9 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 Facilities 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 to 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, the 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 Date 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 purchase 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 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 ITEM 19.2.
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10 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 Securities 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 obligations 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 United 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, legislative 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 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; ITEM 19.2.
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11 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 States 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 agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the issuance, offering or sale of the Bonds 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 shall 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 the 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;
4. City Continuing Disclosure Certificate . The City Continuing Disclosure Certificate executed and delivered by the City;
5. Bond Counsel Opinion . An unqualified approving opinion for the Bonds, dated the Closing Date and addressed to the City, of Bond Counsel, to the effect that the ITEM 19.2.
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12 Bonds are the valid, legal and binding obligations of the City and that the interest thereon is excluded from gross income for federal income 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 effect 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 agreement 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 captions 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 Facilities 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, fraudulent 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. 3 of the Community Facilities District;
7. Special Counsel Opinion . An opinion, dated the Closing Date and addressed to the Underwriter, of Jones Hall LLP , acting as special counsel to the City and the Community Facilities District, substantially in the form of Appendix B hereto;
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 ITEM 19.2.
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13 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 LLP, 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 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 correct 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 ITEM 19.2.
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14 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 K. Hovnanian at Jaeger Ranch, LLC (the “Property Owner”) in the form under Appendix G hereto.
25. Property Owner Continuing Disclosure Certificate . Executed copies of the Property Owner Continuing Disclosure Certificate from the Property Owner in the form set forth under Appendix F of the Official Statement.
26. Property Owner Closing Certificate . An executed bring -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 property within Improvement Area No. 3, 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 date 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 Statement 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 contemplated 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 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, as of the date hereof and as of the date of the Closing:
ITEM 19.2.
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15 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 deliver 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 necessary, in the reasonable judgment of the Underwriter, the City and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.
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 which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has been satisfied as to the Bonds of that maturity, provided that, the Underwriter’s reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the City or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have different interest rates, each separate CUSIP number within that maturity will be treated as a separate maturity of the Bonds.
C. The Underwriter confirms that it has offered the Bonds to the public on or before the date of this Purchase Agreement at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in Appendix A attached hereto, except as otherwise set forth therein. Appendix A also sets forth, as of the date of this Purchase Agreement, ITEM 19.2.
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16 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 satisfied and for which the City and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the City to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold -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 least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
The Underwriter will advise the City promptly after the close of the fifth (5th) business day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public.
D. The Underwriter confirms that:
(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 Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter and (ii) to comply with the hold -the-offering-price rule, if applicable, if and for so long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and (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.
(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 public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has ITEM 19.2.
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17 been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold -the-offering-price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires.
E. The City acknowledges that, in making the 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 dealer who is a member of a selling group, or of any broker -dealer that is a party to a third -party distribution agreement, to comply with its corresponding agreement to comply with the requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold -the-offering-price rule, if applicable to the Bonds.
F. The Underwriter acknowledges that sales of any Bonds to any person that is a related party to the Underwriter shall not constitute sales to the public for 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 another), (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 stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other); and
d. “sale date” means the date of execution of this Purchase Agreement by all parties.
ITEM 19.2.
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18 6. Expenses.
A. Whether or not the Underwriter accepts delivery of and pays for the Bonds as set forth herein, it shall be under no obligation to pay, and the City shall pay out of the proceeds of the Bonds or any other legally available funds of the City, all expenses incidental to the performance of the City’s obligations hereunder, including but not limited to the cost of printing and delivering the Bonds to the Underwriter; the costs of printing and shipping the Preliminary Official Statement and the Official Statement; the fees and disbursements of the City, the Community Facilities District, the Fiscal Agent, Bond Counsel, Disclosure Counsel, accountants and any other experts or consultants retained by the City or the Community Facilities District in connection with the issuance and sale of the Bonds; and any other expenses not specifically enumerated in paragraph (B) of this Section incurred in connection with the issuance and sale of the Bonds.
B. Whether or not the Bonds are delivered to the Underwriter as set forth herein, the City shall be under no obligation to pay, and the Underwriter shall be responsible for and pay, CUSIP® and CDIAC fees and expenses to qualify the Bonds for sale under any “blue sky” laws; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds not specifically enumerated in paragraph (A) of this Section, including the fees and disbursements of its counsel.
7. Undertakings of the City . The City agrees: (a) to inform the Underwriter, from time to time, upon the reasonable request of the Underwriter, of the amount then on deposit in the Reserve Fund and all accounts thereunder; and (b) to make available to the Underwriter, upon reasonable request of the Underwriter, at the expense of the City, sufficient copies of its audited financial statements, if any, and any resolutions of its legislative body with respect to the Community Facilities District Resolutions, the Bonds, the Fiscal Agent Agreement, the Official Statement, any amendments or supplements thereto, and other documents relating to the Bonds and pertaining to the City or the Community Facilities District adopted or executed, as the case may be, after the Closing Date, to the extent that such documents are publicly available.
8. Notices. Any notice of other communication to be given to the City under this Purchase Agreement may be given by delivering the same in writing to the City of Rancho Cordova, 2729 Prospect Park Drive, Rancho Cordova, California 95670, Attention: Finance Director; any notice or other communication to be given to the Underwriter under this Purchase Agreement may be given by delivering the same in writing to Piper Sandler & Co., 2321 Rosecrans Ave., Suite 3200, El Segundo, California 90245 Attention: Public Finance. All such notices, requests or other communications may be made by telephone, personal or courier delivery, registered or certified mail, facsimile transmission or electronic communication, provided that delivery by facsimile transmission or electronic communication must be confirmed by the sender. The City and the Underwriter may, by notice given as aforesaid, specify a different address for any such notices, requests or other communications.
9. Parties In Interest . This Purchase Agreement is made solely for the benefit of the City and the Underwriter (including any successors or assignees of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof. The City and the Underwriter may not assign this Agreement. The term “successor” shall not include any holder of any Bonds merely by virtue of such holding.
10. Survival of Representations and Warranties. The representations and warranties of the City under this Purchase Agreement shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing and regardless of any investigations made by or on ITEM 19.2.
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19 behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the City or the Community Facilities District and regardless of delivery of and payment for the Bonds.
11. Severability. If any provision of this Purchase Agreement is, or is held or deemed to be, invalid, inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions, because it conflicts with any provisions of any constitution, statute, rule of public policy or for any other reason, such circumstances shall not make the provision in question invalid, inoperative or unenforceable in any other case or circumstance, or make any other provision or provisions of this Agreement invalid, inoperative or unenforceable to any extent whatsoever.
12. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Purchase Agreement may be conducted by electronic means. Each party agrees and acknowledges that it is such party’s intent, that if such party signs this Purchase Agreement using an electronic signature, it is signing, adopting and accepting this Purchase Agreement and that signing this Purchase Agreement using an electronic signature is the legal equivalent of having placed the undersigned officer’s handwritten signature on this Purchase Agreement on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Purchase Agreement in a usable format.
13. Execution in Counterparts. This Purchase Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
14. Effective. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the City and shall be valid and enforceable as of the time of such acceptance.
15. No Prior Agreements . This Purchase Agreement supersedes and replaces all prior negotiations, agreements and understanding between the parties hereto in relation to the sale of the Bonds by the City.
16. Governing Law. This Purchase Agreement shall be governed by the laws of the State.
ITEM 19.2.
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S-1
17. Effective Date. This Purchase Agreement shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the City and shall be valid and enforceable as of the time of such acceptance.
Very truly yours,
PIPER SANDLER & CO.
By:
Its: Authorized Officer
The foregoing is hereby agreed to and
accepted as of the date first above written:
CITY OF RANCHO CORDOVA
By:
Authorized Representative
Time of Execution: _____________ p.m. California time
[EXECUTION PAGE OF BOND PURCHASE AGREEMENT – IMPROVEMENT AREA NO. 3 OF CITY OF RANCHO CORDOVA THE RANCH COMMUNITY FACILITIES DISTRICT NO. 2021-1 SERIES 2025 BONDS]
ITEM 19.2.
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A-1
APPENDIX A
$___________
IMPROVEMENT AREA NO. 3 OF
CITY OF RANCHO CORDOVA
THE RANCH COMMUNITY FACILITIES DISTRICT NO. 2021-1
SPECIAL TAX BONDS
SERIES 2025
MATURITY SCHEDULE
Maturity
(September 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Satisfied*
10% Test
Not
Satisfied
Subject to
Hold-The-
Offering-
Price Rule
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
20__(T)
20__(T)
_________________________________
(T) Term Bond.
(C) Priced to optional call at [par] on September 1, 20__. * At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day immediately following the date of this Purchase Agreement.
ITEM 19.2.
ATTACHMENT 3
B-1
APPENDIX B
OPINION OF SPECIAL COUNSEL
[Closing Date]
VIA OVERNIGHT MAIL
Piper Sandler & Co.
2321 Rosecrans Ave., Suite 3200
El Segundo, California 90245
City of Rancho Cordova
The Ranch Community Facilities District No. 2021-1
2729 Prospect Park Drive
Rancho Cordova, California 95670
Re: Improvement Area No. 3 of City of Rancho Cordova The Ranch Community Facilities District No. 2021-1 Special Tax Bonds Series 2025
Ladies and Gentlemen:
We have acted as counsel for the City of Rancho Cordova (the “City”) and the City of Rancho Cordova The Ranch Community Facilities District No. 2021 -1 (the “Community Facilities District”), in connection with the purchase and sale of the Improvement Area No. 3 of City of Rancho Cordova The Ranch Community Facilities District No. 2021 -1 Special Tax Bonds Series 2025 (the “Bonds”). As such Counsel, we have reviewed the Bond Purchase Agreement, dated [BPA Date] (the “Purchase Agreement”), by and between Piper Sandler & Co. (the “Underwriter”) and the City, the Fiscal Agent Agreement, dated as of October 1, 2025 (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 Continuing Disclosure Certificate, dated [Closing Date], executed by the City (the “City Continuing Disclosure Certificate”), the Preliminary Official Statement, dated [POS Date], relating to the Bonds (the “Preliminary Official Statement”), the Official Statement, dated [BPA Date], relating to the Bonds (the “Official Statement”), Resolution No. ______ adopted by the City Council of the City on ______, 2025 (“Bond Resolution”), and such other documents, certificates, records and papers as we have deemed necessary to render the below opinions.
The Bonds, Fiscal Agent Agreement, Purchase Agreement, and the City Continuing Disclosure Certificate, are collectively referred to herein as the “Bond Documents.” Capitalized terms used herein and not otherwise defined shall have the meanings assigned to them in the Purchase Agreement.
With your permission we have assumed, without undertaking to verify the same by independent investigation, the following: (a) the authenticity of original documents and the genuineness of all signatures (other than those of the City and the Community Facilities District); (b) the conformity to the originals of all documents submitted to us as copies; (c) the truth, accuracy, and completeness of the information, representations, and warranties contained in these documents, certificates, records and papers we have reviewed; and (d) compliance with all covenants and agreements contained in such documents.
ITEM 19.2.
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Based on the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:
1. The City is a municipal corporation duly organized and validly existing pursuant to the Constitution and laws of the State of California;
2. The Community Facilities District is duly organized and validly existing as a community facilities district under the Constitution and laws of the State;
3. The Bond Resolution was duly adopted at a meeting of the City Council, which meeting was duly called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout;
4. The preparation and distribution of the Preliminary Official Statement and the Official Statement have been duly approved by the City Council, acting for itself or as the Legislative Body of the Community Facilities District;
5. The execution and delivery by the City of the Bond Documents, and the Bonds and the performance of its obligations thereunder have been duly authorized by all requisite action of the City Council, acting for itself or as the Legislative Body of the Community Facilities District, and the Bonds and the Bond Documents have been duly executed and delivered by the Community Facilities District, and constitute legal, valid and binding obligations of the Community Facilities District enforceable against the Community Facilities District, in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights in general and to the application of equitable principles if equitable remedies are sought;
6. To the best of our knowledge, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or to the best of such counsel’s knowledge, threatened in any way affecting the existence of the City or the Community Facilities District or the titles of the officers of each to their respective offices, or seeking to restrain or to enjoin the execution and delivery of the Bond Documents, or the issuance, sale or delivery of the Bonds or the application of the proceeds thereof or the collection or application of the Special Taxes, or the exclusion from gross income for State personal income taxes of interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Bond Documents or any action of the City or the Community Facilities District contemplated by any of said documents or in any way contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or the powers of the City or its authority with respect to the Purchase Agreement or any other applicable agreement, or any action on the part of the City or the Community Facilities District contemplated by any of said documents;
7. To the best of our knowledge, the City and the Community Facilities District are not in breach of or in default under any 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 is a party or is otherwise subject or bound, including the Bond Documents, a consequence of which could be to materially and adversely affect the ability of the City or the Community Facilities District to perform their obligations under the Bonds, the Bond Documents or which, with the passage of time or the giving of notice or both, would constitute an event of default thereunder; and;
ITEM 19.2.
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8. To the best of our knowledge, the adoption of the Bond Resolution and the execution and delivery of the Bonds and the Bond Documents, did not and will not conflict with or constitute a breach of or default under any applicable court or administrative decree or order, or under any loan agreement, note, ordinance, 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, a consequence of which could be to materially and adversely affect the ability of City or the Community Facilities District to perform their obligations under the Bonds or any Bond Documents.
The opinions set forth above are subject to the following additional qualifications:
General principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law; and limitations imposed by bankruptcy, insolvency, fraudulent conveyance, receivership, conservatorship, reorganization, arrangement, liquidation, moratorium or other similar laws affecting the enforcement of creditors’ rights in general heretofore or hereafter enacted, as such laws may be applied in the event of bankruptcy, insolvency, reorganization, arrangement, receivership, conservatorship, liquidation, readjustment of debt or other similar proceedings of, or moratorium or similar occurrence affecting municipal corporations in the State.
We express no opinion as to matters governing by laws other than the laws of the State and the federal laws of the United States of America, or the enforceability of any choice of law provision in the documents described herein.
This opinion is solely for your benefit in connection with the transactions covered by the first paragraph of this letter and may not be relied upon or used by, circulated, quoted or referred to, nor may copies hereof be delivered to, any other person or for any other purpose without our prior written approval; provided, however, copies of this opinion may be included in the closing transcripts for the transactions connected with the issuance of the Bonds. We disclaim any obligation to update this opinion letter for events occurring or coming to our attention after the date hereof.
Respectfully submitted,
JONES HALL LLP
ITEM 19.2.
ATTACHMENT 3
C-1
APPENDIX C
IMPROVEMENT AREA NO. 3 OF
CITY OF RANCHO CORDOVA
THE RANCH COMMUNITY FACILITIES DISTRICT NO. 2021-1
SPECIAL TAX BONDS
SERIES 2025
CLOSING CERTIFICATE OF THE CITY
I, the undersigned, hereby certify that I am the ________ of the City of Rancho Cordova (the “City”), the City Council (the “City Council”) of which is the Legislative Body for The Ranch Community Facilities District No. 2021 -1 (the “Community Facilities District”), a community facilities district duly organized and existing under the laws of the State of California (the “State”) and I am authorized to execute this Certificate on behalf of the City in connection with the issuance of the above-captioned bonds (the “Bonds”). All capitalized terms herein not otherwise defined shall have the meanings given such terms in the Bond Purchase Agreement (the “Bond Purchase Agreement”), dated [BPA Date], by and between the City and Piper Sandler & Co.
I further certify on behalf of the City that:
(i) The representations, warranties and covenants of the City contained in the Bond Purchase Agreement, made on behalf of the City and the Community Facilities District, are true and correct in all material respects on and as of the date hereof as if made on the date hereof; (ii) The Community Facilities District Resolutions, Formation Documents and the City Documents are in full force and effect and have not been amended, modified or supplemented; (iii) Except as described in the Official Statement, there is no action, suit, proceeding, inquiry or investigation at law or in equity, or by any court or regulatory agency, public board or body pending, with respect to which the City or the Community Facilities District has been served with process, or to the best knowledge of the City or the Community Facilities District, threatened wherein an unfavorable decision, ruling or finding would: (a) affect the creation, organization, existence or powers of the City or the Community Facilities District, or the titles of their officers to their respective offices, (b) enjoin or restrain the issuance, sale and delivery of the Bonds, the levy or collection of the Special Taxes or any other moneys or property pledged or to be pledged under the Fiscal Agent Agreement, or the pledge thereof, (c) in any way question or affect any of the rights, powers, duties or obligations of the City or the Community Facilities District with respect to the Special Taxes or moneys and assets pledged or to be pledged to pay the principal of, premium, if any, or interest on the Bonds, (d) in any way question or affect any authority for the issuance of the Bonds, or the validity or enforceability of the Bonds or the proceedings relating to the issuance of the Bonds, or (e) in any way question or affect the Bond Purchase Agreement or the transactions contemplated thereby, the Official Statement or the City Documents; (iv) The information in the Preliminary Official Statement (other than statements pertaining to the book -entry system and under the headings “ IMPROVEMENT AREA NO. 3 – 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. 3 – Development in the District,” as to which no view is expressed) as of its date was and as of the date hereof is, true and correct in all material ITEM 19.2.
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respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading;
(v) The City has complied with all agreements and covenants, and satisfied all conditions, on its part to be complied with or satisfied under the Bond Purchase Agreement and under the Community Facilities District Resolutions, the Formation Documents, the City Documents and the Official Statement at or prior to the date hereof; (vi) No event has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the date hereof any statement or information contained in the Preliminary Official Statement or the Official Statement (other than statements pertaining to the book -entry system and under the headings “ IMPROVEMENT AREA NO. 3 – Development in the District,” as to which no view is expressed) or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein not misleading in any material respect;
(vii) The use of and distribution by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offer and sale of the Bonds is hereby ratified; and (viii) The City and the Community Facilities District are each in compliance with all covenants set forth in the Fiscal Agent Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the date set forth below.
Dated: [Closing Date] CITY OF RANCHO CORDOVA
By:
Its:
ITEM 19.2.
ATTACHMENT 3
D-1
APPENDIX D
IMPROVEMENT AREA NO. 3 OF
CITY OF RANCHO CORDOVA
THE RANCH COMMUNITY FACILITIES DISTRICT NO. 2021-1
SPECIAL TAX BONDS
SERIES 2025
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION CERTIFICATE The undersigned is an authorized officer of U.S. Bank Trust Company, National Association (the “Bank”), and as such, is familiar with the facts herein certified and is authorized and qualified to state and certify the following:
(i) The Bank is duly organized and existing as a national banking association under the laws of the United States of America, having the full power and authority to accept and perform its duties under the Fiscal Agent Agreement, dated as of October 1, 2025 (the “Fiscal Agent Agreement”) by and between the City and the Bank, as fiscal agent. Capitalized terms used herein and not otherwise defined have the meanings given to such terms in the Bond Purchase Agreement, dated [BPA Date], by and between the City and Piper Sandler & Co.; (ii) Pursuant to the Fiscal Agent Agreement, the Bank will apply the proceeds from the Bonds to the purposes specified in the Fiscal Agent Agreement; (iii) The Bank is duly authorized to accept the obligations created by the Fiscal Agent Agreement and to authenticate the Bonds pursuant to the terms of the Fiscal Agent Agreement;
(iv) The Fiscal Agent Agreement has been duly authorized, executed and delivered by the Bank and, assuming due authorization, execution and delivery thereof by the other parties thereto, constitutes a valid and binding agreement of the Bank enforceable against the Bank in accordance with its terms;
(v) The Bonds have been validly authenticated and delivered by the Bank pursuant to the Fiscal Agent Agreement;
(vi) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Bank that has not been obtained is or will be required for the authentication of the Bonds or the consummation by the Bank of the other transactions contemplated to be performed by the Bank in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Fiscal Agent Agreement;
(vii) There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body that has been served on the Bank or, to the best of its knowledge, threatened in any way affecting the existence of the Bank, or seeking to restrain or to enjoin the execution and delivery of the Fiscal Agent Agreement or the authentication of the Bonds, by the Bank, or in any way contesting or affecting the validity or ITEM 19.2.
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enforceability, as against the Bank, of the Fiscal Agent Agreement or any action of the Bank contemplated by any of said documents, or in which an adverse outcome would materially and adversely affect the ability of the Bank to perform its obligations under the Fiscal Agent Agreement; (viii) The Bank is not in breach of or in default under any applicable law or administrative rule or regulation of the State of California (the “State”) or 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 Bank is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the ability of the Bank to perform its obligations under the Fiscal Agent Agreement ( provided, however, that the Bank does not certify as to compliance with State or federal securities laws); and (ix) The authentication of the Bonds, and the execution and delivery of the Fiscal Agent Agreement by the Bank, and compliance with the provisions of each, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State or the United States 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, ordinance, resolution, Fiscal Agent Agreement, contract, agreement or other instrument to which the Bank is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the ability of the Bank to perform its obligations under the Fiscal Agent Agreement.
Dated: [Closing Date] U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION,
as Fiscal Agent
By:
Authorized Officer
ITEM 19.2.
ATTACHMENT 3
E-1
APPENDIX E
FISCAL AGENT’S COUNSEL OPINION
[Closing Date]
City of Rancho Cordova
The Ranch Community Facilities District No. 2021-1
Rancho Cordova, California
Piper Sandler & Co.
El Segundo, California
Re: Improvement Area No. 3 of City of Rancho Cordova The Ranch Community Facilities District No. 2021-1 Special Tax Bonds Series 2025 Ladies and Gentlemen:
We have acted as counsel for U.S. Bank Trust Company, National Association, a national banking association (the “Bank”) in connection with the execution by the Bank of the Fiscal Agent Agreement, dated as of October 1, 2025 (the “Fiscal Agent Agreement”) by and between the City and the Bank, as fiscal agent. We are generally familiar with the Articles of Association and the Bylaws of the Bank and are also familiar with the corporate proceedings of the Bank with regard to its authorization, execution and delivery of the Fiscal Agent Agreement. Capitalized terms used herein shall have the respective meanings ascribed to them in the Fiscal Agent Agreement, except as otherwise defined herein.
We have examined such documents and have reviewed such questions of law as we have considered necessary and appropriate for the purposes of this opinion. In such review, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity with originals of all documents submitted to us as copies. Where questions of fact material to our opinions expressed below were not established independently, we have relied upon statements of officers of the Bank as contained in their certificates.
Based upon the foregoing, we are of the opinion that:
1. The Bank is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America.
2. The Bank has all requisite corporate power, authority and legal right to execute and deliver the Fiscal Agent Agreement and to perform its duties and obligations under the Fiscal Agent Agreement, and has taken all necessary corporate action to authorize the execution and delivery thereof and the performance of its obligations thereunder, including the authentication and delivery of the Bonds in its capacity as Fiscal Agent under the Fiscal Agent Agreement.
ITEM 19.2.
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3. The Bank has duly authorized, executed and delivered the Fiscal Agent Agreement. Assuming the due authorization, execution and delivery thereof by the other parties thereto, the Fiscal Agent Agreement is a legal, valid and binding agreement of the Bank, enforceable in accordance with its terms against the Bank.
4. To our knowledge, no authorization, approval, consent, or order of any governmental agency or regulatory authority having jurisdiction over the Bank that has not been obtained by the Bank is required for the authorization, execution and delivery by the Bank of the Fiscal Agent Agreement or the authentication and delivery of the Bonds by the Bank under the Fiscal Agent Agreement.
The opinions set forth above are subject to the following qualifications and exceptions:
(a) the opinions are subject to the effect of any applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws of general application affecting creditors' rights; and
(b) the opinions are subject to the effect of general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing, and other similar doctrines affecting the enforceability of agreements generally (regardless of whether considered in a proceeding in equity or at law).
Our opinions expressed above are limited to the laws of the State of California and the federal laws of the United States of America.
The foregoing opinions are being furnished to you solely for your benefit and may not be relied upon by, nor may copies be delivered to, any other person without our prior written consent.
Very truly yours,
ITEM 19.2.
ATTACHMENT 3
F-1
APPENDIX F
IMPROVEMENT AREA NO. 3 OF
CITY OF RANCHO CORDOVA
THE RANCH COMMUNITY FACILITIES DISTRICT NO. 2021-1
SPECIAL TAX BONDS
SERIES 2025
CERTIFICATE OF SPECIAL TAX CONSULTANT
The undersigned hereby states and certifies:
1. That he is an authorized officer of Goodwin Consulting Group, Inc. (the “Special Tax Consultant”) and as such is familiar with the facts herein certified and is authorized and qualified to certify the same.
2. That the Special Tax Consultant has prepared the Rate and Method of Apportionment of Special Tax for Improvement Area No. 3 of the City of Rancho Cordova The Ranch Community Facilities District No. 2021- 1 (the “Community Facilities District”) (the “Rate and Method”) as set forth in Appendix A to the Official Statement dated [BPA Date], for the Improvement Area No. 3 of City of Rancho Cordova The Ranch Community Facilities District No. 2021 -1 Special Tax Bonds Series 2025 (the “Bonds”). Capitalized terms not otherwise defined herein shall be defined as provided in the Rate and Method or the Fiscal Agent Agreement, dated as of October 1, 2025 (the “Fiscal Agent Agreement”) by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent.
3. That the Special Taxes, if levied in accordance with the Rate and Method and collected will annually yield sufficient revenue to make timely payments of the annual debt service on the Bonds, and annual Administrative Expenses related to the levy and collection of the Special Taxes and the expenses of the Fiscal Agent for the Bonds (no representation is made as to the actual amounts that will be collected in future years).
4. That the Annual Special Tax, if collected in the maximum amounts permitted pursuant to the Rate and Method on the Closing Date (net of estimated Administrative Expenses equal to a maximum of $30,000 for Fiscal Year 2025-26 (subject to inflation at 2.00% per Fiscal Year effective for Fiscal Year 202 6-27), would generate at least 110% of the Annual Debt Service payable with respect to the Bonds payable from such Special Taxes, assuming the debt service schedule shown in the Official Statement is true and correct.
5. That all information supplied by the Special Tax Consultant for use in the Official Statement is true and correct, as of the date of the Official Statement and as of the date hereof.
6. That, as of the dates of the Preliminary Official Statement and the Official Statement and as of the date hereof, the information contained in those portions of the Official Statement entitled “SECURITY FOR THE BONDS – Special Taxes and – Rate and Method ,” “IMPROVEMENT AREA NO. 3 ,” “CONTINUING DISCLOSURE,” “APPENDIX A,” including the tables sourced to the Special Tax Consultant, and the other data provided by the Special Tax Consultant and included in the Official Statement, do not, to our knowledge, contain any untrue ITEM 19.2.
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statement of a material fact or omit to state a material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading.
7. The Community Facilities District, the City, the Underwriter, and all the professionals involved in the financing are entitled to rely on this Certificate.
Dated: [Closing Date] GOODWIN CONSULTING GROUP
By:
Title:
ITEM 19.2.
ATTACHMENT 3
G-1
APPENDIX G
IMPROVEMENT AREA NO. 3 OF
CITY OF RANCHO CORDOVA
THE RANCH COMMUNITY FACILITIES DISTRICT NO. 2021-1
SPECIAL TAX BONDS
SERIES 2025
CERTIFICATE OF PROPERTY OWNER
[POS Date]
The undersigned party certifies and represents that it is duly authorized on behalf of K.
HOVNANIAN AT JAEGER RANCH, LLC, a California limited liability company (the “ Property Owner”), to execute and deliver this Certificate of Property Owner (this “Certificate”) in connection with the issuance, sale and delivery by City of Rancho Cordova of the Bonds captioned above (the “Bonds”).
Capitalized terms used but not defined in this Certificate have the same meaning as is set forth in the Bond Purchase Agreement with respect to the Bonds between Piper Sandler & Co., as underwriter (the “Underwriter”), and the City.
As used in this Certificate, the phrase “ Actual Knowledge of the Undersigned ” means the actual knowledge (as opposed to constructive) that the undersigned currently has as of the date of this Certificate or has obtained through (i) interviews with such current officers and responsible employees of the Property Owner as the undersigned has reasonably determined are likely, in the ordinary course of his or her respective duties, to have knowledge of the matters set forth in this Certificate, and (ii) review of documents reasonably available to the undersigned and which the undersigned reasonably deemed necessary for the undersigned to obtain knowledge of the matters set forth in this Certificate. The undersigned has not conducted any extraordinary inspection or inquiry other than such inspections or inquiries as are prudent and customary in connection with the ordinary course of the Property Owner’s current business and operations. The undersigned has not contacted individuals who are no longer employed by the Property Owner.
As used in this Certificate, the term “ Relevant Entity” of the Property Owner means any Person presently directly or indirectly through one or more intermediaries controlling, controlled by, or under common control with the Property Owner, and about whom information could be material to potential investors in their investment decision regarding the Bonds (including without limitation information relevant to Property Owner’s proposed development of the Property (defined herein), or to the Property Owner’s ability to pay the Special Taxes prior to delinquency). As used in this Certificate, the term “ Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization, or a government or political subdivision thereof. For purposes hereof, the term “ control” (including the terms “controlling ,” “ controlled by, ” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
ITEM 19.2.
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As used in this Certificate, the term “ Property” means the real property currently owned by the Property Owner within Improvement Area No. 3 of the City of Rancho Cordova The Ranch Community Facilities District No. 2021 -1 (the “ Community Facilities District ”), as further described in the Preliminary Official Statement.
The undersigned certifies that he or she is familiar with the facts set forth in this Certificate, and further hereby certifies as follows, as an authorized officer or representative of Property Owner:
(1) The Property Owner has been duly organized and validly exists in good standing under the laws of the State of California and has or will have prior to the Closing, as required, all requisite right, power and authority:
(i) to execute and deliver this Certificate,
(ii) to execute and deliver the Continuing Disclosure Certificate (Developer) at Closing,
(iii) to acquire, own, develop and sell the Property, as described in the Preliminary Official Statement,
(iv) to carry on its business as described in the Preliminary Official Statement, and
(v) to perform its obligations under the Continuing Disclosure Certificate (Developer).
(2) The Property Owner agrees to execute at Closing the Continuing Disclosure Certificate (Developer) substantially in the form attached to the Preliminary Official Statement under Appendix F, with such additional changes as may be agreed upon by the Underwriter, Bond Counsel and the Property Owner.
(3) Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, Property Owner is not aware of any material failures by it or any entity under managerial control of Property Owner to comply in all material respects with previous continuing disclosure undertakings in a written certificate or agreement executed by it to provide periodic continuing disclosure reports or notices of material events respecting securities offerings in California within the past five (5) years. (4) To the Actual Knowledge of the Undersigned, execution and delivery of the Continuing Disclosure Certificate (Developer), and the performance by the Property Owner of its obligations under the Continuing Disclosure Certificate (Developer), will not conflict with or constitute a breach of or default under any loans, lines of credit, agreements, or other contractual or financial obligations of the Property Owner, or any applicable law, regulation, judgment or decree.
(5) To the Actual Knowledge of the Undersigned, neither the Property Owner nor any of its Relevant Entities is currently in material default on any loans, lines of credit, credit agreements, or other material contractual or financial obligations, or in breach of any applicable law, regulation, judgment or decree, and no event has occurred and is continuing ITEM 19.2.
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that would constitute such a default or breach, the result of which could reasonably be expected to materially and adversely affect the ability of the Property Owner:
(i) to acquire, own, develop and sell the Property, as described in the Preliminary Official Statement,
(ii) to pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency,
(iii) to carry on its business as described in the Preliminary Official Statement, or
(iv) to perform its obligations under the Continuing Disclosure Certificate (Developer).
(6) Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, the Property Owner has not assumed any obligations under any loans, lines of credit, credit agreements, or other material contractual or financial obligations, or any applicable judgment or decree, which could reasonably be expected to materially and adversely affect the ability of the Property Owner:
(i) to acquire, own, develop and sell the Property, as described in the Preliminary Official Statement,
(ii) to pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency,
(iii) to carry on its business as described in the Preliminary Official Statement, or
(iv) to perform its obligations under the Continuing Disclosure Certificate (Developer).
(7) Except as described in the Preliminary Official Statement, the Property Owner does not have any loans outstanding and unpaid and no lines of credit that are secured by the Property.
(8) Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, neither the Property Owner nor any of its Relevant Entities is currently in default in, or, in the last five (5) years, has ever defaulted to any material extent in, the payment of special taxes or assessments in connection with the Community Facilities District or any other community facilities districts or assessment districts in California that was not cured prior to the institution of any enforcement action with a court of law. (9) Except as disclosed in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, there is no litigation, inquiry, investigation or administrative proceeding of any nature pending against the Property Owner (with service of process to the Property Owner having been accomplished), or to the Actual Knowledge of the Undersigned, overtly threatened in writing against the Property Owner, or to the Actual Knowledge of the Undersigned, pending (with service of process to such Relevant Enti ty having been ITEM 19.2.
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accomplished) or overtly threatened in writing against any Relevant Entity of the Property Owner, in each case which, if successful, could reasonably be expected to:
(i) materially and adversely affect the ability of the Property Owner to acquire, own, develop and sell the Property, as described in the Preliminary Official Statement,
(ii) materially and adversely affect the ability of the Property Owner to pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency,
(iii) materially and adversely affect the ability of the Property Owner to carry on its business as described in the Preliminary Official Statement, (iv) materially adversely affect the ability of the Property Owner to perform its obligations under the Continuing Disclosure Certificate (Developer), (v) challenge, question the validity or enforceability of, or restrain or enjoin the performance of, the Special Taxes, the Bonds, the Resolution, the Fiscal Agent Agreement, the Continuing Disclosure Certificate (Developer), or the Bond Purchase Agreement, or
(vi) restrain or enjoin collection of Special Taxes or other sums to be pledged to pay the principal of and interest on the Bonds.
(10) Except as disclosed in the Preliminary Official Statement or in this Certificate:
(i) the Property Owner and, to the Actual Knowledge of the Undersigned, its Relevant Entities, are solvent;
(ii) neither the Property Owner nor, to the Actual Knowledge of the Undersigned, any of its Relevant Entities, has filed for bankruptcy or been declared bankrupt in the last 10 years; and
(iii) to the Actual Knowledge of the Undersigned, there are no proceedings pending (with service of process to the Property Owner having been accomplished) or overtly threatened in writing in which the Property Owner or any of its Relevant Entities may be adjudicated as bankrupt, become the debtor in a bankruptcy proceeding, be discharged from any or all of its respective debts or obligations, be granted an extension of time to pay its respective debts or obligations, or be granted a reorganization or readjustment of its respective debts or obligations. (11) As of the date hereof, to the Actual Knowledge of the Undersigned, the information in the sections of the Preliminary Official Statement entitled “ IMPROVEMENT AREA NO. 3 – Development in the District,” “OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 3 ,” and “CONTINUING DISCLOSURE - K. Hovnanian,” concerning the Property Owner and its Relevant Entities, the Property, the Property Owner’s development and financing plans, and the Property Owner’s contractual arrangements (but excluding any information cited as coming from a source other than the Property Owner), is ITEM 19.2.
ATTACHMENT 3
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true and correct in all material respects, and contains no untrue statement of a material fact and does not omit any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (12) Except as disclosed in the Preliminary Official Statement, the Property Owner has not submitted an application for, nor received actual notice of, (i) the formation or authorization of any other assessment district or community facilities district that would include any portion of the Property, or (ii) the authorization or issuance of any debt secured by an assessment or another special tax to be levied on any portion of the Property, other than the Special Tax.
(13) Except as set forth in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, there are no claims, disputes, lawsuits, actions or contingent liabilities of or against the Property Owner or its Relevant Entities, or among, by or between the Property Owner and any contractors working on the development of the Property, which could reasonably be expected to materially and adversely affect:
(i) the ability of the Property Owner to acquire, own, develop and sell the Property, as described in the Preliminary Official Statement, (ii) the ability of the Property Owner to pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency, (iii) the ability of the Property Owner to carry on its business as described in the Preliminary Official Statement, or
(iv) the ability of the Property Owner to perform its obligations under the Continuing Disclosure Certificate (Developer).
(14) To the Actual Knowledge of the Undersigned, the written information submitted by, or on behalf of and authorized by the employees of the Property Owner involved in the issuance of the Bonds to Integra Realty Resources (the " Appraiser") and contained in the sections of the Appraisal Report dated ______, 2025 and highlighted in Exhibit A attached hereto, was, at the time of submission true and correct in all material respects.
(15) The Property Owner covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Property Owner will not bring any action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, that in any way:
(i) seeks to challenge or overturn the formation of the Community Facilities District,
(ii) seeks to challenge the adoption of the ordinance levying Special Taxes within Improvement Area No. 3 of the Community Facilities District, ITEM 19.2.
ATTACHMENT 3
G-6
(iii) seeks to invalidate the Community Facilities District or any of the Bonds or any refunding obligations, or
(iv) seeks to invalidate the special tax liens imposed under Section 3115.5 of the Streets and Highways Code based on recordation of the notices of special tax lien relating thereto.
The foregoing covenant shall not prevent the Property Owner in any way from bringing any other action, suit, proceeding, inquiry or investigation at law or in equity before any court, regulatory agency, public board or body, relating to the following:
(a) a claim that the Special Tax has not been levied in accordance with the Rate and Method,
(b) the application or use of the Special Taxes levied and collected, or (c) the enforcement of the obligations of the City or the Community Facilities District under the Fiscal Agent Agreement or any agreements between the Property Owner and the City or the Community Facilities District or under which the Property Owner is a party or beneficiary.
(16) The Property Owner has received a copy of the Rate and Method containing the prepayment formula. The Property Owner acknowledges that any prepayment of the Special Taxes may only be made in accordance with the Rate and Method. (17) The Property Owner shall comply with the provision of the Mello -Roos Community Facilities Act of 1982, as amended, relating to the Notice of Special Tax described in California Government Code Section 53341.5 in connection with the sale of the Property.
(18) Based upon its current development plans, including, without limitation, its current budget and subject to economic conditions and risks generally inherent in the development of real property, the Property Owner anticipates that it will have sufficient funds to (i) carry on its business as described in the Preliminary Official Statement, (ii) acquire, own, develop and sell the Property as described in the Preliminary Official Statement, and (iii) pay Special Taxes on the Property (to the extent the responsibility of the Property Owner) prior to delinquency.
However, no assurance can be given that sources of financing available to the Property Owner will be sufficient to complete the property development and home construction as currently anticipated and as described in the Preliminary Official Statement.
While the Property Owner has made such internal financing available in the past, there can be no assurance whatsoever of its willingness or ability to do so in the future. Neither the Property Owner nor any of its Relevant Entities has any legal obligation of any kind to make any such funds available or to obtain loans. Other than pointing out the willingness of the Property Owner to provide internal financing in the past, the Property Owner has not represented in any way that it will do so in the future. If and to the extent that internal financing and home sales revenues are inadequate to pay the costs to complete the Property Owner’s planned development in Improvement Area No. 3 of the Community Facilities ITEM 19.2.
ATTACHMENT 3
G-7
District and other financing by the Property Owner is not put into place, there could be a shortfall in the funds required to complete the proposed development by the Property Owner and portions of the Property may not be developed.
(19) The Property Owner consents to the issuance of the Bonds. The Property Owner acknowledges and agrees that the proceeds of such Bonds will be used for the acquisition and construction of the improvements described in the Preliminary Official Statement. The Property Owner acknowledges that the costs to acquire and construct such improvements are estimates, and that any increase in costs in excess of the estimated costs relating to improvements will reduce the improvements which may be financed by the City, and neither the City, nor the Community Facilities District has any obligation to provide moneys to pay for any such costs other than from the proceeds of Bonds or Special Taxes. (20) During the period between the date of this Certificate and the Closing Date, if the Property Owner has actual knowledge of any event relating to or affecting such Property Owner, its Relevant Entities, or the acquisition, ownership, development or sale of the Property which could cause the information under the captions of the Preliminary Official Statement indicated in Section 11 of this Certificate (and subject to the limitations and exclusions contained in Section 11 of this Certificate) to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, such Property Owner shall notify the City and the Underwriter and if, in the opinion of counsel to the City or the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Preliminary Official Statement, such Property Owner shall reasonably cooperate with the City in the preparation of an amendment or supplement to the Preliminary Official Statement in form and substance satisfactory to counsel to the City and to the Underwriter.
(21) As a condition to the issuance of the Bonds, the Property Owner agrees to deliver a bring-down certificate, dated the Closing Date, in substantially the form attached as Appendix H to the Bond Purchase Agreement, to affirm and restate the Property Owner’s certifications, representations and covenants made in this Certificate. If any event related to or affecting the Property Owner, its Relevant Entities or the acquisition, ownership, development or sale of the Property occurs, as a result of which it is necessary to modify the bring-down certificate, the Property Owner agrees to deliver a new bring -down certificate revised to reflect such event.
(22) The Property Owner acknowledges and agrees that:
(i) in connection with the purchase and sale of the Bonds under the Bond Purchase Agreement, and with the discussions, undertakings and procedures leading up to the consummation of the purchase and sale of the Bonds under the Bond Purchase Agreement, the Underwriter is and has been acting solely as principal and is not acting as the agent or fiduciary of the Property Owner, (iii) the Underwriter has not assumed a fiduciary responsibility in favor of the Property Owner with respect to (a) the offering of the Bonds contemplated hereby or the process leading thereto (whether or not the Underwriter, or any affiliate of the Underwriter, has advised or is currently advising the Property Owner on other ITEM 19.2.
ATTACHMENT 3
G-8
matters), or (b) any other obligation to the Property Owner with respect to the offering contemplated by the Bond Purchase Agreement, and (iii) the Property Owner has consulted its own legal, financial and other advisors to the extent it has deemed appropriate in connection with the offering contemplated by the Bond Purchase Agreement.
ITEM 19.2.
ATTACHMENT 3
G-9
On behalf of the Property Owner, the undersigned has reviewed the contents of this Certificate and the Property Owner has consulted with counsel regarding the meaning of its contents.
The Property Owner acknowledges and understands that a variety of state and federal laws, including but not limited to the Securities Act of 1933, as amended, and Rule 10b- 5 promulgated under the Securities Exchange Act of 1934, as amended, may apply to the Property Owner, and that under some circumstances certification as to the matters set forth in this Certificate, without additional disclosures or other action, may not fully discharge all duties and obligations of the Property Owner under such laws.
The undersigned has executed this Certificate solely in his or her capacity as an authorized officer or representative of the Property Owner and he or she will have no personal liability arising from or relating to this Certificate. Any liability arising from or relating to this Certificate may only be asserted against the Property Owner.
K. HOVNANIAN AT JAEGER RANCH, LLC,
a California limited liability company
By:
Name:
Title:
ITEM 19.2.
ATTACHMENT 3
G-10
EXHIBIT A
EXCERPTS FROM THE APPRAISAL REPORT
(to be attached)
ITEM 19.2.
ATTACHMENT 3
H-1
APPENDIX H
$___________
IMPROVEMENT AREA NO. 3 OF
CITY OF RANCHO CORDOVA
THE RANCH COMMUNITY FACILITIES DISTRICT NO. 2021-1
SPECIAL TAX BONDS
SERIES 2025
BRING-DOWN CERTIFICATE OF PROPERTY OWNER
The undersigned party certifies and represents he or she is duly authorized on behalf of K.
HOVNANIAN AT JAEGER RANCH, LLC, a California limited liability company (the “ Property Owner”), to execute and deliver this Bring -Down Certificate of Property Owner (this “Bring -Down Certificate”) in connection with the issuance, sale and delivery by City of Rancho Cordova of the Bonds captioned above (the “Bonds”).
This Bring- Down Certificate is delivered pursuant to the Bond Purchase Agreement with respect to the Bonds dated [BPA Date], between Piper Sandler & Co., as underwriter, and the City (the “Purchase Agreement”).
In connection with the distribution of the Preliminary Official Statement relating to the Bonds, the Property Owner executed a Certificate of Property Owner dated [POS Date] (the “Certificate”).
Capitalized terms used but not defined in this Bring- Down Certificate have the same meanings as set forth in the Purchase Agreement and the Certificate.
The undersigned, on behalf of the Property Owner, further certifies as follows:
(1) The undersigned is familiar with the facts certified in the Certificate and this Bring - Down Certificate, and is authorized and qualified to certify the same as an authorized officer or representative of the Property Owner.
(2) The undersigned has received the final Official Statement dated [BPA Date] relating to the Bonds (the “Final Official Statement”).
(3) Each statement made in the Certificate is affirmed and restated as if made on the date hereof; provided that each statement made in the Certificate referring to the Preliminary Official Statement is affirmed as it relates to the Final Official Statement. (4) To the Actual Knowledge of the Undersigned (as defined in the Certificate), no event has occurred since the date of the Preliminary Official Statement that has, in any material way, adversely affected the statements and information described in Paragraph 11 of the Certificate (and subject to the limitations and exclusions contained in Paragraph 11 of the Certificate) relating to the Property Owner and its Relevant Entities, the Property, the Property Owner’s development and financing plans, and the Property Owner’s contractual arrangements (but excluding any information cited as coming from a source other than the Property Owner), which should be disclosed in the Final Official Statement for the purposes for which it is to be used in order to make such statements and information contained in the Final Official Statement not misleading in any material respect.
ITEM 19.2.
ATTACHMENT 3
H-2
(5) For a period of 90 days after the Closing Date, if the undersigned has actual knowledge of any event relating to or affecting the Property Owner, its Relevant Entities, or the acquisition, ownership development or sale of the Property which could cause the information under the captions of the Final Official Statement indicated in Section 11 of the Certificate (and subject to the limitations and exclusions contained in Section 11 of the Certificate) to contain an untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Property Owner shall notify the City and the Underwriter and if, in the opinion of counsel to the City or the Underwriter, such event requires the preparation and publication of a supplement or amendment to the Final Official Statement, the Property Owner shall reasonably cooperate with the City in the preparation of an amendment or supplement to the Final Official Statement in form and substance satisfactory to counsel to the City and to the Underwriter. (6) The Property Owner has duly executed and delivered the Continuing Disclosure Certificate (Developer), and the Continuing Disclosure Certificate (Developer) constitutes the legal, valid and binding obligation of the Property Owner, enforceable against the Property Owner in accordance with its terms, except as such enforcement is limited by bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance, and other similar laws relating to or affecting the rights of creditors and certain equitable, legal, or statutory principles affecting the enforcement of contractual rights generally, regardless of whether such enforcement is considered in a proceeding in equity or at law.
The undersigned has executed this Bring -Down Certificate solely in his or her capacity as an authorized officer or representative of the Property Owner and he or she will have no personal liability arising from or relating to this Bring -Down Certificate. Any liability arising from or relating to this Bring-Down Certificate may only be asserted against the Property Owner.
Dated: [Closing Date]
K. HOVNANIAN AT JAEGER RANCH, LLC,
a California limited liability company
By:
Name:
Title:
ITEM 19.2.
ATTACHMENT 3
I-1
APPENDIX I
IMPROVEMENT AREA NO. 3 OF
CITY OF RANCHO CORDOVA
THE RANCH COMMUNITY FACILITIES DISTRICT NO. 2021-1
SPECIAL TAX BONDS
SERIES 2025
CERTIFICATE OF APPRAISER
Integra Realty Resources (the “Appraiser”), Rocklin, California prepared an appraisal of the properties within Improvement Area No. 3 of the City of Rancho Cordova The Ranch Community Facilities District No. 2021 -1 (the “Community Facilities District”) dated _______, 2025 (the “Appraisal”). The Appraisal is described and summarized in the Preliminary Official Statement dated [POS Date] (the “Preliminary Official Statement”) and the Official Statement dated [BPA Date] (the “Official Statement”), including as Appendix B thereto, relating to the bonds captioned above.
The Appraiser hereby certifies that, to the best of his knowledge and belief, all information with respect to the Appraisal in the Preliminary Official Statement and in the Official Statement was true and correct as of the date of the Appraisal and that the Appraiser is aware that acts and events may have occurred since the date of the Appraisal which could result in both positive and negative effects on market value; however, an updated Appraisal has not been completed as of this date.
The Appraiser hereby consents to the use of the Appraisal in connection with the distribution and use of the Preliminary Official Statement and Official Statement.
Dated: [Closing Date]
INTEGRA REALTY RESOURCES
By:
ITEM 19.2.
ATTACHMENT 3
J-1
APPENDIX J
$___________
IMPROVEMENT AREA NO. 3 OF
CITY OF RANCHO CORDOVA
THE RANCH COMMUNITY FACILITIES DISTRICT NO. 2021-1
SPECIAL TAX BONDS
SERIES 2025
FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Piper Sandler & Co. (“Piper”) hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”).
1. Sale of the General Rule Maturities. As of the date of this certificate, for each Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold to the Public is the respective price listed in Schedule A.
2. Initial Offering Price of the Hold-the-Offering-Price Maturities. (a) Piper offered the Hold-the-Offering-Price Maturities to the Public for purchase at the respective initial offering prices listed in Schedule A (the “Initial Offering Prices”) on or before the Sale Date. A copy of the pricing wire or equivalent communication for the Bonds is attached to this certificate as Schedule B.
(b) As set forth in the Bond Purchase Agreement, dated [BPA Date] , by and between Piper and the Issuer, Piper has agreed in writing that, (i) for each Maturity of the Hold -the-Offering- Price Maturities, it would neither offer nor sell any of the Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the Holding Period for such Maturity (the “hold-the-offering-price rule”), and (ii) any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker -dealer who is a party to the retail distribution agreement, to comply with the hold -the-offering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold -the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.
3. Defined Terms.
(a) Issuer means the City of Rancho Cordova.
(b) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(c) Hold-the-Offering-Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.” ITEM 19.2.
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(d) Holding Period means, with respect to a Hold-the-Offering-Price Maturity, the period starting on the Sale Date and ending on the earlier of (i) the close of the fifth business day after the Sale Date, or (ii) the date on which Piper has sold at least 10% of such Hold -the-Offering-Price Maturity to the Public at prices that are no higher than the Initial Offering Price for such Hold -the- Offering-Price Maturity.
(e) Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
(f) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
The term “related party” for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. (g) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is [BPA Date]. (h) Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents Piper’s interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder.
The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Certificate as to Arbitrage and with respect to compliance with the federal income tax rules affecting the Bonds, and by Jones Hall LLP in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes, the preparation of the Internal Revenue Service Form 8038 -G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds.
Dated: [Closing Date] PIPER SANDLER & CO.
By:
Managing Director
ITEM 19.2.
ATTACHMENT 3
Schedule
SCHEDULE A
SALE PRICES
(Attached)
ITEM 19.2.
ATTACHMENT 3
Schedule
SCHEDULE B
PRICING WIRE OR EQUIVALENT COMMUNICATION
(Attached)
ITEM 19.2.
ATTACHMENT 3
Jo
nes Hall Draft 8.21.25
PRELI
MINARY OFFICIAL STATEMENT DATED SEPTEMBER ___, 2025
NEW ISSUE-FULL – BOOK ENTRY NOT RATED
In the opinion of Jones Hall LLP, as Bond Counsel, subject, however to certain qualifications described herein, 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 p reference for purposes of the federal alternative minimum tax. Interest on the Bonds may be subject to the corporate alternative minimum tax. In the further opinion of Bond Counsel, such interest is exempt from California personal income taxes. See “TAX MATTERS” herein. $_____________*
IMPROVEMENT AREA NO. 3 OF
CITY OF RANCHO CORDOVA
THE RANCH COMMUNITY FACILITIES DISTRICT NO. 2021-1
SPECIAL TAX BONDS
SERIES 2025
Dated: Date of Delivery Due: September 1, as shown on inside cover Authority for Issuance. The above-captioned bonds (the “Bonds”), are being issued by the City of Rancho Cordova (the “City”) by and through Improvement Area No. 3 (“Improvement Area No. 3”) of City of Rancho Cordova The Ranch Community Facilities District No. 2021 -1 (the “District”).
The Bonds are special tax obligations of the City, authorized pursuant to the Mello -Roos Community Facilities Act of 1982, as amended, being California Government Code Section 53311, et seq. (the “Mello -Roos Act”), and are issued pursuant to a Fiscal Agent Agreement, dated as of October 1, 2025 (the “Fiscal Agent Agreement”) by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (th e “Fiscal Agent”). See “THE BONDS – Authority for Issuance.” Security and Sources of Payment. The Bonds are secured by and payable from a pledge of Special Taxes (as defined herein) levied on property within Improvement Area No. 3 according to a rate and method of apportionment of special tax, including from the proceeds of any foreclosure actions brought following a delinquency in the payment of the Special Taxes (as defined herein), and from amounts held in certain funds under the Fiscal Agent Agreement, all as more fully described herein. Unpaid Special Taxes do not constitute a personal indebtedness of the owners of the parcels within Improvement Area No. 3. In the event of delinquency, proceedings may be conducted only against the parcel of real property securing the delinquent Special Tax. There is no assurance the owners will be able to pay the Special Tax o r that they will pay such Special Tax even though financially able to do so. To provide funds for payment of the Bonds and the interest thereon as a result of any delinquent installments, the City will establish a Reserve Fund from Bond proceeds, as described herein. See “SECURITY FO R THE BONDS.” Property in Improvement Area No. 3 subject to the Special Tax is comprised of land in the City of Rancho Cordova, Sacramento County, California, under development for 245 age-restricted (55+) single-family homes. It is a continuation of a larger development being undertaken by homebuilder K. Hovnanian at Jaeger Ranch, LLC, a California limited liability company, that is planned for a total of 1,437 s ingle-family homes, as well as public and quasi -public uses, parks and open space not subject to the Special Tax, as well as multifamily and commercial uses, at build -out.
Home construction , sales and closings are underway, as described herein , and bonds for other improvement areas of the District have previously been issued. See “IMPROVEMENT AREA NO. 3 ” and “OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 3.” Use of Proceeds. The Bonds are being issued to (i) construct and acquire certain public facilities, including payment of fees related to publi c facilities, authorized for the District and Improvement Area No. 3 ; (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 6; and (iv) pay the costs of issuance of the Bonds. See “FINANCING PLAN.”
Bond Terms. Interest on the Bonds is payable semiannually on March 1 and September 1 of each year, commencing March 1, 2026 . The Bonds will be issued in the denomination of $5,000 or integral multiples of $5,000 in excess thereof. The Bonds, when delive red, will be initially registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). DTC will act as securities deposit ory for the Bonds.
See “THE BONDS – Description of the Bonds” and “APPENDIX G – DTC and the Book-Entry Only System.” Redemption. The Bonds are subject to optional redemption, mandatory sinking fund redemption, and special mandatory redemption from prepaid Special Taxes. See “THE BONDS – Redemption.”
THE BONDS ARE SPECIAL LIMITED OBLIGATIONS OF THE CITY, PAYABLE SOLELY FROM THE SPECIAL TAX REVENUES AND CERTAIN OTHER FUNDS AND AMOUNTS HELD BY THE FISCAL AGENT UNDER THE FISCAL AGENT AGREEMENT. THE INFORMATION SET FORTH IN THIS OFFICIAL STATEMENT, INCLUDING INFORMATION UNDER THE HEADING “BOND OWNERS’ RISKS,” SHOULD BE READ IN ITS ENTIRETY.
MATURITY SCHEDULE
(see inside cover)
This cover page contains certain information for quick reference only. It is not a summary of essential information about th e Bonds. Potential investors should read this entire Official Statement to obtain information essential for making an informed investment decisi on. Investment in the Bonds involves risks that may not be appropriate for some investors. See “BOND OWNERS’ RISKS” for a discussion of special ri sk factors that should be considered in evaluating the investment quality of the Bonds.
The Bonds are offered when, as and if issued by the City and accepted by the Underwriter, subject to approval as to their leg ality by Jones Hall LLP, San Mateo, California, as Bond Counsel, and subject to certain other conditions. Jones Hall LLP also serves as disclosure counsel to the City.
Certain matters will be passed upon for the City by Meyers Nave, A Professional Law Corporation, Sacramento, California, as C ity Attorney. Certain legal matters will be passed upon for the Underwriter by its counsel, Kutak Rock LLP, Irvine, California. It is anticipated that the Bonds, in book -entry form, will be available for delivery through the facilities of DTC on or about ________, 2025. [PIPER LOGO]
The
date of this Official Statement is: _________, 2025.
__________
*
Preliminary; subject to change.
This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitu te an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer solicitation or sale would be unlawful prior to registration or q ualification under the securities laws of such jurisdiction.
ITEM 19.2.
ATTACHMENT 4
MATURITY SCHEDULE
$__________ Serial Bonds
(Base CUSIP†: _______)
Maturity Principal Interest CUSIP†
(September 1) Amount Rate Yield Price ( )
$________ _____% Term Bond due September 1, ____, Yield: _____%, Price: _____%; CUSIP† _____
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright (c) 2025 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the City, the Underwriter, the Municipal Advisor, or their agents or counsel take any responsibility for the accuracy of such numbers.
ITEM 19.2.
ATTACHMENT 4
CITY OF RANCHO CORDOVA
City Council
Siri Pulipati, Mayor
Garrett Gatewood, Vice Mayor
Linda Budge, Councilmember
David M. Sander, Ph.D., Councilmember
Joe Little, Councilmember
Staff
Micah Runner, City Manager
Kim Juran-Karageorgiou, Administrative Services Director Stacy Leitner, City Clerk
Adam Lindgren of Meyers Nave, A Professional Law Corporation, City Attorney
SPECIAL SERVICES
Bond Counsel and Disclosure Counsel
Jones Hall LLP
San Mateo, California
Municipal Advisor
NHA Advisors, LLC
San Rafael, California
Special Tax Consultant
Goodwin Consulting Group, Inc.
Sacramento, California
Appraiser
Integra Realty Resources
Sacramento, California
Fiscal Agent
U.S. Bank Trust Company, National Association
Seattle, Washington
ITEM 19.2.
ATTACHMENT 4
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Official Statement. This Official Statement is submitted in connection with the sale of the Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
This Official Statement is not to be construed as a contract with the purchasers of the Bonds.
Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure by the City, in any press release and in any oral statement made with the approval of an authorized officer of the City, the words or phrases “will likely result,” “are expected to”, “will continue”, “is anticipated”, “estimate”, “project,” “forecast”, “expect”, “intend” and similar expressions identify “forward looking statements.” Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward -looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to be differences between forecasts and actual results, and those differences may be material. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, give rise to any implication that there has been no change in the affairs of the City since the date hereof.
Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the City to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and if given or made, such other information or representation must not be relied upon as having been authorized by the City or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.
Involvement of Underwriter. The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, their responsibilities to investors under the Federal Securities Laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. All summaries of the documents referred to in this Official Statement, are made subject to the provisions of such documents, respectively, and do not purport to be complete statements of any or all of such provisions.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.
ITEM 19.2.
ATTACHMENT 4
TABLE OF CONTENTS
Page Page
INTRODUCTION ................................................ 1 FINANCING PLAN ............................................. 7 THE BONDS ...................................................... 8 Authority for Issuance .................................... 8 Description of the Bonds ................................ 8 Redemption .................................................... 9 Transfer or Exchange of Bonds ................... 11
SECURITY FOR THE BONDS ........................ 12
Special Taxes ............................................... 12 Rate and Method .......................................... 13 Special Tax Fund ......................................... 16 Deposit and Use of Proceeds of Bonds ....... 17
Delinquent Payments of Special Tax;
Covenant for Foreclosure ........................ 17
Reserve Fund ............................................... 19 Improvement Fund ....................................... 20 No Additional Bonds Except for Refunding .. 21
DEBT SERVICE SCHEDULES ........................ 22
IMPROVEMENT AREA NO. 3 ......................... 24
Formation and Background .......................... 24
Description and Location .............................. 24 Development in the District .......................... 28 Environmental Factors ................................. 37 THE FACILITIES .............................................. 38 Eligible Facilities ........................................... 38 Acquisition by the City and other Local
Agencies .................................................. 38
OWNERSHIP OF PROPERTY WITHIN
IMPROVEMENT AREA NO. 3 ..................... 39
VALUE OF PROPERTY WITHIN
IMPROVEMENT AREA NO. 3 ..................... 41
Assessed Valuation ...................................... 41 Appraised Value ........................................... 41 Value to Special Tax Burden Ratios ............ 43
Priority of Lien .............................................. 47 Estimated Tax Burden on Single -Family
Home ....................................................... 50 Special Tax Collections and Delinquencies . 51
BOND OWNERS’ RISKS ................................. 51 Limited Obligation of the City to Pay Debt
Service ..................................................... 51 Concentration of Ownership of Undeveloped
Property .................................................... 51 Appraised Values ......................................... 52 Levy and Collection of the Special Tax ........ 52
Property Tax Delinquencies ......................... 54 Property Values and Risks Related to
Development ............................................ 55 Future Property Development ...................... 58
Other Possible Claims Upon the Value of
Taxable Property ...................................... 58 Exempt Properties ........................................ 59 FDIC/Federal Government Interests in
Properties ................................................. 59 Depletion of the Reserve Fund ..................... 60
Bankruptcy Delays ........................................ 61 Disclosure to Future Purchasers .................. 63
No Acceleration Provisions ........................... 63 Loss of Tax Exemption ................................. 63 IRS Audit of Tax-Exempt Bond Issues ......... 64
Voter Initiatives ............................................. 64 Case Law Related to the Mello -Roos Act
Voting ....................................................... 65 Secondary Market for Bonds ........................ 66
Pandemic Diseases ...................................... 66 Cyber Security .............................................. 66 Potential Early Redemption of Bonds from
Prepayments ............................................ 67
CONSTITUTIONAL LIMITATIONS ON
TAXATION AND APPROPRIATIONS .......... 67
LEGAL MATTERS ............................................ 68 Legal Opinion ............................................... 68 No Litigation .................................................. 68 TAX MATTERS ................................................. 68 CONTINUING DISCLOSURE ........................... 70
The City ........................................................ 70 JV Entity ....................................................... 70 NO RATING ...................................................... 71 UNDERWRITING ............................................. 71 CONTINGENT FEES ........................................ 71 EXECUTION ..................................................... 72
APPENDIX A Rate and Method of Apportionment of Special Tax APPENDIX B The Appraisal
APPENDIX C Summary of Certain Provisions of the Fiscal Agent Agreement APPENDIX D Sacramento County and City of Rancho Cordova Demographic Information APPENDIX E Form of Opinion of Bond Counsel
APPENDIX F Form of Continuing Disclosure Undertakings
APPENDIX G DTC and the Book-Entry Only System
ITEM 19.2.
ATTACHMENT 4
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__________________________________
OFFICIAL STATEMENT
__________________________________
$___________*
IMPROVEMENT AREA NO. 3 OF
CITY OF RANCHO CORDOVA
THE RANCH COMMUNITY FACILITIES DISTRICT NO. 2021-1
SPECIAL TAX BONDS
SERIES 2025
This Official Statement, including the cover page and all appendices hereto, is provided to furnish certain information in connection with the issuance by the City of Rancho Cordova (the “City”) of the above -captioned bonds (the “ Bonds”), for and on behalf of its Improvement Area No. 3 (“Improvement Area No. 3”) of the City of Rancho Cordova The Ranch Community Facilities District No. 2021-1 (the “District”).
Any statements made in this Official Statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized. Definitions of certain terms used herein and not defined herein shall have the meaning set forth in the Fiscal Agent Agreement. See APPENDIX C.
INTRODUCTION
This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and attached appendices, and the documents summarized or described in this Official Statement. A full review should be made of the entire Official Statement. The offering of the Bonds to potential investors is made only by means of the entire Official Statement.
Formation of District, Future Annexation Area and Improvement Areas. The District was established, Improvement Area No. 1 was designated as the initial improvement area within the District (“ Improvement Area No. 1 ”) with an initial bond authorization of $20,350,000, and a future annexation area was created for the District (the “Future Annexation Area”), pursuant to proceedings conducted by the City under the Mello -Roos Community Facilities Act of 1982, as amended (Section 53311, et seq., of the Government Code of the State of California) (the “Mello-Roos Act”).
In April 2024, land designated as Improvement Area No. 2 of the District (“Improvement Area No. 2”) was annexed to the District from the Future Annexation Area, and an initial bond authorization was established for Improvement Area No. 2 in the amount of $14,000,000 . Land designated as Improvement Area No. 3 of the District (“Improvement Area No. 3 ”) was annexed to the District from the Future Annexation Area, and an initial bond authorization was established for Improvement Area No. 3 in the amount of $16,000,000. Similarly, in July 2025,
* Preliminary; subject to change.
ITEM 19.2.
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land designated as Improvement Area No. 4 of the District (“ Improvement Area No. 4 ”) was annexed to the District from the Future Annexation Area, and an initial bond authorization was established for Improvement Area No. 4 in the amount of $22,250,000, and land designated as Improvement Area No. 5 of the District (“Improvement Area No. 5”) was annexed to the District from the Future Annexation Area, and an initial bond authorization was established for Improvement Area No. 5 in the amount of $20,350,000.
The Bonds represent the first series of special tax bonds authorized and issued by the City for Improvement Area No. 3 and are secured solely by the Special Taxes (defined herein) levied in Improvement Area No. 3 and no other improvement areas of the District.
The Bonds. The Bonds are issued pursuant to the provisions of the Mello -Roos Act, a Fiscal Agent Agreement, dated as of October 1, 2025 (the “Fiscal Agent Agreement”) between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “ Fiscal Agent”), and a resolution adopted on [September 2], 2025 by the City Council of the City, which authorized the issuance of the Bonds (the “Resolution”).
Registration of Ownership of the Bonds. The Bonds are issued only as fully registered bonds in book-entry form, registered in the name of Cede & Co., as nominee of The Depository Trust Company (“ DTC”), without coupons, in the denomination of $5,000 or any integral multiple thereof and shall be dated as of and bear interest from the date of delivery thereof at the rate or rates set forth on the cover page hereof. Interest on the Bonds is payable on March 1 and September 1 of each year (each an “ Interest Payment Date ”), commencing March 1, 2026. Ultimate purchasers of Bonds will not receive physical certificates representing their interest in the Bonds. So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, references herein to the Owners shall mean Cede & Co., and shall not mean the ultimate purchasers of the Bonds. Payments of the principal, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co. so long as DTC or Cede & Co. is the registered owner of the Bonds. Disbursements of such payments to DTC’s Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of DTC’s Participants and Indirect Participants, as more fully described herein. See “APPENDIX G – DTC and the Book-Entry Only System.”
Use of Proceeds. Proceeds of the Bonds will primarily be used to finance a portion of the costs of acquiring and constructing certain public infrastructure improvements necessary for development in the District, including payment of fees related thereto (the “ Facilities,” as described herein). The Facilities consist generally of road and related improvements, including drainage, water, sanitary sewer, joint trench utilities, concrete curbs, gutters and sidewalks, maintenance holes, street lighting, landscaping, masonry walls, traffic signals, park improvements (and/or fees to finance such improvements) and other miscellaneous infrastructure improvements necessary for development of property within the District.
Proceeds of the Bonds will also be used to make a deposit in the Reserve Fund (defined herein), pay capitalized interest on a portion of the Bonds through and including September 1, 2026, and pay the cost of issuance of the Bonds.
Security and Sources of Payment of the Bonds. The Bonds are secured by, and payable from, “ Special Tax Revenues ,” which means the proceeds of the Special Taxes annually received by the City, including all scheduled payments , prepayments and delinquent payments thereof, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes, net of the Administrative Expense Priority and excluding any penalties and extraordinary Administrative Expenses collected in connection ITEM 19.2.
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with any such foreclosure . “Special Taxes ” means the special tax levied on taxable real property within the boundaries of Improvement Area No. 3 under the Rate and Method of Apportionment of Special Tax for Improvement Area No. 3 (the “ Rate and Method ”), and “Administrative Expense Priority ” means (i) for Fiscal Year 2025 -26, $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.
The Bonds are also payable from amounts held in certain funds and accounts pursuant to the City, including the Reserve Fund, all as more fully described herein. The Special Tax applicable to each taxable parcel in Improvement Area No. 3 will be levied and collected according to the tax liability determined by the application of the Rate and Method, which is set forth in APPENDIX A hereto. The Special Taxes represent fixed liens on the parcels of land subject to a Special Tax in Improvement Area No. 3 and failure to pay the Special Taxes could result in proceedings to foreclose title to the delinquent property. The Special Taxes do not constitute the personal indebtedness of the owners of taxable parcels and no proceedings to collect directly from an owner is permitted. See “SECURITY FOR THE BONDS – Rate and Method” and “APPENDIX A – Rate and Method of Apportionment of Special Tax.”
Pursuant to the Mello-Roos Act, the Resolution of Formation (as defined herein), and the Fiscal Agent Agreement, so long as any Bonds are outstanding, the City will annually levy the Special Tax against all taxable land within Improvement Area No. 3 in accordance with the proceedings for the authorization and issuance of the Bonds and to make provision for the collection of the Special Tax in amounts which will be sufficient to pay interest on, principal of and redemption premium (if any) on the Bonds as such becomes due and payable and to replenish the Reserve Fund (as defined herein) as necessary. See “SECURITY FOR THE BONDS – Special Taxes” herein.
In connection with the issuance of the Bonds, the City will direct the Fiscal Agent to establish a “ Reserve Fund ,” which will be funded in an amount equal to the Reserve Requirement (described herein) with respect to the Bonds. Amounts in the Reserve Fund are available for payment of the Bonds in the event of delinquencies in the payment of the Special Taxes to the extent of such delinquencies. See “SECURITY FOR THE BONDS – 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.
No Additional Bonds Except for Refunding . The Bonds represent the first series of special tax bonds issued for Improvement Area No. 3. In the Fiscal Agent Agreement , the City covenants not to issue additional bonds payable from Special Taxes and secured by the Special Tax Revenues equally and ratably with the Bonds, except that the City may issue bonds to refund all or part of the Bonds . See “SECURITY FOR THE BONDS – No Additional Bonds Except for Refunding.”
The Ranch Project, the Developer, the Joint Venture and Improvement Area No. 3.
Land in the District (and the improvement areas therein) is located within The Ranch Special Planning Area (“ TRSPA”), which is within the Sunridge Specific Plan area of the City. The TRSPA encompasses approximately 530 gross acres within the southeastern portion of the City of Rancho Cordova, primarily south of Douglas Road, east of Rancho Cordova Parkway, an d west and north of Grant Line Road. The specific plan designates approximately 1,690 dwelling units (single and multi-family) at build-out.
ITEM 19.2.
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Development in the District is being undertaken a s part of a larger project being developed by K. Hovnanian at Jaeger Ranch, LLC, a California limited liability company (“ K.
Hovnanian”), known as “The Ranch” that includes market rate units, age -qualified units, a multifamily project, a commercial project and public and quasi -public uses such as parks, trails and open space. At build-out, project is anticipated to include approximately 1,437 single-family residential units. Bonds have been issued in Improvement Area Nos. 1 & 2 of the District, which areas are within the project. See “IMPROVEMENT AREA NO. 3 – Development in the District” for more details on the overall project and components thereof.
Land in Improvement Area No. 3 is developing into 245 age-restricted (55+) single-family homes in a community being marketed by the JV Entity (as defined below) as “Four Seasons at the Ranch.” Within the community, homes are being built with four product lines spread across six villages with typical lot sizes ranging from 4,430 to 7,480 square feet. The following table shows the status of development of the 245 lots within Improvement Area No. 3 as of July 15, 2025. See “IMPROVEMENT AREA NO. 3” and “OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 3” for additional details.
Improvement Area No. 3 of
The Ranch Community Facilities District No. 2021-1
Status of Development – As of July 15, 2025
Neighborhood
Total No.
Planned
Units(1)
No. Building
Permits
Issued
Closed
Homes
Units
Completed and
Unsold or in
Escrow(1)
Units Under
Construction(2)
Autumn 79 19 5 12 2
Summer 51 21 5 4 3
Spring 60 21 3 16 2
Winter 55 26 6 18 2
Total 245 87 19 50 9
(1) Includes 11 model homes.
(2) A unit is considered under construction when trenching begins on the lot, and a building permit has been received.
Source: The JV Entity.
Joint Venture Ownership. On January 30, 2025, K. Hovnanian sold all but 21 of the lots to be developed with Age Qualified units in the overall project to GTIS-HOV Holdings XVI LLC, a California limited liability company (“JV Entity”), including 224 of the lots in Improvement Area No. 3. The 21 lots not purchased by the JV Entity were the 11 model home lots and 10 additional lots that were already under construction and have subsequently been sold to individual homeowners. As of July 15, 2025, other than individual homeowners and HCA ( as defined herein), all of the property in Improvement Area No. 3 is owned by the JV Entity. The JV Entity is a joint venture between K. Hovnanian and GTISCal at Four Seasons at the Ranch LLC, a Delaware limited liability company ( “GTISCal”). GTISCal has a 50.1% interest in the JV Entity and K. Hovnanian has a 49.9% interest in the JV Entity. See “IMPROVEMENT AREA NO. 3” and “OWNERSHIP OF PROPERTY WITHIN IMPROVEMENT AREA NO. 3” for additional details on the ownership arrangement.
Value of Property. Property in Improvement Area No. 3 is security for the Special Tax.
The City ordered preparation of an appraisal report (the “ Appraisal”), of the estimated value of the taxable land within Improvement Area No. 3 as of the July 15, 2025 date of value, prepared by Integra Realty Resources, Sacramento, California (the “Appraiser”). The Appraiser indicated a value estimate of $ 80,250,000, which included 70 completed homes 17 of which were owned ITEM 19.2.
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by individuals and 10 are model homes, 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, and subject to the conditions and qualifications and the hypothetical condition set forth therein. This value estimate represents a “not -less-than” value based on the market value for the smallest floor plan for each product line improved with a completed home without a complete assessed improvement value reflected on the County Assessor’s tax roll.
The Appraisal is set forth in its entirety as APPENDIX B hereto. The description herein of the Appraisal is intended for limited purposes only; the Appraisal should be read in its entirety. In considering the estimates of value evidenced by the Appraisal, it should be noted that the Appraisal is based upon a number of standard and special assumptions that affected the estimates as to value, in addition to the hypothetical condition that proceeds of the Bonds are available to reimburse the JV Entity for certain eligible public improvements already complete. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 3 – Appraised Value.”
The principal amount of the direct and overlapping debt in Improvement Area No. 3 is $13,473,193*, which consists of the estimated amount of Bonds ($ 12,900,000*) and $573,193 of overlapping general obligation and CFD bond debt. Consequently, the estimated value of property in Improvement Area No. 3 subject to the Special Tax lien ($80,250,000) , is approximately 6.0* times the principal amount of the direct and overlapping debt in Improvement Area No. 3 . This is an average, and individual parcels may have value -to-lien ratios that are substantially different. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 3 – Value to Special Tax Burden Ratios.”
Risks of Investment. Investment in the Bonds involves risks that may not be appropriate for some investors. See “BOND OWNERS’ RISKS” for a discussion of special factors that should be considered, in addition to the other matters set forth herein, in considering the investment quality of the Bonds.
Limited Obligation of the City. The general fund of the City is not liable and the full faith and credit of the City is not pledged for the payment of the interest on, or principal of or redemption premiums, if any, on the Bonds. The Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the City or any of its income or receipts, except the Special Tax Revenues and amounts in certain funds established under the Fiscal Agent Agreement as described herein. The Bonds are special limited obligations of the City, and neither the City Council, the City nor any officer or employee thereof shall be liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds other than from the Special Tax Revenues and amounts in certain funds established under the Fiscal Agent Agreement as described herein.
Summary of Inf ormation. Brief descriptions of certain provisions of the Fiscal Agent Agreement and certain other documents are included herein. The descriptions and summaries of documents herein do not purport to be comprehensive or definitive, and reference is made to each such document for the complete details of all its respective terms and conditions, copies of which are available for inspection at the office of the City. All statements herein with respect to certain rights and remedies are qualified by reference to laws and principles of equity relating to or affecting creditors’ rights generally. Capitalized terms used in this Official Statement and not
* Preliminary; subject to change.
ITEM 19.2.
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otherwise defined herein have the meanings ascribed to such terms in the Fiscal Agent Agreement. See “APPENDIX C – Summary of Certain Provisions of the Fiscal Agent Agreement.” The information and expressions of opinion herein speak only as of the date of this Official Statement and are subject to change without notice. Neither delivery of this Official Statement, any sale made hereunder, nor any future use of this Official Statement shall, under any circumstances, create any implication that there has been no change in the affairs of the City or Improvement Area No. 3 since the date hereof.
ITEM 19.2.
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FINANCING PLAN
The Bonds are being issued to (i) construct and acquire certain public facilities, including payment of fees related to public facilities, authorized for the District and Improvement Area No. 3 (referred to herein as the “ Facilities”); (ii) make a deposit into the Reserve Fund equal to the Reserve Requirement with the Bonds; (iii) fund capitalized interest on a portion of the Bonds through and including September 1, 2026; and (iv) pay the costs of issuance of the Bonds.
A summary of the estimated sources and uses of funds associated with the sale of the Bonds follows:
Estimated Sources of Funds:
Principal Amount of the Bonds $
Plus/less: [Net] Original Issue Premium/Discount
Total $
Estimated Uses of Funds:
Deposit to Improvement Fund $
Deposit to Reserve Fund(1)
Deposit to Capitalized Interest Account of Bond Fund(2) Costs of Issuance(3)
Total $
(1) Equal to the Reserve Requirement with respect to the Bonds. (2) Used to pay capitalized interest on a portion of the Bonds through and including September 1, 2026.
(3) Used to pay costs of issuance of the Bonds, including initial fees, expenses and charges of the Fiscal Agent, costs of printing the preliminary and final Official Statements, administrative fees of the City, Underwriter’s discount, Municipal Advisor, fees of Bond Counsel and Disclosure Counsel, and other costs of issuance.
ITEM 19.2.
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THE BONDS
Authority for Issuance
The Bonds are issued pursuant to the Fiscal Agent Agreement, the Resolution adopted by the City Council on [September 2], 2025, and the Mello-Roos Act.
Description of the Bonds
The Bonds are being issued as fully registered bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company (“ DTC”), and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiple thereof, under the book -entry system maintained by DTC. Ultimate purchasers of Bonds will not receive physical certificates representing their interest in the Bonds. So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, references herein to the Owners shall mean Cede & Co., and shall not mean the ultimate purchasers of the Bonds. Payments of the principal, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co., by U.S. Bank Trust Company, National Association, as the fiscal agent, registrar and transfer agent (the “Fiscal Agent”) for the Bonds, so long as DTC or Cede & Co. is the registered owner of the Bonds. Disbursements of such payments to DTC’s Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of DTC’s Participants and Indirect Participants, as more fully described herein. See “APPENDIX G – DTC and the Book-Entry Only System.”
The Bonds will be dated as of and bear interest from the date of delivery thereof at the rates and mature in the amounts and years, as set forth on the cover page hereof. The principal of the Bonds and premiums due upon the redemption thereof, if any, will be payable in lawful money of the United States of America at the principal corporate trust office of the Fiscal Agent in Seattle, Washington, or such other place as designated by the Fiscal Agent, upon presentation and surrender of the Bonds.
Interest on the Bonds, computed on the basis of a 360-day year consisting of twelve 30- day months, will be paid in lawful money of the United States of America semiannually on March 1 and September 1 of each year (each an “Interest Payment Date ”), commencing March 1, 2026 . Interest on the Bonds (including the final interest payment upon maturity or earlier redemption) is payable by check of the Fiscal Agent mailed on each Interest Payment Date by first class mail to the registered Owner thereof at such registered Owner’s address as it appears on the registration books maintained by the Fiscal Agent at the close of business on the 15th day of the calendar month preceding the Interest Payment Date (the “ Record Date”), or by wire transfer made on such Interest Payment Date upon written instructions received by the Fiscal Agent on or before the Record Date preceding the Interest Payment Date, of any Owner of $1,000,000 or more in aggregate principal amount of Bonds; provided that so long as any Bonds are in book-entry form, payments with respect to such Bonds shall be made by wire transfer, or such other method acceptable by the Fiscal Agent, to DTC. See “APPENDIX G – DTC and the Book-Entry Only System.”
Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof unless (i) it is authenticated on an Interest Payment Date, in which event it shall bear interest from such date of authentication, or (ii) it is authenticated prior to an Interest Payment Date and after the close of business on the Record Date preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (iii) it is ITEM 19.2.
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authenticated prior to the Record Date preceding the first Interest Payment Date, in which event it shall bear interest from the dated date; provided, however, that if at the time of authentication of a Bond, interest is in default thereon, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon. So long as the Bonds are registered in the name of Cede & Co., as nominee of DTC, payments of the principal, premium, if any, and interest on the Bonds will be made directly to DTC, or its nominee, Cede & Co. Disbursements of such payments to DTC’s Participants is the responsibility of DTC and disbursements of such payments to the Beneficial Owners is the responsibility of DTC’s Participants and Indirect Participants, as more fully described herein.
See “APPENDIX G - DTC and the Book-Entry Only System.”
Redemption
Optional Redemption. The Bonds are subject to optional redemption from any source of available funds (other than prepayments of the Special Tax by property owners), in whole or in part among maturities as specified by the City and by lot within a maturity, on any date on and after September 1, 20__ at the following respective redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates
Redemption
Price
September 1, 20__ through August 31, 20__ 103%
September 1, 20__ through August 31, 20__ 102
September 1, 20__ through August 31, 20__ 101
September 1, 20__ and any date thereafter 100
Mandatory Redemption from Prepayments. The Bonds are subject to mandatory redemption from prepayments of the Special Tax by property owners, in whole or in part among maturities as shall be specified by the City and by lot within a maturity, on any Interest Payment Date at the following respective redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption:
Redemption Dates
Redemption
Price
Interest Payment Dates through and including March 1, 20__ 103% September 1, 20__ and March 1, 20__ 102
September 1, 20__ and March 1, 20__ 101
September 1, 20__ and any Interest Payment Date thereafter 100
See “BOND OWNERS’ RISKS – Potential Early Redemption of Bonds from Prepayments” for a discussion of the potential for the Bonds to be priced with original issue premium and then be redeemed from Special Tax prepayments prior to maturity.
Mandatory Sinking Fund Redemption. The Bonds maturing September 1, 20__ and September 1, 20__ (the “ Term Bonds”) are subject to mandatory sinking payment redemption in part on September 1, 20__ and September 1, 20__, and on each September 1 therea fter to maturity, by lot, at a redemption price equal to one hundred percent (100%) of the principal amount thereof to be redeemed, without premium, in the aggregate respective principal amounts as set forth in the following tables:
ITEM 19.2.
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September 1, 20__ Term Bonds
Mandatory
Redemption Date
(September 1)
Sinking Fund
Payment
September 1, 20__ Term Bonds
Mandatory
Redemption Date
(September 1)
Sinking Fund
Payment
The amounts in the foregoing table shall be reduced pro rata, in order to maintain substantially uniform debt service, as a result of any prior partial optional redemption or mandatory redemption of the Bonds.
In lieu of redemption, moneys in the Bond Fund may be used and withdrawn by the Fiscal Agent for purchase of Outstanding Bonds, upon the filing with the Fiscal Agent of an Officer’s Certificate requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such Officer’s Certificate may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, plus interest accrued to the date of purchase.
Redemption Procedure by Fiscal Agent. The Fiscal Agent shall cause notice of any redemption to be mailed by first class mail, postage prepaid, at least 20 days but not more than 60 days prior to the date fixed for redemption, to the Securities Depositories and to one or more Information Services, and to the respective registered Owners of any Bonds designated for redemption, at their addresses appearing on the Bond registration books in the Principal Office of the Fiscal Agent; but such mailing shall not be a condition precedent to such redemption and failure to mail or to receive any such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of such Bonds.
Such notice shall state the redemption date and the redemption price and, if less than all of the then Outstanding Bonds are to be called for redemption, shall designate the CUSIP numbers and bond numbers of the Bonds to be redeemed by giving the individual CUSIP number and number of each Bond to be redeemed or shall state that all Bonds between two stated numbers, both inclusive, are to be redeemed or that all of the Bonds of one or more maturities have been called for redemption, shall state as to any Bond called in part the principal amount thereof to be redeemed, and shall require that such Bonds be then surrendered at the Principal Office of the Fiscal Agent for redemption at the said redemption price, and shall state that further interest on such Bonds will not accrue from and after the redemption date.
The City has the right to rescind any notice of the optional redemption of Bonds. Any notice of redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an event of default.
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Upon the payment of the redemption price of Bonds being redeemed, each check or other transfer of funds issued for such purpose shall, to the extent practicable, bear the CUSIP number identifying, by issue and maturity, the Bonds being redeemed with the proceeds of such check or other transfer.
Whenever provision is made in the Fiscal Agent Agreement for the redemption of less than all of the Bonds of any maturity, the Fiscal Agent shall select the Bonds to be redeemed, from all Bonds or such given portion thereof of such maturity by lot in any manner which the Fiscal Agent in its sole discretion shall deem appropriate. Upon surrender of Bonds redeemed in part only, the City shall execute and the Fiscal Agent shall authenticate and deliver to the registered Owner, at the expense of the City, a new Bond or Bonds, of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond or Bonds.
Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of, and interest and any premium on, the Bonds so called for redemption shall have been deposited in the Bond Fund, such Bonds so called shall cease to be entitled to any benefit under the Fiscal Agent Agreement other than the right to receive payment of the redemption price, and no interest shall accrue thereon on or after the redemption date specified in such notice.
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 accordance 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 services 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 19.2.
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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,” which means the proceeds of the Special Taxes annually received by the City, including all scheduled payments, prepayments and delinquent payments thereof, interest thereon and proceeds of the redemption or sale of property sold as a result of foreclosure of the lien of the Special Taxes, net of the Administrative Expense Priority and excluding any penalties and extraordinary Administrative Expenses collected in connection with any such foreclosure. “ Administrative Expense Priority ” means (i) for Fiscal Year 2025- 26, $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 repayment of the Bonds. In addition, the Bonds are secured by a pledge of all amounts in the Reserve Fund, and any series of additional bonds may be secured by a reserve account within the Reserve Fund or a separate reserve fund, as provided in the applicable Supplemental Agreement for such Series. 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 the 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. 3 will be levied and collected according to the tax liability determined by the City through the application 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. 3. 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. 3, 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.”
ITEM 19.2.
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The amount of Special Taxes that the City may levy in any year on taxable property in Improvement Area No. 3, from which principal and interest on the Bonds is to be paid, is limited by the maximum rates approved by the qualified electors within Improvement Area No. 3 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 the 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 trust 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. 3 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 at the Maximum Special Tax rate authorized by the qualified electors within Improvement Area No. 3 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 of 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 given 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. 3 will be levied and collected according to the tax liability determined by the City through the application of the appropriate 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. 3 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. 3.
Each year, the City will determine the Special Tax Requirement for the upcoming 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 ITEM 19.2.
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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, (iii) to replenish reserve funds to the extent such replenishment was not included in the computation of the Special Tax Requirement 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 pursuant 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. 3 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 Property or Other Property, (iii) for Single Family Property, determine within which Village each Parcel of Developed Property is located and the number of Residential Units on the Parcel; (iv) for Other Property, determine the Acreage of each Parcel; and (v) 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. 3 was recorded after January 1 of the prior Fiscal Year (or any other date after which the Assessor will not incorporate the newly -created Parcels into the then current tax roll), (ii) because of the date the parcel map was recorded, the Assessor does not yet recognize the new Parcels created by the parcel map, and (iii) one or more of the newly -created Parcels is in a different Development Class and/or Land Use Category 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. 3, which generally provides that each year the City will use the definitions contained in the Rate and Method to classify each parcel as tax-exempt or taxable. Changes to maximum special tax rates due to Land Use Changes are handled per Section D of the Rate and Method. See APPENDIX A.
ITEM 19.2.
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Maximum Special Tax Rates. The Maximum Special Tax for a Parcel of Developed Property or Final Map Property is the greater of (i) the Base Special Tax set forth below, or (ii) the Maximum Special Tax determined pursuant to Section D of the Rate and Method. For additional details, see APPENDIX A.
Land Use Category
Fiscal Year 2026-27
Base Special Tax (1)(2)
Single Family Property
Villages 12-1 & 13 $4,092.02 per Residential Unit or SFD Lot Village 15-1 $3,206.98 per Residential Unit or SFD Lot
Villages 19 & 21-1 $3,109.34 per Residential Unit or SFD Lot Village 20 $2,399.40 per Residential Unit or SFD Lot
Other Property $31,012.74 per Acre
(1) On July 1 each fiscal year, all figures shown shall be increased by 2% 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 District. Subject to change pursuant to Section D of the Rate and Method.
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 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.
Levy of Special Tax . Once the Special Tax Requirement has been determined for a particular Fiscal Year, the Special Tax will be levied according to steps set forth in the Rate and Method. See Section E of the Rate and Method set forth as APPENDIX A.
Termination of the Special Tax. The Special Tax will be levied until all Bonds have been repaid and all authorized facilities have been funded; however, Special Taxes cannot be levied under any circumstance after fiscal year 2064-65.
Prepayment of the Special Tax. The Special Tax obligation assigned to a particular parcel within Improvement Area No. 3 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 and to fund facilities, as determined pursuant to Section H of the Rate and Method. See “THE BONDS – Redemption.”
ITEM 19.2.
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Projected Fiscal Year 2026-27 Special Tax Levy . The following table shows the projected Fiscal Year 2026-27 special tax levy by village for Improvement Area No. 3
Projected Fiscal Year 2026-27
Special Tax Levy By Village (1)
Village
Projected
FY 2026-27
Maximum
Special Tax
Projected
FY 2026-27
Actual
Special Tax (2)*
Villages 12-1 & 13 $323,270 $288,153
Village 15-1 163,556 150,045
Villages 19 & 21-1 186,560 169,095
Village 20 131,967 122,608
Total $805,353 $729,901
* Preliminary, subject to change.
(1) Based on building permits issued prior to July 15, 2025, and final maps recorded by June 30, 2025.
(2) Includes debt service due in 2027 on the Series 2025 Special Tax Bonds and estimated administrative expenses in the amount of $30,600.
Sources: Piper Sandler & Co.; 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 Revenues, 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 amounts then on deposit in the Bond Fund, such that the amount in the Bond Fund equals the principal, including any mandatory sinking fund payments, premium, if any, and interest due on the Bonds on the next Interest Payment Date. 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 for the current Bond Year and the amount needed to restore the balance of the Reserve Fund to the Reserve Requirement, the amount in the Debt Service Account in excess of such amount may, at the discretion of the City, be transferred to the Surplus Account, which will occur on or after September 15th of each year.
ITEM 19.2.
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Moneys in the Surplus Account may, at the City’s discretion, be transferred to the Improvement Fund 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 pledged to payment of the Bonds. See “ – Assignment of Maximum Special Tax” above.”
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 2025 Costs of Issuance Fund, the Improvement Fund, the Bond Fund (for capitalized interest) and the Reserve Fund established under the Fiscal Agent 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 covenanted in the Fiscal Agent Agreement with and for the benefit of the Owners of the Bonds that it will annually on or before September 1 of each year review the public records of the County of Sacramento 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 it will enforce the lien of the Special Taxes by commencing, or cause to be commenced, foreclosure proceedings to judgment and sale in such manner and upon such timing as advised by legal counsel, taking into account the amounts delinquent, the estimate cost of legal proceedings, the status of Special Tax collections and available debt service reserves, under the following circumstances:
(a) if 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 enforce the lien on all delinquent parcels; or
(b) if property owned by any single property owner in Improvement Area No. 3 is delinquent on four or more consecutive semi -annual Special Tax installments (irrespective of the total delinquencies in Improvement Area No. 3) it will enforce the lien against such property.
Additionally, notwithstanding any of the foregoing, in certain instances the amount of a Special Tax delinquency on a particular parcel in relation to the cost of appropriate foreclosure proceedings may be such that the costs do not warrant the foreclosure proceedings costs. In such cases, the City will pursue collection efforts but foreclosure proceedings may be delayed by the City until there are sufficient Special Tax delinquencies accruing to such parcel (including interest and penalties thereon) to warrant the cost of such foreclosure proceedings.
ITEM 19.2.
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The owners of the Bonds benefit from the Reserve Fund established pursuant to the Fiscal Agent Agreement; however, if delinquencies in the payment of the Special Taxes 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. 3 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% above 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 redeem the property to be sold. If a judgment debtor fails to redeem and the property is sold, his or her only remedy is an action to set aside the sale, which must be brought within 90 days of the date of sale. If, as a result of such an action a foreclosure sale is set aside, the judgment is revived, and the judgment creditor is entitled to interest on the revived judgment as if the sale had not been made (California Code of Civil Procedure Section 701.680).
Foreclosure by court action is subject to normal litigation delays, the nature and extent of which are largely dependent upon the nature of the defense, if any, put forth by the debtor and the condition of the calendar of the superior court of the county. Such foreclosure actions can be stayed by the superior court on generally accepted equitable grounds or as the result of the debtor’s filing for relief under the Federal bankruptcy laws. The Mello -Roos Act provides that, upon foreclosure, the Special Tax lien will have the same lien priority as is provided for ad valorem taxes and special assessments. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 3 – 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 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 is expected to be applicable to the Special Tax levies, but no assu rance can be given that it will continue in any or all of the years that the Bonds are outstanding. Per a recent policy change, the County indicates it intends to remove parcels from th e Teeter Plan after one year of non- payment, effectively meaning that if the first and second installments are both ITEM 19.2.
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delinquent, the County would not cover the full amount, and in the following year delinquencies on the subject parcel would also not be covered.
To the extent that the County’s Teeter Plan continues in existence and is carried out as adopted, and to the extent the County does not discontinue the Teeter Plan with respect to the City or Improvement Area No. 3 , the County’s Teeter Plan may help protect owners of the Bonds from the risk of delinquencies in the payment of Special Taxes. However, there can be no assurance that the County will not modify or eliminate its Teeter Plan, or choose to remove Improvement Area No. 3 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 delinquencies in that agency in any year exceeds 3% of the total of all taxes and assessments levied on the secured roll by that agency.
Reserve Fund
Under the Fiscal Agent Agreement, the Fiscal Agent 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 Req uirement” is 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 –
(a) in no event shall the City be obligated to deposit an amount in the Reserve Fund in excess of the amount permitted by the applicable provisions of the Code to be so deposited from the proceeds of tax -exempt bonds without having to restrict the yield of any investment purchased with any portion of such deposit and, if the amount of any such deposit is so limited, the Reserve Requirement shall be only the amount of such deposit as permitted by the Code;
(b) the City may meet all or a portion of the Reserve Requirement with respect to the Bonds by depositing a Qualified Reserve Fund Credit Instrument in accordance with the Fiscal Agent Agreement; and
(c) the Reserve Requirement shall be set at the time of issuance of the Bonds and shall not increase thereafter but may decrease.
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 principal of, and interest ITEM 19.2.
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on, the Bonds secured by the Reserve Fund. Whenever a transfer is made from the Reserve Fund to the Bond Fund due to a deficiency in the Bond Fund, the Fiscal Agent will provide written notice thereof to the City. 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.
Whenever, on the Business Day prior 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 amounts 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, including that the long-term credit rating 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, including 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 established 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 ITEM 19.2.
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incur any liability for any disburs ement from the Improvement Fund made in reliance 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.”
No Additional Bonds Except for Refunding
The Resolution of Formation authorizes the issuance of up to $ 16,000,000 of bonded indebtedness for Improvement Area No. 3; the Bonds represent the first series of special tax bonds issued pursuant to this authorization . In the Fiscal Agent Agreement , the City covenants not to issue additional bonds (“Additional Bonds”) payable from Special Taxes and secured by the Special Tax Revenues equally and ratably with the Bonds, except that the City may issue bonds to refund all or part of the Bonds . The City may also issue bonds secured by Special Taxes on a subordinate basis. [Review/Confirm]
ITEM 19.2.
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DEBT SERVICE SCHEDULES
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
The Ranch Community Facilities District No. 2021-1
Improvement Area No. 3
Special Tax Bonds Series 2025
Debt Service Schedule
Period Ending
Sept. 1
Bonds
Principal
Bonds
Interest(1)
Bonds
Total Debt Service
2025
2055
Total
_____________
(1) Interest on a portion of the Bonds due through September 1, 2026 will be paid from capitalized interest.
Source: Underwriter.
ITEM 19.2.
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Projected Debt Service Coverage. The projected debt service coverage on the Bonds for Fiscal Year 2026-27 is set forth below, and is based on the current status of development and only the Bonds outstanding. The Bonds have been structured so there is at least 110% debt service coverage in every year the Bonds are outstanding.
City of Rancho Cordova
The Ranch Community Facilities District No. 2021-1
Improvement Area No. 3
Special Tax Bonds Series 2025
Projected Fiscal Year 2026-27 Debt Service Coverage(1)(2)
Bond Year
Maximum
Special Tax
Developed
and Final Map
Property (3)
Priority
Administration (4)
Estimated
Series 2025
Debt Service*
Debt Service Coverage
from Developed and
Final Map Property *
2027 $805,353 ($30,600) $699,300 110.79%
* 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) 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.
(3) Includes projected Maximum Special Tax revenues based on the status of development as of July 15, 2025.
Assumes no future development. .
(4) As defined in the Fiscal Agent Agreement, the Administrative Expense Priority for fiscal year 2025 -26 is $30,000 and escalates by 2% per year.
Sources: Piper Sandler & Co.; Goodwin Consulting Group, Inc.
ITEM 19.2.
ATTACHMENT 4
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IMPROVEMENT AREA NO. 3
Formation and Background
On December 6, 2021, the City Council, as legislative body of the District and Improvement Area No. 1, established the bonded indebtedness limit for the District in the principal amount of not to exceed $86,470,000 (excluding bonds described in Section 53364.2(e) of the Act), initially allocated as follows: (i) for Improvement Area No. 1, $20,350,000 and (ii) for land within the Future Annexation Area, $66,120,000. Under the provisions of the Mello-Roos Act, since there were fewer than 12 registered voters residing within Improvement Area No. 1 at any point during the 90 -day period preceding the adoption of the City’s resolution forming the District on December 6, 2021 (the “Resolution of Formation ”), the sole qualified elector was the developer/landowner who was entitled to cast one vote for each acre or portion of an acre of land owned within Improvement Area No. 1. The landowner voted to incur the indebtedness and to approve the annual levy of Special Taxes to be collected within Improvement Area No. 1, for the purpose of paying for the Facilities, including repaying any indebtedness of Improvement Area No. 1, replenishing reserve funds and paying administrative expenses.
In April 2024, land designated as Improvement Area No. 2 of the District was annexed to the District from the Future Annexation Area, and an initial bond authorization was established for Improvement Area No. 2 in the amount of $14,000,000 , and land designated as Improvement Area No. 3 of the District was annexed to the District from the Future Annexation Area, and an initial bond authorization was established for Improvement Area No. 3 in the amount of $16,000,000.
In July 2025, land designated as Improvement Area No. 4 of the District was annexed to the District from the Future Annexation Area, and an initial bond authorization was established for Improvement Area No. 4 in the amount of $22,250,000 , and land designated as Improvement Area No. 5 of the District was annexed to the District from the Future Annexation Area, and an initial bond authorization was established for Improvement Area No. 5 in the amount of $20,350,000.
In October 2022, bonds were issued for Improvement Area No. 1 in the principal amount of $12,975,000. In March 2025, bonds were issued for Improvement Area No. 2 in the principal amount of $10,880,000. The Bonds are the first series and expected to be the only series of special tax bonds issued for Improvement Area No. 3. Bonds are anticipated to be issued for Improvement Area No. 4 and for Improvement Area No. 5 in the future, as development of the larger project being undertaken by the JV Entity progresses. The Bonds are secured only by Special Taxes levied in Improvement Area No. 3; there is no cross -collateralization of security among improvement areas.
Description and Location
General. Land in the District is being developed by the JV Entity as part of K.
Hovnanian’s “The Ranch” project, which is located within The Ranch Special Planning Area (“TRSPA”), which lies within the Sunridge Specific Plan area. The TRSPA encompasses approximately 530 gross acres within the southeastern portion of the City of Rancho Cordova, primarily south of Douglas Road, east of Rancho Cordova Parkway, and west and north of Grant Line Road. The specific plan will include approximately 1,690 dwelling units (single and multi-family) at build out.
ITEM 19.2.
ATTACHMENT 4
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Under the TRSPA “The Ranch” project was designated for development into 1,690 residential units, which comprises 732 single -family homes, 705 age restricted single -family homes, 38 age-restricted rental units, and 215 high density residential affordable rental units. In addition to the residential units, the community will also have 5.73 acres of commercial land and a clubhouse to support the age restricted units. The clubhouse will feature a ballroom building, indoor and outdoor pool, gym, bocce court, horseshoe pits, tennis courts, pickleball courts and community garden. There are also public trails throughout the community and has approximately 198 acres of wetland preserve.
The greater Rancho Cordova area is a mature suburban area, which encompasses all types of land uses, including single-family and multifamily 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 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 pages show the consolidated boundary map of the District (including Improvement Area Nos. 1 through 5 therein ), and a site plan showing the proposed development by village for the entire project.
ITEM 19.2.
ATTACHMENT 4
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[Insert Map 1 – CFD Consolidated Boundary Map]
ITEM 19.2.
ATTACHMENT 4
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[Insert Map 2 - Site Plan for The Ranch Project]
ITEM 19.2.
ATTACHMENT 4
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Development in the District
The JV Entity 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 Development Agreement and the policies and requirements of the City. No assurance can be given that the plans or projections detailed below will actually occur.
The Ranch Project. K. Hovnanian at Jaeger Ranch, LLC, a California limited liability company (previously defined as “K. Hovnanian”), is the master developer of 530 gross acres of property located in the City of Rancho Cordova being developed as The Ranch. Currently the project is expected to include approximately 1,437 single family residences at build out. The Overall Project is anticipated to consist of the following:
• Approximately 120 acres of property proposed to be developed as 732 single - family residential units (the “Market Rate Project”).
• Approximately 152.25 acres of property proposed to be developed as 705 active adult single family units (the “Age Qualified Project”). • Approximately 7.14 acres of property proposed to be developed as 215 high density multifamily units (the “Multifamily Project”).
• Approximately 6.74 acres of property proposed to be developed with commercial improvements (the “Commercial Project”).
• Approximately 200 acres of parks, trails, open space, detention basins, landscaping, and public roadways.
The Market Rate Project . The Market Rate Project is being developed by K.
Hovnanian in four phases, with Phase I consisting of 209 units, Phase II consisting of 258 units, Phase III consisting of 179 units, and Phase IV consisting of 86 units. The Market Rate project will feature an 11 -acre community active park, a 2 -acre neighborhood active park, a 1.2 -acre passive park, miles of trails, and multiple acres of open space. The Market Rate Project is separated from the Age Qualified Project by open space preserves but is joined by a causeway.
The Age Qualified Project. The Age Qualified Project is being developed by the JV Entity under K. Hovnanian’s Four Seasons brand. K. Hovnanian's Four Seasons at The Ranch is proposed as a new 55+ age -qualified lifestyle community offering four distinctive collections for a wide variety of buyers. The Age Qualified Project is being developed in four phases, with Phase V consisting of 245 units, Phase VI consisting of 284 units, Phase VII consisting of 132 units, and Phase VIII consisting of 44 units.
The Age Qualified Project will offer a range of amenities, including a linear park, a pocket park, miles of nature trails, and multiple acres of open space. The project will feature a resort-style clubhouse, an indoor and outdoor pool, fitness rooms, bocce ball courts, pickleball courts, a dog park, and various indoor activities.
The Multifamily Project. The Multifamily Project parcel will be dedicated to the City for the development of 215 multifamily units.
ITEM 19.2.
ATTACHMENT 4
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The Commercial Project. The Commercial Project site will be sold by K. Hovnanian to a commercial developer.
Improvement Area No. 1. Only the property in Improvement Area No. 3 serves as security for the Bonds; the information below regarding Improvement Area No. 1 is provided for informational purposes only as part of the discussion of the Overall Project.
Land in Improvement Area No. 1 is under development by K. Hovnanian and consists of Phases I and II of the Market Rate Project and is made up of 6 Villages comprising 467 single family residential units:
• Village 3 – 65 single family units being marketed as “Canyon.” • Village 4, Unit 1 – 53 single family units being marketed as “Reserve.” • Village 4, Unit 2 – 63 single family units being marketed as “Reserve.” • Village 5 – 45 single family units being marketed as “Montrose.” • Village 6 – 40 single family units being marketed as “Montrose.” • Village 8 – 130 single family units being marketed as “Paseo.” • Village 9 – 71 single family units being marketed as “Springs.”
As of July 15, 2025, 415 homes have closed escrow in Improvement Area No. 1.
In October 2022, bonds were issued for Improvement Area No. 1 in the principal amount of $12,975,000.
Improvement Area No. 2. Only the property in Improvement Area No. 3 serves as security for the Bonds; the information below regarding Improvement Area No. 2 is provided for informational purposes only as part of the discussion of the Overall Project.
The property in Improvement Area No. 2 consists of approximately 49 acres comprised of 265 residential lots as Phases III and IV of the overall The Ranch project. Development by K.
Hovnanian is underway as multiple product lines of the Market Rate Project within 5 villages, comprising 4 marketing neighborhoods, as described herein. Typical lot sizes range from 2,730 to 6,300 square feet.
• Village 1 – 86 single family units being marketed as “The Reserve.” • Village 2 – 49 single family units being marketed as “Canyon.” • Village 7 – 28 single family units being marketed as “Montrose.” • Village 10 – 69 single family units being marketed as “Silverbrook.” • Village 11 – 33 single family units being marketed as “Silverbrook.”
As of July 15, 2025, 55 homes have closed escrow in Improvement Area No. 2.
In March 2025, bonds were issued for Improvement Area No. 2 in the principal amount of $10,880,000.
Improvement Area No. 3. The property in Improvement Area No. 3 consists of approximately __ acres comprised of 245 Age Qualified residential lots as Phase V of the overall The Ranch project. Development by the JV Entity is underway as multiple product lines of the Age Qualified Project within 6 villages, comprising 4 marketing neighborhoods , as described herein. Typical lot sizes range from 3,808 to 6,300 square feet.
• Village 12-1 – 40 single family Age Qualified units being marketed as “Autumn.” ITEM 19.2.
ATTACHMENT 4
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• Village 13 – 39 single family Age Qualified units being marketed as “Autumn.” • Village 15-1 – 51 single family Age Qualified units being marketed as “Summer.” • Village 19 and 21 -1 – 60 single family Age Qualified units being marketed as “Spring.”
• Village 20 – 55 single family Age Qualified units being marketed as “Winter.”
As shown below, as of July 15, 2025, 17 homes have closed escrow in Improvement Area No. 3.
Only the property in Improvement Area No. 3 serves as security for the Bonds.
Ownership of Property in Improvement Area No. 3 . On January 30, 2025, K.
Hovnanian sold all but 21 of the lots to be developed with Age Qualified units in the Overall Project to GTIS- HOV Holdings XVI LLC, a California limited liability company (“ JV Entity”), including 224 of the lots in Improvement Area No. 3. The 21 lots not purchased by the JV Entity were 10 of the 11 model home lots and 11 additional lots that were already under construction and have subsequently been sold to individual homeowners.
All 11 completed model homes were conveyed to HCA Model Fund 2014 -4 LLC, a Texas limited liability company (“ HCA”) and leased to K. Hovnanian for model use, with a repurchase right. During the time that HCA is under contract with K. Hovnanian, the taxes on the model homes will be paid by K. Hovnanian. The 11th home is owned by the JV Entity.
As of July 15, 2025, other than 17 individual homeowners and HCA, all of the property in Improvement Area No. 3 is owned by the JV Entity. K. Hovnanian is the managing member of the JV Entity.
For more ownership information see “OWNERSHIP OF PROPERTY IN THE DISTRICT” below.
Development Plan. A tentative map was approved for the entirety of the project. A large lot map was recorded in June of 2023 subdividing the project into villages. Final Maps for all Villages in Improvement Area No. 3 were recorded between October 2023 and June 2024.
See the table below for mapping dates applicable to the various villages in Improvement Area No. 3.
Improvement Area No. 3
Village Lots Map Number Recording Date
12-1 40
Subdivision Map No. FM-2021-
002-13 Small Lot Final Map Recorded June 18, 2024
13 39
Subdivision Map FM-2021-
002-09 Small Lot Final Map Recorded October 6, 2023
15-1 51
Subdivision Map FM-2021-
002-11 Small Lot Final Map Recorded October 13, 2023
19 &
21-1 60
Subdivision Map FM-2021-
002-11 Small Lot Final Map Recorded October 13, 2023
20 55
Subdivision Map FM-2021-
002-11 Small Lot Final Map Recorded October 13, 2023
Totals 245
ITEM 19.2.
ATTACHMENT 4
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The JV Entity is developing the property in Improvement Area No. 3 in four product lines:
Autumn, Summer, Spring, and Winter. Each home in each product line will be a single -family, detached home.
All Improvement Area No. 3 product lines are in active development. Each of these product lines is described and summarized below:
Autumn (Village 12-1 & 13 – 40 Lots & 39 Lots) . The Autumn product line is located in Villages 12 -1 & 13 and is being developed as 79 single -family residential units with 4 floor plans. Each Autumn lot is approximately 60’ x 105’. Autumn in Village 13 opened for sales in November 2024 and Autumn in Village 12-1 is expected to open for sales in 2026. The JV Entity anticipates developing the lots to final build -out by February 2028. As of July 15, 2025, 5 of the Autumn units in Improvement Area No. 3 have been sold or closed to homebuyers.
The following table provides the status of the proposed development of the 79 units of the Autumn neighborhood as of July 15, 2025.
Autumn, Village 12-1/13
(as of July 15th, 2025)
Floor
Plan
Approx.
Square
Footage
Total
Number
of
Planned
Units
Number
of
Building
Permits
Issued
Units
Completed,
Sold, and
Closed
Units
Completed
and Unsold
or in
Escrow(1)
Finished
Lots
Units Under
Construction(2)
Est. Base
Price(3)
Plan 1 2,264 20 7 0 6 13 1 $678,157
Plan 2 2,446 20 6 2 3 14 1 700,990
Plan 3 2,729 17 3 1 2 14 0 734,490
Plan 4 2,916 22 3 2 1 19 0 749,573
Totals 79 19 5 12 60 2
(1) Includes 2 completed model homes , 2 of which were conveyed by K. Hovnanian to HCA and 1 of w hich is owned by the JV Entity.
(2) A unit is considered under construction when trenching begins on the lot, and a building permit has been received. A total of 19 building permits have been issued: 2 for the models; and 17 for units for which vertical construction has started or has been completed.
(3) Base sale prices are estimated as of July 15, 2025. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessions or price reductions which may be offered.
Source: JV Entity.
ITEM 19.2.
ATTACHMENT 4
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Summer (Village 15-1 - 51 Lots). The Summer product line is located in Villages 15-1 and is being developed as 51 single-family residential units with 3 floor plans. Each Summer lot is approximately 50’ x 105’. Summer in Village 15 -1 opened for sales in November 2024. The JV Entity anticipates developing the lots to final build- out by October 2026. As of July 15, 2025, 5 of the Summer units in Improvement Area No. 3 have been sold or closed to homebuyers.
The following table provides the status of the proposed development of the 51 units of the Summer neighborhood as of July 15, 2025.
Summer, Village 15-1
(as of July 15th, 2025)
Floor Plan
Approx.
Square
Footage
Total
Number
of
Planned
Units
Number
of
Building
Permits
Issued
Units
Completed,
Sold, and
Closed
Units
Completed
and Unsold
or in
Escrow(1)
Finished
Lots
Units Under
Construction(2)
Est. Base
Price(3)
Plan 1 1,761 17 8 2 4 9 2 $588,823
Plan 2 2,069 16 4 1 2 12 1 $625,323
Plan 3 1,969 18 9 2 7 9 0 $611,490
Totals 51 21 5 13 30 3
(1) Includes 2 completed model homes that K. Hovnanian has conveyed to HCA. (2) A unit is considered under construction when trenching begins on the lot, and a building permit has been received. A total of 21 building permits have been issued: 2 for the models; and 19 for units for which vertical construction has started or has been completed.
(3) Base sale prices are estimated as of July 15, 2025. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessions or price reductions which may be offered.
Source: JV Entity.
ITEM 19.2.
ATTACHMENT 4
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Spring (Villages 19 and 21-1 – 27 lots and 33 lots). The Spring product line is located in Villages 19 and 21 -1 and is being developed as 60 single -family residential units with 3 floor plans. Each Spring lot is approximately 44’ x 105’. Spring in Village 19 opened for sales in November 2024 and Village 21 -1 is anticipated to open for sales in April 2026. The JV Entity anticipates developing the lots to final build -out by January 2027. As of July 15, 2025, 3 Spring units in Improvement Area No. 3 have been sold or closed to homebuyers.
The following table provides the status of the proposed development of the 60 units of the Spring neighborhoods in Improvement Area No. 3 as of July 15, 2025.
Spring, Village 19/21-1
(as of July 15th, 2025)
Floor
Plan
Approx.
Square
Footage
Total
Number
of
Planned
Units
Number of
Building
Permits
Issued
Units
Completed,
Sold, and
Closed
Units
Completed
and Unsold
or in
Escrow(1)
Finished
Lots
Units Under
Construction(2)
Est. Base
Price(3)
Plan 1 1,670 18 6 2 3 12 1 $558,323
Plan 2 1,758 21 7 1 5 14 1 595,990
Plan 3 1,978 21 8 0 8 13 0 573,490
Totals 60 21 3 16 39 2
(1) Includes 3 completed model homes that K. Hovnanian has conveyed to HCA. (2) A unit is considered under construction when trenching begins on the lot, and a building permit has been received. A total of 21 building permits have been issued: 3 for the models; and 18 for units for which vertical construction has started or has been completed.
(3) Base sale prices are estimated as of July 15, 2025. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessions or price reductions which may be offered.
Source: JV Entity.
ITEM 19.2.
ATTACHMENT 4
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Winter (Village 20 - 55 Lots). The Winter product line is located in Village 20 and is being developed as a master planned community of 55 single-family residential units with 4 floor plans. Each Winter lot is approximately 56’ x 68’. Winter opened for sales in November 2024.
The JV Entity anticipates developing the lots to final build -out by January 2027. As of July 15, 2025, 6 Winter units in Improvement Area No. 3 have been sold or closed to homebuyers.
The following table provides the status of the proposed development of the 55 units of the Winter neighborhood as of July 15, 2025.
Winter, Village 20
(as of July 15th, 2025)
Floor
Plan
Approx.
Square
Footage
Total
Number
of
Planned
Units
Number
of
Building
Permits
Issued
Units
Completed,
Sold, and
Closed
Units
Completed
and Unsold
or in
Escrow(1)
Finished
Lots
Units
Under
Construction(2)
Est. Base
Price(3)
Plan 1 1,308 9 4 0 3 5 1 $494,990
Plan 2 1,442 19 9 3 5 10 1 $505,823
Plan 3 1,441 13 7 1 6 6 0 $506,823
Plan 4 1,701 14 6 2 4 8 0 $537,157
Totals 55 26 6 18 29 2
(1) Includes 4 completed model homes that K. Hovnanian has conveyed to HCA. (2) A unit is considered under construction when trenching begins on the lot, and a building permit has been received. A total of 26 building permits have been issued: 4 for the models; and 22 for units for which vertical construction has started. (3) Base sale prices are estimated as of July 15, 2025. Base sales prices are subject to change and exclude any lot premiums, options, upgrades, incentives and any selling concessions or price reductions which may be offered.
Source: JV Entity.
ITEM 19.2.
ATTACHMENT 4
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Infrastructure. As of the valuation date of the Appraisal, site development work is complete on Villages 13, 15- 1, 19, 20, and 21 -1 and home construction is underway. The lots within Village 12-1 are graded, underground utilities are complete, and topside infrastructure is still remaining to be completed.
The conditions of development for the Overall Project require the construction of various improvements at various times. The following conditions impact the property in Improvement Area No. 3:
A. Chrysanthy Blvd.: K. Hovnanian was required to construct Chrysanthy Blvd. from the existing Chrysanthy Blvd. at Rancho Cordova Pkwy. at the west boundary of the Overall Project to the intersection with Wheatridge Drive. Status: complete.
B. Detention Basin 4: Prior to the issuance of the first building permit in Village 13, Detention Basin 4 must be substantially complete, and prior to the first occupancy permit in Village 13, Detention Basin 4 must be complete. Status: complete.
C. Detention Basin 5: Prior to the issuance of the first building permit in Villages 15-1,19, 20, and 21- 1, Detention Basin 5 must be substantially complete, and prior to the first occupancy permit in Villages 15 -1,19, 20, and 21 -1, Detention Basin 5 must be complete. Status: complete.
D. Neighborhood Park in Village 8: Pursuant to the Park Development Agreement dated June 17, 2020 by and between the Cordova Recreation and Park District (the “Park District”) and K. Hovnanian, as amended by the First Amendment to Park Development Agreement The Ranch Development dated August 21, 2024, by and between the Park District and K. Hovnanian (as amended, the “Park Agreement”), the neighborhood park located in Village 8 must (i) start design prior to the first production building permit in Village 8, and (ii) start construction prior to the 65 th production building
permit in Village 8 or prior to the 234 th market-rate production building permit in the Overall Project. Status: design was started prior to the first building permit in Village 8; construction of the park is complete and the park was accepted by the Cordova Recreation and Park District on August 21, 2024. Status: complete.
E. Community Park: Pursuant to the Park Agreement, the 11 -acre community park located between Phase II and Phase IV must (i) start outreach and design prior to the 242
nd market rate production building permit is issued and (ii) start construction prior to the 468th market rate production building permit is issued; provided, however, that in lieu of starting construction, K. Hovnanian may provide either a bond to cover the anticipated costs of the park or receive a letter from the park district’s general manager adjusting the timing of the start of the park. Status: K. Hovnanian started outreach and design prior to the 242 nd building permit and intends to post a bond in lieu of starting construction when the Park District requests the posting of the bond. K.
Hovnanian is working diligently with the park district to get formal plan approval to begin construction of the park as soon as possible.
F. Onsite Infrastructure: All of Improvement Area No. 3 is graded, with home pads. Street, landscaping, medians, and streetlights constructed with the applicable street improvements are being constructed on a Village -by-Village basis. For all Villages in Improvement Area No. 3 other than Village 12-1, all onsite infrastructure is completed. The 40 Village 12 -1 lots are graded, underground utilities are complete, and ITEM 19.2.
ATTACHMENT 4
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topside infrastructure is still remaining to be completed and anticipated to occur by July 2026.
Developer Financing Plan. To date, K. Hovnanian and the JV Entity has financed its land acquisition and various site development and homebuilding costs related to its property in Improvement Area No. 3 through internally generated funds and through a construction loan (the “Construction Loan”) with Western Alliance Bank (“Western”).
As of July 15, 2025, K. Hovnanian, previous to the sale to the JV Entity and also on behalf of the JV Entity has completed work estimated to cost approximately $ ________ for onsite land development and approximately $______ for allocated offsite land development, and approximately $ ______ on land acquisition, homebuilding, marketing and sales costs in Improvement Area No. 3. K. Hovnanian on behalf of the JV Entity expects to complete work costing approximately $______ on remaining onsite land development, approximately $ ______ for allocated offsite land development, and approximately $______ on homebuilding, marketing, and sales costs in Improvement Area No. 3. The JV Entity expects to use internal funding to complete its development within Improvement Area No. 3 , and believes that it will have sufficient funds available to complete its planned development as described in this Official Statement.
On March 28, 2025, the JV Entity entered into the Construction Loan with Western, which includes an A&D loan in the principal amount of up to $79,800,000 and a revolving line of credit of up to $30,000,000 (for a total of $109,800,000). The Construction Loan is secured by a Deed of Trust recorded against the property in IA No. 3 (and elsewhere in the Overall Project) owned by the JV Entity. The Deed of Trust secures a debt in the maximum principal amount of $109,800,000. The lien of the Construction Loan Deed of Trust on property in Improvement Area No. 3 has been, and will be, reconveyed with each home sale. If there is a default under the Construction Loan, Western could seek foreclosure of the Deed of Trust on the property in Improvement Area No. 3 (as well as other property owned by the JV Entity) to cure the delinquency. As of July 15, 2025, the Construction Loan is in good standing.
Although the JV Entity expects to have sufficient funds available to complete its development in Improvement Area No. 3 as described in this Official Statement, there can be no assurance that amounts necessary to finance the development costs will be available from the JV Entity, the Construction Loan, or any other source when needed. Neither K. Hovnanian, the JV Entity, nor any of its related entities are under any legal obligation of any kind to expend funds for the development of and construction of homes on its property in Improvement Area No. 3. Any contributions by K. Hovnanian, the JV Entity, or any related parties to fund the costs of such development are entirely voluntary.
If and to the extent that internal funding and the Construction Loan are inadequate to pay the costs to complete the planned development by the JV Entity within Improvement Area No. 3 and other financing is not put into place, there could be a shortfall in the funds required to complete the planned development in Improvement Area No. 3.
Except as described in this Official Statement and except for those consents, permits, authorizations, certifications and approvals of governmental entities required in the ordinary course of development, the JV Entity has no actual knowledge of any impediment to construction or obtaining land use entitlements which could be reasonably expected to have a material adverse effect on its ability to complete the planned development of its property within Improvement Area No. 3 as described in the Official Statement. The JV Entity reserves the right ITEM 19.2.
ATTACHMENT 4
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to change its development at any time without notice. Additionally, homes under contract to be sold may not result in closed escrows as sales contracts are subject to cancellation.
Environmental Factors
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 Management Agency Flood Map, Community Panel No. 06067C -0240J, revised July 19, 2018. Land in the District meets the requirements of the Central Valley Flood Protection Plan (SB 5).
Wetlands. The project has obtained an LOP (letter of permission) from U.S. Army Corp., a 401 Water Quality Certification from the Regional Water Control Board for the planned development of land and a 1602 Streambed Alteration Agreement from CDFW for the overall project. Section 404 of the Clean Water Act requires authorization from the Secretary of the Army, acting through the Corps of Engineers, for the discharge of dredged or fill material into all waters of the United States, including wetlands ; K Hovnanian has obtained the required 404 permit for development to occur in Improvement Area No. 3. In addition, the project has permits and approvals from the State and approximately 198 acres of wetland preserve.
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 . The Fire and Resource Assessment Program of CAL FIRE has classified areas in California by Fire Hazard Severity Zone. Land in Improvement Area No. 3 is classified in a “moderate” Fire Hazard Severity Zone (FHSZ), as defined by CAL FIRE.
ITEM 19.2.
ATTACHMENT 4
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THE FACILITIES
Eligible Facilities
The Facilities eligible to be financed by the District (including Improvement Area No. 3 therein) are set forth in the Resolution of Formation and consist of roadway and transportation improvements, including roadway design, project management, grading, and construction of roadways, including curbs, gutters, sidewalks, pavement, street lighting, dry utilities, soundwalls and landscaping, as well as drainage facilities, park improvements and other miscellaneous improvements. Authorized Facilities also include sanitary sewer facilities, water facilities and other capital improvements for which developer impact fees are payable to the City for development within the District (including Improvement Area No. 3 therein), as well as 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 public improvements (and/or development impact fees) eligible to be financed with the proceeds of the Bonds (the “ Facilities,” as described below). See “FINANCING PLAN” for additional details.
The following table estimates the cost of the Facilities approved to be financed with proceeds of the Bonds.
Table 2
City of Rancho Cordova
Improvement Area No. 3 of
The Ranch Community Facilities District No. 2021-1
Approved Cost of Facilities to be Financed
Facility Category Estimated Cost
Construction Costs
(Streets, Drainage, Sewer, Water and Soft Costs)
Development impact fees
Total
Source: JV Entity.
Acquisition by the City and other Local Agencies
In connection with the formation of the District, the City and K. Hovnanian entered into a Funding, Construction and Acquisition Agreement dated as of October 1, 2022 (the “Acquisition Agreement”) which provides that K. Hovnanian (or successors) will construct (or cause to be constructed or funded) the Facilities. As components of the Facilities 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 District bond proceeds, will be the responsibility of K. Hovnanian.
Joint community facilities agreements have been or will be entered into with the Cordova Recreation and Park District, Sacramento County Water Agency and/or the Sacramento Regional County Sanitation District so that a portion of the proceeds of the District bonds may finance the development impact fees and/or Facilities to be acquired by those local agencies.
ITEM 19.2.
ATTACHMENT 4
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The Rate and Method provides that the funding of Improvement costs can also be made from collections of the Special Tax available as the “pay -as-you-go” component of Special Taxes. The pay-as-you-go funding component is expected to provide for funding of the cost of a portion of the 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. 3
Unpaid Special Taxes do not constitute a personal indebtedness of the owners of the parcels within Improvement Area No. 3. There is no assurance that an owner or any subsequent owners have the ability to pay the Special Taxes or that, even if they have the ability, they will choose to pay such taxes. An owner may elect to not pay the Special Taxes when due and cannot be legally compelled to do so. Neither the City nor any Bondowner will have the ability at any time to seek payment directly from the owners of property within Improvement Area No. 3 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. 3.
The JV Entity has provided the information set forth below. No assurance can be given that all information is complete. No assurance can be given that development of the property will be completed, or that it will be completed in a timely manner. The Special Taxes are not personal obligations of K. Hovnanian, the JV Entity, or of any subsequent landowners; the Bonds are secured only by the Special Taxes and moneys available under the Fiscal Agent Agreement. See “SECURITY FOR THE BONDS” and “BOND OWNERS’ RISKS” herein.
Current Ownership - Production Homes. As noted above, On January 30, 2025, K.
Hovnanian sold all but 21 of the lots to be developed with Age Qualified units in the Overall Project to GTIS- HOV Holdings XVI LLC, a California limited liability company (“JV Entity”), including 224 of the lots in Improvement Area No. 3. The 21 lots not purchased by the JV Entity were 10 of the 11 model home lots and 11 additional lots that were already under construction and have subsequently been sold to individual homeowners. As of July 15, 2025, other than individual homeowners and HCA, all of the property in Improvement Area No. 3 is owned by the JV Entity.
The JV Entity is a joint venture between K. Hovnanian and GTISCal at Four Seasons at the Ranch LLC, a Delaware limited liability company (“GTISCal”). GTISCal has a 50.1% interest in the JV Entity and K. Hovnanian has a 49.9% interest in the JV Entity.
GTISCal is an affiliate of GTIS Partners (“GTIS”). GTIS is an investor in real estate in the United States and Brazil. As of the first quarter of 2025, GTIS has committed over $6.4 billion of equity capital in its projects, and has investments in 10,400+ apartments and 60,400+ single family homes and lots in the U.S.
K. Hovnanian is the managing member of the JV Entity.
K. Hovnanian and the JV Entity entered in a Master Services Agreement, wherein K.
Hovnanian, as an independent contractor and not an employee of JV Entity, contracted to ITEM 19.2.
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develop and construct the Age Qualified portion of the Overall Project on behalf of the JV Entity.
Current Ownership - Model Homes . Ten of the 11 completed model homes were conveyed to HCA Model Fund 2014 -4 LLC, a Texas limited liability company (“ HCA”) pursuant to separate Model Home Purchase and Leaseback Agreements (the “ HCA Agreements”).
Pursuant to the HCA Agreements, while HCA owns the model homes, HCA leases the model homes to K. Hovnanian to use as model homes for the Improvement Area No. 3 products. As Improvement Area No. 3 is built -out, K. Hovnanian will market and sell the model homes on behalf of HCA. K. Hovnanian also has a repurchase right. During the time that HCA is under contract with K. Hovnanian, the taxes on the model homes will be paid by K. Hovnanian.
HCA secured a loan from Plainscapital Bank to acquire the model lots and the loan is secured by a Deed of Trust on the 10 model lots it owns dated January 23, 2025 for an amount up to $20,000,000.
K. Hovnanian. K. Hovnanian is an indirect, wholly -owned subsidiary of Hovnanian Enterprises, Inc., a Delaware corporation (“ Hovnanian”), which is based in Matawan, New Jersey, and has been in the business of developing residential real estate communities in California since 1994. Hovnanian is subject to the informational requirements of the Securities Exchange Act of 1934 (the “ Exchange Act”) and in accordance therewith files reports, proxy statements, and other information, including financial statements, with the SEC. The SEC maintains an Internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC, including Hovnanian. The address of such internet website is www.sec.gov. All documents subsequently filed by Hovnanian pursuant to the requirements of the Exchange Act after the date of this Official Statement will be available for inspection in such manner as the SEC prescribes.
Copies of Hovnanian’s Annual Report and each of its other quarterly and current reports, including any amendments, are available from Hovnanian’s website at www.khov.com. The website address is given for reference and convenience only. The information on the website may be incomplete or inaccurate and has not been reviewed by the City or the Underwriter.
Nothing on the website is a part of this Official Statement or incorporated into this Official Statement by reference.
ITEM 19.2.
ATTACHMENT 4
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VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 3
Assessed Valuation
The value of taxable property within Improvement Area No. 3 is a critical factor in determining the investment quality of the Bonds. The remedy for non -payment of the Special Tax is potential foreclosure of the delinquent real property.
Assessed Valuation Generally. As provided by Article XIII A of the California Constitution, county assessors’ assessed values are to reflect market value as of the date the property was last assessed (or 1975, whichever is more recent), increased by a maximum of 2% per year. Properties may be reassessed by the County only upon a change of at least 51% ownership of existing property or upon new construction. The assessed values of parcels in the District thus reflect the estimate of the County Assessor (the “ Assessor”) of market value when acquired (or 1975, whichever is later), possibly increased by up to 2% per year, and for parcels on which construction has occurred since their date of acquisition, the Assessor’s estimate of market value as of the time of construction, possibly increased by up to 2% per year.
The following table provides assessed valuations of taxable property in Improvement Area No. 3 for Fiscal Year 2025-26.
Fiscal Year
Assessed Land
Value
Assessed
Structure Value
Total Assessed
Value
Building Permits
Issued (1) (2)
2025-26 $29,385,381 $8,310,000 $37,695,381 102
______________________
(1) Represents the number of parcels for which a building permit for new construction was issued prior to June 1 of the prior fiscal year. As of June 1, 2025, 100 building permits have been pulled. (2) As of July 15, 2025, date of value, 102 building permits have been pulled. Assumes no further development.
Source: Sacramento County Assessor’s Office, Goodwin Consulting Group, inc.
Appraised Value
General. In order to obtain a more accurate estimate of the value of land in Improvement Area No. 3, the City ordered preparation of an appraisal report (the “ Appraisal”), as of the July 15, 2025 date of value. The Appraisal was prepared by Integra Realty Resources, Sacramento, California (the “ Appraiser”). The Appraisal is set forth in APPENDIX B hereto. The description herein of the Appraisal is intended for limited purposes only; the Appraisal should be read in its entirety. The conclusions reached in the Appraisal are subject to certain assumptions, conditions and qualifications which are set forth in the Appraisal.
The Appraisal estimated the market value of all of the land in Improvement Area No. 3, which, as of the date of value, encompasses land within The Ranch at Sunridge Specific Plan area at the southeastern portion of the City, primarily south of Douglas Road, east of Rancho Cordova Parkway, and west and north of Grant Line Road. Land in Improvement Area No. 3 is developing into 245 age -restricted (55+) single -family homes as part of K. Hovnanian’s “Four Seasons at the Ranch” community. For additional details, see APPENDIX B hereto.
Value Estimate . The appraised valuation excludes the value of all portions of the property in Improvement Area No. 3 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 ITEM 19.2.
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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 July 15, 2025 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 $ 80,250,000. based on the following summary.
Appraised Property Summary by Ownership as of July 15, 2025
Owner
Partially
Improved
Lots
Finished
SFR Lots
Homes Under
Construction
Completed
Homes (1)
Total
Individual
Homeowners -- -- -- 17 17
GTIS-HOV
Holdings XVI,
LLC(2) 40 98 20 70 228
Total 40 98 20 87 245
___________________
(1) Completed homes without a complete assessment for structural improvements by County Assessor . (2) Inclusive of 10 model homes held by HCA Model Fund 2014 -4, LLC.
Source: Appraisal.
The Appraiser’s valuation process utilized both a land residual analysis, a discounted cash flow analysis that considers home prices and costs, 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 subject lot categories and adjustments to the benchmark lot values are considered, as applicable. This value estimate represents a “not-less- than” value based on the market value for the smallest floor plan for each product line improved with a completed home without a complete assessed improvement value reflected on the County Assessor’s tax roll.
The final estimate of market value was estimated by employing the sales comparison approach and land residual analysis, as detailed in the Appraisal , as detailed in APPENDIX B .
The estimate of market value accounts for the impact of the lien of the Special Taxes securing the Bonds.
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 reimburse K. Hovnanian for certain improvements already completed.
Assumptions and Limiting Conditions . In considering the estimate of value evidenced by the Appraisal, the Appraisal is based upon a number of limiting conditions and standard and extraordinary assumptions which affect the estimates as to value, including, among others, the following.
ITEM 19.2.
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• 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. 3; thus, certain parcels may have a greater value than others. This disparity is significant because in the event of nonpayment of the Special Tax, the only remedy is to foreclose against the delinquent parcel.
No assurance can be given that the foregoing valuation can or will be maintained during the period of time that the Bonds are outstanding in that the City has no control over the market value of the property within Improvement Area No. 3 or the amount of additional indebtedness that may be issued in the future by other public agencies, the payment of which, through the levy of a tax or an assessment, may be on a parity with the Special Taxes. See “ –Priority of Lien” below.
For a description of certain risks that might affect the assumptions made in the Appraisal, see “BOND OWNERS’ RISKS” herein.
Value to Special Tax Burden Ratios
The principal amount of the direct and overlapping debt in Improvement Area No. 3 is $13,473,193
*, which consists of the estimated amount of Bonds ($ 12,900,000*) and $573,193 of overlapping general obligation and CFD bond debt. Consequently, the estimated value of property in Improvement Area No. 3 subject to the Special Tax lien ($80,250,000) , is approximately 6.0* times the principal amount of the direct and overlapping debt in Improvement Area No. 3. 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. 3 to the principal amount of the Bonds and other direct and overlapping debt for Improvement Area No. 3, it should be noted that only the real property upon which there is a delinquent Special Tax can be foreclosed upon, and the real property within Improvement Area No. 3 cannot be foreclosed upon as a whole to pay delinquent Special Taxes of the owners of such parcels within Improvement Area No. 3 unless all of the property is subject to a delinquent Special Tax.
* Preliminary; subject to change.
ITEM 19.2.
ATTACHMENT 4
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In any event, individual parcels may be foreclosed upon separately to pay delinquent Special Taxes levied against such parcels.
Other public agencies whose boundaries overlap those of Improvement Area No. 3 could, without the consent of the City and in certain cases without the consent of the owners of the land within Improvement Area No. 3 , impose additional taxes or assessment liens on the land within Improvement Area No. 3. The purpose would be to finance additional regional or local public improvements or services. The lien created on the land within Improvement Area No. 3 through the levy of such additional taxes or assessments may be on a parity with the lien of the Special Tax. In addition, construction loans may be obtained by the developers of property in Improvement Area No. 3 or home loans may be obtained by ultimate homeowners.
The deeds of trust securing such debt on property within Improvement Area No. 3, however, will be in a junior position to the lien of the Special Tax.
The land within Improvement Area No. 3 is located within the boundary of an Elk Grove Unified School District community facility district, pursuant to which an annual special tax of $200 per parcel will be levied following issuance of a building permit. As additional development occurs in Improvement Area No. 3 the Elk Grove USD CFD lien amount may be larger than what is shown.
ITEM 19.2.
ATTACHMENT 4
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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. 3 for fiscal year 2026-27, based on the status of development as of July 15, 2025 and assuming no further development. Value-to-lien ratios on individual parcels may vary considerably from any average.
Table 3
Improvement Area No. 3 of City of Rancho Cordova
The Ranch Community Facilities District No. 2021-1
Special Tax Bonds Series 2025
Value-to-Lien Ratios by Development Status – Projected for Fiscal Year 2026-27
Development Status (1)
No. of
Expected
Units
Appraised
Value (2)*
Projected
FY 2026-27
Maximum
Special Tax*
Projected
FY 2026-27
Special Tax
Levy (3)*
Percent of
Projected
Special Tax
Levy*
CFD
Bonds (4)*
Overlapping
Debt(5) *
Total
Debt*
Average
Appraised
Value-to-
Lien*
GIS-HOV Holdings XVI, LLC
Completed Homes
Village 20 18 $7,524,000 $43,189 $43,189 5.9% $763,310 $41,525 $804,835 9.3 Village 19 15 7,335,000 46,640 46,640 6.4 824,300 37,300 861,600 8.5 Village 21-1 3 1,467,000 9,328 9,328 1.3 164,860 8,164 173,024 8.5 Village 15-1 17 9,214,000 54,519 54,519 7.5 963,543 42,074 1,005,617 9.2 Village 13 17 10,897,000 69,564 69,564 9.5 1,229,455 47,316 1,276,771 8.5 Lots with Building Permits Paid
Village 20 6 1,452,000 14,396 14,396 2.0 254,437 14,926 269,363 5.4 Village 19 3 744,000 9,328 9,328 1.3 164,860 7,460 172,320 4.3 Village 15-1 3 765,000 9,621 9,621 1.3 170,037 7,425 177,462 4.3 Village 13 3 870,000 12,276 12,276 1.7 216,963 8,350 225,313 3.9 Residential Lots
Village 20 25 4,975,000 59,985 50,626 6.9 894,737 62,193 956,930 5.2 Village 19 6 1,230,000 18,656 15,745 2.2 278,273 14,920 293,193 4.2 Village 21-1 30 6,240,000 93,280 78,725 10.8 1,391,365 81,643 1,473,007 4.2 Village 15-1 27 5,697,000 86,588 73,078 10.0 1,291,548 66,823 1,358,371 4.2 Village 13 15 3,675,000 61,380 51,803 7.1 915,549 41,750 957,299 3.8 Village 12-1 40 9,000,000 163,681 138,142 18.9 2,441,465 47,905 2,489,370 3.6 Subtotal 228 $71,085,000 $752,433 $676,980 92.7% $11,964,703 $529,773 $12,494,477 5.7
Individual Homeowners
Completed Homes
Village 20 6 $2,640,000 $14,396 $14,396 2.0% 254,437 $14,926 $269,363 9.8 Village 19 3 1,545,000 9,328 9,328 1.3 164,860 7,460 172,320 9.0 Village 15-1 4 2,280,000 12,828 12,828 1.8 226,716 9,900 236,616 9.6 Village 13 4 2,700,000 16,368 16,368 2.2 289,283 11,133 300,417 9.0 Subtotal 17 $9,165,000 $52,920 $52,920 7.3% $935,296 $43,419 $978,716 9.4
Total 245 $80,250,000 $805,353 $729,901 100.0% $12,900,000 $573,193 $13,473,193 6.0
(Footnotes on Following Page)
ITEM 19.2.
ATTACHMENT 4
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* Preliminary; subject to change.
(1) Development status is based on the Appraisal Report and as of the July 15, 2025 date of value. (2) Appraised values were allocated to the individual parcels based on the expected development and lot status for each parcel, a s reported in the Appraisal. The allocated appraised values are not indicative of the market values of the communities or the individual lots. (3) Includes debt service due in 2027 on the Series 2025 Special Tax Bonds and estimated administrative expenses in the amount of $30,600. As of July 15, 2025, date of value, 102 building permits have been pulled. Assumes no further development. (4) Includes the $12,900,000 par amount of the Series 2025 Special Tax Bonds. Allocated based on the fiscal year 2026-27 special tax levy. (5) Includes the overlapping debt liens listed under Direct and Overlapping Tax and Assessment Debt in the overlapping debt repor t prepared by California Municipal Statistics, Inc. The overlapping debt report is based on the parcels and assessed values as of fiscal year 2024-25. Does not include any PACE liens secured by assessments or special taxes on the property.
Sources: Piper Sandler & Co.; Integra Realty Resources, Inc.; California Municipal Statistics, Inc.; Goodwin Consulting Group, Inc.
ITEM 19.2.
ATTACHMENT 4
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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. 3 for Fiscal Year 2026-27.
Table 4
Improvement Area No. 3 of City of Rancho Cordova
The Ranch Community Facilities District No. 2021-1
Special Tax Bonds Series 2025
Value-to-Lien Ratio Ranges – Projected for Fiscal Year 2026-27
Appraised Value-
to-Lien Category
No. of
Parcels*
Appraised
Value (1)*
Projected
FY 2026-27
Special Tax
Levy (2)*
Percent of
Projected
Special Tax
Levy*
CFD
Bonds(3)*
Overlapping
Debt (4)* Total Debt*
Average
Appraised
Value-to-
Lien*
Greater than 5:1 118 $52,029,000 $341,183 46.7% $6,029,940 $296,918 $6,326,858 8.2 3:1 to 5:1 127 28,221,000 388,718 53.3 6,870,060 276,275 7,146,335 3.9 Total 245 $80,250,000 $729,901 100.0% $12,900,000 $573,193 $13,473,193 6.0
* Preliminary; subject to change.
(1) Appraised values were allocated to the individual parcels based on the expected development and lot status for each parcel, a s reported in the Appraisal. The allocated appraised values are not indicative of the market values of the communities or the individual lots. (2) As of July 15, 2025, date of value, 10 2 building permits have been pulled. Assumes no further development. Includes debt service due in 2027 on the Series 2025 Special Tax Bonds and estimated administrative expenses in the amount of $30,600. (3) Includes the $12,900,000 par amount of the Series 2025 Special Tax Bonds. Allocated based on the fiscal year 2026 -27 special tax levy. (4) Includes the overlapping debt liens listed under Direct and Overlapping Tax and Assessment Debt in the overlapping debt repor t prepared by California Municipal Statistics, Inc. The overlapping debt report is based on the parcels and assessed values as of fiscal year 2024 -25. Does not include any PACE liens secured by assessments or special taxes on the property.
Sources: Piper Sandler & Co.; Integra Realty Resources, Inc.; California Municipal Statistics, Inc.; 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. 3, and payment of the Special Tax is secured by a lien on certain real property within Improvement Area No. 3 . Such lien is co -equal to and independent of the lien for general taxes and any other liens imposed under the Mello-Roos Act, regardless of when they are imposed on the property in Improvement Area No. 3 . The imposition of additional special taxes, assessments and general property taxes will increase the amount of independent and co-equal liens which must be satisfied in foreclosure. The City, the County and certain other public agencies are authorized by the 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. 3. 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 agency 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. 3, may be placed upon property in Improvement Area No. 3 at any time.
Under California law, the Special Taxes have priority over all existing and future private liens imposed on property subject to the lien of the Special Taxes.
Set forth below is a statement of direct and overlapping public bonded debt (the “Overlapping Debt Report ”) prepared by California Municipal Statistics, Inc. as of August 1, ITEM 19.2.
ATTACHMENT 4
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2025. The Overlapping Debt Report includes only such information as has been reported to California Municipal Statistics, 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. 3 in whole or in part. The second column shows the assessed value of the area common to Improvement Area No. 3 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. 3. In addition to the bonded debt shown in the Overlapping Debt Report, various local agencies, including the City, levy additional parcels charges, assessments and special taxes on parcels in Improvement Area No. 3 . See Table 6 for estimated amounts of these parcel charges, assessments and special taxes for Fiscal Year 2024-25.
The Overlapping Debt Report does not include PACE debt secured by assessments or special taxes on any property. Based on the Special Tax Consultant’s review for Fiscal Year 2024-25, and given that no individual homeowners yet own property in Improvement Area No. 3 some homeownership, none of the parcels within Improvement Area No. 3 had a PACE lien. [Review/Confirm]
November 2024 Bond Measures. Land in the District is within the Elk Grove Unified School District and subject to tax for payment of a portion of its general obligation bonds and Community Facilities District No. 1 bonds. The original authorization for the general obligation bonds is $476.0 million and no unused authorization remains. The authorization for the Community Facilities District No. 1 bonds is $205 million and the current unused authorization is approximately $17.2 million. In addition, the school district successfully passed Measure N on the November 2024 ballot, which authorized the school district to issue an additional $542 million of general obligation bonds. Likewise, the Sacramento Metropolitan Fire District successfully passed its Measure O on the November 2024 ballot, which authorized the issuance of $415 million of general obligation bonds. The Measure O has $255 million in authorization remaining.
ITEM 19.2.
ATTACHMENT 4
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Table 5
Improvement Area No. 3 of City of Rancho Cordova
The Ranch Community Facilities District No. 2021-1
Special Tax Bonds Series 2025
Direct and Overlapping Indebtedness
As of August 1, 2025
2024-25 Local Secured Assessed Valuation: $10,299,600
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 8/1/25 Los Rios Community College District General Obligation Bonds 0.004% $ 11,137 Elk Grove Unified School District General Obligation Bonds 0.020 81,239 Elk Grove Unified School District Community Facilities District No. 1 0.256 463,290 Sacramento Metro Fire District General Obligation Bonds 0.011 17,527 City of Rancho Cordova Community Facilities District No. 2021-1, I.A. 3 100.000 0 (1) TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT $573,193
OVERLAPPING GENERAL FUND DEBT:
Sacramento County General Fund Obligations 0.004% $ 4,059 Sacramento County Pension Obligation Bonds 0.004 8,682
Sacramento County Board of Education Certificates of Participation 0.004 49 Elk Grove Unified School District Certificates of Participation 0.020 1,934 City of Rancho Cordova Certificates of Participation 0.077 8,073 Sacramento Metropolitan Fire General Fund Obligations 0.011 735 Sacramento Metropolitan Fire Pension Obligation Bonds 0.011 2,213 Cordova Recreation and Park District General Fund Obligations 0.049 2,610 TOTAL GROSS OVERLAPPING GENERAL FUND DEBT $28,355
Less: Sacramento County supported obligations 422 TOTAL NET OVERLAPPING GENERAL FUND DEBT $27,933
GROSS COMBINED TOTAL DEBT $601,548 (2)
NET COMBINED TOTAL DEBT $601,126
Ratios to 2024-25 Local Secured Assessed Valuation:
Direct Debt ($0) ........................................................................... 0.00% Total Direct and Overlapping Tax and Assessment Debt ............. 5.57% Gross Combined Total Debt ......................................................... 5.84% Net Combined Total Debt 5.84%
____________________
* In November 2024 additional bond authorizations for Elk Grove Unified School District and Sacramento Metropolitan Fire Dist rict were passed by voters. See “Priority of Lien” above.
(1) Excludes Mello-Roos Act bonds to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non -bonded capital lease obligations.
Source: California Municipal Statistics, Inc.
ITEM 19.2.
ATTACHMENT 4
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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 2025-26.
Table 6
Improvement Area No. 3 of City of Rancho Cordova
The Ranch Community Facilities District No. 2021-1
Special Tax Bonds Series 2025
Sample Tax Bill – Fiscal Year 2025-26
Village
20 Villages
19&21-1
Village
15-1
Villages
12-1&13
Net Taxable Value Amount Amount Amount Amount
Estimated Market Values (1) $440,000.00 $515,000.00 $570,000.00 $675,000.00 Less: Homeowner's Exemption (7,000.00) (7,000.00) (7,000.00) (7,000.00) Net Taxable Value $433,000.00 $508,000.00 $563,000.00 $668,000.00
Ad Valorem Property Taxes Rate Amount Amount Amount Amount Base Property Tax 1.0000% $4,330.00 $5,080.00 $5,630.00 $6,680.00 Los Rios College General Obligation Bond 0.0200% 86.60 101.60 112.60 133.60 Elk Grove Unified General Obligation Bond 0.0382% 165.41 194.06 215.07 255.18 Sacramento Metro Fire District General Obligation Bond (3) 0.0190% 82.27 96.52 106.97 126.92 Total Ad Valorem Property Taxes 1.0772% $4,664.28 $5,472.18 $6,064.64 $7,195.70
Parcel Charges, Assessments, and Special Taxes (2)(4) Amount Amount Amount Amount Water and Drainage Studies - SCWA 13 $7.00 $7.00 $7.00 $7.00 Elk Grove USD CFD No. 1 200.00 200.00 200.00 200.00 Transit Related Services Zone 2 (5) 111.74 111.74 111.74 111.74 Rancho Cordova CFD No. 2013-2 (5) 455.80 455.80 455.80 455.80 CRPD CFD No. 2018-1 Zone 3 (5) 177.09 177.09 177.09 177.09 Rancho Cordova CFD 2014-2 308.00 308.00 308.00 308.00 Rancho Cordova CFD No. 2018-2 86.00 86.00 86.00 86.00 Rancho Cordova Lighting District 2012-1 18.00 18.00 18.00 18.00 The Ranch IA 3 CFD No. 2021-1 (6) 2,352.34 3,048.38 3,144.08 4,011.78 Total Parcel Charges, Assessments, and Special Taxes $3,715.97 $4,412.01 $4,507.71 $5,375.41
Total Taxes $8,380.25 $9,884.19 $10,572.35 $12,571.11
Total Effective Tax Rate 1.90% 1.92% 1.85% 1.86%
(1) Represents the base retail values provided in the Appraisal. Actual home sale prices will vary, which may increase or decrease the total effective tax rate from that shown.
(2) Based on fiscal year 2024 -25 charges identified on the Sacramento County -issued property tax bills. Charges subject to change in future years..
(3) Based on the estimated average annual tax rate included in Measure O. (4) Does not include any PACE liens secured by assessments or special taxes on the property. (5) Based on fiscal year 2025 -26 charges identified on the Sacramento County -issued property tax bills. Charges subject to change in future years.
(6) Equal to the applicable Maximum Special Tax rate in fiscal year 2025 -26.
Sources: Sacramento County Tax Collector's Office; Goodwin Consulting Group, Inc.
ITEM 19.2.
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Special Tax Collections and Delinquencies
Fiscal Year 2025 -26 is the first fiscal year during which the Special Tax will be levied, with the first payment due in December 2025. Accordingly, there is no history of collections and delinquencies. The levy of Special Taxes in Improvement Area No. 3 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 decision. 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 in the event Special Tax collections are delinquent, other than from amounts, if any, on deposit in the Reserve Fund or funds derived from the tax sale or foreclosure and sale of parcels on which levies of the Special Tax are delinquent, nor is the City obligated to advance funds to pay such debt service on the Bonds. The Bonds are not general obligations of the City but are limited obligations of the City, payable solely from the proceeds of the Special Tax and certain funds held under the Fiscal Agent Agreement, including amounts deposited in the Reserve Fund and investment income thereon, and the proceeds, if any, from the sale of property in the event of a foreclosure. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.” Any tax for the payment of the Bonds will be limited to the Special Tax to be collected within Improvement Area No. 3.
Concentration of Ownership of Undeveloped Property
Ownership of the land within the Dis trict is currently concentrated. In Fiscal Year 2025 - 26, the Special Taxes are to be levied based on building permits issued prior to July 15, 2025, and final maps recorded by June 30, 2025 , although a s of July 15, 2025, 17 homes in Improvement Area No. 3 were owned by individual homeowners, with the remainder of the homes/lots owned by the JV Entity, and, as to 10 of the 11 the model homes, HCA. Although it is anticipated that there will be transfers of ownership of this property as development progresses and home sales are closed, the timely payment of the Bond s depends upon the willingness and ability of all of the owners of taxable property within Improvement Area No. 3 to pay the Special Taxes when due. The only assets of the owners of property within Improvement Area No. 3 which constitute security for the Bonds are such owners’ real property holdings located within Improvement Area No. 3, 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. 3, choose to default on payments of the Special Tax on parcels. Also see “– Bankruptcy Delays” below.
ITEM 19.2.
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Development of undeveloped property within Improvement Area No. 3 may be subject to unexpected delays, disruptions and changes which may affect the willingness 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 K. Hovnanian. 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. 3 – Development in the District.”
Appraised Values
The Appraisal summarized in APPENDIX B estimates the market value of certain taxable property within Improvement Area No. 3 . This market value is merely the present opinion of the Appraiser, and is subject to the assumptions and limiting conditions stated in the Appraisal. The City has not sought the present opinion of any other appraiser of the value of the taxed parcels . A different present opinion of value might be rendered by a different appraiser.
The opinion of value relates to sale by a willing seller to a willing buyer as of the date of valuation, each having similar information and neither being forced by other circumstances to sell or to buy. Consequently, the opinion is of limited use in predicting the selling price at a foreclosure sale, because the sale is forced and the buyer may not have the benefit of full information.
In considering the estimates of value evidenced by the appraisal, it should be noted that the appraisal is based upon a number of standard and special assumptions which affect the estimates as to value, in addition to hypothetical conditions, as set forth in the Appraisal (see APPENDIX B hereto). Some of the improvements to be financed by the Bonds were not in place as of the date of inspection; thus, the value estimate is subject to a hypothetical condition (of such improvements being in place)
In addition, the opinion is a present opinion of the Appraiser as of the indicated date of value. It is based upon present facts and circumstances. Differing facts and circumstances may lead to differing opinions of value. The appraised market value is not evidence of future value because future facts and circumstances may differ significantly from the present.
No assurance can be given that any of the appraised property in Improvement Area No. 3 could be sold in a foreclosure for the estimated market value contained in the Appraisal. Such sale is the primary remedy available to Bondowners if that property should become delinquent in the payment of Special Taxes.
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. 3.
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 ITEM 19.2.
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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 the special tax levied against any parcel for which an occupancy permit for private residential use has been issued may not be increased as a consequence of delinquency or default by the owner of any other parcel within a community facilities district by more than 10% above the amount that would have been levied in such fiscal year had there never been any such delinquencies or defaults. In cases of significant delinquency, these factors may result in defaults in the payment of principal of and interest on the Bonds.
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. 3 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. 3 subject to a Special 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. 3 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 burden on the remaining taxed parcels.
Property Tax Delinquencies . Failure of the owners of Taxable Property to pay property taxes (and, consequently, the Special Tax), or delays in the collection of or inability to collect the Special Tax by tax sale or foreclosure and sale of the delinquent parcels, could result in a deficiency in the collection of Special Tax revenues. See “ – 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 the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ordinary ad valorem property taxes. Under these procedures, if taxes are unpaid for a period of five years or more, the property is deeded to the State and then is subject to sale by the County.
If sales or foreclosures of property are necessary, there could be a delay in payments to owners of the 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 ITEM 19.2.
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FOR THE BONDS – Delinquent Payments of Special Tax; Covenant for Superior Court Foreclosure.”
The ability of the City to collect interest and penalties specified by State law and to foreclose against properties having delinquent Special Tax installments may be limited in certain respects with regard to properties in which the Federal Deposit Insurance Corporation (the “FDIC”) has or obtains an interest. The FDIC would obtain such an interest by taking over a financial institution that has made a loan that is secured by property within Improvement Area No. 3. See “ – FDIC/Federal Government Interests in Properties” below.
Other laws generally affecting creditors’ rights or relating to judicial foreclosure may affect the ability to enforce payment of Special Taxes or the timing of enforcement of Special Taxes. For example, the Soldiers and Sailors Civil Relief Act of 1940 affords protections such as a stay in enforcement of the foreclosure covenant, a six -month period after termination of military service to redeem property sold to enforce the collection of a tax or assessment and a limitation on the interest rate on the delinquent tax or assessment to persons in military service if the court concludes the ability to pay such taxes or assessments is materially affected by reason of such service.
Overlapping Tax Districts. The land in Improvement Area No. 3 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. 3 ; this would decrease the value to lien ratios of parcels in Improvement Area No. 3.
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. 3 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, there 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.”
The City intends 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. 3, 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.
ITEM 19.2.
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Any future decline in home values in Improvement Area No. 3 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 of 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 the taxable property within Improvement Area No. 3 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 City may bring an action to foreclose on the delinquent property in an attempt to obtain funds with which to pay debt service on the Bonds. Land development and land values could be adversely affected by economic and other factors beyond the City’s control, such as: a general economic downturn; adverse judgments in future litigation that could affect the scope, timing or viability of development; relocation of employers out of the area; stricter land use regulations; shortages of water, electricity, natural gas or other utilities; destruction of property caused by earthquake, flood or other natural disasters; environmental pollution or contamination.
The Appraisal information included as APPENDIX B sets forth certain assumptions of the Appraiser in estimating the market value of the property within Improvement Area No. 3 as of the date indicated. No assurance can be given that the land values are accurate if these assumptions are incorrect or that the values will not decline in the future if one or more events, such as natural disasters or adverse economic conditions, occur. See “Appraised Values” above.
Neither the City nor the Underwriter has evaluated development risks. Since these are largely business risks of the type that property owners customarily evaluate individually, and inasmuch as changes in land ownership may well mean changes in the evaluation with respect to any particular parcel, the City is issuing the Bonds without regard to any such evaluation.
Thus, the issuance of the Bonds in no way implies that the City or the Underwriter has evaluated these risks or the reasonableness of these risks. The following is a discussion of specific risk factors that could affect the timing or scope of property development in Improvement Area No. 3 or the value of property in Improvement Area No. 3.
Land Development. Land values are influenced by the level of development in the area in many respects.
First, undeveloped or partially developed land is generally less valuable than developed land and provides less security to the owners of the Bonds should it be necessary for the City to foreclose on undeveloped or partially developed property due to the nonpayment of Special Taxes.
ITEM 19.2.
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Second, failure to complete development on a timely basis could adversely affect the land values of those parcels that have been completed. Lower land values would result in less security for the payment of principal of and interest on the Bonds and lower proceeds from any foreclosure sale necessitated by delinquencies in the payment of the Special Tax. See “VALUE OF PROPERTY WITHIN IMPROVEMENT AREA NO. 3 – Value to Special Tax Burden Ratios.” No assurance can be given that the proposed development within Improvement Area No. 3 will be completed, and in assessing the investment quality of the Bonds, prospective purchasers should evaluate the risks of noncompletion.
The Master Developer does not provide any assurances to the City that the project will be developed or that sources of financing that will actually be available will be sufficient to complete the currently projected development. The Master Developer does not have any obligation to the City or to owners of the Bonds to complete the project overall or particular developments therein.
Risks of Real Estate Investment Generally . Continuing development of land within Improvement Area No. 3 may be adversely affected by changes in general or local economic conditions, fluctuations in the real estate market, increased construction costs, development, financing and marketing capabilities of individual property owners, water or electricity shortages, and other similar factors. Development in Improvement Area No. 3 may also be affected by development in surrounding areas, which may compete with development in Improvement Area No. 3. In addition, land development operations are subject to comprehensive federal, state and local regulations, including environmental, land use, zoning and building requirements.
There can be no assurance that proposed land development operations within Improvement Area No. 3 will not be adversely affected by future government policies, including, but not limited to, governmental policies to restrict or control development, or future growth control initiatives.
There can be no assurance that land development operations within Improvement Area No. 3 will not be adversely affected by these risks.
Natural Disasters. The value of the parcels in Improvement Area No. 3 in the future can be adversely affected by a variety of natural occurrences, particularly those that may affect infrastructure and other public improvements and private improvements on the parcels in Improvement Area No. 3 and the continued habitability and enjoyment of such private improvements. For example, the areas in and surrounding Improvement Area No. 3, like those in much of California, may be subject to earthquakes or other unpredictable seismic activity, however, Improvement Area No. 3 is not located in a seismic special studies zone.
Other natural disasters could include, without limitation, landslides, floods, droughts, wildfires or tornadoes. One or more natural disasters could occur and could result in damage to improvements of varying seriousness. Although the land in Improvement Area No. 3 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. The damage may entail significant repair or replacement costs and that repair or replacement may never occur either because of the cost, or because repair or replacement will not facilitate habitability or other use, or because other considerations preclude such repair or replacement. Under any of these circumstances there could be significant delinquencies in the payment of Special Taxes, and the value of the parcels may well depreciate.
ITEM 19.2.
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Drought. California has been subject to droughts from time -to-time in the past.
Although the City does not believe any future drought would impact development in Improvement Area No. 3, no assurances can be given in this regard.
Legal Requirements. Other events that may affect the value of a parcel include changes in the law or application of the law. Such changes may include, without limitation, local growth control initiatives, local utility connection moratoriums and local application of statewide tax and governmental spending limitation measures. Development in Improvement Area No. 3 may also be adversely affected by the application of laws protecting endangered or threatened species.
Hazardous Substances. Any discovery of a hazardous substance detected on property within Improvement Area No. 3 would affect the marketability and the value of some or all of the property in Improvement Area No. 3. In that event, the owners and operators of a parcel within Improvement Area No. 3 may be required by law to remedy conditions of the parcel relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well -known and widely applicable of these laws.
California laws with regard to hazardous substances are also applicable to property within Improvement Area No. 3 and are as stringent as the federal laws. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of property whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the parcels be contaminated by a hazardous substance is to reduce the marketability and value of the parcel by the costs of remedying the condition, because the purchaser, upon becoming owner, will become obligated to remedy the condition just as is the seller.
The values set forth in the Appraisal do not take into account the possible reduction in marketability and value of any of the parcels within Improvement Area No. 3 by reason of the possible liability of the owner (or operator) for the remedy of a hazardous substance condition on a parcel. Although the City is not aware that the owner (or operator) of any of the property within Improvement Area No. 3 has a current liability for a hazardous substance with respect to any of the parcels, it is possible that such liabilities do currently exist and that the City is not aware of them.
Further, it is possible that liabilities may arise in the future with respect to any of the parcels within Improvement Area No. 3 resulting from the existence, currently, on the parcel of a substance presently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the existence, currently, on the parcel of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly affect the value of a parcel within Improvement Area No. 3 that is realizable upon a foreclosure sale.
Endangered and Threatened Species. It is illegal to harm or disturb any plants or animals in their habitat that have been listed as endangered species by the United States Fish & Wildlife Service under the Federal Endangered Species Act or by the California Fish & Game Commission under the California Endangered Species Act without a permit. Although the Master Developer believes that no federally listed endangered or threatened species would be affected by the proposed development within Improvement Area No. 3, other than any that are ITEM 19.2.
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permitted by the entitlements already received (which allow for the impact of development and specify the mitigation required), the discovery of an endangered plant or animal could delay development of vacant property in Improvement Area No. 3 or reduce the value of undeveloped property.
Future Property Development
Continuing development of the parcels in Improvement Area No. 3 may be adversely affected by changes in general or local economic conditions, new legislation, 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 plants or animals in their habitat that have been listed as endangered species, changes in law, and other similar factors. Development in Improvement Area No. 3 may also be affected by development in surrounding areas, which may compete with the property in Improvement Area No. 3.
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. 3 –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. 3 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. 3 subject to a Special Tax. The table does not specifically identify which of the governmental obligations are secured by liens on one or more of the parcels in Improvement Area No. 3 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. 3 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 subordinate 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 Tax or not, this result may not apply in the case of bankruptcy. See “– Bankruptcy Delays” below.
ITEM 19.2.
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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. 3 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 treated 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.
FDIC/Federal Government Interests in Properties
General. The ability of the City to foreclose the lien of delinquent unpaid Special Tax installments may be limited with regard to properties in which the FDIC, the Drug Enforcement Agency, the Internal Revenue Service, or other federal agency has or obtains an interest.
Federal courts have held that, based on the supremacy clause of the United States Constitution, in the absence of Congressional intent to the contrary, a state or local agency cannot foreclose to collect delinquent taxes or assessments if foreclosure would impair the federal government interest.
The supremacy clause of the United States Constitution reads as follows: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the contrary notwithstanding.”
This means that, unless Congress has otherwise provided, if a federal governmental entity owns a parcel that is subject to Special Taxes 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 United States Court of Appeal, Ninth Circuit held that the Federal National Mortgage Association (“FNMA”) is a federal instrumentality for purposes of this doctrine, and not a private entity, and that, as a result, an exercise of state power over a mortgage interest held by FNMA constitutes an exercise of state power over property of the United States.
ITEM 19.2.
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The City has not undertaken to determine whether any federal governmental entity currently has, or is likely to acquire, any interest (including a mortgage interest) 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. 3 is taken over by the FDIC, and prior thereto or thereafter the loan or loans go into default, resulting in ownership of the property 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 assessed 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 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 purports 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 therefore 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 application 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. 3 in which the FDIC has or obtains an interest, although prohibiting the lien of the Special Taxes to be foreclosed 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 the 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 ITEM 19.2.
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