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Transfer or Exchange of Bonds
So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, transfers and exchanges of Bonds shall be made in accord ance with DTC procedures. See APPENDIX G. Any Bond may, in accordance with its terms, be transferred or exchanged by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by delivery of a duly written instrument of transfer in a form approved by the Fiscal Agent. Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the City shall execute and the Fiscal Agent shall authenticate and deliver a new Bond or Bonds, for a like aggregate principal amount of Bonds of authorized denominations and of the same maturity. The cost for any s ervices rendered or any expenses incurred by the Fiscal Agent in connection with any such transfer or exchange shall be paid by the City. The Fiscal Agent shall collect from the Owner requesting such transfer any tax or other governmental charge required to be paid with respect to such transfer or exchange.
No transfers or exchanges of Bonds shall be required to be made (i) within 15 days prior to the date established by the Fiscal Agent for selection of Bonds for redemption or (ii) with respect to a Bond after such Bond has been selected for redemption.
ITEM 12.1.
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SECURITY FOR THE BONDS
The Bonds are secured by and payable from a first pledge of the proceeds of the “Special Tax Revenues,” defined in the Fiscal Agent Agreement as the proceeds of the Special Tax received by the City for Improvement Area No. 1, less an amount equal to the Administrative Expense Priority , including all scheduled payments and delinquent payments thereof, interest and penalties thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes . “Administrative Expense Priority” means (i) for Fiscal Year 2023-24, $30,000, and (ii) for each subsequent year, an amount equal to the preceding fiscal year ’s Administrative Expense Priority plus an additional 2% of such amount.
All of the Special Tax Revenues and all moneys deposited in the Bond Fund and, until disbursed as provided in the Fiscal Agent Agreement , the Improvement Fund and the Special Tax Fund are pledged to secure the repa yment of the Bonds. In addition, the Bonds are secured by a pledge of all amounts in the Reserve Fund. Such pledge shall constitute a first lien on the Special Tax Revenues and said amounts.
The Special Tax Revenues and all moneys deposited into said funds are pledged to the payment of the principal of, and interest and any premium on, the Bonds as provided in the Fiscal Agent Agreement and in the Mello -Roos Act until all of the Bonds have been paid and retired or until moneys or Federal Securities (as defined in the Fiscal Agent Agreement) have been set aside irrevocably for that purpose. The City may issue additional bonds secured on a parity with the Bonds only for refunding purposes; see “–Additional Bonds” below.
Amounts in a Costs of Issuance Fund established under the Fiscal Agent Agreement are not pledged to the repayment of the Bonds. The Facilities are not in any way pledged to the repayment of the Bonds. Any proceeds of condemnation, destruction or other disposition of any Facilities are not pledged to the repayment of the Bonds and are free and clear of any lien or obligation imposed under the Fiscal Agent Agreement.
Special Taxes
A Special Tax applicable to each taxable parcel in Improvement Area No. 1 will be levied and collected according to the tax liability determined by the City through the applica tion of the Rate and Method prepared by Goodwin Consulting Group, Inc., Sacramento, California (the “Special Tax Consultant ”) and set forth in APPENDIX A hereto, for all taxable properties in Improvement Area No. 1 . Interest and principal on the Bonds is payable from the annual Special Taxes to be levied and collected on such property within Improvement Area No. 1, from amounts held in certain funds and accounts established under the Fiscal Agent Agreement and from the proceeds, if any, from the sale of such property for delinquency of such Special Taxes.
The Special Taxes are exempt from the property tax limitation of Article XIIIA of the California Constitution, pursuant to Section 4 thereof as a “special tax ” authorized by a two - thirds vote of the qualified electors. The levy of the Special Taxes was authorized by the City pursuant to the Mello- Roos Act in a maximum amount determined according to the Rate and Method approved by the City. See “Rate and Method ” below and “APPENDIX A – Rate and Method of Apportionment of Special Tax.”
The amount of Special Taxes that the City may levy in any year on taxable property in Improvement Area No. 1, from which principal and interest on the Bonds is to be paid, is limited ITEM 12.1.
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by the maximum rates approved by the qualified electors within Improvement Area No. 1 which are set forth as the “Maximum Special Tax” in the Rate and Method . Under the Rate and Method, Special Taxes will be levied annually in an amount not in excess of t he Maximum Special Tax for the purpose of making payments on the Bonds. The Special Taxes and any interest earned on the Special Taxes shall constitute a fund for the principal of and interest on the Bonds pursuant to the Fiscal Agent Agreement and, so long as the amount levied for principal of and interest on these obligations remains unpaid, the Special Taxes and investment earnings thereon shall not be used for any other purpose, except as permitted by the Fiscal Agent Agreement, and shall be held in trust for the benefit of the owners thereof and shall be applied pursuant to the Fiscal Agent Agreement. The Rate and Method apportions the Special Tax Requirement (as defined in the Rate and Method and described below) among the taxable parcels of real property within Improvement Area No. 1 according to the rate and methodology set forth in the Rate and Method. See “– Rate and Method” below. See also “APPENDIX A – Rate and Method of Apportionment of Special Tax.”
The City may levy the Special Tax up to the Maximum Special Tax rate authorized by the qualified electors within Improvement Area No. 1 as set forth in the Rate and Method if conditions so require and the City has covenanted to annually levy the Special Taxes in an amount at least sufficient to pay the Special Tax Requirement (as defined below). Because each Special Tax levy for payment o f the Bonds is limited to the Maximum Special Tax rates authorized as set forth in the Rate and Method, no assurance can be given that, in the event of Special Tax delinquencies, the amount of the Special Tax Requirement will in fact be collected in any gi ven year. See “BOND OWNERS’ RISKS – Levy and Collection of the Special Tax” herein. The Special Taxes are collected for the City by the County in the same manner and at the same time as ad valorem property taxes.
In addition to the Maximum Special Tax rate limitation in the Rate and Method, Section 53321(d) of the Mello-Roos Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such fiscal year had there never been any such delinquencies or defaults.
Rate and Method
The Special Tax authorized under the Mello -Roos Act applicable to land within Improvement Area No. 1 will be levied and collected according to the tax liability determined by the City through the application of the app ropriate amount or rate as described in the Rate and Method (defined terms set forth below in this section have the meanings set forth in the Rate and Method) set forth in “APPENDIX A – Rate and Method of Apportionment of Special Tax.” The Special Tax will be levied each year from parcels within Improvement Area No. 1 in an amount at least sufficient to pay debt service on outstanding Bonds and administrative expenses. The Special Tax is expected to be collected at the same time and in the same manner as ad valorem property taxes. The City reserves the right to collect the taxes in another manner if required to meet annual obligations of Improvement Area No. 1.
Each year, the City will determine the Special Tax Requirement for the up coming fiscal year. The “Special Tax Requirement” is defined in the Rate and Method as the amount necessary in any fiscal year (i) to pay principal and interest on Bonds which are due in the calendar year which begins in such fiscal year, (ii) to pay periodic costs for the Bonds, including but not limited to , credit enhancement, liquidity support and rebate payments on the Bonds, ITEM 12.1.
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(iii) to replenish reserve funds to the extent such replenishment was not included in the computation of the Special Tax Req uirement in a previous fiscal year , (iv ) to cure any delinquencies in the payment of principal or interest on Bonds which have occurred in the prior fiscal year or, based on prior delinquencies, are expected to occur in the current fiscal year , (v) to pay Administrative Expenses, and (vi) to pay directly for Authorized Facilities, so long as such levy under this clause (vi) does not increase the Special Tax on Final Map Property or Undeveloped Property (as defined in the Rate and Method ). The Special Tax Requirement components in clauses (i) and (ii) may be reduced in any fiscal year by (a) interest earnings on, or surplus balances in, funds and accounts for the Bonds to the extent that such earnings or balances are available to apply against debt service p ursuant to the Indenture, Bond resolution, or other legal document that set forth these terms, ( b) in the sole and absolute discretion of the City, proceeds received by the City from the collection of penalties associated with delinquent Special Taxes; and (c) any other revenues available to pay such costs as determined by the City.
Parcels Subject to the Special Tax. The City will prepare a list of the parcels subject to the Special Tax using the records of the City and the County Assessor. The City has the authorization to tax all parcels within Improvement Area No. 1 except tax-exempt parcels as described in the Rate and Method.
Each Fiscal Year, the Administrator shall: (i) assign each Parcel of Taxable Property to the appropriate Development Class, (ii) for Developed Property, categorize each Parcel as Single Family Detached Property, Single Family Attached Prope rty or Other Property, (iii) for Single Family Detached Property, determine the Lot Category for each SFD Lot; (iv) for Single Family Attached Property, determine the number of SFA Units on each Parcel; (v) for Other Property, determine the Acreage of each Parcel; and (vi) determine the Special Tax Requirement for the Fiscal Year. In addition, the Administrator shall, on an ongoing basis, monitor the Tentative Map, Final Maps, and Building Permits to determine if there are any proposed Land Use Changes that would change the Expected Maximum Special Tax Revenues.
If the Expected Maximum Special Tax Revenues will be revised pursuant to a proposed Land Use Change, the Administrator shall apply the steps set forth in Section D of the Rate and Method. In any Fiscal Year, if it is determined that: (i) a parcel map for property in Improvement Area No. 1 was recorded after January 1 of the prior Fiscal Year (or any other date after which the Assessor will not incorporate the newly -created Parcels into the then curr ent tax roll), (ii) because of the date the parcel map was recorded, the Assessor does not yet recognize the new Parcels created by the parcel map, and (iii) one or more of the newly -created Parcels is in a different Development Class and/or Land Use Categ ory than other Parcels created by the subdivision, the Administrator shall calculate the Special Taxes for the property affected by recordation of the parcel map by determining the Special Taxes that apply separately to the property within each Development Class and/or Land Use Category, then applying the sum of the individual Special Taxes to the Parcel that was subdivided by recordation of the parcel map.
Assignment of Maximum Special Tax. The Rate and Method describes in detail the precise method for assigning the Maximum Special Tax to parcels within Improvement Area No. 1, which generally provides that each year the City will use the definitions contained in the Rate and Method to classify each parcel as tax-exempt or taxable. Changes to maximum special tax rates due to Land Use Changes are handled per Section D of the Rate and Method . See APPENDIX A.
ITEM 12.1.
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Maximum Special Tax Rates. The Maximum Special Tax for a Parcel of Developed Property based on a lot category of “A,” “B,” or “C” designated in the Rate and Method, based on lot size (see the “Lot Category” definitions in Appendix A) at the time the District was formed, as shown below and in Attachment 2 of the Rate and Method. The Rate and Method includes a designated tax amount for Attached Property and Other Property, however no development into those designations is expected. For additional details, see APPENDIX A.
Development Status Land Use
Lot
Category
FY 2024-25
Maximum Special Tax (1)(2)
Developed Property Single Family Detached A $1,859.24 per Residential Unit Single Family Detached B $2,682.74 per Residential Unit Single Family Detached C $3,463.78 per Residential Unit Single Family Attached N/A $1,859.24 per Residential Unit Other Property N/A $26,955.74 per Acre
Final Map Property Single Family Detached A $1,859.24 per SFD Lot Single Family Detached B $2,682.74 per SFD Lot
Single Family Detached C $3,463.78 per SFD Lot
Single Family Attached N/A $1,859.24 per Residential Unit Other Property N/A $26,955.74 per Acre
Undeveloped Property N/A N/A $26,955.74 per Acre
(1) On July 1, 2025 and each July 1 thereafter, the Maximum Special Taxes shall be increased by two percent of the amount in effect in the previous fiscal year.
(2) Represents the Maximum Special Tax rates based on currently expected land uses in the CFD. Subject to change pursuant to Section D of the RMA.
Source: Goodwin Consulting Group, Inc.
In addition to the Maximum Special Tax rate limitation in the Rate and Method, Section 53321(d) of the Mello-Roos Act provides that the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinq uency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such fiscal year had there never been any such delinquencies or defaults.
Levy of Special Tax . Once the Special Tax Requirement has been determined for a particular Fiscal Year, the Special Tax will be levied Proportionately on each Parcel of Developed Property up to 100% of the Maximum Special Tax fo r each Parcel of Developed Property until the amount levied is equal to the Special Tax Requirement prior to applying any Capitalized Interest that is available in the CFD accounts. “Developed Property” for purposes of the Rate and Method means, in any Fis cal Year, all Parcels of Taxable Property that are not Taxable Owners Association Property, Taxable Public Property, or Taxable Welfare Exemption Property for which a Building Permit for new construction was issued prior to June 1 of the preceding Fiscal Year.
Termination of the Special Tax . The Special Tax will be levied until all Bonds have been repaid and all authorized facilities have been funded ; however, Special Taxes cannot be levied under any circumstance after fiscal year 2062-63.
Prepayment of the Special Tax . The Special Tax obligation assigned to a particular parcel within Improvement Area No. 1 can be prepaid, which will release the parcel making the prepayment from the Mello-Roos special tax lien. Section H of the Rate and Method sets forth a detailed formula by which the prepayment for a parcel can be calculated. Proceeds of such prepayment will be used to redeem a portion of the Bonds. See “THE BONDS – Redemption.” ITEM 12.1.
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Projected Fiscal Year 202 4-25 Special Tax Levy . The following table shows the projected Fiscal Year 2024-25 special tax levy for Improvement Area No. 1
Projected Fiscal Year 2024-25
Special Tax Levy (1)
Projected Fiscal Year 202 4-25 Special Tax Levy . The following table shows the projected Fiscal Year 2024-25 special tax levy for Improvement Area No. 1
Development Status Land Use
Lot
Category
FY 2024-25
Maximum Special Tax (1)(2)
Developed Property Single Family Detached A $40,903 $40,903 Single Family Detached B 118,041 118,041
Single Family Detached C 79,667 79,667
Final Map Property Single Family Detached A $130,147 $114,202 Single Family Detached B 375,583 329,571
Single Family Detached C 232,073 203,642
Undeveloped Property N/A N/A $0 $0
Total $976,414 $886,027
(1) Based on building permits issued by July 31, 2023 and final maps recorded by June 30, 2023. (2) Includes anticipated debt service due in 2025 on the Series 2023 Special Tax Bonds and estimated administrative expenses in the amount of $30,600. The Administrative Expense Priority for fiscal year 2023-24 is $30,000 and escalates by 2% per year.
Sources: Goodwin Consulting Group, Inc.
Special Tax Fund
When received, the Special Tax Revenues are required under the Fiscal Agent Agreement to be deposited into a Special Tax Fund to be held by the City in trust for the benefit of the City and the Owners of the Bonds. Within the Special Tax Fund, the City will establish and maintain two accounts, (i) the Debt Service Account, to the credit of which the City will deposit, immediately upon receipt, all Special Tax Revenue s, and (ii) the Surplus Account, to the credit of which the City will deposit surplus Special Tax Revenue as described below. Moneys in the Special Tax Fund will be disbursed as provided below and, pending any disbursement, will be subject to a lien in favor of the Owners of the Bonds. Notwithstanding the foregoing, the City may semi -annually transfer from the Special Tax Fund so held an amount equal to one -half of the Administrative Expense Priority as necessary for the payment of Administrative Expenses up to the Administrative Expense Priority.
All Special Tax Revenue will be deposited in the Debt Service Account upon receipt.
No later than 10 Business Days prior to each Interest Payment Date, the City will withdraw from the Debt Service Account of the Special Tax Fund and transfer ( i) to the Fiscal Agent for deposit in the Reserve Fund, an amount which when added to the amount then on deposit therein, is equal to the Reserve Requirement, and (ii) to the Fiscal Agent for deposit in the Bond Fund an amount, taking into account any amou nts then on deposit in the Bond Fund, such that the amount in the Bond Fund equals the principal, including any mandatory sinking fund payments, premium, if any, and interest due on the Bonds on the next Interest Payment Date. At such time as deposits to the Debt Service Account equal the principal, including any mandatory sinking fund payments, premium if any, and interest becoming due on the Bonds ITEM 12.1.
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for the current Bond Year and the amount needed to restore the balance of the Reserve Fund to the Reserve Re quirement, the amount in the Debt Service Account in excess of such amount may, at the discretion of the City on or after September 15th of each year , be transferred to the Surplus Account and thereafter be free of the pledge to pay the Bonds.
Moneys in the Surplus Account may, at the City ’s discretion, be used to pay for costs of the Facilities, to pay the principal of, premium, if any, and interest on the Bonds or to replenish the Reserve Fund to the amount of the Reserve Requirement, but are not pledge d to payment of the Bonds.
Deposit and Use of Proceeds of Bonds
The Bonds are additionally secured by certain amounts generated from proceeds of the Bonds, together with interest earnings thereon pledged under the Fiscal Agent Agreement.
The proceeds of the initial purchase of the Bonds shall be paid to the Fiscal Agent, who shall deposit such proceeds in the 2022 Costs of Issuance Fund, the Improvement Fund, the Bond Fund (for capitalized interest) and the Reserve Fund established under the Fiscal Age nt Agreement. See APPENDIX C for information on use of the moneys, including investment earnings thereon, in the various funds established under the Fiscal Agent Agreement. See also “– Reserve Fund” and “– Improvement Fund” below.
Delinquent Payments of Special Tax; Covenant for Foreclosure
The Special Tax will be collected in the same manner and the same time as ad valorem property taxes, except at the City ’s option, the Special Taxes may be billed directly to property owners. In the event of a delinquency in the payment of any installment of Special Taxes, the City is authorized by the Mello -Roos Act to order institution of an action in superior court to foreclose the lien therefore.
The City has covenant ed in the Fiscal Agent Agreement with and for the benefit of the Owners of the Bonds that it will annually on or before September 1 of each year review the public records of the County relating to the collection of the Special Tax in order to determine the amount of the Special Tax collected in the prior fiscal year, and if the City determines on the basis of such review that the amount so collected is deficient by more than 5 % of the total amount of the Special Tax levied in such fiscal year, it will withi n 30 days thereafter institute foreclosure proceedings as authorized by the Mello-Roos Act in order to enforce the lien of the delinquent installment of the Special Tax against each separate lot or parcel of land in Improvement Area No. 1 for which such installment of the Special Tax is delinquent, and will diligently prosecute and pursue su ch foreclosure proceedings to judgment and sale; provided, that if the City determines on the basis of such review that:
(a) the amount so collected is deficient by less than 5% of the total amount of the Special Tax levied in Improvement Area No. 1 in such fiscal year, but that property owned by any single property owner in Improvement Area No. 1 is delinquent by more than $5,000 with respect to the Special Tax due and payable by such property owner in such fiscal year, or
(b) that property owned by any single property owner in Improvement Area No. 1 is delinquent on four consecutive semi -annual Special Tax installments (irrespective of the total delinquencies in Improvement Area No. 1), ITEM 12.1.
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then the City will institute, prosecute and pursue such foreclosure proceedings in the time and manner provided in the Fiscal Agent Agreement against each such property owner.
Under the Mello -Roos Act, foreclosure proceedings are instituted by the bringing of an action in the superior court of the county in which the parcel lies, naming the owner and other interested persons as defendants. The action is prosecuted in the same manner as other civil actions. In such action, the real property subject to the special taxes may be sold at a judicial foreclosure sale for a minimum price which will be sufficient to pay or reimburse the delinquent Special Taxes.
The owners of the Bonds benefit from the Reserve Fund establi shed pursuant to the Fiscal Agent Agreement; however, if delinquencies in the payment of the Special Taxes are significant enough to completely deplete the Reserve Fund, there could be a default or a delay in payments of principal and interest to the Owners of the Bonds pending prosecution of foreclosure proceedings and receipt by the City of the proceeds of foreclosure sales.
Additionally, it is possible that no bids are received at a foreclosure sale. Provided that it is not levying the Special Tax at the Maximum Special Tax rates set forth in the Rate and Method, the City may adjust the Special Taxes levied on all property within Improvement Area No. 1 subject to the Special Tax to provide an amount required to pay debt service on the Bonds, and to replenish the Reserve Fund, provided however such adjustment may not exceed the Maximum Special Tax or include an increase as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% abov e the amount that would have been levied in such fiscal year had there never been any such delinquencies or defaults.
Under current law, a judgment debtor (property owner) has at least 140 days from the date of service of the notice of levy in which to re deem the property to be sold. If a judgment debtor fails to redeem and the property is sold, his or her only remedy is an action to set aside the sale, which must be brought within 90 days of the date of sale. If, as a result of such an action a foreclos ure sale is set aside, the judgment is revived , and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made (California Code of Civil Procedure Section 701.680).
Foreclosure by court action is subject to normal litigation delays, the nature and extent of which are largely dependent upon the nature of the defense, if any, put forth by the debtor and the condition of the calendar of the superior court of the county. Such foreclosure actions can be stayed by the superior court on generally accepted equitable grounds or as the result of the debtor’s filing for relief under the Federal bankruptcy laws. The Mello -Roos Act provides that, upon foreclosure, the Special Tax lien will have the same lien priority as is p rovided for ad valorem taxes and special assessments. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 1 – Priority of Lien.”
Teeter Plan. In 1949, the California Legislature enacted an alternative method for the distribution of property taxes to local agencies. This method, known as the “Teeter Plan,” is found in Sections 4701-4717 of the California Revenue and Taxation Code. Upon adoption and implementation of this method by a county board of supervisors, local agencies for which the county collects property taxes and certain other public agencies and taxing areas located in the county receive annually the full amount of their shares of property taxes and other impositions collected on the secured roll, including delinquent property taxes which have yet to be collected.
While the county bears the risk of loss on unpaid delinquent taxes, it retains the penalties ITEM 12.1.
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associated with delinquent taxes when they are paid. In turn, the Teeter Plan provides participating local agencies with stable cash flow and the elimination of collection risk.
The Board of Supervisors of Sacramento County has adopted the Teeter Plan, and the County elects to apply its Teeter Plan to the collection of the Special Taxes annually. As such, the Teeter Plan has been applicable since the initial year of a Special Tax levy, but no assurance can be given that it will continue in any or all of the years that the Bonds are outstanding. To the extent that the County ’s Teeter Plan continues in existence and is carried out as adopted, and to the extent the County does not discontinue the Teeter Plan with respect to the City or Improvement Area No. 1, the County’s Teeter Plan may help protect owners of the Bonds from the risk of delinquencies in the payment of Special Taxes. However, there can be no assurance that the County will not modify or eliminate its Teeter Plan, or choose to remove Improvement Area No. 1 from its Teeter Plan permanently in any year while the Bonds are outstanding.
Once adopted, a county’s Teeter Plan will remain in effect in perpetuity unless the board of supervisors orders its discontinuance or unless, prior to the commencement of a fiscal year, a petition for discontinuance is received and joined in by resolutions of the governing bodies of not less than two-thirds of the participating districts in the county. An electing county may, however, decide to discontinue the Teeter Plan with respect to any levying agency in the county if the board of supervisors, by action taken not later than July 15 of a fiscal year, elects to discontinue the procedure with respect to such levying agency and the rate of secured tax delin quencies in that agency in any year exceeds 3% of the total of all taxes and assessments levied on the secured roll by that agency.
Reserve Fund
Under the Fiscal Agent Agreement, the Fiscal Age nt established the Reserve Fund , which is available for payment of the Bonds in the event of delinquencies in the payment of the Special Taxes to the extent of such delinquencies.
The City is required to maintain on deposit in the Reserve Fund an amount that is equal to the Reserve Requirement with respect to the Bonds. The “Reserve Requirement” means the least of (i) 125% of the average Annual Debt Service on the Bonds; (ii) Maximum Annual Debt Service on the Bonds; and (iii) 10% of the original principal amount of the Bonds (or, if the Bonds have more than a de minimis amount of original issue discount or premium, 10% of the issue price of such Series of Bonds); provided, that in no event shall the City be ob ligated to deposit an amount in the Reserve Fund in e xcess of the amount permitted by the applicable provisions of the Code to be so deposited from the proceeds of tax -exempt bonds without having to restrict the yield of any investment purchased with any p ortion of such deposit and, if the amount of any such deposit is so limited, the Reserve Requirement shall be only the amount of such deposit as permitted by the Code . The Reserve Requirement shall not increase subsequent to the issuance of the Bonds.
Amounts deposited in the Reserve Fund will be used and withdrawn by the Fiscal Agent solely for the purpose of making transfers to the Bond Fund in the event of any deficiency at any time in the Bond Fund of the amount then required for payment of the princi pal of, and interest on, the Bonds secured by the Reserve Fund. If there are additional delinquencies after depletion of funds in the Reserve Fund, the City is not obligated to pay the Bonds or supplement the Reserve Fund.
ITEM 12.1.
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Whenever, on the Business Day p rior to any Interest Payment Date, the amount in the Reserve Fund exceeds the then applicable Reserve Requirement, the Fiscal Agent will transfer an amount equal to the excess from the Reserve Fund to the Bond Fund or the Improvement Fund as provided below, except that investment earnings on amounts in the Reserve Fund may be withdrawn from the Reserve Fund for purposes of making payment to the Federal government to comply with rebate requirements.
Moneys in the Reserve Fund will be invested and deposited in accordance with the Fiscal Agent Agreement. Interest earnings and profits resulting from the investment of moneys in the Reserve Fund and other moneys in the Reserve Fund will remain therein until the balance exceeds the Reserve Requirement; any amount s in excess of the Reserve Requirement will be transferred to the Improvement Fund, if the Facilities have not been completed, or if the Facilities have been completed, to the Bond Fund to be used for the payment of the principal of and interest on the Bonds in accordance with the Fiscal Agent Agreement.
The City has the right at any time to cause the Fiscal Agent to release funds from the Reserve Fund, in whole or in part, by tendering to the Fiscal Agent an irrevocable standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance company (a “Qualified Reserve Fund Credit Instrument”), provided certain conditions are met, includi ng that the long-term credit rat ing of such bank or insurance company is rated at least “AA” (without regard to qualifier) by S&P or Moody’s.
Whenever the balance in the Reserve Fund exceeds the amount required to redeem or pay the Outstanding Bonds, incl uding interest accrued to the date of payment or redemption and premium, if any, due upon redemption, and making any other transfer required under the Fiscal Agent Agreement, the Fiscal Agent will transfer the amount in the Reserve Fund to the Bond Fund to be applied, on the next succeeding Interest Payment Date, to the payment and redemption of all of the Outstanding Bonds. If the amount so transferred from the Reserve Fund to the Bond Fund exceeds the amou nt required to pay and redeem the Outstanding Bonds, the balance in the Reserve Fund will be transferred to the City, after payment of any amounts due the Fiscal Agent, to be used for any lawful purpose of the City.
Improvement Fund
Under the Fiscal Agent Agreement, the Fiscal Agent establishes an “Improvement Fund,” which is held and used by the Fiscal Agent to pay the costs of the Facilities.
Disbursements from the Improvement Fund will be made by the Fiscal Agent in accordance with written requests of the City.
Before any payment from the Improvement Fund shall be made, the City shall file or cause to be filed with the Fiscal Agent a written request of the City for disbursement of moneys from such fund. Such withdrawals shall be implemented by the City pursuant to the terms and requirements of the Acquisition Agreement (described below). The Fiscal Agent need not make any such payment if it has received notice of any lien, right to lien or attachment upon, or claim affecting the right to receive payment of, any of the moneys to be so paid, that has not been released or will not be released simultaneously with such payment. The Fiscal Agent shall not incur any liability for any disburs ement from the Improvement Fund made in relian ce upon any requisition. When the City determines that all of the costs of the Facilities to be financed with proceeds of the Bonds have been paid, the City shall provide written notification of such determination to the Fiscal Agent and direct the Fiscal Agent to transfer any remaining balance in any Improvement Fund into the Bond Fund. See “THE FACILITIES – Acquisition by the City.” ITEM 12.1.
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Additional Bonds
The Resolution of Formation authorizes the issuance of up to $ 25,000,000 of bonded indebtedness for Improvement Area No. 1 ; the Bonds represent the first series of bonds and under the provisions of the Fiscal Agent Agreement the City is precluded from issuing additional bonds secured by the Special Taxes on parity wit h the Bonds, except for refunding bonds issued under the Act. The City may issue bonds for Improvement Area No. 1 secured by Special Taxes on a subordinate basis to the pledge of Special Taxes for payment of the Bonds.
ITEM 12.1.
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DEBT SERVICE SCHEDULE AND COVERAGE
Debt Service Schedule. The annual debt service on the Bonds based on the interest rates and maturity schedule set forth on the cover of this Official Statement is set forth below (assuming no early redemptions).
City of Rancho Cordova
Arista Del Sol Community Facilities District No. 2022-1 Improvement Area No. 1
Special Tax Bonds Series 2023
Debt Service Schedule
Period Ending
Sept. 1
Bonds
Principal
Bonds
Interest(1)
Bonds
Total Debt Service
Total
_____________
(1) A portion of the interest on the Bonds due through September 1, 2024 will be paid from capitalized interest.
Source: Underwriter.
ITEM 12.1.
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Projected Debt Service Coverage . The projected debt service coverage for Fiscal Year 2024-25 is set forth below, and is based on the current status of development and only the Bonds outstanding. To the extent that development status changes , the debt service coverage may be different than what is shown. The Bonds have been structured so there is at least 110% debt service coverage from Special Tax Revenues in every year the Bonds are outstanding.
City of Rancho Cordova
Arista Del Sol Community Facilities District No. 2022-1 Improvement Area No. 1
Special Tax Bonds Series 2023
Projected Fiscal Year 2024-25 Debt Service Coverage(1)(2)
Maximum
Special Tax
Developed
Property (3)
Maximum
Special Tax
Developed
and Final
Map
Property (3)
Priority
Admin (4)
Estimated
Series 2023
Debt Service*
Debt Service
Coverage
from
Developed
Property *
Debt Service
Coverage
from
Developed
and Final
Map
Property *
$238,611 $976,414 ($30,600) $855,425 24.32% 110.57%
* Preliminary; subject to change.
(1) Pursuant to Section 53321(d) of the Government Code, the special tax levied against any assessor's parcel for which an occupancy permit for private residential use has been issued shall not be increased as a consequence of delinquency or default by the owner of any other assessor's parcel within the District by more than 10% above the amount that would have been levied in the fiscal year had there never been any such delinquencies or defaults. (2) Based on currently-expected land uses in Improvement Area No. 1. Subject to change pursuant to Section D of the RMA.
(3) Includes projected Maximum Special Tax revenues based on the status of development as of July 31, 2023.
Assumes no future development.
(4) As defined in the Fiscal Agent Agreement. Equals $30,000 in FY 2023-24, escalating by 2% per year thereafter.
Sources: Piper Sandler & Co.; Goodwin Consulting Group, Inc.
ITEM 12.1.
ATTACHMENT 4
-23-
IMPROVEMENT AREA NO. 1
Formation and Background
On January 3, 2022 , the City Council adopted a Resolution of Intention to form the District, designate Improvement Area No. 1 as an improvement area therein, and establish the Future Annexation Area, to levy a special tax and to incur bonded indebtedness for the purpose of financing the Facilities and making contributions to certain public facilities. After conducting a noticed public hearing, on May 16, 2022, the City Council adopted the Resolution of For mation, which established the District , designated Improvement Area No. 1 therein, and created the Future Annexation Area , approved the Rate and Method for Improvement Area No. 1 and set forth the necessity to incur bonded indebtedness for the District and Improvement Area No. 1 in a total amount not to exceed $ 50,000,000 (excluding bonds or notes described in Section 53364.2(e) of the Mello-Roos Act), initially allocated as follows: (i) for Improvement Area No. 1, $25,000,000 and (ii) for the portion of th e District that is in the Future Annexation Area and not currently in Improvement Area No. 1, $ 25,000,000. On the same day, an election was held within Improvement Area No. 1 in which Woodside, as the sole eligible landowner voters in the District, approved the proposed bonded indebtedness and the levy of the Special Tax within Improvement Area No. 1. See “OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 1” below.
Description and Location
General. The District is referred to by the City as the “Arista Del Sol” residential project, which is located within the Sunridge Specific Plan area of the City, northwest of Grantline Road at northwest corner of Chrysanthy Boulevard and Grant Line Road , south of Douglas Road, which represents the main east/west thoroughfare in the neighborhood. This is approximately 15 miles east of the Sacramento Central Business District, south of U.S. Highway 50, one of two main east-west routes in Sacramento . On- and off-ramps for U.S. Highway 50 are accessible via Sunrise Boulevard, about seven miles northwest of the District. To the east, it provides access to El Dorado County, various foothills communities, the Sierra Nevada Mountains and Lake Tahoe. To the west, Highway 50 is the principal route to Sacramento’s Central Business District and other major freeways.
The Sunridge Specific Plan provides a mix of uses organized around the various single family residential neighborhoods, many of which have been completed and sold o ut. The plan area is primarily residential but is supplemented with commercial and office uses; housing types consist mostly of detached single-family residential units.
Improvement Area No. 1 represents a portion of a planned larger primarily residential community, “Arista Del Sol,” comprised of 740 residential lots. In addition to the residential units, the community is planned for a neighborhood park, commercial lots, two detention basins and two onsite preserves. The portion of the overall Arista Del Sol project in Improvement Area No. 1 is approved for development as 366 single-family residential units on separate lots. As of the July 31, 2023 date of the Appraisal the project included 7 homes owned by individual homeowners, 68 homes under construction, 277 partially improved lots, and 14 completed homes currently serving as models. The greater Rancho Cordo va area is a mature suburban area, which encompasses all types of land uses, including single -family and mul tifamily residential, retail, office and industrial, and has experienced continued growth since the mid 1980’s. This area currently is a substantial suburban office market within the Sacramento region, as well as a major employment center, most of which is located along U.S. Highway 50 ITEM 12.1.
ATTACHMENT 4
-24-
which traverses the City. For certain demographic information relating to the City and the County, see “APPENDIX D – Sacramento County and City of Rancho Cordova Demographic Information.”
Maps. The following page s show the boundary map of the District (including Improvement Area No. 1 therein), and the villages planned for the project.
ITEM 12.1.
ATTACHMENT 4
-25-
[Insert CFD Boundary Map]
ITEM 12.1.
ATTACHMENT 4
-26-
[Insert Site Plan Map]
ITEM 12.1.
ATTACHMENT 4
-27-
Development in the District
Woodside has provided the following information with respect to development within the District. No assurance can be given that all information is complete. No assurance can be given that development of the property will be completed, or that it will be completed in a timely manner. Since the ownership of the parcels is subject to change, the development plans outlined below may not be continued by the subsequent owner if the parcels are sold, although development by any subsequent owner will be subject to the Devel opment Agreement and the policies and requirements of the City. No assurance can be given that the plans or projections detailed below will actually occur.
The portion of the overall Arista Del Sol project in Improvement Area No. 1 is approved for development into 366 single -family residential units on separate lots , with development underway four neighborhoods known as “Valley Oaks at Cypress,” “Palo Verde at Cypress,” “Sycamore at Cypress,” and “Acacia II at Cypress.” The proposed product mix for the homes planned to be constructed by Woodside within the neighborhoods is set forth in the following table.
Improvement Area No. 1 Floor Plan Summary
Floor Plan
Living
Area (SF)
Bedroom
Bathroom
Stories
Garage
Typical
Lot Size
(SF)
Developer's
Base
Price(1)
Aster P1 1,877 3 2.0 One 2-Car 4,725 $575,990
Coral P2 2,065 4 3.0 One 2-Car 4,725 $599,990
Alpine P3 2,264 4 3.0 Two 2-Car 4,725 $630,990
Elderberry P4 2,438 4 3.0 Two 2-Car 4,725 $654,990
Echo P1 1,673 3 2.0 Two 2-Car 4,200 $515,990
Sage P2 1,850 3 2.5 Two 2-Car 4,200 $538,990
Grove P3 2,074 4 3.0 Two 2-Car 4,200 $565,990
Sunrise P4 2,358 4 3.0 Two 2-Car 4,200 $595,990
Autumn P1 2,166 3 2.5 One 2-Car 4,725 $624,990
Cove P2 2,460 4 3.5 Two 2-Car 4,725 $659,990
Crescent P3 2,578 4 3.5 Two 2-Car 4,725 $674,990
Jasmine P4 2,879 4 3.5 Two 2-Car 4,725 $719,990
Primrose P1 2,395 3 2.5 One 2-Car 5,775 $687,990
Canyon P2 2,662 3-4 3.0 One 2-Car 5,775 $722,990
Orchid P3 3,105 4-5 3.5 Two 2-3-Car 5,775 $777,990
Waterfall P4 3,523 5 4.5 Two 2-3-Car 5,775 $842,990
(1) As of July 2023, subject to change.
Status of Development. Woodside obtained approval of final maps in May of 2022, with lots ranging from 4,200 to 5,775 square feet. Model home construction commenced in November 2022 and currently 14 models are open and marketing of homes to consumers is ongoing. The first phase of production homes began in December 2022. As of July 31, 2023, 7 homes are owned by individual homeowners, with the remaining 359 lots comprising 68 homes under construction, 277 partially improved lots, and 14 completed homes currently serving as models. The following table summarizes lot status as of the Appraisal valuation date, July 31, 2023.
ITEM 12.1.
ATTACHMENT 4
-28-
Improvement Area No. 1 Lot Development Status
(as of July 31, 2023)
Community
Partially
Improved
Lots
Partially
Completed
Homes
Completed
Homes (1) Total
Acacia 67 17 6 90
Sycamore 70 23 3 96
Valley Oaks 70 12 6 88
Palo Verde 70 16 6 92
TOTAL 277 68 21 366
(1) These are the model homes; completed homes without a complete assessment for structural improvements by County Assessor.
Woodside’s development expectations described above are based on Woodside’s current plans. These plans may change due to changes in economic and market conditions or other factors. No assurance can be given that home construction and sales will be carrie d out on the schedule and according to the plans described herein, or that the home construction and sale plans or base prices set forth above will not change after the date of this Official Statement.
Woodside reserves the right to change its development plans at any time without notice.
Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation by th e homebuyer. See “SPECIAL RISK FACTORS — Property Values and Risks Related to Development.”
Financing Plan . [WOODSIDE TO VERIFY] Woodside intends to finance the development of its neighborhood s within the project using internal sources, including cash generated from its homebuilding operations and advances from affiliates of its parent Woodside Homes Company. Woodside Homes Company has a $330 million unsecured term loan.
Woodside Homes Company also has an unsecured revolving credit facility with borrowing capacity as of April 1, 2023 of $200 million, which is not subject to a borrowing base. [[UNDERWRITER WANTS CONFIRMATION THESE ARE IN GOOD STANDING]]
As of July 30, 2023, Woodside has expende d approximately $33 million on its development within Improvement Area No. 1, including land acquisition costs and site development cost, and anticipated expending an additional approximately $145 million to complete the development, including, site develo pment costs, permits and fees, direct and indirect home construction costs, and marketing and sales costs and expenses.
No assurance can be given that amounts necessary to fund the planned development by Woodside in Improvement Area No. 1 will be available when needed. Neither Woodside nor any other entity or person is under any legal obligation of any kind to expend funds fo r the development of the property as planned by Woodside in Improvement Area No. 1. Any contributions by Woodside or any other entity or person to fund the costs of such development are entirely voluntary. Woodside has no legal obligation to Bond holders t o make any such funds available for construction or development, or the payment of ad valorem property taxes or the Special Taxes. Many factors beyond Woodside’s control, or a decision by Woodside to alter its current plans, may cause the actual sources and uses to differ from the projections.
If and to the extent that internal funding, including but not limited to home sales revenues and corporate financing from affiliates of Woodside’s parent company, is inadequate to pay the costs to complete the plann ed development by Woodside within Improvement Area No. 1 and other financing by Woodside is not put into place, there could be a shortfall in the funds required ITEM 12.1.
ATTACHMENT 4
-29-
to complete the proposed development by Woodside in Improvement Area No. 1 and the remaining portions of Woodside’s project in Improvement Area No. 1 may not be developed.
See “SPECIAL RISK FACTORS – Property Values and Property Development” herein.
Environmental Matters
Flood Hazard Map Information . Land in the District is located in Flood Zone X, described as areas outside of the 100 and 500 -year flood plains (less than 0.2% annual chance flooding in any given year - flood insurance not required). This information is according to the Federal Emergency Manage ment Agency Flood Map, Community Panel No. 06067C-0309H, revised August 16, 2012 . Land in the District is not subject to the Central Valley Flood Protection Plan (SB 5).
Seismic Conditions. According to the California Seismic Safety Commission, the District is located within Zone 3, areas of moderate seismic activity. Zone 3 is considered to be the lowest risk zone in California. In addition, the District is not located within a Fault -Rupture Hazard Zone (formerly referred to as an Alquist -Priolo Special Study Zone), as defined by Special Publication 42 of the California Department of Conservation, Division of Mines and Geology.
Wildfire Hazards. Land in Improvement Area No. 1 is not located in a High or Very High Fire Hazard Severity Zone (FHSZ), as defined by CAL FIRE.
ITEM 12.1.
ATTACHMENT 4
-30-
THE FACILITIES
Eligible Facilities
The Facilities eligible to be financed by the District (including Improvement Area No. 1 therein) are set forth in the Resolution of Formation and include roadway and transportation improvements, park improvements, in -tract improvements as well as certain development impact fees imposed by the City and other local agencies, including fees for transportation related facilities, sanitary sewer facilities, water facilities and other capital improvements for which developer impact fees are payable as a condition of development within the District (collectively, the “Facilities), as well as improvements and incidental expenses as authorized by the Mello-Roos Act.
The proceeds of the Bonds will be used for a portion of the cost of the Facilities. See “FINANCING PLAN” for additional details. The following table estimates the cost of the Facilities needed for development of property in Improvement Area No. 1.
Table 2
City of Rancho Cordova
Arista Del Sol Community Facilities District No. 2022-1 Improvement Area No. 1
Special Tax Bonds Series 2023
Expected Cost of CFD Eligible Facilities
Facility Category Estimated Cost
Costs Expended
as of July 2023
Remaining
Improvement
Area No. 1 Costs
CFD Eligible Construction
Costs
Development impact fees
Total
Acquisition by the City and other Local Agencies
In connection with the issuance of the Bonds, the City and Woodside will enter into a Funding, Construction and Acquisition Agreement dated as of September 1, 2023 (the “Acquisition Agreement” ) which provides that Woodside (or successors) will construct (or cause to be constructed or funded) the Facilities. As components of the Fac ilities are completed, proceeds of a portion of the Bonds will be used to pay all or a part of the purchase price of various Facilities pursuant to the terms of the Acquisition Agreement. The portion of the cost of construction of the Facilities , which will not be provided from Bond proceeds, will be the responsibility of Woodside.
It is also anticipated that the City will enter into joint community facilities agreements with the Cordova Recreation and Park District (CRPD) and/or the Sacramento County Water Agency (SCWA) so that a portion of the proceeds of the Bonds and other special tax bonds issued for Improvement Area No. 1 may finance the development impact fees and/or Facilities to be acquired by those local agencies.
ITEM 12.1.
ATTACHMENT 4
-31-
The Rate and Method provides that the funding of Improvement costs can also be made from collections of the Special Tax available for a limited time as the “pay-as-you-go” component of Special Taxes. The pay -as-you-go funding component is expected to provide for funding of the cost of a portion of the Facilities (both improvements and fees) in excess of the amount provided from bond proceeds (if such proceeds are not sufficient) through annual Special Tax collections in excess of the amount needed to pay the debt service.
OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 1
Unpaid Special Taxes do not constitute a personal indebtedness of the owners of the parcels within Improvement Area No. 1 . There is no assurance that an owner or any subsequent owners have the ability to pay the Special Taxes or that, even if they have the ability, they will choose to pay such taxes. An owner may elect to not pay the Special Taxes when due and cannot be le gally compelled to do so. Neither the City nor any Bondowner will have the ability at any time to seek payment directly from the owners of property within Improvement Area No. 1 of the Special Tax or the principal or interest on the Bonds, or the ability to control who becomes a subsequent owner of any property within Improvement Area No. 1.
Woodside has provided the respective information set forth under the heading “OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 1 ” below. No assurance can be given t hat all information is complete. No assurance can be given that development of the property will be completed, or that it will be completed in a timely manner. The Special Taxes are not personal obligations of Woodside or of any subsequent landowners; th e Bonds are secured only by the Special Taxes and moneys available under the Fiscal Agent Agreement. See “SECURITY FOR THE BONDS” and “BOND OWNERS’ RISKS” herein.
All of the land in Improvement Area No. 1 , other than homes recently sold to individual homeowners, is currently owned by Woodside 05N, LP, a California limited partnership (referred to as “Woodside”). Woodside does not intend to sell any of its land to merchant builders.
Woodside is wholly owned by Woodside Group, LLC, a Nevada limited liability company (“Woodside Group”), directly or through its wholly owned subsidiaries. Woodside is owned 99% directly by Woodside Group, as a limited partner. The remaining 1% interest is owned by WDS GP, Inc., a California corporation, as its general partner, which is wholly owned by Woodside Homes of California, Inc., a California corporation, which in turn is wholly owned by Woodside Group. The parent of Woodside Group is Woodside Homes Company, LLC, a Delaware limited liability company (“Woodside Homes Company”). Since February 28, 2017, the ultimate parent of Woodside Homes Company has been Sekisui House, Ltd, one of Japan’s largest homebuilders, which was founded in 1960 and is headquartered in Osaka, Japan.
Woodside Group’s subsi diaries engage in the design, construction, and sale of single - family homes under the brand name of “Woodside Homes.” Woodside is one of America’s top 30 homebuilders having built more than 40,000 homes across the United States, with current operations in Arizona, California, Nevada, and Utah.
ITEM 12.1.
ATTACHMENT 4
-32-
VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 1
Appraised Values
General. The value of taxable property within Improvement Area No. 1 is a critical factor in determining the investment quality of the Bonds. In order to obtain a more accurate estimate of the value of land in Improvement Area No. 1 , the City ordered preparation of an appraisal report (the “Appraisal”), of the estimated value of the taxable land within Improvement Area No. 1 as of the July 31, 2023 date of value. The Appraisal was prepared by Integra Realty Resources, Sacramento, California (the “Appraiser”). The Appraisal is set forth in APPENDIX B hereto. The description herein of the Appraisal is intended for limited purposes only; the Appraisal should be read in its entirety. The conclusions reached in the Appraisal are subject to certain assumptions, conditions and qualific ations which are set forth in the Appraisal. For additional background, see APPENDIX B hereto.
Value Estimate . The appraised valuation excludes the value of all portions of the property in Improvement Area No. 1 designated for public and quasi -public purposes and assumes completion of infrastructure funded by the Bonds and accounts for the impact of the lien of the Special Tax. The following estimate represents the market value of the property to be subject to the Special Tax, based on the hypothetical condition certain impact fees to be financed by the Bonds have been paid.
The value estimate for the property as of the date of value, using the methodologies described in the Appraisal and subject to the limiting and hypothetical conditions and general and special assumptions set forth in the Appraisal is $77,114,000.
The Appraiser’s valuation process began by employing the sales comparison approach to estimate the not-less-than market value for the completed single -family homes, based on the smallest floor plan being marketed within each community. In valuing the residential lots, both a land residual analysis and a discounted cash flow analysis that considers home prices and costs were utilized , leading to an estimate of residual land value, and a sales comparison approach. In the sales comparison approach, adjustments were applied to the prices of comparable bulk lot transactions, and a market value was concluded. The two approaches are then reconciled into an opinion of market value per improved lot. It should be noted that benchmarks are utilized for lot categories and adjustments to the benchmark lot values are considered, as applicable.
ITEM 12.1.
ATTACHMENT 4
-33-
Arista Del Sol Community Facilities District No. 2022-1 Improvement Area No. 1
Appraised Value by Ownership as of July 31, 2023
Owner: Woodside 05N LP
Lots/Homes
Lot/Home
Value
Permit
and Fees
Value per
Component Market Value
Finished Lots
Aracia at Cypress 67 $181,000 - $181,000 $12,127,000
Sycamore at Cypress 70 170,000 - 170,000 11,900,000
Valley Oak at Cypress 70 170,000 - 170,000 11,900,000
Palo Verde at Cypress 70 165,000 - 165,000 11,550,000
Homes Under Construction
Aracia at Cypress 17 $181,000 $88,900 $269,900 $4,588,000 Sycamore at Cypress 23 170,000 88,900 258,900 5,955,000 Valley Oak at Cypress 12 170,000 88,900 258,900 3,107,000 Palo Verde at Cypress 16 165,000 88,900 253,900 4,062,000
Completed Homes
Aracia at Cypress 5 $660,000 - $660,000 $3,300,000*
Sycamore at Cypress 2 555,000 - 555,000 1,110,000*
Valley Oak at Cypress 4 540,000 - 540,000 2,160,000*
Palo Verde at Cypress 3 510,000 - 510,000 1,530,000*
Market Value - Woodside Homes 359 $73,289,000
Individual Homeowners
Completed Homes
Aracia at Cypress 1 $660,000 - $660,000 $660,000*
*Sycamore at Cypress 1 555,000 - 555,000 555,000*
Valley Oak at Cypress 2 540,000 - 540,000 1,080,000*
Palo Verde at Cypress 3 510,000 - 510,000 1,530,000*
Market Value - Individual
Homeowners 7 $3,825,000
Total Market Value 366 $77,114,000
* “Not less than” valuations based on smallest floorplan offered.
Source: The Appraisal.
Hypothetical Condition. The market value estimated by the Appraiser is based on a hypothetical condition. A hypothetical condition is defined by USPAP as “a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results but is used for the purpose of the analysis.” It is a hypothetical condition of the Appraisal that the proceeds from the Bonds will be used to fund certain improvements. The estimate of market value accounts for the impact of the lien of the Special Taxes securing the Bonds.
Assumptions and Limiting Conditions . In considering the estimate of value evidenced by the Appraisal, the Appraisal is based upon a number of limiting conditions and standard and extraordinary assumptions which affect the estimates as to value, including, among others, the following.
• The value conclusions are based on the following hypothetical conditions that may affect the assignment results. A hypothetical condition is a condition contrary to known fact on ITEM 12.1.
ATTACHMENT 4
-34-
the effective date of the appraisal but is supposed for the purpose of analysis . The value conclusions are subject to the following extraordinary assumptions that may affect the assignment results. An extraordinary assumption is uncertain information accepted as fact. If the assumption is found to be false as of the effective date of the appraisal, The Appraiser reserves the right to modify the value conclusions.
• The valuation analysis did not include review of a current title report of all properties to determine any possible conditions of title affecting the properties appraised. The Appraiser accepts no responsibility for matters pertaining to title.
• The Appraiser has also assumed that there is no hazardous material on or in the property that would cause a loss in value. Should future conditions and events involving hazardous material reduce the level of permitted development or delay the completion of any projected development, the value of the undeveloped land would likely be reduced from that estimated by the Appraiser. See “BOND OWNERS ’ RISKS – Land Values” and “ – Hazardous Substances” below. See “APPENDIX B – The Appraisal” hereto for a description of certain assumptions made by the Appraiser.
Accordingly, because the Appraiser arrived at an estimate of current market value based upon certain conditions and assumptions which may or may not be fulfilled, no assurance can be given that should the parcels become delinquent due to unpaid Special Taxes, and be foreclosed upon and offered for sale for the amount of the delinquency, that any bid would be received for such property or, if a bid is received, that such bid would be sufficient to pay such delinquent Special Taxes.
Limitations of Appraisal Valuation. Property values may not be evenly distributed throughout Improvement Area No. 1 ; thus, certain parcels may have a greater value than others. This disparity is significant because in the event of nonpayment of the Special Tax, the only remedy is to foreclose against the delinquent parcel.
No assurance can be given that the foregoing valuation can or will be maintained during the period of time that the Bonds are outstanding in that the City has no control over the market value of the property within Improvement Area No. 1 or the amount of a dditional indebtedness that may be issued in the future by other public agencies, the payment of which, through the levy of a tax or an assessment, may be on a parity with the Special Taxes. See “ –Priority of Lien” below.
For a description of certain ris ks that might affect the assumptions made in the Appraisal, see “BOND OWNERS’ RISKS” herein.
ITEM 12.1.
ATTACHMENT 4
-35-
Value to Special Tax Burden Ratios
The principal amount of the direct and overlapping debt in Improvement Area No. 1 is $15,837,441*, which consists of the estimated amount of Bonds ($15,500,000*) and $337,441 of overlapping general obligation and CFD bond debt. Consequently, the estimated value of property in Improvement Area No. 1 subject to the Special Tax lien ($77,114,000), is approximately 4.9* times the principal amount of the direct and overlapping debt in Improvement Area No. 1. This is an average and individual parcels may vary considerably from this average.
In comparing the value of the real property within Improvement Area No. 1 to the principal amount of the Bonds and other direct and overlapping debt for Improvement Area No. 1, it should be noted that only the real property upon which there is a delinquent Special Tax can be foreclosed upon, and the real property within Improvement Area No. 1 cannot be foreclosed upon as a whole to pay delinquent Special Taxes of the owners of such parcels within Improvement Area No. 1 unless all of the property is subject to a delinquent Special Tax.
In any event, individual parcels may be foreclosed upon se parately to pay delinquent Special Taxes levied against such parcels.
Other public agencies whose boundaries overlap those of Improvement Area No. 1 could, without the consent of the City and in certain cases without the consent of the owners of the land within Improvement Area No. 1 , impose additional taxes or assessment liens on the land within Improvement Area No. 1 . The purpose would be to finance additional regional or local public improvements or services. The lien created on the land within Improvement Area No. 1 through the levy of such additional taxes or assessments may be on a parity with the lien of the Special Tax. In addition, construction loans may be obtained by a developer of property in Improvement Area No. 1 or home loans may be obtai ned by ultimate homeowners. The deeds of trust securing such debt on property within Improvement Area No. 1, however, will be in a junior position to the lien of the Special Tax.
The land within Improvement Area No.1 is located within the boundary of an Elk Grove Unified School District community facility district, pursuant to which a n annual special tax of approximately $200 per parcel will be levied following issuance of a building permit. As additional development occurs in Improvement Area No. 1 the Elk Grove USD CFD lien amount may be larger than what is shown.
* Preliminary, subject to change.
ITEM 12.1.
ATTACHMENT 4
-36-
Value-to-lien Ratios by Development Status. The following table shows the projected status of development and value-to- lien ratios by village in Improvement Area No. 1 for fiscal year 2023-24, based on the status of development as of July 31, 2023 and assuming no further development. Value-to-lien ratios on individual parcels may vary considerably from any average.
ITEM 12.1.
ATTACHMENT 4
-37-
Table 3
City of Rancho Cordova
Arista Del Sol Community Facilities District No. 2022-1 Improvement Area No. 1
Special Tax Bonds Series 2023
Value-to-Lien Ratios by Appraisal Status – Projected for Fiscal Year 2024-25
Appraisal Status (1) Owner
Project
Name
No. of
Parcels
Appraised
Value (2)
Projected
FY 2024-25
Maximum
Special Tax
Projected
FY 2024-25
Special
Tax
Levy (3)
Percent of
Projected
Special
Tax
Levy
CFD
Bonds (4)
Overlapping
Debt (5)
Total
Debt
Average
Appraised
Value-to-
Lien
Completed Homes Individuals Acacia 1 $660,000 $3,464 $3,464 0.4% $60,595 $2,793 $63,388 10.4:1 Sycamore 1 $555,000 $2,683 $2,683 0.3% $46,931 $2,356 $49,287 11.3:1 Valley Oak 2 $1,080,000 $5,365 $5,365 0.6% $93,863 $4,587 $98,450 11.0:1 Palo Verde 3 $1,530,000 $5,578 $5,578 0.6% $97,576 $6,506 $104,081 14.7:1 Subtotal 7 $3,825,000 $17,090 $17,090 1.9% $298,965 $16,242 $315,206 12.1:1
Completed Homes (Models) Woodside 05N LP Acacia 5 3,300,000 17,319 17,319 2.0 302,974 13,966 316,940 10.4:1 Sycamore 2 1,110,000 5,365 5,365 0.6 93,863 4,712 98,575 11.3:1 Valley Oak 4 2,160,000 10,731 10,731 1.2 187,726 9,174 196,899 11.0:1 Palo Verde 3 1,530,000 5,578 5,578 0.6 97,576 6,506 104,081 14.7:1 Subtotal 14 8,100,000 38,993 38,993 4.4 682,138 34,357 716,495 11.3:1
Homes Under Construction Woodside 05N LP Acacia 17 4,588,000 58,884 58,884 6.6 1,030,111 19,864 1,049,975 4.4:1 Sycamore 23 5,955,000 61,703 61,703 7.0 1,079,422 25,824 1,105,246 5.4:1 Valley Oak 12 3,107,000 32,193 32,193 3.6 563,177 13,474 576,650 5.4:1 Palo Verde 16 4,062,000 29,748 29,748 3.4 520,404 17,629 538,033 7.5:1 Subtotal 68 17,712,000 182,528 182,528 20.6 3,193,114 76,791 3,269,905 5.4:1
Partially Improved Lots Woodside 05N LP Acacia 67 12,127,000 232,073 203,642 23.0 3,562,487 53,486 3,615,973 3.4:1 Sycamore 70 11,900,000 187,791 164,786 18.6 2,882,731 52,674 2,935,406 4.1:1 Valley Oak 70 11,900,000 187,791 164,786 18.6 2,882,731 52,674 2,935,406 4.1:1 Palo Verde 70 11,550,000 130,147 114,202 12.9 1,997,834 51,217 2,049,050 5.6:1 Subtotal 277 $47,477,000 $737,803 $647,416 73.1% $11,325,784 $210,051 $11,535,835 4.1:1
Total 366 $77,114,000 $976,414 $886,027 100.0% $15,500,000 $337,441 $15,837,441 4.9:1
(1) Ownership information and construction status based on the Appraisal Report and as of the July 31, 2023 date of value of the Appraisal. (2) Appraised values were allocated to the individual parcels based on the expected development and lot statu s for each parcel, as reported in the Appraisal. The allocated appraised values are not indicative of the market values of the villages or the individual lots.
(3) Includes building permits issued prior to July 31, 2023, final maps recorded prior to June 30, 2023, and assumes no further development. Includes debt service due in 2025 on the Series 2023 Special Tax Bonds a nd estimated administrative expenses in the amount of $30,600. The Administrative Expense Priority for fiscal year 2023 -24 is $30,000. (4) Includes the $15,500,000 par amount of the Series 2023 Special Tax Bonds. Allocated based on the Projected FY 2024 -25 Special Tax Levy. (5) Includes the overlapping debt liens listed under "Direct and Overlapping Tax and Assessment Debt" in the ove rlapping debt report prepared by California Municipal Statistics, Inc. The overlapping debt report is based on the parcel and assessed value as of FY 2022-23. Does not include any PACE liens secured by assessments or special taxes on the property.
ITEM 12.1.
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Sources: Sacramento County Assessor's Office; Integra Realty Resources, Inc.; Piper Sandler & Co.; Goodwin Consulting Group, Inc.
ITEM 12.1.
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Value-to-lien Ratios By Category. The following table sets forth the projected value- to-lien ratios by category for parcels in Improvement Area No. 1 for Fiscal Year 2024-25.
Table 4
City of Rancho Cordova
Arista Del Sol Community Facilities District No. 2022-1 Improvement Area No. 1
Special Tax Bonds Series 2023
Value-to-Lien Ratio Ranges – Projected for Fiscal Year 2024-25
Appraised
Value-to-
Lien
Category
No. of
Parcels*
Appraised
Value (1)*
Projected FY
2024-25
Special Tax
Levy (2)*
Percent of
Projected
Special Tax
Levy* CFD Bonds(3)*
Overlapping
Debt (4)* Total Debt*
Average
Appraised
Value-to-
Lien
10:1 to 20:1 21 $11,925,000 $56,083 6.3% $981,103 $50,599 $1,031,702 11.6:1 5:1 to 10:1 121 $24,674,000 $237,846 26.8% $4,160,837 $108,143 $4,268,980 5.8:1 3:1 to 5:1 224 $40,515,000 $592,098 66.8% $10,358,061 $178,699 $10,536,760 3.8:1 Totals 366 $77,114,000 $886,027 100.0% $15,500,000 $337,441 $15,837,441 4.9:1
* Preliminary; subject to change.
(1) Appraised values were allocated to the individual parcels based on the expected development and lot status for each parcel, as reported in the Appraisal. The allocated appraised values are not indicative of the market values of the villages or the individual lots. (2) Includes building permits issued prior to July 31, 2023, final maps recorded prior to June 30, 2023, and assumes no further development. Includes debt service due in 2025 on the Series 2023 Special Tax Bonds and estimated administrative expenses in the amount of $30,600. The Administ rative Expense Priority for fiscal year 2023-24 is $30,000.
(3) Includes the $15,500,000 par amount of the Series 2023 Special Tax Bonds. Allocated based on the Projected FY 2024 -25 Special Tax Levy. (4) Includes the overlapping debt liens listed under "Direct and Overlapping Tax and Assessment Debt" in the overlapping debt report prepared by California Municipal Statistics, Inc. The overlapping debt report is based on the parcel and assessed value as of FY 2022 -23. Does not include any PACE liens secured by assessments or special taxes on the property.
Sources: Integra Realty Resources, Inc.; Piper Sandler & Co.; Goodwin Consulting Group, Inc.
Priority of Lien
The principal of and interest on the Bonds are payable from the Special Tax authorized to be collected within Improvement Area No. 1, and payment of the Special Tax is secured by a lien on certain real property within Improvement Area No. 1 . Such lien is co-equal to and independent of the lien for general taxes and any other liens imposed under the Mello-Roos Act, regardless of when they are imposed on the property in Improvement Area No. 1 . The imposition of additional special taxes, assessments and general property taxes will increase the amount of independent and co-equal liens which must be satisfied in foreclosure. The City, the County and certain other public agencies are authorized by the Mello -Roos Act to form other community facilities districts and improvement areas and, under other provisions of State law, to form special assessment districts, either or both of which could include all or a portion of the land within Improvement Area No. 1. In addition, property owners can voluntarily agree to incur Property Assessed Clean Energy (PACE) liens on their properties.
There can be no assurance that the developers will not petition for the formation of other community facilities districts and improvement areas or for a special assessment district or districts and that parity special taxes or special assessments will not be levied by the County or some other public a gency to finance additional public facilities, however no other special districts are currently contemplated by the City or the developers.
Private liens, such as deeds of trust securing loans obtained by developers of land in Improvement Area No. 1, may be placed upon property in Improvement Area No. 1 at any time.
Under California law, the Special Taxes have priority over all existing and future private liens imposed on property subject to the lien of the Special Taxes.
ITEM 12.1.
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Set forth below is a statement o f direct and overlapping public bonded debt (the “Overlapping Debt Report”) prepared by California Municipal Statistics, Inc. as of July 1, 2023.
The Overlapping Debt Report includes only such information as has been reported to California Municipal Statis tics, Inc. by the issuers of the debt described therein and by others. The Overlapping Debt Report is included for general informational purposes only. Neither the City nor the Underwriter makes any representation as to its completeness or accuracy.
The first column in the table names each public agency which has outstanding bonded debt as of the date of the report and whose territory overlaps Improvement Area No. 1 in whole or in part. The second column shows the assessed value of the area common to Improvement Area No. 1 and the other public agency (overlapping territory), as a percentage of the total assessed value of the other public agency. This percentage, multiplied by the total outstanding bonded debt of each overlapping agency (which is not shown in the table) produces the amount shown in the third column, which is the apportionment of each overlapping agency’s outstanding debt to taxable property in Improvement Area No. 1. In addition to the bonded debt shown in the Overlapping Debt Report, variou s local agencies, including the City, levy additional parcels charges, assessments and special taxes on parcels in Improvement Area No. 1 . See the sample tax bill at Table 6 for estimated amounts of these parcel charges, assessments and special taxes for Fiscal Year 2023-24.
The Overlapping Debt Report does not include PACE debt secured by assessments or special taxes on any property. Given that no individual homeowners yet own property in Improvement Area No. 1, none of the parcels within Improvement Area No. 1 have a PACE lien.
ITEM 12.1.
ATTACHMENT 4
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Table 5
City of Rancho Cordova
Arista Del Sol Community Facilities District No. 2022-1 Improvement Area No. 1
Special Tax Bonds Series 2023
Direct and Overlapping Indebtedness
As of July 1, 2023
2022-23 Local Secured Assessed Valuation: $28,994,860
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 7/1/23 Los Rios Community College District General Obligation Bonds 0.012% $ 52,324 Elk Grove Unified School District General Obligation Bonds 0.062 268,839 Elk Grove Unified School District Community Facilities District No. 1 0.009 16,278 City of Rancho Cordova Community Facilities District No. 2022-1, IA 1 100. 0 (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $337,441
OVERLAPPING GENERAL FUND DEBT:
Sacramento County General Fund Obligations 0.014% $ 16,379 Sacramento County Pension Obligation Bonds 0.014 75,615 Sacramento County Board of Education Certificates of Participation 0.014 302 Elk Grove Unified School District Certificates of Participation 0.062 6,772 City of Rancho Cordova Certificates of Participation 0.251 30,396 Sacramento Metropolitan Fire General Fund Obligations 0.035 2,584 Sacramento Metropolitan Fire Pension Obligation Bonds 0.035 8,816 Cordova Recreation and Park District General Fund Obligations 0.156 9,573 TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $150,437
Less: Sacramento County supported obligations 1,746 TOTAL NET OVERLAPPING GENERAL FUND DEBT $148,691
GROSS COMBINED TOTAL DEBT $487,878 (2)
NET COMBINED TOTAL DEBT $486,132
(1) Excludes Mello-Roos Act bonds to be sold.
(2) Excludes tax and revenue anticipation notes, ent erprise revenue, mortgage revenue and non -bonded capital lease obligations.
Ratios to 2022-23 Local Secured Assessed Valuation:
Direct Debt ($0) ...................................................................... 0.00% Total Direct and Overlapping Tax and Assessment Debt ....... 1.16% Gross Combined Total Debt .................................................... 1.68% Net Combined Total Debt ........................................................ 1.68%
Source: California Municipal Statistics, Inc.
ITEM 12.1.
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Estimated Tax Burden on a Single-Family Home
The following table sets forth the estimated total tax burden on a single -family home, based on projected tax rates for Fiscal Year 2023-24.
Table 6
City of Rancho Cordova
Arista Del Sol Community Facilities District No. 2022-1 Improvement Area No. 1
Special Tax Bonds Series 2023
Sample Tax Bill – Fiscal Year 2023-24
Net Taxable Value Amount
Estimated Market Values (1) $555,000.00
Less: Homeowner's Exemption (7,000.00)
Net Taxable Value $548,000.00
Ad Valorem Property Taxes Rate Amount
Base Property Tax 1.0000% $5,480.00
Los Rios College General Obligation Bond 0.0226% $123.85 Elk Grove Unified General Obligation Bond 0.0303% $166.04 Total Ad Valorem Property Taxes 1.0529% $5,769.89
Parcel Charges, Assessments, and Special Taxes (2)(3)* Amount Water and Drainage Studies - SCWA 13 $6.92
Elk Grove USD CFD No. 1 $200.00
Transit Services Tax $89.80
Rancho Cordova Lighting District 2012-1 $2.56
Rancho Cordova CFD 2014-2 $512.68
Rancho Cordova CFD No. 2013-2 $624.44
Rancho Cordova CFD No. 2022-1 (4) $2,630.14
Total Parcel Charges, Assessments, and Special Taxes $4,066.54
Total Taxes $9,836.43
Total Effective Tax Rate 1.77%
* Preliminary; subject to change.
(1) Represents the concluded base retail value for a unit in Sycamore at Cypress, as reported in the Appraisal. (2) Does not include any PACE assessments or special taxes. (3) Except where otherwise noted, based on fiscal year 2022-23 tax rates. (4) Equal to the applicable Maximum Special Tax rate in FY 2023-24.
Sources: Integra Realty Resources, Inc.; Goodwin Consulting Group, Inc.
ITEM 12.1.
ATTACHMENT 4
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Special Tax Collections and Delinquencies
Fiscal Year 2023-24 will be the first fiscal year during which the Special Tax will be levied. Accordingly, there is no history of collections and delinquencie s. The levy of Special Taxes in Improvement Area No. 1 is currently covered by the Teeter Plan in the County. See “SECURITY FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure –Teeter Plan.”
BOND OWNERS’ RISKS
The purchase of the Bonds involves a degree of risk that may not be appropriate for some investors. The following includes a discussion of some of the risks that should be considered before making an investment deci sion. This discussion does not purport to be comprehensive or definitive or a complete statement of all factors that may be considered as risks in evaluating the credit quality of the Bonds.
Limited Obligation of the City to Pay Debt Service
The City has no obligation to pay principal of and interest on the Bonds if Special Tax collections are delinquent or insufficient, other than from amounts, if any, on deposit in the Reserve Fund or funds derived from the tax sale or foreclosure and sale of parcels for Special Tax delinquencies. The City is not obligated to a dvance funds to pay debt service on the Bonds.
Concentration of Ownership of Undeveloped Property
All of the land within Improvement Area No. 1 is currently owned and controlled, directly or indirectly, by Woodside. Although there will be transfers of ownership of this property as development progresses and home sales are closed, the timely payment of the Bonds depends upon the willingness and ability of all of the owners of taxable property within Improvement Area No. 1 to pay the Special Taxes when due. The only assets of the owners of property within Improvement Area No. 1 which constitute security for the Bonds are such owners’ real property holdings located within Improvement Area No. 1, and each parcel may only be foreclosed against for delinquent Special Taxes levied against such parcel. If the current landowners choose to pay some but not all of the Special Taxes, they may, as owners of parcels in Improvement Area No. 1 , choose to default on payments of the Special Tax on parcels. Also see “– Bankruptcy Delays” below.
Development of undeveloped property within Improvement Area No. 1 may be subject to unexpected delays, disruptions and changes which may affect the willi ngness and ability of the homebuilder or other property owners to pay the Special Taxes when due. Certain infrastructure improvements remain to be completed in order for homes to be completed on the timeline currently expected by Woodside. No assurance can be given that the proposed residential development will be partially or fully completed, and for purposes of evaluating the investment quality of the Bonds, prospective purchasers should consider the possibility that such parcels will remain vacant and only partially improved. See the information set forth under the caption “IMPROVEMENT AREA NO. 1 – Development in the District.”
ITEM 12.1.
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Levy and Collection of the Special Tax
General. The principal source of payment of principal of and interest on the Bonds is the proceeds of the annual levy and collection of the Special Tax against property within Improvement Area No. 1.
Limitation on Maximum Annual Special Tax Rate. The annual levy of the Special Tax is subject to the maximum annual Special Tax rate authorized in the Rate and Method . The levy cannot be made at a higher rate even if the failure to do so means that the estimated proceeds of the levy and collection of the Special Tax, together with other available funds, will not be sufficient to pay debt service on the Bonds.
In addition to the maximum annual Special Tax rate limitation in the Rate and Method , Section 53321(d) of the Mello-Roos Act provides that th e special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such fiscal year had there never been any such delinquencies or defaults. In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the Bonds.
No Relationship Between Property Value and Special Tax Levy. Because the Rate and Method is not based on property value, the levy of the Special Tax will rarely, if ever, result in a uniform relationship between the value of particular parcels in Improvement Area No. 1 subject to a Special Tax and the amount of the levy of the Special Tax against those parcels.
Thus, there will rarely, if ever, be a uniform relationship between the value of the parcels in Improvement Area No. 1 subject to a S pecial Tax and their proportionate share of debt service on the Bonds, and certainly not a direct relationship.
Factors that Could Lead to Special Tax Deficiencies. The following are some of the factors that might cause the levy of the Special Tax on any particular parcel of Taxable Property to vary from the Special Tax that might otherwise be expected:
Transfers to Governmental Entities. The number of parcels in Improvement Area No. 1 subject to a Special Tax could be reduced through the acquisition of Taxable Property by a governmental entity and failure of the government to pay the Special Tax based upon a claim of exemption or, in the case of the federal government or an agency thereof, immunity from taxation, thereby resulting in an increased tax bu rden on the remaining taxed parcels.
Property Tax Delinquencies . Failure of the owners of Taxable Property to pay property taxes (and, consequently, the Special Tax), or delays in the collection of or inability to collect the Special Tax by tax sale or f oreclosure and sale of the delinquent parcels, could result in a deficiency in the collection of Special Tax revenues. See “– Property Tax Delinquencies” below.
Delays Following Special Tax Delinquencies and Foreclosure Sales . The Fiscal Agent Agreement generally provides that the Special Tax is to be collected in the same manner as ordinary ad valorem property taxes are collected and, except as provided in the special covenant for foreclosure described in “SECURITY FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure ” and in the Mello-Roos Act, is subject to ITEM 12.1.
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the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ordinary ad valorem property taxes. Under these procedures, if taxes are unpaid for a period of five years or more, the property is deeded to the State a nd then is subject to sale by the County.
If sales or foreclosures of property are necessary, there could be a delay in payments to owners of the Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the City of the proceeds of sale if the Reserve Fund is depleted . See “SECURITY FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure.”
The ability of the City to collect interest and penalties specified by State law and to foreclose against properties having delinquent Special Tax installments may be limited in certain respects with regard to properties in which the Federal Deposit Insurance Corporation (the “FDIC”) has or obtains an interest. The FDIC would obtain such an interest by t aking over a financial institution that has made a loan that is secured by property within Improvement Area No. 1. See “ – FDIC/Federal Government Interests in Properties” below.
Other laws generally affecting creditors ’ rights or relating to judicial fo reclosure may affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenan t, a six- month period after termination of military service to redeem property sold to enforce the collection of a tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military service if the court concludes the ability to pay such taxes or assessments is materially affected by reason of such service.
Overlapping Tax Districts. The land in Improvement Area No. 1 is also located within the boundaries of various local agencies that could issue debt in the future payable from special taxes or other amounts levied on the parcels in Improvement Area No. 1 ; this would decrease the value to lien ratios of parcels in Improvement Area No. 1.
Property Tax Delinquencies
General. Delinquencies in the payment of property taxes and, consequently, the Special Taxes, can occur because the owners of delinquent parcels may not have received property tax bills from the County in a timely manner, including situations in which the County initially sent property tax bills to the property developer or merchant builder at a time when the parcels in question had already been sold to individual homeowners. Delinquencies can also reflect economic difficulties and duress by the property owner.
Numerous future delinquencies by the owners of Taxable Property in Improvement Area No. 1 in the payment of property taxes (and, consequently, the Special Taxes, which are collected on the ordinary property tax bills) when due could result in a deficiency in Special Tax Revenues necessary to pay debt service on the Bonds, which could in turn result in the depletion of the Reserve Fund, prior to reimbursement from the resale of foreclosed property or payment of the delinquent Special Tax. In that event, ther e could be a delay or failure in payments of the principal of and interest on the Bonds. See “SECURITY FOR THE BONDS – Reserve Fund, ” and “SECURITY FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure.”
ITEM 12.1.
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The City int ends to take certain actions designed to mitigate the impact of future delinquencies, including: enforcing the lien of the Special Taxes through collection procedures that will include foreclosure actions under certain circumstances (see “SECURITY FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure”); and increasing the levy of Special Taxes against non -delinquent property owners in Improvement Area No. 1, to the extent permitted under the Rate and Method and the Mello-Roos Act and to the extent the Special Taxes are not already being levied at the Maximum Annual Special Tax rate.
Any future decline in home values in Improvement Area No. 1 could result in property owner unwillingness or inability to pay mortgage payments, as well as ad valorem property taxes and Special Taxes, when due. Under such circumstances, bankruptcies are likely to increase. Bankruptcy by homeowners with delinquent Special Taxes would delay the commencement and completion of foreclosure proceedings to collect delinquent Special Taxes.
It is possible that laws could be enacted in the future to assist homeowners in default in the payment of mortgages and property taxes. It is further possible that federal laws could be enacted that would adversely impact the ability o f the City to foreclose on parcels with delinquent Special Taxes. No assurance can be given that any such laws will be enacted, or if enacted will be effective in assisting affected homeowners.
Property Values and Risks Related to Development
The value of Taxable Property within Improvement Area No. 1 is a critical factor in determining the investment quality of the Bonds. If a property owner defaults in the payment of the Special Tax, the C ity’s only remedy is to foreclose on the delinquent property in an attempt to obtain funds with which to pay the delinquent Special Tax. Land values could be adversely affected by economic and other factors beyond the City ’s control, such as a general economic downturn, relocation of employers out of the area, shortages of water, electricity, natural gas or other utilities, destruction of property caused by earthquake, flood, wildfires, or other natural disasters, environmental pollution or contamination, or unfavorable economic conditions.
The following is a discussion of specific risk factors that could affect the value of property in Improvement Area No. 1.
Current Challenges to the Homebuilding Industry . No assurances can be given that the timing of construction of homes and/or sale of homes to individual homeowners projected by Woodside in this Official Statement will be accomplished. Due to the current state of world affairs, the pace of homebuilding and sale of homes to individual homeowners in Improvement Area No. 1 may be adversely affected by a variety of factors, including rising interest rates, inflation and changes in economic conditions, increases in certain construction costs, droughts and water shortages or other environmental factors, workforce shortages and supply chain disruptions. Further, the recent increases in interest rates may slow the demand for new residential homes and a combination of historically high new home pri ces and rising interest rates may price some homebuyers out of entry -level homes. High inflation could force prospective homebuyers to account for other costs over purchasing a new home at a higher interest rate. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 1 – Appraised Values – Currently Changing Market Conditions” above.
Although such factors are not currently having a significant impact on the overall development of homes in Improvement Area No. 1, the impacts caused by such factors are ITEM 12.1.
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evolving and no prediction can be made with respect to the ultimate effects of these factors on Woodside’s ability to sell and close homes in Improvement Area No. 1. These external factors, if and as they arise, could have a material adverse effect on the ability to develop the homes in Improvement Area No. 1 as planned, and no assurance can be provided that Woodside will be able to (a) complete in whole or in any part, or within any particular time, its construction of homes within Improvement Area No. 1; (b) avoid additional material increases in development costs or delays resulting from work stoppages, reduced attendance of workers and shortages or delays in the delivery of building materials; or (c) sell homes, and close home sales or not experience purchase contract cancellations, due to an economic downturn driven by rising interest rates, inflation or other changes in economic conditions.
Natural Disasters. The value of the Taxable Property in the future can be adversely affected by a variety of natural o ccurrences, particularly those that may affect infrastructure and other public improvements and private improvements on the Taxable Property and the continued habitability and enjoyment of such private improvements.
The areas in and surrounding Improvement Area No. 1, like those in much of California, may be subject to unpredictable seismic activity, including earthquakes. See “IMPROVEMENT AREA NO. 1 – Description and Location.”
Other natural disasters could include , without limitation, floods, wildfires, droughts or tornadoes. One or more natural disasters could occur and could result in damage to improvements of varying seriousness. Although land in Improvement Area No. 1 is not in a high-risk area (or a special fire hazard severity zone) for wildfires, landslides, floods, or tornadoes, natural disasters such as these are unpredictable and may occur anywhere throughout the State, with devastating consequences. In particular, large fires have impacted other parts of the City and County in recent years. The damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost, or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances there could be significant delinquencies in the payment of Special Taxes, and the value of the Taxable Property may well depreciate or disappear.
Droughts. The State is subject from time -to-time to drought conditions, which could have an impact on future development in Improvement Area No. 1 . Drought conditions have been present in the State numerous times in the recent past. Although much of the Stat e, including property in the City, is now out of the worst drought category, the City cannot predict when worsening drought conditions and concomitant water -reduction requirements will return, what effect drought conditions could have on property values, or whether or to what extent water reduction requirements may affect the development of Improvement Area No. 1.
Legal Requirements. Other events that may affect the value of Taxable Property include changes in the law or application of the law. Such changes may include, without limitation, local growth control initiatives, local utility connection moratoriums and loca l application of statewide tax and governmental spending limitation measures.
Hazardous Substances . One of the most serious risks in terms of the potential reduction in the value of Taxable Property is a claim with regard to a hazardous substance. In general, the owners and operators of Taxable Property may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances.
The federal Comprehensive Environmental Response, Compensation and Liabilit y Act of 1980, ITEM 12.1.
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sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner or operator is obligated to remedy a hazardous substance condition of property whether or not the owner or operator has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the Taxable Property be affect ed by a hazardous substance, is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition.
The property values set forth in this O fficial Statement do not take into account the possible reduction in marketability and value of any of the Taxable Property by reason of the possible liability of the owner or operator for the remedy of a hazardous substance condition of the parcel. Although the City is not aware that the owner or operator of any of the Taxable Property has such a current liability with respect to any of the Taxable Property, it is possible that such liabilities do currently exist and that the City is not aware of them.
Further, it is possible that liabilities may arise in the future with respect to any of the Taxable Property resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but that has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently on the parcel of a substance not presently classified as hazardous but that may in the future be so classified.
Further, such liabilities may arise n ot simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of Taxable Property that is realizable upon a delinquency.
Endangered and Threatened Species. It is illegal to harm or disturb any plants or animals in their habitat that have been listed as endangered species by the United States Fish & Wildlife Service under the Federal Endangered Species Act or by the California Fish & Game Commission under the Calif ornia Endangered Species Act without a permit. Although Woodside believes that no federally listed endangered or threatened species would be affected by the proposed development within Improvement Area No. 1, other than any that are permitted by the entitlements already received (which allow for the impact of development and specify the mitigation required), the discovery of an endangered plant or animal could delay development of vacant property in Improvement Area No. 1 or reduce the value of undeveloped property.
Future Property Development
Continuing development of the parcels in Improvement Area No. 1 may be adversely affected by changes in general or local economic conditions, fluctuations in or a deterioration of the real estate market, increased construction costs, development, financing and marketing capabilities of the developer, water or electricity shortages, discovery on the undeveloped property of any pl ants or animals in their habitat that have been listed as endangered species, changes in law, and other similar factors. Development in Improvement Area No. 1 may also be affected by development in surrounding areas, which may compete with the property in Improvement Area No. 1.
For example, H.R. 1 of the 115th U.S. Congress, known as the “Tax Cuts and Jobs Act,” was enacted into law on December 22, 2017 (the “Tax Act” ). The Tax Act made significant changes to many aspects of the Code that could have an impact on future property development, although to-date none have been widespread.
ITEM 12.1.
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Other Possible Claims Upon the Value of Taxable Property
While the Special Taxes are secured by the Taxable Property, the security only extends to the value of such Taxable Property that is not subject to priority and parity liens and similar claims.
The table in the section entitled “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 1 –Priority of Lien ” shows the presently outstanding amount of governmental obligations (with stated exclusions), the tax or assessment for which is or may become an obligation of one or more of the parcels in Improvement Area No. 1 subject to a Special Tax.
The table also states the additional amount of general obligation bonds the tax for which, if and when issued, may become an obligation of one or more of the parcels in Improvement Area No. 1 subject to a Special Tax. The table does not spec ifically identify which of the governmental obligations are secured by liens on one or more of the parcels in Improvement Area No. 1 subject to a Special Tax.
In addition, other governmental obligations may be authorized and undertaken or issued in the future, the tax, assessment or charge for which may become an obligation of one or more of the parcels in Improvement Area No. 1 subject to a Special Tax and may be secured by a lien on a parity with the lien of the Special Tax securing the Bonds.
In general, as long as the Special Tax is collected on the County tax roll, the Special Tax and all other taxes, assessments and charges also collected on the tax roll are on a parity, that is, are of equal priority. Questions of priority become significant when collection of one or more of the taxes, assessments or charges is sought by some other procedure, such as foreclosure and sale. In the event of proceedings to foreclose for delinquency of Special Taxes securing the Bonds, the Special Tax will be subordinat e only to existing prior governmental liens, if any.
Otherwise, in the event of such foreclosure proceedings, the Special Taxes will generally be on a parity with the other taxes, assessments and charges, and will share the proceeds of such foreclosure proceedings on a pro rata basis. Although the Special Taxes will generally have priority over non-governmental liens on a parcel of Taxable Property, regardless of whether the non-governmental liens were in existence at the time of the levy of the Special T ax or not, this result may not apply in the case of bankruptcy. See “– Bankruptcy Delays” below.
Exempt Properties
Certain properties are exempt from the Special Tax in accordance with the Rate and Method and the Mello-Roos Act, which provides that properties or entities of the state, federal or local government are exempt from the Special Tax; provided, however, that property within Improvement Area No. 1 acquired by a public entity through a negotiated transaction or by gift or devise, which is not otherwise exempt from the Special Tax, will continue to be subject to the Special Tax. See “SECURITY FOR THE BONDS – Rate and Method.”
In addition, although the Mello- Roos Act provides that if property subject to the Special Tax is acquired by a public entity through eminent domain proceedings, the obligation to pay the Special Tax with respect to that property is to be t reated as if it were a special assessment, the constitutionality and operation of these provisions of the Mello- Roos Act have not been tested, meaning that such property could become exempt from the Special Tax. The Mello- Roos Act further provides that no other properties or entities are exempt from the Special Tax unless the properties or entities are expressly exempted in a resolution of consideration to levy a new special tax or to alter the rate or method of apportionment of an existing special tax.
ITEM 12.1.
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FDIC/Federal Government Interests in Properties
General. The ability of the City to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties i n which the FDIC, the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.
Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressiona l intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest.
The supremacy clause of the United States Constitution reads as follows: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States , shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding.”
This means that, unless Congress has otherwise provided, if a federal govern mental entity owns a parcel that is subject to Special Taxes but does not pay taxes and assessments levied on the parcel (including Special Taxes), the applicable state and local governments cannot foreclose on the parcel to collect the delinquent taxes and assessments.
Moreover, unless Congress has otherwise provided, if the federal government has a mortgage interest in the parcel and the City wishes to foreclose on the parcel as a result of delinquent Special Taxes, the property cannot be sold at a foreclosure sale unless it can be sold for an amount sufficient to pay delinquent taxes and assessments on a parity with the Special Taxes and preserve the federal government ’s mortgage interest. In Rust v. Johnson (9th Circuit; 1979) 597 F.2d 174, the Unite d States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association (“FNMA”) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.
The City has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage int erest) in any of the parcels subject to the Special Taxes, and therefore expresses no view concerning the likelihood that the risks described above will materialize while the Bonds are outstanding.
FDIC. In the event that any financial institution making any loan which is secured by real property within Improvement Area No. 1 is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, resulting in ownership of the proper ty by the FDIC, then the ability of the City to collect interest and penalties specified by State law and to foreclose the lien of delinquent unpaid Special Taxes may be limited.
The FDIC’s policy statement regarding the payment of state and local real property taxes (the “Policy Statement”) provides that property owned by the FDIC is subject to state and local real property taxes only if those taxes are assessed according to the property ’s value, and that the FDIC is immune from real property taxes assess ed on any basis other than property value.
According to the Policy Statement, the FDIC will pay its property tax obligations when they become due and payable and will pay claims for delinquent property taxes as promptly as is ITEM 12.1.
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consistent with sound business practice and the orderly administration of the institution’s affairs, unless abandonment of the FDIC ’s interest in the property is appropriate. The FDIC will pay claims for interest on delinquent property taxes owed at the rate provided under state law, to the extent the interest payment obligation is secured by a valid lien. The FDIC will not pay any amounts in the nature of fines or penalties and will not pay nor recognize liens for such amounts. If any property taxes (including interest) on FDIC -owned property are secured by a valid lien (in effect before the property became owned by the FDIC), the FDIC will pay those claims. The Policy Statement further provides that no property of the FDIC is subject to levy, attachment, garnishment, foreclosure or sale without the FDIC’s consent. In addition, the FDIC will not permit a lien or security interest held by the FDIC to be eliminated by foreclosure without the FDIC’s consent.
The Policy Statement states that the FDIC generally will not pay non -ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the FDIC acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purp orts to secure the payment of any such amounts.
Special taxes imposed under the Mello-Roos Act and a Rate and Method which determines the special tax due each year are specifically identified in the Policy Statement as being imposed each year and therefor e covered by the FDIC ’s federal immunity. The Ninth Circuit issued a ruling on August 28, 2001, in which it determined that the FDIC, as a federal agency, is exempt from special taxes levied under the Act.
The City is unable to predict what effect the ap plication of the Policy Statement would have in the event of a delinquency in the payment of Special Taxes on a parcel within Improvement Area No. 1 in which the FDIC has or obtains an interest, although prohibiting the lien of the Special Taxes to be fore closed out at a judicial foreclosure sale could reduce or eliminate the number of persons willing to purchase a parcel at a foreclosure sale. Such an outcome could cause a draw on the Reserve Fund and perhaps, ultimately, if enough property were to become owned by the FDIC, a default in payment on the Bonds.
Depletion of Reserve Fund
The Reserve Fund is to be maintained at an amount equal to the Reserve Requirement as defined in the Fiscal Agent Agreement . See “SECURITY FOR THE BONDS – Reserve Fund.” The Reserve Fund will be used to pay principal of and interest on the Bonds if insufficient funds are available from the proceeds of the levy and collection of the Special Tax against property within Improvement Area No. 1 . If the Reserve Fund is depleted, it can be replenished from the proceeds of the levy and collection of the Special Taxes that exceed the amounts to be paid to the owners of the Bonds under the Fiscal Agent Agreement. However, because the Special Tax levy is limited to the annual Maximum Annual Special Tax rates, it is possible that no replenishment would be achieved if the Special Tax proceeds, together with other available funds, remain insufficient to pay all such amounts. Thus , it is possible that the Reserve Fund will be depleted and not be replenished by the levy and collection of the Special Taxes.
ITEM 12.1.
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Bankruptcy Delays
The payment of the Special Tax and the ability of the City to foreclose the lien of a delinquent unpaid Special Tax, as discussed in “SECURITY FOR THE BONDS,” may be limited by bankruptcy, insolvency or other laws generally affecting creditors’ rights or by the laws of the State of California relating to judicial foreclosure. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel’s approving legal opinion ) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors ’ rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.
Although bankruptcy proceedings would not cause the Special Taxes to become extinguished, bankruptcy of a property owner or any other person claiming an interest in the property could result in a delay in superior court foreclosure proceedings and could re sult in the possibility of Special Tax installments not being paid in part or in full. Such a delay would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds.
In addition, the amount of any lien on prope rty securing the payment of delinquent Special Taxes could be reduced if the value of the property were determined by the bankruptcy court to have become less than the amount of the lien, and the amount of the delinquent Special Taxes in excess of the redu ced lien could then be treated as an unsecured claim by the court.
Any such stay of the enforcement of the lien for the Special Tax, or any such delay or non - payment, would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent Special Taxes not being paid in full.
To the extent that property in Improvement Area No. 1 continues to be owned by a limited number of property owners, the chances are increased that the Reserve F und could be fully depleted during any such delay in obtaining payment of delinquent Special Taxes. As a result, sufficient moneys would not be available in the Reserve Fund to make up shortfalls resulting from delinquent payments of the Special Tax and t hereby to pay principal of and interest on the Bonds on a timely basis.
On July 30, 1992, the United States Court of Appeals for the Ninth Circuit issued its opinion in a bankruptcy case entitled In re Glasply Marine Industries. In that case, the court held that ad valorem property taxes levied by Snohomish County in the State of Washington after the date that the property owner filed a petition for bankruptcy were not entitled to priority over a secured creditor with a prior lien on that property. The court upheld the priority of unpaid ad valorem taxes imposed before the bank ruptcy petition (the “pre-petition taxes ”), but unpaid taxes imposed after the filing of the bankruptcy petition ( “post-petition taxes”) were declared to be unsecured “administrative expenses” of the bankruptcy estate, and were therefore held to be payable from the bankruptcy estate only after payment of all secured creditors. As a result, the secured creditor of the property was able to foreclose on the property and retain all of the proceeds of the sale except for the amount of the pre-petition taxes.
According to the court ’s ruling, as administrative expenses, post -petition taxes would have to be paid, but only if the debtor had sufficient assets not subject to other perfected security interests to do so. In certain circumstances, payment of such adminis trative expenses may also be allowed to be deferred. Once the property is transferred out of the bankruptcy estate (through foreclosure or otherwise) it would at that time again become subject to and would secure liens for then current and future ad valorem taxes.
ITEM 12.1.
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Glasply was controlling precedent on bankruptcy courts in the State of California for several years subsequent to the date of the Ninth Circuit’ s holding. Pursuant to state law, the lien date for general ad valorem property taxes levied in the St ate of California is the January 1 preceding the fiscal year for which the taxes are levied. Under the Glasply holding, a bankruptcy petition filing would have prevented the lien for general ad valorem property taxes levied in fiscal years subsequent to th e filing of a bankruptcy petition from attaching and becoming a lien so long as the property was a part of the estate in bankruptcy. However, the Glasply holding was for the most part subsequently rendered inoperative with respect to the imposition of a li en for and the collection of ad valorem taxes by amendments to the federal Bankruptcy Code (Title 11 U.S.C.) which were part of the Bankruptcy Reform Act of 1994 (the “Bankruptcy Reform Act ”) passed by Congress during the later part of 1994. The Bankruptcy Reform Act added a provision to the automatic stay section of the Bankruptcy Code which, pursuant to Section 362(b)(18) thereof, excepts from the Bankruptcy Code’s automatic stay provisions, “the creation of a statutory lien for an ad valorem property tax imposed by . . . a political subdivision of a state, if such tax comes due after the filing of the petition ” by a debtor in bankruptcy court. The effect of this provision is to continue the secured interest of ad valorem taxes on real property (i.e., post-petition taxes) in effect during the period following the filing of a bankruptcy petition, including during the period bankruptcy proceedings are pending.
Without further clarification by the courts or Congress, the original rationale of the Glasply holding could, however, still result in the treatment of post -petition special taxes as “administrative expenses,” rather than as tax liens secured by real property, at least during the pendency of bankruptcy proceedings. This treatment might result from the f act that, although the lien of special taxes is of record from the date of the filing of a Notice of Special Tax Lien, the actual special tax is levied annually. As noted above, special taxes have a different lien date than the lien date for general ad valorem taxes in the State of California noted above. The lien of a Mello -Roos special tax attaches upon recordation of the notice of the special tax lien, as provided for in Section 53328.3 of the Act, as opposed to the annual January 1 lien date for general ad valorem taxes. Thus, in deciding whether the original Glasply ruling is applicable to a bankruptcy proceeding involving special taxes rather than general ad valorem property taxes, a court might consider the differences in the statutory provisions for creation of the applicable tax lien (general ad valorem or special tax) in determining whether there is a basis for post petition special taxes to be entitled to a lien on the property during pending bankruptcy proceedings. If a court were to apply Glasply to eliminate the priority of the special tax lien as a secured claim against property with respect to post- petition levies of the Special Taxes made against property owners within Improvement Area No. 1 who file for bankruptcy, collections of the Special Taxes from such property owners could be reduced as the result of being treated as “administrative expenses” of the bankruptcy estate. Also, and most importantly, is the fact that the original holding in Glasply and the mitigation of that holding by the Bankruptcy Reform Act of 1994 both appear to be applicable only to general ad valorem taxes, and, therefore, the exemption from the automatic stay in Section 362(b)(18) di scussed above may not be applicable to special taxes since they were not expressly mentioned or provided for in this section, nor defined to be included within the term “ad valorem taxes.”
ITEM 12.1.
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Disclosure to Future Purchasers
The City has recorded a notice of the Special Tax lien in the Office of the County Recorder. While title companies normally refer to such notices in title reports, there can be no guarantee that such reference will be made or, if made, that a prospective purchaser or lender will consider such special tax obligation in the purchase of a parcel of land or a home in Improvement Area No. 1 or the lending of money secured by property in Improvement Area No.
1. The Mello-Roos Act and the City’s Mello-Roos Act Goals and Policies require the subdivider of a subdivision (or its agent or representative) to notify a prospective purchaser or long -term lessor of any lot, parcel, or unit subject to a Mello -Roos special tax of the existence and maximum amount of such special tax using a statutorily prescribed form. California Civil Code Section 1102.6b requires that in the case of transfers other than those covered by the above requirement, the seller must at least make a good faith effort to notify the prospective purchaser of the special tax lien in a format prescribed by statute. Failure by an owner of the property to comply with these requirements, or failure by a purchaser or lessor to consider or understand the nature and existence of the Special Tax, could adversely affect the willingness and ability of the purchaser or lessor to pay the Special Tax when due.
No Acceleration Provisions
The Bonds do not contain a provision allowing for their acceleration in the event of a payment default or other default under the terms of the Bonds or the Fiscal Agent Agreement.
Under the Fiscal Agent Agreement, a Bondowner is given the right for the equal benefit and protection of all Bondowners similarly situated to pursue certain remedies. So long as the Bonds are in book-entry form, DTC will be the sole Bondowner and will be entitled to exercise all rights and remedies of Bondholders, in accordance with its procedures and rules.
Loss of Tax Exemption
As discussed under the caption “TAX MATTERS,” interest on the Bonds might become includable in gross income for purposes of federal income taxation retroactive to the date the Bonds were issued as a result of future acts or omissions of the City in violation of its covenants in the Fiscal Agent Agreement. The Fiscal Agent Agreement does not contain a special redemption feature triggered by the occurrence of an event of taxability. As a result, if interest on the Bonds were to become includable in gross income for purposes of federal income taxation, the Bonds would continue to remain outstanding until maturity unless earlier redeemed pursuant to optional redemption, mandatory sinking fund redemption or special mandatory redemption upon prepayment of the Special Taxes. See “THE BONDS – Redemption.”
Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Bondowners from realizing the full current benefit of the tax status of such interest.
IRS Audit of Tax-Exempt Bond Issues
The Internal Revenue Service (the “IRS”) has initiated an expan ded program for the auditing of tax- exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the IRS. It is also possible that the market value of such Bonds might be affected as a result of such an audit (or by an audit of similar bonds or securities).
ITEM 12.1.
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Voter Initiatives
Under the California Constitution, the power of initiative is reserved to the voters for the purpose of enacting statutes and constitutiona l amendments. Since 1978, the voters have exercised this power through the adoption of Proposition 13 and similar measures, including Proposition 218, which was approved in the general election held on November 5, 1996, and Proposition 26, which was approved on November 2, 2010.
Any such initiative may affect the collection of fees, taxes and other types of revenue by local agencies such as the City. Subject to overriding federal constitutional principles, such collection may be materially and adversely affected by voter-approved initiatives, possibly to the extent of creating cash- flow problems in the payment of outstanding obligations such as the Bonds.
Proposition 218 – Voter Approval for Local Government Taxes —Limitation on Fees, Assessments, and Cha rges—Initiative Constitutional Amendment, added Articles XIIIC and XIIID to the California Constitution, imposing certain vote requirements and other limitations on the imposition of new or increased taxes, assessments and property-related fees and charges.
On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act. ” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and loc al government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Special Taxes for general gove rnmental purposes require a majority vote and taxes for specific purposes (“special taxes”) require a two-thirds vote.
The Special Taxes and the bond authorization for Improvement Area No. 1 were each authorized by not less than a two- thirds vote of the landowners within Improvement Area No. 1 who constituted the qualified electors at the time of such voted authorization. The City believes, therefore, that issuance of the Bonds does not require the conduct of further proceedings under the Act, Proposition 218 or Proposition 26.
Case Law Related to the Mello-Roos Act Voting
On August 1, 2014, the California Court of Appeal, Fourth Appellate District, issued its opinion in City of San Diego v. Melvin Shapiro, et al. (D063997). The case involved a Convention Center Facilities District (the “CCFD”) established by the City of San Diego. The CCFD is a financing district established under the City ’s charter (the “Charter”) and was intended to function much like a community facilities district established under the Mello -Roos Act. The CCFD was comprised of all of the real property in the entire City. However, the CCFD special tax was to be levied only on properties in the CCFD that were improved with a hotel.
At the election to authorize the CCFD special tax, the CCFD proceedings limited the electorate to owners of hotel properties a nd lessees of real property owned by a governmental entity on which a hotel was located. Registered voters in the City of San Diego were not permitted to vote. This definition of the qualified electors of the CCFD was based on Section ITEM 12.1.
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53326(c) of the Mello- Roos Act, which generally provides that, if a special tax will not be apportioned in any tax year on residential property, the legislative body may provide that the vote shall be by the landowners of the proposed community facilities district whose proper ty would be subject to the special tax.
The San Diego Court held that the CCFD special tax election did not comply with the City’s Charter and with applicable provisions of the California Constitution -- specifically Article XIIIA, section 4 ( “Cities, Cou nties and special districts, by a two -thirds vote of the qualified electors of such district, may impose special taxes on such district….”) and Article XIIIC, section 2(d) (“No local government may impose, extend, or increase any special tax unless and unt il that tax is submitted to the electorate and approved by a two -thirds vote. ”) -- because the electors in the CCFD election should have been the registered voters residing within the CCFD (the boundaries of which were coterminous with the boundaries of the City of San Diego).
As to Improvement Area No. 1 , there were fewer than 12 registered voters within Improvement Area No. 1 at the time of the election to authorize the Special Taxes. Significantly, the San Diego Court expressly stated that it was not addressing the validity of a landowner election to impose special taxes on residential property pursuant to the Mello -Roos Act in situations where there are fewer than 12 registered voters. Therefore, by its terms, the San Diego Court’s holding does not apply to the special tax election in Improvement Area No. 1.
Moreover, Sections 53341 and 53359 of the Act establish a limited period of time in which special taxes levied under the Mello-Roos Act may be challenged by a third party:
53341. Any action or proceeding to attack, review, set aside, void, or annul the levy of a special tax or an increase in a special tax pursuant to [the Mello -Roos Act] shall be commenced within 30 days after the special tax is approved by the voters….
53359. An action to determine the validity of bonds issued pursuant to [the Mello-Roos Act] or the validity of any special taxes levied pursuant to [the Mello - Roos Act] … shall …. be commenced within 30 days after the voters approve the issuance of the bonds or the special tax …
Section 53326(b) of the Mello -Roos Act defines the authorized voters for an election in which the special taxes will be levied on residential property: “Except as otherwise provided in subdivision (c), if at least 12 persons, who need not necessarily be the same 12 persons, have been registered to vote within the territory of the proposed community facilities district for each of the 90 days preceding the close of the protest hearing, the vote shall be by the registered voters of the proposed district, with each voter having one vote. Otherwise, the vote shall be by the landowners of the proposed district and each person who is the owner of land at the close of the protest hearing, or the authorized representative thereof, shall have one vote for each acre or portion of an acre of land that he or she owns within the proposed community facilities district not exempt from the special tax….”
Landowner voters approved the Special Taxes and the issuance of bonds for Improvement Area No. 1 in compliance with all applicable requirements of the Mello -Roos Act and, pursuant to Sections 53341 and 53359 of the Mello -Roos Act, the statute of limitations period to challenge the validity of the special tax has expired. Because the San Diego Court expressly stated that it did not consider the facts presented by Improvement Area No. 1 and the ITEM 12.1.
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District, and because the period for challenging the Special Taxes has passed, the City believes the Special Taxes are valid and cannot be challenged.
Secondary Market for Bonds
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that any Bonds can be sold for any particular price. Prices of bond issues for which a market is being made will depend upon then -prevailing circumstances. Such prices could be substantially different from the original purchase price.
No assurance can be given that the market price for the Bonds will not be affected by the introduction or enactment of any future legislation (including without limitation amendments to the Internal Revenue Code), or changes in interpretation of the Internal Revenue Cod e, or any action of the IRS, including but not limited to the publication of proposed or final regulations, the issuance of rulings, the selection of the Bonds for audit examination, or the course or result of any IRS audit or examination of the Bonds or obligations that present similar tax issues as the Bonds.
Pandemic Diseases
In recent years and particularly as a result of the COVID-19 pandemic, public health authorities have warned of threats posed by outbreaks of disease and other public health threats. Pandemic diseases arising in the future could have significant adverse health and financial impacts throughout the world, leading to loss of jobs and personal financial hardships, and/or actions by federal, State and local gove rnmental authorities to contain or mitigate the effects of an outbreak.
Taxpayer assistance measures may include deferral of due dates of property taxes, which was an assistance program during the COVID -19 pandemic, and with or without a deferral some taxpayers may be unable to make their property and Special Tax payments. No assurance can be given that the property tax payment dates will not be deferred in the future, which may cause a delay in the receipt of Special Taxes. In addition, home values may be affected by a reduction in demand stemming from personal finances, or general widespread economic circumstances resulting from pandemic diseases.
Cyber Security
The City, like many other public and private entities, relies o n computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subject to multiple cyber threats, including without limitatio n hacking, viruses, ransomware, malware and other attacks. No assurance can be given that the City ’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City or Improvement Area No. 1, or the administration of the Bonds. The City is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation the County tax collector for the levy and collection of Special Taxes, the Fiscal Agent, and the dissemination agent. No assurance can be given that the City, Improvement Area No. 1 and these other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.
ITEM 12.1.
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Potential Early Redemption of Bonds from Prepayments
Property owners within Improvement Area No. 1 , including Woodside and individual homeowners, are permitted to prepay their Special Tax obligation at any time. Such prepayments could also be made from the proceeds of bonds issued by or on behalf of an overlapping special assessment district or community facilities distr ict. Such prepayments will result in a redemption of the Bonds on the interest payment date for which timely notice may be given under the Fiscal Agent Agreement following the receipt of the prepayment. The resulting redemption of Bonds that were purchas ed at a price greater than par could reduce the otherwise expected yield on such Bonds.
LEGAL MATTERS
Legal Opinion
The legal opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, approving the validity of the Bonds will be made available to purchasers at the time of original delivery and is attached in substantially final form as APPENDIX E.
Jones Hall, A Professional Law Corporation, San Francisco, California, has served as Disclosure Counsel to the City. Meyers Nave, A Professional Law Corporation, Sacramento, California, will pass upon certain legal matters for the City as its City Attorney. Kutak Rock LLP, Irvine, California, is serving as counsel to the Underwriter.
No Litigation
At the time of delivery of the Bonds, the City will certify that there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, public board or body, pending with respect to which the City has been served with process or threatened, which (i) in any way questions the powers of the City Council or the City, (ii) in any way questions the validity of any proceeding taken by the City Council in connection with the issuance of the Bonds, (iii) w herein an unfavorable decision, ruling or finding could have a material adverse effect on the transactions contemplated by the purchase contract with respect to the Bonds, (iv) which, in any way, could adversely affect the validity or enforceability of the resolutions of the City Council adopted in connection with the formation of the District or Improvement Area No. 1, or the issuance of the Bonds, the Fiscal Agent Agreement, the Continuing Disclosure Agreement or the purchase contract with respect to the Bonds, (v) to the knowledge of the City, which in any way questions the exclusion from gross income of the recipients thereof of the interest on the Bonds for federal income tax purposes, or (vi) in any other way questions the status of the Bonds under State tax laws or regulations.
ITEM 12.1.
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TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. Interest on the Bonds may be subject to the corporate alternative minimum tax.
The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended (the “Tax Code”) that must be satisfied subsequent to the issuance of the Bonds in order that the interest thereon be, and continue to be, excludable from gross income for federal income tax purposes.
The City has made certain representations and covenants in order to comply with each such requirement. Inaccuracy of those representations, or failure to comply with certain of those covenants, may cause the inclusion of such interest in gross income for federal income tax purposes, which may be retroactive to the date of issuance of the Bonds.
Tax Treatment of Original Issue Discount and Premium. If the initial offering price to the public at which a Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes “original issue discount” for purposes of federal income taxes and State of California personal income taxes. If the initial offering price to the public at which a Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes “original issue premium” for purposes o f federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium are disregarded.
Under the Tax Code, original issue discount is treated as interest excluded from federal gross income and exempt from State of California personal income taxes to the extent properly allocable to each owner thereof subject to the limitations described in t he first paragraph of this section. The original issue discount accrues over the term to maturity of the Bond on the basis of a constant interest rate compounded on each interest or principal payment date (with straight- line interpolations between compoun ding dates). The amount of original issue discount accruing during each period is added to the adjusted basis of such Bonds to determine taxable gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The Tax Code contain s certain provisions relating to the accrual of original issue discount in the case of purchasers of the Bonds who purchase the Bonds after the initial offering of a substantial amount of such maturity. Owners of such Bonds should consult their own tax advisors with respect to the tax consequences of ownership of Bonds with original issue discount, including the treatment of purchasers who do not purchase in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public.
Under the Tax Code, original issue premium is amortized on an annual basis over the term of the Bond (said term being the shorter of the Bond’s maturity date or its call date). The amount of original issue premium amortized each y ear reduces the adjusted basis of the owner of the Bond for purposes of determining taxable gain or loss upon disposition. The amount of original issue premium on a Bond is amortized each year over the term to maturity of the Bond on the basis of a consta nt interest rate compounded on each interest or principal payment date (with straight-line interpolations between compounding dates). Amortized bond premium is not deductible for federal income tax purposes. Owners of premium Bonds, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect ITEM 12.1.
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to State of California personal income tax and federal income tax consequences of owning such Bonds.
California Tax Status. In the further opinion of Bond Co unsel, interest on the Bonds is exempt from California personal income taxes.
Other Tax Considerations. Current and future legislative proposals, if enacted into law, clarification of the Tax Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals, clarification of the Tax Code or court decisions may also affect the market price for, or marketability of, the Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whethe r, if enacted, such legislation would apply to bonds issued prior to enactment.
The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of s uch opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation or as to the tax treatment of interest on the Bonds, or as to the consequences of owning or receiving interest on the Bonds, as of any future date. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
Owners of the Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may have federal or state tax consequences other than as described above. Other than as expressly described above, Bond Counsel expresses no opinion regarding other federal or state tax consequences arising with respect to the Bonds, the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on the Bonds.
CONTINUING DISCLOSURE
The City
The City has covenanted for the benefit of owners of the Bonds to provide certain financial information and operating data relating to Improvement Area No. 1 by not later than nine months after the end of the City ’s fiscal year (presently June 30) in each year (the “City Annual Report”) commencing with its report for the 2022-23 fiscal year (due by April 1, 2024) (provided that the City Annual Report due by April 1, 2024 shall be satisfied by the posting of this Official Statement and the City’s audited financial statements for Fiscal Year 2022 -23), and to provide notices of the occurrence of certain enumerated events. Additionally, Woodside has covenanted for the benefit of owners of the Bonds to provide certain information by April 1 and October 1 of any fiscal year (commencing April 1, 2024) with respect to the property owned by it and its Affiliates (as defined in the Continuing Disclosure Certificate) within Improvement Area No. 1 (the “Developer Semi-Annual Report ”) to owners of the Bonds (so long as it is responsible for a certain percentage of the Special Taxes), as described in the Developer Semi- Annual Report, and to provide notices of the occurrence of certain enumerated events.
ITEM 12.1.
ATTACHMENT 4
-61-
The City Annual Report and the Developer Semi-Annual Report and notices of listed events will be filed with the Municipal Securities Rulemaking Board. The covenants of the City have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2 -12(b)(5) (the “Rule”). The specific nature of the information to be contained in the Annual Report or the notices of listed events by the City and the Semi-Annual Reports for Woodside is summarized in “APPENDIX F – Form of Continuing Disclosure Undertakings.”
A review of the City’s compliance with prior continuing disclosure undertakings in the last five years indicates that the City has been in compliance during such period.
The City retain s Goodwin Consulting Group, Inc. to serve as dissemination agent with respect to the filings to be made with respect to the Bonds and its other undertakings under the Rule.
Woodside
Woodside is not an obligated party under the Rule but has voluntarily agreed to provide semi-annual continuing disclosure for the benefit of Bondowners. Woodside will enter into a Continuing Disclosure Certificate (Developer) covenanting to provide certain information regarding the development of its property and notice of certain material events as they occur until such time as Woodside owns property in Improvement Area No. 1 responsible for less than 20% of the special tax levy for Improvement Area No. 1.
Woodside represents that it is not aware of any material failures by it within the past five years to comply with previous undertakings to provide continuing disclosure reports or notices of certain listed material events with respect to community facilities districts or assessment districts in California.
NO RATING
The City has not obtained a formal credit rating on the Bonds and does not anticipate obtaining one on the Bonds in the future. Prospective purchasers of the Bonds are required to make independent determinations as to the credit quality of the Bonds and their appropriateness as an investment.
UNDERWRITING
The Bonds are being purchased by Piper Sandler & Co. , as underwriter (the “Underwriter”), at a purchase price of $____________ (which represents the aggregate principal amount of the Bonds ($____________), [plus/minus] [net] original issue [premium/discount] of $____________, and less an Underwriter’s discount of $____________).
The purchase agreement relating to the Bonds provides that the Underwriter will purchase all of the Bonds, if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in such purchase agreement.
ITEM 12.1.
ATTACHMENT 4
-62-
The Underwriter m ay offer and sell the Bonds to certain dealers and others at prices lower than the off ering prices stated on the inside cover page hereof. The offering prices may be changed from time to time by the Underwriter.
PROFESSIONAL FEES
In connection with the issuance of the Bonds, some or all of fees or other compensation payable to certain professionals is contingent upon the issuance and delivery of the Bonds.
Those professionals include:
• Piper Sandler & Co., as the Underwriter;
• Jones Hall, A Professional Law Corporation, as Bond Counsel and Disclosure Counsel;
• Kutak Rock LLP, as Underwriter’s Counsel;
• Goodwin Consulting Group, Inc., as Special Tax Consultant; • NHA Advisors, LLC, as Municipal Advisor; and
• U.S. Bank Trust Company, National Association, as Fiscal Agent for the Bonds.
EXECUTION
The execution and delivery of the Official Statement by the City has been duly authorized by the City Council, acting as the legislative body of the District and Improvement Area No. 1.
CITY OF RANCHO CORDOVA
By:
Administrative Services Director
ITEM 12.1.
ATTACHMENT 4
A-1
APPENDIX A
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
ITEM 12.1.
ATTACHMENT 4
B-1
APPENDIX B
THE APPRAISAL
ITEM 12.1.
ATTACHMENT 4
C-1
APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE FISCAL AGENT AGREEMENT
ITEM 12.1.
ATTACHMENT 4
D-1
APPENDIX D
SACRAMENTO COUNTY AND CITY OF RANCHO CORDOVA
DEMOGRAPHIC INFORMATION
The following information concerning the City of Rancho Cordova (the “City”) and the County of Sacramento (the “County”) is included only for the purpose of supplying general information regarding the area of the City and County. The Bonds are not a debt of the City, the County, the State of California (the “State”) or any of its political subdivisions, and neither the City, the County, the State nor any of its political subdivisions is liable therefor.
General
The City. The City was incorporated on July 1, 2003, is located in the northeastern portion of the County, 10 miles east of downtown Sacramento and 90 miles northeast of San Francisco. Organized as a General Law City under State law, the City operates under the Council-Manager form of government with five members elected to the Council, one of which serves as mayor for a year.
The County. The County was incorporated in 1850 as one of the original 27 counties of the State. The County ’s largest city, the City of Sacramento serves as the seat of government for both the County and the State. Sacramento became the State Capital in 1854. The County is the major component of the Sacramento Metropolitan Statistical Area ( “SMSA”), which includes Sacramento, El Dorado, and Placer Counties.
The County encompasses approximately 994 square miles in the northern portion of the Central Valley, which is California’s prime agricultural region. The County is bordered by Contra Costa and San Joaquin Counties on the south, Ama dor and El Dorado Counties on the east, Placer and Sutter Counties on the north, and Yolo and Solano Counties on the west. The County extends from the low delta lands between the Sacramento and San Joaquin rivers north to about ten miles beyond the State Capitol and east to the foothills of the Sierra Nevada Mountains. The southernmost portion of the County has direct access to San Francisco Bay.
Population
The following table lists population estimates for the City, the County and the State for the last five calendar years, as of January 1, 2023.
CITY OF RANCHO CORDOVA, COUNTY OF SACRAMENTO
AND STATE OF CALIFORNIA
Population Estimates
Calendar Years 2019 through 2023, as of January 1
Calendar Year
City of
Rancho Cordova
County of
Sacramento
State of
California
2019 77,259 1,538,054 39,605,361
2020 78,333 1,553,157 39,648,938
2021 79,480 1,579,186 39,286,510
2022 80,156 1,573,366 39,078,674
2023 81,117 1,572,453 38,940,231
Source: State Department of Finance.
ITEM 12.1.
ATTACHMENT 4
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Employment and Industry
The unemployment rate in the Sacramento --Roseville--Arden-Arcade MSA was 4.4 percent in June 2023, up from a revised 4.0 percent in May 2023 , and below the year -ago estimate of 3.7 percent. This compares with an unadjusted unemployment rate of 4. 9 percent for California and 3.8 percent for the nation during the same period. The unemployment rate was 3.9 percent in El Dorado County, 3.8 percent in Placer County, 4.5 percent in Sacramento County, and 4.8 percent in Yolo County.
The table below provides information about employment rates and employment by industry type for the Sacramento MSA (which includes Sacramento, Placer, Yolo and El Dorado Counties) for the calendar years 2018 through 2022.
SACRAMENTO-ARDEN ARCADE-ROSEVILLE MSA
(El Dorado, Placer, Sacramento, Yolo Counties)
Employment by Industry
(March 2022 Benchmark)
2018 2019 2020 2021 2022
Civilian Labor Force (1) 1,088,500 1,101,200 1,095,600 1,107,800 1,124,500 Employment 1,047,200 1,061,100 998,400 1,036,700 1,082,500 Unemployment 41,200 40,100 97,200 71,100 42,000
Unemployment Rate 3.8% 3.6% 8.9% 6.4% 3.7%
Wage and Salary Employment (2)
Agriculture 9,100 8,700 8,300 9,000 8,600
Mining and Logging 400 500 500 500 500
Construction 64,500 69,400 70,200 74,900 76,800
Manufacturing 36,000 36,800 36,100 37,700 40,300
Wholesale Trade 28,400 28,600 26,600 26,900 28,300
Retail Trade 102,000 100,500 95,100 100,600 100,800
Transportation, Warehousing and Utilities 29,500 32,200 34,300 37,500 40,500 Information 36,700 35,200 34,800 34,100 33,200
Finance and Insurance 36,700 35,200 34,800 34,100 33,200 Real Estate and Rental and Leasing 16,800 17,300 16,900 17,700 19,100 Professional and Business Services 136,000 137,300 133,500 140,600 147,500 Educational and Health Services 159,800 166,600 164,000 168,800 175,400 Leisure and Hospitality 106,200 109,600 83,900 93,600 108,700 Other Services 34,200 35,400 31,000 33,300 36,100
Federal Government 14,100 14,200 14,800 14,500 14,300
State Government 120,400 121,900 121,700 127,300 128,700 Local Government 103,500 105,300 98,900 98,400 102,900
Total, All Industries (3) 1,009,900 1,031,300 980,700 1,025,400 1,072,300
(1) Labor force data is by place of residence; includes self -employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self -employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(3) Totals may not add due to rounding.
Source: State of California Employment Development Department.
ITEM 12.1.
ATTACHMENT 4
D-3
Principal Employers
The following table shows the principal employers in the City, as shown in the City ’s Annual Comprehensive Financial Report for fiscal year ending June 30, 2022.
CITY OF RANCHO CORDOVA
Principal Employers
As of June 2022
Employer
Number of
Employees
Percent of Total
Employment
VSP Global 1,600 3.32%
Franklin Templeton 1,200 2.49
Cordova Folsom Unified School District 1,017 2.11
Accentcare Home Health 727 1.51
Health Net Federal Services 700 1.45
The Permanente Medical Group 559 1.16
Kaiser Foundation Hospitals 497 1.03
Plexus Optix, Inc. 428 0.89
Nidec Motor Corporation 400 0.83
Automotive Importing Manufacturing Ir 303 0.63
Source: City of Rancho Cordova, Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2022.
ITEM 12.1.
ATTACHMENT 4
D-4
Major Employers
The following table lists the major employers within the County as of July 2023, in alphabetical order.
COUNTY OF SACRAMENTO
Major Employers
As of July 2023
Employer Name Location Industry
Aerojet Rocketdyne Inc Rancho Cordova Aerospace Industries (mfrs) Agreeya Solutions Folsom Information Technology Services AMPAC FINE CHEMICALS LLC Rancho Cordova Electronic Equipment & Supplies-Mfrs Apple Distribution Ctr Elk Grove Distribution Centers (whls) California Department-Crrctns Sacramento Insurance Agents Brokers & Service California State Univ Scrmnt Sacramento Schools-Universities & Colleges Academic Corrections Department Sacramento State Govt-Correctional Institutions Dept of Transportation In Ca Sacramento Government Offices-State Disabled American Veterans Sacramento Veterans' & Military Organizations Employment Development Dept Sacramento Outplacement Consultants Environmental Protection Agcy Sacramento State Govt-Air/Water/Solid Waste Management Intel Corp Folsom Semiconductor Devices (mfrs)
Kaiser Permanente South Sacramento Hospitals
L A Care Health Plan Sacramento Health Plans
Mercy General Hospital Sacramento Hospitals
Mercy San Juan Medical Ctr Carmichael Hospitals
Sacramento Bee Sacramento Newspapers (publishers/Mfrs)
Sacramento Municipal Utility Sacramento Utility Contractors Sacramento Municipal Utility Sacramento Electric Contractors Securitas Security Svc USA Sacramento Security Guard & Patrol Service State Compensation Ins Fund Sacramento Insurance
Summit Funding Inc Sacramento Real Estate Loans
Sutter Medical Ctr-Sacramento Sacramento Hospitals
Villara Building Systems Mcclellan Building Contractors Water Resource Dept Sacramento Government Offices-State
Source: State of California Employment Development Department, extracted from The America ’s Labor Market Information System (ALMIS) Employer Database, 2023 2nd Edition.
ITEM 12.1.
ATTACHMENT 4
D-5
Effective Buying Income
“Effective Buying Income ” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor -related income (such as employer contributions to private pension funds), proprietor ’s income, rental income (which includes imputed rental income of owner -occupants of non -farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance). Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penaltie s, etc.) and personal contributions to social insurance.
According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.”
The following table summarizes the total effective buying income for the City, the County, the State and the United States for the period 2019 through 2023.
CITY OF RANCHO CORDOVA, COUNTY OF SACRAMENTO, THE STATE OF CALIFORNIA
AND THE UNITED STATES
Effective Buying Income
As of January 1, 2019 through 2023
Year Area
Total Effective
Buying Income
(000s’ Omitted)
Median Household
Effective Buying
Income
2019 City of Rancho Cordova $1,747,688 $54,335
County of Sacramento 40,651,806 56,387
California 1,183,264,399 62,637
United States 9,017,967,563 52,841
2020 City of Rancho Cordova $1,882,411 $57,795
County of Sacramento 42,705,779 59,288
California 1,243,564,816 65,870
United States 9,487,165,436 55,303
2021 City of Rancho Cordova $2,040,016 $62,867
County of Sacramento 45,067,224 62,945
California 1,290,894,604 67,956
United States 9,809,944,764 56,790
2022 City of Rancho Cordova $2,246,178 $68,685
County of Sacramento 51,287,459 70,279
California 1,452,426,153 77,058
United States 11,208,582,541 64,448
2023 City of Rancho Cordova $2,533,621 $71,022
County of Sacramento 51,865,551 70,001
California 1,461,799,662 77,175
United States 11,454,846,397 65,326
Source: Claritas, LLC
ITEM 12.1.
ATTACHMENT 4
D-6
Commercial Activity
A summary of historic taxable sales within the City and the County during the past five years in which data is available is shown in the following tables.
Total taxable sales during the first quarter of calendar year 202 3 in the City were reported to be $ 510,811,705, a 2.04% increase in total taxable sales of $ 500,623,682 reported during the first quarter calendar year 2022.
CITY OF RANCHO CORDOVA
Taxable Transactions
(Dollars in Thousands)
Retail and Food Services Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2018 1,311 1,101,787 2,345 1,619,685
2019 1,355 1,174,329 2,487 1,682,310
2020 1,512 1,113,850 2,788 1,701,472
2021 1,404 1,341,515 2,597 1,983,873
2022 1,429 1,383,055 2,682 2,157,443
Source: California Department of Tax and Fee Administration
Total taxable sales during the first quarter of calendar year 202 3 in the County were reported to be $ 8,267,684,541, a 3.23% decrease in total taxable sales of $ 8,543,643,235 reported during the first quarter calendar year 2022.
COUNTY OF SACRAMENTO
Taxable Transactions
(Dollars in Thousands)
Source: California Department of Tax and Fee Administration Retail and Food Services Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2018 24,853 17,593,375 39,066 25,443,669
2019 25,530 18,156,992 40,858 26,717,621
2020 28,055 18,488,106 45,361 27,173,406
2021 25,936 23,795,032 42,482 33,918,020
2022 26,589 24,592,149 44,158 36,380,064
ITEM 12.1.
ATTACHMENT 4
D-7
Construction Activity
The following tables show a five -year summary of the valuation of building permits issued in the City and the County.
CITY OF RANCHO CORDOVA
Total Building Permit Valuations
(Dollars in Thousands)
2018 2019 2020 2021 2022
Permit Valuation
New Single-family $104,525.9 $158,521.8 $164,435.7 $171,194.6 $186,410.7 New Multi-family 3,069.2 0.0 0.0 0.0 0.0
Res. Alterations/Additions 3,798.0 3,492.2 7,657.0 6,503.1 6,202.0 Total Residential 111,393.1 162,014.0 172,092.7 177,697.7 192,619.0
New Commercial 10,152.0 2,320.7 28,635.4 2,672.0 12,093.0 New Industrial 11,662.0 366.0 0.0 0.0 2,030.0
New Other 805.7 1,336.2 2,150.6 5,970.7 11,624.9
Com. Alterations/Additions 26,283.6 24,046.0 34,812.6 67,569.2 35,436.7 Total Nonresidential 48,903.3 28,068.9 65,598.6 76,211.9 61,184.6
New Dwelling Units
Single Family 217 561 575 552 620
Multiple Family 50 0 0 0 149
TOTAL 267 561 575 552 769
Source: Construction Industry Research Board, Building Permit Summary.
COUNTY OF SACRAMENTO
Total Building Permit Valuations
(Dollars in Thousands)
2018 2019 2020 2021 2022
Permit Valuation
New Single-family $1,069,568.4 $1,108,399.9 $1,008,391.7 $1,310,379.5 $1,183,213.4 New Multi-family 158,647.0 265,188.8 467,418.7 323,462.6 413,368.8 Res. Alterations/Additions 276,723.6 293,210.5 262,864.6 276,570.4 373,410.0 Total Residential 1,504,939.0 1,666,799.2 1,738,675.0 1,910,412.5 1,969,995.8
New Commercial 303,806.0 666,664.3 449,494.3 197,946.8 268,582.0 New Industrial 14,151.1 31,851.4 31,155.0 83,171.4 38,163.2 New Other 128,325.7 105,555.1 75,356.7 104,932.9 155,071.3 Com. Alterations/Additions 518,663.2 700,604.0 335,458.0 320,447.6 432,950.0 Total Nonresidential 964,946.0 1,504,674.8 891,464.0 706,498.7 894,766.5
New Dwelling Units
Single Family 3,589 3,981 3,588 4,205 3,832
Multiple Family 1,272 2,008 2,868 2,266 3,419
TOTAL 4,861 5,989 6,456 6,471 7,251
Source: Construction Industry Research Board, Building Permit Summary .
ITEM 12.1.
ATTACHMENT 4
E-1
APPENDIX E
FORM OF OPINION OF BOND COUNSEL
[Closing Date]
City Council
City of Rancho Cordova
2729 Prospect Park Drive
Rancho Cordova, California 95670
OPINION: $___________ City of Rancho Cordova
Arista Del Sol Community Facilities District No. 2022-1 Improvement Area No. 1, Special Tax Bonds Series 2023
Members of the City Council:
We have acted as bond counsel to the City of Rancho Cordova (the “City”) in connection with the delivery by the City of the above -referenced bonds (the “Bonds”), issued pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being California Government Code Section 53311, et seq. (the “Act”), and pursuant to a Fiscal Agent Agreement, dated September 1, 2023, by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent Agreement ”). We have examined the Act, an executed copy of the Fiscal Agent Ag reement and such certified proceedings and other papers as we deem necessary to render this opinion.
As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Fiscal Agent Agreement and in the certi fied proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation.
Based upon our examination we are of the opinion, under existing law, that:
1. The City is duly organized and existing under the laws of the State of California, with power to enter into the Fiscal Agent Agreement , to perform the agreements on its part contained therein, and to issue the Bonds.
2. The Bonds have been duly authorized, executed and delivered by the City and are legal, valid and binding obligations of the City.
3. The Fiscal Agent Agreement has been duly approved by the City and constitutes a legal, valid and binding obligation of the City, enforceable against the City in accordance with its terms.
4. Pursuant to the Act, the Fiscal Agent Agreement establishes a valid lien on and pledge of the Special Tax Revenues (as defined in the Fiscal Agent Agreement) and the other sources pledged for the security of the Bonds.
5. Interest on the Bonds is exclude d from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum ITEM 12.1.
ATTACHMENT 4
D-2
tax. Interest on the Bonds may be subject to the corporate alternative minimum tax. The opinions set forth in the prec eding sentences are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with each of such requirements. Failure to comply with certain of such requirements may cause the inclusion of such interest in gross income for federal income t ax purposes to be retroactive to the date of delivery of the Bonds.
6. The interest on the Bonds is exempt from personal income taxation imposed by the State of California.
We express no opinion regarding any other tax consequences arising with respect to the ownership, sale or disposition of, or the amount, accrual or receipt of interest on, the Bonds.
The rights of the owners of the Bonds and the enforceability of the Bonds and the Fiscal Agent Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors ’ rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in accordance with principles of equity or otherwise in appropriate cases.
This opinion is given as of the date hereof, and we assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Moreover, our opinions are not a guarantee of a particular result, and are not binding on the Internal Revenue Service or any court; rather, our opinions represent our legal judgment based upon our review of existing law that we deem relevant to such opinions and in reliance upon the representations, opinions, and covenants referenced above.
Our engagement with respect to this matter has terminated as of the date hereof.
Respectfully submitted,
A Professional Law Corporation
ITEM 12.1.
ATTACHMENT 4
F-1
APPENDIX F
FORM OF CONTINUING DISCLOSURE UNDERTAKINGS
CONTINUING DISCLOSURE CERTIFICATE
(City)
$_________
CITY OF RANCHO CORDOVA
ARISTA DEL SOL COMMUNITY FACILITIES DISTRICT NO. 2022-1 IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS
SERIES 2023
THIS CONTINUING DISCLOSURE CERTIFICATE (the “Disclosure Certificate ”) is executed and delivered by the City of Rancho Cordova, a public body, corporate and politic, organized and existing under and by virtue of the laws of the State of California (the “City”), in connection with the issuance of the bonds captioned above (the “Bonds”). The Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of September 1, 2023 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association , as fiscal agent (the “Fiscal Agent”). The City hereby covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Parti cipating Underwriter in complying with S.E.C. Rule 15c2 - 12(b)(5).
Section 2. Definitions. In addition to the definitions set forth above and in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report ” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Annual Report Date” means the date that is nine months after the end of the City’s fiscal year (currently April 1 based on the City’s fiscal year end of June 30).
“Dissemination Agent ” means Goodwin Consulting Group , or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.
“District” means the City of Rancho Cordova Arista Del Sol Community Facilities District No. 2022-1.
ITEM 12.1.
ATTACHMENT 4
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“EMMA System” means the Electronic Municipal Market Access system of the MSRB or such other electronic system designated by the MSRB or the Securities and Exchange Commission for compliance with the Rule.
“Improvement Area No. 1” means Improvement Area No. 1 of the District.
“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate.
“MSRB” means the Municipal Securities Rulemaking Board, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
“Official Statement” means the final official statement executed by the City in connection with the issuance of the Bonds.
“Participating Underwriter” means Piper Sandler & Co., as the initial underwriter of the Bonds.
“Rule” means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as it may be amended from time to time.
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, com mencing April 1 , 2024, with the report for the 2022-23 fiscal year (provided that the City Annual Report due by April 1, 2024 shall be satisfied by the posting of this Official Statement and the City’s au dited financial statements for Fiscal Year 2022 -23), provide to the MSRB through the EMMA System an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by referenc e other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not availab le by that date. If the City ’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5( b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide, or cause the Dissemination Agent to provide, an Annual Report by the Annual Report Date as required i n subsection (a) above, the Dissemination Agent shall provide in a timely manner to the MSRB through the EMMA System, in an electronic format as prescribed by the MSRB, a notice to such effect.
(c) The Dissemination Agent shall:
ITEM 12.1.
ATTACHMENT 4
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(1) determine each year prior to the Annual Report Date the then -applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(2) if the Dissemination Agent is other than the City, file a report with the City and the Participating Underwriter certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.
Section 4. Content of Annual Reports . The City’ s Annual Report shall contain or incorporate by reference the following documents and information:
(a) Audited Financial Statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the Issuer ’s audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a form at similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. This submission should be made with the following caveat:
THE CITY’S ANNUAL FINANCIAL STATEMENT IS PROVIDED SOLELY TO COMPLY WITH THE SECURITIES EXCHANGE COMMISSION STAFF ’S INTERPRETATION OF RULE 15c2-12. NO FUNDS OR ASSETS OF THE CITY (OTHER THAN THE PROCEEDS OF THE SPECIAL TAXES LEVIED FOR Improvement Area No. 1 AND SECURING THE BONDS) ARE
REQUIRED TO BE USED TO PAY DEBT SERVICE ON THE BONDS AND THE CITY IS NOT
OBLIGATED TO ADVANCE AVAILABLE FUNDS FROM THE CITY TREASURY TO COVER ANY DELINQUENCIES. INVESTORS SHOULD NOT RELY ON THE FINANCIAL CONDITION OF THE CITY IN EVALUATING WHETHER TO BUY, HOLD OR SELL THE BONDS.
(b) The following additional items, indicating information as of the previous September 30th, with respect to the Bonds:
(1) Principal amount of Bonds outstanding under the Fiscal Agent Agreement.
(2) Balance in Reserve Fund.
(3) Table indicating Special Tax levy, amount collected, delinquent amount and percent delinquent for the most recent year , and whether the Special Tax levy is covered by the Teeter Plan.
(4) Status of foreclosure proceedings and summary of results of foreclosure sales, if any.
(5) Identity of any delinquent taxpayer representing more than 5% of levy and value-to-lien ratios of applicable properties (using assessed values unless more accurate information is available without charge to the City).
(6) Aggregate assessed value for all parcels in Improvement Area No. 1.
ITEM 12.1.
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(7) Until the fiscal year in which the Special Tax levied on the developed property in Improvement Area No. 1 is greater than or equal to the annu al debt service on the Bonds, the number of building permits issued by the City for single family residential homes in such fiscal year in Improvement Area No. 1.
(c) For so long as there is any owner of property in Improvement Area No. 1 whose properties collectively represent 10% or more of the Special Taxes , the following information regarding the status of development in Improvement Area No. 1:
(1) Significant amendments to land use entitlements.
(2) Status of any legislative, administrative and judicial challenges to the construction of the development known to the City.
(3) Assessed valuation of property shown on County Assessor’s tax rolls with no “improvements” value in Improvement Area No. 1 for the current (as of the date of the report) fiscal year.
(4) List of landowners (as shown County Assessor ’s tax roll) and assessor ’s parcel number(s) of parcels held by owners whose properties collectively represent 10% or more of the Special Taxes for the current (as of the date of the report) fiscal year.
(d) In addition to any of the information expressly required to be provided under paragraphs (a), (b) and (c) of this Section, the Issuer shall provide such further information, if any, as may be nece ssary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
Any or all of the items listed above may be included by specific reference to other documents, including official statements o f debt issues of the City or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.
Section 5. Reporting of Listed Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform. (6) Rating Changes.
(7) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701- TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds.
ITEM 12.1.
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(8) Modifications to rights of security holders, if material. (9) Bond calls, if material, and tender offers.
(10) Defeasances.
(11) Release, substitution, or sale of property securing repayment of the securities, if material.(12) Bankruptcy, insolvency, receivership or similar event of the City.
(13) The consummation of a merger, consolidation, or acquisition involving the City, or the sale of all or substantially all of the assets of the City (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material.
(14) Appointment of a successor or additional Fiscal Agent or the change of name of the Fiscal Agent, if material.
(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of d efault, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material (for a definition of “financial obligation, ” see clause (e)).
(16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties (for a definition of “financial obligation,” see clause (e)).
(b) Whenever the City obtains knowle dge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB through the EMMA System, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Fiscal Agent Agreement.
(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), (a)(14) and (a)(15) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(6) also contains the qualifier “material” with respect to certain notices, determinations or other eve nts affecting the tax status of the Bonds. The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event’s occurrence is material for purposes of U.S. federal s ecurities law. Whenever the City obtains knowledge of the occurrence of any of these Listed Events, the City will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the City will cause a notice to be filed as set forth in paragraph (b) above.
(d) For purposes of this Disclosure Certificate , any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantiall y all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entr y of an order confirming a plan of reorganization, ITEM 12.1.
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arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.
(e) For purposes of Section 5(a)(15) and ( 16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule.
Section 6. Identifying Information for Filings with the MSRB . All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.
Section 7. Termination of Reporting Obligation . The City ’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Eve nt under Section 5(b).
Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent will be Goodwin Consulting Group, Inc.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (1) is approved by holders of the Bonds in the manner provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the consent of holders, or (2) does not, in the opinion of the Fiscal Agent or nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
ITEM 12.1.
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If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide in formation to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the accounting principles shall be filed in the same manner as for a Listed Event under Section 5(b).
Section 10. Additional Information . Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to includ e any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate , the City shall have no obligation under this Disclosure Certificate to update such informati on or include it in any future Annual Report or notice of occurrence of a Listed Event.
Section 11. Identifying Information for Filings with EMMA . All documents provided to EMMA under this Disclosure Certificate will be accompanied by identifying informa tion as prescribed by the MSRB.
Section 12. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
Section 1 3. Duties, Immunities and Liabilities of Dissemination Agent . The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys ’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent ’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and s hall not be deemed to be acting in any fiduciary capacity for the City, the Fiscal Agent, the Bond owners or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
Section 14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Fiscal Agent, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.
ITEM 12.1.
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Section 15. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.
Date: _________, 2023
CITY OF RANCHO CORDOVA for and on
behalf of CITY OF RANCHO CORDOVA
ARISTA DEL SOL COMMUNITY
FACILITIES DISTRICT NO. 2022-1
By:
Authorized Officer
AGREED AND ACCEPTED:
GOODWIN CONSULTING GROUP,
as Dissemination Agent
By:
Name:
Title:
ITEM 12.1.
ATTACHMENT 4
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CONTINUING DISCLOSURE CERTIFICATE
(Developer)
Relating to:
$_________
CITY OF RANCHO CORDOVA
ARISTA DEL SOL COMMUNITY FACILITIES DISTRICT NO. 2022-1 IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS
SERIES 2023
THIS CONTINUING DISCLOSURE CERTIFICATE (Developer) (the “Disclosure Certificate”) dated as of __________, 2023, is executed and delivered by Woodside 05N, LP, a California limited liability partnership (the “Developer”) in connection with the issuance by the City of Rancho Cordova ( the “City”) of its $_________ City of Rancho Cordova Arista Del Sol Community Facilities District No. 2022- 1 Improvement Area No. 1 Special Tax Bonds Series 2023 (the “Bonds”). The Bonds are being executed and delivered pursuant to a Fiscal Agent Agreement, dated as of September 1, 2023 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association , as fiscal agent (the “Fiscal Agent”).
The Developer covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate . This Disclosure Certificate is being executed and delivered by the Developer for the benefit of the holders and beneficial owners of the Bonds.
Section 2. Definitions. In addition to the definitions set forth herein and in the Fiscal Agent Agreement, which apply to any capitalized te rm used in this Disclosure Certificate unless otherwise defined in this Disclosure Certificate, the following capitalized terms shall have the following meanings:
“Affiliate” means with respect to the Developer, means any other Person (i) who directly, or indirectly through one or more intermediaries, is currently controlling, controlled by or under common control with the Developer, and (ii) for whom information, including financial information or operating data, conce rning such Person is material to potential investors in their evaluation of Improvement Area No. 1 and investment decision regarding the Bonds (i.e., information regarding such Person’s assets or funds that would materially affect the Developer’s ability to develop the Property as described in the Official Statement or to pay its Special Taxes on the Property (to the extent the responsibility of the Developer) prior to delinquency). For purposes hereof, the term “control” (including the terms “controlling,” “controlled by” or “under common control with”) means the present possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
"Woodside" means Woodside 05N, L.P., a California limited partnership.
“Assumption Agreement” means an undertaking of a Major Owner, or an Affiliate thereof, for the benefit of the holders and beneficial owners of the Bonds containing terms s ubstantially similar to this Disclosure Certificate (as modified for such Major Owner ’s development and financing plans with respect to Improvement Area No. 1), whereby such Major Owner or Affiliate agrees to provide Periodic Reports and notices of significant events, setting forth the information ITEM 12.1.
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described in sections 4 and 5 hereof, respectively, with respect to the portion of the property in Improvement Area No. 1 owned by such Major Owner and its Affiliates and, at the option of the Developer or such Major Owner, agrees to indemnify the Dissemination Agent (if any) pursuant to a provision substantially in the form of Section 11 hereof.
“Dissemination Agent” means the entity acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the Developer and which has filed with the Developer, the City , and the Participating Underwriter a written acceptance of such designation, and which is experienced in providing dissemination agent services such as those required under this Disclosure Certificate . The I nitial Dissemination Agent is the Developer.
“District” means the City of Rancho Cordova Arista Del Sol Community Facilities District No. 2022-1.
“EMMA” shall mean the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access System for municipal securities disclosures, maintained on the Internet at http://emma.msrb.org/.
“Improvement Area No. 1” means Improvement Area No. 1 of the District.
“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate.
“Major Owner” means, as of any Report Date, an owner of land in Improvement Area No. 1 that is responsible in the aggregate for 20% or more of the Special Taxes anticipated to be levied at any time during the then-current fiscal year.
“Official Statement” means the final official statement executed by the City in connection with the issuance of the Bonds.
“Participating Underwriter” means Piper Sandler & Co., the original underwriter of the Bonds.
“Periodic Report ” means any Periodic Report provided by the Developer pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof.
“Property” means the real property in Improvement Area No. 1 that is owned by (i) the Developer, (ii) any Affiliate of the Developer.
“Report Date” means April 1 and October 1 of any fiscal year. If, in any year, the Report Date falls on a Saturday, Sunday, or a holiday, such Report Date shall be extended to the next following day that is not a Saturday, Sunday, or holiday.
“Special Taxes” means the special taxes levied on taxable property in Improvement Area No. 1.
ITEM 12.1.
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Section 3. Provision of Periodic Reports.
(a) The Developer shall, or, upon written direction of the Developer the Dissemination Agent shall, not later than the Report Date, commencing April 1, 2024, file or cause to be filed with EMMA a Periodic Report which is consistent with the requirements of Section 4 of this Disclosure Certificate with a copy to the Participating Underwriter and the City.
Not later than 15 calendar days prior to the Report Date, the Developer shall provide the Periodic Report to the Dissemination Agent (if different from the Dev eloper). The Developer shall provide a written certification with (or included as a part of) each Periodic Report furnished to the Dissemination Agent (if different from the Developer), the Participating Underwriter and the City to the effect that such Pe riodic Report constitutes the Periodic Report required to be furnished by it unde r this Disclosure Certificate. The Dissemination Agent, the Participating Underwriter and the City may conclusively rely upon such certification of the Developer and shall have no duty or obligation to review the Periodic Report. The Periodic Report may be submitted as a single document or as separate documents comprising a package and may incorporate by reference other information as provided in Section 4 of this Disclosure Certificate.
(b) If the Dissemination Agent does not receive a Periodic Report by 15 calendar days prior to the Report Date, the Dissemination Agent shall send a reminder notice to the Developer that the Periodic Report has not been provided as required u nder Section 3(a) above. The reminder notice shall instruct the Developer to determine whether its obligations under this Disclosure Certificate have terminated (pursuant to Section 6 below) and, if so, to provide the Dissemination Agent with a notice of such termination in the same manner as for a Listed Event (pursuant to Section 5 below). If the Developer does not provide, or cause the Dissemination Agent to provide, a Periodic Report to EMMA by the Report Date as required in subsection (a) above, the Dissemination Agent shall send a notice to EMMA in the form at prescribed by the MSRB, with a copy to City and the Participating Underwriter.
(c) With respect to the Periodic Report, the Dissemination Agent shall, to the extent the Periodic Report has been furnished to it, file the Periodic Report with EMMA and file a report with the Developer (if the Dissemination Agent is other than the Developer), the City and the Participating Underwriter certifying that the Periodic Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to and filed with EMMA.
Section 4. Content of Periodic Reports . The Developer ’s Periodic Report shall contain or incorporate by reference the information set forth in Exhibit A relating to the Developer, any or all of which may be included by specific reference to other documents, including official statements of debt issues of the Developer or related public entities, which have been submitted to EMMA or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from EMMA. The Developer shall clearly identify each such other document so included by reference.
In addition to any of the information expressly required to be provided in Exhibit A, the Developer’s Periodic Report shall include such further information, if any, as may be necessary to make the specifically required statements, in the light of the circ umstances under which they are made, not misleading.
Section 5. Reporting of Significant Events.
(a) The Developer shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to itself or the Property, if material:
ITEM 12.1.
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(i) bankruptcy or insolvency proceedings commenced by or against the Developer and, if known, any bankruptcy or insolvency proceedings commenced by or against any Affiliate of the Developer that is reasonably likely to have a significant impact on the Developer’s ability to pay Special Taxes on the Property or to sell or develop the Property;
(ii) failure to pay any taxes, special taxes (including the Special Taxes) or assessments due with respect to the Property on or prior to the delinquency date to the extent such failure is not promptly cured by the Developer upon discovery thereof;
(iii) filing of a lawsuit of which the Developer is aware against the Developer or an Affiliate seeking damages, which is reasonably likely to have a significant impact on the Developer’s ability to pay Special Taxes on the Property or to sell or develop the Property;
(iv) material damage to or destruction of any of the improvements on the Property; and
(v) any payment default or other material default by t he Developer on the Option Agreements or any loan with respect to the construction of improvements on the Property.
(b) Whenever the Developer obtains knowledge of the occurrence of a Listed Event, the Developer shall as soon as possible determine if such event would be material under applicable Federal securities law.
(c) If the Developer determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Developer shall, or shall cause the Dissemination Agent to, promptly file a notice of such occurrence with EMMA, with a copy to the City and the Participating Underwriter.
Section 6. Duration of Reporting Obligation.
(a) All the Developer ’s obligations hereunder shall commence on the date hereo f and terminate (except as provided in Section 11) on the earliest to occur of the following:
(i) upon the legal defeasance, prior redemption or payment in full of all the Bonds, or
(ii) at such time as Property owned by the Developer is no longer responsible for payment of 20% or more of the Special Taxes levied in Improvement Area No. 1, or
(iii) the date on which the Developer prepays in full all of the Special Taxes attributable to the Property.
The Developer shall give notice of the termination of its obligations under this Disclosure Certificate in the same manner as for a Listed Event under Section 5.
(b) If a portion of the Property owned by the Developer, or any Affiliate of the Developer, is conveyed to a Person that, upon such conveyance, will be a Major Owner, the ITEM 12.1.
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obligations of the Developer hereunder with respect to the propert y in Improvement Area No. 1 owned by such Major Owner and its Affiliates may be assumed by such Major Owner or by an Affiliate thereof, and if so assumed the Developer ’s obligations hereunder with respect to such portion of the Property will be terminated. In order to effect such an assumption, such Major Owner or Affiliate shall enter into an Assumption Agreement. If not so assumed, the Developer shall report the information, as applicable to the transferee, required herein so long as the transferee is a Major Owner.
Section 7. Dissemination Agent . The Developer may, from time to time, appoint or engage a Dissemination Agent to assist the Developer in carrying out its obligations under this Disclosure Certificate, and may discharge any such Disseminati on Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be the Developer. The Dissemination Agent may resign by providing thirty days ’ written notice to the City, the Participating Underwriter and the D eveloper. The acquisition of any portion of the Property by the Developer pursuant to the Option Agreements shall not require any assumption by the Developer.
Section 8. No Amendment. The Developer may not amend this Disclosure Certificate.
Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Developer from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Periodic Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the Develo per chooses to include any information in any Periodic Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the Developer shall have no obligation under this Disclosure Certific ate to update such information or include it in any future Periodic Report or notice of occurrence of a Listed Event.
Section 10. Default. In the event of a failure of the Developer to comply with any provision of this Disclosure Certificate, the Participating Underwriter and any holder or beneficial owner of the Bonds may, take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Developer to comply with its obligations under thi s Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole and exclusive remedy under this Disclosure Certificate in the event of any failure of the Developer to comply with this Disclosure Certificate shall be an action to compel performance. Neither the Developer nor the Dissemination Agent shall have any liability to any holder or beneficial owner of the Bonds or any other party for monetary damages or fina ncial liability of any kind whatsoever arising from or relating to this Disclosure Certificate.
Section 11. Duties, Immunities and Liabilities of Dissemination Agent . The Dissemination Agent shall have only such duties as are specifically set forth in t his Disclosure Certificate, and the Developer agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents (each, an “Indemnified Party”), harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the reasonable costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding loss, liabilities, costs and expenses due to an Indemnified Party ’s negligence or willful misconduct or failure to perform its duties hereunder. The Dissemination Agent shall be paid compensation for its services provided hereunder in accordance with its schedule of fees as amended from time to ITEM 12.1.
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time, w hich schedule, as amended, shall be reasonably acceptable, and all reasonable expenses, reasonable legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty o r obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Developer, the Fiscal Agent, the Bond owners, or any other party. The obligations of the Developer under this S ection shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
Section 12. Notices. Any notice or comm unications to be among any of the parties to this Disclosure Certificate may be given by regular, overnight or electronic mail as follows:
To the Developer Woodside 05N, LP
111 Woodmere Road, Suite 190
Folsom, CA 95630
Email: [email protected]
To the City: City of Rancho Cordova
Attn: CFD Administrator
2729 Prospect Park Drive
Rancho Cordova, CA 95670
Email: [email protected]
[email protected]
To the Participating
Underwriter: Piper Sandler & Co.
3626 Fair Oaks Boulevard, Suite 100
Sacramento, CA 95864
Email: [email protected]
Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Developer (its successors and assigns), the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds and shall create no ri ghts in any other person or entity. All obligations of the Developer hereunder shall be assumed by any legal successor to the obligations of the Developer as a result of a sale, merger, consolidation or other reorganization.
Section 14. Counterparts. Th is Disclosure Certificate may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
ITEM 12.1.
ATTACHMENT 4
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IN WITNESS WHEREOF, the Developer has executed this Disclosure Certificate as of the date first above written.
WOODSIDE 05N, LP,
A California limited partnership
By: ______________________________
Name: ___________________________
Title: _____________________________
ITEM 12.1.
ATTACHMENT 4
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EXHIBIT A
PERIODIC REPORT
Relating to:
$_________
CITY OF RANCHO CORDOVA
ARISTA DEL SOL COMMUNITY FACILITIES DISTRICT NO. 2022-1
SPECIAL TAX BONDS
SERIES 2023
This Periodic Report is hereby submitted under Section 4 of the Continuing Disclosure Certificate (Developer) (the “Disclosure Certificate ”) dated ________, 2023 executed by Woodside 05N, LP, a California limited liability partnership (the “Developer”) in connection with the issuance of special tax bonds by the City of Rancho Cordova (the “City”) with respect to the City of Rancho Cordova Arista Del Sol Community Facilities District No. 2022-1 (the “District”).
Capitalized terms used in this Periodic Report but not otherwise defined have the meanings given to them in the Disclosure Certificate.
I. Property Ownership and Development
The information in this section is provided as of ____________________ (this date must be not more than 60 days before the date of this Periodic Report).
A. Property currently owned by the Developer or its Affiliates (if any) in Improvement Area No. 1 (the “Property”):
Development name:
Number of lots (acreage if not subdivided):
B. Status of land development or construction activities:
______________________________________________________________________
______________________________________________________________________
C. Number of building permits pulled during the reporti ng period and the aggregate number of building permits for the Property developed by the Developer or an Affiliate (if any) , and any significant amendments to land use or development entitlements:
______________________________________________________________________
______________________________________________________________________
D. Aggregate property sold, optioned or leased by the Developer or an Affiliate (if any) to end users or merchant builders:
Since the Reported Date of Since the Last Periodic
ITEM 12.1.
ATTACHMENT 4
F-17
Information in the Official
Statement
Report
Lots ____
Lots ____
E. Any updates to ownership of the Property by the Developer or an Affiliate (if any), as stated in the Official Statement, and any other changes in ownership , whether acquisition of land in Improvement Area No. 1 by the Developer or an Affiliate (if any), or sales of land in Improvement Area No. 1 to other property owners, distinguishing between (i) end users (e.g., single family homeowners), (ii) developers and (iii) merchant builders.
______________________________________________________________________
______________________________________________________________________
II. Legal and Financial Status of Developer
Unless such information has previously been included or incorporated by reference in a Periodic Report, describe any change in the legal structure of the Developer or the financial condition and financing plan of the Developer that would materially and adv ersely interfere with its ability to complete its development plan described in the Official Statement.
______________________________________________________________________
______________________________________________________________________
III. Change in Development or Financing Plans
Unless such information has previously been included or incorporated by reference in a Periodic Report, describe any development plans or financing plans relating to the Property that are materially different from the proposed development and financing plan described in the Official Statement.
______________________________________________________________________
______________________________________________________________________
IV. Official Statement Updates
Unless such information has previously been included or incorporated by reference in a Periodic Report, describe any other significant changes in the information relating to the Developer or the Property contained in the Official Statement under the h eading “IMPROVEMENT AREA NO. 1 – Development in the District ” that would materially and adversely interfere with the Developer ’s ability to develop and sell the Property as described in the Official Statement.
______________________________________________________________________
______________________________________________________________________
ITEM 12.1.
ATTACHMENT 4
F-18
V. Other Material Information
In addition to any of the information expressly required above, provide such further information, if any, as may be necessa ry to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
_____________________________________________________________________
______________________________________________________________________
Certification
The undersigned Developer hereby certifies that this Periodic Report constitutes the Periodic Report required to be furnished by the Developer under the Disclosure Certificate.
ANY STATEMENTS REGARDING THE DEVELOPER, THE DEVELOPMENT OF THE PROPERTY, THE DEVELOPER ’S FINANCING PLAN OR FINANCIAL CONDITION, OR THE
BONDS, OTHER THAN STATEMENTS MADE BY THE DEVELOPER IN AN OFFICIAL
RELEASE, OR FILED WITH THE MUNICIPAL SECURITI ES RULEMAKING BOARD, ARE NOT AUTHORIZED BY THE DEVELOPER. THE DEVELOPER IS NOT RESPONSIBLE FOR
THE ACCURACY, COMPLETENESS OR FAIRNESS OF ANY SUCH UNAUTHORIZED STATEMENTS.
THE DEVELOPER HAS NO OBLIGATION TO UPDATE THIS PERIODIC REPORT OTHER THAN AS EXPRESSLY PROVIDED IN THE DISCLOSURE CERTIFICATE.
Dated:
WOODSIDE 05N, LP,
A California limited partnership
By: ______________________________
Name: ___________________________
Title: _____________________________
ITEM 12.1.
ATTACHMENT 4
G-1
APPENDIX G
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the Depository Trust Company ( “DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership int erest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC P articipants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.
Neither the issuer of the Bonds (the “Issuer”) nor the trustee, fiscal agent or paying agent appointed with respect to the Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.
No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices s ent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.
1. The Depository Trust Company ( “DTC”), New York, NY, will act as securities depository for the securities (the “Securities”). The Securities will be issued as fully -registered securities registered in the name of Cede & Co. (DTC ’s partnership nominee) or such other name as may be requested b y an authorized representative of DTC. One fully -registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.
2. DTC, the world ’s lar gest securities depository, is a limited -purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation ” within the me aning of the New York Uniform Commercial Code, and a “clearing agency ” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.
DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC ’s participants (“ Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book- entry transfers and pledges between Direct Participants ’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is ITEM 12.1.
ATTACHMENT 4
G-2
a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( “DTCC”). DTCC is the holding compan y for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( “Indirect Participants”). DTC has a Standard & Poor’s rating of AA+.
The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com.
3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC ’s records. The ownership interest of each actual purchaser of each Security ( “Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf o f Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book -entry system for the Securities is discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’ s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and propo sed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Benef icial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices will be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’ s MMI ITEM 12.1.
ATTACHMENT 4
G-3
Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. ’s consenting or voting rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC ’s practice is to credit Direct Participants ’ accounts upon DTC ’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registere d in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time.
Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9. A Beneficial Owner will give notice to elect to have its Securities purchased or tendered, through its Participant, to the Agent, and will effect delivery of such Securities by causing the Direct Participant to transfer the Participant ’s interest in the Securities, on DTC ’s records, to the Agent. The requirement for physical delivery of Securities in connection with an optional tender or a ma ndatory purchase will be deemed satisfied when the ownership rights in the Securities are transferred by Direct Participants on DTC ’s records and followed by a book - entry credit of tendered Securities to the Agent’s DTC account.
10. DTC may discontinue pr oviding its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.
11. Issuer may decide to discontinue use of the system of book -entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.
12. The information in this section concerning DTC and DTC ’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.
ITEM 12.1.
ATTACHMENT 4
1 $_______
CITY OF RANCHO CORDOVA
ARISTA DEL SOL COMMUNITY FACILITIES DISTRICT NO. 2022-1 IMPROVEMENT AREA NO. 1
SPECIAL TAX BONDS
SERIES 2023
BOND PURCHASE AGREEMENT
_________, 2023
City of Rancho Cordova
Arista del Sol Community Facilities District No. 2022-1 2729 Prospect Park Drive
Rancho Cordova, California 95670
Ladies and Gentlemen:
The undersigned, Piper Sandler & Co., as underwriter (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (this “Purchase Agreement”) with the City of Rancho Cordova (the “City”) for its Arista del Sol Community Facilities District No. 2022-1 (the “Community Facilities District”), which upon acceptance will be binding upon the Underwriter and the City. The agreement of the Underwriter to purchase the Bonds (as hereinafter defined) is contingent upon the City satisfying all of the obligations imposed upon it under this Purchase Agreement. This offer is made subject to the City’s acceptance by the execution of this Purchase Agreement and its delivery to the Underwriter at or before 11:59 p.m., California time, on the date hereof, and, if not so accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the City at any time prior to the acceptance hereof by the City. All capitalized terms used herein, which are not otherwise defined, shall have the meaning provided for such terms in the Fiscal Agent Agreement, dated as of September 1, 2023 (the “Fiscal Agent Agreement”) by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”).
1. Purchase, Sale and Delivery of the Bonds.
A. Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein: the Underwriter hereby agrees to purchase from the City and the City hereby agrees to sell to the Underwriter all (but not less than all) of the $_______ aggregate principal amount of the City of Rancho Cordova Arista del Sol Community Facilities District No. 2022-1 Improvement Area No. 1 Special Tax Bonds, Series 2023 (the “Bonds”), dated the Closing Date (as hereinafter defined), bearing interest at the rates and maturing on the dates a nd in the principal amounts set forth in Appendix A hereto. The purchase price for the Bonds shall be $_______ (being 100% of the aggregate principal amount thereof, less a n et original issue discount of $________, less an Underwriter’s discount of $______).
The Underwriter agrees to make a bona fide initial public offering of all of the Bonds in compliance with federal and state securities laws, at a price not in excess of the initial offering prices (or yields) set forth in Appendix A attached hereto and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter reserves the right to change the public offering prices (or yields) as it deems necessary in connection with the offering of the Bonds, without any ITEM 12.1.
ATTACHMENT 5
2 requirement of prior notice, provided that the Underwriter shall not change the interest rates set forth in Appendix A. The Bonds may be offered and sold to certain dealers at prices lower than such initial offering prices.
The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable from the Special Taxes and certain other amounts as provided in the Fiscal Agent Agreement, the Preliminary Official Statement (as hereinafter defined), and the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5, Part 1, Division 2, Title 5 of the Government Code of the State of California (the “Community Facilities District Act”).
The issuance of the Bonds has been duly authorized by the Ci ty pursuant to a resolution (the “Resolution”), adopted by its City Council (the “City Council”) on behalf of the Community Facilities District, on ________, 2023. The proceeds of the Bonds shall be used to (i) construct and acquire certain public facilit ies, including payment of fees related to public facilities, authorized for the District and Improvement Area No. 1 of the Community Facilities District (“Improvement Area No. 1”); (ii) make a deposit into the debt service reserve fund for the Bonds; (iii) pay capitalized interest on a portion of the Bonds through and including September 1, 202 4 and (iv) pay the costs of issuance of the Bonds.
B. The City hereby acknowledges that the Underwriter is entering into this Purchase Agreement in reliance on the repre sentations, warranties and agreements made by the City on behalf of itself and on behalf of the Community Facilities District herein, and the City shall take all action necessary to enforce its rights hereunder for the benefit of the Underwriter and shall immediately notify the Underwriter if it becomes aware that any representation, warranty or agreement made by the City, on behalf of itself or on behalf of the Community Facilities District, herein is incorrect in any material respect.
C. The City acknowledge s and agrees that: (i) the primary role of the Underwriter, as an underwriter, is to purchase securities for resale to investors in an arm’s -length commercial transaction between the City and the Underwriter and that the Underwriter has financial and other interests that differ from those of the City and the Community Facilities District; (ii) the Underwriter is not acting as a municipal advisor, financial advisor or fiduciary to the City, the Community Facilities District, or any other person or entity and has not assumed any advisory or fiduciary responsibility to the City or the Community Facilities District with respect to the transaction contemplated hereby and the discussions, undertakings and proceedings leading thereto (irrespective of whether the Un derwriter has provided other services or is currently providing other services to the City or the Community Facilities District on other matters); (iii) the only obligations the Underwriter has to the City or the Community Facilities District with respect to the transaction contemplated hereby expressly are set forth in this Purchase Agreement, except as otherwise provided by applicable rules and regulations of the Securities and Exchange Commission or the rules of the Municipal Securities Rulemaking Board (the “MSRB”); and (iv) the City has consulted its own legal, accounting, tax, financial and other advisors, as applicable, to the extent it has deemed appropriate in connection with the transaction contemplated herein. The City acknowledges that it has previously provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure under Rule G -17 of the MSRB and acknowledges that it has engaged NHA Advisors, LLC, as its municipal advisor (as defined in Securities and Exchange Commission Rule 15Ba1) and will rely solely on NHA Advisors, LLC for financial advice with respect to the Bonds.
D. Pursuant to the authorization of the City, the Underwriter has distributed copies of the Preliminary Official Statement dated _______, 202 3, r elating to the Bonds, which, together with the cover page, inside cover page and appendices thereto is herein called the “Preliminary Official Statement.” By its acceptance of this Purchase Agreement, the City hereby ITEM 12.1.
ATTACHMENT 5
3 consents to and ratifies the use and d istribution by the Underwriter of the Preliminary Official Statement, and the City agrees to execute a final official statement relating to the Bonds (the “Official Statement”) which will consist of the Preliminary Official Statement with such changes as may be made thereto, with the approval of Jones Hall, a Professional Corporation, Bond Counsel and Disclosure Counsel (herein called “Bond Counsel”), and the Underwriter, and to provide copies thereof to the Underwriter as set forth in Section 2(S) hereof. The City hereby authorizes and requires the Underwriter to use and promptly distribute, in connection with the offer and sale of the Bonds, the Preliminary Official Statement, the Official Statement and any supplement or amendment thereto. The City furth er authorizes the Underwriter to use and distribute, in connection with the offer and sale of the Bonds, the Fiscal Agent Agreement, this Purchase Agreement and all information contained herein, and all other documents, certificates and statements furnishe d by or on behalf of the City or the Community Facilities District to the Underwriter in connection with the transactions contemplated by this Purchase Agreement. The Preliminary Official Statement and/or the Official Statement may be delivered and printed in a “designated electronic format” as defined in the MSRB’s Rule G-32 and as may be agreed to by the City and the Underwriter. The City confirms that it does not object to distribution of the Preliminary Official Statement or the Official Statement in electronic form. A copy of the most recent Preliminary Official Statement sent to a potential purchaser shall be sent by first class mail or electronically (or other equally prompt means) not later than the first business day following the day upon which each such request is received.
E. To assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5) (the “Rule”), the City will undertake pursuant to the City Continuing Disclosure Certificate , in the form attached to the Offic ial Statement under Appendix F (the “City Continuing Disclosure Certificate ”), to provide annual reports and notices of certain enumerated events. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Official Statement.
F. Except as the Underwriter and the City may otherwise agree, the City will deliver to the Underwriter, at the offices of Bond Counsel in San Francisco, California, or at such other location as may be mutually agreed upon by th e Underwriter and the City, the documents hereinafter mentioned; and the City will deliver to the Underwriter through The Depository Trust Company’s (“DTC”) FAST delivery system, the Bonds, in definitive form (all Bonds bearing CUSIP® numbers printed thereon), duly executed by the City and authenticated by the Fiscal Agent in the manner provided for in the Fiscal Agent Agreement and the Community Facilities District Act at 8:00 a.m. California time, on ________, 2023 (the “Closing Date”), and the Underwrite r will accept such delivery and pay the purchase price of the Bonds as set forth in paragraph (A) of this Section by wire transfer, payable in federal or other immediately available funds (such delivery and payment being herein referred to as the “Closing”). The Bonds shall be in fully registered book-entry form (which may be typewritten) and shall be registered in the name of Cede & Co., as nominee of DTC, which will act as securities depository for the Bonds, and the specimen Bonds will be made available for checking by the Underwriter not less than 5 days prior to the Closing.
G. Except as the City and the Underwriter may otherwise agree, the City will deliver to the Underwriter, at the offices of Bond Counsel in San Francisco, California, or at such other location as may be mutually agreed upon by the Underwriter and the City, the documents hereinafter mentioned on the Closing Date.
ITEM 12.1.
ATTACHMENT 5
4 2. Representations, Warranties and Covenants of the Community Facilities District .
The City represents, warrants and covenants to the Underwriter, on behalf of itself and the Communities Facilities District, as the case may be, that:
A. The City is a municipal corporation duly organized and validly existing pursuant to the Constitution and laws of the State of California (t he “State”), and has duly authorized the formation of the Community Facilities District pursuant to resolutions duly adopted by the City Council (the “Community Facilities District Formation Resolution” and, together with the Resolution, the “Community Fac ilities District Resolutions”) and the Community Facilities District Act. The City Council, as the legislative body of the Community Facilities District, has duly adopted the Community Facilities District Formation Resolution, has duly adopted a Resolution and Ordinance levying the Special Taxes (for all purposes herein, as such are defined in the Fiscal Agent Agreement) within Improvement Area No. 1 (the “Ordinance”), and has caused to be recorded in the real property records of Sacramento County, a notic e of special tax lien ( the “Notice of Special Tax Lien”) (the Community Facilities District Formation Resolution, the Ordinance, and the Notice of Special Tax Lien being collectively referred to herein as the “Formation Documents”), and the City Council has duly adopted the Resolution. Each of the Formation Documents remains in full force and effect as of the date hereof and has not been amended. The Community Facilities District is duly organized and validly existing as a community facilities district under the laws of the State. The City has, and at the Closing Date will have, as the case may be, full legal right, power and authority: (i) to execute, deliver and perform its obligations under this Purchase Agreement and the Fiscal Agent Agreement and to carry out all transactions contemplated by each of such agreements; (ii) to enter into the City Continuing Disclosure Certificate; and (iii) to carry out, give effect to and consummate the transactions contemplated by the Formation Documents, the Fiscal Ag ent Agreement, this Purchase Agreement and the Official Statement.
This Purchase Agreement, the Fiscal Agent Agreement, and the City Continuing Disclosure Certificate are collectively referred to herein as the “City Documents.” B. By all necessary official ac tion of the City, the City has duly authorized and approved the execution and delivery by the City of, and the performance by City of, the obligations on its part contained in, the City Documents and has approved the use and distribution by the Underwriter of the Preliminary Official Statement and the execution, use and distribution by the Underwriter of the Official Statement, and, as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or r escinded. When executed and delivered by the parties thereto, the City Documents will constitute the legally valid and binding obligations of the City, on its own behalf and on behalf of the Communities Facilities District, enforceable upon the City and t he Community Facilities District in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights genera lly. To the best of the City’s knowledge, the City has complied, and will at the Closing Date be in compliance in all respects, with the terms of the City Documents that are applicable to the City, and the Community Facilities District has complied, and w ill at the Closing Date be in compliance in all respects, with the terms of the City Documents that are applicable to the Community Facilities District.
C. The information in the Preliminary Official Statement (other than statements pertaining to the book -entry system and under the headings “ IMPROVEMENT AREA NO. 1 – Development in the District,” as to which no view is expressed) as of its date was and as of the date hereof is, and in the Official Statement (other than statements pertaining to the book -entry system and under the headings “IMPROVEMENT AREA NO. 1 – Development in the District,” as to which no view is expressed) as of its date is, true and correct in all material respects and does not contain ITEM 12.1.
ATTACHMENT 5
5 any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and, upon delivery and up to and including 25 days after the End of the Underwriting Period (as defined in paragraph (D) be low), the Official Statement will be amended and supplemented so as to contain no misstatement of any material fact or material omission of any statement necessary to make the statements contained therein, in the light of the circumstances in which such st atements were made, not misleading.
D. Up to and including 25 days after the End of the Underwriting Period (as defined below), the City will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The City will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise materially affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. As used herein, the term “End of the Underwriting Period” means the later of such time as: (i) the Bonds a re delivered to the Underwriter; or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public. Unless the Underwriter gives notice to the contrary, the End of the Unde rwriting Period shall be deemed to be the Closing Date. Any notice delivered pursuant to this provision shall be written notice delivered to the City at or prior to the Closing Date and shall specify a date (other than the Closing Date) to be deemed the “ End of the Underwriting Period.” If in the opinion of the Underwriter any such event or proceedings requires the preparation and distribution of a supplement or amendment to the Official Statement, the City shall prepare and furnish to the Underwriter, at the City’s expense, such number of copies of the supplement or amendment to the Official Statement, in (i) a “designated electronic format” consistent with the requirements of the MSRB’s Rule G-32 and (ii) a printed format form in substance mutually agreed upon by the City and the Underwriter as the Underwriter may reasonably request. If such amendment or supplement to the Official Statement shall be made subsequent to the Closing Date, the City also shall furnish, or cause to be furnished, such additiona l legal opinions, certificates, instruments and other documents as the Underwriter may reasonably deem necessary to evidence the truth and accuracy of any such supplement or amendment to the Official Statement.
E. As of the time of acceptance hereof and as of the Closing Date, the City and the Community Facilities District, as applicable, have each complied, and will at the Closing Date be in compliance in all material respects, with the Formation Documents and the City Documents, and any immaterial noncomplia nce by the City or the Community Facilities District, if any, will not impair the ability of the City or the Community Facilities District, as applicable, to carry out, give effect to or consummate the transactions contemplated by the foregoing. From and after the date of issuance of its Bonds, the City will continue to comply with the covenants of the City contained in the City Documents and it shall cause the Community Facilities District to continue to comply with the covenants of the Community Facilities District contained in the City Documents.
F. Except as described in the Preliminary Official Statement, neither the City nor the Community Facilities District is, and as of the Closing Date, neither will be, in any respect material to the transactions refe rred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City or the Community Facilities District, as the case may be, is a party or is otherwise subject or bound; and, to the City’s knowledge, no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would ITEM 12.1.
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6 constitute a default or event of default under any such instrument which breach, default or event could have an adverse effect on the City’s ability or the Community Facilities District’s ability to perform their respective obligations under the City Documents; and as of such times, except as disclosed in the Official Statement, the authorization, execution and delivery of the City Documents and compliance with the provisions of each thereof, or the performance of the conditions precedent to be performed by the City pursuant to this Purchase Agreement, will not conflict with or constitute a breach of or defa ult under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or u nder any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the City or the Community Facilities District of their respective obligations under the City Documents or the performance of the conditions precedent to be performed by the City pursuant to this Purchase Agreement. The City has received all licenses, permits or other regulatory approvals required, if any, for the pledge, collection and/or application by the Community Facilities District of the Special Taxes (as defined in the Fiscal Agent Agreement) and other moneys pledged to the payment of the principal of and interest on the Bonds under the Fiscal Agent Agreement.
G. Except as may be required under the “blue sky” or other securities laws of any jurisdiction, all approvals, consents, authorizations, elections and orders of, or filings or registrations with, any governmental autho rity, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the City or the Community Facilities District of their respective obligations under the City Documents, and the performance of the conditions precedent to be performed by the City pursuant to this Purchase Agreement, have been or will be obtained at the Closing Date and are or will be in full force and effect at the Closing Date.
H. At the time of acceptance hereof there is and as of the Closing there will be no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body (collectively and individually, an “A ction”) pending (notice of which has been served on the City or the Community Facilities District) or to the best knowledge of the City or the Community Facilities District threatened, in which any such Action: (i) in any way questions the powers of the Ci ty Council or the existence of the Community Facilities District or the titles of the officers of the City and/or the Community Facilities District to their respective offices; (ii) affects, contests or seeks to prohibit, restrain or enjoin the issuance or delivery of the Bonds or the payment or collection of Special Taxes or any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contests or affects the validity of the City Documents or the consummation of the transactions on the part of the City or the Community Facilities District contemplated thereby; (iii) contests the exclusion of interest on the Bonds from federal or State income taxation or contests the powers of the City or the Community Facilities District which may result in any material adverse change relating to the financial condition of the City or the Community Facilities District; (iv) except as disclosed in the Official Statement, wherein an unfavorable decision, ruling or finding would materiall y adversely affect the financial position or condition of the City or the Community Facilities District or would result in any material adverse change in the ability of the City to pledge or apply the Special Taxes (as defined in the Fiscal Agent Agreement) or to pay debt service on the Bonds; or (v) contests the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserts that the Preliminary Official Statement or the Official St atement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were ITEM 12.1.
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7 made, not misleading; and as of the time of acceptance hereof there is and, as of the Closing Date, there will be no known basis for any Action of the nature described in clauses (i) through (v) of this sentence.
I. The City will furnish such information, execute such instruments and tak e such other action in cooperation with the Underwriter and at the expense of the Underwriter as the Underwriter may reasonably request in order: (i) to qualify the Bonds for offer and sale under the “blue sky” or other securities laws and regulations of such states and other jurisdictions of the United States of America as the Underwriter may designate; and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds, provided; however, that the City will not be required to execute a special or general consent to service of process or qualify as a foreign corporation in connectio n with any such qualification in any jurisdiction.
J. The City Documents conform as to form and tenor to the descriptions thereof contained in the Preliminary Official Statement. The City represents that the Bonds, when issued, executed and delivered in acco rdance with the Fiscal Agent Agreement and sold to the Underwriter as provided herein, will be validly issued and outstanding obligations of the City, entitled to the benefits of the Fiscal Agent Agreement. The City and the Community Facilities District w ill each comply with the covenant in the Fiscal Agent Agreement to cause the Special Taxes to be levied and collected at the same time and in the same manner as ordinary ad valorem property taxes. The Fiscal Agent Agreement creates a valid pledge of, first lien upon and security interest in, the Special Taxes, and in the moneys in the Special Tax Fund established pursuant to the Fiscal Agent Agreement, on the terms and conditions set forth in the Fiscal Agent Agreement. The Fiscal Agent Agreement creates a valid pledge of the moneys in certain funds and accounts established pursuant to the Fiscal Agent Agreement, subject in all cases to the provisions of the Fiscal Agent Agreement permitting the application thereof for the purposes and on the terms and conditions set forth therein.
K. Except as disclosed in the Preliminary Official Statement, there are, to the best of the City’s knowledge, no entities with outstanding assessment liens against any of the properties within Improvement Area No. 1 which are senior to or on a parity with the Special Taxes.
L. The issuance and sale of the Bonds is not subject to any transfer or other documentary stamp taxes of the State or any political subdivision thereof.
M. The City shall not knowingly take or omit to take any action that, under existing law, may adversely affect the exclusion from gross income for federal income tax purposes, or the exemption from State of California personal income tax, of the interest on the Bonds. The City has not been notified of any listing or proposed listing by the Intern al Revenue Service to the effect that the City is a bond issuer whose arbitrage certifications may not be relied upon.
N. Any certificate signed on behalf of the Community Facilities District by any officer or employee of the City authorized to do so and del ivered to the Underwriter in connection with the issuance and sale of the Bonds shall be deemed to be a representation and covenant by the Community Facilities District to the Underwriter as to the statements made therein.
O. The City will apply the proceeds of the Bonds in accordance with the Fiscal Agent Agreement and as described in the Official Statement.
ITEM 12.1.
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8 P. At or prior to the Closing, the City will have duly authorized, executed and delivered the City Continuing Disclosure Certificate in substantially the f orm under Appendix F to the Official Statement. Based on a review of previous undertakings, the Preliminary Official Statement and the Official Statement describe the instances in which the City has failed to comply with any previous undertakings with reg ard to the Rule to provide annual reports or notices of material events in the last five years.
Q. Between the date of this Purchase Agreement and the date of Closing, the City will not offer or issue any bonds, notes or other obligations for borrowed money n ot previously disclosed to the Underwriter and the City shall not create, assume or guarantee any indebtedness payable from, or pledge or otherwise encumber, the Special Taxes or other assets, properties, funds or interests that will be pledged as security for the Bonds pursuant to the City Documents.
R. Until such time as moneys have been set aside in an amount sufficient to pay all then outstanding Bonds at maturity or to the date of redemption if redeemed prior to maturity, plus unpaid interest thereon and premium, if any, to maturity or to the date of redemption if redeemed prior to maturity, the City will faithfully perform and abide by all of the covenants, undertakings and provisions contained in the Fiscal Agent Agreement.
S. The Preliminary Official Stat ement was deemed final by a duly authorized officer of the City prior to its delivery to the Underwriter, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of the Rule. The City hereby covenants and agrees that, within seven (7) business days from the date hereof, or upon reasonable written notice from the Underwriter within sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, the City shall cause a final electronic and/or printed form of the Official Statement as set forth in Section 1 above to be delivered to the Underwriter in sufficient quantity to comply with paragraph (b)(4) of the Rule and Rules G-12, G-15, G-32 and G-36 of the Municipal Securities Rulemaking Board.
T. The City hereby approves the preparation and distribution of the Official Statement, consisting of the Preliminary Official Statement with such changes as are noted thereon and as may be made thereto, with the approval of Bond Cou nsel and the Underwriter from time to time prior to the Closing Date.
U. The City hereby ratifies any prior use of and authorizes the future use by the Underwriter, in connection with the offering and sale of the Bonds, of the Preliminary Official Statement, the Official Statement, this Purchase Agreement and all information contained herein, and all other documents, certificates and written statements furnished by the City to the Underwriter in connection with the transactions contemplated by this Purchase Agreement.
The execution and delivery of this Purchase Agreement by the City shall constitute a representation by the City to the Underwriter that the representations and warranties contained in this Section 2 with respect to the City and the Community Facilities District are true as of the date hereof.
3. Conditions to the Obligations of the Underwriter . The obligation of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and warranties on the part of the City, on its own behalf and on behalf of the Community Facilities District, contained herein, to the accuracy in all material respects of the statement s of the officers and other officials of the city and the Community Facilities District made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the City and the Community Facilities District of ITEM 12.1.
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9 their o bligations to be performed hereunder at or prior to the Closing Date and, to the following additional conditions:
A. At the Closing Date, the Community Facilities District Resolutions, the Formation Documents, and the City Documents shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds, and with the transactions contemplated thereby, and by this Purchase Agreement, all such actions as, in the opinion of Bond Counsel, shall be necessary and appropriate.
B. At the Closing Date, except as was described in the Preliminary Official Statement, neither the City nor the Community Fa cilities District shall be, in any respect material to the Bonds, the City Documents or the transactions referred to herein or contemplated hereby, in breach of or in default under, any law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality of either thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument t o which the City or the Community Facilities District, respectively, is a party or is otherwise subject or bound, and the performance by the City or the Community Facilities District, respectively, of its obligations under the Bonds, the City Documents, th e Community Facilities District Resolutions, this Purchase Agreement and any other instruments contemplated by any of such documents, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America or of any department, division, agency or instrumentality of either thereof or under any applicable court or administrative decree or order or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City or the Community Facilities District, respectively, is a party or is otherwise subject or bound, in any manner which would materially and adversely affect the performance by the City or the Community Facilities District, respectively, of its obligations under the City Documents, the Bonds or the Community Facilities District Resolutions.
C. The information contained in the Official Statement is, as of the Closing Dat e and as of the date of any supplement or amendment thereto pursuant hereto, true and correct in all material respects and does not, as of the Closing Date or as of the date of any supplement or amendment thereto, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
D. The Underwriter shall have the right to cancel its obligation to pur chase the Bonds and to terminate this Purchase Agreement by written notice to the City if, between the date of this Purchase Agreement and the Closing Date, in the Underwriter’s sole and reasonable judgment any of the following events shall occur (each a “Termination Event”):
1. Between the date hereof and the Closing Date, the market price or marketability, at the initial offering prices set forth on the cover page of the Official Statement, of the Bonds, or the ability of the Underwriter to enforce contracts for the sale of the Bonds, shall have been materially adversely affected, in the judgment of the Underwriter (evidenced by a written notice to the City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following:
a. Legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or the legislature of the State or recommended to the ITEM 12.1.
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10 Congress by the President of the United States of America or a member of the President’s Cabinet, the Department of the Treasury, the Internal Revenue Service or any member of Congress or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration, or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department of the United States of America, the Internal Revenue Service or other federal or State authority with appropriate jurisdiction, with the purpose or effect, directly or indirectly, of imposing federal or State income taxation upon such interest as would be received by any owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; b. Legislation introduced in or enacted (or resolution passed) by the Congress, or shall have been favorably reported out of committee or be pending in committee, or shall have been recommended to the Congress for passage by the President of the United States of America or a member of the President’s Cabinet, or an order, decree, injunction or decision issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release, statement or other form of notice issued or made by or on behalf of the Securi ties and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, the Resolution or the City Documents, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Fiscal Agent Agreement is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligati ons of the general character of the Bonds, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws as amended and then in effect;
c. A general suspension of trading in securities on the New York Stock Exchange or other major exchange shall be in force, or minimum or maximum prices for trading shall have been fixed and be in force, or maximum ranges for prices for securities shall have been required and be in force on any such exchange, whether by virtue of determination by that exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction;
d. there shall have occurred (1) an outbreak or escalation of hostilities or the declaration by the Uni ted States of a national emergency or war or (2) any other calamity or crisis in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis;
e. Except as disclosed in or contemplated by the Official Statement, any material adverse change in the affairs of the City or the Community Facilities District shall have occurred;
2. The introduction, proposal or enactment of any amendment to the federal or California Constitution or any action by any federal or State court, legis lative body, regulatory body or other authority materially adversely affecting the tax status of the City or the Community Facilities District, their property, income, securities (or interest thereon), the validity or enforceability of Special Taxes;
3. Any event occurring or information becoming known which, in the judgment of the Underwriter, makes untrue or incorrect in any material respect any statement or ITEM 12.1.
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11 information contained in the Preliminary Official Statement or in the Official Statement or has the effect that the Preliminary Official Statement or the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
4. A general banking moratorium shall have been declared by federal, State of New York or State of California officials authorized to do so or a material disruption in securities settlement, payment or clearance services affecting the Bonds shall have occurred;
5. Any new restriction on transactions in securities materially affecting the market for securities (including the imposition of any limitation in interest rates) or the extension of credit by, or a charge to the net capital requirements of, underwriters shall have been established by the New York Stock Exchange, the Comptroller of the Currency, the Securities and Exchange Commission or any other federal or State agency or the Congress of the United S tates of America, or by Executive Order;
6. A decision by a court of the United States of America shall be rendered, or a stop order, release, regulation or no -action letter by or on behalf of the Securities and Exchange Commission or any other governmental a gency having jurisdiction of the subject matter shall have been issued or made, to the effect that the issuance, offering or sale of the Bonds as contemplated by this Purchase Agreement or by the Official Statement, or any document relating to the issuance, offering or sale of the Bonds is or would be in violation of any provision of the federal securities laws at the Closing Date, including the Securities Act of 1933, the Securities Exchange Act of 1934 and the Trust Indenture Act of 1939;
7. Any proceeding s hall have been commenced or be threatened in writing by the Securities and Exchange Commission against the City or the Community Facilities District.
8. The commencement of an Action described in Section 2(H).
Upon the occurrence of a Termination Event and th e termination of this Purchase Agreement by the Underwriter, all obligations of the City, the Community Facilities District, and the Underwriter under this Agreement shall terminate, without further liability, except that the City and the Underwriter shall pay their respective expenses as set forth in Section 6 below.
E. At or prior to the Closing Date, the Underwriter shall have received a counterpart original or certified copy of the following documents, in each case satisfactory in form and substance to the Underwriter:
1. Official Statement. The Official Statement and each supplement or amendment, if any thereto, executed by an authorized officer of the City;
2. Fiscal Agent Agreement . The Fiscal Agent Agreement, duly executed and delivered by the City and the Fiscal Agent;
3. Resolutions. Certifications by the City Clerk with respect to each resolution and ordinance of the City Council, for the City or as the legislative body of the Community Facilities District, relating to the City Documents, the transactions contemplated thereby, formation of the Community Facilities District and issuance of the Bonds; ITEM 12.1.
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12 4. City Continuing Disclosure Certificate . The City Continuing Disclosure Certificate executed and delivered by the City;
5. Bond Counsel Opinion . An unqualified app roving opinion for the Bonds, dated the Closing Date and addressed to the City, of Bond Counsel, to the effect that the Bonds are the valid, legal and binding obligations of the City and that the interest thereon is excluded from gross income for federal i ncome tax purposes and exempt from personal income taxes of the State, in substantially the form included as Appendix E to the Official Statement, together with a letter of Bond Counsel, dated the Closing Date and addressed to the Underwriter, to the effec t that such opinion addressed to the City may be relied upon by the Underwriter to the same extent as if such opinion was addressed to it;
6. Supplemental Opinion. A supplemental opinion or opinions, dated the Closing Date and addressed to the Underwriter, of Bond Counsel, to the effect that:
(i) this Purchase Agreement has been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the other parties thereto, constitutes the legal, valid and binding agreemen t of the City and is enforceable in accordance with its terms, except to the extent that enforceability may be limited by moratorium, bankruptcy, reorganization, insolvency or other similar laws affecting creditors’ rights generally or by the exercise of judicial discretion in accordance with general principles of equity or otherwise in appropriate cases and by limitations on legal remedies against public agencies in the State; (ii) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Fiscal Agent Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended;
(iii) the information contained in the Official Statement on the cover and under the captions “THE BONDS” (other than by reference Appendix G – DTC and the Book-Entry Only System), “SECURITY FOR THE BONDS,” “ LEGAL MATTERS” and in Appendices C and E to the Official Statement (excluding any financial, statistical and economic data, forecasts, numbers, charts, graphs, estimates , projections, and assumptions and any information regarding The Depository Trust Company and the book-entry system as to which Bond Counsel need express no opinion or view, and further, excluding any material that may be treated as included under such cap tions by cross -reference), are accurate insofar as such statements purport to summarize certain provisions of the Bonds, the Fiscal Agent Agreement, Bond Counsel’s final approving opinion and the Community Facilities District Act; and
(iv) the Community Facili ties District has been duly formed, and the Special Taxes have been duly and validly levied in accordance with the provisions of the Community Facilities District Act and, except to the extent prohibited by moratorium, bankruptcy, reorganization, fraudulen t conveyance or transfer, insolvency or other similar laws affecting creditors’ rights generally, a lien to secure payment of the Special Taxes has been imposed on taxable property in Improvement Area No. 1 of the Community Facilities District;
7. Special Co unsel Opinion . An opinion, dated the Closing Date and addressed to the Underwriter, of Jones Hall, a Professional Corporation, acting as special counsel to the City and the Community Facilities District, substantially in the form of Appendix B hereto; ITEM 12.1.
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13 8. Closing Certificate of the City . A certificate, dated the Closing Date, and signed by an authorized officer of the City substantially in the form of Appendix C hereto, together with such additional certifications as Bond Counsel may require;
9. Bank Incumbency Certificate . Certified copies of the general resolution of the Fiscal Agent authorizing the execution and delivery of certain documents by certain officers of the Fiscal Agent, which resolution authorizes the execution of the Fiscal Agent Agreement and the authentication of the Bonds;
10. Fiscal Agent’s Certificate. A certificate of the Fiscal Agent, dated the Closing Date, in form and substance acceptable to the Underwriter and its counsel, substantially in the form of Appendix D hereto;
11. Fiscal Agent’s Counsel Opinion. An opinion of counsel to the Fiscal Agent, dated the Closing Date, addressed to the Underwriter and the City, substantially in the form of Appendix E hereto;
12. Disclosure Counsel Opinion. An opinion, dated the Closing Date and addressed to the Underwriter and to the City, of Jones Hall, a Professional Corporation, as disclosure counsel (“Disclosure Counsel”), in form and substance acceptable to the Underwriter;
13. Opinion of Underwriter’s Counsel . An opinion of Kutak Rock LLP, counsel to the Underwriter, dated the date of the Closing, addressed to the Underwriter, in form and substance acceptable to the Underwriter;
14. Special Tax Consultant Certificate . A certificate, dated the Closing Date from Goodwin Consulting Group substantially in the form attached as Appendix F hereto;
15. Certificate Regarding Continuing Disclosure Compliance . A Continuing Disclosure Compliance Certificate, dated the Closing Date, duly executed and delivered by Goodwin Consulting Group, Inc. in form and substance acceptable to the Underwriter and Disclosure Counsel;
16. Transcript. A transcript of all proceedings relating to the authorization, issuance, sale and delivery of the Bonds, including certified copies of the Fiscal Agent Agreement and all resolutions of the City and the Community Facilities District relating thereto;
17. Nonarbitrage Certificate. A certificate of the City, dated the Closing Date, in a form acceptable to Bond Counsel and the Underwriter, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended;
18. Specimen Bonds. Copies of the Specimen Bonds;
19. Issue Price Certificate . An issue price certificate of the Underwriter in the form attached as Appendix J hereto;
20. Certificate of Underwriter. A certificate from the Underwriter to the City, in form satisfactory to the City and signed by an authorized officer of the Underwriter, accepting delivery of the Bonds to the Underwriter and receipt of all documents required by the Underwriter, and the satisfaction or waiver of all conditions and terms of this Purchase Agreement by ITEM 12.1.
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14 the City, and confirming to the City that as of the Closing Date, all of the representations of the Underwriter contained in this Purchase Agreement are true, complete and correc t in all material respects;
21. Form 8038-G. An Information Return for Tax -Exempt Bond Issues (Internal Revenue Service Form 8038-G), in a form satisfactory to Bond Counsel for filing, executed by a duly authorized officer of the City, together with evidence that such Form 8038 -G has been mailed;
22. CDIAC Statements. Copies of filings with the California Debt and Investment Advisory Commission relating to the issuance of the Bonds;
23. Letter of Representations . A copy of the Blanket Letter of Representations to DTC relating to the Bonds signed by the City;
24. Certificate Regarding Preliminary Official Statement . Prior to and in connection with printing and distribution of the Preliminary Official Statement, (i) an executed certificate of the City and (ii) an executed certificate of Woodside 05N, LP (the “Property Owner”) in the form under Appendix G hereto.
25. Property Owner Continuing Disclosure Certificate . Executed copies of the Continuing Disclosure Certificate (Developer) from the Property Owner in the form set forth under Appendix F of the Official Statement.
26. Property Owner Closing Certificate . An executed b ring-down certificate from the Property Owner, dated as of the Closing Date, in form and substance as set forth in Appendix H hereto.
27. Property Owner Counsel Opinion . The opinion of counsel to the Property Owner, dated the Closing Date and addressed to the City and the Underwriter , in form and substance acceptable to the Underwriter and Bond Counsel.
28. Appraiser Closing Certificate. A certificate in form and substance as set forth in Appendix I hereto of Integra Realty Resources , the appraiser of the prope rty within Improvement Area No. 1, dated as of the Closing Date.
29. Additional Documents . Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the da te hereof and as of the Closing Date, of the material representations and warranties of the City, on its own behalf and on behalf of the Community Facilities District, contained herein, and of the statements and information contained in the Official Statem ent and the due performance or satisfaction by the City at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by the City and the Community Facilities District in connection with the transactions contempl ated hereby and by the Fiscal Agent Agreement and the Official Statement.
If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Agreement , or if the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated for any reason permitted by this Purchase Agreement, this Purchase Agreement shall ITEM 12.1.
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15 terminate and neither the City nor the Underwriter shall be under any further obligation hereunder, except that the respective obligations of the Underwriter and the City set forth in Section 6 hereof shall continue in full force and effect.
4. Representations and Agreements of the Underwriter. The Underwriter represents to and agrees with the City that:
A. The Underwriter is duly authorized to execute and deliver this Purchase Agreement and to take any action under the Purchase Agreement required to be taken by it.
B. The Underwriter is in compliance with MSRB Rule G -37 with respect to the City and the Community Facilities District, and is not prohibited thereby from acting as underwriter with respect to securities of the City and the Community Facilities District. The Underwriter is in compliance with MSRB Rule G-17 with respect to the City and the Community Facilities District.
C. The Underwriter has, and has had, no financial advisory relationship with the City or the Community Facilities District with respect to the Bonds, and no investment firm controlling, controlled by or under common control with the Underwriter has or has had any such financial advisory relationship, within the meaning of California Government Code Section 53590, or otherwise.
D. The Underwriter has not paid or agreed to pay, nor will it pay or agree to pay, any entity, company, firm or person (including, but not limited to, the City’s financial consultants, or any officer, agent or employee thereof), other than a bona fide officer, agent or employee working for the Underwriter, any compensation, fee, gift or other consideration contingent upon or resulting from the award of or entering into this Purchase Agreement.
E. The Underwriter has reasonably determined that the City’s undertaking in the City Continuing Disclosure Certificate to provide continuing disclosure with respect to the Bonds is sufficient to effect compliance with the Rule.
5. Establishment of Issue Price.
A. The Underwriter agrees to assist the City in establishing the issue price of the Bonds and shall execute and d eliver to the City at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Appendix J, with such modifications as may be appropriate or necess ary, in the reasonable judgment of the Underwriter, the City and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.
B. Except as otherwise set forth in Appendix A attached hereto, the City will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity. At or promptly after the execution of this Purchase Agreement, the Underwriter shall report to the City the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the City the prices at wh ich it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that, the Underwriter’s reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the City or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have different ITEM 12.1.
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16 interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds.
C. The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purc hase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Appendix A attached hereto. Appendix A also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement) and (ii) the 10% test has not been satisf ied and for which the City and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the City to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
a. the close of the fifth (5th) business day after the sale date; or b. the date on which the Underwriter has sold at lea st 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
The Underwriter will advise the City promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
D. The Underwriter confirms that:
(i) any selling group agreement and any third-party distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(A)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Und erwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter and (ii) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter particip ating in the initial sale of the Bonds to the public (each such term being used as defined below), and (C) to acknowledge that, unless otherwise advised by the dealer or broker -dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
ITEM 12.1.
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17 (ii) any selling group agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to require each broker- dealer that is a party to such third -party distribution agreement to (A) report the prices at which it sells to the publ ic the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfi ed as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold -the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires.
E. The City acknowledges that, in making the representation set forth in this section, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold- the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third- party distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker -dealer that is a party to such agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold -the-offering-price rule, if applicable to the Bonds, as set forth in the third-party distribution agreement and the related pricing wires. The City further acknowledges that the Underwriter shall not be liable for the failure of any deal er who is a member of a selling group, or of any broker -dealer that is a party to a third -party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold -the-offering-price rule, if applicable to the Bonds.
F. The Underwriter acknowledges that sales of any Bonds to any person that is a related party to the Underwriter shall not constitute sales to the public f or purposes of this section.
Further, for purposes of this section:
a. “public” means any person other than an underwriter or a related party;
b. “underwriter” means (A) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a third -party distribution agreement participating in the initial sale of the Bonds to the public);
c. a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of anot her), (B) more than 50% common ownership of their capital interests or profits interests, if both entities are partnerships (including direct ownership by one partnership of another), or (C) more than 50% common ownership of the value of the outstanding st ock of the corporation or the ITEM 12.1.
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