.77 is subject to the cultivation requirements of Section

21.60.030 (Personal Recreational Use), except that a qualified patient 18 years of age or older may cultivate personal medicinal cannabis plants in excess of the six-plant (6-plant) limit if the amount is consistent with the patient’s medical needs as determined by a physician, provided it complies with California Health and Safety Code Sections 11362.1, 11362.2, and 11362.77, remains indoors in a secure structure, and does not constitute commercial cannabis activity.

B. Medicinal Cannabis Cooperatives Prohibited. The establishment or operation of any medicinal cannabis collective, cooperative, storefront dispensary, operator, establishment, or provider shall be considered a prohibited use in all zoning districts of the City. No use permit, variance, building permit, or any other entitlement or permit,

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whether administrative or discretionary, shall be approved or issued for the establishment of any such collective, cooperative, storefront dispensary, operator, establishment, or provider in any zoning district, and no person shall otherwise establish such businesses or operations in any zoning district.

C. For medicinal cannabis non-storefront retail, see Section 21.60.050 (Non-Storefront Retail).
§ 21.60.050 Non-Storefront Retail.

A. Non-Storefront Retail of both medicinal and adult-use cannabis is conditionally permitted subject to the following limitations:

1. Operation is allowed only upon issuance of:
(i) A Conditional Use Permit pursuant to this Chapter and Chapter 21.19 (Conditional Use Permits and Administrative Use Permits); (ii) A Cannabis Regulatory Permit pursuant to Chapter 5.55 (Cannabis Regulatory Permit) of this code;
(iii) A valid City business license pursuant to Chapter 3.28 (Business License Tax);
(iv) A Type 9 California Department of Cannabis Control license (or successor license type); and
(v) All other required permits, entitlements, and State License(s).

2. Non-Storefront Retail cannabis businesses are allowed only in the Riverside Corridor (RSC) zoning district of the Uptown/Town Centre Specific Plan and the Commercial/Light Industrial (C-3) zoning district.

B. In addition to complying with all procedures and requirements for issuance of a Conditional Use Permit specified in Chapter 21.19, the Planning Commission shall not approve a Conditional Use Permit for a Non-Storefront Retail cannabis business unless it makes all of the following findings, supported by substantial evidence in the record:

1. The proposed use is likely to enhance or not materially detract from the economic vitality of the area in which it is proposed to be located;

2. The Applicant has adequately addressed potential adverse impacts of the proposed use and will implement appropriate mitigation measures to reduce those impacts to a less-than-significant level or to the maximum extent feasible;

3. The proposed use will not result in an overconcentration of cannabis businesses in the surrounding area; and

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4. The extent of support or opposition to the proposed use and location from members of the community has been considered and the project, with conditions of approval, is compatible with the surrounding area.

C. If a Non-Storefront Retailer Permittee fails to hold a valid State License or fails to actively engage in business in the city for a period of six (6) consecutive months, as evidenced by tax filings under Chapter 3.22 (Cannabis Business Tax) of this code, the Conditional Use Permit shall be subject to revocation after notice and the opportunity for a hearing by the Planning Commission pursuant to Section 21.24.050 (Revocations and Suspensions).

D. Separation Requirements. A Non-Storefront Retailer shall not be located within a sixhundred-foot (600-foot) radius of:

1. Any public or private school providing instruction in kindergarten or any grades 1 through 12;

2. Any day care center;

3. Any youth center; or

4. Any public park or City-owned park that is in existence at the time the Application is filed.

5. Notwithstanding the foregoing, the Planning Commission may approve a Conditional Use Permit for a Non-Storefront Retailer located within the separation distances set forth above if the Planning Commission finds, based on substantial evidence in the record, all of the following:
a. The proposed site will not pose a threat to the public health, safety, and welfare of the surrounding community and properties;
b. Due to the non-storefront nature of the business, customers will not be present at the site and there will be no operational interface with protected uses; and
c. Adequate conditions of approval can be imposed to mitigate any potential adverse impacts on the adjacent protected use.

E. Signage Standards. In addition to the standards in Chapter 21.52 (Signs) of this code, a Non-Storefront Retailer shall comply with the following signage standards, which may be further limited by the Conditional Use Permit:

1. All on-site signage on the exterior of the building shall total no more than twenty (20) square feet;

2. No highway-oriented sign, whether existing or proposed, shall be permitted on the same site as a Non-Storefront Retailer;

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3. Non-Storefront Retailers shall not advertise on any highway-oriented sign in the City; and

4. Non-Storefront Retailers shall not advertise on any off-premises sign in the City.

F. Administration. The Director is authorized to develop Application forms and to promulgate and administer reasonable guidelines and policies necessary to carry out the purposes and intent of this Chapter.
§ 21.60.060 Prohibited Commercial Cannabis Activities. With the exception of Non-Storefront Retail pursuant to Section 21.60.050, no other commercial cannabis activities are permitted in the City, and no use permit, variance, building permit, or any other entitlement or permit, whether administrative or discretionary, shall be approved or issued for any such activity, including but not limited to:

A. Cultivation (all state license types);
B. Manufacturing (e.g., California Department of Cannabis Control License Types 6, 7, N, P, and S);
C. Distribution (e.g., California Department of Cannabis Control License Types 11 and 13); D. Testing laboratory (e.g., California Department of Cannabis Control License Type 8); E. Storefront retailer (e.g., California Department of Cannabis Control License Type 10); F. Microbusiness (e.g., California Department of Cannabis Control License Type 12); G. Temporary Cannabis Events pursuant to California Business and Professions Code Section 26200; and
H. Any other commercial cannabis activity or business licensed by the state under Division 10 of the California Business and Professions Code, as it may be amended from time to time.
§ 21.60.070 Commercial Cannabis Delivery Activity from Outside the City. Cannabis businesses licensed by the California Department of Cannabis Control and physically located outside city limits may deliver cannabis into the City if they comply with all requirements Chapter 3.22 (Cannabis Business Tax), Chapter

3.28 (Business License Tax), Subsection 5.55.140.C (Deliveries From Outside the City), and all applicable State laws, policies and procedures.
§ 21.60.080 Violations. No person, whether as principal, agent, employee, or otherwise, shall violate, cause the violation of, or otherwise fail to comply with any of the requirements of this Chapter. Every act prohibited or declared unlawful, and every failure to perform an act made mandatory by this Chapter, shall be a misdemeanor or an infraction, at the discretion of the City Attorney or the District Attorney. In addition to the penalties provided in this Section, any condition caused or allowed to exist in violation of any of the provisions of this Chapter is declared a public nuisance and may be abated as provided in Chapters 1.02 (Penalties) and 1.03 (Administrative Citation) of this code, Chapter 5.55 (Cannabis Regulatory Permit) of this code, and/or under state law. Nothing in this Section limits the City’s authority to pursue administrative, civil, and other remedies pursuant to Chapter 5.55 (Cannabis Regulatory Permit).

Page 339 of 431 ends

1010 Marsh St., San Luis C
(805) 546�8208 •FAX(:

PROOF OF PUBLICATION
(2015.5 C.C.P.)

STATE OF CALIFORNIA,
County of San Luis Obispo,
I am a citizen of the United States and a resident
of the county aforesaid; I am over the age of
eighteen years, and not a party interested in the
above entitled matter. I am the principal clerk
of the printer of the New Times, a newspaper
of general circulation, printed and published
weekly in the City of San Luis Obispo, County
of San Luis Obispo, and which has been
adjudged a newspaper of general circulation by
the Superior Court of the County of San Luis
Obispo, State of California, under the date of
February 5, 1993, Case number CV72789: that
notice of which the annexed is a printed copy
(set in type not smaller than nonpareil), has been
published in each regular and entire issue of said
newspaper and not in any supplement thereof on
the following dates, to-wit:
b
in the year 2026.

I certify ( or declare) under the the penalty of
perjury that the foregoing is true and correct.

Dated;-
t San Luis Ob�, Califr
ia, this day
b of O
t1 S! , 2026.
rz�U
Patricia Horton, New Times Legals
Amnm.et:Eb-loiw/•NTMGAdmm/NTMGOffia::/BUSIN"ESS/Pu.blicN�JProofofPub Proc

NOTICE OF CITY COUNCIL

PUBLIC HEARING
NOTICE IS HEREBY GIVEN that the City of Paso Robles City Council will hold a Public Hearing to consider the following project:

Project Description: Consideration of Adult-Use Cannabis Applicant
Non-Storefront Retail. The project
includes·

1. Introduction for first reading by title
only an ordinance to:
a. Add Paso Robles Municipal Code
Chapter 5.55 (Cannabis Regulatory
Permit), which would specify the
process and requirements for a
Cannabis Regulatory Permit, and
minimum operational requirements for
cannabis businesses; and
b. Amend Paso Robles Municipal
Code Table 21.32-1 (Zoning District
Use Regulations) and Chapter 21.60
(Cannabis), and Uptown/Town Centre
Specific Plan Table 5.3-1 (Allowed
Land Uses and Permit Requirements)
to allow Cannabis Non-Storefront
Retail in the Riverside Corridor (RSC)
and Commercial/Light Industrial (C-3)
zoning districts without a limit on the
number of non-storefront retailers.

2. Revocation of Resolution 22-144,
which allows only 3 specific cannabis
businesses to have premises located in
the city limits.

3. Discussion of the appropriate fee for
the Cannabis Regulatory Permit The
actual fee would be adopted after a
future public hearing.

RZN25-08, SPA26-03, P25-0077
City Initiated
Location: I The Riverside Corridor (RSC) and
' Commercial/Light Industrial (C-3)
Zoning Districts
-·--·--------- - ----------- ---- CEQA De!ennination: The proposed ordinance is not subject to the California Environmental Quality
Act (CEQA) because it does not qualify
as a "project" under CEOA. State CEQA
Guidelines §15060(cl provides that "[a]
n activity is not subject to CEOA if ...
the activity is not a project as defined in
Section 15378."
1--------J--.--.C.C..-'----------------
Hearing Date: The City Council will hold a Public
Hearing on August 18, 2026, at 6:00 p.m.
at the Norris Room, Centennial Park, 600
______ _,_ccNccic""ke"-rsc.:oc:.n.=.Dc:.riv:..:e'-', Pc..:ac:.soccRcccoc:.bc:.le'"s,.=.CccA.:c93446="-'· On July 14, 2026, the Planning Commission held a public hearing to consider the project On a vote of 5-0 (Commissioners Christensen and Covarrubias absent!, the Planning Commission adopted Resolution PC 26-027 to recommend the Council
adopt an ordinance to approve the amendments. The
Planning Commission also recommended holders of Cannabis Regulatory Permits be required to renew every 2 years instead of every year as recommended by the Police Department.

The public has the option to attend the meeting in person or to participate remotely. To participate remotely, residents can livestream the meeting at www.prcity.com/youtube, and call (805)865-7276 to provide live public comment via telephone. The phone line will open just prior to the start of the meeting.

Written public comments can be submitted via email to
[email protected] or US Mail (submit early) to the City Clerk, 1000 Spring Street, Paso Robles, CA 93446 provided that the comments are received prior to the time of the public hearing. Comments received prior to 12:00 noon on the day of the meeting will be posted as an addendum to the agenda. If submitting written comments, please note the agenda item by number or name. Comments on the proposed application must be received prior to the time of the hearing to be considered by the Planning Commission.

Challenge to the application in court will be limited to issues raised at the public hearings or in written correspondence delivered to the Planning Commission and/or City Council at, or prior to, the public hearings.

Co?i0• of the orn'r•• .-,-ti report will be availohle frr •cvie"' e" 1h11 , w,
• ·www.prci.;.com' ,1eetings1 on 1I1e r
"BC arir . ,. uraveany1 ·estions,�\·•� ct
rne C Devel, ment Deparc-.:eni at· ) 237-� 70.

I 6,
Attachment 6

Page 340 of 431 ends

Council Agenda Report
From: Ryan Cornell, Administrative Services Director/City Treasurer Subject: Approval of a Resolution Authorizing Certain Disclosures and Actions in Connection with the Issuance by the SLO County Financing Authority of its Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A
CEQA Determination: The City finds that this action is not a project under the California Environmental Quality Act pursuant to State Guidelines Section State CEQA Guidelines, §§ 15060, subd. (c)(2)-(3), 15378.

Date: August 18, 2026
Facts

1. The City has previously entered into a Nacimiento Project Water Delivery Entitlement Contract (the “Contract”) with the San Luis Obispo County Flood Control and Water Conservation District (the “District”), in connection with the Nacimiento Water Project (the “Project”) for the supply of additional water for the use and benefit of the City.

2. The SLO County Financing Authority (“Authority”) has previously issued revenue bonds to fund the Project, the repayment of which is secured by the payments made pursuant to the Contract, including those made by the City.

3. The District and the Authority have determined that it is necessary and desirable to proceed with the refunding of all or a portion of the Authority’s previously issued 2015 A Bonds for debt service savings through the issuance and sale of revenue refunding bonds, consisting of one or more series designated asthe Authority’s Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (the “Bonds”).

4. In connection with the issuance of the Bonds, the Authority will prepare an Official Statement to be provided to potential investors of the Bonds. Because repayment of the Bonds is secured by payments under the Contract, the Official Statement will include an appendix thereto that includes information related to the City and its finances.

5. The City is now being asked to approve the preparation and use by the Authority of the appendix, including confirming the material accuracy of the City information therein, as well as approving a form Continuing Disclosure Agreement.

Options

1. Take no action;

2. Approve a resolution, agreements, and other necessary actions authorizing the City’s disclosure information in connection with the issuance of the Bonds;

3. Provide alternative direction to staff.

Analysis and Conclusions
The proposed issuance of the Bonds by Authority is expected to refinance all $75.5 million of the Authority’s outstanding 2015 A Bonds (specifically, the maturities of the 2015 A Bonds from September

Page 341 of 431 ends

1, 2027, through September 1, 2038). The transaction will not extend the final maturity of the original 2015 A Bonds.

The security structure and debt service payments on the Bonds are funded by the Delivery Contracts between the District and the Atascadero Mutual Water Company, the City, the City of San Luis Obispo, and the Templeton Community Services District (collectively, the “Participating Agencies” or each a “Participating Agency”). The District allocates Capital Projects Installment Debt Service among all Participating Agencies, according to the proportion of Project Construction Costs paid by each Participating Agency.

The table below provides the Nacimiento Capital Projects Installment Debt Service Allocation by Participating Agency:

Participating Agency
Tax-Exempt
Bonds Taxable Bonds
% Total of
Bond Debt
Service
Atascadero Mutual Water Company 0.00% 98.74% 20.08%
Paso Robles 45.03% 0.57% 35.99%
San Luis Obispo (SLO) 52.28% 0.69% 41.79%
Templeton Community Services District (CSD) 2.69% 0.00% 2.14% Total 100.00% 100.00% 100.00%
Based on preliminary tax-exempt pricing yields provided by the Authority’s and the District’s Municipal Advisor, KNN Public Finance, and the Underwriter, Loop Capital Markets, as of the week of July 30, 2026, the 2026 Revenue Refunding Bonds are projected to generate approximately $4.4 million in total annual debt service savings for the Participating Agencies, with each Participant Agency receiving savings proportional to its share of the annual debt service obligations.

The Authority’s Debt Policy requires that any issuance of current refunding bonds achieve at least 3% NPV savings, calculated net of costs of issuance and expressed as a percentage of the refunded bonds’ par amount. The pricing of the 2026 Revenue Refunding Bonds is expected to occur in September 2026.

Working with its Municipal Advisor and Underwriter, the Authority would only enter the market and sell the 2026 Revenue Refunding Bonds if it was certain that the 3% NPV savings threshold could be achieved.

Final debt service savings will be secured on the pricing day of the 2026 Revenue Refunding Bonds in September.

The pricing of the Bonds is expected to occur in September 2026.

The table below allocates the estimated debt service savings from the Bonds by Participating Agency.

Because Atascadero Mutual Water Company is only responsible for a share of the Authority’s 2007 B Bonds (taxable) debt service, which are not being refunded, the estimated savings generated by the Bonds will be shared only by those Participating Agencies that are responsible for a portion of the debt service on the Authority’s 2015 A Bonds.

Page 342 of 431 ends

As detailed in Exhibit A to the Resolution, the following information is made available in accordance with California Government Code Section 5852.1 to provide certain public disclosures related to the estimated borrowing costs of the Bonds. All figures represented below, as provided by the Municipal Advisor, are good-faith estimates as of the week of June 29, 2026 and are subject to change based on the interest rate environment and other market and structuring factors on the day of sale:

1. True Interest Cost: 3.13%

2. Cost of Issuance: $873,000 (includes legal, municipal advisor, rating agency, underwriter’s discount and estimated cost of bond insurance)

3. Proceeds Amount: $75,819,062

4. Total Debt Service: $92,640,715
In order for the Authority to proceed with the sale and issuance of the Bonds, the City Council needs to approve and adopt the Resolution 26-XXX (Attachment 1) that, among other things, incorporates and approves the documents below, all of which are attached to this report.

Appendix A to the Preliminary Official Statement and Official Statement (Attachment 2): This Appendix A includes certain disclosures of the City related to Litigation (related to water revenues and any pending claims that could materially affect its finances) and certain financial and other information.

Continuing Disclosure Agreement (Attachment 3): This document is an agreement between the City and the District, whereby the City covenants and agrees to provide annual disclosures in the form of an Annual Disclosure Report and event notices to be distributed by the Dissemination Agent to bondholders.

SLO County Financing Authority Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (Estimated as of the week of July 30, 2026; Preliminary subject to change)

45.03% 52.28% 2.69%
2026 Refunding Revenue Bonds Estimated Savings Estimated Savings Allocation by Participant Fiscal Year
Ending
Prior 2015
Bonds
Annual Debt
Service
2026 Bonds
Annual Debt
Service
(Preliminary)
Annual
Savings
City of Paso
Robles
City of San
Luis Obispo
Templeton
Community
Services
District
Total Annual
Savings
A B C=A-B D=45.03%*C E=52.28%*C F=2.69%*C G=C=D+E+F
6/30/27 $1,649,491 $1,389,881 $259,610 $116,902 $135,724 $6,984 $259,610 6/30/28 8,096,606 7,754,875 341,731 153,882 178,657 9,193 341,731 6/30/29 8,095,669 7,756,000 339,669 152,953 177,579 9,137 339,669 6/30/30 8,095,500 7,755,625 339,875 153,046 177,687 9,143 339,875 6/30/31 8,101,522 7,758,125 343,397 154,632 179,528 9,237 343,397 6/30/32 8,090,400 7,748,125 342,275 154,126 178,941 9,207 342,275 6/30/33 8,095,338 7,754,875 340,463 153,310 177,994 9,158 340,463 6/30/34 8,097,463 7,752,500 344,963 155,337 180,346 9,279 344,963 6/30/35 8,090,650 7,750,500 340,150 153,170 177,830 9,150 340,150 6/30/36 8,098,175 7,757,875 340,300 153,237 177,909 9,154 340,300 6/30/37 8,096,400 7,753,875 342,525 154,239 179,072 9,214 342,525 6/30/38 8,094,625 7,752,875 341,750 153,890 178,667 9,193 341,750 6/30/39 8,093,700 7,749,000 344,700$0 155,218 180,209 9,272 344,700 Total $98,795,538 $94,434,131 $4,361,407 $1,963,942 $2,280,144 $117,322 $4,361,407

Page 343 of 431 ends

Fiscal Impact
The proposed issuance of the Bonds is expected to generate approximately $220,000 in annual debt service savings, resulting in an estimated $2.8 million in total debt service savings to the City over the life of the bonds compared to the outstanding Authority’s 2015A Bonds. A breakdown of the estimated savings by jurisdiction is provided in the table below:

Paso Robles
(45.03%)
City of SLO
(52.28%)
Templeton
CSD (2.69%) Total
2015 A Total Debt Service $ 44,487,631 $ 51,650,307 $ 2,657,600 $ 98,795,538 2026 Revenue Refunding Bonds Total 41,716,114 48,432,566 2,492,035 92,640,715 Total Savings: 2,771,516 3,217,741 165,555 6,154,822
2015 A Average Debt Service 3,645,405 4,232,329 217,769 8,095,504 2026 Average Debt Service 3,425,179 3,976,646 204,613 7,606,438 Average Annual Savings: 220,227 255,684 13,156 489,066
Note: Estimates based on market conditions as of the week of June 29, 2026. Preliminary and subject to change.

CEQA
The City finds that this action is not a project under the California Environmental Quality Act pursuant to State Guidelines Section State CEQA Guidelines, §§ 15060, subd. (c)(2)-(3), 15378.

Recommendation
Approve Resolution 26-XXX, authorizing (i) certain disclosures regarding the City, including describing certain demographic, financial, statistical and other information of the City to be included in Appendix A to the Preliminary Official Statement and the Official Statement that will be used by the Underwriter in the marketing and sale of the Authority’s Bonds; and (ii) the execution and delivery of a Continuing Disclosure Agreement; and (iii) authorize the taking of all necessary actions in connection with such issuance of the Bonds.

Attachments

1. Resolution 26-XXX – 2015 Nacimiento Water Bonds Refunding

2. Preliminary Official Statement

3. Continuing Disclosure Agreement

Page 344 of 431 ends

Attachment 1
RESOLUTION 26-XXX

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EL PASO DE ROBLES

APPROVING CERTAIN DISCLOSURES REGARDING THE CITY AND AUTHORIZING CERTAIN ACTIONS IN

CONNECTION WITH SUCH REFUNDING IN CONNECTION WITH THE REFUNDING OF THE SLO COUNTY FINANCING AUTHORITY’S 2015 NACIMIENTO WATER PROJECT REVENUE REFUNDING BONDS WHEREAS, the City of El Paso de Robles (the “City”) has heretofore entered into a Nacimiento Project Water Delivery Entitlement Contract, as amended (the “Delivery Contract”), with the San Luis Obispo County Flood Control and Water Conservation District (the “District”), in connection with the Nacimiento Water Project (the “Project”) for the supply of additional water for the use and benefit of the lands and inhabitants served by the City of El Paso de Robles (the “City”); and WHEREAS, on September 26, 2007, the SLO County Financing Authority (the “Authority”) issued its $157,845,000 Nacimiento Water Project Revenue Bonds, 2007 Series A (the “2007A Bonds”) and its $38,565,000 Nacimiento Water Project Revenue Bonds, 2007 Series B (Taxable) in order to finance and refinance the Project; and
WHEREAS, on August 19, 2015, the Authority issued $107,115,000 Nacimiento Water Project Revenue Refunding Bonds, 2015 Series A (the “2015A Bonds”) in order to refund a portion of the 2007A Bonds; and WHEREAS, the District and the Authority have determined that it is necessary and desirable to proceed with the refunding of all or a portion of the 2015A Bonds for debt service savings through the issuance and sale of Authority Bonds, consisting of one or more series of the SLO County Financing Authority (County of San Luis Obispo, California) Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (the “Bonds”); and
WHEREAS, in connection with such refunding, this City Council (the “Council”) has been presented with a form of Preliminary Official Statement, together with an appendix containing statistical and other descriptive information regarding the City (the captions containing such information being referred to herein as the “Appendix”), based upon information provided and to be provided by the City, and a form of Continuing Disclosure Agreement (the “Continuing Disclosure Agreement”); and WHEREAS, Section 5852.1 of the Government Code of the State of California (the “Government Code”) requires that the Council obtain from an underwriter, municipal advisor or private lender and disclose, prior to authorization of the issuance of bonds with a term of greater than 13 months, good faith estimates of the following information in a meeting open to the public: (a) the true interest cost of the bonds, (b) the sum of all fees and charges paid to third parties with respect to the bonds, (c) the amount of proceeds of the bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the bonds, and (d) the sum total of all debt service payments on the bonds calculated to the final maturity of the bonds plus the fees and charges paid to third parties not paid with the proceeds of the bonds; and WHEREAS, in compliance with Section 5852.1 of the Government Code, the Council has obtained from KNN Public Finance, LLC, as municipal advisor to the Authority (the “Municipal Advisor”), based on interest rate estimates provided by Loop Capital Markets LLC, as underwriter (the “Underwriter”) of the Bonds, the required good faith estimates and such estimates are disclosed and set forth on Exhibit A attached hereto;

Page 345 of 431 ends

Attachment 1
NOW, THEREFORE, the City Council of the City of El Paso de Robles does hereby resolve and determine as follows:

Section 1. The foregoing recitals are true and correct.

Section 2. The form of the Appendix presented to and reviewed by this meeting of the Council, with such changes as the Mayor, City Manager, City Treasurer or a designee thereof (each, an “Authorized Representative”) may determine to be in the best interests of the City, is hereby approved. The Authority is authorized to include the Appendix in the Preliminary Official Statement and Official Statement relating to the Bonds, and the Underwriter is authorized to use the Appendix in the marketing and sale of the Bonds. From the date hereof until the closing date of the Bonds (unless such date is extended in writing by the Authority), an Authorized Representative shall notify the Authority and the Underwriter immediately upon the occurrence of any material change to information regarding the City in the Appendix.

Section 3. The form of Continuing Disclosure Agreement presented to and reviewed by this meeting of the City Council is hereby approved, and an Authorized Representative of the City is hereby authorized and directed to execute and deliver said Continuing Disclosure Agreement, substantially in the form presented to and approved at this meeting of the Council, with such changes therein as an Authorized Representative, the City Attorney and the District may approve, such approval to be evidenced by the signature of said Authorized Representative.

Section 4. In accordance with Section 5852.1 of the Government Code, good faith estimates of the following have been obtained from the Municipal Advisor based on interest rate estimates provided by the Underwriter and are set forth on Exhibit A attached hereto: (a) the true interest cost of the Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Bonds, (c) the amount of proceeds of the Bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Bonds, and (d) the sum total of all debt service payments on the Bonds calculated to the final maturity of the Bonds plus the fees and charges paid to third parties not paid with the proceeds of the Bonds.

Section 5. The Authorized Representatives of the City are each hereby authorized and directed, for and in the name and on behalf of the City, to do or cause to be done any and all things and take any and all other actions in support of the issuance of the Bonds, including, without limitation, the execution of certificates and ancillary documents and the delivery of opinions on behalf of the City as may be reasonably required by the District, which they, or any of them, deem necessary or advisable in order to consummate the purposes described herein.

This resolution shall take effect immediately upon its adoption.

APPROVED this 18th day of August, 2026, by the following vote:

AYES:

NOES:

ABSTAIN:

ABSENT:

Page 346 of 431 ends

Attachment 1
John R. Hamon, Jr., Mayor
ATTEST:
________________________________
Melissa Martin, City Clerk
Exhibit A: Good Faith Estimates

Page 347 of 431 ends

Exhibit A

EXHIBIT A

GOOD FAITH ESTIMATES
The following information was obtained from KNN Public Finance, LLC based on interest rate estimates provided by Loop Capital Markets LLC, as the underwriter of the SLO County Financing Authority (County of San Luis Obispo, California) Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (the “Bonds”), and is provided in compliance with Section 5852.1 of the Government Code with respect to the Bonds:

It should be noted that the following information constitutes good faith estimates only as of June 29, 2026. The actual interest cost, finance charges, amount of proceeds and total payment amount may vary from the estimates below due to the timing of Bond sale, the amount of Bonds sold, the amortization of the Bonds sold, and prevailing market interest rates at the time of each sale. The date of sale and the amount of Bonds sold will be determined by the Authority and the District based on achieving net present value debt service savings and other factors related to refinancing outstanding debt. The actual interest rates at which the Bonds will be sold will depend on the bond market on the date and at the time of the sale. The actual amortization of the Bonds will also depend, in part, on market interest rates on the date and at the time of the sale. Market interest rates are affected by economic, national, international, and other factors beyond the control of the Municipal Advisor, the Underwriter, the Authority, or the District.

1. True Interest Cost of the Bonds. Assuming the maximum aggregate principal amount of the Bonds authorized ($80,000,000) are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the true interest cost of the Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is 3.13%.

2. Finance Charge of the Bonds. Assuming the maximum aggregate principal amount of the Bonds authorized ($80,000,000) are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the finance charge of the Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Bonds), is $873,000, as follows.

3. Amount of Proceeds to be Received. Assuming the maximum aggregate principal amount of the Bonds authorized ($80,000,000) are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the amount of proceeds expected to be received by the Authority for sale of the Bonds less the finance charge of the Bonds described in 2 above and any reserves or capitalized interest paid or funded with proceeds of the Bonds, is $75,819,062.

4. Total Payment Amount. Assuming the maximum aggregate principal amount of the Bonds authorized ($80,000,000) are sold and based on market interest rates prevailing at the time of preparation of this information, a good faith estimate of the total payment amount, which means the sum total of all payments the Authority will make to pay debt service on the Bonds plus the finance charge of the Bonds described in paragraph 2 above not paid with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $92,640,715.

Page 348 of 431 ends

Attachment 2
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.

PRELIMINARY OFFICIAL STATEMENT DATED AS OF _________, 2026 NEW ISSUE – BOOK ENTRY ONLY RATINGS: S&P: [“___” (Insured)]; “___” (Underlying) [DAC LOGO] (See “RATINGS” herein.)
In the opinion of Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel, under existing law, and subject to the matters described in “TAX MATTERS” herein, interest on the 2026 Bonds is excluded pursuant to section 103(a) of the Internal Revenue Code of 1986 from the gross income of the owners thereof for federal income tax purposes and is not included in the federal alternative minimum tax on the owners thereof who are individuals. It is also the opinion of Bond Counsel that under existing law, interest on the 2026 Bonds is exempt from personal income taxes of the State of California. See “TAX MATTERS” herein. $[PAR]*

SLO COUNTY FINANCING AUTHORITY
(COUNTY OF SAN LUIS OBISPO, CALIFORNIA)

NACIMIENTO WATER PROJECT

REVENUE REFUNDING BONDS,
2026 SERIES A
Dated: Date of Issuance Due: September 1, as shown on inside cover page The SLO County Financing Authority (the “Authority”), a joint exercise of powers authority established pursuant to an agreement between the County of San Luis Obispo, California (the “County”) and the San Luis Obispo County Flood Control and Water Conservation District (the “Flood Control District”), is issuing $[PAR] principal amount of SLO County Financing Authority (County of San Luis Obispo, California) Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (the “2026 Bonds”) to: (i) provide funds to refund all of the SLO County Financing Authority Nacimiento Water Project Revenue Refunding Bonds, 2015 Series A (the “2015 Bonds”) outstanding on the date of issuance of the 2026 Bonds; [(ii) purchase a municipal bond insurance policy for the 2026 Bonds;] and (iii) pay certain costs associated with the issuance of the 2026 Bonds, all as more fully described herein. See “PLAN OF REFUNDING” and “ESTIMATED SOURCES AND USES OF FUNDS.” The 2015 Bonds were issued to advance refund a portion of the Authority’s then outstanding Nacimiento Water Project Revenue Bonds, 2007 Series A, thereby refinancing the costs of the acquisition, construction and equipping of certain public capital improvements within the County, generally comprising the Nacimiento Water Project (the “Nacimiento Project”).

The 2026 Bonds will be issued and secured pursuant to the terms of an Indenture of Trust, dated as of September 1, 2007 (the “Original Indenture”), previously supplemented and amended, and as further supplemented and amended by the Third Supplemental Indenture of Trust dated as of [October 1], 2026 (the “Third Supplemental Indenture” and together with the Original Indenture, as previously supplemented and amended, the “Indenture”), each by and between the Authority and U.S. Bank Trust Company, National Association, as successor trustee (the “Trustee”).

The 2026 Bonds are obligations of the Authority payable solely from and secured by Revenues (as defined in the Indenture) The Revenues consist primarily of gross water sales revenues of the Water Enterprises of the Participants (each as defined herein) payable to the Flood Control District pursuant to individual Water Delivery Entitlement Contracts, as amended (each, a “Delivery Contract”), between the Flood Control District and the respective Participant, and pledged by the Flood Control District pursuant to the terms and conditions of a Pledge Agreement, dated as of September 1, 2007 (the “Pledge Agreement”), by and between the Flood Control District and the Authority. Pursuant to each Delivery Contract, each Participant pledges the gross water sales revenues of its Water Enterprise (as defined herein) to pay the obligations under its Delivery Contract, including its pro rata share of the costs of the Nacimiento Project, Additional Capital Project Costs, Capital Projects Installment Debt Service, Master Water Contract Costs, Capital Reserve Costs, Operation and Maintenance Variable Energy Costs (each as defined herein) and other costs associated with the Nacimiento Project, and each Participant is obligated to make its respective payments under its Delivery Contract to the Flood Control District regardless of the failure of the Flood Control District to deliver water to the respective Participant. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–Pledge Agreement” and “–The Delivery Contracts.” In addition to the 2015 Bonds, the Authority previously issued 2007 Taxable Bonds and 2018 Bonds (each as defined herein) and may issue Additional Bonds secured on a parity with the 2007 Taxable Bonds, the 2018 Bonds and the 2026 Bonds. The 2007 Taxable Bonds, the 2018 Bonds, the 2026 Bonds and any Additional Bonds are referred to as the “Bonds.” The 2026 Bonds will be issued in book-entry form only, in authorized denominations of $5,000 and integral multiples thereof and will be initially issued and registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the 2026 Bonds. Purchasers will not receive certificates representing their interests in the 2026 Bonds. Payments of principal of and interest on the 2026 Bonds will be made by the Trustee to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the 2026 Bonds. See APPENDIX F– “DTC AND THE BOOK-ENTRY ONLY SYSTEM.” The principal of the 2026 Bonds is payable on September 1 of each year as set forth on the inside cover page hereof. Interest on the 2026 Bonds is payable semiannually on each March 1 and September 1, commencing March, 1 2027.

The 2026 Bonds are subject to optional redemption as more fully described herein.* See “The 2026 Bonds–Redemption Provisions.”

* Preliminary; subject to change.

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[The scheduled payment of principal of and interest on the 2026 Bonds when due will be guaranteed under a municipal bond insurance policy to be issued concurrently with the delivery of the 2026 Bonds by [Insurer]. See “BOND INSURANCE” and APPENDIX G–“SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”]
[Insurer Logo]
_______________________

MATURITY SCHEDULE
On Inside Cover Page
_______________________
THE 2026 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM REVENUES OF THE

AUTHORITY CONSISTING PRIMARILY OF PAYMENTS MADE BY THE PARTICIPANTS TO THE FLOOD CONTROL

DISTRICT UNDER THE DELIVERY CONTRACTS AND RECEIVED BY THE AUTHORITY PURSUANT TO THE PLEDGE AGREEMENT. THE 2026 BONDS ARE NOT A DEBT OF THE AUTHORITY, THE FLOOD CONTROL DISTRICT, THE

PARTICIPANTS, THE COUNTY, OR THE STATE OF CALIFORNIA, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE AUTHORITY SHALL NOT BE OBLIGATED TO PAY THE PRINCIPAL OF, OR INTEREST ON THE 2026 BONDS, EXCEPT FROM THE FUNDS PROVIDED UNDER THE INDENTURE AND THE PLEDGE AGREEMENT. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA, OR

ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE AUTHORITY, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE 2026 BONDS. THE AUTHORITY HAS NO TAXING POWER.

This cover page contains information for quick reference only. It is not a summary of this issue. Potential investors are advised to read the entire Official Statement to obtain information essential to making an informed investment decision with respect to the 2026 Bonds. For a discussion of certain risk factors associated with investment in the 2026 Bonds, see “CERTAIN RISKS TO BOND OWNERS” as well as other factors discussed throughout this Official Statement.

The 2026 Bonds will be offered when, as and if executed, delivered, and received by the Underwriter, subject to the approval as to their legality by Norton Rose Fulbright US LLP, Los Angeles, California, Bond Counsel, and certain other conditions. Norton Rose Fulbright US LLP, Los Angeles, California is also acting as Disclosure Counsel for the Authority. Certain legal matters will be passed upon for the County by County Counsel and for the Underwriter by Anzel Galvan LLP, San Francisco, California, Underwriter’s Counsel. It is anticipated that the 2026 Bonds in book-entry only form will be available through the facilities of DTC in New York, New York, on or about ________, 2026.

Loop Capital Markets
Dated: __________, 2026

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Attachment 2

MATURITY SCHEDULE
$[PAR]*

SLO COUNTY FINANCING AUTHORITY
(COUNTY OF SAN LUIS OBISPO, CALIFORNIA)

NACIMIENTO WATER PROJECT

REVENUE REFUNDING BONDS,
2026 SERIES A
Maturity
(September 1)
Principal
Amount
Interest
Rate Yield Price CUSIP No.†
2027 $ % %
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
C

* Preliminary; subject to change.
† CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by FactSet Research Systems Inc. on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services. None of the County, the Underwriter, their agents, or counsel is responsible for the selection or uses of the CUSIP numbers, and no representation is made as to their correctness on the applicable Bonds or as included herein. The CUSIP numbers of specific maturities is subject to change following the issuance of the 2026 Bonds as a result of various actions, including, but not limited to, a refunding in whole or in part or as the result of the procurement of a secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the 2026 Bonds.

C Priced at par call on September 1, 20___.

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No dealer, broker, salesperson or other person has been authorized by the County or the Authority to give any information or to make any representation other than those contained herein and, if given or made, such other information or representation must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of any offer to buy nor shall there be any sale of the 2026 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers of the 2026 Bonds. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of facts.

Information contained in APPENDIX A–“THE PARTICIPANTS” has been obtained from the respective Participant. All other information set forth herein has been obtained from the County or the Authority and from other sources and is believed to be reliable but is not guaranteed as to accuracy or completeness. The information and expressions of opinions herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the County, the Authority or the Participants since the date hereof. This Official Statement is submitted in connection with the sale of the 2026 Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose, unless authorized in writing by the County. All summaries of the documents and laws are made subject to the provisions thereof and do not purport to be complete statements of any or all such provisions. All capitalized terms used herein, unless noted otherwise, shall have the meanings prescribed in the Indenture and the Pledge Agreement. This Official Statement, including any supplement or amendment hereto, is intended to be deposited with the Electronic Municipal Market Access site maintained by the Municipal Securities Rulemaking Board.

Any statement made in this Official Statement involving any forecast or matter of estimates or opinion, whether or not expressly stated, is intended solely as such and not as a representation of fact. Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended (the “Securities Act”). Such forward-looking statements are generally identified by use of the words “plan,” “project,” “expect,” “estimate,” “budget” or other similar words. Such forward-looking statements include, but are not limited to, statements contained under the caption “PLAN OF REFUNDING” and in APPENDIX A–“THE PARTICIPANTS.” Such forward-looking statements refer to the achievement of certain results or other expectations or performance which involve known and unknown risks, uncertainties and other factors. These risks, uncertainties and other factors may cause actual results, performance or achievements to be materially different from any projected results, performance or achievements described or implied by such forward looking statements. Neither the County nor the Authority plans to issue updates or revisions to such forward-looking statements if or when the expectations, events, conditions or circumstances on which such statements are based, occur, or if actual results, performance or achievements are materially different from any results, performance or achievements described or implied by such forward-looking statements.

The 2026 Bonds have not been registered with the Securities and Exchange Commission by reason of the provisions of Section 3(a)(2) of the Securities Act of 1933, as amended. The registration or qualification of the 2026 Bonds in accordance with applicable provisions of Securities Laws of the states in which these Bonds have been registered or qualified, and the exemption from registration or qualification in other states, shall not be regarded as a recommendation thereof. Neither these states nor any of their agencies have passed upon the merits of the securities or the accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense.

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

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The Underwriter may offer and sell the 2026 Bonds to certain dealers, institutional investors and others at prices lower than the public offering prices stated on the inside cover page hereof, and said public offering prices may be changed from time to time by the Underwriter.

The County, the Flood Control District and each Participant maintains a website. Unless specifically indicated otherwise, the information presented on those websites is not incorporated by reference as part of this Official Statement and should not be relied upon in making investment decisions with respect to the 2026 Bonds. [[INSURER] (the “2026 Insurer”) makes no representation regarding the 2026 Bonds or the advisability of investing in the 2026 Bonds. In addition, the 2026 Insurer has not independently verified, makes no representation regarding, and does not accept any responsibility for the accuracy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom, other than with respect to the accuracy of the information regarding the 2026 Insurer, supplied by the 2026 Insurer and presented under the heading “BOND INSURANCE” and APPENDIX G–”SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”]

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Attachment 2

SLO COUNTY FINANCING AUTHORITY
James W. Hamilton, CPA, County Auditor-Controller-Treasurer-Tax Collector, Chair Matthew P. Pontes, County Chief Executive Officer, Secretary Katie Girardi, San Luis Obispo County Pension Trust Executive Director, Member

PARTICIPANTS
Atascadero Mutual Water Company
City of El Paso de Robles
City of San Luis Obispo
Templeton Community Services District

SPECIAL SERVICES
Norton Rose Fulbright US LLP
Los Angeles, California
Bond Counsel and Disclosure Counsel
KNN Public Finance, LLC
Berkeley, California
Municipal Advisor
U.S. Bank Trust Company, National Association
Los Angeles, California
Trustee

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i

TABLE OF CONTENTS
Page Page
INTRODUCTION .......................................................... 1 General; Purpose; Authority for Issuance............... 1 The Nacimiento Project.......................................... 2 The Authority ......................................................... 2 The Flood Control District ..................................... 2 The Participants...................................................... 2 Security and Sources of Payment........................... 3 Additional Bonds ................................................... 4 Certain Risk Factors............................................... 5 Continuing Disclosure............................................ 5 Reference to Documents ........................................ 5 THE FLOOD CONTROL DISTRICT............................ 6 General................................................................... 6 Nacimiento Dam .................................................... 6 PLAN OF REFUNDING................................................ 8 ESTIMATED SOURCES AND USES OF FUNDS .... 10
THE 2026 BONDS....................................................... 13 General................................................................. 13 Redemption Provisions ........................................ 13 Redemption Procedures........................................ 13

SECURITY AND SOURCES OF PAYMENT FOR
THE BONDS................................................................ 14 General................................................................. 14 Flow of Funds ...................................................... 15 Pledge Agreement ................................................ 15 The Delivery Contracts ........................................ 17 Covenants Under the Delivery Contracts............. 20
Reserve Fund........................................................ 28 Investments of Amounts on Deposit Under the
Indenture ......................................................... 29 Existing Obligations of the Participants............... 29 Additional Bonds ................................................. 29 Indenture Events of Default and Remedies.......... 30
Limited Obligations ............................................. 31 [BOND INSURANCE.................................................. 32 Bond Insurance Policy ......................................... 32 CERTAIN RISKS TO BOND OWNERS .................... 33
General................................................................. 33 Statutory and Regulatory Impact ......................... 33 No Obligation to Tax ........................................... 33 Drought................................................................ 33 Climate Change ................................................... 36 Earthquakes, Floods, and Other Disasters ........... 36 Wildfires .............................................................. 37 Water Quality and PFAS...................................... 37 [Risks Associated with Bond Insurance............... 38 Investment of Funds............................................. 39 Limitations on Remedies and Bankruptcy ........... 39
Cybersecurity....................................................... 39 Limited Liability of Authority to the Owners...... 40
Changes in Law ................................................... 40

CONSTITUTIONAL AND STATUTORY

LIMITATIONS ON TAXES AND
APPROPRIATIONS .................................................... 40 Article XIII A of the California Constitution ....... 40 Article XIII B of the California Constitution....... 41 Article XIII C and Article XIII D of the California
Constitution .................................................... 42 Future Initiatives.................................................. 44 FINANCIAL STATEMENTS...................................... 44 CONTINUING DISCLOSURE ................................... 44 Flood Control District.......................................... 44 The Participants................................................... 45 TAX MATTERS.......................................................... 45 LITIGATION............................................................... 47 Steinbeck Vineyards and Eidemiller.................... 47 Authority and Flood Control District................... 48 Participants .......................................................... 48 LEGAL MATTERS ..................................................... 48 MUNICIPAL ADVISOR............................................. 49 RATINGS..................................................................... 49 UNDERWRITING....................................................... 49 MISCELLANEOUS..................................................... 49

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ii

INDEX OF MAPS AND TABLES
Page
Table 1 – 2015 Bonds to be Refunded...........................................................................................................................9 Table 2 – Estimated Sources and Uses of Funds.........................................................................................................10 Table 3 – Debt Service Schedule.................................................................................................................................11 Table 4 – Nacimiento Capital Installment Debt Service Allocation............................................................................18 Table 5 – Delivery Contract Payments........................................................................................................................21 Table 6 – Delivery Entitlement Share..........................................................................................................................22 Table 7 – Capital Reserve and Operation and Maintenance Costs..............................................................................23 Table 8 – Nacimiento Project and Bond Legal Structure ............................................................................................26

APPENDICES
APPENDIX A-THE PARTICIPANTS......................................................................................................................A-1 Appendix A1-Atascadero Mutual Water Company ..................................................... A1-1 Appendix A2-City of El Paso De Robles..................................................................... A2-1 Appendix A3-City of San Luis Obispo ........................................................................ A3-1 Appendix A4-Templeton Community Services District .............................................. A4-1 APPENDIX B-THE DELIVERY CONTRACTS......................................................................................................B-1 APPENDIX C-FORMS OF PRINCIPAL LEGAL DOCUMENTS...........................................................................C-1 APPENDIX D-FORMS OF CONTINUING DISCLOSURE AGREEMENTS.........................................................D-1 APPENDIX E-PROPOSED FORM OF BOND COUNSEL OPINION ....................................................................E-1 APPENDIX F-DTC AND THE BOOK-ENTRY ONLY SYSTEM .......................................................................... F-1 [APPENDIX G-SPECIMEN MUNICIPAL BOND INSURANCE POLICY.......................................................... G-1]

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iii
Unit Map for Nacimiento Water Project

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ii

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Attachment 2
1 OFFICIAL STATEMENT
$[PAR]*

SLO COUNTY FINANCING AUTHORITY
(COUNTY OF SAN LUIS OBISPO, CALIFORNIA)

NACIMIENTO WATER PROJECT

REVENUE REFUNDING BONDS,
2026 SERIES A

INTRODUCTION
This Introduction contains only a brief summary of the terms of the 2026 Bonds being offered and a brief description of this Official Statement. A full review should be made of the entire Official Statement, including the inside cover through the Appendices. All statements contained in this Introduction are qualified in their entirety by reference to the entire Official Statement. All capitalized terms used in this Official Statement and not otherwise defined herein have the meanings given to such terms as set forth in the Indenture (defined below). See APPENDIX C–“FORMS OF PRINCIPAL LEGAL DOCUMENTS.”
General; Purpose; Authority for Issuance
This Official Statement, which includes the cover page through the Appendices hereto (the “Official Statement”), provides certain information concerning the issuance by the SLO County Financing Authority (the “Authority”) of $[PAR]* principal amount of SLO County Financing Authority (County of San Luis Obispo, California) Nacimiento Water Project Revenue Refunding Bonds, 2026 Series A (the “2026 Bonds”).

The proceeds from the issuance of the 2026 Bonds will be used to: (i) provide funds to effect a current refunding of all of the SLO County Financing Authority Nacimiento Water Project Revenue Refunding Bonds, 2015 Series A (the “2015 Bonds”) outstanding on the date of issuance of the 2026 Bonds; [(ii) purchase a municipal bond insurance policy for the 2026 Bonds;] and (iii) pay certain costs associated with the issuance of the 2026 Bonds, all as more fully described herein. See “PLAN OF REFUNDING” and “ESTIMATED SOURCES AND USES OF FUNDS.”
The 2015 Bonds were issued to advance refund a portion of the Authority’s then outstanding Nacimiento Water Project Revenue Bonds, 2007 Series A, thereby refinancing the costs of the acquisition, construction and equipping of certain public capital improvements within the County of San Luis Obispo, California (the “County”), generally comprising the Nacimiento Water Project (the “Nacimiento Project”).

The 2026 Bonds will be issued and secured pursuant to the terms of an Indenture of Trust, dated as of September 1, 2007 (the “Original Indenture”), previously supplemented and amended, and as further supplemented and amended by the Third Supplemental Indenture of Trust, dated as of [October 1], 2026 (the “Third Supplemental Indenture” and together with the Original Indenture, as previously supplemented and amended, the “Indenture”), each by and between the Authority and U.S. Bank Trust Company, National Association, as successor trustee (the “Trustee”). The Authority is a joint exercise of powers authority established pursuant to an agreement between the County and the San Luis Obispo County Flood Control and Water Conservation District (the “Flood Control District”).

The 2026 Bonds are obligations of the Authority payable solely from and secured by Revenues (as defined in the Indenture). The Revenues consist primarily of gross water sales revenues of the Water Enterprises of the Participants (each as defined herein) payable to the Flood Control District pursuant to individual Water Delivery Entitlement Contracts, as amended (each, a “Delivery Contract”), between the Flood Control District and the respective Participant. Pursuant to each Delivery Contract, each Participant has covenanted to pay its pro rata share of various capital expenses relating to the funding of design costs, engineering, planning, mapping, acquiring easements and right-of-way, and construction in connection with the Nacimiento Project, including Additional Capital Project Costs, Capital Projects Installment Debt Service, Master Water Contract Costs, Capital Reserve Costs, Operation and

* Preliminary; subject to change.

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Attachment 2
2 Maintenance Costs, Variable Energy Costs (each as defined herein) and other costs associated with the Nacimiento Project.

Pursuant to a Pledge Agreement dated as of September 1, 2007 (the “Pledge Agreement”), by and between the Flood Control District and the Authority, the Flood Control District pledges the Capital Projects Installment Debt Service from each Participant, the Flood Control District’s Net Revenues, and all amounts in the Water Fund (each as defined in the Pledge Agreement) to the Authority. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–Pledge Agreement” and “–The Delivery Contracts.”
The Nacimiento Project
The Nacimiento Project consists of a multi-port sloping intake facility at Lake Nacimiento with a pump station, two intermediate pump stations, three storage tanks, a control system, and approximately 45 miles of transmission pipeline ranging from 36-inches to 12-inches in diameter, with the ability to deliver 15,750 acre-feet of raw water each year to communities within the County, including the Participants (defined below). The Nacimiento Project became operational on January 7, 2011.

The Authority
The Authority is a joint exercise of powers authority established pursuant to an agreement between the County and the Flood Control District. See “THE AUTHORITY.” The Flood Control District
The Flood Control District was formed in 1945 through the enactment of the San Luis Obispo County Flood Control and Water Conservation District Act. See “THE FLOOD CONTROL DISTRICT.” The Participants
The Participants to the Delivery Contracts are: (i) Atascadero Mutual Water Company (“AMWC”), (ii) City of El Paso de Robles (“Paso Robles”), (iii) City of San Luis Obispo (“SLO”), and (iv) Templeton Community Services District (“Templeton”).

The County of San Luis Obispo Service Area 10, Zone A (“CSA 10”), Bella Vista MHP, LLC (“Bella Vista”), and SMR Mutual Water Company (“SMR”) have also entered into Water Delivery Entitlement Contracts with the Flood Control District, however, those contracts do not provide payments or security for the 2026 Bonds, and none of CSA 10, Bella Vista, or SMR are Participants.

The Flood Control District entered into a Water Delivery Entitlement Contract, dated as of August 17, 2004, as amended, with AMWC (the “AMWC Delivery Contract”); a Water Delivery Entitlement Contract, dated as of August 17, 2004, as amended, with Paso Robles (the “Paso Robles Delivery Contract”); a Water Delivery Entitlement Contract, dated as of August 17, 2004, as amended, with SLO (the “SLO Delivery Contract”); and a Water Delivery Entitlement Contract, dated as of August 17, 2004, as amended, with Templeton (the “Templeton Delivery Contract” and collectively with the AMWC Delivery Contract, the Paso Robles Delivery Contract, the SLO Delivery Contract and the Templeton Delivery Contract, the “Original Water Delivery Entitlement Contracts”). Each Original Water Delivery Entitlement Contract was amended by the Memorandum of Understanding (First Amendment to Nacimiento Project Water Delivery Entitlement Contract), the Second Amendment to the Nacimiento Project Water Delivery Entitlement Contract, and the Third Amendment (Full Allocation) to the Nacimiento Project Water Delivery Entitlement Contract (the “Third Amendment,” and as so amended, collectively, the “Existing Water Delivery Entitlement Contracts”), pursuant to which each Participant, CSA 10, Bella Vista, and SMR agreed to pay its share of various capital expenses relating to the funding of design costs, engineering, planning, environmental mitigation, equipping new facilities and/or construction efforts, accounting services, project administration and management, installation, grading, razing and building the Nacimiento Project. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–The Delivery Contracts” and APPENDIX A–“THE PARTICIPANTS.”

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3 The Flood Control District also entered into a Water Delivery Entitlement Contract, dated as of October 24, 2006, as amended (the “CSA 10 Delivery Contract”), by and between the Flood Control District and the County, acting on behalf of CSA 10; a Water Delivery Entitlement Contract, dated as of April 2016 with Bella Vista (the “Bella Vista Delivery Contract”); and a Water Delivery Contract, dated as of April 2016 with SMR (the “SMR Delivery Contract,” and collectively with the Existing Water Delivery Entitlement Contracts, the CSA 10 Delivery Contract, the Bella Vista Delivery Contract, the “Delivery Contracts”). CSA 10, Bella Vista, and SMR have no obligation with respect to the Bonds, and the CSA 10 Delivery Contract, the Bella Vista Delivery Contract, and the SMR Delivery Contract do not provide payments or security for the 2026 Bonds.

Security and Sources of Payment
The 2026 Bonds will be obligations of the Authority payable solely from and secured by the Revenues and any other amounts held in the funds and accounts established pursuant to the Indenture (excepting the Rebate Fund); provided, however, that amounts on deposit in the Tax-Exempt Reserve Account are available to pay debt service solely on Bonds issued pursuant to the Indenture, the interest upon which is excluded from gross income for purposes of federal income taxation, including the 2018 Bonds and the 2026 Bonds (collectively, the “Tax-Exempt Bonds”).

As defined in the Indenture, the term “Revenues” means: (i) all amounts derived from the Pledge Agreement, and (ii) investment income with respect to the funds and accounts established under the Indenture, except for investment earnings on the Rebate Fund. Pursuant to the Pledge Agreement, the Flood Control District has pledged the Water Revenues (defined herein) pursuant to the respective Delivery Contracts to the Authority under the terms and conditions of the Pledge Agreement.

As used herein, the term “Water Revenues” means, collectively, the Capital Projects Installment Debt Service due from each Participant, including Delinquent Debt Service Payments and the interest thereon, together with the Net Revenues of the Flood Control District. As provided in the Delivery Contracts, and in order to carry out and effectuate the pledge and lien contained therein, the Flood Control District has covenanted that all Water Revenues will be received by the Flood Control District in trust and deposited when and as received into the Nacimiento Water Fund, which fund the Flood Control District maintains and holds in trust separate and apart from other funds so long as any Bonds remain unpaid. During the term of the Pledge Agreement, the Flood Control District is required to withdraw amounts from the Nacimiento Water Fund on each Payment Date for deposit into the Revenue Fund to be applied by the Trustee to pay interest then coming due and maturing or called principal of the 2026 Bonds. Revenues of each Participant consist principally of gross water sales revenues of the Participant’s Water Enterprise (as defined herein). See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–The Delivery Contracts.” To date, there have been no Delinquent Debt Service Payments by the Participants.

Under its Delivery Contract, the respective Participant has: (i) covenanted, inter alia, to pay its share of various capital expenses relating to the funding of design costs, engineering, planning, environmental mitigation, equipping new facilities and/or construction efforts, accounting services, project administration and management, installation, grading, razing and building of the Nacimiento Project; (ii) severally and not jointly, pledged certain revenues (collectively, the “Capital Projects Installment Debt Service,” as more particularly defined in the Pledge Agreement) to be collected by their respective water enterprises (collectively, the “Water Enterprises”); (iii) pledged the gross water sales revenues of its respective Water Enterprise to the payment of total Nacimiento Project Construction Costs; (iv) established rates and charges sufficient to pay its obligations under its Delivery Contract; and (v) made certain other covenants with respect thereto. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–The Delivery Contracts–Gross Pledge and Covenants of Participants” and APPENDIX B–“THE DELIVERY CONTRACTS.”
Subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth in the Indenture, all of the Revenues and any other amounts (including proceeds of the sale of the Bonds) held in the funds and accounts established pursuant to the Indenture (excepting the Rebate Fund) are pledged by the Authority to secure the full and timely payment of the principal of and interest and premium, if any, of the Bonds, and amounts owing to the respective Insurer of the 2007 Taxable Bonds and the 2018 Bonds (each defined below), in accordance with their terms and the provisions of the Indenture. Such pledge constitutes a lien on and security interest in such assets.

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4 The obligation of the Flood Control District to make payments to the Authority under the Pledge Agreement is a special obligation of the Flood Control District payable solely from Water Revenues, the Nacimiento Water Fund and other funds described in the Pledge Agreement, and does not constitute a debt of the Flood Control District or of the State of California or of any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction.

THE 2026 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM

REVENUES OF THE AUTHORITY CONSISTING PRIMARILY OF PAYMENTS MADE BY THE

PARTICIPANTS TO THE FLOOD CONTROL DISTRICT UNDER THE DELIVERY CONTRACTS AND RECEIVED BY THE AUTHORITY PURSUANT TO THE PLEDGE AGREEMENT. THE 2026 BONDS ARE NOT

A DEBT OF THE AUTHORITY, THE FLOOD CONTROL DISTRICT, THE PARTICIPANTS, THE COUNTY

OR THE STATE OF CALIFORNIA, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE AUTHORITY SHALL NOT BE OBLIGATED TO PAY THE PRINCIPAL OF, OR INTEREST ON THE 2026 BONDS, EXCEPT FROM THE FUNDS PROVIDED UNDER THE INDENTURE AND THE PLEDGE AGREEMENT. NEITHER THE FULL FAITH AND CREDIT NOR THE TAXING POWER OF

THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF, INCLUDING THE AUTHORITY, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE 2026 BONDS. THE AUTHORITY HAS NO TAXING POWER.

Outstanding Parity Bonds. The Authority has previously issued under the Indenture, and there will be outstanding following the refunding of the 2015 Bonds, the SLO County Financing Authority Nacimiento Water Project Revenue Bonds, 2007 Series B (Taxable) (the “2007 Taxable Bonds”), in the principal amount of $25,660,000 and the SLO County Financing Authority Nacimiento Water Project Revenue Refunding Bonds, 2018 Series A (the “2018 Bonds”), in the principal amount of $21,745,000. The 2007 Taxable Bonds and the 2018 Bonds are secured by Revenues on a parity with the 2026 Bonds.

The scheduled payment of the principal of and interest on the 2007 Taxable Bonds is insured by a financial guaranty insurance policy issued by National Public Finance Guarantee Corporation, successor to MBIA Insurance Corporation (the “2007 Insurer”). The scheduled payment of principal of and interest on the 2018 Bonds is guaranteed under a separate municipal bond insurance policy issued concurrently with the delivery of the 2018 Bonds by Build America Mutual Assurance Company (the “2018 Insurer”). See “PLAN OF REFUNDING.” Reserve Fund. Pursuant to the Indenture a reserve fund, which includes a Tax-Exempt Reserve Account and a Taxable Reserve Account (each a “Reserve Account” and together, the “Reserve Fund”) was established as security for the Tax-Exempt Bonds and the Taxable Bonds, within each Reserve Account funded in an amount equal to the applicable Reserve Requirement (as defined herein). Amounts on deposit in the Tax-Exempt Reserve Account are available to pay debt service solely on the 2018 Bonds and the 2026 Bonds. Amounts on deposit in the Taxable Reserve Account are available to pay debt service solely on the 2007 Taxable Bonds. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–Reserve Fund.”
[Bond Insurance. Concurrently with the issuance of the 2026 Bonds, [INSURER] (the “2026 Insurer”) will issue its Municipal Bond Insurance Policy for the 2026 Bonds (the “Policy”). The Policy guarantees the scheduled payment of principal of and interest on the 2026 Bonds when due as set forth in the form of the Policy included as an exhibit to this Official Statement.

The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law.]
Additional Bonds
The Authority may issue one or more additional series of Bonds secured by a pledge of Revenues on a parity with the 2026 Bonds. The Indenture does not require satisfaction of any debt service coverage ratio condition to issue Additional Bonds. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–Additional Bonds.”

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5 Certain Risk Factors
An investment in the 2026 Bonds involves risk. For a discussion of certain risk factors associated with investment in the 2026 Bonds, see “CERTAIN RISKS TO BOND OWNERS” as well as other factors discussed throughout this Official Statement.

Continuing Disclosure
Flood Control District. The Flood Control District has covenanted for the benefit of the beneficial owners of the 2026 Bonds to provide certain financial information and operating data relating to the Flood Control District by no later than March 31 of each year commencing with the report due on March 31, 2027 for the Fiscal Year ended June 30, 2026 (each a “Flood Control District Annual Report”), and to provide notices of the occurrence of certain specified events. The Annual Report and notices of specified events will be filed by the Flood Control District or Digital Assurance Certification, L.L.C., as dissemination agent to the Flood Control District with the Municipal Securities Rulemaking Board (the “MSRB”) through its Electronic Municipal Market Access (“EMMA”) site. See “CONTINUING DISCLOSURE” and APPENDIX D–“FORMS OF CONTINUING DISCLOSURE AGREEMENTS–SAN LUIS OBISPO COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT CONTINUING DISCLOSURE AGREEMENT.” These covenants have been made in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12.

Participants. Each Participant has covenanted to provide certain financial and operating data relating to such Participant by no later than nine months following the end of the fiscal year of each Participant commencing with the report due in 2027 for the respective fiscal year ended in 2026 (each a “Participant Annual Report”). Each Participant Annual Report will be filed by the Participant or the Flood Control District, as dissemination agent to each Participant, with the MSRB through its EMMA site.

The fiscal year-end for AMWC is April 30 and the fiscal year-end for Paso Robles, SLO, and Templeton is June 30. See “CONTINUING DISCLOSURE” and APPENDIX D–“FORMS OF CONTINUING DISCLOSURE AGREEMENTS–PARTICIPANTS CONTINUING DISCLOSURE AGREEMENTS.” Reference to Documents
The summaries and descriptions in this Official Statement of the Indenture, the 2026 Bonds, the Pledge Agreement, the Delivery Contracts, the Continuing Disclosure Agreements, and other agreements relating to the 2026 Bonds are qualified in their entirety by reference to such documents, and the descriptions herein of the 2026 Bonds are qualified in their entirety by the form thereof and the information with respect thereto included in such documents.

All capitalized terms used herein, unless noted otherwise, shall have the meanings prescribed in the Indenture and the Pledge Agreement. See APPENDIX C–“FORMS OF PRINCIPAL LEGAL DOCUMENTS.”

THE AUTHORITY
General
The Authority was created pursuant to a Joint Exercise of Powers Agreement, dated as of August 15, 2000 (the “Joint Powers Agreement”), between the County and the Flood Control District. The Joint Powers Agreement was entered into pursuant to the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title I of the California Government Code. The Authority was created to issue bonds for the purpose of financing all or a portion of the costs of the purchase, construction, expansion, improvement, or rehabilitation of any real or other tangible property for the County and the Flood Control District and to borrow money for the purpose of financing the acquisition of bonds, notes and other obligations to provide financing and refinancing for such capital improvements of the County and the Flood Control District. The Joint Powers Agreement may be amended at any time, or from time to time, except as limited by contract with the holders of bonds issued by the Authority or certificates of participation in payments to be made by the Authority or its members or by applicable regulations or laws of any jurisdiction having authority, including to provide for the addition of new parties.

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6 Governance and Management
Pursuant to the Joint Powers Agreement, the Authority is administered by a three-member Board of Commissioners, two of whom are appointed by the County and one who is appointed by the Flood Control District.

The current Commissioners of the Authority are:

Member Title
James W. Hamilton, CPA, County Auditor- Controller-Treasurer-Tax Collector Chair Matthew P. Pontes, County Chief Executive Officer Secretary Katie Girardi, SLO Pension Trust Executive Director Member County Counsel serves as the Legal Advisor to the Authority. The Chief Executive Officer of the County currently serves as the Authority’s Secretary.

THE FLOOD CONTROL DISTRICT
General
The Flood Control District was formed in 1945 pursuant to State Legislation through the enactment of the San Luis Obispo County Flood Control and Water Conservation District Act. The Flood Control District is Countywide and has as its governing body the Board of Supervisors. Other key staff include: the Director of Public Works, Public Works Finance Division Manager, Utilities Division Manager, and Nacimiento Water Project Supervising Engineer. The purposes of the Flood Control District are:
 to provide for the control, disposition, and distribution of the flood and storm waters of the Flood Control District and the flood and storm waters of the streams that flow into the Flood Control District;
 to prevent the waste or diminution of the water supply to the Flood Control District;  to conserve flood and storm waters by spreading, storing, retaining, and causing these waters to percolate into Flood Control District soils;
 to retain these waters for beneficial use, such as the purchase and sale thereof within the Flood Control District;
 to protect watercourses, watersheds, public highways, life and property from damage or destruction from these waters; and
 to provide for recreation activities incidental to and in connection with said purposes.

The County Public Works Department manages and operates the Nacimiento Project on behalf of the Flood Control District. In addition, the Public Works Department manages over 50 separate facilities and special districts, including two dams, four wholesale water systems, three retail water systems, two water treatment plants, and three sewer treatment plants.

Nacimiento Dam
Overview. Nacimiento Dam and Reservoir (“Nacimiento”) is located in the northern part of the County and owned and operated by the Monterey County Water Resources Agency (the “MCWRA”), as successor-in-interest to the Monterey County Flood Control and Water Conservation District for the combined goals of flood protection, water conservation, operation of the Salinas Valley Water Project, and recreation, with safety being the primary consideration.

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7 Nacimiento, completed in 1957, is an earthfill dam with a height of 215 feet above the streambed and a crest length of 1,650 feet. When Nacimiento is full (elevation 800 feet) it has a maximum storage capacity of 377,900 acrefeet, is 18 miles long, and has about 165 miles of shoreline, making it the largest reservoir in the County. The maximum elevation during flood stage is 825 feet, with a maximum temporary capacity of 538,000 acre feet and a temporary surface area of 7,149 acres.

Master Water Contract. The Flood Control District and MCWRA entered into an agreement, dated October 19, 1959, as amended (collectively, the “Master Water Contract”), pursuant to which MCWRA agrees, among other things, to provide up to 17,500 acre feet of water per year from Nacimiento to the Flood Control District.

Pursuant to the Master Water Contract, none of the Authority, the County, or the Flood Control District is liable for any maintenance costs for Nacimiento.

Extensive repairs and upgrades were made to the Nacimiento spillway in the 1970s, and additional upgrades were completed in the early 2000s that included: a new gate system; raising and strengthening spillway chute walls; anchoring the chute walls with “sister” walls; strengthening and anchoring approach channel walls; modifying the High-Level Gate Operations System with an upgraded mechanical system; and strengthening the bridge pier with steel reinforced concrete.
[DSOD Review. In light of the lessons learned from the March 2017 failure of the Lake Oroville spillways incident, in September 2017, the State Division of Safety of Dams (the “DSOD”) released updated information on the 1,249 dams under its jurisdiction, including Nacimiento. The updated DSOD information (the “2017 DSOD Update”) for each dam included: (i) downstream hazard classifications; (ii) condition assessment; and (iii) reservoir restriction status, reflecting the most recent physical inspections and comprehensive re-evaluations by DSOD engineers and engineering geologists, and technical analyses performed by dam owners at that time.  Downstream Hazard Classification. The downstream hazard classification identified for a dam is based solely on the size of the dam’s reservoir and population that would be impacted by a dam failure; it does not reflect the condition of the dam or its structures.

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8 The hazard classification is used in part to prioritize development of inundation maps and emergency action plans. Dams are classified as high hazard if at least one person is at risk downstream in the event of a dam failure, and extremely high hazard if the loss of human life is considerable. Using this standard, the Nacimiento downstream hazard was classified as extremely high hazard.  Condition Assessments. DSOD dam condition assessments are based on five condition ratings from the U.S. Army Corps of Engineers National Inventory of Dams, with some minor modifications.

The ratings include satisfactory, fair, poor, unsatisfactory, and not rated. Dams rated as satisfactory have no identified deficiencies. Dams rated as fair, poor or unsatisfactory have at least one identified deficiency.

Nacimiento was rated satisfactory, meaning it had no identified deficiencies. Dam condition assessments may change from year to year as repair work is completed or new deficiencies are identified.  Reservoir Restrictions. The 2017 DSOD Update for Nacimiento did not contain any reservoir restrictions at the time.

Following the 2017 DSOD review, MCWRA, with oversight from the DSDOD, completed necessary repair work for the Nacimiento and Lake San Antonio spillways. The repairs that were completed permitted full operations of Nacimiento and water storage.

Assembly Bill No. 1270 (“AB 1270”), signed by the Governor on February 26, 2018, requires the DSOD to, among other things, annually inspect each fiscal year all dams, groins, abutments, spillways, outlet works, and toe areas, other than those classified as low hazard potential.

Based on the information shared with the County in July 2025, Nacimiento continues to hold a satisfactory rating from the DSOD, meaning no deficiencies were identified that would alter the dam’s regulatory condition or operational status. As part of ongoing DSOD oversight, Monterey County has identified a series of required dam‑ safety projects necessary to maintain compliance with current dam‑ safety standards. These projects include spillway rehabilitation, spillway evaluation and repairs, plunge‑ pool erosion control, low‑ level outlet improvements, embankment seismic stability evaluation and implementation, spillway bridge maintenance, and related structural and operational upgrades.

The list of Nacimiento dam‑ safety subprojects provided in July 2025 includes eleven components with a combined estimated cost of approximately $83.8 million (2023 dollars) and an associated unfunded need of roughly $73 million after accounting for identified grant funding. These dam‑ safety and spillway projects are under the responsibility and jurisdiction of the MCWRA, which continues coordination with DSOD on required assessments and compliance actions.

Because Nacimiento is owned and operated by the MCWRA, none of the Authority, the County, or the Flood Control District has conducted an independent assessment of Nacimiento, nor do any of them have an obligation to so. None of the Authority, the County, or the Flood Control District can make any prediction as to the safety or condition of Nacimiento, nor can any assurances be given regarding the accuracy of updates from the DSOD or the conclusions contained therein, or the effect AB 1270 will have on future operations of Nacimiento.][to be confirmed]

PLAN OF REFUNDING
The proceeds of the 2026 Bonds will be used by the Authority to provide funds to (i) refund all of the 2015 Bonds outstanding on the date of issuance of the 2026 Bonds; [(ii) purchase a municipal bond insurance policy for the 2026 Bonds; and (iii) pay certain costs associated with the issuance of the 2026 Bonds. See also “ESTIMATED SOURCES AND USES OF FUNDS.”
The Authority issued $107,115,000 original principal amount of the 2015 Bonds pursuant to the Original Indenture, of which $80,160,000 aggregate principal amount is currently outstanding. The 2015 Bonds maturing on September 1, 2026 in the principal amount of $4,680,000 will be maturing before the issuance of the 2026 Bonds. A portion of the proceeds from the issuance of the 2026 Bonds will be deposited with the Trustee which, together with

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9 certain moneys on deposit under the Indenture, will be sufficient and will be used to pay on [___], 2026, the date of issuance of the 2026 Bonds, the redemption price equal to 100% of the principal amount of the 2015 Bonds to be refunded, plus accrued and unpaid interest thereon to such date.

The following table details the maturity dates and principal amounts of the 2015 Bonds expected to be refunded by the 2026 Bonds. The particular maturities and principal amounts of such maturities of the 2015 Bonds to be refunded will be determined by the Authority in its sole discretion at the time of sale of the 2026 Bonds.

Table 1
2015 Bonds to be Refunded
$75,480,000*
SLO County Financing Authority
Nacimiento Water Project Revenue Refunding Bonds
2015 Series A
Dated Date: August 19, 2015
Redemption Date: [___], 2026
Redemption Price: 100%
Maturity
(September 1) Principal Amount Interest Rate CUSIP†
2027 $ 2,395,000 5.000% 798693DJ3
2027 2,500,000 3.000 798693DT1
2028 3,605,000 5.000 798693DK0
2028 1,500,000 3.125 798693DU8
2029 1,170,000 5.000 798693DL8
2029 4,145,000 3.250 798693DV6
2030 5,370,000 5.000 798693DM6
2030 185,000 3.375 798693DW4
2031 2,300,000 5.000 798693DN4
2031 3,500,000 3.500 798693DX2
2032 4,565,000 5.000 798693DP9
2032 1,500,000 3.625 798693DY0
2033 3,850,000 5.000 798693DQ7
2033 2,500,000 3.625 798693DZ7
2034 4,135,000 5.000 798693DR5
2034 2,500,000 3.750 798693EA1
2037T 11,500,000 5.000 798693EB9
2038T 18,260,000 4.000 798693DS3
* Preliminary; subject to change.
† CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, managed by FactSet Research Systems Inc. on behalf of the American Bankers Association. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Services.

T Term Bonds.

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10 ESTIMATED SOURCES AND USES OF FUNDS
The proceeds to be received from the sale of the 2026 Bonds are estimated to be applied as set forth in the following table:

Table 2
Estimated Sources and Uses of Funds
Sources of Funds:

Par Amount of 2026 Bonds $
[Net] Original Issue Premium
Funds held under the Indenture
Total Sources
Uses of Funds:

Redemption of Refunded 2015 Bonds(1) $
Costs of Issuance(2)
Underwriter’s Discount
Total Uses $
(1) See “PLAN OF REFUNDING.”
(2) Includes fees of the County, Bond and Disclosure Counsel, the Municipal Advisor, the Trustee, [the premium for the municipal bond insurance policy,] fees relating to the credit ratings, printing, accounting and other costs associated with the issuance of the 2026 Bonds. [Remainder of page intentionally left blank.]

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11 DEBT SERVICE SCHEDULE
The following table presents the semi-annual and Fiscal Year debt service for Outstanding Bonds following the issuance of the 2026 Bonds, excluding the 2015 Bonds. See “PLAN OF REFUNDING.”
Table 3
Debt Service Schedule*
2007 Taxable Bonds 2018 Bonds 2026 Bonds Total
Fiscal Year Debt
Date Principal Interest Total Principal Interest Total Principal Interest Total Service 9/1/2026 $1,180,000 $747,628 $1,927,628 $260,000 $408,463 $668,463 3/1/2027 — 714,759 714,759 — 401,963 401,963
9/1/2027 1,245,000 714,759 1,959,759 275,000 401,963 676,963 3/1/2028 — 680,080 680,080 — 395,088 395,088
9/1/2028 1,315,000 680,080 1,995,080 290,000 395,088 685,088 3/1/2029 — 643,451 643,451 — 387,838 387,838
9/1/2029 1,390,000 643,451 2,033,451 300,000 387,838 687,838 3/1/2030 — 604,732 604,732 — 383,338 383,338
9/1/2030 1,470,000 604,732 2,074,732 305,000 383,338 688,338 3/1/2031 — 563,785 563,785 — 378,763 378,763
9/1/2031 1,555,000 563,785 2,118,785 325,000 378,763 703,763 3/1/2032 — 520,471 520,471 — 373,888 373,888
9/1/2032 1,645,000 520,471 2,165,471 330,000 373,888 703,888 3/1/2033 — 474,649 474,649 — 368,731 368,731
9/1/2033 1,740,000 474,649 2,214,649 335,000 368,731 703,731 3/1/2034 — 426,182 426,182 — 363,288 363,288
9/1/2034 1,840,000 426,182 2,266,182 355,000 363,288 718,288 3/1/2035 — 374,928 374,928 — 357,519 357,519
9/1/2035 1,945,000 374,928 2,319,928 360,000 357,519 717,519 3/1/2036 — 320,750 320,750 — 351,444 351,444
9/1/2036 2,055,000 320,750 2,375,750 375,000 351,444 726,444 3/1/2037 — 263,508 263,508 — 345,116 345,116
9/1/2037 2,170,000 263,508 2,433,508 395,000 345,116 740,116 3/1/2038 — 203,063 203,063 — 338,450 338,450
9/1/2038 2,295,000 203,063 2,498,063 405,000 338,450 743,450 3/1/2039 — 139,136 139,136 — 331,363 331,363
9/1/2039 2,430,000 139,136 2,569,136 8,680,000 331,363 9,011,363 3/1/2040 — 71,448 71,448 — 157,763 157,763
9/1/2040 2,565,000 71,448 2,636,448 9,015,000 157,763 9,172,763 3/1/2041 — — — — — —
TOTAL** $26,840,000 $12,749,512 $39,589,512 $22,005,000 $10,277,567 $32,282,567

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12 * Excludes the 2015 Bonds to be refunded with the 2026 Bonds. ** Row does not total due to independent rounding.

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13 THE 2026 BONDS
General
The 2026 Bonds will be dated their date of original delivery, will be issued in fully registered form, in denominations of $5,000 and any integral multiple thereof and will mature on the dates and in the principal amounts and bear interest at the rates as set forth on the inside cover of this Official Statement.

Interest on the 2026 Bonds shall be payable semiannually on March 1 and September 1 of each year commencing March 1, 2027 (each, an “Interest Payment Date”). The 2026 Bonds, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository of the 2026 Bonds. Ownership interests in the 2026 Bonds may be purchased in bookentry only form. Purchasers will not receive securities certificates representing their interests in the 2026 Bonds purchased. Payments of principal of and interest on the 2026 Bonds will be paid by the Trustee to DTC, which is obligated in turn to remit such principal and interest to its DTC Participants for subsequent disbursement to the beneficial owners of the 2026 Bonds. See APPENDIX F–“DTC AND THE BOOK-ENTRY ONLY SYSTEM.” Interest on the 2026 Bonds will be paid on each Interest Payment Date to the persons in whose name the ownership of the 2026 Bonds is registered on the registration books maintained by the Trustee for the registration of ownership and registration of transfer of the 2026 Bonds as of the close of business on the immediately preceding Record Date, such interest to be paid by check of the Trustee mailed by first class mail, postage prepaid, on each Interest Payment Date to the Owners at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date; or by wire transfer made on such Interest Payment Date to any Owner of $1,000,000 or more in aggregate principal amount of 2026 Bonds who has requested such transfer pursuant to written notice filed with the Trustee on or before the preceding Record Date.

So long as the 2026 Bonds are registered in the name of the Cede & Co., all payments with respect to principal of, and interest on, the 2026 Bonds and all notices with respect to such 2026 Bonds will be made and given, respectively, to DTC.

Redemption Provisions
Optional Redemption for 2026 Bonds.* The 2026 Bonds maturing before September 1, 20[___] are not subject to optional redemption by the Flood Control District.

The 2026 Bonds maturing on and after September 1, 20[___] are subject, at the option of the Authority at the direction of the Flood Control District, to call and redemption from any available source of funds prior to their stated maturity on any date on or after September 1, 20[___], as a whole or in part in the order directed by the Authority, from any source of available funds, at a redemption price equal to the principal amount of the 2026 Bonds to be redeemed, without premium, plus accrued interest thereon to the date fixed for redemption.

Redemption Procedures
Notice of Redemption. Notice of redemption of the 2026 Bonds is required to be mailed by the Trustee, by first-class mail, postage prepaid, to the respective Owners of any 2026 Bonds designated for redemption at their addresses appearing on the Registration Books and to the Securities Depositories and the Information Services at least 30 days but not more than 60 days prior to the redemption date. Each notice of redemption is required to state the redemption date, the place or places of redemption, the CUSIP numbers and numbers of the 2026 Bonds to be redeemed, and in the case of 2026 Bonds to be redeemed in part only, the respective Authorized Denominations of the principal amount thereof to be redeemed. Each such notice is also required to state that on said date there will become due and payable on each of said 2026 Bonds the principal amount relating thereto or of said specified portion of the principal thereof in the case of a 2026 Bond to be redeemed in part only, plus accrued interest, if any, and

* Preliminary; subject to change.

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14 through which date such interest will accrue, and that from and after such date interest thereon shall cease to accrue and shall require that such 2026 Bonds be then surrendered at the Principal Office of the Trustee.

Neither the failure to receive such notice nor any defect in the notice so mailed will affect the sufficiency of the proceedings for redemption of such 2026 Bonds or the cessation of accrual of interest as of the redemption date.

Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of Authorized Denominations equal in aggregate principal amount or maturity amount, as applicable, representing the unredeemed portion of the Bonds so surrendered.

Selection of 2026 Bonds for Partial Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the 2026 Bonds of a maturity, the Trustee shall select the 2026 Bonds to be redeemed from all 2026 Bonds of such maturity not previously called for redemption, as directed by the Authority, at the request of the Flood Control District, or, in the absence of such direction, by lot in any manner which the Authority in its sole discretion shall deem appropriate and fair. For purposes of such selection, all 2026 Bonds shall be deemed to be comprised of separate Authorized Denominations and such separate Authorized Denominations shall be treated as separate 2026 Bonds which may be separately redeemed.

Effect of Notice of Redemption. If notice of redemption has been duly given as specified in the Indenture and moneys for the redemption (including the interest to the applicable date of redemption and including any applicable premium) have been set aside in the Redemption Account or any of the accounts therein, the 2026 Bonds will become due and payable on said date of redemption, and upon presentation and surrender thereof at the Principal Office of the Trustee, said 2026 Bonds will be paid at the redemption price thereof, together with interest accrued and unpaid to said date of redemption and premium, if any.

If on said date of redemption, moneys for the redemption of the 2026 Bonds to be redeemed together with interest to said date of redemption shall be held by the Trustee so as to be available therefor on such date of redemption, and if notice of redemption thereof shall have been given as aforesaid and not cancelled, then from and after said date of redemption interest represented by such 2026 Bonds shall cease to accrue and become payable Purchase in Lieu of Redemption. In lieu of redemption of any 2026 Bond, amounts on deposit in the Principal Account or Redemption Account may also be used and withdrawn by the Trustee at any time, upon the Written Request of the Authorized Representative, for the purchase of such 2026 Bond at public or private sale when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as the Authority may in its discretion determine, in accordance with all applicable laws, so long as such prices do not exceed par.

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
General
The Bonds are obligations of the Authority payable solely from and secured by the Revenues and any other amounts held in the funds and accounts established pursuant to the Indenture (except the Rebate Fund), which amounts are pledged by the Authority to secure the full and timely payment of the principal of and interest and premium, if any, of the 2026 Bonds; provided, however, that amounts on deposit in the Tax-Exempt Reserve Account are available to pay debt service solely on Tax-Exempt Bonds and amounts on deposit in the Taxable Reserve Account are available to pay debt service solely on Taxable Bonds. As defined in the Indenture, the term “Revenues” means: (i) all amounts derived from the Pledge Agreement, and (ii) investment income with respect to the funds and accounts established under the Indenture except for investment earnings on the Rebate Fund. Pursuant to the Pledge Agreement, the Flood Control District has pledged the Water Revenues received from Participants under the Delivery Contracts to the Authority for payment of the Bonds. See “–Pledge Agreement” and “–The Delivery Contracts.”

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15 Flow of Funds
Pursuant to the Indenture, the Authority has established with the Trustee a special fund designated the “Revenue Fund” which the Trustee maintains and holds in trust. Within the Revenue Fund, the Trustee will establish special accounts designated as the “Principal Account” and the “Interest Account” each of which are required to be held and maintained as separate and distinct funds and accounts. The Revenues, except for investment earnings on the Reserve Fund, are required to be promptly transferred to the Trustee by the Authority and deposited by the Trustee upon receipt thereof into the “Revenue Fund” and held, disbursed, allocated and applied by the Trustee only as provided in the Indenture. On each Interest Payment Date, the Trustee is required to transfer the Revenues then in the Revenue Fund into the following funds and accounts the following amounts in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any deposit is made to any account subsequent in priority:

First: The Trustee shall deposit into the Interest Account an amount which, together with the amounts then on deposit therein including, with respect to amounts, if any, transferred by the Trustee from the Reserve Fund, is sufficient to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest coming due and payable on the Bonds on such Interest Payment Date and any amount of interest previously due and unpaid.

Second: The Trustee shall deposit into the Principal Account, if necessary, an amount which, together with the amounts then on deposit therein, including amounts, if any, transferred from the Reserve Fund, shall be sufficient to cause the aggregate amount on deposit in the Principal Account to equal the amount of principal or mandatory sinking account payment coming due and payable on the Bonds within the Bond Year and any amount of principal previously due and unpaid.

THE 2026 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY

FROM REVENUES OF THE AUTHORITY CONSISTING PRIMARILY OF PAYMENTS MADE BY THE

PARTICIPANTS TO THE FLOOD CONTROL DISTRICT UNDER THE DELIVERY CONTRACTS AND RECEIVED BY THE AUTHORITY PURSUANT TO THE PLEDGE AGREEMENT. THE 2026 BONDS ARE

NOT A DEBT OF THE AUTHORITY, THE FLOOD CONTROL DISTRICT, THE PARTICIPANTS, THE

COUNTY OR THE STATE OF CALIFORNIA, WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION. THE AUTHORITY SHALL NOT BE OBLIGATED TO PAY THE PRINCIPAL OF, OR INTEREST ON THE 2026 BONDS, EXCEPT FROM THE FUNDS PROVIDED UNDER THE INDENTURE AND THE PLEDGE AGREEMENT. NEITHER THE FULL FAITH AND

CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA, OR ANY POLITICAL

SUBDIVISION THEREOF, INCLUDING THE AUTHORITY, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE 2026 BONDS. THE AUTHORITY HAS NO TAXING POWER.

Pledge Agreement
Capitalized terms used in this section “–Pledge Agreement” and not otherwise defined shall have the meanings given to such terms as set forth in the Pledge Agreement. See also APPENDIX C–“FORMS OF PRINCIPAL LEGAL DOCUMENTS–PLEDGE AGREEMENT.”
Allocation of Water Revenues. Under the Pledge Agreement, the Flood Control District has irrevocably pledged to the Authority: (i) the Capital Projects Installment Debt Service due from each Participant, including Delinquent Debt Service Payments and interest thereon received by the Flood Control District pursuant to each Delivery Contract; (ii) Net Revenues collected from the operation of the Nacimiento Project; and (iii) all amounts on deposit in the Nacimiento Water Fund (collectively, the “Water Revenues”) to the payment of Municipal Obligations.

To date, there have been no Delinquent Debt Service Payments by the Participants. See also “–The Delivery Contracts.”
“Capital Projects Installment Debt Service” is defined in the Pledge Agreement to mean payments on debt or similar obligations incurred by the Flood Control District for the Nacimiento Project consisting of, in the aggregate, (i) principal and interest (or mandatory sinking fund payments, installments or lease or

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Attachment 2
16 similar payments due) with respect to all Bonds at the time Outstanding in accordance with their terms, provided that capitalized interest funded from the proceeds of the Bonds need not be taken into account, (ii) annual costs of administering the Bonds, including the annual fees of the Trustee, and (iii) the costs, if any, of annual credit enhancement for the Bonds, whether or not based on a derivative structure as provided in Section 5922(a) of the Government Code.
“Municipal Obligations” is defined in the Pledge Agreement to mean the amounts due with respect to the Bonds (including the 2026 Bonds), including any amounts due to the provider of a municipal bond insurance policy, an investment agreement, or any reserve surety. The Flood Control District has agreed and covenanted to maintain and hold in trust the Water Revenues separate and apart from other funds so long as any Bonds remain unpaid.
“Net Revenues” is defined in the Pledge Agreement to mean the sum of (i) the proceeds of sale by the Flood Control District of Surplus Water, (ii) revenues received by the Flood Control District from Wheeling Customers, and (iii) revenues received by the Flood Control District from the sale of Reserve Water, less the costs of making such sales and collecting said revenues.

Pursuant to the Pledge Agreement, the Flood Control District is required to withdraw amounts from the Nacimiento Water Fund five Business Days prior to each Interest Payment Date and each maturity date for the Bonds (each a “Payment Date”) for deposit into the Debt Service Fund held by the Trustee.

Any moneys on deposit in the Nacimiento Water Fund not necessary to make any of the payments required above may be expended by the Flood Control District at any time for any purpose permitted by law.

Covenants Under the Pledge Agreement. The Flood Control District covenants, among other things, to:
(i) faithfully observe and perform all agreements, conditions covenants and terms contained in the Tax Certificate in connection with the issuance of the Tax-Exempt Bonds; (ii) to preserve and protect the security and rights of the Authority to the payments due under the Delivery Contracts and defend such rights against all claims and demands of all persons; (iii) comply with and carry out all provisions of continuing disclosure agreements; and (iv) enforce its rights under each Delivery Contract in accordance with the terms thereof and use its best efforts to collect Capital Projects Installment Debt Service and Net Revenues in such time and amounts to permit payment of debt service on the Bonds in accordance with their terms.

Net Contract. The Pledge Agreement is deemed and construed to be a net contract, and the Flood Control District is required during the term of the Pledge Agreement to make the payments due, free of any deductions and without abatement, diminution or set-off whatsoever.

Limited Liability of Flood Control District. The Flood Control District is not required to pay or advance any moneys derived from any source of income other than Water Revenues, the Nacimiento Water Fund and the other funds provided in the Pledge Agreement for the payment of amounts due on the Bonds, or for the performance of any agreements or covenants required to be performed by it contained in the Pledge Agreement. The Flood Control District may, however, advance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used by the Flood Control District for such purpose.

THE OBLIGATION OF THE FLOOD CONTROL DISTRICT TO MAKE PAYMENTS TO THE

AUTHORITY UNDER THE PLEDGE AGREEMENT IS A SPECIAL OBLIGATION OF THE FLOOD CONTROL

DISTRICT PAYABLE SOLELY FROM WATER REVENUES, THE NACIMIENTO WATER FUND AND

OTHER FUNDS DESCRIBED IN THE PLEDGE AGREEMENT, AND DOES NOT CONSTITUTE A DEBT OF

THE FLOOD CONTROL DISTRICT OR OF THE STATE OF CALIFORNIA OR OF ANY POLITICAL

SUBDIVISION THEREOF IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.

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17 The Delivery Contracts
Capitalized terms used in this Section “–The Delivery Contracts” and not otherwise defined shall have the meanings given to such terms as set forth in the Delivery Contracts. See also APPENDIX B–“THE DELIVERY CONTRACTS.”
General. In order to carry out and effectuate the pledge and lien contained in the Pledge Agreement, the Flood Control District agreed and covenanted that all payments made pursuant to the Delivery Contracts received by the Flood Control District are in trust and are required to be deposited when and as received into the Nacimiento Water Fund. The Flood Control District agrees and covenants to maintain and hold the Nacimiento Water Fund in trust, separate and apart from other funds so long as any Bonds remain unpaid. The Nacimiento Water Fund is maintained by the Flood Control District within the Treasury Combined Investment Pool of the County, into which the Flood Control District deposits all of its Net Revenues and all payments received by the Flood Control District under each Delivery Contract from the Participants.

Pursuant to each Delivery Contract, the Participants, severally and not jointly, pledge the Capital Projects Installment Debt Service to be collected by their respective Water Enterprise and have made certain covenants with respect thereto. See APPENDIX B–“THE DELIVERY CONTRACTS.” For purposes of the Delivery Contracts, the 2026 Bonds constitute “Municipal Obligations.” The parties to each Delivery Contract respectively acknowledged that the total Nacimiento Project construction costs were $173.3 million. Each Delivery Contract is substantially similar in its material terms. For a summary of the Delivery Contracts, see APPENDIX B–“THE DELIVERY CONTRACTS.”
Each Participant covenants and agrees not to create or allow any lien or payment from the respective revenues of their Water Enterprise that is superior to the obligations of the Participant payable under the respective Water Delivery Contract. See “–Covenants Under the Delivery Contracts.” The Delivery Contracts permit Participants to create liens on or payments from its Water Enterprise subordinate to its obligations payable under its Delivery Contract. [Outstanding subordinate obligations to be confirmed/updated.] Accordingly, SLO and Templeton have each executed loans with the State Water Resources Control Board (“SWRCB”) that are payable from “net revenues” of their respective Water Systems. Payments of Capital Projects Installment Debt Service made by SLO and Templeton, and the other Participants, pursuant to their respective Delivery Contracts are payable from and secured by a pledge of gross water sales revenues. See “–Gross Pledge and Covenants of Participants.” Term of Delivery Contracts. Each Delivery Contract remains in effect throughout the term provided by the Master Water Contract; provided, that if and when, through no fault of the Flood Control District, one or more provisions of the Master Water Contract is terminated or suspended in the manner and for a cause specified in the Master Water Contract, the obligations of Flood Control District to the Participants and to the Other Participants under the Delivery Contracts and under Like-Contracts will likewise be terminated or suspended; provided, however, that the Delivery Contracts may not be terminated, suspended or rescinded so long as there remain outstanding any Municipal Obligations incurred by the Flood Control District for the Nacimiento Project, including the 2026 Bonds.

Obligation to “Take or Pay.” Neither the failure or refusal of any Participant to accept delivery of water from the Nacimiento Project to which such Participant is entitled under the Delivery Contract or the failure of the Flood Control District to deliver such water will in any way relieve any Participant of its obligations to make payments to the Flood Control District pursuant to its Delivery Contract. Each Participant is obligated to pay all amounts due under its Delivery Contract without reduction or offset of any kind, whether or not the Nacimiento Project or any part thereof is then operating or operable or its service is suspended, interfered with, reduced or curtailed or terminated in whole or in part for any reason, and the Contract Payments of such Participant are not conditional upon the performance or nonperformance by any party to the Delivery Contract, or the Like–Contracts, for any reason whatsoever, provided, however, that any savings from non-operation of the Nacimiento Project is required to be apportioned among the Participants in accordance with the respective Unit Percentage Share of the Participants.

The obligation of each Participant to make Delivery Contract Payments and other payments required to be made under the Delivery Contracts is incurred by each Participant for the benefit of holders of Municipal Obligations and is absolute and unconditional. Such payments are absolutely net, free of any deductions, and are not subject to

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18 any reduction, whether by offset, recoupment, counterclaim or others. Each Participant is required to make all such payments notwithstanding the occurrence of any act or circumstances that may constitute failure of consideration, destruction of or damage to the Nacimiento Project, commercial frustration of purpose, any change in the tax or other laws of the United States or the State, or any political subdivision thereof.

Participant’s “Step-Up” Obligations. If for any reason a Participant or any Other Participant fails to pay its share of Capital Projects Installment Debt Service under its Delivery Contract or under its Like-Contract, the amount of the resulting Debt Service Shortfall will be paid, collectively, by all Non-Delinquent Participants. If there is more than one Delinquent Participant, the amount of the Debt Service Shortfall will be the sum of the unpaid amounts for each Delinquent Participant. When such a Debt Service Shortfall occurs, the Participant will be required to increase its Contract Payments for the particular Water Year by an amount equal to its pro rata share of the Debt Service Shortfall; provided, however, that each Other Participant who is not a Delinquent Participant will be required by the Other Participant’s Like-Contract to also contribute to the Debt Service Shortfall so that the Participant, and all of the Other Participants who are not Delinquent Participants, shall each contribute to the Debt Service Shortfall in a proportion determined by dividing each said Non-Delinquent Participant’s Capital Projects Installment Debt Service share (under Article 16(C)(3) of the Delivery Contract and the Like-Contracts) by the aggregate of all the Participant’s Installment Debt Service shares of all Non-Delinquent Participants, including the Participant; and provided further, that the Participant in no event will be required under this paragraph to contribute to the Debt Service Shortfall by an amount in any Water Year exceeding the amount which is 25% of the share of Capital Projects Installment Debt Service allocated to the Participant pursuant to its Delivery Contract. See Table 4 below for the share of Capital Projects Installment Debt Service allocated to each Participant. “Step-Up” to Be Exhausted Before Recourse to Debt Service Reserve Fund/Surety Bond. Shortfalls in Total Participant Contract Payments are required to be remedied under the Delivery Contracts prior to any withdrawal from the Reserve Fund or under the reserve surety bond posted for the Municipal Obligations. Drawings on or under the debt service reserve fund or reserve surety bond will be delayed until and unless insufficient moneys are available from Non-Defaulting Participants.

Participant Payments Due Under the Delivery Contracts. On or before April 1 of each Calendar Year, the Flood Control District is required to estimate the new or additional Nacimiento Project Costs for the Fiscal Year commencing on the immediately following July 1 and the result comprises the Total Participant Contract Payments due, collectively, from each Participant under its Delivery Contract and from the Other Participants under their respective Like-Contracts for the said Fiscal Year. Nacimiento Project Costs include:
 Nacimiento Project Construction Costs – Includes the costs of constructing any portion of the Nacimiento Project, including design, engineering, planning, environmental mitigation, equipping new facilities and/or construction efforts, accounting services, project administration and management, installation, grading, razing and building the Nacimiento Project, and includes the costs attributable to environmental mitigation requirements, the costs attributable to the Reserved Capacity, and costs attributable to all other construction costs.  Additional Capital Project Costs – Costs expended or incurred by the Flood Control District for Capital Projects related to the Nacimiento Project, improvements or repairs thereto undertaken by the Flood Control District in addition to the Nacimiento Project, which is an Approved Additional Project, an Emergency Project or a Required Additional Project.  Capital Projects Installment Debt Service – See “–Capital Projects Installment Debt Service.”  Master Water Contract Costs incurred following the first date upon which an allocation of ad valorem property taxes as described under the caption APPENDIX B– “THE DELIVERY CONTRACTS.”
 Capital Reserve Costs – See “–Capital Reserve Costs, and Operating and Maintenance Costs.”  Operation and Maintenance Costs – The reasonable and necessary current expenses of maintaining, repairing and operating the Nacimiento Facilities, including District administrative expenses directly attributable to the Nacimiento Facilities, but excluding the Capital Reserve Costs and the Capital Projects Installment Debt Service, all computed in accordance with generally accepted accounting principles applicable to enterprise funds of government agencies.  Variable Energy Costs – The actual energy costs incurred by the Flood Control District in conveying and delivering: (i) the Delivery Entitlement and Surplus Water to the Participants and (ii) the

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Attachment 2
19 respective Other Delivery Entitlements and surplus water to the Other Participants as defined under their respective Like-Contracts and as set forth in the Delivery Contracts.  Other Costs – Other annual or incidental costs associated with the Nacimiento Facilities.

Nacimiento Project Costs are allocated by the Flood Control District among the Participants as described below:

Capital Projects Installment Debt Service. The Flood Control District allocates Capital Projects Installment Debt Service among all Participants, according to the proportion of Nacimiento Project Construction Costs paid by the Participant and the Other Participants, as they may be adjusted for cash contributions (see APPENDIX B–“THE DELIVERY CONTRACTS”); provided, however, that the Capital Projects Installment Debt Service is required to further be allocated into a component representing principal of and interest on the 2018 Bonds, the 2026 Bonds and other Tax-Exempt Bonds (collectively, the “Tax-Exempt Debt Service”) and a component representing the principal of and interest on the 2007 Taxable Bonds and other Taxable Bonds (collectively, the “Taxable Debt Service”).

Table 4
Nacimiento Capital Projects Installment Debt Service Allocation Percentage
of Total Capital
Projects
Installment
Participant Tax-Exempt Bonds* Taxable Bonds** Debt Service Atascadero Mutual Water Company 0.00% 98.74% 20.08%
City of Paso Robles 45.03 0.57 35.99
City of San Luis Obispo 52.28 0.69 41.79
Templeton Community Services District 2.69 0.00 2.14
Total 100.00% 100.00% 100.00%
* Outstanding in the principal amount of $102,165,000, immediately prior to the issuance of the 2026 Bonds. ** Outstanding in the principal amount of $26,840,000, immediately prior to the issuance of the 2026 Bonds.

Source: Flood Control District.
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20 Covenants Under the Delivery Contracts
Pledge of Gross Water Sales Revenues. Unless a Participant has paid cash as its portion of the total Nacimiento Project Construction Costs, each Participant pledges the gross water sales revenues of its respective Water Enterprise to the Participant’s obligations under the respective Delivery Contract, and covenants and agrees to establish, fix and collect rates and charges from the customers of its respective Water Enterprise at levels sufficient to produce revenues from the Participant’s Water Enterprise which are at least equal to: (i) the costs of operating and maintaining its respective Water Enterprise; plus (ii) the Contract Payments, calculated in accordance with the respective Delivery Contract, including the amounts allocated to the Participant as the Participant’s share of Capital Projects Installment Debt Service; plus (iii) the Coverage Factor (defined as 125% of each Participant’s pro rata share of the Capital Projects Installment Debt Service, calculated for each Fiscal Year) for the amounts allocated to the Participant as the Participant’s share of Capital Project Installment Debt; and (iv) under certain circumstances, the imposition of a surcharge following the occurrence of any payment default by the Participant.

Water Enterprise Operation and Maintenance
No Sale, Lease or Disposing of Participant’s Water Enterprise. Each Participant covenants and agrees not to sell, lease or otherwise dispose of its Water Enterprise or any part thereof essential to the proper operation thereof or to the earning or collection of the gross revenues of the Participant’s Water Enterprise, nor to enter into any agreement or lease which would impair the operation of the Participant’s Water Enterprise, or any part thereof necessary in order to secure adequate revenues for the payment of amounts due under the respective Delivery Contract; provided, however, that any real or personal property which has become nonfunctional or obsolete or which is not needed for the efficient operation of such Participant’s Water Enterprise may be sold or disposed of if such disposition will not have the effect of reducing revenues of the Participant’s Water Enterprise below the levels required under the respective Delivery Contract.

Participant to Maintain Participant’s Water Enterprise. Each Participant covenants and agrees to maintain and preserve its Water Enterprise in good repair and working order at all times, to operate the same in an efficient and economical manner and to pay all operation and maintenance costs of the Participant’s Water Enterprise as they become due, all in accordance with the best business judgment of the Participant.

Participant’s Budgets. Each Participant covenants and agrees to adopt and deliver a budget to the Flood Control District approved by the Participant’s governing body setting forth the amounts budgeted to be paid under the respective Delivery Contract no later than the first day of each fiscal year ending June 30.

Participant’s Covenants. Each Participant covenants and agrees to comply with, keep, observe and perform all agreements, conditions, covenants and terms, express or implied, required to be performed by the Participant contained in all contracts for the use of the Participant’s Water Enterprise and all contracts affecting or involving the Participant’s Water Enterprise to the extent that the Participant is a party thereto.

No Superior Liens or Payments. Each Participant covenants and agrees not to create or allow any lien on or payment from the revenues of the Participant’s Water Enterprise or any part thereof prior to, or superior to, the Participant’s obligations to amounts payable under the respective Delivery Contract.

Participant to Insure Water Enterprise. Each Participant covenants and agrees to procure and maintain insurance relating to the Participant’s Water Enterprise which the Participant deems advisable or necessary to protect its interests. Such insurance shall afford protection in such amounts and against such risks as are usually covered in connection with similar water enterprises in the State; provided, that the Participant is not required to procure or maintain any such insurance unless such insurance is commercially available at reasonable cost; and provided further, that any such insurance may be maintained under a self-insurance program, so long as such self-insurance program is maintained in accordance with standards and in such amounts as are then usually maintained for similar water enterprises in the State.

Participant to Pay Obligations; Observe Laws. Each Participant covenants and agrees to pay and discharge all taxes, assessments and other governmental charges which may be lawfully imposed upon the Participant’s Water

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21 Enterprise or any part thereof when the same becomes due and to duly observe and conform to all valid regulations and requirements of any governmental authority relative to the operation of the Participant’s Water Enterprise that are not being contested by the Participant in good faith.

Eminent Domain. Each Participant covenants and agrees that if all or any material part of the Participant’s Water Enterprise is taken by eminent domain proceedings, or if the Participant receives any insurance proceeds resulting from a casualty loss to any material portion of the Participant’s Water Enterprise, the proceeds are required to be used by the Participant to construct or install replacements for the condemned or destroyed components of the Participant’s Water Enterprise or to prepay the Participant’s share of Capital Projects Installment Debt Service as described in the respective Delivery Contract.
[Remainder of page intentionally left blank.]

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22 Table 5 presents the Fiscal Year Capital Projects Debt Service Payments to be paid by each Participant for the Taxable 2007 Bonds, the 2015 Bonds and the 2018 Bonds. See “PLAN OF REFUNDING.”
Table 5
Delivery Contract Payments
Total
Participants
Payments†
Fiscal Year Debt Service
Date AMWC Paso Robles SLO Templeton
Taxable
2007 Bonds 2015 Bonds* 2018 Bonds Total
6/30/2027 $2,371,435 $4,249,511 $4,934,717 $253,131 $11,808,794 $2,642,388 $8,095,981 $1,070,425 $11,808,794 6/30/2028 2,371,375 4,249,404 4,934,592 253,124 11,808,495 2,639,839 8,096,606 1,072,050 11,808,495 6/30/2029 2,371,100 4,248,910 4,934,019 253,095 11,807,124 2,638,530 8,095,669 1,072,925 11,807,124 6/30/2030 2,370,645 4,248,095 4,933,072 253,046 11,804,858 2,638,183 8,095,500 1,071,175 11,804,858 6/30/2031 2,371,103 4,248,915 4,934,025 253,095 11,807,139 2,638,517 8,101,522 1,067,100 11,807,139 6/30/2032 2,371,136 4,248,976 4,934,095 253,099 11,807,306 2,639,256 8,090,400 1,077,650 11,807,306 6/30/2033 2,371,291 4,249,253 4,934,417 253,115 11,808,077 2,640,120 8,095,338 1,072,619 11,808,077 6/30/2034 2,370,736 4,248,258 4,933,262 253,056 11,805,313 2,640,831 8,097,463 1,067,019 11,805,313 6/30/2035 2,371,189 4,249,069 4,934,204 253,104 11,807,566 2,641,110 8,090,650 1,075,806 11,807,566 6/30/2036 2,371,239 4,249,159 4,934,309 253,110 11,807,817 2,640,679 8,098,175 1,068,963 11,807,817 6/30/2037 2,371,119 4,248,944 4,934,058 253,097 11,807,218 2,639,259 8,096,400 1,071,559 11,807,218 6/30/2038 2,371,630 4,249,859 4,935,121 253,151 11,809,762 2,636,571 8,094,625 1,078,566 11,809,762 6/30/2039 2,370,816 4,248,402 4,933,429 253,065 11,805,712 2,637,199 8,093,700 1,074,813 11,805,712 6/30/2040 2,371,619 4,249,840 4,935,099 253,150 11,809,709 2,640,584 -- 9,169,125 11,809,709 6/30/2041 2,371,519 4,249,661 4,934,891 253,140 11,809,211 2,636,448 -- 9,172,763 11,809,211 TOTAL $35,567,952 $63,736,256 $74,013,312 $3,796,579 $177,114,100 $39,589,514 $105,242,028 $32,282,558 $177,114,100 * Expected to be refunded with the 2026 Bonds.
† Includes credits from the levy of ad valorem property taxes, special assessments or special taxes. Each Delivery Contract permits any Participant to issue obligations to fund all or a portion of its Capital Projects Installment Debt Service by levying an ad valorem tax, special assessment or special tax. See APPENDIX B-” THE DELIVERY CONTRACTS.” Source: Municipal Advisor.

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23 All other costs of operating and maintaining the Nacimiento Project, including Master Water Contract Costs, and any Additional Capital Projects are allocated among the Participants pro rata based on their Delivery Entitlement Share. These allocations are calculated by the Flood Control District each Fiscal Year for the Participants, and the calculations of said allocations are made available to each Participant. The obligations of the Participants for any Approved Additional Project are established at the time of and by the agreement for each such Approved Additional Project.

Table 6
Delivery Entitlement Share
As of Fiscal Year 2025-26
Participant Acre Feet Percentage
Atascadero Mutual Water Company 3,244 20.597%
City of Paso Robles 6,488 41.194
City of San Luis Obispo 5,482 34.806
Templeton Community Services District 406 2.578
County Service Area 10, Zone A 40 0.254
Bella Vista MHP, LLC 10 0.063
SMR Mutual Water Company 80 0.508
TOTAL 15,750 100.000%
Source: Flood Control District.

During the term of the Delivery Contracts, the Flood Control District is also required to proceed with due diligence to collect Total Participant Contract Payments as and when due, and deposit amounts collected into the Nacimiento Water Fund promptly upon receipt, and apply all other amounts comprising Total Participant Contract Payments in the following order of priority:

First: To the payment of Master Water Contract Costs;
Second: To the payment of Operation and Maintenance Costs; Third: To the payment of Variable Energy Costs;
Fourth: To the payment of Additional Capital Project Costs; and Fifth: To the replenishment of Capital Reserves for the Nacimiento Project.

Capital Reserve Costs, and Operating and Maintenance Costs. Each Water Year, the Flood Control District is required to determine the amount of Capital Reserves necessary for the Nacimiento Project and allocate Capital Reserve Costs and Operation and Maintenance Costs to each Participant and to CSA 10, Bella Vista, and SMR on the basis of the Unit Percentage Share attributable to the Units used by the Flood Control District to deliver the Delivery Entitlement to the Participants, and to CSA 10, Bella Vista, and SMR. Based upon the Flood Control District’s Fiscal Year 2025-26 budget, there was apportioned to each Participant, and to CSA 10, Bella Vista, and SMR the following proportional share of the said costs (expressed as a percentage) for each of the Units used to deliver water to such Participant and to CSA 10, Bella Vista, and SMR:

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Attachment 2
24 Table 7
Capital Reserve and Operation and Maintenance Costs
For Fiscal Year 2025-26(1)
Participant Amount(2) Percent(3)
Atascadero Mutual Water Company $ 917,231 17.59%
City of Paso Robles 1,608,473 30.84
City of San Luis Obispo(4) 2,476,545 47.49
Templeton Community Services District 140,441 2.69
County Service Area 10, Zone A(5) 14,465 0.28
Bella Vista MHP, LLC(5) 3,598 0.07
SMR Mutual Water Company(5) 54,058 1.04
Total $5,214,811 100.00%
(1) Based upon the Fiscal Year 2025-26 budget.
(2) Excludes Variable Energy Costs that are billed quarterly based upon actual use, and debt service. (3) Column does not total due to rounding.
(4) The amount for the City of San Luis Obispo includes a one-time payment of $494,188 to replenish capital reserves drawn on in a previous budget year.
(5) Payments made pursuant to the CSA 10, Bella Vista, and SMR Delivery Contracts do not provide payments or security for the 2026 Bonds.

See “INTRODUCTION–The Participants.”
Source: Flood Control District.

Time and Amount of Delivery Contract Payments. Except as established in the Delivery Contracts as to Capital Projects Installment Debt Service, the Delivery Contract Payments made by the Participants to the Flood Control District commenced the first Fiscal Year during which the Delivery Entitlement became available to the Participants under the respective Delivery Contracts, and in any event, promptly following receipt by the Participants of an invoice from the Flood Control District. The Delivery Contract Payments are determined by the Flood Control District as provided in each Delivery Contract and are paid by each Participant to the Flood Control District in accordance with the respective Delivery Contract, except and to the extent each Participant is entitled to an offsetting credit as further described in the Delivery Contracts. See APPENDIX B – “THE DELIVERY CONTRACTS.” (i) On or before July 1 of each Fiscal Year, each Participant is required to pay a sum equal to 60% of the Participant’s allocation of Capital Reserve Costs, and Operation and Maintenance Costs as calculated and allocated as provided in the Delivery Contracts; and (ii) On the immediately following January 1 within each Fiscal Year, each Participant is required to pay a sum equal to 40% of the Participant’s allocation of Capital Reserve Costs and Operation and Maintenance Costs as calculated and allocated as provided in the Delivery Contracts; and (iii) On or before the 30th day following its receipt of an invoice from the Flood Control District as provided in the Delivery Contracts, each Participant is required to pay Variable Energy Costs as calculated and allocated as provided in the Delivery Contracts, for the Calendar Quarter most recently concluded; and (iv) On or before July 1 of each Fiscal Year, each Participant is required to pay a sum equal to the Participant’s allocation of Capital Projects Installment Debt Service for that Fiscal Year as calculated and allocated as provided in the Delivery Contracts; and (v) On or before July 1 of each Fiscal Year, each Participant shall pay a sum equal to the Participant’s allocation of remaining Nacimiento Project Costs, including Additional Capital Project Costs and Master Water Contract Costs as calculated and allocated as provided in the Delivery Contracts.

Gross Pledge and Covenants of Participants. Each Participant pledges under each Delivery Contract, respectively, the gross water sales revenues of the Participant’s Water Enterprise to secure the Participant’s obligations under the Delivery Contract, and covenants and agrees to establish, fix and collect rates and charges from the customers of the Participant’s Water Enterprise at levels sufficient to produce revenues from the Participant’s Water Enterprise which are at least equal to:

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25 (i) The costs of operating and maintaining the Participant’s Water Enterprise; plus (ii) The Contract Payments, calculated in accordance with the Delivery Contract, including the amounts allocated to the Participant as the Participant’s share of Capital Projects Installment Debt Service; plus
(iii) The Coverage Factor (defined as 125% of each Participant’s pro rata share of the Capital Projects Installment Debt Service, calculated for each Fiscal Year) for the amounts allocated to the Participant as the Participant’s share of Capital Projects Installment Debt Service, provided, however, that there will be credited towards compliance with the Coverage Factor requirement all Available Capital Reserves of the Participant.

Under certain circumstances, the Participant may be required to pay a surcharge following the occurrence of any payment default by the Participant as provided in its Delivery Contract.

Notwithstanding the provisions of paragraph (iii) above, each Participant will be permitted to withdraw and apply Available Capital Reserves for its operational and capital needs from time to time during any water year. As defined in each Delivery Contract, the term “Available Capital Reserves” means amounts maintained by the Participant for its Water Enterprise for capital reserves, including unreserved, unrestricted working capital balances in the funds established for the Water Enterprise, including allowances for contingencies, as of each Calculation Date.

Financial Covenants under the Delivery Contract
Punctual Payment; Compliance with Documents. The Flood Control District is required to punctually pay or cause to be paid the interest and principal to become due with respect to all of the Municipal Obligations (including the Bonds), but solely from amounts paid to the Flood Control District under the Delivery Contracts, and each Participant shall punctually pay or cause to be paid the Capital Projects Installment Debt Service, in strict conformity with the terms of the Municipal Obligations (including the Bonds), the Delivery Contracts and the Legal Documents and will faithfully observe and perform all of the conditions, covenants and requirements of the Delivery Contracts and the Legal Documents including any and all supplements thereto.

Extension of Payment of Municipal Obligations. None of the Flood Control District or any Participant will directly or indirectly extend or assent to the extension of the maturity of any of the Municipal Obligations (including the Bonds) or the time of payment of any claims for interest by the purchaser or owner of such Municipal Obligations (including the Bonds) or by any other arrangement, and in case the maturity of any of the Municipal Obligations (including the Bonds) or the time of payment of any such claims for interest shall be extended, such Municipal Obligations (including the Bonds) or claims for interest shall not be entitled, in case of any default under the Legal Documents, to the benefits of the Delivery Contracts, except subject to the prior payment in full of the principal of all of the Municipal Obligations (including the Bonds) then outstanding and of all claims for interest thereon which shall not have been so extended. The Flood Control District may issue obligations or cause obligations to be issued for the purpose of refunding any outstanding Municipal Obligations (including the Bonds), and such issuance shall not be deemed to constitute an extension of maturity of the affected Municipal Obligations (including the Bonds).

Against Encumbrances. None of the Flood Control District or any Participant will create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the revenues and other assets pledged under a Delivery Contract while any of the Municipal Obligations (including the Bonds) are outstanding, except the pledge created by the Legal Documents and the Delivery Contracts, any Additional Debt and any pledge, lien, charge, or other encumbrance which is subordinate to the obligations under the Delivery Contracts. Subject to this limitation and the terms of the Indenture, the Flood Control District expressly reserves the right to enter into one or more indentures or trust agreements, and reserves the right to issue other obligations or cause them to be issued for such purposes.

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26 Covenants to Maintain Tax-Exempt Status of Tax-Exempt Bonds. In the event that any Tax-Exempt Bonds attributable in whole or in part to a Participant are issued and Outstanding, such Participant covenants and agrees not to use, permit the use of, or omit to use Gross Proceeds or any other amounts (or any property, the acquisition, construction or improvement of which is to be financed directly or indirectly with Gross Proceeds) in a manner that if made or omitted, respectively, would cause the interest on any of the TaxExempt Bonds to become includable in the gross income, as defined in Section 61 of the Code, of the Owner thereof for federal income tax purposes.

Nacimiento Project Shortages. In any year in which there is a shortage or interruption in water deliveries to the Participants due to drought or other temporary cause; or if there is a reduction in the supply of water from the Water Project under the Master Water Contract that threatens or causes a permanent shortage in the amount of water available for delivery to the Participants under the respective Delivery Contracts, the Flood Control District is authorized to make reductions in the Delivery Entitlement Share for each Participant.

The Flood Control District, its officers, agent or employees are not liable for any damage, direct or indirect, arising from shortages in the amount of water from the Water Project available to any Participant pursuant to its Delivery Contract caused by drought, the non-availability of water under the Master Water Contract, operation of the Water Project, operation of laws or any cause beyond the control of the Flood Control District. However, such reduction in water delivery does not entitle a Participant to make any reductions in its Capital Projects Installment Debt Service, see “–Obligation to “Take or Pay.” [Remainder of page intentionally left blank.]

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27 Table 8
Nacimiento Project and Bond Legal Structure

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28 Reserve Fund
The Reserve Fund is comprised of the Tax-Exempt Reserve Account and the Taxable Reserve Account. The Tax-Exempt Reserve Account secures the payment of Tax-Exempt Bonds only, including the 2018 Bonds and the 2026 Bonds, and is not available to pay debt service on any Taxable Bonds. The Taxable Reserve Account secures the payment of the 2007 Taxable Bonds only, and is not available to pay debt service on any Tax-Exempt Bonds.

The Tax-Exempt Reserve Account and the Taxable Reserve Account are funded in amounts equal to the applicable Reserve Requirement, as described below.

To date, there have been no delinquencies by any Participant in the payment of Capital Projects Installment Debt Service, and the Trustee has not drawn on the Reserve Fund as a result of any debt service delinquency.

Investment earnings on amounts in the Reserve Fund and Delinquent Debt Service Payments shall be deposited to the following funds and accounts and transferred in the following order:

First: Reimbursement to the provider of any Reserve Surety for any drawings thereunder;
Second: The Reserve Fund to the level of the Reserve Requirement; Third: The Interest Account, up to an amount sufficient to make payment on the Bonds on Tax-Exempt Bonds or Taxable Bonds, as applicable, on the next Interest Payment Date; and
Fourth: The Principal Account.

All or any portion of the applicable Reserve Requirement may be satisfied by the provision of a qualified surety bond, being a surety bond issued by an insurance company rated in one of the two highest categories (without regard to numerical or other modifiers) of any Rating Agency at the time such surety bond is obtained (a “Reserve Surety”), that, together with moneys on deposit in the applicable Reserve Account of the Reserve Fund, provides an aggregate amount equal to the applicable Reserve Requirement. In the event of replacement of cash and investments in the Tax-Exempt Reserve Account with a Reserve Surety, the Trustee is required to transfer any excess amounts then on deposit in the Tax-Exempt Reserve Account into a segregated account of the Revenue Fund, which monies are required to be applied either (i) to the payment within one year of the date of transfer of capital expenditures of the Authority or the Flood Control District permitted by law, or (ii) to the redemption of Tax-Exempt Bonds on the earliest succeeding date on which such redemption is permitted hereby, and pending such application shall be held either not invested in investment property (as defined in section 148(b) of the Code), or invested in such property to produce a yield that is not in excess of the yield on the Tax-Exempt Bonds; provided, however, that the Authority may by written direction to the Trustee cause an alternative use of such amounts if the Authority will first have obtained a written opinion of nationally recognized bond counsel substantially to the effect that such alternative use will not adversely affect the exclusion pursuant to section 103 of the Code of interest on the Tax-Exempt Bonds from the gross income of the owners thereof for federal income tax purposes. If the credit rating of the provider of any Reserve Surety is subsequently downgraded by any Rating Agency, the Authority is not required to replace such Reserve Surety.

So long as either the Tax-Exempt Reserve Account or the Taxable Reserve Account includes both cash/investments and a Reserve Surety, the Trustee shall, in the event of a Delinquent Debt Service Payment under the Pledge Agreement, apply all cash or the proceeds of investments to the payment of principal of and interest on the Bonds hereunder, prior to making a drawing against the Reserve Surety. Upon a draw on such Reserve Account of the Reserve Fund, the Trustee is required to accept Delinquent Debt Service Payments received from the Flood Control District for purposes of replenishing the applicable Reserve Account of the Reserve Fund or reimbursing the provider of the Reserve Surety.

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29 Tax-Exempt Reserve Account. In the event that on any Interest Payment Date, the full amount of the interest of or principal or redemption price of the Tax-Exempt Bonds required to be deposited on such Interest Payment Date, in the Interest Account, Principal Account or Redemption Account, as applicable, is not then on deposit therein, the Trustee is required on such Interest Payment Date to withdraw from the Tax-Exempt Reserve Account an amount equal to any such deficiency and notify the Authority and the Flood Control District of any such withdrawal. All money in or available under the Tax-Exempt Reserve Account is required to be used and withdrawn by the Trustee solely for the purpose of making transfers to the Interest Account and the Principal Account, in such order of priority, in the event of any deficiency at any time in any of such Account to pay debt service on the Tax-Exempt Bonds then Outstanding, except that so long as the Authority is not in default under the Indenture, any amount in the Tax-Exempt Reserve Account in excess of the Reserve Requirement (Tax-Exempt Bonds) is required to be withdrawn from the Tax-Exempt Reserve Account semiannually at least two Business Days prior to each Interest Payment Date and be deposited in the Interest Account and credited to the obligations of the Flood Control District under the Pledge Agreement relating to the Tax-Exempt Bonds.

The term “Reserve Requirement (Tax-Exempt Bonds)” is defined in the Indenture to mean, as of any date of calculation, an amount equal to the least of (i) 125% of the average annual debt service on the Tax-Exempt Bonds for that and any subsequent Bond Year, (ii) 100% of the maximum annual debt service on the Tax-Exempt Bonds for that or any subsequent Bond Year, or (iii) 10% of the issue price of the Tax-Exempt Bonds. Upon the issuance of the 2026 Bonds, the Reserve Requirement (Tax-Exempt Bonds) is estimated to be $9,172,762.50 which is equal to 100% of the maximum annual debt service on the Tax-Exempt Bonds.

The Tax-Exempt Reserve Account is currently invested in a Forward Delivery Agreement dated September 26, 2007, as amended by the Amendment No. 1 to Forward Delivery Agreement for the Reserve Fund, dated August 19, 2015, and the Amendment No. 2 to Forward Delivery Agreement for the Reserve Fund, dated April 9, 2018, and as further amended by the Amendment No. 3 to Forward Delivery Agreement for the Reserve Fund, dated the closing date of the 2026 Bonds, each between the Authority and Truist Securities Inc., as successor in interest to SunTrust Bank. This agreement provides for payment of a guaranteed rate per annum to the Authority in an amount equal to 5.015%. The Authority has and will continue to rebate earnings in excess of the Arbitrage Yield on the TaxExempt Bonds.

Investments of Amounts on Deposit Under the Indenture
Except as otherwise provided in the Indenture, all moneys in any of the funds or accounts established pursuant to the Indenture are required be invested solely in Permitted Investments, or, if any fund or account is held by the Trustee solely in Permitted Investments, as directed in writing by an Authorized Representative of the Flood Control District two Business Days prior to the making of such investment. Moneys in any funds and accounts are required to be invested in Permitted Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in the Indenture.

Permitted Investments acquired as an investment of moneys in any fund established under the Indenture are required to be credited to such fund. For the purpose of determining the amount in any fund, all Permitted Investments credited to such fund will be valued at the lesser of cost or market value exclusive of accrued interest, if any, paid as part of the purchase price thereof. See APPENDIX C–“FORMS OF PRINCIPAL LEGAL DOCUMENTS–THE INDENTURE.”
Existing Obligations of the Participants
For a discussion of existing indebtedness of each Participant, see APPENDIX A–“THE PARTICIPANTS” and the discussion under the subheadings “–Outstanding Long-Term Indebtedness” therein.

Additional Bonds
In addition to the 2026 Bonds, the Trustee shall, upon Written Request of the Authority, by a supplement to the Indenture, establish one or more other Series of Bonds secured by the pledge made under the Indenture equally and ratably with any Bonds previously issued and delivered, in such principal amount as shall be determined by the

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30 Authority, but only upon compliance with the provisions of the Indenture and any additional requirements set forth in the applicable Supplemental Indenture. The Supplemental Indenture providing for the execution and delivery of such Additional Bonds shall specify the purposes for which such Additional Bonds are then proposed to be delivered, which shall be one or more of the following: (i) to provide moneys needed to provide for the Project Costs by depositing into the Project Fund the proceeds of such Additional Bonds to be so applied; (ii) to provide for the payment or redemption of Bonds theretofore Outstanding under the Indenture, by depositing with the Trustee moneys and/or investments required for such purpose under the defeasance provisions of the Indenture; or (iii) to provide moneys needed to refund or refinance all or part of any other current or future obligations of the Authority with respect to the funding of the Nacimiento Project. See APPENDIX C–“FORMS OF PRINCIPAL LEGAL DOCUMENTS.” The Indenture does not require satisfaction of any debt service coverage ratio condition to issue Additional Bonds.

Indenture Events of Default and Remedies
Events of Default. The Indenture provides the following Events of Default:
(i) if default by the Authority shall be made in the due and punctual payment of the principal of any Bonds when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for sinking fund redemption, by acceleration, or otherwise; (ii) if default shall be made in the due and punctual payment of any installment of interest on any Bonds when and as the same shall become due and payable;
(iii) if default shall be made by the Authority in the observance of any of the other covenants, agreements or conditions on its part in the Indenture or in the Bonds contained, if such default shall have continued for a period of 30 days after written notice thereof, which grace period shall not be extended beyond 60 days, Trustee or the Owners of not less than 25% in aggregate principal amount of the Bonds at the time Outstanding; provided, however, if the failure stated in the notice can be corrected, but not within the applicable period, the Authority, the Trustee and such Owners shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Authority within the applicable period and diligently pursued until the default is corrected; (iv) the occurrence of an Event of Bankruptcy with respect to the Authority; and (v) the occurrence of a default under the Pledge Agreement.

Remedies Upon Default. The Bonds are subject to acceleration prior to their maturity. If an Event of Default occurs, then, and in each and every such case during the continuance of such Event of Default, the Trustee or the Owners of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding shall be entitled, upon notice in writing to the Authority, to declare the principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, anything in the Indenture or in the Bonds contained to the contrary notwithstanding.

Any such declaration, however, is subject to the condition that if, at any time after such declaration and before any judgment or decree for the payment of moneys due shall have been obtained or entered, the Authority shall deposit with the Trustee a sum sufficient to pay all the principal or redemption price of and installments of interest on the Bonds payment of which is overdue, with interest on such overdue principal at the rate borne by the respective Bonds, and the reasonable charges and expenses of the Trustee, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding, by written notice to the Authority and the Trustee, or the Trustee if such declaration was made by the Trustee other than upon direction of the Bond Owners, may, on behalf of the Owners of all of the Bonds rescind and annul such declaration and its consequences and waive such default; but no such

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31 rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon.

The payments of Capital Projects Installment Debt Service due from the Participants are not subject to acceleration.

Subject to the terms of the Indenture regarding certain limitation on the Owners’ right to sue, any Owner shall have the right, for the equal benefit and protection of all Owners similarly situated:
(i) by mandamus, suit, action or proceeding, to compel the Authority and its members, officers, agents or employees to perform each and every term, provision and covenant contained in the Indenture and in the Bonds, and to require the carrying out of any or all such covenants and agreements of the Authority and the fulfillment of all duties imposed upon it by the Bond Law;
(ii) by suit, action or proceeding in equity, to enjoin any acts or things which are unlawful, or the violation of any of the Owners’ rights; or
(iii) upon the occurrence of any Event of Default, by suit, action or proceeding in any court of competent jurisdiction, to require the Authority and its members and employees to account as if it and they were the trustees of an express trust.

As provided in the Pledge Agreement, the Flood Control District covenants and agrees that it will enforce its rights under each of the Delivery Contracts, in accordance with the terms thereof, and, in particular, that it shall use its best efforts to collect Capital Projects Installment Debt Service and Net Revenues in such time and amounts as shall permit the payment of principal of and interest on the Bonds in accordance with their terms. In the event of a Debt Service Shortfall, the Flood Control District covenants and agrees to enforce its right to collect each Delinquent Debt Service Payment under the Delivery Contract with the Delinquent Participant and use its best efforts to remedy such Debt Service Shortfall by enforcing the step-up provisions of the Delivery Contracts with the Participants that are then not delinquent. As defined in the Pledge Agreement, the term “Delinquent Debt Service Payment” shall mean those payments of Capital Projects Installment Debt Service due under any Delivery Contract that are not, in fact, paid on the date upon which each payment of Capital Projects Installment Debt Service is required to be made by a Participant under a Delivery Contract (the “Due Date”). The term “Debt Service Shortfall” shall mean the aggregate amount of Delinquent Debt Service Payments due from Delinquent Participants on the Due Date in question. The term “Delinquent Participant” shall mean any Participant which fails to meet its obligation for payment for Nacimiento Project Water under any Delivery Contract, as further described in the respective Delivery Contracts. To date, there have been no Delinquent Debt Service Payments by any Participant that resulted in a Debt Service Shortfall.

The Authority has no security interest in or mortgage on any Water Enterprise operated and to be operated by a Participant or any real property of the Flood Control District or any Participant and no default under the Pledge Agreement shall result in the loss of the respective Water Enterprise or any other property of the Flood Control District or the Participants. This limitation on remedies of the Authority shall be binding on successors in interest to the Authority’s rights under the Pledge Agreement.

Limited Obligations
THE 2026 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY

FROM REVENUES OF THE AUTHORITY CONSISTING PRIMARILY OF PAYMENTS MADE BY THE

PARTICIPANTS TO THE FLOOD CONTROL DISTRICT UNDER THE DELIVERY CONTRACTS AND RECEIVED BY THE AUTHORITY PURSUANT TO THE PLEDGE AGREEMENT. THE 2026 BONDS ARE

NOT A DEBT OF THE AUTHORITY, THE FLOOD CONTROL DISTRICT, THE PARTICIPANTS, THE

CREDIT NOR THE TAXING POWER OF THE STATE OF CALIFORNIA, OR ANY POLITICAL

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32 SUBDIVISION THEREOF, INCLUDING THE AUTHORITY, IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE 2026 BONDS. THE AUTHORITY HAS NO TAXING POWER.

The obligation of the Flood Control District to make payments to the Authority under the Pledge Agreement is a special obligation of the Flood Control District payable solely from Water Revenues and the funds described in the Pledge Agreement and does not constitute a debt of the Flood Control District or of the State of California or of any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction. [BOND INSURANCE
Bond Insurance Policy
Concurrently with the issuance of the 2026 Bonds, [INSURER] (the “2026 Insurer”) will issue its Municipal Bond Insurance Policy for the 2026 Bonds (the “Policy”). The Policy guarantees the scheduled payment of principal of and interest on the 2026 Bonds when due as set forth in the form of the Policy included as an exhibit to this Official Statement.

The Policy is not covered by any insurance security or guaranty fund established under New York, California, Connecticut or Florida insurance law.
[TO COME]]

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33 CERTAIN RISKS TO BOND OWNERS
The following information should be considered by potential investors in evaluating the credit quality of the 2026 Bonds. However, it does not purport to be an exhaustive list of the risks or other considerations which may be relevant to an investment in the 2026 Bonds. In addition, the order in which the following information is presented is not intended to reflect the relative importance of any such risks.

General
The payment of principal of and interest on the 2026 Bonds is secured solely by a pledge of the Revenues and certain funds under the Indenture. The realization of the Water Revenues sufficient to enable the Flood Control District to make the payments under the Pledge Agreement is subject to, among other things, the capabilities of management of the Flood Control District and the Participants, the ability of the Participants to provide water services to their users, and the ability of the Participants to establish and maintain water fees and charges sufficient to provide the required debt service coverage as well as pay for Operation and Maintenance Costs.

Among other matters, drought, general and local economic conditions and changes in law and government regulations (including initiatives and moratoriums on growth) could adversely affect the amount of revenues realized by the Participants and ultimately the ability of the Participants to pay their Proportionate Shares to the Flood Control District.

Statutory and Regulatory Impact
Laws and regulations governing conservation, transmission, treatment and delivery of water are enacted and promulgated by government agencies on the federal, State and local levels. Compliance with these laws and regulations may be costly, and, as more stringent standards are developed, these costs will likely increase. In addition, claims against any Participant for violations of regulations with respect to its facilities and services could be significant. Such claims would be payable from the water revenues of such Participant or from other legally available sources of such Participant.

No Obligation to Tax
The obligation of each Participant to make payments under the applicable Delivery Contract does not constitute an obligation of such Participant for which it is obligated to levy or pledge any form of taxation, or for which such Participant has levied or pledged any form of taxation. The obligation of each Participant to make payments under the applicable Delivery Contract does not constitute a debt or indebtedness of the Participants, the Authority, the State or any of its political subdivisions, within the meaning of any constitutional or statutory debt limitation.

Drought
Background. California periodically experiences droughts prompting state and local responses. For example, the water years 2020 through 2022 combined ranked as the three driest years in California’s statewide precipitation record. (A water year begins on October 1 and ends on the following September 30.) Beginning in April 2021, the Governor issued a series of drought emergency proclamations affecting various counties throughout the State, culminating in an October 19, 2021 proclamation declaring a drought state of emergency to be in effect statewide and directing all local water suppliers to implement water shortage contingency plans at a level appropriate to local conditions. On May 24, 2023, Governor Newsom issued an executive order easing water restrictions that were no longer necessary following a series of storms that ended the drought. As of June 16, 2026, according to the U.S.

Drought Monitor, certain areas of the State are in the “abnormally dry” or “moderate drought” categories, while other areas, including the County, are identified as experiencing no drought conditions.

In 2018, responding to earlier drought periods, the California Governor signed Senate Bill 606 and Assembly Bill 1668 into law. These bills relate to water conservation and drought planning and empower the State Department of Water Resources and the State of California Water Resources Control Board to adopt long-term standards for the

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34 following: (i) indoor residential water use; (ii) outdoor residential water use; (iii) commercial, industrial and institutional water use for landscape irrigation; and (iv) water loss. The indoor water use standard has been defined as 55 gallons per person per day (“GPCD”) until January 2025; the standard will decrease over time to 50 GPCD in January 2030. Standards for outdoor residential water use and commercial, industrial and institutional water use for landscape irrigation are still being developed. Urban water suppliers will be required to stay within annual water budgets, based on these standards, for their service areas.

There can be no assurance that existing or future federal or State legislation and actions will not impose mandatory water supply or use restrictions, which could require the Flood Control District and the Participants to impose water use restrictions on customers of the respective Water Enterprises and thereby negatively impact Water Revenues. See also, “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–The Delivery Contracts– Obligation to “Take or Pay.”
Flood Control District. The storage capacity of the Nacimiento Reservoir is 377,900 acre feet (“AF”), with storage levels at approximately 52% or 195,985 AF as of July 10, 2026.

The Nacimiento River Watershed, which feeds the Nacimiento Reservoir, has been a reliable watershed during periods of drought. Data dating to 1958 indicate that inflows to the Nacimiento Reservoir have exceeded the 17,500 acre-feet per year (“AFY”) entitlement of the Flood Control District in every year except 1976, when just 15,041 AF of inflow was recorded. However, available storage in 1976 equal to 57,200 AF was sufficient to make up the difference.

The Flood Control District expects that it will be able to deliver the total entitlement of 15,750 AFY to the Participants. The Master Water Contract requires that downstream releases from the Nacimiento Reservoir cease when storage capacity reaches 22,300 AF (which effectively reserves that water for delivery to the Flood Control District). Since 1958, the capacity of the Nacimiento Reservoir has only declined to 22,300 AF six times, most recently in Fiscal Year 1989-90. The graph below illustrates the historic storage levels in AF of Nacimiento Reservoir since 1958.

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35

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36 See also, “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS–The Delivery Contracts– Obligation to “Take or Pay.”
Participants. For a description of each Participant’s drought and conservation measures, see the subheading “–Drought and Conservation Measures” for each Participant in APPENDIX A–“THE PARTICIPANTS.” Climate Change
The State has historically been susceptible to wildfires and hydrologic variability. As greenhouse gas emissions continue to accumulate in the atmosphere as a result of economic activity, climate change is expected to intensify, increasing the frequency, severity and timing of extreme weather events such as coastal storm surges, drought, wildfires, floods and heat waves, and raising sea levels. The future fiscal impact of climate change on the Flood Control District or the Participants is difficult to predict, but it could be significant, and it could have a material adverse effect on the Flood Control District’s or Participants’ finances by requiring greater expenditures to counteract the effects of climate change, by changing the business and activities of the customers of the Participants’ Water Enterprises or by increasing the cost or decreasing the availability of water supplies.

Earthquakes, Floods, and Other Disasters
From time to time, the Participants are subject to natural calamities that may adversely affect economic activity in the service areas of the Participants which therefore may have a negative impact on one or more Participant’s finances. There can be no assurance that the occurrence of any natural calamity would not cause substantial interference to the Nacimiento Dam or to the Water Enterprises of the Participants, or that any Participant would have insurance or other resources available to make repairs to its Water Enterprises, possibly impacting Revenues.

Earthquake. The casualty and liability insurance of the Participants may not cover losses due to earthquake.

If there were to be an occurrence of severe seismic activity in the service areas of the Participants, there could be substantial damage to and interference with one or more Participant’s Water Enterprises, which could impact the receipt of Revenues.

Small earthquakes, in the range of magnitude 2.0 to 2.7 and smaller, occur quite often throughout and near the County. Larger earthquakes do occur occasionally, as evidenced by a magnitude 6.5 earthquake in December 2003 in the San Simeon-Hosgri fault zone approximately six miles from the community of San Simeon and the magnitude

6.0 earthquake in September 2004 on the San Andreas Fault just north of the Monterey County line. The Shoreline Fault zone, discovered in 2008, which is believed to be capable of producing a substantial earthquake, is located less than one mile off-shore from the Diablo Canyon Power Plant (the “DCPP”), a two reactor nuclear power plant operated by the Pacific Gas & Electric Company (“PG&E”) constructed in 1975.

The Los Osos Fault, which is generally adjacent to the service areas of the Participants, is identified under the State of California Alquist-Priolo Fault Hazards Act as being capable of causing surface rupture damage in the service areas of the Participants. This fault’s main strand lies near the intersection of Los Osos Valley Road and Foothill Boulevard. It is considered to present a high to very high fault rupture hazard to development and facilities in the Los Osos Valley, which lies west of the service areas of the Participants. Other faults identified as being capable of causing surface rupture damage in the vicinity of the service areas of the Participants are the West Huasna, Oceanic, and Edna Faults. These faults are considered potentially active and present a moderate fault rupture hazard.

Liquefaction. Liquefaction occurs when ground shaking causes the mechanical properties of some fine grained, saturated soils to liquefy and act as a fluid (liquefaction). In order for liquefaction to occur, three general geotechnical characteristics must be present: (i) ground water within the potentially liquefiable zone, (ii) the potentially liquefiable zone is granular and meets a specific range in grain-size distribution, and (iii) the potentially liquefiable zone is of low relative density. If those criteria are present and strong ground motion occurs, then those soils could liquefy, depending upon the intensity and duration of the strong ground motion. The larger the earthquake magnitude, and the longer the duration of strong ground shaking, the greater the potential there is for liquefaction to occur.

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37 Portions of the coastal areas within the County are underlaid by sediments that may be vulnerable to liquefaction, and the majority of the pipeline and facilities of Nacimiento are located in a moderate liquefaction potential zone, and the remainder is divided between low and high moderate potential zones.

Flooding. In accordance with the National Flood Insurance Reform Act, the Federal Emergency Management Agency (“FEMA”) assesses its flood hazard map inventory at least once every five years. Portions of the County are located within zones that correspond to the boundaries of a 100-year floodplain. A 100-year floodplain is an area expected to be inundated during a flood event of the magnitude for which there is a 1% (or 1-in-100) probability of occurrence in any year.

A Flood Insurance Study[, most recently revised by FEMA for the County in June 2024,] noted that runoff in the streams is small, with appreciable flows occurring only during and immediately after precipitation. However, during large storms, streamflow increases rapidly, and flood waters can contain high amounts of debris, causing major flood damage. For many of the watercourses that are located in the service areas of the Participants, areas that may be inundated in response to 100-year storm events are located adjacent to or near the stream or river channel. Since many of the watercourses are located in mountainous or remote areas with little or no development, flooding events along these rivers and streams generally result in minimal impacts. Other watercourses that are located in the service areas of the Participants, however, have floodplains that extend well beyond the defined stream or river channel. When a flood occurs along one of these watercourses, and it is located in or near an area that is urbanized, damage to property and infrastructure can be widespread. [confirm/update]
In the southern portion of the County, Arroyo Grande Creek, San Luis Obispo Creek, and their respective tributaries, are watercourses that pass through urbanized areas and that have caused major floods. The north coast area of the County also contains a number of short, steep-gradient creeks that can experience rapid increases in water flows in response to storm events in Cambria. Santa Rosa Creek is such a watercourse that has caused significant flooding events. The largest watercourse in the inland portion of the County is the Salinas River, which is located adjacent to numerous incorporated and unincorporated communities. Although the floodplain of Salinas River can be extensive, it is generally contained within the river channel. Other major inland watercourses include the Estrella River and San Juan Creek. Due to the generally remote locations of these watercourses, flooding impacts are generally not significant.

Wildfires
In recent years, wildfires have caused extensive damage throughout the State. Certain of these fires have burned thousands of acres and destroyed hundreds and in some cases thousands of homes. In some instances, entire neighborhoods have been destroyed. Wildfires can also significantly impact vegetation and soils, which can adversely impact water quality within the water sources and regulating reservoirs. Areas in the County have experienced similar large and damaging wildfires in recent years.

The areas in the County face ongoing wildfire risks, with some land within the County and the Participants’ jurisdictions being categorized into the moderate, high and very high California Department of Forestry and Fire Protection (CALFIRE) Fire Hazard Severity Zones. If wildfires were to substantially damage or destroy land within the County, including facilities and systems maintained by the Flood Control District and the Participants, Water Revenues could be negatively affected.

Water Quality and PFAS
In recent years, State and federal agencies have enacted regulations concerning per- and poly-fluoroalkyl substances (“PFAS”) in drinking water. PFAS are commonly used in various consumer and industrial products such as fabrics, carpets, firefighting foams, food packaging and nonstick cookware and are known for their nonstick, waterproof, and heat and stain-resistant properties. There are over 15,000 types of individual PFAS compounds.

Perfluorooctane sulfonate (“PFOS”), perfluorooctanoic acid (“PFOA”), perfluorobutane sulfonic acid (“PFBS”), and perfluorohexane sulfonic acid (“PFHxS”) are among the synthetic organic chemicals in the group of compounds referred to as PFAS.

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Attachment 2
38 The State of California Water Resources Board’s Division of Drinking Water (the “Division”) has established and modified from time to time Notification Levels (the “NLs”) for PFOA, PFOS, PFBS, and PFHxS, respectively. NLs are non-regulatory, precautionary health-based measures for concentrations of chemicals in drinking water that warrant notification and further monitoring and assessment. Response Levels (the “RLs”) are nonregulatory, precautionary health-based measures that are set at higher levels than NLs and represent thresholds at which the Division recommends that water systems remove a water source from use or treat it if the option is available to them. Legislation that took effect on January 1, 2020 requires that water systems that receive a monitoring order from the Division and detect levels of PFAS that exceed their respective RL must either take a drinking water source out of use, treat the water or provide specific public notification they continue to supply water above the RL.

In April 2024, the U.S. Environmental Protection Agency announced final regulations establishing the first national drinking water standards for six PFAS: PFOA, PFOS, PFBS, PFHxS, perfluorononanoic acid (“PFNA”), and hexafluoropropylene oxide dimer acid (“HFPO-DA” or “GenX”). The regulations require public water systems to monitor for the regulated PFAS, notify the public if monitoring detects such PFAS at levels that exceed the regulatory standards, and reduce the levels of such PFAS in drinking water if they exceed the standards. Regulated public water systems will have until April 2027 to complete their initial monitoring for these PFAS and must include information about the results of their monitoring in their annual water quality reports to customers. Public water systems that detect PFAS above the new standards will have until April 2029 to implement solutions to reduce the PFAS to meet the standards.

In accordance with Order DW 2025-0002-DDW, issued by the California State Water Resources Control Board Division of Drinking Water on December 12, 2025, community water systems are required to monitor all active sources for PFAS to comply with the U.S. Environmental Protection Agency National Primary Drinking Water Regulations (89 Federal Register 32532; amended June 11, 2024, 89 Federal Register 49101)(U.S. EPA PFAS Rule).

Because the Nacimiento Project serves a population requiring quarterly monitoring, PFAS samples were required to be collected for four consecutive quarters, with all initial monitoring to be completed by March 31, 2027. In accordance with these requirements, the Nacimiento Project completed all required quarterly PFAS sampling during the 2026 monitoring period, with the final sampling event completed in January 2026, well in advance of the regulatory deadline. All results came back negative for all regulated PFAS compounds. The system’s initial PFAS monitoring requirements under Order DW 2025-0002-DDW are now complete. The Participants are responsible for complying with PFAS regulations when providing drinking water to each of their customers. The Participants may be subject to increases in water treatment or other Water Enterprise operating costs to meet State or federal regulations relating to PFAS, which may impact their abilities to meet payment obligations under their respective Delivery Contracts. See APPENDIX A – “THE PARTICIPANTS” for any impacts to the Participants as a result of compliance with PFAS regulations.
[Risks Associated with Bond Insurance
In the event of default of the payment of principal or interest with respect to the 2026 Bonds when all or some becomes due, any owner of the 2026 Bonds shall have a claim under the Policy for such payments. See “BOND INSURANCE” and APPENDIX G–“SPECIMEN MUNICIPAL BOND INSURANCE POLICY.” However, in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments are to be made in such amounts and at such times as such payments would have been due had there not been any such acceleration. The Policy does not insure against redemption premium, if any.

The payment of principal and interest in connection with mandatory or optional prepayment of the 2026 Bonds by the Authority which is recovered by the Authority from the bond owner as a voidable preference under applicable bankruptcy law is covered by the insurance policy, however, such payments will be made by the 2026 Insurer at such time and in such amounts as would have been due absence such prepayment by the Authority unless the 2026 Insurer chooses to pay such amounts at an earlier date.

Under most circumstances, default of payment of principal and interest does not obligate acceleration of the obligations of the 2026 Insurer without appropriate consent. The 2026 Insurer may direct and must consent to any remedies and the consent of the 2026 Insurer may be required in connection with amendments to any applicable bond documents.

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Attachment 2
39 In the event the 2026 Insurer is unable to make payment of principal and interest as such payments become due under the Policy, the 2026 Bonds are payable solely from the moneys received pursuant to the applicable bond documents. In the event the 2026 Insurer becomes obligated to make payments with respect to the 2026 Bonds, no assurance is given that such event will not adversely affect the market price of the 2026 Bonds or the marketability (liquidity) for the 2026 Bonds.

The long-term insured rating on the 2026 Bonds is dependent in part on the financial strength of the 2026 Insurer and its claim paying ability. The financial strength and claims paying ability of the 2026 Insurer are predicated upon a number of factors which could change over time. No assurance is given that the long-term ratings of the 2026 Insurer and of the ratings on the 2026 Bonds insured by the 2026 Insurer will not be subject to downgrade and such event could adversely affect the market price of the 2026 Bonds or the marketability (liquidity) for the 2026 Bonds.

See “RATINGS.”
The obligations of the 2026 Insurer are contractual obligations and in an event of default by the 2026 Insurer, the remedies available may be limited by applicable bankruptcy law or state law related to insolvency of insurance companies.

Neither the Authority nor the Underwriter have made independent investigation into the claims paying ability of the 2026 Insurer and no assurance or representation regarding the financial strength or projected financial strength of the 2026 Insurer is given. Thus, when making an investment decision, potential investors should carefully consider the ability of the Authority to pay principal and interest on the 2026 Bonds and the claims paying ability of the 2026 Insurer, particularly over the life of the investment. See “BOND INSURANCE” for further information provided by the 2026 Insurer and APPENDIX G–“SPECIMEN MUNICIPAL BOND INSURANCE POLICY” for the Policy, which includes further instructions for obtaining current financial information concerning the 2026 Insurer.] Investment of Funds
All funds and accounts held under the Indenture are required to be invested in Permitted Investments as provided under the Indenture. See APPENDIX C–“FORMS OF PRINCIPAL LEGAL DOCUMENTS–THE INDENTURE” attached hereto for a summary of the definition of Permitted Investments. All investments, including the Permitted Investments and those authorized by law from time to time for investments by public agencies, contain a certain degree of risk. Such risks include, but are not limited to, a lower rate of return than expected, loss of market value and loss or delayed receipt of principal. The occurrence of these events with respect to amounts held under the Indenture or by the Participants could have a material adverse effect on the security of the 2026 Bonds.

Limitations on Remedies and Bankruptcy
In addition to the specific limitations on remedies contained in the applicable documents, the rights, obligations and remedies provided in the Indenture, the Pledge Agreement, and the Delivery Contracts are subject to bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors’ rights, to the application of equitable principles if equitable remedies are sought, and to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State.

The enforcement of the remedies provided in the Indenture, the Pledge Agreement, and the Delivery Contracts could prove both expensive and time consuming. In addition, the rights and remedies provided in the Indenture, the Pledge Agreement, and the Delivery Contracts may be limited by and are subject to provisions of the federal bankruptcy laws, as now or hereafter enacted, and to other laws or equitable principles that may affect creditors’ rights. The various opinions of counsel to be delivered with respect to such documents, including the opinion of Bond Counsel (the form of which is attached as APPENDIX E), will be similarly qualified.

Cybersecurity
The Flood Control District and the Participants rely on a complex technology environment to conduct their daily operations. As a recipient and provider of personal, confidential, and sensitive information the Flood Control

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Paso Robles City CouncilAugust 18, 2026

Paso Robles City Council
August 18, 2026