Staff Report - Waiver of City Code Section 4.04.020.C for the agreements pertaining to Delta Shores Facility District — Sacramento City Council, May 31, 2022 (part 1 of 3)

City Council Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org

File ID: 2022-00844 May 31, 2022

Title: Waiver of City Code Section 4.04.020.C for the agreements pertaining to the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022 (Two- Thirds Vote Required) and Authorize the Issuance of the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022 and Related Actions

Location: District 8

Recommendation: 1) Pass a Motion by two-thirds vote waiving the 10-day posting requirement of City Code section 4.04.020.C for the agreements pertaining to the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022; and 2) Adopt a Resolution authorizing the following: a) the issuance of the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022; b) the execution and delivery of a Master Indenture, a First Supplemental Indenture, a Bond Purchase Contract, an Official Statement, and a Continuing Disclosure Certificate; and c) certain related actions.

Contact: Brian Wong, Debt Manager, (916) 808-5811, [email protected]; Claudia Lara, Debt Analyst, (916) 808-2267, [email protected], Office of the City Treasurer

Presenter: Brian Wong, Debt Manager, (916) 808-5811, [email protected], Office of the City Treasurer

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SEE NEXT PAGE FOR LIST OF ATTACHMENTS]

Attachments:
1-Description/Analysis
2-Resolution
3-Master Indenture
4-First Supplemental Indenture
5-Bond Purchase Contract
6-Preliminary Official Statement
7-Continuing Disclosure Certificate
8-Appraisal Report prepared by BBG, Inc.
9-Appraisal Review Report prepared by Smith & Associates, Inc.

Description/Analysis

Issue Detail: Passing a Motion will waive the 10-day posting requirements of City Code section 4.04.020.C for the agreements pertaining to the City of Sacramento Delta Shores Community Facilities District (CFD) No. 2019-01 (Improvements) Improvement Area No. 2 (IA 2) Special Tax Bonds, Series 2022 (the Bonds). Staff is seeking this waiver of the posting requirement because, while the plain language contained in Section 4.04.020.C applies to the contracts being approved today, unlike contracts that are typically posted prior to City Council approval, the contracts being approved today do not impact the general fund. The contracts being approved today, the Bond Purchase Contract, the Master Indenture, and the First Supplemental Indenture of the Bonds, only impact the revenue generated by special taxes levied within the boundaries of the City of Sacramento Delta Shores Community Facilities District (CFD) No. 2019-01 (Improvements).

Adoption of the recommended resolution will authorize the issuance of the Bonds and the execution and delivery of related documents. The Bonds will be issued in an amount not to exceed $12 million, and the proceeds will be used for the following purposes:

• To finance the costs of acquisition and construction of certain eligible public facilities. • To fund a debt service reserve fund to secure repayment of the Bonds. • To pay costs of issuance.
• To fund capitalized interest – through December 1, 2022, on the non-escrow component of the Bonds, and through September 1, 2024, on the escrow component of the Bonds. • To fund an escrow fund for the Bonds.

The Bonds will be issued as a public offering through a negotiated sale and will be secured under the Master Indenture by a pledge of special taxes levied on parcels within IA 2 subject to the CFD special tax and lien recorded to the titles of those parcels.

Policy Considerations: City Code section 4.04.020.C requires all agreements greater than $1,000,000 be posted on the City’s website and made available to the public at least 10 days prior to the City Council acting on agreements meeting this criterion. The City Council may waive this requirement if two-thirds of its members vote to do so.

The Bonds are being issued in accordance with the Mello-Roos Community Facilities Act of 1982 (Government Code sections 53311 through 53368.3) (the Act), the approving vote of the qualified electors within IA 2, the Master Indenture, and the First Supplemental Indenture for the Bonds. The issuance of the Bonds is consistent with the City’s Debt-Management Policy in effect as of the date of this council report.

Economic Impacts: Not applicable.

Environmental Considerations:

California Environmental Quality Act (CEQA): The authorization to issue the Bonds, is a governmental fiscal activity that does not involve the approval of any physical development or activity that would have the potential for causing a significant effect on the environment. Approval is not a project requiring review under the CEQA. CEQA Guidelines sections 15378(b)(4) and 15060(c)(3).

To the extent the issuance of the Bonds is considered a project, the environmental impacts from public facilities that have been, or will be, constructed with the proceeds of the bonds have been identified and evaluated in an environmental impact report (EIR).

The City prepared an EIR that evaluated the environmental effects of the Delta Shores Project (P06-197). The Delta Shores Project EIR was certified by the City Council by Resolution No. 2009-030 on January 13, 2009. Minor changes to the EIR have been adopted subsequently by the City.

Sustainability: Not applicable.

Commission/Committee Action: Not applicable.

Rationale for Recommendation: The Bond Purchase Contract pertaining to the Bonds between the City of Sacramento and Piper Sandler & Co., the underwriter of the Bonds, the Master Indenture, the First Supplemental Indenture for the Bonds are each agreements expected to involve more than $1 million. Staff is seeking this waiver of the posting requirement because, while the plain language contained in Section 4.04.020.C applies to the contracts being approved today, unlike contracts that are typically posted prior to City Council approval, the contracts being approved today do not impact the general fund. The contracts being approved today, the Bond Purchase Contract, the Master Indenture, and the First Supplemental Indenture of the Bonds, only impact the revenue generated by special taxes levied within the boundaries of the City of Sacramento Delta Shores Community Facilities District (CFD) No. 2019-01 (Improvements).

Approval of the attached resolution authorizes the City Treasurer or designee to take the actions necessary for the issuance of the Bonds and the execution of the related documents.

Issuing the Bonds will generate tax-exempt bond proceeds for the acquisition and construction of authorized facilities. Bond proceeds will be administered in accordance with the Acquisition- and-Shortfall Agreement (City Agreement No. 2019-1513) between the City and M & H Realty Partners VI L.P. (Developer).

Financial Considerations: While the City will issue the Bonds, neither the City’s General Fund nor any other legally available source of funds, aside from the CFD special tax levied on taxable property within IA 2, will have any obligation to pay or ensure the full and timely repayment of debt service related to the Bonds.

Interest on the Bonds will be exempt from taxation. Consistent with the Internal Revenue Service regulations for tax-exempt bonds, the weighted average life of the Bonds will not exceed 120% of the average reasonably expected economic life of the authorized facilities funded by the Bonds.

Terms of the Sale
The Bonds will be issued in an amount not to exceed $12 million to finance the acquisition and construction of certain eligible public facilities. The true interest cost for the Bonds may not exceed 6.25% and is anticipated to be around 5.81% (based on current market rates as of May 12, 2022 plus an interest rate buffer of 0.25%), and the underwriter’s compensation may not exceed 1.5% of the principal amount of the Bonds. Good faith estimates of certain financial terms of the Bonds, as required by Government Code 5852.1, are provided in the tables below.

Non-Escrow
Bonds
Escrow
Bonds Total
Source of Funds:

Par Amount of Bonds 5,370,000.00 4,915,000.00 10,285,000.00 Original Issue Discount (111,771.45) (111,771.45)
Transfer from Non-Escrow Bonds 1,031,558.86 1,031,558.86 Total Sources 5,258,228.55 5,946,558.86 11,204,787.41
Use of Funds:

Acquisition and Construction Fund 3,153,561.87 4,444,701.37 7,598,263.24 Debt Service Reserve Fund 494,188.55 470,298.63 964,487.18 Capitalized Interest - through Dec 1, 2022 132,885.56 132,885.56 Capitalized Interest - through Sep 1, 2024 623,317.57 623,317.57 Costs of Issuance (1)
1,477,592.57 408,241.29 1,885,833.86
Total Uses 5,258,228.55 5,946,558.86 11,204,787.41
Estimates based on market conditions as of May 12, 2022 + interest rate buffer of 0.25%.

Source: Piper Sandler & Co., the Underwriter of the Bonds (1) Includes Underwriter's discount, bond counsel, disclosure counsel, special tax consultant, municipal advisor, and trustee fees; appraisal costs, printing costs, and other issuance costs.

Structure of the Bonds
The Bonds will include two components – non-escrow and escrow bonds. The non-escrow component of the Bonds will be sized based on the special tax revenues of the residential units in Multifamily Density Residential (MDR) Village Nos. 5 and 8 at buildout, assuming there will be a total of 223 medium density residential units at buildout. Capitalized interest on the non- escrow bonds runs through December 1, 2022. Construction proceeds of the non-escrow component of the Bonds will be available to acquire certain eligible public facilities from the Developer immediately after the closing of the Bonds, anticipated in mid-June 2022.

The escrow component of the Bonds will be sized based on the special tax revenues of the residential units in MDR Village Nos. 6 & 7 at buildout, assuming there will be a total of 198 medium density residential units at buildout. Interest on the escrow component of the Bonds through no earlier than September 1, 2023, will be paid from amounts held in the Escrow Fund under the Master Indenture. In the event that the release conditions for the Escrow Fund are not satisfied on or prior to June 1, 2024, then amounts in the Escrow Fund will be applied to pay interest due on the escrow component of the Bonds through and including September 1, 2024, and to redeem the escrow component of the Bonds on September 1, 2024. Special tax revenues from residential units in High Density Residential Village Nos. 6 through 10, as well as the Mixed-Use Village at buildout will be utilized for a second issuance of IA 2 bonds. The benefits of issuing the escrow component of the Bonds in conjunction with the non-escrow component of the Bonds are as follows:

• To mitigate interest rate sensitivity. If the City, at the request of the Developer, were to issue a small issuance of additional IA 2 bonds in calendar year 2023, the interest rate environment would likely be higher than current market rates given the several additional interest rate hikes that the Federal Reserve is anticipated to implement in the second half of this calendar year. Higher interest rates would negatively impact the principal amount of bonds that could be issued in a second issuance of IA 2 bonds and would negatively impact the amount of bond proceeds that could be available to acquire certain eligible public facilities from the Developer.

Non-Escrow
Bonds
Escrow
Bonds Total
Par Amount 5,370,000.00 4,915,000.00 10,285,000.00 True Interest Cost 5.750212% 5.874248% 5.810359%
Total Interest Payments to Final Maturity 6,571,791.84 6,449,505.07 13,021,296.91 Total Debt Service to Final Maturity 11,941,791.84 11,364,505.07 23,306,296.91 Estimates based on market conditions as of May 12, 2022 + interest rate buffer of 0.25%.

Source: Piper Sandler & Co., the Underwriter of the Bonds Estimated Bond Statistics
• Reduces total costs of issuance related to IA 2 bonds by not having to pay additional bond counsel, disclosure counsel, municipal advisor, and other fees, that would otherwise be paid as part of a second issuance of IA 2 bonds.

Construction proceeds for the escrow component of the Bonds will be on deposit with the trustee of the Bonds and will be available to acquire certain eligible public facilities from the Developer after the City has confirmed the satisfaction of the Escrow Fund release triggers in accordance with the Master Indenture. In the event the Escrow Fund release triggers have not been satisfied by the Developer by June 1, 2024, the available balance in the Escrow Fund will be used to redeem the escrow component of the Bonds on September 1, 2024.

Value-to-Lien
In accordance with the California Debt and Investment Advisory Commission’s guidelines for issuing land-secured bonds, the ratio of property values within a community facilities district to the total tax and assessment burden on the district’s parcels – the “value-to-lien ratio” – must be at least 3:1. The value-to-lien ratio of taxable property in IA 2 of the CFD (inclusive of the Bonds and certain overlapping debt) is 3.31:1, as determined by the appraiser, BBG, Inc.

Security for the Bonds
Payment of debt service of the Bonds is secured solely by special taxes on real property within IA 2 and is solely the responsibility of Taxable Property (as defined in the Amended and Restated Rate and Method of Apportionment for IA 2) within IA 2. A standard debt service reserve fund will also be established for the Bonds.

Local Business Enterprise (LBE): Not applicable.

RESOLUTION NO. 2022-_____
Adopted by the Sacramento City Council

May 31, 2022

AUTHORIZING (1) THE ISSUANCE OF THE CITY OF SACRAMENTO DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2 SPECIAL TAX BONDS, SERIES 2022; (2) THE

EXECUTION AND DELIVERY OF A MASTER INDENTURE, A FIRST

SUPPLEMENTAL INDENTURE, A BOND PURCHASE CONTRACT, AN OFFICIAL

STATEMENT, AND A CONTINUING DISCLOSURE CERTIFICATE IN CONNECTION WITH THE BONDS; AND (3) CERTAIN OTHER ACTIONS IN CONNECTION WITH

THE BONDS
BACKGROUND:

A. Through a special, mailed-ballot election held on October 15, 2019, in Improvement Area No. 2 of the Delta Shores Community Facilities District No. 2019-01 (Improvements), City of Sacramento, County of Sacramento, State of California (the “Improvement Area”), the qualified electors in the Improvement Area duly authorized the issuance of $18,800,000 principal amount of special-tax bonds under the Mello-Roos Community Facilities Act of 1982 as amended (Government Code sections 53311 through 53368.3; the “Act”) for the purpose of financing the acquisition and construction of certain public facilities (the “Facilities”).

B. Through a special, mailed-ballot election held on January 25, 2022 in the Improvement Area, the qualified electors in the Improvement Area reduced the authorized principal amount of special-tax bonds that may be issued under the Act for the purpose of financing the acquisition and construction of the Facilities to $18,000,000.

C. At the election held on October 15, 2019, the qualified electors in the Improvement Area authorized the levy and collection of a special tax under the Act to be used to pay the interest on, principal of, and redemption premiums (if any) on, the bonds, and, at the election held on January 25, 2022, the rate and method of apportionment of such special tax was amended and restated under the Act.

D. The Sacramento City Council (the “City Council”) has determined to authorize the issuance of the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022 (the “Series 2022 Bonds”) under the Act to finance certain of the Facilities.

E. The City desires to sell the Series 2022 Bonds to Piper Sandler & Co. (the “Underwriter”), and the City Council has determined that a private (i.e., negotiated) sale of the Series 2022 Bonds to the Underwriter under the Act will result in a lower overall cost.

F. In furtherance of the City’s issuance of the Series 2022 Bonds, forms of the following documents have been filed with the Sacramento City Clerk (the “Clerk”) for the City Council’s consideration and approval:
 A Master Indenture between the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), providing for the issuance of special- tax bonds for the Improvement Area in series and specifying the general terms of, and the security for, the bonds (the “Master Indenture”).  A First Supplemental Indenture between the City and the Trustee, which supplements the Master Indenture and specifies the terms on which the Series 2022 Bonds are to be issued and secured (the “First Supplemental Indenture” and, together with the Master Indenture, the “Indenture”).  A Bond Purchase Contract, under the terms of which, among other things, the City agrees to sell the Series 2022 Bonds to the Underwriter and the Underwriter agrees to purchase the Series 2022 Bonds (the “Bond Purchase Contract”).
 A preliminary form of an Official Statement describing the Series 2022 Bonds (the “Preliminary Official Statement”).
 A Continuing Disclosure Certificate obligating the City to provide certain ongoing disclosure with respect to the Series 2022 Bonds (the “Continuing Disclosure Certificate”).

G. All acts, conditions, and things required by California law to exist, to have happened, and to have been performed before and in connection with the consummation of the financing authorized by this resolution do exist, have happened, and have been performed in regular and due time, form, and manner as required by law, and the City is now duly authorized and empowered, under each requirement of law, to authorize the execution and delivery of certain documents in order to further implement the financing in the manner and upon the terms provided in this resolution.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:

Section 1. The statements in paragraphs A through G of the Background are true.

Section 2. The City Council hereby authorizes and approves the issuance of the Series 2022 Bonds in accordance with the Indenture in an aggregate principal amount not to exceed $12,000,000.

Section 3. The City Council hereby determines that the value of the real property within the Improvement Area that will be subject to the levy of a special tax under the Act to pay debt service on the Series 2022 Bonds (based upon appraisal of the real property in the Improvement Area made in a manner consistent with the Act and the City’s policies concerning the use of the Act) is at least three times the sum of the following: the principal amount of the Series 2022 Bonds, plus the principal amount of all other bonds outstanding that are secured by a special tax levied under the Act on property within the Improvement Area, plus the principal amount of all other bonds outstanding that are secured by special assessments levied on property within the Improvement Area. Accordingly, the limitations of section 53345.8(a) of the Act have been duly satisfied.

Section 4. The City Council hereby approves the Master Indenture and authorizes and directs the Sacramento City Treasurer or his designee (the “Treasurer”) to execute and deliver it to the Trustee on the City’s behalf in substantially the form on file with the Clerk, with any changes the Treasurer may require or approve with the concurrence of the Sacramento City Attorney or her designee (the “City Attorney”), and with approval to be conclusively evidenced by the execution and delivery of the Master Indenture.

Section 5. The City Council hereby approves the First Supplemental Indenture and its terms and conditions. The date, maturity date or dates, fixed interest rates, interest- payment dates, forms, registration privileges, place or places of payment, denominations, terms of redemption and number of Series 2022 Bonds, and other terms of the Series 2022 Bonds are to be as provided in the First Supplemental Indenture as finally executed and delivered.
(a) The Treasurer is hereby authorized and directed to execute and deliver to the Trustee, on the City’s behalf, the First Supplemental Indenture in substantially the form on file with the Clerk, with any changes the Treasurer may require or approve with the concurrence of the City Attorney, and with approval to be conclusively evidenced by the execution and delivery of the First Supplemental Indenture.
(b) The City Council hereby authorizes and directs the Treasurer to execute and deliver to the Trustee, on the City’s behalf, written instructions providing for the delivery of the Series 2022 Bonds to the Underwriter in accordance with the Bond Purchase Contract upon payment by the Underwriter of the purchase price of the Series 2022 Bonds (the “Instructions”).
(c) The Series 2022 Bonds are to be executed by the manual or facsimile signature of the Mayor of the City and countersigned by the manual or facsimile signature of the Clerk, and each of the Series 2022 Bonds must be in the form set forth in, and otherwise be in accordance with, the Indenture. When the Series 2022

Bonds are so executed, the Treasurer shall deliver them to the Trustee for authentication. The Trustee is then to deliver the Series 2022 Bonds to the Underwriter in accordance with the Instructions.

Section 6. The City Council hereby approves the Bond Purchase Contract and authorizes the Treasurer to execute and deliver it to the Underwriter on the City’s behalf in substantially the form on file with the Clerk, with any changes the Treasurer may require or approve with the concurrence of the City Attorney, and with approval to be conclusively evidenced by the execution and delivery of the Bond Purchase Contract, all subject to the following: the true interest cost for the Series 2022 Bonds may not exceed

6.25%, and the Underwriter’s compensation may not exceed 1.50% of the principal amount of the Series 2022 Bonds.

Section 7. The City Council hereby approves the Preliminary Official Statement and authorizes the Underwriter to distribute it.
(a) The City Council hereby authorizes and directs the Treasurer to execute and deliver to the Underwriter on the City’s behalf a certificate deeming the Preliminary Official Statement, in substantially the form on file with the Clerk and with any changes the Treasurer approves in the interest of the City with the concurrence of the City Attorney, to be final within the meaning of Securities Exchange Commission Rule 15c2-12.
(b) The City Council hereby authorizes and directs the Treasurer to execute and deliver to the Underwriter, on the City’s behalf, a final form of the Official Statement describing the Series 2022 Bonds (the “Final Official Statement”) in substantially the form of the Preliminary Official Statement, with any changes the Treasurer may require or approve with the concurrence of the City Attorney, and with approval to be conclusively evidenced by the execution and delivery of the Final Official Statement.
(c) The City Council hereby authorizes the Underwriter to distribute the Final Official Statement.

Section 8. The City Council hereby approves the Continuing Disclosure Certificate and authorizes and directs the Treasurer to execute and deliver it to the Underwriter on the City’s behalf in substantially the form on file with the Clerk, with any changes the Treasurer may require or approve with the concurrence of the City Attorney, and with approval to be conclusively evidenced by the execution and delivery of the Continuing Disclosure Certificate.

Section 9. The officers of the City, each acting alone, are hereby authorized and directed to do any and all things (including but not limited to the creation of funds required for the proper accounting and management of tax and bond proceeds) and to execute and deliver any and all documents and agreements they consider necessary or advisable to carry out, give effect to, and comply with, the terms and intent of this resolution, the Indenture, the Bond Purchase Contract, the Preliminary Official

Statement, the Final Official Statement, the Continuing Disclosure Certificate, and the Series 2022 Bonds. All actions previously taken by those officers with respect to the Series 2022 Bonds are hereby ratified, confirmed, and approved.

Section 10. The City Council hereby approves the execution and delivery of all agreements, documents, certificates and instruments referred to herein with electronic signatures as may be permitted under the California Uniform Electronic Transactions Act and digital signatures as may be permitted under Section 16.5 of the California Government Code using DocuSign.

Section 11. This resolution takes effect when adopted.

OH&S DRAFT
5/04/22
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MASTER INDENTURE
between the

CITY OF SACRAMENTO
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Relating to the

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2 SPECIAL TAX BONDS

Dated as of June 1, 2022

4141-9530-1935.7

MASTER INDENTURE
This Master Indenture (t he “Master Indenture”), dated as of June 1, 2022, between the City of Sacramento, a California muni cipal corporation (the “City”), and U.S. Bank Trust Company, National Association, a nationa l banking associatio n duly organized and existing under and by virtue of the laws of the United States of America and authorized to accept and execute trusts of the character herein set forth, as trustee (the “Trustee”); WITNESSETH:

WHEREAS, at an election held in Impr ovement Area No. 2 of the Delta Shores Community Facilities District No. 2019-01 (Improvements), City of Sacramento, County of Sacramento, State of Californi a (the “Improvement Area”) on October 15, 2019, the qualified electors therein duly au thorized the issuance of eighteen m illion eight hundred thousand dollars ($18,800,000) principal amount of special tax bonds under the Mello-Roos Community Facilities Act of 1982, as amended (being Section 53311 et se q. of the Government Code of the State of California), and all laws amendatory thereof or supplemental thereto (collectively, the “Act”), for the purpose of financing the acquisition and construction of certain public facilities; and WHEREAS, at an election held in the Improvement Area on January 25, 2022, the qualified electors therein reduced the author ized principal amount of special tax bonds that may be issued under the Act for the purpose of fi nancing the acquisition and construction of the Facilities to eighteen million dollars ($18,000,000); and WHEREAS, at the election held on October 15, 2019, the qualified electors in the Improvement Area authorized the levy and collecti on of a special tax unde r the Act to be used for the purpose of paying the interest on and principal of and redemption premiums, if any, on the bonds, and, at the election held on January 25, 2022, the rate and method of apportionment of such special tax was amended and restated under the Act; and WHEREAS, the City Council of the City has determined to authorize the issuance of City of Sacramento Delta Shores Communi ty Facilities District No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds (the “Bonds”) in series pursuant hereto and pursuant to one or more Suppl emental Indentures and to s ecure the Bonds in the manner provided herein; and
WHEREAS, the City has determined that all things necessary to cause the Bonds, when duly executed by the City and authentica ted by the Trustee and delivered as provided herein, to be legal and valid special tax obligations of the City enforceable in accordance with their terms, and to constitute this Master Inde nture a valid agreement for the uses and purposes herein set forth in accordance with its terms, have been done and ta ken, and the execution and delivery hereof and the execution and delivery of th e Bonds, subject to the terms hereof, have in all respects been duly authorized;
NOW, THEREFORE, THIS MASTER I NDENTURE WITNESSETH, that in order to secure the payment of the interest on a nd principal of and redemp tion premiums, if any, on all Bonds at any time issued and outstanding he reunder according to their tenor, and to secure

2 4141-9530-1935.7

the observance and performance of all the agre ements, conditions, covenants and terms therein and herein set forth, and to declare the conditions and terms upon and subject to which the Bonds shall be issued and received, and in consideration of the premises and of the mutual agreements and covenants contained herein and of the purchase and acceptance of the Bonds by the respective registered owners thereof from time to time, and for other valuable considerations, the receipt whereof is hereby acknow ledged, the City does hereby agree and covenant with the Trustee, for the benefit of the respective regist ered owners from time to time of the Bonds, as follows:

ARTICLE I

DEFINITIONS; EQUAL SECURITY
SECTION 1.01. Definitions. Unless the context otherwise requires, all terms defined in this section shall for all purpos es hereof and of any Supplemental Indenture and of the Bonds and of any certific ate, opinion, report, request or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein:

Accountant’s Report
“Accountant’s Report” means a report signed by an Independent Certified Public Accountant.

Acquisition and Construction Fund
“Acquisition and Construction Fund” means the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Im provement Area No. 2 Special Tax Bonds Acquisition and Construction Fund es tablished pursuant to Section 2.04 (to be maintained by the Treasurer).

Act
“Act” means collectively the Mello-Roos Community Facilities Act of 1982, as amended (being Sections 53311 et seq. of the Govern ment Code of the Stat e of California), and all laws amendatory thereof or supplemental thereto.

Bond Redemption Fund
“Bond Redemption Fund” means the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Im provement Area No. 2 Special Tax Bonds Bond Redemption Fund established pursuant to Section 5.02 (to be maintained by the Trustee).

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Bond Reserve Fund
“Bond Reserve Fund” means the City of Sacramento Delta Shores Community Facilities District No. 2019- 01 (Improvements) Improvement Area No. 2 Special Tax Bonds Bond Reserve Fund established pursuant to Section 5.02 (to be maintained by the Trustee).

Bond Year
“Bond Year” means the twel ve-month period ending on September 1 of each year; provided, that the first Bond Year sha ll commence on the date of the execution, authentication and initial delivery of the first Series issued hereunder.

Bonds, Serial Bonds, Term Bonds
“Bonds” means the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvement s) Improvement Area No. 2 Sp ecial Tax Bonds at any time Outstanding hereunder that are ex ecuted, authenticated and deliver ed in accordance with the provisions hereof. “Serial B onds” means Bonds for which no Sinking Fund Account Payments are established. “Term Bonds” means Bonds which are redeemable or payable on or before their specified maturity date or dates from Sinking Fund Account Payments established for the purpose of redeeming or paying such Bonds on or before their specified maturity date or dates.

Business Day
“Business Day” means any day (other than a Saturday or a Sunday) on which the Trustee is open for business at its Principal Corporate Trust Office.

Certificate of the City
“Certificate of the City” means an inst rument in writing signed by the City Manager or the Treasurer, or by any other officer of the City duly authorized by the City Council for that purpose.

City
“City” means the City of Sacramento, a California municipal corporation.

City Council
“City Council” means the City Council of the City.

City Clerk
“City Clerk” means the City Clerk of the City.

City Manager
“City Manager” means the City Manager of the City.

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Code
“Code” means the Inte rnal Revenue Code of 1986 a nd all regulations of the United States Department of the Treasury issued thereunder from ti me to time to the extent that such regulations are, at the time, applicable and in effect, and in this regard reference to any particular section of the Code shall include re ference to any successor to such section of the Code.

Community Facilities District
“Community Facilities District” means the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements), City of Sacramento, County of Sacramento, State of California, a community facilities district duly organized and existing in the City under and by virtue of the Act.

Community Facilities Fund
“Community Facilities Fund” means th e City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Im provement Area No. 2 Special Tax Bonds Community Facilities Fund established pursuant to Section 5.02 (to be maintained by the Treasurer).

Costs of Issuance
“Costs of Issuance” means, with respect to any Series, all costs and expenses payable by or reimbursable to th e City that are related to th e authorization, sale, execution, authentication and initial delive ry of such Series, including, but not limited to, costs of preparation and reproduction of do cuments, rating agency fees, fees and charges of the Trustee (including fees and expenses of its counsel), legal fees and charges and fees and charges of other consultants and professionals, toge ther with all costs for the prep aration of the Bonds of such Series, and any other cost or expense in conn ection with the authori zation, sale, execution, authentication and initial delivery of such Series.

Costs of Issuance Fund
“Costs of Issuance Fund” means the City of Sacramento Delta Shores Community Facilities District No. 2019- 01 (Improvements) Improvement Area No. 2 Special Tax Bonds Costs of Issuance Fund established pursuant to Section 2.05 (to be maintained by the Trustee).

Debt Service
“Debt Service” means, for any Bond Year , the sum of (1) the interest payable during such Bond Year on all Outstanding Bonds, assuming that all Outs tanding Serial Bonds are retired as scheduled and that all Outstanding Term Bonds are redeemed or paid as scheduled at the times of and in amounts equal to the sum of all Sinking Fund Account Payments (except to the extent that such interest is to be paid fro m the proceeds of sale of any Bonds), plus (2) the principal amount of all Outstanding Serial Bonds maturing by their terms in such Bond Year,

5 4141-9530-1935.7

plus (3) the Sinking Fund Account Payments re quired to be deposited in the Sinking Fund Account in such Bond Year.

Event of Default
“Event of Default” means an event described as such in Section 9.01.

Expense Fund
“Expense Fund” means the City of S acramento Delta Shores Community Facilities District No. 2019- 01 (Improvements) Improvement Area No. 2 Special Tax Bonds Expense Fund established pursuant to Section 5.02 (to be maintained by the Treasurer).

Expenses
“Expenses” means all expenses paid or incurred by the City for the cost of planning and designing the Facili ties, including the cost of e nvironmental evaluations, and all costs associated with the deter mination of the amount of the Sp ecial Tax, the collection of the Special Tax and the payment of the Special Tax, t ogether with all costs otherwise incurred in order to carry out the authorized purposes of the Community Faci lities District, and any other expenses incidental to the ac quisition, construction, completion an d inspection of the Facilities; all as determined in accordance with Generally Accepted Accounting Principles.

Facilities
“Facilities” means the public facilities authorized to be acquired and constructed in and for the Community Facilities District under and pursuant to the Act at the special elections held in the Improvement Area on October 15, 2019 and January 25, 2022.

Federal Securities
“Federal Securities” means (a) any securities now or hereafter authorized both the interest on and principal of whic h are guaranteed by the full faith and credit of the United States of America, and (b) any of the following obligat ions of federal agenci es not guaranteed by the full faith and credit of the United States of Americ a: (1) participation certif icates or senior debt obligations of the Federal Home Loan Mortgage Corporation, (2 ) bonds or debentures of the Federal Home Loan Bank Board established un der the Federal Home Loan Bank Act and bonds of any federal home lo an bank established under such act , and (3) stocks, bonds, debentures, participations and other obligations of or issu ed by the Federal National Mortgage Association, the Student Loan Marketing Association, the Go vernment National Mortgage Association and the Federal Home Loan Mortgage Corporation, to the extent that such securities or obligations are eligible for the legal investment of City funds, together with a ny repurchase agreements which are secured by any of such securities or obligations that (1) have a fair market value (determined at least daily) at least equal to on e hundred two percent (102%) of the amount invested in the repurchase agreement, (2) are in the possession of the Tr ustee or a third party acting solely as custodian for the Trustee who holds a perfected first lien therein, and (3) are free from all third party claims.

6 4141-9530-1935.7

First Supplemental Indenture
“First Supplemental Indenture” means the First Supplemental Indenture, dated as of June 1, 2022, between the City and the Trustee supplemental to this Master Indenture.

Fiscal Year
“Fiscal Year” means the twelve-month pe riod terminating on June 30 of each year, or any other annual accountin g period hereafter selected and designated by the City as its Fiscal Year in accordance with applicable law.

Fitch
“Fitch” means Fitch, Inc., a corporation duly organized and existing under and by virtue of the laws of th e State of Delaware, and its successors or assigns, except that if such entity shall be dissolved or liquidated or shall no longer pe rform the functions of a securities rating agency, then the term “Fitch” shall be de emed to refer to any other nationally recognized securities rating agency selected by the City.

Generally Accepted Accounting Principles
“Generally Accepted Accounting Principl es” means the uniform accounting and reporting procedures set forth in publications of the American Institute of Certified Public Accountants or its successor, or by any other ge nerally accepted authority on such procedures, and includes, as applicable, the standards set forth by the Government al Accounting Standards Board or its successor.

Holder
“Holder” means any person who shall be the registered owner of any Outstanding Bond, as shown on the registration books maintained by the Trustee pursuant to Section 3.03.

Improvement Area
“Improvement Area” means Improvement Ar ea No. 2 of the City of Sacramento Delta Shores Community Faciliti es District No. 2019-01 (Improve ments), City of Sacramento, County of Sacramento, State of California, a portion of the Community Facilities District designated as such improvement area pursuant to the Act.

Independent Certified Public Accountant
“Independent Certified Public Account ant” means any nationally recognized certified public accountant or firm of such accountants, appointed and paid by the City, and who, or each of whom --
(1) is in fact independent and not under the domination of the City;

7 4141-9530-1935.7

(2) does not have a substantial financial interest, direct or indirect, in the operations of the City; and
(3) is not connected with the City as an officer or employee of the City, but who may be regularly retained to audit th e accounting records of and make reports thereon to the City.

Legal Investments
“Legal Investments” means any securities in which f unds of the City may be legally invested in accordance with the applicable law in effect at the time of such investment and in accordance with the then current investme nt policy of the City (as adopted by the City Council).

MAI
“MAI” means the designation assigned by the Appraisal Institute of professionals who adhere to ethical professional practice, continuing education, and best practices and industry trends with respect to real property valuation.

Master Indenture
“Master Indenture” means this Master Indenture, dated as of June 1, 2022, between the City and the Trust ee, entered into under and pursuan t to the Act and as may be amended and supplemented pursuant to its terms.

Maximum Annual Debt Service
“Maximum Annual Debt Service” means, as of any date of calculation, the largest Debt Service in any Bond Year during the period from the date of such calculation through the final maturity date of all Outstanding Bonds.

Mayor
“Mayor” means the Mayor of the City.

Moody’s
“Moody’s” means Moody’s Investors Service, a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors or assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, th en the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the City.

Net Special Tax Revenues
“Net Special Tax Revenues” means the proceeds of the Special Tax, less the Priority Administrative Expenses.

8 4141-9530-1935.7

Opinion of Counsel
“Opinion of Counsel” means a written opinion of coun sel (including, without limitation, counsel for the City) retained by the City.

Outstanding
“Outstanding,” when used as of any pa rticular time with reference to Bonds, means (subject to the provisions of Section 8.02) all Bonds except -- (1) Bonds cancelled and destroyed by the Tr ustee or delivered to the Trustee for cancellation and destruction;
(2) Bonds paid or deemed to have been paid within the meaning of Section

10.01; and
(3) Bonds in lieu of or in substitution for which other Bonds shall have been executed by the City and authenticated and delivered by the Trustee pursuant to Section

3.04. Principal Corporate Trust Office
“Principal Corporate Trust Office” means the corporate trust office of the Trustee in Los Angeles, California, at which at any par ticular time its corporate trust business is being administered, except that with re spect to presentation of Bonds for registrati on, payment, redemption, transfer or exchange, such term shall mean the corporate trust operations office of the Trustee in St. Paul, Minnesota , or such other office designate d by the Trustee from time to time as its Principal Corporate Trust Office.

Priority Administrative Expenses
“Priority Administrative Expenses” means (i) for the Fiscal Year 2021-22, $20,000, and (ii) for each subsequent Fiscal Year, an amount equal to the Priority Administrative Expenses for the preceding Fiscal Year plus 3% of such amount.

Rebate Fund
“Rebate Fund” means the City of Sacramen to Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds Rebate Fund established pursuant to Section 6.03 (to be maintained by the Treasurer).

Required Bond Reserve
“Required Bond Reserve” means:
(1) prior to the firs t to occur of the delivery by the City of a Series 2022 Escrow Fund Release Certificate to the Trustee an d the Series 2022 Escr ow Bonds Mandatory Redemption Date, as of any date of calculation, the least of (a) ten percent (10%) of the principal

9 4141-9530-1935.7

amount of the Outstanding Bonds other than the Series 2022 Escrow Bonds, or (b) Maximum Annual Debt Service with respect to the Outsta nding Bonds other than the Series 2022 Escrow Bonds, or (c) one hundred twenty-five percent (125 %) of the average Debt Service payable with respect to the Outstanding Bonds other than the Series 2022 Escrow Bonds in the current and in all future Bond Years, all as determined by the City under the Code and specified in writing to the Trustee; provided, that such requirement (or any portion thereof) may be satisfied by the provision of one or more polic ies of municipal bond insurance or surety bonds issued by a municipal bond insurer or by a letter of credit issued by a bank, the obligations insured by which insurer or issued by which bank, as the case may be, have at le ast one rating at the time of issuance of such policy or surety bond or letter of credit equal to “A” or higher assigned by Fitch or “A” or higher assigned by Moody’s or “A” or higher assigned by Standard & Poor’s, in each case without regard to any numerical modifier or plus or minus sign; and provided further, that the amount of the Required Bond Reserve shall not increase at any time except upon the delivery by the City of a Series 2022 Escrow Fund Release Certificate to the Trustee as provided in clause (2) below or the issuance of a new Series of Bonds; and provided further, that, with respect to the issuance of any issue of Bonds , if the amount on deposit in the Bond Reserve Fund would have to be increased by an amount greater than ten pe rcent (10%) of the stated principal amount of such issue of Bonds (or, if th e issue has more than a de minimis amount of original issue discount or premium, of the issu e price of such issue of Bonds) then the Required Bond Reserve shall be such lesser amount as is determined by a deposit of such 10%.; and (2) on and after the first to occur of the delivery by the City of a Series 2022 Escrow Fund Release Certificate to the Trust ee and the Series 2022 Escrow Bonds Mandatory Redemption Date, as of any date of calculation, the least of (a) ten percent (10%) of the principal amount of the Outstanding Bonds , or (b) Maximum A nnual Debt Service, or (c) one hundred twenty-five percent (125%) of the average Debt Se rvice payable hereunder in the current and in all future Bond Years, all as determined by the City under the Code and specified in writing to the Trustee; provided, that such requirement (or any portion thereof) may be satisfied by the provision of one or more polic ies of municipal bond insurance or surety bonds issued by a municipal bond insurer or by a letter of credit issued by a bank, the obligations insured by which insurer or issued by which bank, as the case may be, have at le ast one rating at the time of issuance of such policy or surety bond or letter of credit equal to “A” or higher assigned by Fitch or “A” or higher assigned by Moody’s or “A” or higher assigned by Standard & Poor’s, in each case without regard to any numerical modifier or plus or minus sign; and provided further, that the amount of the Required Bond Reserve shall not increase at any time except upon the delivery by the City of a Series 2022 Escrow Fund Release Ce rtificate to the Trustee or the issuance of a new Series of Bonds; and provided further, that, with respect to the issuance of any issue of Bonds, if the amount on deposit in the Bond Reserve Fund would have to be increased by an amount greater than ten percent (10%) of the stated principal amount of such issue of Bonds (or, if the issue has more than a de minimis amount of original issue discount or premium, of the issue price of such issue of Bonds) then the Re quired Bond Reserve shall be such lesser amount as is determined by a deposit of such 10%.

Series
“Series” means any series of the Bonds authorized, execute d and authenticated pursuant hereto and pursuant to one or more Su pplemental Indentures as constituting a single

10 4141-9530-1935.7

series and delivered on initial issuance in a si multaneous transaction pursuant to Section 2.02, and any Bonds thereafter executed, authenticated and delivered in lieu thereof or in substitution therefor pursuant to Section 3.04.

Series 2022 Bonds
“Series 2022 Bonds” has the meaning gi ven to such term in the First Supplemental Indenture.

Series 2022 Escrow Bonds
“Series 2022 Escrow Bonds” has the meanin g given to such term in the First Supplemental Indenture.

Series 2022 Escrow Bonds Mandatory Redemption Date
“Series 2022 Escrow Bonds Mandatory Redemption Date” has the meaning given to such term in the First Supplemental Indenture.

Series 2022 Escrow Fund
“Series 2022 Escrow Fund” has the meani ng given to such term in the First Supplemental Indenture.

Series 2022 Escrow Fund Release Certificate
“Series 2022 Escrow Fund Release Certific ate” has the meaning given to such term in the First Supplemental Indenture.

Sinking Fund Account
“Sinking Fund Account” means the account in the Bond Redemption Fund referred to by that name established pursuant to Section 5.02.

Sinking Fund Account Payments
“Sinking Fund Account Payments” m eans the payments required by all Supplemental Indentures to be deposited in the Sinking Fund A ccount for the payment of the Term Bonds.

Special Tax
“Special Tax” means the special tax authorized to be levied and collected annually on all Taxable Land in the Improvemen t Area under and pursuant to the Act at the special election held in the Improvement Area on January 25, 2022.

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Special Tax Formula
“Special Tax Formula” means the Amende d and Restated Rate and Method of Apportionment of Special Tax approved at the election held in the Improvement Area on January 25, 2022.

Special Tax Fund
“Special Tax Fund” means the City of Sacramento Delta Shores Community Facilities District No. 2019- 01 (Improvements) Improvement Area No. 2 Special Tax Bonds Special Tax Fund established pursuant to Section 5.01 (to be maintained by the Treasurer).

Standard & Poor’s
“Standard & Poor’s” means Standard & Poor’s Rating Services, a division of The McGraw Hill-Companies, Inc., a corporation duly organized and existing under and by virtue of the laws of the State of New York, and its successo rs or assigns, except that if such entity shall be dissolved or liquidate d or shall no longer perform the func tions of a securi ties rating agency, then the term “Standard & Poor’s” shall be deem ed to refer to any other nationally recognized securities rating agency selected by the City.

Supplemental Indenture
“Supplemental Indenture” means any indenture then in full force and effect that has been made and entered into by the City an d the Trustee, amendatory of or supplemental hereto; but only to the extent that such Suppl emental Indenture is sp ecifically authorized hereunder.

Tax Certificate
“Tax Certificate” means any certificate de livered upon the original issuance of a Series relating to Section 148 of the Code, or any functionally similar replacement certificate.

Taxable Land
“Taxable Land” means all land within the Improvement Ar ea taxable under the Act in accordance with the proceedings for the authorization of the issuance of the Bonds and the levy and collection of the Special Tax.

Treasurer
“Treasurer” means the City Treasurer of the City.

Trustee
“Trustee” means U.S. Bank Trust Comp any, National Association, a national banking association duly organized and existing unde r and by virtue of the laws of the United States of America and authorized to accept and execu te trusts of the character herein set forth, at

12 4141-9530-1935.7

its Principal Corporate Trust Of fice, and its successors or assi gns, or any othe r bank or trust company which may at any time be substituted in its place as provided in Section 7.01.

Written Request of the City
“Written Request of the City” means an instrument in writing signed by the City Manager or the Treasurer, or by any other officer of the City duly authorized by the City Council for that purpose.

SECTION 1.02. Equal Security . In consideration of the acceptance of the Bonds by the Holders thereof, this Master Indentur e shall be deemed to be and shall constitute a contract between the City and th e Holders from time to time to secure the full and final payment of the interest on and principa l of and redemption premiums, if any, on all Bonds which may from time to time be authorize d, sold, executed, authenticated a nd delivered hereunder, subject to the agreements, conditions, covenants and terms contained herein; and all agreements, conditions, covenants and terms contained herein required to be observed or performed by or on behalf of the City shall be for the equal and proportionate benefit, security and protection of all Holders without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number thereof or the time of execution, authentication or delivery thereof or otherwise for any cause whatso ever, except as expre ssly provided herein or therein.

ARTICLE II

ISSUANCE OF BONDS
SECTION 2.01. Authorization and Purpose of Bonds.
(a) The City Council has reviewed all proceedings heretofore taken relative to the authorization of the Bonds and has found, as a result of such review, and hereby finds and determines that all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by the Act, and the City is now authorized, pursuant to each and every requirement of the Act and hereof, to issue the Bonds in one or more Series as from time to time shall be authorized and esta blished by the City pursuant to the Act and pursuant hereto and pursuant to one or more Supplem ental Indentures, which Series shall be entitled to the benefit, protection and security hereof. The Bonds shall be designated the “City of Sacramento Delta Shores Co mmunity Facilities District No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds,” togeth er with such further appropriate particular designation added to or incorporated in the titl e of the Bonds of each Series as the City may determine or as shall be requ ired by the Act, and each Bond shall bear upon its face the designation so determined for the Series to which it be longs. Additionally, the Bonds may contain or have endorsed thereon such other desc riptive provisions, specifications and words not inconsistent with the provisions hereof as may be desirable or necessary to comply with custom or the rules of any securities exchange or commission or brokerage board or otherwise as may be determined by the City prior to the delivery thereof.

13 4141-9530-1935.7

(b) The purpose for which the Bonds are to be issued is to provide funds to finance the acquisition and construction of the Facilities, refund any Ou tstanding Bonds, make deposits to the Bond Reserve Fund or otherwis e provide for the satisfaction of the Required Bond Reserve, pay the Costs of Issuance, fund interest on the Bonds, pay Expenses, and pay other incidental expenses relating to any of th e foregoing, as further provi ded herein or in any Supplemental Indenture.
(c) From and after the issuance of any Seri es, the findings and determinations of the City Council respecting such Series shall be c onclusive evidence of the existence of the facts so found and determined in any act ion or proceeding in any court in which the validity of any Bonds of such Series is at issue, and no bona fide purchaser of any Bonds of such Series shall be required to see to the existence of any fact or to the performance of any condition or to the taking of any proceeding required prior to such issuance or to the application of the purchase price paid for such Series. The validity of the issuance of any Series shall not be dependent on or affected in any way by any proceedings taken by the City fo r the acquisition and construction of any Facilities, or any contracts made by the City in connection therewith, or the failure to complete the acquisition and construction of any Facilities. The recital co ntained in the Bonds that the Bonds are issued pursua nt to the Act and pursuant hereto and pursuant to one or more Supplemental Indentures shall be conclusive evid ence of their validity a nd of the regularity of their initial issuance, and all B onds shall be incontestable from a nd after their initial issuance, which shall be the date the definitive Bonds (or any temporary Bond exchangeable therefor) shall have been delivered to the purchaser thereof a nd the purchase price th ereof shall have been received.

SECTION 2.02. Conditions for the Issuance of Bonds. The City may at any time issue a Series payable from the Net Special Tax Revenues as provided herein on parity with all other Series theretofore issued hereunder, but only subject to the following conditions, which are hereby made conditions precedent to the issuance of any su ch Series other than the Series 2022 Bonds:
(a) The issuance of such Series shall have been authorized pursuant to the Act and pursuant hereto and shall have been provide d for by a Supplemental Indenture which shall specify the following:
(1) The purpose for which such Series is to be issued;
(2) The principal amount and designation of such Series and the denomination or denominations of the Bonds of such Series;
(3) The date, the maturity date or dates, the interest payment dates and the dates on which Sinking Fund Account Payments are due, if any, for such Series; provided, that (i) the Serial Bonds of such Series shall be payable as to principal on September 1 of each year in which principal of such Series fa lls due, and the Term Bonds of su ch Series shall be subject to mandatory redemption on September 1 of each year in which Sinking Fund Account Payments for such Series are due; (ii) the Bonds of such Series shall be payable as to interest semiannually on March 1 and September 1 of each year, except th at the first installment of interest may be payable on either March 1 or September 1 and sh all be for a period of not longer than twelve

14 4141-9530-1935.7

(12) months and the interest shall be payable thereafter semiannually on March 1 and September 1, (iii) all the Bonds of such Series of like maturity shall be identic al in all respects, except as to number or denomination, and (iv) se rial maturities of Serial Bonds of such Series or Sinking Fund Account Payments for Term Bonds of such Series, or any combination thereof, shall be established to provide for the redemption or paymen t of the Bonds of such Series on or before their respective maturity dates;
(4) The redemption premiums and redemption terms, if any, for such Series; (5) The form of the Bonds of such Series;
(6) The amount, if any, to be deposited from the proceeds of sale of such Series in the Bond Redemption Fund, and its use to pay interest on the Bonds of such Series; (7) The amount, if any, to be deposited from the proceeds of sale of such Series in the Bond Reserve Fund; provided, that the Required Bond Reserve shall be satisfied at the time that such Series becomes Outstanding;
(8) The amount, if any, to be deposited from the proceeds of sale of such Series in the separate account for such Series to be maintained in the Costs of Issuance Fund; and (9) Such other provisions that are appr opriate or necessary and are not inconsistent with the provisions hereof;
(b) No Event of Default hereunder or unde r any Supplemental Indenture shall have occurred and shall be then continuing;
(c) The Net Special Tax Revenues expected to be available to the City if the Special Tax were to be levied and collected at its maximum rate and amount on all Taxable Land in the Improvement Area during e ach Fiscal Year that any Bonds of such Series will be Outstanding, as shown by a written certificate of a special tax consultant selected by the City on file with the Trustee, would have produced a sum equal to at least 110% of the annual Debt Service during the Bond Year that begins in such Fiscal Year; provided, that the Net Special Tax Revenues expected to be available to the City from the levy of the Special Tax on any Unit (as defined in the Special Tax Form ula) of High-Density Residentia l Property (as defined in the Special Tax Formula) or any Unit of Mixed-Use Residential Property (as defined in the Special Tax Formula) shall not be used in such calcula tion for any Fiscal Year unless such Unit of High- Density Residential Property or Unit of Mixed- Use Residential Property is classified as Developed Property (as defined in the Special Tax Formula) under the Special Tax Formula as of the date of such calculation; and
(d) The aggregate Value-to-Lien Ratio of all Taxable Land (excluding the Value of any parcels of Taxable Land then delinquent in the payment of any Special Tax) shall be at least 3:1; and, for the purposes of this subpara graph (d) of this Section 2.02, the term “Value” means either the current assessed valuation of a parcel of Taxable Land or the appraised value of a parcel of Taxable Land determined by an MAI appraiser, and the term “Value-to-Lien Ratio” means the Value of all Taxable Land to the aggr egate principal amount of all Bonds Outstanding

15 4141-9530-1935.7

and the Series proposed to be is sued plus the aggregate principa l amount of all ot her assessment bonds and bonds issued under the Act and reasonably allocable to such Taxable Property.

Notwithstanding subparagraphs (c) and (d) of this Section 2.02, nothing contained herein shall limit the issuance of any Series payable from the Net Special Tax Revenues as provided herein if after the issu ance and delivery of such Series none of the Bonds theretofore issued hereunder will be Outstanding, and nothing contained herein shall limit the issuance of any Series payable from the Net Special Tax Reve nues as provided herein if, after the issuance and delivery of such Series, the Debt Service in each Bond Year th at begins after the issuance of such Series is not increased by reason of the issuance of such Series.

SECTION 2.03. Procedure for the Issuance of Bonds . At any time after the sale of any Series in accordance with the Act, such Series shall be executed by the City and shall be delivered to the Trustee and thereupon shall be authenticated and delivered by the Trustee, but only upon receipt by the Trustee of the following documents or money:
(a) An executed copy of the Supplemental I ndenture authorizing the issuance of such Series;
(b) A Written Request of the City as to the delivery of such Series; (c) An Opinion of Counsel to the effect that (i) the Supplemental Indenture has been duly executed and delivered by, and constitutes the valid and binding obligation of, the City; and (ii) the Bonds of such Series constitu te the valid and binding special tax obligations of the City;
(d) A Certificate of the City containing su ch statements as may be reasonably necessary to show compliance with the requirements of Section 2.02; (e) The proceeds of sale of such Series; and
(f) Such further documents or money as are required by the provisions of the Supplemental Indenture authorizing the issuance of such Series.

SECTION 2.04. Acquisition and Construction Fund . There has been established and there is hereby es tablished in the treasury of the City a fund to be known as the “City of Sacramento Delta Shor es Community Facilities Dist rict No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds Ac quisition and Construction Fund,” into which fund shall be deposited (in a separate account to be maintained therein) the amount required to be deposited therein by the provisions of each Supplem ental Indenture providing for the issuance of a Series. All money in the Acquisition and Constr uction Fund shall be a pplied by the Treasurer in the manner provided by the Act for payment of costs of the acquisition and construction of the Facilities (or for making reimbursements to the City for such costs theretofore paid by it), including payment of costs incide ntal to or connected with such acquisition and construction; or for the repayment of funds advanc ed to or for the Community Faci lities District; provided, that any money remaining in the separate account in the Acquisition and Construction Fund created in connection with the issuance of such Series (after the completion of the payment of the costs of the acquisition and construction of the Facilities for which such Series was issued) shall be

16 4141-9530-1935.7

withdrawn by the Treasurer fro m the Acquisition and Construc tion Fund and deposited by the Treasurer in the Special Tax Fund.

SECTION 2.05. Costs of Issuance Fund . There is hereby established with the Trustee a fund to be known as the “City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds Costs of Issuance Fund,” into which fund shall be depos ited (in a separate acc ount to be maintained therein) the amount required to be deposited therein by the provision of each Supplemental Indenture providing for the issuance of a Series. All money in th e Costs of Issuance Fund shall be applied by the Trustee as directed in writing by the City in the manner provided by law for payment of Costs of Issuance; provided, that any money remaining in the separate account in the Costs of Issuance Fund created in connection w ith the issuance of such Series (after the completion of the payment of the Costs of Issuance relating to such Series as specified in writing by the City to the Trustee) shal l be withdrawn by the Trustee from the Costs of Issuance Fund and transferred to the City for deposit in the separate account in the Acquisition and Construction Fund, if any, created in connection with the issuance of such Series and, if no separate account in the Acquisition and Construction Fund was created in connection with the issuance of such Series or if the City directs the Trustee in writing to do so, shall be withdrawn by the Trustee from the Costs of Issuance Fund and deposited in the Bond Redemption Fund and, in either case, the separate account in the Costs of Issuance F und created in connection with the issuance of such Series will be closed.

ARTICLE III

TERMS AND PROVISIONS OF BONDS
SECTION 3.01. Terms of Bonds.
(a) The interest on and principal of and redemption premiums, if any, on the Bonds shall be payable in lawful money of th e United States of America at the Principal Corporate Trust Office of the Tr ustee; provided that the Trustee may agree with the Holder of any Bond that such Holder may, in lieu of su rrendering the same for a new Bond, endorse on such Bond a record of partial payment of the prin cipal of such Bond in th e form set forth below (which shall be typed or printed on such Bond):

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PAYMENTS ON ACCOUNT OF PRINCIPAL

Payment Date
Principal
Amount Paid
Balance of Principal
Amount Unpaid
Signature
of Holder

_________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________ _________________

The Trustee shall maintain a record of each such partial payment made in accordance with the foregoing agreement and such r ecord of the Trustee shall be conclusive.

Such partial payment shall be valid upon payment of the amount thereof to the Holder of such Bond, and the City and the Trustee shall be fully released and disc harged from all liability to the extent of such payment regardle ss of whether such endorsement shall or shall not have been made upon such Bond by the Holder thereof and re gardless of any error or omission in such endorsement.
(b) The Bonds of each Series shall be issued as fully registered Bonds in such denominations as may be authorized in the Supplemental Indenture authorizing the issuance of such Series (but not to exceed the principal amount of Bonds of such Series maturing on any one date) and shall be dated as provided in the S upplemental Indenture auth orizing the issuance of such Series and shall be numbered as determined by the City. (c) Each Bond shall bear intere st from the interest paym ent date next preceding the date of authentication thereof, unless it is authenticated on a day during the period from the sixteenth (16
th) day of the month next preceding an in terest payment date to such interest payment date, both dates inclusive, in which event it shall bear interest from such interest payment date, or unless it is authenticated on a day on or before the fifteenth (15 th) day of the month next preceding the first interest payment date, in which event it shall bear interest from its date; provided, that if at the time of authenticati on of any Bond interest is then in default on any Outstanding Bonds, such Bond shall bear interest from the interest payment date to which interest has previously been paid or made available for payment on the Outstanding Bonds.

Payment of interest on the Bonds due on or before the maturity or prior redemption thereof shall be made only to the person whose name appears in the registration books required to be kept by the Trustee pursuant to Section 3.03 as the registered owner thereof at the close of business as of the fifteenth (15 th) day of the month next preceding each in terest payment date, such interest to be paid by check mailed by first class mail to such registered owner at hi s address as it appears on such books (except that in the case of a Ho lder of one million dollars ($1,000,000) or more in aggregate principal amount of Outstanding Bonds, payment shall be made at such Holder’s option by federal wire transfer of immediately available funds according to written instructions provided by such Holder to the Trustee at least fifteen (15) days before such interest payment date to an account in a bank or trust company or savi ngs bank that is a me mber of the Federal Reserve System and that is located in the United States of America). Payment of the principal of and redemption premiums, if a ny, on the Bonds shall be made only to the person whose name appears in the registration books required to be kept by the Trustee pursuant to Section 3.03 as the registered owner thereof, such principal and redemption premiums, if any, to be paid only on

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the surrender of the Bonds at the Principal Corporat e Trust Office of the Tr ustee at maturity or on redemption prior to maturity.
(d) The Bonds shall recite in substance that they are special tax obligations of the City and the interest on and principal of and redemption premiums, if any, on the Bonds are payable solely from the Net Speci al Tax Revenues and the other f unds provided herein for such payment, and that the City is not obligated to pay the Bonds except from the Net Special Tax Revenues and such other funds; that the General F und of the City is not liable and the full faith and credit of the City is not pledged for the payment of the in terest on or principal of or redemption premiums, if any, on the Bonds, and that no tax or assessment other than the Special Tax shall ever be levied or collected to pay the interest on or principal of or redemption premiums, if any, on the Bonds; th at the Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any of the pr operty of the City or any of its income or receipts except the Net Special Tax Revenues and such other funds; and that neither the payment of the interest on or principal of or redemption premiums, if a ny, on the Bonds is a general debt, liability or obligation of the City.

SECTION 3.02. Execution of Bonds . The Bonds shall be signed on behalf of the City by the manual or a facsimile signatu re of the Mayor and countersigned by the manual or a facsimile signature of the Ci ty Clerk. In case any officer of the City who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall have been delivered to the purchaser by the Trustee, such Bonds may nevertheless be delivered and issued and, upon such delivery and issuance, shall be as binding upon the City as though the officer who signed the same had continued to be such o fficer until such delivery and issuance. Also, any Bond may be signed on behalf of the City by any o fficer of the City w ho on the actual date of the execution of such Bond shall be the proper officer of the City, although on the nominal date of such Bond such person shall not have been such officer of the City. Only those Bonds that bear thereon a certificate of authentication executed by the Tr ustee shall be entitled to any benefit, protection or security hereunder or be valid or obligatory for any purpose, and such certificate of the Trustee shall be conclusive evid ence that the Bonds so au thenticated have been duly authorized, sold, executed and delivered hereunder and are entitled to the benefits hereof.

SECTION 3.03. Transfer and Exchange of Bonds . The Trustee will keep at its Principal Corporate Trust Office sufficient books for the transfer and exchange of the Bonds, which books shall at all times during normal business hours with reasonable prior notice be open to inspection by the City or by any Holder. Any Bond may, in accordance with its terms, be transferred or exchanged on such books by the person in whose name it is registered, in person or by his duly authorized attorney, upon payment by the Holder requesting such transfer or exchange of any tax or other governmental charge required to be paid with respect to such transfer or exchange and upon surrender of su ch Bond for cancellation accompanied by delivery of a duly executed written instrument of transfer or exchange in a form acceptable to the Trustee.

Whenever any Bond or Bonds shall be surrendered for transfer or exchange, the City shall execute and the Trustee shall authenticate and de liver a new Bond or Bonds of the same Series and maturity date and of authorized denomina tions for the same aggregate principal amount, except that neither the City nor the Trustee shall be required (i) to transfer or exchange any Bonds of any Series during the fifteen-day period prior to the selection of any Bonds of such Series for redemption under Article IV, or (ii) to transfer or exchange any Bond which has been

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selected for redemption in whole or in part, except the unredeemed portion of such Bond selected for redemption in part, from and after the day that such Bond has been selected for redemption in whole or in part under Article IV.

The City and the Trustee may deem and tr eat the registered owner of any Bond as the absolute owner of such Bond for all purposes hereof, whether such Bond shall be overdue or not, and neither the City nor th e Trustee shall be affected by any notice or knowledge to the contrary; and payment of the interest on such B ond shall be made only to the registered owner thereof at the close of business as the fifteenth (15 th) day of the month next preceding each interest payment date and paymen t of the principal of and rede mption premium, if any, on such Bond shall be made only to the registered owne r thereof, which paymen ts shall be valid and effectual to satisfy and di scharge the liability on such Bond to the extent of the sum or sums so paid.

SECTION 3.04. Mutilated, Destroyed, Stolen or Lost Bonds . In case any Bond shall become mutilated in respect of the body of such B ond or shall be believed by the Trustee to have been destroye d, stolen or lost, upon proof of ownership satisfactory to the Trustee and upon the surrender of such mutilated Bond at the Principal Corporate Trust Office of the Trustee, or upon the receipt of evidence satisfactory to the Trus tee of such destruction, theft or loss and upon receipt of indemnity satisfactory to the Trustee, and also upon payment of all expenses incurred by the City and the Trustee in the premises, the City shall execute and the Trustee shall authenticate and de liver at its Principal Corpor ate Trust Office a new Bond or Bonds of the same Series and maturity date for the same aggregate principal amount of like tenor and date and bearing such numbers and notations as the Trustee sh all determine in exchange and substitution for and upon cancellation of the mutilat ed Bond or in lieu of and in substitution for the Bond so destroyed, stolen or lost.

If any such destroyed, stolen or lost Bond shall have ma tured or shall have been called for redemption, payment of the amount due thereon may be made by the Trustee upon receipt of like proof, indemnity and payment of expenses.

Any replacement Bonds issued pursuant to this section shall be entitled to equal and proportionate benefits with al l other Bonds issued hereunder, and the City and the Trustee shall not be required to treat both the origin al Bond and any replacement Bond as being Outstanding for the purpose of determining the principal amount of Bonds which may be issued hereunder or for the purpose of determining any percentage of Bonds Outstanding hereunder, but both the original and the replacement Bond shall be treated as one and the same.

SECTION 3.05. Temporary Bonds . Any Bonds may be initially issued in temporary form exchangeable for definitive Bonds when ready for delivery, which temporary Bonds shall be printed, lithographed or typewritte n, shall be of such denominations as may be determined by the City, shall be issued in fully registered form, shall contain such reference to any of the provisions hereof as may be appropriate and shall be executed by the City upon the same conditions and in substantia lly the same manner as the defin itive Bonds. If the City issues temporary Bonds, it will execute and furnish de finitive Bonds without delay, and thereupon the temporary Bonds may be surrende red in exchange therefor at the Principal Corporate Trust Office of the Trustee, and the Tr ustee shall deliver in exchange for such temporary Bonds an

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equal aggregate principal amount of definitive Bonds of authori zed denominations of the same Series and maturity date or dates, and until so exchanged, the temporary Bonds shall be entitled to the same benefits as definitive Bonds issued hereunder.

SECTION 3.06. Use of Depository for Bonds.
(a) Unless otherwise provided in the S upplemental Indenture delivered in connection with the issuance of a Series of Bonds, The Depository Trust Company, New York, New York, is appointed as depository for the Bonds, and the Bonds of each Series shall be initially registered in the name of “Cede & C o.,” as nominee of The Depository Trust Company, and shall be initially issued as one Bond for each of the maturities bearing interest at a particular rate of interest per annum in the principal amounts set forth in the Supplemental Indenture providing for their issuance, and registered ownership of the Bonds of such Series, or any portion thereof, may not thereafter be transferred except:
(i) To any successor of Cede & Co., as nominee of The Depository Trust Company, or its nominee, or to any substitute depository designated pursuant to clause (ii) of this section (a “substitute depository ”); provided, that any successo r of Cede & Co., as nominee of The Depository Trust Company or substitute depository, shall be qualified under any applicable laws to provide the services proposed to be provided by it; (ii) To any substitute depository designated by the City, upon (1) the resignation of The Depository Trust Company or its successor (or any substitute depository or its successor) from its functions as depository, or (2) a determination by the City to substitute another depository for The Depository Trust Company (or its successor) because The Depository Trust Company or its successor (or any substitute depository or its successor) is no longer able to carry out its functions as depository; provided, that any such substitute depository shall be qualified under any applicable laws to provide the services proposed to be provided by it; or (iii) To any person as provided below, upon (1) the resignation of The Depository Trust Company or its successor (or s ubstitute depository or its successor) from its functions as depository, or (2) a determination by the City to remove The Depository Trust Company or its successor (or any substitute depos itory or its successor) from its functions as depository.
(b) In the case of any transfer pursuant to clause (i) or clause (ii) of subsection (a) hereof, upon receipt of all the Bonds of any Series by the Trus tee, together with a Written Request of the City to the Trustee, a new Bond for each maturity of such Series bearing a particular rate of interest per annum shall be executed by the City and authenticated and delivered by the Trustee in the aggregate prin cipal amount of the Bonds of such Series, registered in the name of such successor or such substitute depository, or their nominees, as the case may be, all as specified in such Written Reque st of the City. In th e case of any transfer pursuant to clause (iii) of subsection (a) hereof, upon receipt of all the Bonds of any Series by the Trustee, together with a Writte n Request of the City to the Tr ustee, a new Bond or Bonds for each maturity of such Series bearing a particular rate of interest per annum shall be executed by the City and authenticated and delivered by the Tr ustee in such denominations and registered in the names of such persons as are requested in su ch Written Request of the City, subject to the

21 4141-9530-1935.7

limitations of Section 3.03, and thereafter, the Bonds of such Series shall be transferred pursuant to Section 3.03; provided, that the Trustee shall not be required to deliver such new Bonds on a date prior to sixty (60) days after receipt of such Written Request of the City. (c) So long as any Bonds are registered in the name of Cede & Co. or its registered assigns, the City and the Trustee shall be entitled to treat the person in whose name any Bond of any Series is registered as the owner thereof for all pu rposes hereof and any applicable laws, notwithstanding any notice to the contrary received by the City or the Trustee; and the City and the Trustee shall have no responsibility for tran smitting payments to, communication with, notifying, or otherwise dealing with any beneficial owners of the Bonds of such Series, and neither the City nor the Trustee shall have any responsibility or obligation, legal or otherwise, to the beneficial owners or to any other party, including The Depository Trust Company or its successor (or substitute depositor y or its successor), except to The Depository Trust Company or its successor (o r substitute depository or its successor) as a Holder of the Bonds of such Series.
(d) So long as any Bonds are registered in the name of Cede & Co. or its registered assigns, the City and the Trustee shall cooperate with Cede & Co., as sole Holder, or its registered assigns, in effect ing payment of the interest on and principal of and redemption premiums, if any, on such Bonds by arranging for payment in such manner that funds for such payments are properly identified and are made immediately available on the date they are due.

ARTICLE IV

REDEMPTION OF BONDS
SECTION 4.01. Privilege of Redemption of Bonds . Any Series subject to redemption prior to maturity pur suant to a Supplemental Indent ure shall be redeemable, upon notice being given as provided in this article, at such times, upon payment of such redemption premiums, if any, and upon such te rms (in addition to and consistent with the terms contained in this article) as may be prescrib ed in the Supplemental Indenture au thorizing the issuance of such Series.

SECTION 4.02. Selection of Bonds for Redemption . Unless otherwise provided in the Supplemental Indenture providing fo r the issuance of a Series of Bonds, if less than all the Bonds of any Series are to be redeem ed at the option of the City at any one time, the City shall select the maturity date or dates of the Bonds of such Series to be redeemed, and if less than all the Bonds of any Series of any one maturity date are to be redeemed at any one time, the Trustee shall select the Bonds of such Series or the portions thereo f of such maturity date to be redeemed in integral multiples of five thousan d dollars ($5,000) in any manner that it deems appropriate. The City shall notify the Trustee in writing at least fifteen (15) days prior to the date fixed for the selection of any Bonds for redemption, and after such selection the Trustee shall promptly notify the City in writing of the numbers of the B onds selected for redemption in whole or in part.

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SECTION 4.03. Notice of Redemption . The Trustee shall mail a notice of redemption pursuant to Section 11.09 to the respective Holders of all Bonds selected for redemption in whole or in part and to all securities information services selected by the City and designated to the Trustee in writing to comply with custom or the rules of any securities exchange or commission or brokerage board or otherwise as may be determined by the City in its sole discretion and to the orig inal underwriter or first purcha ser of the Bonds selected for redemption. Such notice shall stat e the date of such notice, the Bonds to be redeemed, the date of issue of such Bonds, the redemption date, the redemption price, the place of redemption (being the address of the Principal Corporate Tr ust Office of the Trustee), the CUSIP number (if any) of the maturity or maturiti es and, if less than all of any such maturity, the numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed in part only, the respective portions of the princi pal amount thereof to be redeem ed, and shall give notice that further interest on such Bonds or the portions thereof redeemed will not accrue from and after the redemption date, and shall require that such Bonds be surrendere d at the Principal Corporate Trust Office of the Trustee for payment of the redemption price th ereof. If any Bond so chosen for redemption shall not be redeemable in whole, such notice shall also state that such Bond is to be redeemed in part only and that upon presen tation of such Bond for re demption there will be issued in lieu of the unredeemed portion of principal thereof a new Bond or Bonds of the same Series and maturity date of authorized denominations equa l in aggregate pr incipal amount to such unredeemed portion.

With respect to any notice of optional redemption or extraordinary redemption from prepayments of the Special Tax, unless, upon the giving of notice, the Bonds to be redeemed have been deemed to have been paid within the meaning of Ar ticle X of this Master Indenture, the notice must state that the rede mption will be conditional upon the receipt by the Trustee on or before the date fi xed for redemption of amounts suff icient to pay the principal of, and premium, if any, and interest on, the Bonds to be redeemed, and that if those amounts have not been so received the notice will be of no for ce and effect and the City will not be required to redeem the Bonds. If any such notice of redemption contains such a condition and such amounts are not so received, the redemption will not be ma de and the Trustee shall within a reasonable time thereafter give notice to the effect that the amounts were not so received and the redemption was not made, the notice to be given by the Trustee in the same manner, and to the same parties, as the notice of redemption was given. The failu re to redeem Bonds subject to a conditional redemption notice will not constitute an Event of Default.

Any notice of optional redemption or extraordinary redemption from prepayments of the Special Tax may be resc inded by written notice given to the Trustee by the City no later than five Business Days before the date specified fo r redemption. The Trus tee shall give notice of such rescission as soon thereafter as practicable in the same manner, and to the same parties, as the notice of redemption was given.

SECTION 4.04. Partial Redemption of Bonds. Upon surrender of any Bond redeemed in part only, the City shall execute and the Trustee shall authenticate and deliver to the registered owner thereof at the expense of the City a new Bond or Bonds of the same Series and maturity date and of authorized denominations equal in aggregate pr incipal amount to the unredeemed portion of the Bond surrendered.

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SECTION 4.05. Effect of Redemption of Bonds . If notice of redemption has been duly given as aforesaid and money for the payment of th e principal of and redemption premiums, if any, on, together w ith interest to the redemption date on, the B onds or portions thereof so called for redemption is held by the Trustee, then on the redemption date designated in such notice such Bonds or such portions thereof shal l become due and payable, and from and after the date so designated interest on the Bonds or such portions thereof so called for redemption shall cease to accrue and the Holders of such Bonds shall have no rights in respect thereof except to receive payment of the princi pal or such portions thereof and the redemption premiums, if any, thereon and the interest accrued thereon to the redemption date.

ARTICLE V

PAYMENT OF BONDS
SECTION 5.01. Deposit of Proceeds of the Special Tax in the Special Tax Fund; Pledge of Net Special Tax Revenues and Other Amounts . The City agrees and covenants that all proceeds of the Special Tax, when and as received, will be received and held by it in trust hereunder, and will be deposited as and when received in the “City of Sacr amento Delta Shores Community Facilities District No. 2019-01 (Improvements) Im provement Area No. 2 Special Tax Bonds Special Tax Fund,” whic h fund is hereby established in the treasury of the City and which fund the City hereby agrees and covenants to main tain with the Treasurer so long as any Bonds are Outstanding hereunder, and all such money in the Special Tax Fund shall be accounted for separately and apar t from all other accounts, funds, money or other resources of the City, and shall be disbursed, allocated and applied solely to the uses and purposes hereinafter set forth in this article. Subject only to the provisions of this Master Indentur e permitting the application thereof for the purpos es and on the terms and conditions set forth herein, there are hereby pledged to secure the payment of the principal of and premium, if any, and interest on the Bonds in accordance with their te rms and the provisions of this Ma ster Indenture, all of the Net Special Tax Revenues received by or on behalf of the City and any other amounts held in the Special Tax Fund, the Bond Redemption Fund, and the Bond Reserve Fund. This pledge constitutes a lien on and security interest in such assets and will attach, be perfected, and be valid and binding without any physical delivery or further act.

Notwithstanding anything to the contrary in this Master Indenture, as soon as practicable after the receipt by the City of any prepayment of the Special Tax, the Treasurer shall (i) deposit any component thereof representing the “Future Facilities Amount” (as defined in the Special Tax Formula) in the Acquisition and C onstruction Fund, (ii) deposit any component thereof representing the “Administrative Fees and Expenses” (as defined in the Special Tax Formula) in the Expense Fund, and (iii) transf er to the Trustee for deposit in the Bond Redemption Fund, any remaining amounts, for the extraordinary redemption of Bonds pursuant to the terms of any Supplemental Indenture. The respective amounts of the deposits and transfers described in clauses (i), (ii) and (iii) will be determined by the Treasurer.

SECTION 5.02. Allocation of Money in the Special Tax Fund . All money in the Special Tax Fund shall be set aside by the Treasurer in the following respective funds and accounts (each of which funds and accounts the City agrees and covenants to maintain with the

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Treasurer or the Trustee, as the case may be, so long as any Bonds are Outstanding hereunder) in the following order of priority, and all money in each of such funds and accounts shall be applied, used and withdrawn only for the purposes hereinafter authorized in this section, namely:
(1) City of Sacramento Delta Shores Community Facilities District No. 2019- 01 (Improvements) Improvement Area N o. 2 Special Tax Bonds Expense Fund (maintained by the Treasurer) (Priority Administrative E xpenses Deposit). Promptly after the receipt of any proceed s of the Special Tax in a Fis cal Year, the Treasurer shall, from the money in the Special Tax Fund, tran sfer to and deposit in the Expense Fund a sum equal to the Priority Administrative Expenses for such Fiscal Year. (2) City of Sacramento Delta Shores Community Facilities District No. 2019- 01 (Improvements) Improvement Area No. 2 Special Tax Bonds Bond Redemption Fund (maintained by the Trustee). On or before the first (1 st) day in each March and September, the Treasurer shall, from the th en remaining money in the Special Tax Fund, transfer to the Trustee for deposit in th e Bond Redemption Fund an amount of money equal to the aggregate amount of interest becoming due and payabl e on all Outstanding Bonds on such March 1 or September 1, as th e case may be, and on or before the first (1st) day in September 1 in each year, the Treasurer shall, from the then remaining money in the Special Tax Fund, transfer to the Trustee for deposit in the Bond Redemption Fund an amount of money equal to the aggreg ate amount of principal becoming due and payable on all Outstanding Serial Bonds on such Septem ber 1 plus the Sinking Fund Account Payments required to be made on such Septem ber 1 into the Sinking Fund Account; provided, that all of the aforesaid pa yments shall be made without priority of any payment over any other payment, and in the event that the money in the Bond Redemption Fund on any March 1 or September 1 is not equal to the amount of interest becoming due on all Bonds on such date, or in the event that the money in the Bond Redemption Fund on any September 1 is not e qual to the amount of principal of the Bonds becoming due on such date plus the amount of the Si nking Fund Account Payments becoming due on such date, as th e case may be, then such money shall be applied pro rata in such proportion as su ch interest and principal and Sinking Fund Account Payments bear to each other; and provided further, that no deposit need be made into the Bond Redemption Fund if the amount of money contained therein is at least equal to the amount required by the terms of th is paragraph to be deposited therein at the times and in the amounts herein provided.

All money in the Bond Redemption Fund shall be used and withdrawn by the Trustee solely to pay the in terest on the Bonds as it sh all become due and payable (including accrued interest on any Bonds purchased or redeem ed prior to maturity) plus the principal of and redemption premiums, if any, on the Bonds as they shall mature or upon the prior redemption thereo f, except that any money in the Sinking Fund Account shall be used only to purchase or redeem or retire Term Bonds a nd any money deposited in the Bond Redemption Fund from the proceeds of a Series of Bonds to be used to pay interest on that Series of Bonds shall, subj ect to the terms of th e Supplemental Indenture providing for the issuance of such Series of Bonds, be us ed only to pay interest on that Series of Bonds.

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(3) City of Sacramento Delta Shores Community Facilities District No. 2019- 01 (Improvements) Improvement Area No. 2 Special Tax Bonds Bond Reserve Fund (maintained by the Trustee). On or before the first (1 st) day in September in each year, the Treasurer shall, from the then remaini ng money in the Special Tax Fund, transfer to the Trustee for deposit in th e Bond Reserve Fund such amount of money as shall be required to restore the Bond Reserve Fund to an amount equal to the Required Bond Reserve; and for this purpose all investment s in the Bond Reserve Fund shall be valued on or before September 1 of each year at the face value thereof if such investments mature within twelve (12) mo nths from the date of valua tion, or if such investments mature more than twelve (12) months after the date of valu ation, at the lesser of (i) the par value of such investments, or (ii) the pr ice at which such investments are redeemable by the holder at his or her opti on, if so redeemable, or if not so redeem able, at the lesser of (i) the par value of such investments, or (ii) the market value of such investments; provided, that no de posit need be made in to the Bond Reserve Fund if the amount contained therein is at least equal to th e Required Bond Reserve. In making any valuations hereunder, the Trustee may utili ze computerized securi ties pricing services that may be available to it, including those available through its regular accounting system and rely thereon.

Any money in the Bond Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of (i) paying the interest on or principal of the Bonds in the event there is insufficient money in the Bond Rede mption Fund available for this purpose; (ii) reinstating the amount available under any municipal bond insurance policy, surety bond, or letter of credit held in satisfaction of all or a porti on of the Required Bond Reserve (each a “Reserve Fund Credit Instrument”); or (i ii) retiring Bonds, in whole or in part, to the extent that the amount on deposit in the Bond Reserv e Fund exceeds the Required Bond Reserve due to a redemption or defeasance of Bonds; provided, that if as a result of any of the valuations require d by the first paragraph of this Secti on 5.02(2) it is determined that the amount of money in the Bond Reserve Fund exceeds the Required Bond Reserve, the Trustee shall withdraw th e amount of money representing such excess from such fund and shall depo sit such amount of money in the Bond Redemption Fund; and provided further, that prior to the first to occur of the delivery by the City of a Series 2022 Escrow Fund Release Certificate to the Trustee and the Series 2022 Escrow Bonds Mandatory Redemption Date, any money in the Bond Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of pa ying the interest on or principal of Bonds other than the Series 2022 Escrow Bonds in the event there is insufficient money in the Bond Redemption Fund available for this purpose. (4) Expense Fund. On September 1 in e ach year, the Treasurer shall, from the then remaining money in the Special Tax F und, transfer to and de posit in the Expense Fund a sum equal to the amount required by the City for the payment of budgeted Expenses during the twelve-month period begi nning on such date, or to reimburse the City for the payment of unbudgeted Expenses during the prior twelve-month period, in each case, to the extent such Expenses we re not already funded or reimbursed by a deposit of Priority Administrative Expenses as set out in subpara graph (1) above. All money in the Expense Fund shall be used and withdrawn by the Treasurer only for transfer to or for the account of the City to pay budgeted Expenses as herein provided, or

26 4141-9530-1935.7

to reimburse the City for th e payment of unbudgeted Expenses as herein provided, or, at the option of the City, to pay interest on or principal of or redemp tion premiums, if any, on the Bonds in the event that no other money is available therefor.

All money remaining in the Special Tax Fund on September 1 of each year, after transferring all of the sums required to be tran sferred therefrom on or prior to such date by the provisions of Sections 5.02(1), (2 ), (3), and (4), shall be wit hdrawn from the Special Tax Fund by the Treasurer for and deposited in the “C ity of Sacramento Delta Shores Community Facilities District No. 2019- 01 (Improvements) Improvement Area No. 2 Special Tax Bonds Community Facilities Fund,” which fund the City he reby agrees and covena nts to maintain with the Treasurer so long as any Bonds are Outstand ing hereunder, and all money in the Community Facilities Fund shall be used a nd withdrawn by the City solely fo r the benefit of the Community Facilities District in accordance with the Act; provided, that the Treasurer shall not make any such withdrawal of money in the Special Tax Fund if and when (to the Treasurer’s actual knowledge) an Event of Default is then existing hereunder.

ARTICLE VI

COVENANTS OF THE CITY
SECTION 6.01. Punctual Payment and Performance . The City will punctually pay the interest on a nd principal of and redemption pr emium, if any, to become due on every Bond issued hereunder in st rict conformity with the terms of the Act and hereof and of the Bonds, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein and in all Supplemental Indentures and in the Bonds required to be observed and performed by it.

SECTION 6.02. Against Indebtedness and Encumbrances . The City will not issue any evidences of indebtedness payabl e from the Net Special Tax Revenues except as provided herein, and will not crea te, nor permit the creation of, a ny pledge, lien, charge or other encumbrance upon any money in the Special Tax F und other than as provided herein; provided, that the City may at any time, or from time to time, issue evidences of indebtedness for any lawful purpose of the Community Facilities Di strict which are payabl e from any money in the Community Facilities Fund as ma y from time to time be depos ited therein (as provided in Section 5.02) so long as any paymen ts due thereunder shall be subordi nate in all respects to the use of the Net Special Tax Revenues as provided herein.

SECTION 6.03. Against Federal Income Taxation.
(a) The City will not take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, and specifically the City will not directly or indirectly use or make any use of the proceeds of the Bonds or any other funds of the City or take or omit to take any action that would cause the Bonds to be “arb itrage bonds” subject to federal income taxation by reason of S ection 148 of the Code or “pri vate activity bonds ” subject to federal income taxation by reason of Section 141(a) of the Code or obligations subject to federal

27 4141-9530-1935.7

income taxation because they ar e “federally guaranteed” as pr ovided in Section 149(b) of the Code; and to that end the City, with respect to the proceeds of the Bonds and such other funds, will comply with all requirements of such sections of the Code; pr ovided, that if the City shall obtain an opinion of nationally recognized bond counsel to the e ffect that any action required under this section is no longer required, or to th e effect that some further action is required, to maintain the exclusion from gross income of the interest on the Bonds pursuant to Section 103 of the Code, the City may rely conclusively on su ch opinion in complying with the provisions hereof. In the event that at any time the City is of the opinion that for purposes of this section it is necessary to restrict or limit the yield on th e investment of any money held by the Treasurer hereunder or otherwise the City sh all so instruct the Treasurer in writing, and the Treasurer shall take such action as may be necessary in accordance with such instructions. (b) Without limiting the generality of th e foregoing, the City will pay from time to time all amounts required to be rebated to the United States of America pursuant to Section 148(f) of the Code and all regulat ions of the United States Depa rtment of the Treasury issued thereunder to the extent that such regulations ar e, at the time, applicable and in effect, which obligation shall survive payment in full or defe asance of the Bonds, and to that end, there has been established and there is hereby continued in the treasury of the City a fund to be known as the “City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area N o. 2 Special Tax Bonds Rebate Fund” to be held in trust and administered by the Treasurer. The City will comply with the provisions of each Tax Certificate with respect to making deposits in the Rebate Fund, and all money held in the Rebate Fund is pledged to provide payments to the Unite d States of America as provided herein and in each Tax Certificate and no other person shall have claim to such money except as provided in each Tax Certificate.
(c) In connection with the issuance of a Series of Bonds, the City may exclude the application of the covenants contained in this Section 6.03 to such Series of Bonds.

SECTION 6.04. Payment of Claims . The City will pay and discharge any and all lawful claims which, if unpaid, might become payable from the Net Special Tax Revenues or any part thereof or upon any funds in the hands of the Treasurer or the Trustee allocated to the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, or which might impair the security of the Bonds.

SECTION 6.05. Accounting Records and Other Reports.
(a) The City will keep, or in the case of tr ansactions made by the Trustee it will cause the Trustee to keep, appr opriate accounting records in whic h complete and correct entries shall be made of all transactions relating to th e receipt, investment, disbursement, allocation and application of the proceeds of the Special Tax and of the proceeds of the Bonds, which accounting records shall at all t imes during normal business hours with reasonable prior notice be subject to the inspection of any Holder (or his representative authorized in writing). (b) The City will prepare annually not later than October 30 of each year (commencing in the year 2022) and file with the California Debt and Investment Advisory Commission by mail, postage prepaid, or any othe r method approved by the California Debt and

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Investment Advisory Commission all informati on required to be filed pursuant to Section 53359.5(b) of the Act. Additionally, the City w ill notify the California Debt and Investment Advisory Commission by mail, postage prepaid, or any other method approved by the California Debt and Investment Advisory Commission, within te n (10) days if the Trustee fails to pay any interest on or principal of any of the Bonds on any scheduled payment date or if funds are withdrawn from the Bond Reserve Fund to pay any interest on or principal of the Bonds.

SECTION 6.06. Protection of Security and Rights of Holders. The City will preserve and protect the security of the Bonds and the rights of the Holders and will warrant and defend their rights against all claims and demands of all persons.

SECTION 6.07. Levy and Collection of the Special Tax . The City, so long as any Bonds are Outstanding, will annually levy th e Special Tax against all Taxable Land in the Improvement Area in accordance with the Special Tax Formula and, subject to the limitations in the Special Tax Formula and the Act, make provi sion for the collection of the Special Tax in amounts which will be sufficient, together w ith the money then on deposit in the Bond Redemption Fund or on deposit with the Trustee for transfer to the Bond Redemption Fund, after making reasonable allowances for contingencies and errors in the estimates, to yield proceeds equal to the amounts required for compliance w ith the agreements, conditions, covenants and terms contained herein, and which in any event will be sufficient to pay the interest on and principal of and Sinking Fund Account Payments for and rede mption premiums, if any, on the Bonds as they become due and payable and to replenish the Bond Reserve Fund (including reinstating the amount available under any Reserv e Fund Credit Instrument, as contemplated by Section 5.02(2)) and to pay all cu rrent Expenses as they become due and payable in accordance with the provisions and terms he reof. The Special Tax shall be collected in the same manner as ordinary ad valorem property ta xes for the County of Sacramento are collected and, except as otherwise provided in Section 6.08 or by the Act, shall be subject to the same penalties and the same collection procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes.

SECTION 6.08. Foreclosure of Special Tax Liens . The City will annually on or before October 1 of each year review th e public records of the County of Sacramento relating to the collection of the Special Tax in order to dete rmine the amount of the Special Tax collected in the prior Fiscal Year, and (a) on the ba sis of such review the City will, not later than the succeeding December 1, institute foreclosure proceedings as authorized by the Act against all parcels that are delinquent in the payment of such Special Tax in such Fiscal Year by one thousand five hundred thirty dol lars ($1,530) or more for Fi scal Year 2021-22, which dollar amount shall escalate by two percent (2.0%) per a nnum for each Fiscal Y ear after Fiscal Year 2021-22, in order to enforce the lie n of all such delinquent instal lments of such Special Tax, and will diligently prosecute and pursue such foreclos ure proceedings to judgment and sale, and (b) on the further basis of such review, if the City determines that the total amount so collected is less than ninety-five per cent (95%) of the total amount of the Special Tax levied in such Fiscal Year, the City will, not later than the succeedi ng December 1, institute foreclosure proceedings as authorized by the Act against all parcels that are delinquent in the payment of such Special Tax in such Fiscal Year to enforce the lien of all the delinquent installments of such Special Tax, and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale; provided, that any actions taken to enforce de linquent Special Tax liens shall be taken only

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consistent with Sections 53356.1 through 53356.7, both inclusive, of the Government Code of the State of California; and provide d further, that the City shall not be obligated to enforce the lien of any delinquent installment of the Special Tax for any Fiscal Year in which the City shall have received one hundred percent (100%) of the amount of such installment from the County of Sacramento pursuant to the so-called “Teeter Plan.”
SECTION 6.09. Continuing Disclosure . The City will comply with and carry out all of the provisions of each continuing disclosure certificate or continuing disclosure agreement executed by the City in connection with the issuance of a Series of Bonds, as originally executed and as it may be amended from time to time in accordance with the terms thereof, and notwithstanding any other provision he reof, failure of the City to comply with any continuing disclosure certificate or continuing disclosure agreemen t shall not be considered an Event of Default hereunder; provided, that a ny Holder may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this section.

SECTION 6.10. Further Assurances. The City will adopt, deliver, execute, make and file any and all furthe r assurances, instruments and re solutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Holders of the rights and benefi ts provided herein, including without limita tion the filing of all financing stat ements, agreements, instruments or other documents in the forms and in the locatio ns necessary to perfect and protect, and to continue the perfection of, the pledge of the Net Special Tax Revenues provided herein to the fullest extent possible under applicable law of the State of California.

ARTICLE VII

THE TRUSTEE
SECTION 7.01. The Trustee . U.S. Bank Trust Company, National Association, at its Principal Corporate Trust Of fice, is hereby appointed Trustee for the purpose of receiving all money which the City is required to transfer to it hereunder and for applying and using such money as provided herein for the pur pose of paying the interest on and principal of and redemption premiums, if any, on the Bonds. The City agrees that it will at all times maintain a Trustee having a Principal Corporate Trust Office in San Francisco or Los Angeles, California.

The City may remove the Trustee initia lly appointed and any successor thereto and may appoint a successor or successors thereto by an instrument in writing; provided, that any such successor shall be a bank or trust comp any doing business and having a corporate trust office in San Francisco or Los Angeles, California, having a combined capital (exclusive of borrowed capital) and surplus of at least one hundred million dollars ($100,000,000) and subject to supervision or examination by a federal or state banking author ity, and if such bank or trust company publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the pur pose of this section the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The

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Trustee may at any time resign by giving written notice of such resignation to the City and by giving notice of such resignati on by mail pursuant to Section 11.09 to the Holders, and upon receiving such notice of resigna tion, the City shall promptly appoint a successor Trustee by an instrument in writing having the qualifications re quired hereby. Any resignation or removal of a Trustee and appointment of a su ccessor Trustee shall become effective only upon the acceptance of appointment by the successor Trustee. If within thirty (30) days after notice of the removal or resignation of the Trustee no successor Trustee sh all have been appointed by the City and shall have accepted such appointment, the removed or resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee, which court may thereupon, after such notice, if any, as it may deem prop er and prescribe and as may be required by law, appoint a successor Trustee having the qualifications required hereby.

Notwithstanding anything to the contrary contained herein, any corporation or association into which the Trustee may be merged or with which it may be consolidated, or any corporation or association resul ting from any merger or consolid ation to which the Trustee shall be a party, or any corporation or association succeeding to the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto.

The Trustee is hereby authorized to pay interest on the Bonds due on or before the maturity or prior redemption thereof to the Holders as their names appear at the close of business as of the fifteenth (15th) day of the month next preceding each intere st payment date on the registration books required to be kept by it pursu ant to Section 3.03 as the registered owners thereof, such interest to be paid by check mailed by first class mail to the Holders at their addresses appearing on such books (except that in the case of a Holder of one million dollars ($1,000,000) or more in principal amount of Outsta nding Bonds, payment shall be made at such Holder’s option by wire transfer of immediately available funds to an account in a bank or trust company or savings bank that is a member of th e Federal Reserve System and that is located in the United States of America acco rding to written instructions pr ovided by such Holder to the Trustee at least fifteen (15) days before such interest payment date) and to pay to the Holders the principal of and redemption pr emiums, if any, on the Bonds upon presentation and surrender of the Bonds to the Trustee at maturity or on redemption prior to maturity. The Trustee shall cancel and destroy all Bonds paid by it at maturity or on redemption prior to maturity and all Bonds surrendered to it by the City, and sh all (if requested by the City) deliver to the City a certificate of such destruction, and the Trustee shall k eep accurate records of all Bonds cancelled and destroyed by it hereunder. All money held by or on behalf of the Trustee for the payment of the interest on or principal of or redemption premiums, if any, on th e Bonds, whether at maturity or upon prior redemption, shall be held in trust for the account of the Holders thereof, and the Trustee shall not be required to pay Holders or the City any intere st on, or be liable to the City, the Holders or any other person for any interest earned on, any money so held.

The City shall from time to time, subject to any agreement be tween the City and the Trustee then in force, pay the Trustee compensation for its services, reimburse the Trustee for all its advances and expenditures, including but not limited to advances to and fees and expenses of independent accountants, counsel and engi neers or other experts employed by it in the exercise and performance of its rights and oblig ations hereunder, and indemnify and save the Trustee harmless against loss, expenses, costs, claims and liabilities (including without limitation

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those of its attorneys and agen ts) not arising from its own ne gligence or willful misconduct which it may incur in the exercise and performance of its rights and obligations hereunder, which obligation shall survive the resignation or removal of any Trustee or the defeasance of the Bonds.

SECTION 7.02. Liability of the Trustee . The recitals of facts, agreements and covenants contained herein an d in the Bonds shall be taken as statements, agreements and covenants of the City, and the Trustee does not assume any responsibility for the correctness of the same and does not make any representation as to the sufficiency or validity hereof or of the Bonds or of the Special Tax, or as to the financial or technical feasibility of the acquisition and construction of any of the Facilities, and shall not incur any responsibility in respect thereof other than in connection with the rights and obligat ions expressly assigned to or imposed upon it herein or in the Bonds, and shall not be liable in connection with the performance of its duties hereunder except for its own negligence or willful misconduct. The Trustee shall not be liable for any error of judgment made in good faith, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts, and no provision hereof shall require the Trustee to expend or risk its own funds or otherwise incur any liability for the performance of its duties hereunder, or in the exercise of any of its rights or powers hereunder.

The Trustee shall perform only those dutie s expressly set fort h herein, and no implied duties or obligations shall be read herein against the Trustee. The Trustee shall have no responsibility with re spect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Bonds.

SECTION 7.03. Notice to the Trustee The Trustee shall be protected in acting upon any Bond, certificate, c onsent, notice, opinion, report, request, resolution or other document or paper believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counse l, including, w ithout limitation, counsel to the City, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection with re spect to any action taken or suffered hereunder in good faith and in accordance therewith. The Tr ustee shall not be deemed to have knowledge of any default or Event of Default hereunder unless and until an officer at its Principal Corporate Trust Office responsible for the administration of its oblig ations hereunder shall have actual knowledge thereof or the Trustee shall have r eceived written notice ther eof at its Principal Corporate Trust Office.

Whenever in the administration of its rights and obligations hereunder the Trustee shall deem it necessary or desirable that a matter be established or proved prior to taking or suffering any action hereunder, such matter (unle ss other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively established or proved by a Certificate of the C ity or an Accountant’s Report, which shall be full warrant to the Trustee for any action taken or suff ered under the provisions hereof upon the faith th ereof, and on which the Trustee ma y conclusively rely, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable.

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ARTICLE VIII

AMENDMENT OF OR SUPPLEMENT TO THE MASTER INDENTURE
SECTION 8.01. Procedure for Amendment of or Supplement to the Master Indenture.
(a) Amendment or Supplement With Consent of Holders. This Master Indenture and the rights and obligations of the City and of the Holders may be amended or supplemented at any time by the execution and deliv ery of a Supplemental Indenture by the City and the Trustee, which Supplemental Indenture shall become binding when the written consents of the Holders of a majority in aggregate princi pal amount of the Bonds then Ou tstanding, exclusive of Bonds disqualified as provided in Section 8.02, shall have been filed with the Trustee; provided, that no such amendment or supplement shall (1) extend the maturity of or reduce the interest rate on or otherwise alter or impair the obligation of the City to pay th e interest on or principal of or Sinking Fund Account Payment for or redemption premium, if any, on any Bond at the time and place and at the rate and in th e currency and from the funds provi ded herein without the express written consent of the Holder of such Bond, or (2) permit the issuance by the City of any obligations payable from the Net Special Tax Reve nues on a parity with the Bonds other than as provided herein, or jeopar dize the ability of the City to levy and collect the Special Tax, or (3) reduce the percentage of Bonds required for the written consen t to any such amendment or supplement, or (4) modify any rights or obligations of the Trustee without its prior written assent thereto. The written consent of the Holders of a Series of Bonds may be effected (a) through a consent by the underwriter of such Series of Bonds at the time of the issuance of such Series of Bonds and (b) through a provision of a Suppl emental Indenture that deems any Holder purchasing such Series of Bonds to consent for pu rposes of this Section 8.01(a) by virtue of its purchase of such Series of Bonds.
(b) Amendment or Supplement Without Cons ent of Holders. This Master Indenture and the rights and obligations of the C ity and of the Holders may also be amended or supplemented at any time by the execution and de livery of a Supplemental Indenture by the City and the Trustee, which Supplemental Indenture shall become binding upon execution without the prior written consent of any Holders, but only for any one or more of the following purposes -- (i) To add to the agreements and cove nants required herein to be performed by the City other agreements and covenants thereafter to be performed by the City which shall not (in the opinion of the City) adversely affect the interests of the Holders, or to surrender any right or power rese rved herein to or conferre d herein upon the City which shall not (in the opini on of the City) materially advers ely affect the interests of the Holders;
(ii) To make such provisions for the purpose of curing any ambiguity or of curing, correcting or supplementing any defective provision contained herein or in regard to questions arising hereunder which the City may deem desirable or necessary and not inconsistent herewith and which shall not (in the opinion of the City) materially adversely affect the interests of the Holders;

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(iii) To authorize the issuance under the Act and hereunder of a Series and to provide the conditions and terms under which su ch Series may be issued, subject to and in accordance with the provisions of Article II;
(iv) To authorize the issuance under and subject to the Act of any refunding bonds for any of the Bonds and to provide the conditions and terms under which such refunding bonds may be issued, subject to and in accordance with the provisions of Article II;
(v) To make such additions, deletions or modifications as may be necessary or appropriate to insure compliance with Section 148(f) of the Code relating to the required rebate of excess investment earnings to the United States of America, or otherwise as may be necessary to insure the exclusion from gross income for purposes of federal income taxation of the interest on the Bonds or the exemption of such interest from State of California personal income taxes;
(vi) To make such additions, deletions or modifications as may be necessary or appropriate to maintain any then current rating on the Bonds; (vii) To permit the qualification hereof under the Trust Indenture Act of 1939, as amended, or any similar federal statute hereafter in effect, and to add such other terms, conditions and provisions as may be permitted by that act or similar federal statute and which shall not (in the opinion of the City) materially adversely affect the interests of the Holders; and
(viii) For any other purpose that does not (in the opinion of the City) materially adversely affect the interests of the Holders.

SECTION 8.02. Disqualified Bonds. Bonds owned or held for the account of the City shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Bonds pr ovided for in this article or in Article IX, a nd shall not be entitled to consent to or take any other action provided for in this article or in Article IX.

SECTION 8.03. Endorsement or Replacement of Bonds After Amendment or Supplement. After the effective date of any action taken as here inabove provided, the City may determine that the Bonds may bear a notati on by endorsement in form approved by it as to such action, and in that cas e upon demand of the Holder of any Bond Outstanding on such effective date and presentation of his Bond for such purpose at the Principal Corporate Trust Office of the Trustee a suitable notation as to such action sha ll be made on such Bond. If the City shall so determine, new Bonds so modified as, in the opin ion of the City, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Holder of any Bond Outstanding on such effective date such new Bonds shall, upon surrender of such Outstanding Bonds, be excha nged at the Principal Corporate Trust Office of the Trustee, without cost to each Holder, for Bonds then Outstanding.

SECTION 8.04. Amendment or Supplement by Mutual Consent . The provisions of this article shall not prevent any Holder from accep ting any amendment or

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supplement as to any particular Bonds held by him; provided, that due notation thereof is made on such Bonds.

ARTICLE IX

EVENTS OF DEFAULT AND REMEDIES OF HOLDERS
SECTION 9.01. Events of Default and Remedies of Holders. If one or more of the following events (herein “Events of Default”) shall happen, that is to say -- (a) if default shall be made by the City in the due and punctual payment of any interest on or principal of or Sinking Fund Acco unt Payment for any of the Bonds when and as the same shall become due and payable, whether at maturity, by proceedings for redemption or otherwise;
(b) if default shall be made by the City in the observance or performance of any of the other agreements or covena nts contained herein required to be observed or performed by it, and such default shall have c ontinued for a period of thirty (30) days after the City shall have been given notice in writing of such default by the Trustee; or (c) if the City shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent ju risdiction shall approve a petition filed with or without the consent of the City seeking arrangement or reorganization under the federal bankruptcy laws or any ot her applicable law of the United States of America or any state therein, or if under the provisions of any other law for th e relief or ai d of debtors any court of competent jurisdiction shall assume custody or c ontrol of the City or of the whole or any substantial part of its property;
then in each and every such case during the con tinuance of such Event of Default the Trustee may take the following remedial steps --
(a) by mandamus or other suit or proceeding at law or in equity to compel the City Council or the City or a ny of the officers or employees of the City to perform each and every term, provision and co venant contained in this Ma ster Indenture and in the Bonds and carry out their duties under the Act and the agreements and covenants with the Holders contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Holders; or
(c) by suit in equity upon the nonpayment of the Bonds to require the City Council or the City or its offi cers and employees to account as the trustee of an express trust.

SECTION 9.02. Application of Net Special Tax Revenues After Default. If an Event of Default shall occur and be con tinuing, all Net Special Ta x Revenues thereafter

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received by the City shall be immediately transf erred to the Trustee and the Trustee shall apply all Net Special Tax Revenues and any other funds thereafter received by the Trustee under any of the provisions of this Master Indenture as follows and in the following order:
(a) To the payment of any expenses necessa ry in the opinion of the Trustee to protect the interests of the Ho lders of the Bonds, including th e costs and expenses of the Trustee and the Holders in declaring such Ev ent of Default, and payment of reasonable fees and expenses of the Trustee (includi ng reasonable fees and disbursements of its counsel and other agents) incu rred in and about the performance of its powers and duties under this Master Indenture.
(b) To the payment of the prin cipal of and interest and premium, if any, then due on the Bonds (upon presentation of the Bonds to be paid, and stamping thereon of the payment if only partially paid, or surrender th ereof if fully paid) subject to the provisions of this Master Indenture, as follows:

First: to the payment to the persons entitled thereto of all installments of interest then due in the order of the maturity of such installments, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to th e persons entitled thereto, without any discrimination or preference; and
Second: to the payment to the persons entitled thereto of the unpaid principal (including Sinking Fund Acc ount Payments) of and redemption premium, if any, on the Bonds which shall have become due, whether at maturity or by call for redemption, in the order of their due dates, with interest on the overdue principal at the rate borne by the respective Bonds, and, if the amount available shall not be sufficient to pay in full all the Bonds due on any date, together with such interest, then to th e payment thereof ratably, according to the amounts of principal of and premium, if any, due on su ch date to the persons entitled thereto, without any discrimination or preference. (c) Any remaining amounts shall be transf erred by the Trustee to the City for deposit in the Special Tax Fund.

SECTION 9.03. Trustee to Represent Holders . The Trustee is hereby irrevocably appointed (and the successive re spective Holders of the Bonds, by taking and holding the same, shall be conclusi vely deemed to have so appoint ed the Trustee) as trustee and true and lawful attorney-in-fact of the Holders of the Bonds fo r the purpose of exercising and prosecuting on their behalf such rights and remedi es as may be available to such Holders under the provisions of the Bonds, this Master Indenture, the Act an d applicable provisions of any other law. Upon the occurrence and continuance of an Event of Default or other occasion giving rise to a right in the Trustee to represent the Holders, the Trustee in its discretion may, and upon the written request of the Holders of not less than a majority in aggregate principal amount of the Bonds then Outstanding, and upon being indemnified to its satisfaction therefor, shall, proceed to protect or enforce its rights or the rights of such Holders by such appropriate action, suit,

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mandamus or other proceedings as it shall deem most effectual to protect and enforce any such right, at law or in equity, either for the speci fic performance of any covenant or agreement contained herein, or in aid of the execution of any power herein granted, or for the enforcement of any other appropriate legal or equitable right or remedy vested in the Trustee or in such Holders under this Master Indenture, the Ac t or any other law; and upon instituting such proceeding, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver of the Net Special Tax Revenues and other amounts and assets pledged under this Master Indenture, pending such proceedings. All rights of action under this Master Indenture or the Bonds or otherwise may be prosecuted a nd enforced by the Trustee without the possession of any of the Bonds or the production thereof in any proceedi ng relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of all the Holders of such Bonds , subject to the provisions of this Master Indenture.

SECTION 9.04. Holders’ Direction of Proceedings . Anything in this Master Indenture to the contra ry notwithstanding, the Holders of a majority in aggregate principal amount of the Bonds then Outstandi ng shall have the right, by an instrument or concurrent instruments in writi ng executed and delivered to th e Trustee, and upon indemnifying the Trustee to its satisfacti on therefor, to direct the me thod of conducting all remedial proceedings taken by the Trustee hereunder, provided that such direction shall not be otherwise than in accordance with law and the provisions of this Master Indenture, and that the Trustee shall have the right to decline to follow any such direction wh ich in the opinion of the Trustee would be unjustly prejudicial to Holders not parties to such direction.

SECTION 9.05. Limitation on Holders’ Right to Sue . No Holder of any Bond shall have the right to instit ute any suit, action or proceeding at law or in equity, for the protection or enforcement of a ny right or remedy under this Mast er Indenture, the Act or any other applicable law with respect to such Bond, unless (1) such Holder shall have given to the Trustee written notice of the occurrence of an Event of Default; (2) the Holders of not less than a majority in aggregate pr incipal amount of the Bonds then Ou tstanding shall have made written request upon the Trustee to exerci se the powers hereinbe fore granted or to institute such suit, action or proceeding in its own name; (3) such Hold er or said Holders shall have tendered to the Trustee indemnity satisfactory to it against the cost s, expenses and liabilities to be incurred in compliance with such request; a nd (4) the Trustee shall have refu sed or omitted to comply with such request for a period of sixt y (60) days after such written re quest shall have been received by, and said tender of indemnity shall have been made to, the Trustee.

Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Holder of Bonds of any remedy hereunder or under law; it being understood and intended that no one or more Holders of Bonds shall have any right in any manner whatever by such Holder’s or Holders’ action to affect, disturb or prejudice the s ecurity of this Master Indenture or the rights of any other Holders of Bonds, or to enforce any right unde r this Master Indenture, the Ac t or other applicable law with respect to the Bonds, except in the manner herein provided, and that all pr oceedings at law or in equity to enforce any such right shall be inst ituted, had and maintained in the manner herein provided and for the benefit and protection of a ll Holders of the Outstanding Bonds, subject to the provisions of this Master Indenture.

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SECTION 9.06. Absolute Obligation of the City . Nothing in Section 9.05 or in any other provisio n of this Master Indenture, or in the Bonds, contained shall affect or impair the obligation of the City, which is absolute and unconditional, to pay the principal of and redemption premium, if any, and in terest on the Bonds to the resp ective Holders of the Bonds at their respective dates of maturity, or upon call for redemption, as herein provided, but only out of the Net Special Tax Revenues and other assets he rein pledged therefor, and not otherwise, or affect or impair the righ t of such Holders, whic h is also absolute and unconditional, to enforce such payment by virtue of the contract embodied in the Bonds.

SECTION 9.07. Termination of Proceedings. In case any proceedings taken by the Trustee or any one or more Holders on acc ount of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or the Holders, then in every such case the Ci ty, the Trustee and the Holders, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the City, the Trustee and the Holders shall continue as though no such proceedings had been taken.

SECTION 9.08. Remedies Not Exclusive . No remedy herein conferred upon or reserved to the Trustee or to the Holders of the Bonds is intended to be exclusive of any other remedy or remedies, and each and every such remedy, to the extent permitted by law, shall be cumulative and in addition to any other remedy given hereunde r or now or he reafter existing at law or in equity or otherwise.

SECTION 9.09. No Waiver of Default. No delay or omission of the Trustee or of any Holder of the Bonds to exercise any right or power ar ising upon the occurrence of any default shall impair any such right or power or sh all be construed to be a waiver of any such default or an acquiescence ther ein; and every power and remedy given by this Master Indenture to the Trustee or to the Holders of the Bonds ma y be exercised from time to time and as often as may be deemed expedient.

ARTICLE X

DEFEASANCE
SECTION 10.01. Discharge of the Bonds.
(a) If the City shall pay or cause to be paid or there shall otherwise be paid to the Holders of all Outstanding Bonds the interest thereon and th e principal thereof and the redemption premiums, if any, ther eon at the times and in the ma nner stipulated therein and herein, then all agreements, cove nants and other obligations of th e City to the Holders of such Bonds hereunder shall thereupon cease, terminat e and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the City all such instruments as may be necessary or desirable to evidence such discharge and sa tisfaction, and the Trustee shall pay over or deliver to the City for deposit in the Community Facilities Fund all money or securities held by it pursuant hereto which are not required for the payment of the interest on and principal of and redemption premiums, if any, on such Bonds.

38 4141-9530-1935.7

(b) Any Outstanding Bonds shall on the maturity date or redemption date thereof be deemed to have been paid within the meanin g of and with the effect expressed in subsection (a) of this section if there shall be on deposit with the Trustee money which is sufficient to pay the interest due on such Bonds on such date and the principal and redemp tion premiums, if any, due on such Bonds on such date.
(c) Any Outstanding Bonds shall prior to the maturity date or redemption date thereof be deemed to have been paid within the meaning and with th e effect expressed in subsection (a) of this section if (1) in case any of such Bonds are to be redeemed on any date prior to their maturity date, notice of redemption shall have been given as provided in Article IV or provision satisfactory to the Trustee shall have been made for the giving of such notice, (2) there shall have been deposited with an escrow agent or the Trustee e ither (x) money in an amount which shall be sufficient to pay when due the interest to become due on such Bonds on and prior to the maturity dates or redemption date s thereof, as the case may be, and the principal of and redemption premiums, if any, on such Bonds on a nd prior to th e maturity dates or the redemption dates thereof, as the case may be or (y) Federal Secu rities which are not subject to redemption except by the holder th ereof prior to maturity (inc luding any Federal Securities issued or held in book-entry form on the books of the Department of the Treasury of the United States of America), the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with su ch escrow agent or the Trustee at the same time, shall be sufficient to pay when due the inte rest to become due on such Bonds on and prior to the maturity dates or redemption dates thereof, as the case may be, and the principal of and redemption premiums, if any, on such Bonds on and prior to the maturity dates or the redemption dates thereof, as the case may be, as evidenced by an Accountant’s Report on file with the City and the Trustee in the case of a deposit pursuant to clause (y) of this subsection, and (3) in the event such Bonds are not by thei r terms subject to redemption w ithin the next succeeding sixty (60) days, the City shall have instructed the Trustee to mail pursuant to Section 11.09 a notice to the Holders of such Bonds that the deposit required by clause (2) above has been made with such escrow agent or the Trustee and that such Bonds are deemed to have been paid in accordance with this section and stating the maturity date s or redemption dates, as the case may be, upon which money will be available for the payment of the principal of and redemption premiums, if any, on such Bonds.

SECTION 10.02. Unclaimed Money . Anything contained herein to the contrary notwithstanding, any m oney held by the Trustee in trus t for the payment and discharge of any of the Bonds or any interest thereon wh ich remains unclaimed for two (2) years after the date when such Bonds or interest thereon have become due and pa yable, either at their stated maturity dates or by call for redemption prior to maturity, if such money was held by the Trustee on such date, or for two (2) years after the date of deposit of such money if deposited with the Trustee after the date when such Bonds or inte rest thereon became due and payable, shall be repaid by the Trustee to the City as its abso lute property free from trust for deposit in the Community Facilities Fund and fo r use in accordance with th e Act, and the Trustee shall thereupon be released and discharg ed with respect thereto and the Holders sh all look only to the City for the payment of such Bonds and interest thereon; provided, that before the Trustee shall be required to make any such repayment the City shall mail pursuant to Section 11.09 a notice to the Holders of all Outstanding Bonds that such money remains unclaimed and that after a date named in such notice, which date shall not be less than thirty (30) days after the date of the

39 4141-9530-1935.7

mailing of such notice, the balance of such money then unclaimed will be returned to the City for deposit in the Community Facilities Fund.

ARTICLE XI

MISCELLANEOUS
SECTION 11.01. Liability of City Limited to Net Special Tax Revenues and Certain Other Funds. Notwithstanding anything contained he rein, the City shall not be required to advance any money derived from any source of income other than the Net Special Tax Revenues and the other funds provided herein for th e payment of the interest on or principal of or redemption premiums, if any, on the Bonds.

The Bonds are special tax oblig ations of the City and the interest on and principal of and redemption premiums, if any, on the Bonds are payable solely fro m the Net Special Tax Revenues and such other funds, and the City is not obligated to pay them except from the Net Special Tax Revenues and such other funds. The Ge neral 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, and no tax or assessment other than the Special Tax shall ever be levied or collected to pay the inte rest 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 a ny of its income or receipts except the Net Special Tax Revenues and such ot her funds, and neither the paym ent of the interest on or principal of or redemption prem iums, if any, on the Bonds is a general debt, liability or obligation of the City. The Bonds do not constitu te an indebtedness of the City within the meaning of any constitutional or statutory debt limitation or re striction, and neither the City Council nor the City nor any officer or employee thereof shall be liable for the payment of the interest on or principal of or redemption premiu ms, if any, on the Bonds otherwise than from the Net Special Tax Revenues and such other funds as provided herein.

SECTION 11.02. Benefits of the Master Indenture Limited to Certain Parties.

Nothing contained herein, express or implied, is intended to give to any entity or person other than the City Council, the City, the Treasurer, th e Trustee and the Holder s any right, remedy or claim under or by reason hereof, and any agreement or covenant required herein to be performed by or on behalf of the City Council or the City or any officer or employee thereof shall be for the sole and exclusive benefit of the Trustee and the Holders.

SECTION 11.03. Successor is Deemed Included in All References to Predecessor. Whenever either the City Council or the City or any officer or employee thereof is named or referred to herein, such reference sh all be deemed to include the successor to the powers, duties and functions with respect to th e administration, control and management of the Community Facilities District and the Facilities that are presently vested in the City Council or the City or such officer or employee, and all agreements and covenants required herein to be performed by or on behalf of the City Council or the City or any officer or employee thereof shall bind and inure to the benef it of the respective successors thereof whether so expressed or not.

40 4141-9530-1935.7

SECTION 11.04. Execution of Documents by Holders . Any declaration, request, consent or other instrument which is pe rmitted or required herein to be executed by Holders may be in one or more instruments of similar tenor, and may be executed by Holders in person or by their attorneys duly authorized in writing. The fact and date of the execution by any Holder or his attorney of any de claration, request, consent or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person si gning such declaration, request, c onsent or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness to such execution duly sworn to before such notary public or other officer. The ownership of Bonds and the amount, maturity, number and da te of holding the same shall be provided by the registration books required to be kept by the Trustee pursuant to Section 3.03.

Any declaration, request, consent or other instrument or writi ng of the Holder of any Bond shall bind all future Holders of such B ond with respect to anything done or suffered to be done by the City in good faith and in accordance therewith.

SECTION 11.05. Deposit and Investment of Money in Accounts and Funds .

All money held by the Treasurer in any fund established here in shall be deposited by the Treasurer in time or dema nd deposits in any state or nationally chartered bank or trust company, including the Trustee or its affili ates, or in any state or federal savings and loan association, and shall be secured at all times by such obligations as are required by law to the fullest extent required by law; provided, that all money in the Acquisition and Construction Fund, the Special Tax Fund and the Expense Fund may be invested by the Treasurer in Lega l Investments. All money held by the Trustee in the Bond Redemp tion Fund shall be invested by the Trustee pursuant to a Written Request of the City receive d by the Trustee at least two (2) days before making any such investment in those Legal Investments specified in such Written Request of the City that mature not later than the date on which it is estimated that such money will be required to be paid out hereunder, all money held by the Trustee in the Series 2022 Escrow Fund shall be invested by the Trustee pursuant to a Written Request of the City received by the Trustee at least two (2) days before making any such investment in those Legal Investments specified in such Written Request of the City that mature not later than the date on which it is estimated that such money will be required to be paid out of the Series 2022 Escrow Fund, and all money held by the Trustee in the Bond Reserve Fund shall be invested by the Trustee pursuant to a Written Request of the City received by the Trustee at least two (2) days before making any such investment in those Federal Securities specified in such Written Request of the City that mature not more than five (5) years from the date of purchase by the Trustee, or the final maturity date of any Outstanding Bonds, whichever is earlier, and the Trustee may conclusively rely that any investment specified in such Wr itten Request of the City is a Legal Investment or a Federal Security hereunder, as the case may be; provided, that in the absence of receipt of any such Written Request of the City, the Trustee shall, to the extent practicable, invest such money in units of a taxable government money-market po rtfolio composed of or secured by Federal Securities. The Trustee (or any of its affiliates) may act as pr incipal or agent or as sponsor, advisor or manager in connecti on with the making of any inve stment by the Trustee hereunder and may impose its customary char ges therefor, and the Trustee sh all not be responsible for any loss suffered in connection with any investment made in accordance herewith.

41 4141-9530-1935.7

The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they o ccur, the City specifically waives receipt of such confirmations to the extent permitted by law; pr ovided, that the Trustee will furnish the City periodic cash transaction statements which shall include details for all i nvestment transactions made by the Trustee hereunder.

Except as otherwise provided in a Suppl emental Indenture providing for the establishment of a fund or account, all interest received on any such money so deposited or invested which exceeds the requirements of th e fund or account from which such money was deposited or invested shall (subject to the requirements of Section 6.03) be deposited in the Bond Redemption Fund, and all losses on any such mone y so deposited or invest ed shall be borne by the fund from which the deposit or investment was made.

SECTION 11.06. Waiver of Personal Liability . No member of the City Council or officer or em ployee of the City shall be indivi dually or personall y liable for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds, but nothing herein contained shall relieve any member of the City Council or officer or employee of the City from the performance of any official du ty provided hereby or by the Act or by any other applicable provisions of law.

SECTION 11.07. Acquisition of Bonds by City . All Bonds acquired by the City, whether by purchase or gift or otherwis e, shall be surrendered to the Trustee for cancellation and destruction by it.

SECTION 11.08. Content of Certificates and Reports . Every certificate or report with respect to complian ce with an agreement, condition, covenant or term provided herein shall include (a) a statemen t that the person or persons maki ng or giving such certificate or report have read such agreem ent, condition, covenant or te rm and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the opinion contained in such certificate or repo rt is based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such agreement, condition, covena nt or term has been complied with; and (d) a statement as to whether, in th e opinion of the signe rs, such agreement, condition, covenant or term has been complied with.

Any such certificate made or given by an officer of the City may be based, insofar as it relates to legal matters, upon a representation made in an Opinion of Counsel unless such officer knows that the representa tion with respect to the matters upon which his certificate may be based, as aforesaid, is erroneous, or in the ex ercise of reasonable care should have known that the same was erroneous. Any such Opinion of Counsel may be based, insofar as it relates to factual matters information with respect to which is in the possession of the City, upon a representation by an officer or officers of the City unless the counsel giving such Opinion of Counsel knows that the representation with resp ect to the matters upon wh ich his representation may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous.

42 4141-9530-1935.7

SECTION 11.09. Notice by Mail. Any notice required to be given by mail to any Holders or to any securities information services or to th e original underw riter or first purchaser of the Bonds shall be given by maili ng a copy of such notice, first class postage prepaid, to such Holders at their addresses app earing in the books required to be kept by the Trustee pursuant to the provisions of Section 3.03 or to such securities information services or to such underwriter or first purchaser not less than thir ty (30) days nor more than ninety (90) days following the action or prior to the event concerning which notice thereof is required to be given; provided, that neither failure to receive any su ch notice nor any immate rial defect contained therein shall affect the sufficien cy or validity of the proceedi ngs taken in connection with the action or the event concerning which such notice was given.

SECTION 11.10. Maintenance of Accounts and Funds . Any account or fund required herein to be establis hed and maintained by the Treas urer or the Trustee may be maintained by the Treasurer or the Trustee, as the case may be in its accounting records in its customary manner either as an account or a fu nd, and may, for the purposes of such accounting records, any audits thereof and any financial reports or statements with respect thereto, be treated either as an account or as a fund; but all su ch accounting records with respect to all such accounts and funds shall at all times be maintained by the Treasurer and the Trustee in accordance with industry standards and with due rega rd for the protection of the security of the Bonds and the rights of the Holders.

SECTION 11.11. Article and Section Headings, Gender and References. The headings or titles of the several articles and sections hereof a nd the table of contents appended hereto shall be solely for convenience of referenc e and shall not affect the construction, effect or meaning hereof, and words of any gender shall be deemed and construed to include all genders.

All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding articles, sections or subdivisio ns hereof; and the words “hereby,” “herein,” “hereof,” “hereto,” “herewith” and “hereunder” and other words of similar import refer to this Master Indenture as a whole and not to any particular article, section or subdivision hereof.

SECTION 11.12. Partial Invalidity . If any one or more of the agreements, conditions, covenants or te rms or portions thereof required hereby to be obser ved or performed by the City or the Trust ee should be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covena nts or such term or terms or such portions thereof shall be null and void and shall be deem ed separable from the remaining agreements, conditions, covenants or te rms or portions thereof and shall in no way affect the validity hereof or of the Bonds; and the Holders shall retain al l the rights and benefits accorded to them under the Act or any other appli cable provisions of law. The City hereby declares th at it would have executed this Master Indenture and each and every other article , section, paragraph, subdivision, sentence, clause and phrase hereof and woul d have authorized the issuance of the Bonds pursuant hereto irrespective of the fact that any one or more of th e articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the applic ation thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.

SECTION 11.13. Execution in Counterparts; Electronic Signatures . This Master Indenture may be executed in several counterpart s, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. Each of the parties

43 4141-9530-1935.7

hereto agrees that the transact ion consisting of this agreemen t may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this agreement using an electronic signature, it is signing, adopting, and accepting this agreement and that signing this agreement using an electroni c signature is the legal equivalent of having placed its handwritten signature on this agreemen t on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this agreement in a usable format.

SECTION 11.14. Governing Law. This Master Indent ure shall be governed by and construed and interpreted in accordance with the laws of the State of California.

SECTION 11.15. Notices. All written notices to be given hereunder shall be given by first class mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely:

If to the City:

City of Sacramento
Historic City Hall
915 I Street, 3rd Floor
Sacramento, California 95814
Attention: Debt-Management Division
If to the Trustee:

U.S. Bank Trust Company, National Association
1 California Street, Suite 1000
San Francisco, CA 94111
Attention: Global Corporate Trust
SECTION 11.16. Effective Date of the Master Indenture . This Master Indenture shall take effect from and after its execution and delivery.

44 4141-9530-1935.7

IN WITNESS WHEREOF, the City of Sacramento has caused this Master Indenture to be signed in it s name by the City Treasurer, and U.S. Bank Trust Company, National Association, as Trustee, in token of its acceptance of the trusts created hereunder, has caused this Master Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the date and year first above written.

CITY OF SACRAMENTO

By_______________________________________
John P. Colville Jr., City Treasurer

U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee

By_______________________________________
Authorized Officer

TABLE OF CONTENTS

Page

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4141-9530-1935.7

ARTICLE I
DEFINITIONS; EQUAL SECURITY

SECTION 1.01. Definitions...................................................................................... 2 SECTION 1.02. Equal Security .............................................................................. 12

ARTICLE II

ISSUANCE OF BONDS

SECTION 2.01. Authorization and Purpose of Bonds ........................................... 12 SECTION 2.02. Conditions for the Issuance of Bonds .......................................... 13 SECTION 2.03. Procedure for the Issuance of Bonds ........................................... 15 SECTION 2.04. Acquisition a nd Construction Fund ............................................. 15 SECTION 2.05. Costs of Issuance Fund ................................................................ 16

ARTICLE III

TERMS AND PROVISIONS OF BONDS

SECTION 3.01. Terms of Bonds ............................................................................ 16 SECTION 3.02. Execution of Bonds ...................................................................... 18 SECTION 3.03. Transfer and Exchange of Bonds ................................................. 18 SECTION 3.04. Mutilated, Destroye d, Stolen or Lost Bonds ................................ 19 SECTION 3.05. Temporary Bonds ......................................................................... 19 SECTION 3.06. Use of Depository for Bonds ....................................................... 20

ARTICLE IV

REDEMPTION OF BONDS

SECTION 4.01. Privilege of Redemption of Bonds ............................................... 21 SECTION 4.02. Selection of Bonds for Redemption ............................................. 21 SECTION 4.03. Notice of Redemption .................................................................. 22 SECTION 4.04. Partial Redemption of Bonds ....................................................... 22 SECTION 4.05. Effect of Redemption of Bonds ................................................... 23

ARTICLE V

PAYMENT OF BONDS

TABLE OF CONTENTS
(continued)
Page

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SECTION 5.01. Deposit of Proceeds of the Special Tax in the Special Tax Fund; Pledge of Net Special Tax Revenues and Other
Amounts ....................................................................................... 23 SECTION 5.02. Allocation of Mone y in the Special Tax Fund ............................. 23

ARTICLE VI

COVENANTS OF THE CITY

SECTION 6.01. Punctual Payment and Performance ............................................ 26 SECTION 6.02. Against Indebtedness and Encumbrances .................................... 26 SECTION 6.03. Against Fede ral Income Taxation ................................................ 26 SECTION 6.04. Payment of Claims ....................................................................... 27 SECTION 6.05. Accounting Reco rds and Other Reports ...................................... 27 SECTION 6.06. Protection of Securi ty and Rights of Holders .............................. 28 SECTION 6.07. Levy and Collecti on of the Special Tax ....................................... 28 SECTION 6.08. Foreclosure of Special Tax Liens ................................................ 28 SECTION 6.09. Continuing Disclosure ................................................................. 29 SECTION 6.10. Further Assurances....................................................................... 29

ARTICLE VII

THE TRUSTEE

SECTION 7.01. The Trustee .................................................................................. 29 SECTION 7.02. Liability of the Trustee ................................................................. 31 SECTION 7.03. Notice to the Trustee .................................................................... 31

ARTICLE VIII

AMENDMENT OF OR SUPPLEMENT TO THE MASTER INDENTURE

SECTION 8.01. Procedure for Amendment of or Supplement to the Master Indenture ...................................................................................... 32 SECTION 8.02. Disqualified Bonds....................................................................... 33 SECTION 8.03. Endorsement or Replac ement of Bonds After Amendment or Supplement .............................................................................. 33 SECTION 8.04. Amendment or Supplement by Mutual Consent .......................... 33

ARTICLE IX

EVENTS OF DEFAULT AND REMEDIES OF HOLDERS

TABLE OF CONTENTS
(continued)
Page

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SECTION 9.01. Events of Default and Remedies of Holders ................................ 34 SECTION 9.02. Application of Net Speci al Tax Revenues After Default ............. 34 SECTION 9.03. Trustee to Represent Holders ....................................................... 35 SECTION 9.04. Holders’ Direction of Proceedings ............................................... 36 SECTION 9.05. Limitation on Ho lders’ Right to Sue ............................................ 36 SECTION 9.06. Absolute Obligation of the City ................................................... 37 SECTION 9.07. Termination of Proceedings ......................................................... 37 SECTION 9.08. Remedies Not Exclusive .............................................................. 37 SECTION 9.09. No Waiver of Default ................................................................... 37

ARTICLE X

DEFEASANCE

SECTION 10.01. Discharge of the Bonds ................................................................ 37 SECTION 10.02. Unclaimed Money ........................................................................ 38

ARTICLE XI

MISCELLANEOUS

SECTION 11.01. Liability of City Lim ited to Net Special Tax Revenues and Certain Other Funds ..................................................................... 39 SECTION 11.02. Benefits of the Master In denture Limited to Certain Parties ....... 39 SECTION 11.03. Successor is Deemed Included in All References to Predecessor .................................................................................. 39 SECTION 11.04. Execution of Documents by Holders ........................................... 40 SECTION 11.05. Deposit and I nvestment of Money in Accounts and Funds ......... 40 SECTION 11.06. Waiver of Personal Liability ........................................................ 41 SECTION 11.07. Acquisition of Bonds by City ...................................................... 41 SECTION 11.08. Content of Cert ificates and Reports ............................................. 41 SECTION 11.09. Notice by Mail ............................................................................. 42 SECTION 11.10. Maintenance of Accounts and Funds ........................................... 42 SECTION 11.11. Article and Section He adings, Gender and References ............... 42 SECTION 11.12. Partial Invalidity........................................................................... 42 SECTION 11.13. Execution in Counterpa rts; Electronic Signatures ....................... 42 SECTION 11.14. Governing Law ............................................................................ 43

TABLE OF CONTENTS
(continued)
Page

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SECTION 11.15. Notices ......................................................................................... 43 SECTION 11.16. Effective Date of the Master Indenture ........................................ 43

4141-9530-1935.7

OH&S DRAFT
5/04/22

4143-1280-7983.7

FIRST SUPPLEMENTAL INDENTURE

between the

CITY OF SACRAMENTO

and

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee

Relating to the

$[PRINCIPAL AMOUNT]

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2 SPECIAL TAX BONDS, SERIES 2022

Dated as of June 1, 2022

TABLE OF CONTENTS

Page

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4143-1280-7983.7

ARTICLE I

DEFINITIONS

SECTION 1.01. Definitions...................................................................................... 2

ARTICLE II
ISSUANCE OF SERIES 2022 BONDS

SECTION 2.01. Authorization of Series 2022 Bonds .............................................. 3 SECTION 2.02. Terms of Series 2022 Bonds .......................................................... 3 SECTION 2.03. Redemption Prices of Series 2022 Bonds ...................................... 5 SECTION 2.04. Form of Series 2022 Bonds............................................................ 6 SECTION 2.05. Application of Net Proceeds of Sale of Series 2022 Bonds ........... 6 SECTION 2.06. Series 2022 Escrow Fund............................................................... 7

ARTICLE III

MISCELLANEOUS

SECTION 3.01. Authority for Firs t Supplemental Indenture ................................... 9 SECTION 3.02. Terms of Series 2022 Bonds Subject to the Master Indenture ........................................................................................ 9 SECTION 3.03. Execution in Counterpa rts; Electronic Signatures ....................... 10 SECTION 3.04. Effective Date of First Supplemental Indenture .......................... 10 EXHIBIT A FORM OF SERIES 2022 BONDS .......................................................... A-1 EXHIBIT B FORM OF SERIES 2022 ESCROW FUND RELEASE
CERTIFICATE ....................................................................................... B-1

1 4143-1280-7983.7

FIRST SUPPLEMENTAL INDENTURE

This First Supplemental Indenture (the “First Supplemental Indenture”), dated as of June 1, 2022, is between the CITY OF SACRAMENTO, a California mu nicipal corporation (the “City”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association duly organized and exis ting under and by virtue of the laws of the United States of America and authorized to accept and execute trusts of the character herein set forth, as trustee (the “Trustee”).

BACKGROUND
A. The City and the Trustee duly executed a Master Indenture (the “ Master Indenture ”) dated as of June 1, 2022, which authorized the issuance of City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Impr ovement Area No. 2 Special Tax Bonds (the “Bonds”) and provided for the issuance of the Bonds in series.

B. The City has determined to prescribe th e terms, conditions, and form of $[PRINCIPAL AMOUNT] aggregate principal am ount of City of Sacramento Delta Shores Community Facilities District No. 2 019-01 (Improvements) Improveme nt Area No. 2 Special Tax Bonds, Series 2022 (the “Series 2022 Bonds”) under the Master Indenture.

C. The City has determined that all things necessary to cause the Series 2022 Bonds, when duly executed by the City and authenticated by the Trustee and delivered as provided herein, to be legal and valid special tax obligations of the City enforceable in accordance with their terms, and to constitute this First Supplemental Indenture a valid agreement for the uses and purposes herein set forth in ac cordance with its terms, have been done and taken, and the execution and delivery hereof and the execution and delivery of the Series 2022 Bonds, subject to the terms hereof, have in all respects been duly authorized.

NOW, THEREFORE, in order to secure the payment of the interest on and the principal of and the redemption premiums, if any, on all Series 2022 Bonds at any time issued and outstanding hereunder according to th eir tenor, and to secure the obser vance and performance of all the agreements, conditions, covenants, and terms therein and herein set forth, and to declare the conditions and terms upon and subject to which the Series 2022 Bonds will be issued and received, and in consideration of the premises and of the mutual agreements and covenants contained herein and of the purchase and acceptance of the Series 2022 Bonds by the registered owners thereof from time to time, and for other valuable considerat ions, the receipt whereof is hereby acknowledged, the City does hereby agree and covenant with the Trustee, for the benefit of the respective registered owners from time to time of the Series 2022 Bonds, as follows:

2 4143-1280-7983.7

ARTICLE I

DEFINITIONS
SECTION 1.01. Definitions.
(a) Except as otherwise provided herein, all term s defined in Section 1.01 of the Master Indenture have the same definitions in this First Supplemental Indenture that are given to them in Section 1.01 of the Master Indenture.
(b) Unless the context otherwise re quires, the terms defined in this Section 1.01(b) have the meanings set forth, and those meanings apply for all purposes of this First Supplemental Indenture, of the Master I ndenture, of the Series 2022 Bonds, and of any certificate, opinion, report, request, or ot her document mentioned herein or therein; and those meanings apply equally to both the singular and plural forms of the terms:
“First Supplemental Indenture ” means this First Supplementa l Indenture, dated as of June 1, 2022, between the City and the Trustee entered into under the Act and the Master Indenture.
“Series 2022 Bonds” means the Bonds referred to by that name authorized to be issued by the Master Indenture and Article II of this First Supplemental Indenture. “Series 2022 Escrow Bonds ” means the Series 2022 Bonds maturing on September 1, 20[__] and bearing interest at the rate of ___% per annum. “Series 2022 Escrow Bonds Mandatory Redemption Date” means September 1, 2024. “Series 2022 Escrow Fund ” means the City of Sacramento Delta Shores Community Facilities District No. 2 019-01 (Improvements) Improveme nt Area No. 2 Special Tax Bonds, Series 2022 Escrow Fund established pursuant to Section 2.06 of this First Supplemental Indenture (to be maintained by the Trustee). “Series 2022 Escrow Fund Release Certificate” means a Certificate of the City delivered to the Trustee pursuant to S ection 2.06(b) or Section 2.06(c) of this First Supplemental Indenture in substantially the form attached to this First Supplemental Indenture as Exhibit B and certifying that the Series 2022 Escrow Fund Release Conditions have been satisfied on or before the date of such certificate and certifying as to the other information required to be certified by the City pursuant to Sect ion 2.06(b) or Section 2.06(c) of this First Supplemental Indenture, as applicable.
“Series 2022 Escrow Fund Release Conditions” means that the City has determined that a final subdivision map or fina l subdivision maps that create individual lots for which residential building permits may be issued without further subdivision of such property has or have been approved by the City and record ed by the developer or developers for the entire area known, as of the date of issuance of the Series 2022 Bonds, as MDR Village 6 and MDR Village 7, and which area is comprised of Parcel 8 and Parcel 2 as shown on that certain Master Parcel Map of Delta Shores Phase 2 filed on November 19, 2021 in Book

3 4143-1280-7983.7

245 of the parcel maps maintained by the County of Sacramento Recorder at Page 10 and also identified as document number 202111190728.
“Series 2022 Escrow Fund Release Cut-Off Date” means June 1, 2024. “Series 2022 Non-Escrow Bonds” means all Series 2022 Bonds other than the Series 2022 Escrow Bonds.
“Term Series 2022 Bonds” means the Series 2022 Bonds that are Term Bonds.

ARTICLE II

ISSUANCE OF SERIES 2022 BONDS
SECTION 2.01. Authorization of Series 2022 Bonds . The City Council has reviewed all proceedings heretofore taken relative to the authorization of the Series 2022 Bonds and has found, as a result of such review, and hereby finds and determines, that all acts, conditions, and things required by law to exist, happen, and be performed precedent to and in the issuance of the Series 2022 Bonds do exist, have happened, and have been performed in due time, form, and manner as required by the Act. Accordingly, the City is now authorized, under every requirement of the Act, the Master Indenture, and this First Supplemental Indenture, to issue the Series 2022 Bonds in the form and manner provided herei n, which Series 2022 Bonds will be entitled to the benefit, protection, and security of the Act, the Master I ndenture, and this First Supplemental Indenture.

The purpose for which the Series 2022 Bonds are to be issued is to provide funds to finance the acquisition of certain Facilities, make deposits to the Bond Reserve Fund, fund a portion of the interest on the Series 2022 Bonds, and pay the Costs of Issuance of the Series 2022 Bonds.

SECTION 2.02. Terms of Series 2022 Bonds.
(a) The Series 2022 Bonds will be issued in the aggregate principal amount of $[PRINCIPAL AMOUNT]; will be designated the “City of Sacramento Delta Shores Community Facilities District No. 2 019-01 (Improvements) Improveme nt Area No. 2 Special Tax Bonds, Series 2022;” will be dated the date of the original delivery thereof; will be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof; and will mature on the dates and in the principal amounts and bear interest (computed on a 360-day year of twelve 30-da y calendar months) at the rates per annum, payable semiannually on March 1 and Sept ember 1 in each year, commencing on September 1, 2022, as follows:

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Maturity Date
(September 1)

Principal Amount

Interest Rate
$ %

_________________

* Term Bond.
(b) Sinking Fund Account Payments are hereby established for the mandatory redemption and payment of the Series 2022 Bonds maturing on September 1, 20[__], which payments shall become due during the years e nding on the dates and in the amounts set forth in the following schedule (except that if any of the Series 2022 Bonds maturing on September 1, 20[__] shall have been optionally or extrao rdinarily redeemed under Section 2.03 of this First Supplemental Indenture, the amounts of the Sinking Fund Account Payments for the Series 2022 Bonds maturing on Se ptember 1, 20[__] shall be reduced proportionately by the principal amount of all such Series 2022 Bonds so optionally or extraordinarily redeemed), namely:

Year Ending
September 1
Sinking Fund
Account Payment
$

___________
* Maturity
Sinking Fund Account Payments are here by established for the mandatory redemption and payment of the Series 2022 Bonds maturing on September 1, 20[__], which payments shall become due during the years ending on the dates and in the amounts set forth in the following schedule (except that if any of the Series 2022 Bonds maturing on September 1, 20[__] shall have been optionally or extraordinarily redeemed under Section

2.03 of this First Supplemental Indenture, the amounts of the Sinking Fund Account Payments for the Series 2022 Bonds maturing on September 1, 20[__] shall be reduced

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proportionately by the principal amount of all such Series 2022 Bonds so optionally or extraordinarily redeemed), namely:

Year Ending
September 1
Sinking Fund
Account Payment
$

___________
* Maturity
All such Sinking Fund Account Payments shall be deposited in the Sinking Fund Account. All money in the Sinking Fund Account representing such Sinking Fund Account Payments shall be used and withdrawn by th e Trustee (upon receipt of a Written Request of the City) at any time for the purchase of the Term Series 2022 Bonds at public or private sale as and when and at such prices (including brokerage a nd other charges) as the City may in its discretion determine, but not to exceed the principal amount of such Term Series 2022 Bonds. All money in the Sinking Fund Account representing such Sinking Fund Account Payments on September 1 of each year during the period beginning on September 1, 20[__], and ending on September 1, 20[__], both dates inclusive, shall be used and withdrawn by the Trustee on each such Sept ember 1 for the mandatory redemption or payment of the Term Series 2022 Bonds; and th e City hereby agrees and covenants with the Holders of the Term Series 2022 Bonds to call and redeem in accordance with Article IV of the Master Indenture, or pay, the Term Series 2022 Bonds from the Sinking Fund Account Payments deposited in the Sinking Fund Account under this paragraph whenever on September 1 of any year, beginning on Se ptember 1, 20[__], there is money in the Sinking Fund Account available for such purpose.

SECTION 2.03. Redemption Prices of Series 2022 Bonds.
(a) The Series 2022 Bonds [maturing on or after September 1, 20[__]], are subject to optional redemption by the City before their respective stat ed maturity dates, as a whole or in part on any date on or after September 1, 20[__], from any source of available funds other than prepayments of the Special Ta x, upon mailed notice as provided in the Master Indenture, at the following redemption pric es (expressed as a percentage of the principal amount of Series 2022 Bonds or portions thereof called for redemption), together with accrued interest to the date of redemption:

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(b) The Series 2022 Bonds are subject to extraord inary redemption by the City before their respective stated maturity dates, as a whole or in part on any interest-payment date, solely from prepayments of the Special Tax, upon ma iled notice as provided in the Master Indenture, at the following rede mption prices (expressed as a percentage of the principal amount of Series 2022 Bonds or portions thereof called fo r redemption), together with accrued interest to the date of redemption:

Redemption Date Redemption Price
Any interest-payment date from September 1, 2022 through and including March 1, 20[__]
103%
September 1, 20[__] and March 1, 20[__] 102%
September 1, 20[__] and March 1, 20[__] 101%
Septembe r 1, 20[__] and any interest-payment date thereafter 100%

(c) The Term Series 2022 Bonds are subject to mandatory redemption by the City before their stated maturity date as provided in Section 2.02 hereof solely from Sinking Fund Account Payments deposited in the Sinking Fund Account, upon mailed notice as provided in the Master Indenture, at a rede mption price equal to the principal amount thereof to be redeemed, together with accrued interest th ereon to the date of redemption, without premium.
(d) The Series 2022 Escrow Bonds are subject to mandatory redemption by the City and shall be redeemed by the City before their stated maturity date, in w hole on the Series 2022 Escrow Bonds Mandatory Redemption Date if the City has not delivered to the Trustee a Series 2022 Escrow Fund Release Certificate on or before the Series 2022 Escrow Fund Release Cut-Off Date, but solely from amounts on deposit in the Series 2022 Escrow Fund on the Series 2022 Escrow Bonds Mandatory Redemption Date, upon mailed notice as provided in the Master Indenture, at a re demption price equal to the principal amount thereof, together with accrued interest thereon to the Series 2022 Escrow Bonds Mandatory Redemption Date, without premium.

SECTION 2.04. Form of Series 2022 Bonds. The Series 2022 Bonds and the authentication and registration endorsements and th e assignment to appear thereon must be substantially in the forms set forth in Exhibit A hereto, with such variations, insertions, or omissions as are appropriate and not inconsistent herewith.

SECTION 2.05. Application of Net Proceeds of Sale of Series 2022 Bonds . The net proceeds of the sale of the Series 2022 Bonds in the amount of $[__________] (composed of

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$[PRINCIPAL AMOUNT].00 aggregate principal am ount of the Series 2022 Bonds, [plus/less] [net] original issue [premium/discount] of $[________], and less an underwriter’s discount of $[_________]) shall be set aside and deposited or tr ansferred by the City or the Trustee, as applicable, in the following accounts and funds (or in a temporary account or fund used to facilitate such transfers or deposits) in the following order:
(a) First, the City shall deposit $[______] in the Acquisition and Construction Fund. (b) Second, the Trustee shall deposit $[_____] in th e Bond Reserve Fund, which equals the Required Bond Reserve as of the date of issuance of the Series 2022 Bonds. (c) Third, the Trustee shall deposit $[_____] in the Bond Redemption Fund to be used by the Trustee solely to pay the interest due on the Series 2022 Non-Escrow Bonds on September 1, 2022, and a portion of the interest due on the Series 2022 Non-Escrow Bonds on March 1, 2023.
(d) Fourth, the Trustee shall deposit $[_____] in the Se ries 2022 Escrow Fund to be applied, set aside and deposited or tran sferred by the Trust ee solely for the purposes and on the terms and conditions set out in Section 2.06 of this First Supplemental Indenture. (e) Fifth, the Trustee shall deposit $[____] in the Costs of Issuance Fund.

SECTION 2.06. Series 2022 Escrow Fund. There is hereby established with the Trustee a fund to be known as the “City of Sacramento De lta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022 Escrow Fund,” into which fund the Trustee shall deposit the am ount required to be deposited therein by Section

2.05(d) of this First Supplemental Indenture. All money in the Series 2022 Escrow Fund shall be applied, set aside and deposited or transferred by the Trustee solely as follows:
(a) Unless and until the Trustee receives a Series 2022 Escrow Fund Release Certificate from the City as provided in Section 2.06(b) or Section 2.06(c) of this First Supplemental Indenture, the Trustee shall transfer th e following amounts from th e Series 2022 Escrow Fund to the Bond Redemption Fund on the following dates solely for the purpose of paying the interest due on the Series 2022 Escrow Bonds on such dates (including interest due on the Series 2022 Escrow Bonds upon the mandatory redemption of the Series 2022 Escrow Bonds on the Series 2022 Escrow Bonds Mandatory Redemption Date, if such mandatory redemption is required by Section 2.03(d) of this First Supplemental Indenture):

Interest Payment Date Amount
September 1, 2022 $
March 1, 2023
September 1, 2023
March 1, 2024
September 1, 2024

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(b) If the Trustee receives a Series 2022 Escrow Fund Release Certificate from the City on or before June 1, 2023, then the Tr ustee shall set aside and depos it or transfer the then- remaining amount on deposit in the Series 2022 Escrow Fund as follows:
(i) First, the Trustee shall transfer to and de posit in the Bond Redemption Fund an amount equal to the remaini ng interest to become due and payable on the Series 2022 Escrow Bonds through and including September 1, 2023, which amount shall be certified by the City in the Series 2022 Escrow Fund Release Certificate and which amount shall be used solely for the purpose of paying the remaining interest to become due and payable on the Series 2022 Escrow Bonds through and including September 1, 2023;
(ii) Second, the Trustee shall transfer to and deposit in the Bond Reserve Fund the amount necessary to cause the amount on deposit in the Bond Reserve Fund to be equal to the Required Bond Reserve as of such date, which amount and the amount of the Required Bond Reserve as of such date shall each be certified by the City in the Series 2022 Escrow Fund Release Certificate delivered to the Trustee; and (iii) Third, the Trustee shall transfer any remain ing amount in the Series 2022 Escrow Fund, to the City for deposit in the Acqui sition and Constructio n Fund and/or as otherwise directed by the City in the Series 2022 Escrow Fund Release Certificate in the manner provided by the Act for payment of costs of the acquisition and construction of the Facilities (or for ma king reimbursements to the City for such costs theretofore paid by it), including payment of costs incidental to or connected with such acquisition and construction; or for the repayment of funds advanced to or for the Community Facilities District.
(c) If the Trustee receives a Series 2022 Escrow Fund Release Certificate from the City after June 1, 2023, but on or before the Series 2022 Escrow Fund Release Cut-Off Date, then the Trustee shall set aside and deposit or transfer the then-remaining amount on deposit in the Series 2022 Escrow Fund as follows:
(i) First, the Trustee shall transf er to and deposit in the Bond Redemption Fund an amount equal to the remaini ng interest to become due and payable on the Series 2022 Escrow Bonds through and including September 1, 2024, which amount shall be certified by the City in the Series 2022 Escrow Fund Release Certificate and which amount shall be used solely for the purpose of paying the remaining interest to become due and payable on the Series 2022 Escrow Bonds through and including September 1, 2024;
(ii) Second, the Trustee shall transfer to and deposit in the Bond Reserve Fund the amount necessary to cause the amount on deposit in the Bond Reserve Fund to be equal to the Required Bond Reserve as of such date, which amount and the amount of the Required Bond Reserve as of such date shall each be certified by the City in the Series 2022 Escrow Fund Release Certificate delivered to the Trustee; and

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(iii) Third, the Trustee shall transfer any remain ing amount in the Series 2022 Escrow Fund to the City for deposit in the Ac quisition and Construction Fund and/or as otherwise directed by the City in the Series 2022 Escrow Fund Release Certificate in the manner provided by the Act for payment of costs of the acquisition and construction of the Facilities (or for ma king reimbursements to the City for such costs theretofore paid by it), including payment of costs incidental to or connected with such acquisition and construction; or for the repayment of funds advanced to or for the Community Facilities District.
(d) If the Trustee does not receive a Series 2022 Escrow Fund Release Certificate from the City on or before the Series 2022 Escrow Fund Release Cut-Off Date, then the Trustee shall apply or transfer the then-remaining amount on deposit in the Series 2022 Escrow Fund as follows:
(i) First, the Trustee shall apply the amount remaining in the Series 2022 Escrow Fund to the mandatory redemption of the Series 2022 Escrow Bonds in full on the Series 2022 Escrow Bonds Mandatory Redemption Date pursuant to Section 2.03(d) of this First Supplemental Indenture; and
(ii) Second, the Trustee shall transfer any amount remaining in the Series 2022 Escrow Fund after the mandatory redemption of the Series 2022 Escrow Bonds in full to the City for deposit in the Acquisition and Construction Fund.

Notwithstanding anything to the contrary set forth in the Master Indenture, all interest received on any money deposited or invested in the Series 2022 Escrow Fund shall (subject to the requirements of Section 6.03 of the Master Indenture) be deposited in the Series 2022 Escrow Fund and applied, together with the other amounts on deposit in the Series 2022 Es crow Fund, as set out in this Section 2.06. After applying, setting aside and de positing or transferring all amounts held in the Series 2022 Escrow Fund as set out in this Section 2.06, the Trus tee shall close the Series 2022 Escrow Fund.

ARTICLE III

MISCELLANEOUS
SECTION 3.01. Authority for First Supplemental Indenture . This First Supplemental Indenture is executed in accordance with the Act, is supplemental to the Master Indenture, and is executed in accordance with Articles II and VIII of the Master Indenture.

SECTION 3.02. Terms of Series 2022 Bonds Subj ect to the Master Indenture . Except as expressly provided in this First Supplemental Indenture, every agreement, condition, covenant, and term in the Master Indenture applies to this First Supplemental Inde nture and to the Series 2022 Bonds with the same force and effect as if they were set forth at le ngth in this First Supplemental Indenture, with such omissions, variations, and modifications as may be appropriate to conform them to this First Supplemental Indenture.

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SECTION 3.03. Execution in Counterparts; Electronic Signatures . This First Supplemental Indenture may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. Each of the parties hereto agrees that the transact ion consisting of this 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 agreement using an electronic signature, it is signing, adopting, and accepting this agreement and that signing this agreement using an electroni c signature is the legal equivalent of having placed its handwritten signature on this agreemen t on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this agreement in a usable format.

SECTION 3.04. Effective Date of First Supplemental Indenture. This First Supplemental Indenture takes effect from and after its execution and delivery. [Remainder of Page Intentionally Blank]

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IN WITNESS WHEREOF, the City has caused this First Supplemental Indenture to be signed in its name by the City Treasurer, and U.S. Bank Trust Company, National Association, as Trustee, in token of its accep tance of the trusts created hereunder, has caused this First Supplemental Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the date and year first above written.

CITY OF SACRAMENTO

By __________________________________
John P. Colville Jr., City Treasurer

U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee

By _________________________________
Authorized Officer

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EXHIBIT A

FORM OF SERIES 2022 BONDS

Unless this Bond is presented by an authori zed representative of The Depository Trust Company, a New York corporation (“DTC”), to U.S. Bank Trust Company, National Association, for registration of transfer, excha nge, or payment, and any Bond issu ed is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such othe r entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof Cede & Co., has an interest herein.

No. ____________ $____________

UNITED STATES OF AMERICA

STATE OF CALIFORNIA

COUNTY OF SACRAMENTO

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2 SPECIAL TAX BOND, SERIES 2022

Interest
Rate
Maturity
Date
Dated
as of CUSIP
_____% September 1, 20 __ June [ __], 2022

REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: DOLLARS
The City of Sacramento, a municipal corpor ation duly organized an d existing under and pursuant to the Constitution and la ws of the State of California (t he “City”), for value received hereby promises to pay (but only out of the Ne t Special Tax Revenues and certain other funds hereinafter referred to) to the registered owner set forth above on the maturity date set forth above (subject to any righ t of prior redemption hereinafter provide d for) the principal amount set forth above, together with interest th ereon from the interest payment da te next preceding the date of authentication of this Bond (unless this Bond is authenticated on a day during the period from the sixteenth (16th) day of the month next preceding an interest payment date to such interest payment date, both dates inclusive, in which event it shall bear interest from such interest payment date, or unless this Bond is authenticated on a day on or before the fift eenth (15th) day of the month next preceding the first interest paymen t date on the Bonds, in which even t it shall bear interest from its date) until the principal hereof shall have been paid, at the interest rate per annum set forth above (computed on a 360-day year of twelve 30-day calendar months), payable semiannually on

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March 1 and September 1 in each year, commencing on September 1, 2022. The interest on and principal of and redemption premium, if any, on this Bond are payable in lawful money of the United States of America at the Principal Corporate Trust Office (as that term is defined in the Indentures hereinafter referred to, and herein the “Principal Corporate Trust Office”) of U.S. Bank Trust Company, National Association (the “Trustee” ), in Los Angeles, California or such other place as the Trustee shall designate. The interest on this Bond due on or before the maturity or prior redemption hereof shall be payable only to the person whose name appears in the registration books, required to be kept by the Trustee, as the re gistered owner hereof at the close of business on the fifteenth (15th) day of the month next pr eceding each interest payment date, such interest to be paid by check mailed by first class mail to such registered owner at his address as it appears on such books, except that in the case of a registered owner of one million dollars ($1,000,000) or more in aggregate principal amount of Bonds, payment shall be ma de at such owner’s option by federal wire transfer of immediately available funds according to written instructions provided by such owner to the Trustee at least fifteen (15) days before such interest payment date to an account in a bank or trust company or savings bank that is a member of the Federal Reserve System and that is located in the United States of America. The principal of and redemption premium, if any, on this Bond shall be payable only to the person whose name appears in such registration books as the registered owner hereof, such principal and redemption premium, if any, to be paid only on the surrender of this Bond at the Principal Corporate Trust Office of the Trustee at maturity or on redemption prior to maturity.

This Bond is one of a duly authorized issue of bonds in the aggregate principal amount of $[PRINCIPAL AMOUNT] issued by the City of S acramento for Improvement Area No. 2 of the Delta Shores Community Faciliti es District No. 2019-01 (Improve ments), City of Sacramento, County of Sacramento, State of California (the “Improvement Area”) located in the City, designated the “City of Sacramento Delta S hores Community Facili ties District No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022” (the “Series 2022 Bonds”), under and pursuant to the Mello-Roos Co mmunity Facilities Act of 1982, as amended (being Sections 53311 et seq. of the Government Code of the State of California), and all laws amendatory thereof or supplemen tal thereto (the “Act”), and under and pursuant to a Master Indenture, dated as of June 1, 2022 (as suppl emented and amended, th e “Master Indenture”), between the City and the Trustee, which Master Indenture authorized the issuance in various series from time to time of “City of Sacramento Delta Shores Community Facilities District No. 2019- 01 (Improvements) Improvement Area No. 2 Speci al Tax Bonds” (the “Bonds”), and a First Supplemental Indenture supplemental thereto, dated as of June 1, 2022 (the “First Supplemental Indenture,” and together with th e Master Indenture, the “Indentu res”), between the City and the Trustee, all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, denominations, maturities, interest rates or redemption provisions of the Series 2022 Bonds). All the Series 2022 Bonds are payable on a parity with all other Bonds issued under the Master Indenture in accordance with the term s and conditions of the Indentures (copies of which are on file at the office of the City Clerk and at the above-mentioned office of the Trustee), and reference is hereby made to the Act and to the Indentures and any and all amendments thereof and supplements thereto for a description of the terms on which the Series 2022 Bonds are issued and for the rights of the register ed owners of the Series 2022 B onds; and all the terms of the Act and the Indentures are hereby inco rporated herein and constitute a contract between the City and the registered owner from time to time of this Series 2022 Bond, to all the provisions of which the registered owner of this Series 2022 Bond, by his acceptance hereof, agrees and consents; and each

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taker and subsequent registered owner hereof shal l have recourse to all the provisions of the Act and the Indentures and shall be bound by all the conditions and terms thereof.

The Series 2022 Bonds are issued to provide funds to finance the acquisition of certain Facilities, make deposits to the Bond Reserve F und, fund a portion of the interest on the Series 2022 Bonds, and pay the Costs of Issuance of the Series 2022 Bonds (as each term is defined in the Indentures) in accordance with the Indentures and are special tax obligations of the City, and the interest on and princi pal of and redemption premiums, if any, on the Seri es 2022 Bonds are payable solely from the Net Special Tax Revenues (a s that term is defined in the Indentures, and herein the “Net Special Tax Revenues”) and certain other funds as provided in the Indentures for such payment, and the City is not obligated to pay them except from the Net Special Tax Revenues and such other funds. 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 inte rest on or the principal of or the redemption premiums, if any, on the Series 2022 Bonds, and no tax or assessment other than the Special Tax (as that term in defined in the Indentures, and he rein the “Special Tax”) shall ever be levied or collected to pay the interest on or the principal of or the redemption premiums, if any, on the Series 2022 Bonds. The Series 2022 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 Net Special Tax Revenues and certain other funds esta blished under the Indentures, and neither the payment of the interest on or the principal of or the redemption premiums, if any, on the Series 2022 Bonds is a general debt, liability or obligat ion of the City. Addi tional Bonds payable on a parity with the Series 2022 Bonds from the Net Special Tax Revenues may be issued subject to the conditions and limitations contained in the Indentures.

The Series 2022 Bonds [maturing on or after September 1, 20[__]], are subject to optional redemption by the City before their respective stated maturity dates, as a whole or in part on any date on or after September 1, 20[__], from any so urce of available funds other than prepayments of the Special Tax, upon mailed notice as provided in the Master Indenture, at the following redemption prices (expressed as a percentage of the principal amount of Series 2022 Bonds or portions thereof called for redemption), together with accrued interest to the date of redemption:

Redemption Date
Redemption Price
September 1, 20[__] through a nd including August 31, 20[__] 103% September 1, 20[__] through a nd including August 31, 20[__] 102% September 1, 20[__] through and including August 31, 20[__] 101% September 1, 20[__] and any date thereafter 100%
The Series 2022 Bonds are subject to extraord inary redemption by the City before their respective stated maturity dates, as a whole or in part on any interest-payment date, solely from prepayments of the Special Tax, upon mailed notice as provided in the Indentures, at the following redemption prices (expressed as a percentage of the principal amount of Series 2022 Bonds or portions thereof called for redemption), together with accrued interest to the date of redemption:

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Redemption Date Redemption Price
Any interest-payment da te from September 1, 2022
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 a ny interest-payment date
thereafte
r
100%

The Series 2022 Bonds maturing on Septem ber 1, 20[__] are s ubject to mandatory redemption by the City before their stated maturity date in part on September 1 in each of the years 20[__] through 20[__], both dates inclusive, solely from Sinking Fund Account Payments deposited in the Sinking Fund Ac count (as those terms are define d in and as pr ovided in the Indentures), upon mailed notice as provided in the Indentures, at a redemption price equal to the principal amount thereof to be re deemed, together with accrued in terest thereon to the date of redemption, without premium.

The Series 2022 Escrow Bonds are subject to mandatory redemption by the City and shall be redeemed by the City before their stated ma turity date, in whole on the Series 2022 Escrow Bonds Mandatory Redemption Date if the City ha s not delivered to the Trustee a Series 2022 Escrow Fund Release Certificate on or before the Series 2022 Escrow Fund Release Cut-Off Date, but solely from amounts on deposit in the Seri es 2022 Escrow Fund on the Series 2022 Escrow Bonds Mandatory Redemption Date, upon mailed notice as provided in the Master Indenture, at a redemption price equal to the prin cipal amount thereof, together w ith accrued interest thereon to the Series 2022 Escrow Bonds Mandatory Redemption Date, without premium.

If less than all the Series 2022 Bonds are to be redeemed at the option of the City at any one time, the City shall select the maturity date or dates of the Series 2022 Bonds to be redeemed, and if less than all the Series 2022 Bonds of any one maturity date are to be redeemed at any one time, the Trustee shall select the Series 2022 Bonds or portions thereof of such maturity date to be redeemed in integral multiples of five thousan d dollars ($5,000) in any manner that it deems appropriate.

Notice of redemption of any Series 2022 Bond or any portion thereof shall be mailed by first class mail not less than thirty (30) days nor more than ninety (90) days before the redemption date to the registered owner thereof and to all se curities information services selected by the City in accordance with the Indentures and to the origin al underwriter or first purchaser of the Series 2022 Bonds selected for redempti on, but neither failu re to receive any such notice nor any

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immaterial defect contained therein shall affect the sufficiency or validity of such proceedings for redemption. If a notice of redemption has been duly given as aforesaid and money for the payment of the principal of and redempti on premiums, if any, on, together w ith interest to the redemption date on, the Series 2022 Bonds or portions thereof so called by redemption is held by the Trustee, then this Series 2022 Bond or the portion thereof to be redeemed shall, on the redemption date designated in such notice, become due and payable at the above-des cribed redemption price; and from and after the date so designated interest on this Series 2022 Bond or the portion thereof to be redeemed shall cease to accrue and the registered owner of this Series 2022 Bond shall have no rights in respect hereof except to receive payment of the redemption price of this Series 2022 Bond or the portion thereof to be redeemed, and upon surrender of this Series 2022 Bond if redeemed in part only, the City shall execute and the Trustee shall authenticate and deliver to the registered owner hereof at the expense of the City a new Series 2022 Bond or new Series 2022 Bonds of the same maturity date and of authorized denominat ions equal in aggregate principal amount to the unredeemed portion of this Series 2022 Bond so surrendered.

The City has covenanted that, so long as any Series 2022 Bonds are outstanding, it will annually levy the Special Tax against all Taxable Land (as that term is defined in the Indentures) in the Improvement Area in accordance with the Sp ecial Tax Formula (as that term is defined in the Indentures) and, subject to the limitations in the Special Tax Formula and the Act, make provision for the collection of the Special Tax in amounts which will be sufficient, together with the money then on deposit in the Bond Redemption Fund (as that term is defined in the Indentures) or on deposit with the Trustee for transfer to the Bond Redemption Fund, after making reasonable allowances for contingencies and errors in the estimates, to yield proceeds equal to the amounts required for compliance with the agreements, c onditions, covenants and te rms contained in the Indentures, and which in any event will be sufficient to pay the interest on and the principal of and the Sinking Fund Account Payments, if any, for and the redemption premiums, if any, on the Series 2022 Bonds as they become due and payable and to replenish the Bond Reserve Fund established under the Indentures and to pay all current Expenses (as that term is defined in the Indentures) as they become due and payable in accordance with the provisions of the Indentures.

The Series 2022 Bonds are issuable in the form of fully registered Bonds in denominations of five thousand dollars ($5,000) or any integral multiple thereof. The regi stered owner of any Series 2022 Bond or Bonds may surrender the same (together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney) in exchange for an equal aggregate principal amount of Series 2022 Bonds of any other authorized denominations in the manner, subject to the conditions and upon payment of the charges provided in the Indentures.

The registration of this Series 2022 Bond is tr ansferable on the registration books kept by the Trustee by the registered owner hereof or by his duly authorized attorney upon surrender of this Series 2022 Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney, and thereupon a new Series 2022 Bond or Series 2022 Bonds of authorized denominat ions in the same aggregate principal amount will be issued to the transferee in exchange ther efor in the manner, subj ect to the conditions and upon payment of the charges provided in the Indentures. The City and the Trustee may deem and treat the person in whose name th is Series 2022 Bond is registered as the absolute owner hereof

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for the purpose of receiving payment of, or on account of, the interest hereon and principal hereof and redemption premium, if any, hereon and for all other purposes.

The rights and obligations of the City and of the registered owners of the Series 2022 Bonds may be amended at any time in the manner, to the extent and upon the terms provided in the Indentures, but no such amendment shall (1) extend the maturity of this Series 2022 Bond or reduce the interest rate hereon or otherwise alter or impa ir the obligation of the C ity to pay the interest hereon or the principal hereof or any Sinking F und Account Payment herefor or the redemption premium, if any, hereon at the time and place and at the rate and in the currency and from the funds provided herein without the express written consent of the registered owner of this Series 2022 Bond, or (2) permit the issuance by the City of any obligations payable from the Net Special Tax Revenues on a parity with the Series 2022 Bonds ot her than as provided in the Indentures, or jeopardize the ability of the City to levy and collect the Special Tax, or (3) reduce the percentage of Series 2022 Bonds required fo r the written consent to an am endment or supplement of the Indentures, or (4) modify any right s or obligations of the Trustee without its prior written assent thereto; all as more fully set forth in the Indentures.

The Series 2022 Bonds do not cons titute an indebtedness of the City within the meaning of any constitutional or statutory debt limitation or restriction, and neither the City Council of the City nor 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 Series 2022 Bonds otherwise than from the Net Special Tax Revenues and the other funds as provided in the Indentures.

This Series 2022 Bond shall not be entitled to any benefits under the Indentures or become valid or obligatory for any purpos e until the certificate of authentication and registration hereon endorsed shall have been signed by the Trustee.

It is hereby certified that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of this Series 2022 Bond do exist, have happened and have been performe d in due time, form an d manner as required by law and that the amount of this Series 2022 Bond, together with all other obligations of the City, does not exceed any limit prescribed by the laws of the State of California and is not in excess of the amount of Series 2022 Bonds permitted to be issued under the Indentures.

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IN WITNESS WHEREOF, the City of Sacramento has caused this Series 2022 Bond to be executed in its name and on its behalf by the manua l or facsimile signature of the Mayor of the City and countersigned by the manual or facsimile signature of the City Clerk and has caused this Series 2022 Bond to be dated June [__], 2022.

CITY OF SACRAMENTO

By _________________________________
Mayor

Countersigned:

_______________________________
City Clerk

[FORM OF CERTIFICATE OF AUTHENTICATION AND
REGISTRATION TO APPEAR ON SERIES 2022 BONDS]

This is one of the Series 2022 Bonds described in the within-mentioned Indentures which has been authenticated and registered on the date indicated below.

Date: June [__], 2022
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee

By _________________________________
Authorized Signatory

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[FORM OF ASSIGNMENT TO APPEAR ON SERIES 2022 BONDS]
For value received the undersigned do(es ) hereby sell, assign and transfer unto _______________________________________________ the within Series 2022 Bond and do(es) hereby irrevocably constitute and appoint ______________________________ attorney to transfer the same on the bond register of the Tr ustee, with full power of substitution in the premises.

___________________________________
Dated: _____________________

SIGNATURE GUARANTEED BY:

__________________________________

Note: The signature(s) to this Assignment must correspond with the name(s) as written on the face of the within Series 2022 Bond in every part icular, without alteration or enlargement or any change whatsoever, and the signature(s) must be guaranteed by an eligible guarantor institution.

Social Security Number, Taxpayer Identification Number or other identifying number of Assignee:
____________________

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EXHIBIT B
FORM OF SERIES 2022 ESCROW FUND RELEASE CERTIFICATE
TO: U.S. Bank Trust Company, National Association, as trustee (the “Trustee”) The undersigned, [Name], [Title] of the City of Sacramento (t he “City”), hereby certifies to, requests and directs the Trustee as follows with respect to the Series 2022 Escrow Fund established under the Master Inde nture, dated as of June 1, 2022 (the “Master Indenture”), as supplemented by the First Supplem ental Indenture, dated as of June 1, 2022 (the “First Supplemental Indenture” and together with the Master Indenture, the “Indenture”), each between the City and Trustee and relating to the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022:
[Use the following if this certificate is delivered on or before June 1, 2023]

1. This Series 2022 Escrow Fund Release Cert ificate is being delivered to the Trustee pursuant to Section 2.06(b) of the First Supplemental Indenture.

2. The Series 2022 Escrow Fund Release Conditions have been satisfied on or before the date hereof.

3. The remaining interest to become du e and payable on the Series 2022 Escrow Bonds through and including September 1, 2023, is $[________]. Pu rsuant to Section 2.06(b)(i) of the First Supplemental Indenture, such amount shall be transferred by the Trustee from the Series 2022 Escrow Fund to the Bond Redemption Fund and used solely for the purpose of paying the remaining interest to become due and payable on the Series 2022 Escrow Bonds through and including September 1, 2023.

1. This Series 2022 Escrow Fund Release Cert ificate is being delivered to the Trustee pursuant to Section 2.06(c) of the First Supplemental Indenture.

2. The Series 2022 Escrow Fund Release Conditions have been satisfied on or before the date hereof.

3. The remaining interest to become du e and payable on the Series 2022 Escrow Bonds through and including September 1, 2024, is $[________]. Pursuant to Section 2.06(c)(i) of the First Supplemental Indenture, such amount shall be transferred by the Trustee from the Series 2022 Escrow Fund to the Bond Redemption Fund and used solely for the purpose of paying

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the remaining interest to become due and payable on the Series 2022 Escrow Bonds through and including September 1, 2024.

4. The Required Bond Reserve (calculated pur suant to clause (2) of the definition thereof) as of the date hereof is $[_______]. The amount on deposit in the Bond Reserve Fund as of the date hereof is $[_______]. Pursuant to Section 2.06(c)(ii) of the First Supplemental Indenture, the Trustee shall transfer $[_____] from the Series 2022 Escrow Fund to the Bond Reserve Fund.
[Include the following paragraph only if paying for Facilities directly from the Series 2022 Escrow Fund pursuant to either Section 2.06( b)(iii) or Section 2.06(c)(iii) of the First Supplemental Indenture. Otherwise, any re maining amounts in the Series 2022 Escrow Fund after the transfers described above are to be transferred to the City for deposit in the Acquisition and Construction Fund]

5. The Trustee is hereby requested pay to th e persons identified in Schedule I hereto, from the remaining amount in the Series 2022 Escrow Fund, the amounts specified in Schedule I for the payment of costs of the acquisition a nd construction of Facilities (or for making reimbursements to the City for such costs ther etofore paid by it), in cluding payment of costs incidental to or connected with such acquisition and construction; or for the repayment of funds advanced to or for the Community Facilities Dist rict. The Trustee shall transfer all amounts, if any, remaining in the Series 2022 Escrow Fund after such payments to the City for deposit in the Acquisition and Construction Fund.

Dated: .

CITY OF SACRAMENTO

B y :
[Name]
[Title]

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SCHEDULE I TO SERIES 2022 ESCROW FUND RELEASE CERTIFICATE Name and Address
of Party to be Paid
Payment
Amount
Nature of
Expenditure
Payment
Instructions

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BOND PURCHASE CONTRACT
$___________
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022
__________, 2022
City of Sacramento
915 I Street
Sacramento, California 95814
Greetings:

Piper Sandler & Co., as underwriter (the “Underwriter”), acting not as a fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Contract with the City of Sacramento (the “City”) with respect to the special tax bonds captioned above (the “Bonds”) issued by the City for the City of Sacramento Delta Shores Community Facilities District No. 2019‐01 (Improvements) (the “CFD”) with respect to Improvement Area No. 2 therein (“Improvement Area No. 2”). Upon your acceptance of this offer, this contract will be binding upon the City and the Underwriter. Terms not otherwise defined in this contract have the same meanings as set forth in the Indenture identified in Section 2(c) below.

This offer is made subject to the City’s acceptance of this contract on or before 11:59 p.m. on the date first set forth above (the “Effective Date”). At or before the City’s acceptance of this contract, the City must cause to be delivered to the Underwriter (a) a certificate from M&H Realty Partners VI, L.P., a California limited partnership (“M&H”) in form and substance as set forth in Exhibit I‐1 to this contract, and dated as of the date of the Preliminary Official Statement identified in Section 4(b) of this contract (the “M&H POS Certificate”); and (b) a certificate from Signature Homes, Inc., a California corporation (“Signature Homes”), in form and substance as set forth in Exhibit I‐2 to this contract, and dated as of the date of the Preliminary Official Statement identified in Section 4(b) of this contract (the “Signature Homes POS Certificate”).

1. Purchase and Sale of Bonds. Relying on the representations, warranties, and covenants in this contract, the Underwriter shall purchase from the City, and the City shall sell to the Underwriter, on the terms and conditions set forth below, all (but not less than all) of $[___________] aggregate principal amount of the Bonds at a purchase price (the “Purchase Price”) of $[____________] (being an amount equal to the par amount of the Bonds, $[__________], [less/plus] a [net] original issue [discount/premium] of $[____________], and less an Underwriter's discount of $[___________]).

2. Authorizing Instruments. The City will issue the Bonds under— (a) the Mello‐Roos Community Facilities Act of 1982, as amended (the “Act”); (b) the resolution of the Sacramento City Council (the “City Council”), adopted on [May 31, 2022], that authorizes the issuance of the Bonds (the “Resolution”); and 30544.00017\34959317.7

Bond‐Purchase Contract | Page 2

(c) a Master Indenture, dated as of [June 1, 2022], as supplemented by a First Supplemental Indenture (the “First Supplemental Indenture”), dated as of [June 1, 2022] (collectively, the “Indenture”), by and between the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

3. Terms of the Bonds. The Bonds are payable solely from Net Special Tax Revenues (as that term is defined in the Indenture) of special taxes levied under the Act on Taxable Property (as that term is defined in the Amended and Restated RMA of Improvement Area No. 2) in Improvement Area No. 2 (the “Special Taxes”). The Bonds will mature on the dates and in the principal amounts, will bear interest at the rates, and will be subject to redemption before maturity as set forth in Exhibit A to this contract. The Underwriter shall make a bona fide public offering of all of the Bonds at the offering prices set forth in Exhibit A. Additional details related to the establishment of the issue price for the Bonds are set forth in Section 20 below. The Bonds are being issued to (a) pay the cost and expense of the acquisition and construction of certain public facilities benefitting the development of Improvement Area No. 2; (b) fund a reserve fund securing the Bonds; (c) pay costs of issuance of the Bonds; (d) fund capitalized interest on a portion of certain non‐escrow Bonds through December 1, 2022; and (e) fund an escrow fund with respect to certain escrowed Bonds, which includes amounts for capitalized interest thereon through September 1, 2024, subject to prior release terms as provided in the Indenture.

4. Preliminary Official Statement; Official Statement; Continuing Disclosure. (a) The City shall deliver to the Underwriter as many copies of the Official Statement relating to the Bonds, dated the Effective Date (as supplemented and amended from time to time, the “Final Official Statement”), as the Underwriter may reasonably need to comply with paragraph (b)(4) of Rule 15c2‐12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934 (“Rule 15c2‐12”). The City shall deliver the Final Official Statement within seven (7) business days after the Effective Date and in sufficient time to accompany any confirmation that requires payment from a customer. The Underwriter shall deposit the Final Official Statement with the Municipal Securities Rulemaking Board (the “MSRB”) using the MSRB’s Electronic Municipal Market Access system, which the Securities and Exchange Commission has designated as the sole repository of disclosure information for purposes of Rule 15c2‐12, on or as soon as practicable after the Closing Date (defined in Section 7 below). The Underwriter shall deliver a copy of the Final Official Statement to each of its customers purchasing Bonds no later than the settlement date of the transaction. (b) The City has authorized and approved, and hereby consents to the Underwriter’s distribution and use of, the Preliminary Official Statement relating to the Bonds dated [POS DATE] (the “Preliminary Official Statement”), and the City has authorized the execution, delivery, and distribution of the Final Official Statement.
(c) In connection with the issuance of the Bonds, and to assist the Underwriter with complying with Rule 15c2‐12, the City shall execute a continuing disclosure certificate, under which the City will provide certain financial and operating data relating to Improvement Area No. 2 as required by Rule 15c2‐12 (the “Continuing Disclosure Certificate”). The form of the Continuing Disclosure Certificate will be attached as an appendix to the Preliminary Official Statement and Final Official Statement.
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5. Representations and Warranties of the City. The City makes the following representations and warranties to the Underwriter as of the Effective Date:
(a) Due Organization and Authority. The CFD was duly formed and is validly existing as a community facilities district under the Act, and Improvement Area No. 2 was validly designated as an improvement area within the CFD.
(b) Full Right, Power, and Authority. The City has complied with all provisions of applicable law, including the Act, in all matters relating to the adoption of the Resolution, the formation of the CFD and the designation of Improvement Area No. 2 therein, the incurrence of bonded indebtedness for Improvement Area No. 2, and the levy of the Special Taxes within Improvement Area No. 2. The City Council thus has the full legal right, power, and authority to adopt the Resolution, and the City has the full legal right, power, and authority— (1) to enter into this contract, the Indenture, and the Continuing Disclosure Certificate (collectively, the “City Documents”);
(2) to issue, sell, and deliver the Bonds;
(3) to secure the Bonds in the manner contemplated in the Indenture; and (4) to carry out and consummate on its part all other transactions contemplated by the City Documents.
(c) Authorization of Documents; Consents and Approvals. Except as may be required under blue‐ sky laws or other securities laws of any state, all consents or approvals the City must obtain in connection with the foregoing have been obtained, and the consents or approvals so obtained are still in full force and effect. The City Council thus has duly authorized— (1) the execution and delivery of the City Documents and the Final Official Statement, and the execution, delivery, and due performance of the City’s obligations under the Bonds and the City Documents; and
(2) the taking of any action that may be required on the part of the City to carry out, give effect to, and consummate on its part the transactions contemplated by the Bonds and the City Documents.
(d) Due Adoption of Resolution and Enforceability of Documents. The Resolution has been duly adopted by the City Council and is in full force and effect; and the City Documents, when executed and delivered by the City and the other parties, will constitute legal, valid, and binding obligations of the City, enforceable against the City in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, or other laws affecting creditors’ rights generally or by the application of equitable principles. (e) Enforceability of Bonds. When delivered to the Underwriter, the Bonds will have been duly authorized by the City; will have been duly executed, issued, and delivered by the City; will constitute legal, valid, and binding obligations of the City enforceable against the City in accordance with their terms, except as enforceability may be limited by bankruptcy, insolvency, or other laws affecting creditors’ rights generally or by the application of equitable principles; and will be entitled to the benefit of, and security afforded by, the Resolution, the Indenture, and the Act.
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(f) Preliminary and Final Official Statements.
(1) In this Section 5(f) only, “information” and “material fact” refer to information and facts that relate to the City and the CFD. They do not include, and no representation or warranty is provided with respect to, information and facts that (A) are submitted by, or on behalf of, M&H or Signature Homes to the Underwriter, the City, or Disclosure Counsel; (B) concern either M&H or Signature Homes, or either of them, or their affiliates, M&H’s or Signature Homes’ and their affiliates’ property ownership and proposed development of the property within the CFD and Improvement Area No. 2, or M&H’s or Signature Homes’ and their affiliates’ financing plans for carrying out that development; (C) are provided by the Underwriter, including but not limited to the information under the caption “UNDERWRITING;” (D) relate to the Depository Trust Company (“DTC”) and its book‐entry system; and (E) are included in Appendices B, C, I and J to the Official Statement.
(2) The information in the Preliminary Official Statement is true in all material respects as of the date of the Preliminary Official Statement, and the information in the Final Official Statement will be true in all material respects as of the Effective Date and the Closing Date. The Preliminary Official Statement does not as of its date, and the Final Official Statement will not as of the Effective Date and the Closing Date, contain any untrue or misleading statement of a material fact relating to the City or the CFD and Improvement Area No. 2 or omit to state any material fact relating to the City or the CFD and Improvement Area No. 2 necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (g) Supplements or Amendments to Official Statement. The City shall promptly notify the Underwriter in writing if, at any time before the earlier of (1) the City’s receipt of the Underwriter’s notice that the Final Official Statement is no longer required to be delivered under Rule 15c2‐12 or (2) the Closing Date (defined in Section 7 below), any event occurs that is known to the City officers participating in the issuance of the Bonds and that might cause the Final Official Statement, as then amended or supplemented, to include an untrue statement of a material fact or to omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Any information the City supplies for inclusion in any amendments or supplements to the Final Official Statement must not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (h) No Conflicts. To the City’s actual knowledge as of the Effective Date, the adoption of the Resolution, the issuance of the Bonds, the execution and delivery of the City Documents, the consummation of the transactions on the part of the City contemplated herein or therein, and the City’s compliance with the provisions hereof or thereof will not conflict with, or constitute on the City’s part a violation of, or a breach of or default under, any of the following in a way that would have a material adverse effect on the City’s ability to perform its obligations under the Bonds and the City Documents:
(1) A material indenture, mortgage, commitment, note, or other agreement or instrument to which the City is a party or by which it is bound.
(2) A provision of the Act or the California Constitution. 30544.00017\34959317.7

Bond‐Purchase Contract | Page 5

(3) An existing law, rule, regulation, ordinance, judgment, order, or decree to which the City (or the members of the City Council or any of the City’s officers in their capacities as such) is subject.
(i) No Defaults. The City has never been in default at any time as to principal of, or interest on, any obligation it has issued where the default might have an adverse effect on the City’s ability to consummate the transactions described in the Bonds and the City Documents, except as specifically disclosed in the Final Official Statement; and, except as specifically disclosed in the Final Official Statement, the City has not entered into any agreement or arrangement of any kind that might give rise to any lien or encumbrance on any of the Special Taxes.
(j) No Litigation. To the actual knowledge of the Sacramento City Attorney’s Office as of the Effective Date, except as is specifically disclosed in the Final Official Statement, the City has not been served with process in, and has not been overtly threatened with, any action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court, public board, or public body—
(1) that questions in any way the powers of the City Council in connection with the issuance of the Bonds;
(2) that questions in any way the validity of any proceeding taken by the City Council in connection with the issuance of the Bonds;
(3) in which an unfavorable decision, ruling, or finding is likely to have a material adverse effect on the City’s financial condition or on the transactions described in this contract; (4) that is likely to adversely affect the validity or enforceability of the Resolution, the Bonds, or the City Documents; or
(5) that questions in any way the status of the Bonds under California’s tax laws or tax regulations.
(k) Certificates of the City. Any certificate that is signed by a City official and delivered to the Underwriter in connection with the transactions contemplated by this contract will be deemed a representation and warranty by the City to the Underwriter as to the truth of the statements in the certificate.
(l) Security for the Bonds. Debt service on the Bonds will be paid solely from the Special Taxes the City receives under the Indenture and the moneys in certain funds and accounts established thereunder.
(m) Levy of Special Taxes. The Special Taxes have been and will be levied in accordance with the Amended and Restated Rate and Method of Apportionment of Special Tax relating to Improvement Area No. 2 and are secured by a lien on the properties within Improvement Area No. 2 on which they are levied.
(n) Pledge of Special Taxes. The Indenture creates a valid pledge of, and first lien upon, the Special Taxes deposited thereunder and the moneys in certain funds and accounts established thereunder, subject in all cases to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein. 30544.00017\34959317.7

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(o) Prior Continuing Disclosure Undertakings. Except as disclosed in the Final Official Statement, the City has complied in all material respects with previous undertakings under Rule 15c2‐12. (p) Prior Assessment and Special Tax Liens. Except as disclosed in the Final Official Statement, to the City’s current and actual knowledge there are no entities with outstanding assessment liens or special tax liens against any of the Taxable Property within Improvement Area No. 2.

6. Blue Sky. The City shall cooperate with the Underwriter (at the Underwriter’s cost) in qualifying the Bonds for offer and sale under the securities or blue‐sky laws of such jurisdictions of the United States as the Underwriter may reasonably request, except that the City is not required to consent to suit or to service of process in, or to qualify to do business in, any jurisdiction. The City consents to the Underwriter’s use of the City Documents, the Preliminary Official Statement, and the Final Official Statement for complying with such securities or blue‐sky laws.

7. Closing.
(a) At 9:00 a.m. (Sacramento time) on [CLOSING DATE], or at such other time or date as the City and the Underwriter may agree on (the “Closing Date”), the City shall deliver or cause to be delivered to the Underwriter the Bonds in definitive form, duly executed by the City’s authorized officers and authenticated by the Trustee, together with the other documents identified in Section 7(b) below, and the Underwriter shall accept the delivery and pay the Purchase Price of the Bonds by making a wire transfer in federal funds payable to the order of the Trustee.
(b) The activities relating to the final execution and delivery of the Bonds and the payment therefor and the delivery of the resolutions, certificates, opinions, and other instruments as described in Section 9 of this contract will occur at the offices of Orrick, Herrington & Sutcliffe LLP (“Bond Counsel”). Bond Counsel will make the documents described in Section 9 hereof electronically available to the parties via an online deal room. The payment for the Bonds and simultaneous delivery of the Bonds to the Underwriter is the “Closing.” The Bonds must be delivered as fully registered Bonds initially in denominations of $5,000 each and any integral multiple thereof. The Bonds must be registered in the name of Cede & Co., as nominee of The Depository Trust Company, and must be made available for checking by the Underwriter at such place as the Underwriter and the Trustee agree at least twenty‐four (24) hours before the Closing.

8. Termination Events. The Underwriter may cancel its obligations to purchase the Bonds if any of the following occurs between the Effective Date and the Closing Date:
(a) The House of Representatives or the Senate of the United States Congress, or a committee of either, has pending before it or favorably passes or recommends legislation that, if enacted, would have the purpose or effect of imposing federal income taxation upon revenues or other income of the general character to be derived by the City or by any similar body under the Resolution, the Indenture, or the Act, or upon interest received on obligations of the general character of the Bonds, or of causing interest on obligations of the general character of the Bonds to be includable in gross income for purposes of federal income taxation, and the legislation, in the Underwriter’s opinion, materially adversely affects the market price of the Bonds.
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(b) Any action or event occurs, including any of the following, that directly or indirectly has the purpose or effect, in the Underwriter’s opinion, of materially and adversely affecting the market price of the Bonds or the market for the Bonds; of adversely affecting the federal income‐tax consequences of owning the Bonds (including causing interest on the Bonds to be included in gross income for purposes of federal income taxation); or of imposing a federal income tax upon revenues or other income of the general character to be derived by the City under the Resolution or the Indenture, or upon interest received on the Bonds or on obligations of the general character of the Bonds:
(1) A tentative decision with respect to legislation is reached by a committee of the House of Representatives or the Senate of the United States Congress, or legislation is favorably reported or re‐reported by such a committee or introduced in (by amendment or otherwise), or passed by, the House of Representatives or the Senate; or is recommended to the United States Congress for passage by the President of the United States; or is enacted.
(2) A decision by a federal court (i.e., the United States Supreme Court, a United States Court of Appeals, a United States District Court, or the United States Tax Court) is rendered.
(3) A ruling, release, order, regulation, or official statement (tentative, proposed, or final) by or on behalf of the United States Treasury Department, the Internal Revenue Service, or other governmental agency is made or proposed to be made. (c) Legislation that takes effect before the Closing is enacted or actively considered for enactment, or a decision by a federal court is rendered, the effect of which is that the Bonds are not exempt from the registration, qualification, or other requirements of the Securities Act of 1933 as then in effect or the Securities Exchange Act of 1934 as then in effect, or that the Resolution or the Indenture, as the case may be, is not exempt from the Trust Indenture Act of 1939 as then in effect.
(d) A stop order, ruling, regulation, or official statement by the Securities and Exchange Commission or any other governmental agency having jurisdiction of the subject matter is issued or made or any other event occurs, the effect of which is that the issuance, offering, or sale of the Bonds, or the execution and delivery of the Indenture as contemplated by this contract or by the Final Official Statement, is or would be in violation of any provision of the federal securities laws, including the Securities Act of 1933 as then in effect, the Securities Exchange Act of 1934 as then in effect, or the Trust Indenture Act of 1939 as then in effect. (e) Any event occurs or any information becomes known to the Underwriter that causes the Underwriter to reasonably believe that the Final Official Statement as then amended or supplemented includes an untrue statement of a material fact or omits to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
(f) There occurs any outbreak of hostilities or any national or international calamity or crisis, including a financial crisis, the effect of which on the financial markets of the United States is such as, in the Underwriter’s reasonable judgment, would materially adversely affect the market for or market price of the Bonds.
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(g) There is in force a general suspension of trading on the New York Stock Exchange, the effect of which on the financial markets of the United States is such as, in the Underwriter’s reasonable judgment, would materially adversely affect the market for or market price of the Bonds.
(h) A general banking moratorium is declared by United States, New York, or California authorities.
(i) Any proceeding is pending or threatened by the Securities and Exchange Commission against the City.
(j) Additional material restrictions not in force as of the Effective Date are imposed upon trading in securities generally by any governmental authority or by any national securities exchange, and the restrictions adversely affect the Underwriter's ability to sell the Bonds. (k) The New York Stock Exchange or other national securities exchange, or any governmental authority, imposes, as to the Bonds or obligations of the general character of the Bonds, any material restrictions not in force on the Effective Date, or increases materially those in force on the Effective Date, with respect to the extension of credit by, or the charge to the net capital requirements of, the Underwriter.
(l) An amendment to the United States or California Constitution is enacted or action is taken by any federal or California court, legislative body, regulatory body, or other authority materially adversely affecting the tax status of the City or its property, income, or securities (or interest thereon); the validity or enforceability of the Special Taxes or the ability of the City to issue the Bonds; or the levy of any of the Special Taxes, all as contemplated by the Resolution, the Indenture, this contract, and the Final Official Statement.

9. Conditions to Closing. The Underwriter’s obligations to purchase the Bonds are subject to the City’s performance of the City’s obligations under this contract at and before the Closing, to the accuracy as of the Effective Date and as of the time of the Closing of the City’s representations and warranties in this contract, and to the following conditions, including the delivery by the City of the documents identified in this Section 9 in form and substance satisfactory to the Underwriter:
(a) At the time of Closing, (1) the Final Official Statement, the Resolution, the Indenture, the Continuing Disclosure Certificate, and this contract must be in full force and effect and must not have been amended, modified, or supplemented except as may have been agreed to in writing by the Underwriter; and (2) the CFD must have been duly formed, Improvement Area No. 2 must have been designated therein, and there must be in full force and effect all resolutions, including the Resolution, that in Bond Counsel’s opinion are necessary in connection with the transactions contemplated by this contract. (b) The Underwriter must receive the Bonds at or before the Closing. The terms of the Bonds delivered must in all instances be as described in the Final Official Statement. (c) At or before the Closing, the Underwriter must receive the following documents in the number of counterparts as are agreeable to the Underwriter and the City:
(1) Bond Counsel’s final approving opinion, dated the Closing Date and substantially in the form attached as Appendix D to the Preliminary Official Statement and Final Official Statement, together with a letter addressed to the Underwriter to the effect that the 30544.00017\34959317.7

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Underwriter may rely upon the opinion to the same extent as if the opinion were addressed to the Underwriter.
(2) A supplemental opinion of Bond Counsel addressed to the Underwriter in substantially the form attached to this contract as Exhibit F.
(3) One or more letters from disclosure counsel to the City, Stradling Yocca Carlson & Rauth, a Professional Corporation (“Disclosure Counsel”), addressed to the City and the Underwriter, stating the following:
(A) without passing upon or assuming any responsibility for the accuracy, completeness, or fairness of the statements contained in the Final Official Statement, and making no representation that Disclosure Counsel has independently verified the accuracy, completeness, or fairness of any such statements, based upon the information made available to Disclosure Counsel in the course of Disclosure Counsel’s participation in the preparation of the Final Official Statement, nothing has come to Disclosure Counsel’s attention that would lead Disclosure Counsel to believe that the Final Official Statement, including the cover page (except for any (i) expressions of opinion, the assumptions, the projections, estimates and forecasts, the charts, the financial statements or other financial, numerical, economic, demographic or statistical data, assessed or appraised valuations, or environmental matters; (ii) information relating to CUSIP numbers; (iii) information with respect to DTC and its book‐entry system; (iv) information contained in the Appendices to the Final Official Statement; (v) information incorporated by reference into the Final Official Statement; and (vi) information with respect to the Underwriter or underwriting matters with respect to the Bonds, including but not limited to information under the caption “UNDERWRITING,” as to which no opinion or view need be expressed) contains an 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; and (B) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended.
(4) A letter from counsel to the Underwriter, Best Best & Krieger LLP (“Underwriter’s Counsel”), addressed to the Underwriter, in form and substance acceptable to the Underwriter.
(5) The opinion of the Sacramento City Attorney’s Office, dated the Closing Date and addressed to the Underwriter, and in substantially the form attached to this contract as Exhibit G.
(6) The Final Official Statement executed on the City’s behalf by a duly authorized officer. (7) A certified copy of the Resolution.
(8) Specimen Bonds.
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(9) Evidence that the City has signed Internal Revenue Service Form 8038‐G and will file it with the Internal Revenue Service.
(10) Executed copies of the City Documents.
(11) A tax certificate signed by the City in form and substance satisfactory to Bond Counsel. (12) In connection with printing and distribution of the Preliminary Official Statement, a signed certificate of the City in the form attached to this contract as Exhibit B. (13) A closing certificate of the City, in form and substance as set forth in Exhibit C to this contract, dated as of the Closing Date.
(14) A certificate of the special tax consultant to the City, NBS, Temecula, California (“Special‐Tax Consultant”), in form and substance as set forth in Exhibit D to this contract, dated as of the Closing Date.
(15) A certificate of the Trustee, in form and substance as set forth in Exhibit E to this contract, dated as of the Closing Date.
(16) An opinion of counsel to the Trustee, dated as of the Closing Date, in form and substance satisfactory to the Underwriter and Bond Counsel. (17) A certificate of the appraiser, BBG, Inc. of Sacramento, California (“Appraiser”), in form and substance as set forth in Exhibit H to this contract, dated as of the Closing Date. (18) A letter of Smith & Associates, independent appraisers, addressed to the City and the Underwriter, regarding its conclusions as to the appraisal report prepared by the Appraiser as stated in the Official Statement.
(19) The M&H POS Certificate, delivered as of the date of the Preliminary Official Statement in the form of Exhibit I‐1 to this contract.
(20) The Signature Homes POS Certificate, delivered as of the date of the Preliminary Official Statement in the form of Exhibit I‐2 to this contract.
(21) A closing certificate of M&H, in form and substance as set forth in Exhibit J‐1 to this contract, dated as of the Closing Date.
(22) A closing certificate of Signature Homes, in form and substance as set forth in Exhibit J‐ 2 to this contract, dated as of the Closing Date.
(23) One or more letters of counsel to M&H, in form and substance as set forth in Exhibit K‐ 1 to this contract, dated as of the Closing Date.
(24) One or more letters of counsel to Signature Homes, in form and substance as set forth in Exhibit K‐2 to this contract, dated as of the Closing Date. (25) A certificate of the market absorption consultant, John Burns Real Estate Consulting of Folsom, California (the “Market Absorption Consultant”), in form and substance as set forth in Exhibit M to this contract, dated as of the Closing Date. 30544.00017\34959317.7

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(26) Continuing disclosure certificates executed by each of M&H and Signature Homes, in form and substance as set forth as Appendix H to the Final Official Statement. (27) A Blanket Letter of Representations of the City to DTC, which qualifies the Bonds for delivery via the facilities of DTC.
(28) Such additional legal opinions, certificates, proceedings, instruments, and other documents as the Underwriter or Bond Counsel may reasonably request to evidence the City’s compliance with legal requirements; the truth and accuracy, as of the time of Closing, of the City’s representations in this contract; and the City’s due performance or satisfaction at or before the time of Closing of all agreements then to be performed and all conditions then to be satisfied by the City.
(d) If the City is unable to satisfy the conditions in Sections 9(a), 9(b), and 9(c) of this contract, or if the Underwriter’s obligations to purchase and accept delivery of the Bonds are terminated for any reason permitted by this contract, then this contract will terminate, and neither the Underwriter nor the City will be under further obligation under this contract other than their obligations to pay expenses, as provided in Section 12 of this contract, which will continue in full force and effect.

10. Conditions to the City’s Obligations. The City’s obligations under this contract are subject to the Underwriter’s performance of its obligations under this contract and the Underwriter’s delivery of an issue price certificate in form and substance reasonably satisfactory to Bond Counsel.

11. Survival of Representations, Warranties, and Agreements. All of the City’s representations, warranties, and agreements in this contract will remain operative and in full force and effect, regardless of any investigations made by or on behalf of the Underwriter, and will survive the Closing.

12. Expenses.
(a) The City shall pay or cause to be paid all reasonable expenses incident to the issuance of the Bonds and to the performance of its obligations under this contract, including (1) expense of delivery of the Bonds and this contract; (2) expense of printing the Preliminary Official Statement, the Final Official Statement, and any amendment or supplement to the Preliminary Official Statement or the Final Official Statement; (3) fees and disbursements of Bond Counsel, Disclosure Counsel, municipal advisor, and other consultants, the Special Tax Consultant, the Appraiser and the Trustee; and (4) expenses (included in the expense component of the Underwriter’s discount) incurred by the Underwriter on behalf of City’s employees which are incidental to implementing this contract, including transaction‐related meals of those employees.
(b) The Underwriter shall pay all advertising expenses in connection with the public offering of the Bonds and all other expenses it incurs in connection with its public offering and distribution of the Bonds, including the fees and expenses of Underwriter’s Counsel.

13. No Fiduciary Duty.
(a) The City and the Underwriter acknowledge and agree that— 30544.00017\34959317.7

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(1) the purchase and sale of the Bonds under this contract is an arm’s‐length commercial transaction between the City and the Underwriter;
(2) in connection with the purchase and sale of the Bonds and with the discussions, undertakings, and procedures leading up to the consummation of the purchase and sale of the Bonds under this contract, the Underwriter is and has been acting solely as principal and is not acting as the agent or fiduciary of the City; (3) the Underwriter has not assumed a fiduciary responsibility in favor of the City with respect to (A) the offering of the Bonds contemplated by this contract or the process leading to this contract (whether or not the Underwriter or any affiliate of the Underwriter has advised or is currently advising the City on other matters), or (B) any other obligation to the City with respect to the offering contemplated by this contract except the obligations expressly set forth in this contract; and (4) the City and the Underwriter have consulted their own legal, financial, and other advisors to the extent they have deemed appropriate in connection with this transaction.
(b) This Section 13 does not limit the Underwriter’s obligations of fair dealing under Municipal Securities Rulemaking Board Rule G‐17.

14. Notices.
(a) To be effective, any notice or other communication given to the City under this contract must be in writing and must be delivered to the following person at the following address:

Office of the City Treasurer
Historic City Hall
915 I Street, 3rd Floor
Sacramento, California 95814
Attention: Brian Wong, Debt Manager
Email address: [email protected]
(b) To be effective, any notice or other communication to be given to the Underwriter under this contract must be in writing and must be delivered to the following person at the following address:

Piper Sandler & Co.
3626 Fair Oaks Blvd., Ste. 100
Sacramento, CA 95864
Attention: Dennis McGuire, Managing Director

15. Benefit. This contract is made solely for the benefit of the parties and their successors and assigns, and no other person, including any purchaser of the Bonds, will acquire or have any right under or by virtue of it.

16. Governing Law and Interpretation. This contract is to be governed by, and construed in accordance with, the laws of the State of California. All currency amounts set forth in this contract are in United States Dollars. The word “including” means “including but not limited to.” 30544.00017\34959317.7

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17. Effective Date. This contract becomes effective when the City accepts it, as indicated in the City’s signature block below.

18. Counterparts. The parties may sign this contract in counterparts, each of which will be considered as an original, but all of which will constitute the same instrument. Such signatures may be made manually or electronically.

19. Severability. If a court with jurisdiction rules that any provision of this contract is invalid, unenforceable, or contrary to law or public policy, then the parties want the court to interpret this contract as follows: (a) by modifying the provision to the minimum necessary to make it enforceable or, if that modification is not permitted by law, by disregarding the provision; (b) by holding that the rest of the contract will remain in effect as written; (c) by holding that the provision will remain as written in any circumstances other than those in which the provision is held to be unenforceable; and (d) by holding the entire contract unenforceable if modifying or disregarding the unenforceable provision would result in the failure of an essential purpose of this contract.

20. Establishment of Issue Price. The Underwriter agrees to make an bona fide initial public offering of all of the Bonds in compliance with federal and state securities laws, at the initial offering prices set forth on Exhibit A attached hereto and incorporated herein by reference. Subject to the paragraphs below, the Underwriter may change the initial offering prices as it deems necessary in connection with the offering of the Bonds without any requirement of prior notice, and may offer and sell the Bonds to institutions at prices lower than those stated in Exhibit A. (a) The following definitions apply only in this Section 20:
(1) “Public” means any person other than an Underwriter or a Related Party. (2) “Underwriter” means (A) any person who agrees under 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 under 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 retail‐distribution agreement participating in the initial sale of the Bonds to the Public).
(3) A purchaser of any of the Bonds is a “Related Party” to an Underwriter if the Underwriter and the purchaser are subject, directly or indirectly, to (A) at least 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). (4) “Sale Date” means the date of execution of this contract by all parties. (b) The Underwriter shall assist the City in establishing the issue price of the Bonds and shall execute and deliver to the City at the Closing an “issue price” or similar certificate, together 30544.00017\34959317.7

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with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit L, with any modifications that be appropriate or necessary, in the reasonable judgment of the Underwriter, the City, and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the Public of the Bonds. All actions to be taken by the City under this section to establish the issue price of the Bonds may be taken on behalf of the City by the City’s municipal advisor, Fieldman, Rolapp & Associates, Inc. (“Municipal Advisor”) and any notice or report to be provided to the City may be provided to the City’s Municipal Advisor. (c) [Except as otherwise set forth in Exhibit A attached hereto,] the City will treat the first price at which 10% of each maturity of the Bonds (the “10% Test”) identified under the column “10% Test Used” in Exhibit L, is sold to the Public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% Test). At or promptly after the execution of this contract, 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 the 10% Test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the Public; provided that the Underwriter's reporting obligation after the Closing Date may be at reasonable periodic intervals.] 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
(d) The Underwriter confirms that the Underwriter has offered the Bonds to the Public on or before the date of this contract at the offering price or prices (the “Initial Offering Price”), or at the corresponding yield or yields, set forth in Exhibit A attached hereto, except as otherwise set forth therein. Exhibit L also sets forth, identified under the column “Hold the Offering Price Rule Used,” as of the date of this Purchase Contract, the maturities, if any, of the Bonds for which the 10% Test has not been satisfied and for which the City and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the City to treat the Initial Offering Price to the public of each such maturity as of the sale date as the issue price of that maturity (the “hold‐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.
(1) the close of the 5th business day after the sale date; or (2) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the Public at a price that is no higher than the Initial Offering Price to the Public. (e) The Underwriter will advise the City promptly after the close of the 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. (f) The Underwriter hereby confirms that any selling group agreement and any third‐party distribution agreement relating to the initial sale of the Bonds to the Public, together with the 30544.00017\34959317.7

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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 retail distribution agreement, as applicable, to (1) report the prices at which it sells to the Public the unsold Bonds of each maturity allotted to it until it is notified by the Underwriter that either the 10% Test has been satisfied as to the Bonds of that maturity or all Bonds of that maturity have been sold to the Public, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals; and (2) comply with the Hold‐the‐Offering‐Price Rule, if applicable, in each case if and for so long as directed by the Underwriter. (g) The City acknowledges the following with respect to the Underwriter’s representation in Section 20(f):
(1) If a selling group has been created in connection with the initial sale of the Bonds to the Public, the Underwriter will rely on the agreement of each dealer who is a member of the selling group to comply with the Hold‐the‐Offering‐Price Rule, if applicable, as set forth in a selling group agreement and the related pricing wires. (2) If a third‐party distribution agreement was employed in connection with the initial sale of the Bonds to the Public, the Underwriter will rely on the agreement of each broker‐ dealer that is a party to the agreement to comply with the Hold‐the‐Offering‐Price Rule, if applicable, as set forth in the third‐party distribution agreement and the related pricing wires.
(3) The Underwriter will 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 regarding the Hold‐the‐ Offering‐Price Rule as applicable to the Bonds.
(h) The Underwriter acknowledges that sales of any Bonds to any person who is a Related Party to the Underwriter will not constitute sales to the Public for purposes of this Section 20. (Signature Page Follows)
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PIPER SANDLER & CO.

By:

Authorized Representative

Accepted and agreed to as of
the date first above written:

CITY OF SACRAMENTO

By:

John P. Colville Jr., City Treasurer

Date and Time of Execution: _______ day of _____________, 2022 at ____:____ a.m./p.m.

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EXHIBIT A

$__________
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022

MATURITY SCHEDULE AND
REDEMPTION TERMS

Maturity
(September 1)
Principal
Amount
Interest
Rate Yield
Initial
Offering
Price
10% Test
Used
Hold‐the‐
Offering‐
Price Rule
Used
$ %

C = Priced to the optional redemption date of September 1, 20__, at ___%.

T = term bond.

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REDEMPTION TERMS
Optional Redemption. The Bonds maturing on or after September 1, 20__, are subject to optional redemption by the City before their respective stated maturity dates, as a whole or in part on any date on or after September 1, 20__, from any source of available funds other than prepayments of the Special Tax, upon mailed notice as provided in the Indenture, at the following redemption prices (expressed as a percentage of the principal amount of Bonds or portions thereof called for redemption), together with accrued interest thereon to the date of redemption.

Redemption Dates
Redemption
Price
September 1, 20__, through and including August 31, 20___ 103 % September 1, 20__, through and including August 31, 20___ 102 September 1, 20__, through and including August 31, 20___ 101 September 1, 20__, and any date thereafter 100

Extraordinary Redemption from Special Tax Prepayments. The Bonds are subject to extraordinary redemption by the City before their respective stated maturity dates, as a whole or in part on any Interest Payment Date, solely from prepayments of the Special Tax, upon mailed notice as provided in the Indenture, at the following redemption prices (expressed as a percentage of the principal amount of Bonds or portions thereof called for redemption), together with accrued interest to the date of redemption:

Redemption Dates
Redemption
Price
Any Interest Payment Date from September 1, 2022 through and including March 1, 20__
103 %
September 1, 20__, and March 1, 20__ 102
September 1, 20__, and March 1, 20__ 101
September 1, 20__, and any Interest Payment Date thereafter 100

Mandatory Sinking Fund Redemption. The Bonds maturing on September 1, 20__, are subject to mandatory redemption by the City before their stated maturity date in part on each September 1, as set forth in the schedule below, solely from Sinking Fund Account Payments established under the Indenture for that purpose, upon mailed notice as provided in the Indenture, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, as follows:

Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

(maturity)

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The Bonds maturing on September 1, 20__, are subject to mandatory redemption by the City before their stated maturity date in part on each September 1, as set forth in the schedule below, solely from Sinking Fund Account Payments established under the Indenture for that purpose, upon mailed notice as provided in the Indenture, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, as follows:

Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

(maturity)

Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

(maturity)

Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

(maturity)

The Escrow Bonds are subject to mandatory redemption by the City before their stated maturity date in part on each September 1, as set forth in the schedule below, solely from Sinking Fund Account Payments established under the Indenture for that purpose, upon mailed notice as provided in the Indenture,
at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, as follows:
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Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

(maturity)

The selection of Bonds for redemption, notice of redemption, and the effect of redemption shall be as prescribed in the Final Official Statement.

Capitalized terms not defined herein shall have the same meaning set forth in the Bond Purchase Contract dated ___________, 2022, between the City and Piper Sandler & Co. or the Final Official Statement, as applicable.

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EXHIBIT B

$___________
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022

CERTIFICATE REGARDING PRELIMINARY OFFICIAL STATEMENT

I, John P. Colville Jr., Sacramento City Treasurer, hereby state and certify as follows:

1. I am the duly appointed, qualified, and acting Treasurer of the City of Sacramento (the “City”), a municipal corporation duly organized and existing under its charter and the Constitution and laws of the State of California. As such, I am familiar with the facts herein certified and am authorized and qualified to certify those facts.

2. With respect to the above‐captioned bonds, the City has deemed the Preliminary Official Statement dated [POS DATE], including the cover page and all appendices, to be final as of its date for purposes of Rule 15c2‐12 promulgated under the Securities Exchange Act of 1934, except for information permitted to be omitted therefrom by Rule 15c2‐12.

Dated as of ______, 2022

CITY OF SACRAMENTO

By
John P. Colville Jr.

City Treasurer

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EXHIBIT C

$____________
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022

CLOSING CERTIFICATE OF THE CITY OF SACRAMENTO

The undersigned hereby certifies and represents that they are the duly appointed and acting representative of the City of
Sacramento (the “City”), that they are authorized to execute this certificate in connection with the issuance of the bonds identified above, and further certifies and reconfirms the following on the City’s behalf:

1. The representations and warranties of the City contained in the Bond Purchase Contract between the City and Piper Sandler & Co., dated __________, 2022 (the “Contract”), are true in all material respects as of the date of this certificate as if made on the date of this certificate.

2. The City has complied with all agreements, covenants, and conditions to be complied with by the City under the Indenture and the Contract as of the date of this certificate.

Each capitalized term not defined in this certificate has the meaning given to it in the Contract.

Dated: ___________, 2022
CITY OF SACRAMENTO

By:

John P. Colville Jr.

City Treasurer

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EXHIBIT D

$___________
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022

CERTIFICATE OF SPECIAL TAX CONSULTANT

The City of Sacramento has retained NBS, Temecula, California (the “Special‐Tax Consultant”) as a special tax consultant in connection with the City of Sacramento Delta Shores Community Facilities District No. 2019‐01 (Improvements) (the “CFD”) with respect to Improvement Area No. 2 therein (“Improvement Area No. 2”). The Special Tax Consultant has reviewed the amended and restated rate and method of apportionment of special tax for Improvement Area No. 2 (the “RMA”), which is set forth in Appendix A to the Official Statement (the “Official Statement”) dated __________, 2022, relating to the bonds identified above (the “Bonds”). The Special Tax Consultant has also reviewed the summaries and descriptions of the RMA in the Official Statement. Based upon that review, the Special Tax Consultant hereby certifies as follows:
(a) The Special Tax levied under the RMA, if levied in the maximum amounts permitted under the special tax formula set forth in the RMA on the date of this certificate, would be levied in a combined amount equal to at least 110% of the projected debt service on the Bonds and Administrative Fees and Expenses, provided that the annual debt service figures in the debt service schedules in the Official Statement, which were relied upon by Special Tax Consultant, are substantially true and correct. Although the Special Tax, if levied in the maximum amounts under the special tax formula set forth in the RMA, would be levied in an amount equal to at least 110% of the projected debt service on the Bonds and Administrative Fees and Expenses, no representation is made herein as to actual amounts that will be collected in future years. (b) All summaries of and information with respect to the RMA in the Official Statement, all information in Tables 2, 3, 4, and 5 in the Official Statement, and all other information provided by the Special Tax Consultant for inclusion in the Official Statement are true and correct as of the date of the Official Statement and as of the date hereof.
(c) The aggregate value of all real property subject to the levy of the Special Tax in Improvement Area No. 2, based upon the appraisal report dated May 19, 2022 (with a date of value of April 1, 2022), is at least three times the lien of the Special Tax and any overlapping community facilities district or assessment district bonds on taxable property within Improvement Area No. 2.

Each capitalized term not defined in this certificate has the meaning given to it in the Official Statement.

Dated: ___________, 2022 NBS

By: _____________________________________
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EXHIBIT E

$____________
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022

CERTIFICATE OF TRUSTEE

The undersigned hereby states and certifies that they are an authorized officer of U.S. Bank Trust Company, National Association, as trustee (the “Trustee”) under that certain Master Indenture, dated as of [June 1, 2022] as supplemented by a First Supplemental Indenture dated as of [June 1, 2022] (collectively, the “Indenture”), by and between City of Sacramento and the Trustee, relating to the above‐captioned bonds (the “Bonds”).

As such, the undersigned is familiar with the following facts and is authorized and qualified to certify the following facts on behalf of the Trustee:
(1) The Trustee 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 enter into and perform its duties under the Indenture.
(2) The Trustee has duly authorized, executed, and delivered the Indenture. (3) To the Trustee’s best knowledge after due inquiry, there is no action, suit, proceeding, or investigation at law or in equity before or by any court or governmental agency, public board, or public body (a) pending against the Trustee or threatened against the Trustee that in the Trustee’s reasonable judgment would affect the Trustee’s existence, or (b) in any way contesting or affecting the validity or enforceability of the Indenture or contesting the Trustee’s powers or its authority to enter into, and perform its obligations under, the Indenture.

Dated: __________, 2022
U.S. Bank Trust Company, National Association,
as Trustee

By
Authorized Officer

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EXHIBIT F

SUPPLEMENTAL OPINION OF BOND COUNSEL

________________, 2022

Piper Sandler & Co.

Sacramento, California

City of Sacramento
Delta Shores Community Facilities District No. 2019‐01
(Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022 (Supplemental Opinion)
Ladies and Gentlemen:

This letter is addressed to you, as Underwriter, pursuant to Section 9(c)(2) of the Bond Purchase Contract, dated _________, 2022 (the “Contract”), between you and the City of Sacramento (the “City”), providing for the purchase of $__________ principal amount of City of Sacramento Delta Shores Community Facilities District No. 2019‐01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022 (the “Bonds”). The Bonds are being issued pursuant to a Master Indenture, dated as of June 1, 2022 (the “Master Indenture”), as supplemented by a First Supplemental Indenture, dated as of June 1, 2022 (the “First Supplemental Indenture” and, together with the Master Indenture, the “Indenture”), each between the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture or, if not defined in the Indenture, in the Contract.

In connection with our role as bond counsel to the City, we have reviewed the Indenture; the Contract; the Tax Certificate, dated the date hereof (the “Tax Certificate”), executed by the City; opinions of counsel to the City and the Trustee; certificates of the City, the Trustee and others; and such other documents, opinions and matters to the extent we deemed necessary to render the opinions and conclusions set forth herein.

The opinions and conclusions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions or conclusions may be affected by actions taken or omitted or events occurring after the original delivery of the Bonds on the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after the original delivery of the Bonds on the date hereof. We have assumed the 30544.00017\34959317.7

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genuineness of all documents and signatures provided to us and the due and legal execution and delivery thereof by, and validity against, any parties other than the City. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. We have further assumed compliance with all covenants and agreements contained in such documents. In addition, we call attention to the fact that the rights and obligations under the Bonds, the Indenture, the Tax Certificate and the Contract and their enforceability may be subject to bankruptcy, insolvency, reorganization, receivership, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against governmental entities such as the City in the State of California. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute or to have the effect of a penalty), right of set‐off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non‐exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinions with respect to the state or quality of title to or interest in any assets described in or as subject to the lien of the Indenture or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets. We express no opinion with respect to the plans, specifications, maps, financial report or other engineering or financial details of the proceedings, or upon the rate and method of apportionment of the Special Tax or the validity of the Special Tax levied upon any individual parcel. Finally, we undertake no responsibility for the accuracy, except as expressly set forth in numbered paragraph 3 below, completeness or fairness of the Official Statement, dated _________, 2022 (the “Official Statement”), or other offering material relating to the Bonds and express no opinion or conclusion relating thereto.

Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions and conclusions:

1. The Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended.

2. The Contract has been duly executed and delivered by, and constitutes a valid and binding obligation of, the City.

3. The statements contained in the Official Statement under the captions “THE BONDS,” “SOURCES OF PAYMENT FOR THE BONDS,” and “TAX MATTERS,” and contained in APPENDIX F – “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE” thereto, excluding any material that may be treated as included under such captions by cross reference or reference to other documents or sources, insofar as such statements expressly summarize certain provisions of the Indenture or set out the content of our final legal opinion as bond counsel to the City concerning the validity of the Bonds and certain other matters, dated the date hereof and addressed to the City, are accurate in all material respects.

This letter is furnished by us as bond counsel to the City. No attorney‐client relationship has existed or exists between our firm and you in connection with the Bonds or by virtue of this letter. We disclaim any obligation to update this letter. This letter is delivered to you as Underwriter of the Bonds, is solely for your benefit as such Underwriter in connection with the original delivery of the Bonds on the date hereof, and is not to be used, circulated, quoted or otherwise referred to or relied upon for any other 30544.00017\34959317.7

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purpose or by any other person. This letter is not intended to, and may not, be relied upon by owners of the Bonds or by any other party to whom it is not specifically addressed.

Very truly yours,

ORRICK, HERRINGTON & SUTCLIFFE
LLP

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EXHIBIT G

OPINION OF THE CITY ATTORNEY

______________, 2022

Piper Sandler & Co.

Sacramento, California

Re: $___________ City of Sacramento Delta Shores Community Facilities District No. 2019‐ 01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022

Ladies and Gentlemen:

We are legal counsel for the City
of Sacramento (the “City”) in connection with the issuance and delivery of the special tax bonds captioned above (the “Bonds”). The Bonds are being issued under a Master Indenture, dated as of [June 1, 2022] as supplemented by a First Supplemental Indenture dated as of [June 1, 2022] (collectively, the “Indenture”), by and between the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). We are providing this opinion to you in connection with the Bond Purchase Contract dated ____________, 2022, between the City and Piper Sandler & Co. (the “Contract”), which among other things provides for the purchase of the Bonds in the aggregate principal amount of $___________. Unless otherwise defined in this opinion, or unless the context otherwise requires, the capitalized terms used below have the meanings given them in the Indenture or, if not defined in the Indenture, in the Contract.

We have examined the Indenture and the Contract (collectively, the “City Documents”) and the Bonds.

Based on that examination and on our examination of such other information, papers, and documents as we considered necessary or advisable to examine before rendering an opinion (including the State of California’s Constitution and laws and the City’s governing instruments, ordinances, and public proceedings), we have concluded that the following statements are accurate as of the date of this opinion:

1. The City is a charter city duly organized and validly existing under its charter and the State of California’s Constitution and laws, with full right and lawful authority (a) to adopt the Resolution; (b) to sign and deliver the City Documents, the Bonds, and all related documents; (c) to perform its obligations under the documents identified in clause (b) of this paragraph; and (d) to issue the Bonds.

2. The City of Sacramento Delta Shores Community Facilities District No. 2019‐01 (Improvements) (the “CFD”) is a community facilities district duly organized and validly existing under California law, including the Mello‐Roos Community Facilities Act of 1982 set out in the California Government Code commencing with Section 53311 (the “Mello‐Roos Act”), and Improvement Area No. 2 of the CFD is a duly and validly designated improvement area within the CFD.

3. The City has duly and validly authorized, executed, and delivered the City Documents and the Bonds. Hence, the City Documents and the Bonds constitute legal, valid, and binding obligations of 30544.00017\34959317.7

Bond‐Purchase Contract | Page G‐2

the City, enforceable against the City in accordance with their terms, except as enforcement may be limited by—
(a) bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting creditors’ rights generally (including fraudulent‐conveyance laws); (b) general principles of equity, including concepts of materiality, reasonableness, and good faith and fair dealing;
(c) the possible unavailability of specific performance or injunctive relief, whether in a proceeding in equity or at law; or
(d) the exercise of judicial discretion in appropriate cases or the limitations on legal remedies against public entities in California.

4. At a public meeting called and held according to law with all public notice required by law, and at which a quorum was present and acting throughout, the Sacramento City Council (the “City Council”) duly adopted the Resolution, which is in full force and effect and has not been amended or rescinded.

5. To our actual knowledge, the City Council’s adoption of the Resolution; the City’s execution and delivery of the City Documents, the Bonds, the Final Official Statement, and all related documents; the consummation of the transactions described in the Resolution, the City Documents, and all related documents; and the City’s compliance with the Resolution, the City Documents, the Bonds, and all related documents do not in any material way—
(a) conflict with, or constitute on the part of the City a violation of, or a breach of or default under, any material indenture, mortgage, commitment, note, or other agreement or instrument to which the City is a party or by which it is bound; (b) violate the City’s charter, the Mello‐Roos Act, or the California Constitution; or (c) violate any law, rule, regulation, ordinance, judgment, order, or decree that applies to the City or to the members of the City Council or any of the City’s officers in their capacity as an officer.

6. Except as specifically disclosed in the Official Statement, to our actual knowledge the City has not been served with process in, and has not been overtly threatened with, any action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court, public board, or public body—
(a) that questions in any way the powers of the City Council in connection with the issuance of the Bonds;
(b) that questions in any way the validity of any proceeding taken by the City Council in connection with the issuance of the Bonds;
(c) in which an unfavorable decision, ruling, or finding is likely to have a material adverse effect on the City’s financial condition or on the transactions described in the Contract; (d) that is likely to adversely affect the validity or enforceability of the Resolution, the Bonds, or the City Documents; or
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(e) that questions in any other way the status of the Bonds under California’s tax laws or tax regulations.
● ● ●
We express no opinion about the following: any indemnification or contribution provision in the City Documents; the City’s, M&H’s, or Signature Homes’ financial capacity or lack of financial capacity; M&H’s or Signature Homes’ development project within the CFD, including Improvement Area No. 2; and the state or federal laws that pertain to the tax‐exempt status of the Bonds. The phrase “to our actual knowledge” does not imply that we have undertaken any independent investigation about the facts at issue, and in fact we have not done so.

Sincerely yours,

Susana Alcala Wood
City Attorney

By: ________________________________
Jeffrey L. Massey
Senior Deputy City Attorney
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EXHIBIT H

$_____________
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022
CERTIFICATE OF APPRAISER
BBG, Inc., of Sacramento, California (the “Appraiser”), prepared an appraisal report of certain properties within Improvement Area No. 2 of the City of Sacramento Delta Shores Community Facilities District No. 2019‐01 (Improvements) with respect to Improvement Area No. 2 therein, dated May 19, 2022, (with a date of value of April 1, 2022) ( the “Appraisal”). The Appraisal is described and summarized in, and is set out as Appendix B to, the Preliminary Official Statement dated _________, 2022 (the “Preliminary Official Statement”), and the Official Statement dated ___________, 2022 (the “Final Official Statement”), relating to the bonds captioned above.

1. The Appraiser hereby certifies as follows to the best of its knowledge and belief: (a) all information with respect to the Appraisal in the Preliminary Official Statement and the Final Official Statement was true and correct as of the date of the Appraisal; (b) since the date of the Appraisal, nothing has come to the attention of the Appraiser that would cause the Appraiser to believe that the value of the property appraised therein is less than the value reported in the Appraisal; provided, 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 of such property; and (c) that an updated Appraisal has not been completed as of the date of this certificate.

2. The Appraiser hereby consents to the use of the Appraisal in connection with the distribution and use of the Preliminary Official Statement and Final Official Statement.

Dated: ___________, 2022
BBG, INC.

By:

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EXHIBIT I‐1
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022

CERTIFICATE OF DEVELOPER
(M&H Realty Partners VI, L.P.)

__________, 2021
In connection with the issuance, sale and delivery by the City of Sacramento (the “City”) with respect to the City of Sacramento Delta Shores Community Facilities District No. 2019‐01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022 (the “Bonds”), and pursuant to a Bond Purchase Contract (the “Bond Purchase Contract”) to be entered into between the City and Piper Sandler & Co., as underwriter (the “Underwriter”), the undersigned, in their capacity as a duly authorized officer or representative of M&H Realty Partners VI, L.P, a California limited partnership (the “Developer”), hereby certifies, on behalf of the Developer, as follows as of the date hereof:

1. The Developer is the owner of certain property (the “Property”) located within Improvement Area No. 2 (“Improvement Area No. 2”) of the City of Sacramento Delta Shores Community Facilities District No. 2019‐01 (Improvements) (the “District”). The undersigned is familiar with the facts herein certified and is duly authorized and qualified to execute this Certificate of Developer (M&H Realty Partners VI, L.P.) (the “Certificate”) on behalf of the Developer and with respect to the Property.

2. Capitalized terms not defined herein have the same meaning as is set forth in the Bond Purchase Contract. As used in this Certificate, the following capitalized terms have the meanings set forth below:
(a) “Actual Knowledge of the Undersigned” means the actual (as opposed to constructive) knowledge that the individual signing this Certificate on behalf of the Developer has as of the date of this Certificate or has obtained through (1) knowledge of the matters set forth in this Certificate; or (2) a review of documents that were reasonably available to the undersigned and that the undersigned has 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 Developer’s current business and operations. The individual signing this Certificate has not contacted any individuals who are no longer employed by, or associated with, the Developer. (b) “Affiliates” means any person presently directly (or indirectly through one or more intermediaries) under managerial control of the Developer, and about whom information could be material to potential investors in their investment decision regarding the Bonds. For purposes of this Certificate, the term “Affiliates” shall not include Signature Homes, Inc.

3. The Developer is a limited partnership validly existing and in good standing as a limited partnership under the laws of the State of California and authorized to conduct business in the State of 30544.00017\34959317.7

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California and has all requisite limited partnership right, power and authority: (i) to execute and deliver this Certificate; and (ii) to undertake all of the transactions on its part described in the Preliminary Official Statement.

4. As of the date of the Preliminary Official Statement, the statements contained in the Preliminary Official Statement under the captions “INTRODUCTION – Delta Shores, the District and Improvement Area No. 2 – General,” “INTRODUCTION –Property Ownership and Development Status,” “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2” (other than under the caption “ – Acquisition of MDR Villages by Signature Homes,” “—Infrastructure and Home Construction by Signature Homes,” and “—Signature Homes Financing Plan” for which no certification is provided), “PROPERTY OWNERSHIP ‐ The Developer” and "CONTINUING DISCLOSURE – Developer Continuing Disclosure" (excluding any statements regarding any property owner or the property owned by a property owner other than the Developer and any statements that cite information from a source other than the Developer) are true and correct in all material respects and do 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.

5. To the Actual Knowledge of the Undersigned, the Developer is able to pay its bills as they become due and no proceedings are pending against the Developer (based upon service of process upon the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned, are threatened in writing in which the Developer or any of its Affiliates may be adjudicated as bankrupt or discharged from any or all of their respective debts or obligations, or granted an extension of time to pay their respective debts or obligations, or be allowed to reorganize or readjust their respective debts, or be subject to control or supervision of the Federal Deposit Insurance Corporation.

6. Except as set forth in the Preliminary Official Statement, no action, suit, proceeding, inquiry, or investigation at law or in equity, before or by any court, regulatory agency, public board or public body is pending against the Developer or any Affiliate (with proper service of process upon the Developer or Affiliate having been accomplished) or, to the Actual Knowledge of the Undersigned, is threatened in writing against the Developer or any Affiliate (a) to restrain or enjoin the collection of the Special Taxes or other sums pledged or to be pledged to pay the principal of and interest on the Bonds, (b) to restrain or enjoin the development or sale of the Property as described in the Preliminary Official Statement, (c) in any way contesting or affecting the validity of the Special Taxes, the District, or Improvement Area No. 2, or (d) which is reasonably likely to materially and adversely affect the Developer’s ability to develop and sell the Property as described in the Preliminary Official Statement or to pay the Special Taxes due with respect to the Property (to the extent the responsibility of the Developer) prior to delinquency.

7. Except as described in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, there are no material loans outstanding and unpaid and no material lines of credit of the Developer or its Affiliates that are secured by an interest in the Property. To the Actual Knowledge of the Undersigned, neither the Developer nor any of its Affiliates is currently in material default on any loans, lines of credit, or other obligation related to the development of the Property (or any other project) that is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes due with respect to the Property (to the extent the responsibility of the Developer) prior to delinquency.
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8. Except as expressly stated in the Preliminary Official Statement, to the Actual Knowledge of the Undersigned, the Developer is not aware that any of the Property (a) has a current liability with respect to the presence of a substance classified as of the date hereof as hazardous under the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 or under applicable California law, or (b) is adversely affected by the presence of endangered or threatened species or of habitat for endangered or threatened species.

9. To the Actual Knowledge of the Undersigned, during the last five years, neither the Developer nor any current Affiliate has, during the period of its ownership, been delinquent to any material extent in the payment of any ad valorem property tax, special assessment, or special tax on property included within the boundaries of a community facilities district or an assessment district in California that (a) caused a draw on a reserve fund relating to financing through the community facilities district or assessment district, or (b) resulted in a foreclosure action being commenced against the Developer or its Affiliates in a court of law.

10. To the Actual Knowledge of the Undersigned, the Developer is fully qualified by all necessary permits, licenses, and certifications to conduct its business as the business is being conducted as of the date hereof and, except for any licenses, certificates, approvals, variances, and permits that may be necessary for the construction and operation of the Developer’s development project within the District as described in the Preliminary Official Statement, there is no consent, approval, authorization, or other order of, or filing with, or certification by, any regulatory authority having jurisdiction over the Developer, other than those that have been obtained and are in full force and effect, that is required for completion and sale, as applicable, of the development project within the District as described in the Preliminary Official Statement.

11. To the Actual Knowledge of the Undersigned, the Developer is not in violation of any provision of, or in default under, its limited partnership agreement or any other relevant and material agreement, lease, or contract to which the Developer is a party or is otherwise subject, the violation of or default under which could reasonably be expected to materially and adversely affect the Developer’s ability to own and develop the Property as described in the Preliminary Official Statement or to pay Special Taxes due with respect to the Property (to the extent the responsibility of the Developer) prior to delinquency.

12. To the Actual Knowledge of the Undersigned, there are no claims, disputes, suits, actions, or contingent liabilities, by and among the Developer, its Affiliates, any contractors working on the development of the Property, or any other party, that is reasonably likely to materially and adversely affect the development of the Property as described in the Preliminary Official Statement or the payment of the Special Taxes due with respect to the Property (to the extent the responsibility of the Developer) prior to delinquency.

13. Based upon the development plans as of the date hereof, including but not limited to the current budget and subject to economic conditions and risks generally inherent in the development of real property, including but not limited to the risks described in the Preliminary Official Statement under the section titled “SPECIAL RISK FACTORS,” to the Actual Knowledge of the Undersigned, the Developer anticipates as of the date hereof that it will have sufficient funds to develop the Property as described in the Preliminary Official Statement and to pay Special Taxes levied against the Property (to the extent the responsibility of the Developer) prior to delinquency and does not anticipate that the City will be required to draw on the reserve fund for the bonds for payment of principal of or interest on the Bonds because of the Developer’s nonpayment of Special Taxes. 30544.00017\34959317.7

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14. An appraisal of the taxable properties within Improvement Area No. 2, dated May 19, 2022 (the “Appraisal Report”), was prepared by BBG, Inc. (the “Appraiser”). The Appraisal Report estimates the market value of the taxable properties within Improvement Area No. 2 as of April 1, 2022 (the “Date of Value”), confirming the market values of the taxable property within Improvement Area No. 2 are not less than the original values set forth in the Appraisal. To Actual Knowledge of the Undersigned, all information submitted by, or on behalf of and authorized by, the Developer to the Appraiser and contained in the sections of the Appraisal Report highlighted in yellow or circled in Exhibit A attached hereto, was true and correct in all material respects as of the Date of Value.

15. A report of John Burns Real Estate Consulting of Folsom, California (the “Market Absorption Consultant”), dated April 19, 2022 (the “Absorption Report”), was prepared. To the Actual Knowledge of the Undersigned, all information submitted by, or on behalf of and authorized by, the Developer to the Market Absorption Consultant and contained in the sections of the Absorption Report highlighted in yellow or circled in Exhibit A attached hereto, was true and correct in all material respects as of the date of the Absorption Report

16. The Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and its Affiliates that it controls will not bring any action, suit, proceeding, inquiry, or investigation at law or in equity before any court, regulatory agency, public board, or public body that in any way seeks to challenge or overturn the formation of the District or the designation of Improvement Area No. 2, to challenge the adoption of the ordinance levying special taxes within Improvement Area No. 2, to invalidate the District, the designation of Improvement Area No. 2, or the Bonds, or 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 Developer and its Affiliates in any way from bringing any other action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, including, without limitation, (a) an action or suit contending that the Special Tax has not been levied in accordance with the methodologies contained in the Rate and Method of Apportionment of Special Taxes pursuant to which Special Taxes are levied, (b) an action or suit with respect to the application or use of the Special Taxes levied and collected, or (c) an action or suit to enforce the obligations of the City under the Resolution, the Indenture, the First Supplemental Indenture, any continuing disclosure certificate, or any other agreements among the Developer or its Affiliates, and the City or to which the Developer or its Affiliates is a beneficiary.

17. The Developer hereby consents to the issuance of the Bonds and acknowledges and agrees that the proceeds of the Bonds will be used as described in the Preliminary Official Statement.

18. The Developer 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 Government Code Section 53341.5 in connection with the sale of the Property, or portions thereof.

19. If, between the date hereof and the Closing Date any event occurs that relates to or affects Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, or contractual arrangements of the Developer or any Affiliates of which the Developer has actual knowledge that would cause the information under the sections of the Preliminary Official Statement indicated in Section 4 above (and subject to the limitations and exclusions contained in Section 4 hereof) to contain an untrue statement of a material fact or to omit to state a material 30544.00017\34959317.7

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fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Developer shall notify the City and the Underwriter; and if, in the opinion of counsel to the City or the Underwriter, the event requires the preparation and publication of a supplement or amendment to the Preliminary Official Statement, the Developer shall reasonably cooperate with the City and the Underwriter in the preparation of an amendment or supplement to the Preliminary Official Statement in form and substance satisfactory to counsel to the City and counsel to the Underwriter.

20. The Developer shall deliver a Closing Certificate dated the date of issuance of the Bonds at the time of issuance of the Bonds, in substantially the form attached as Exhibit J‐1 to the Bond Purchase Contract.

21. The undersigned has reviewed the contents of this Certificate and has conferred with counsel to the Developer for the purpose of discussing the meaning of the contents of this Certificate. The Developer acknowledges and understands that a variety of state and federal securities 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 Developer 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 Developer under those securities laws.

22. Neither the undersigned nor the Developer makes any representation or warranty with regard to preparation of any document required for the issuance of the Bonds or the documents' compliance with any applicable federal or state law, regulation, rule or policy.

The undersigned has executed this Certificate solely in their capacity as an authorized officer or representative of the Developer, and they 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 Developer.

M&H Realty Partners VI, L.P.,
a California limited partnership

By:

Name:

Its:
30544.00017\34959317.7

Bond‐Purchase Contract | Page I‐1‐6

EXHIBIT A

EXCERPTS FROM THE APPRAISAL

30544.00017\34959317.7

Bond‐Purchase Contract | Page I‐2‐1

EXHIBIT I‐2
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022

CERTIFICATE OF DEVELOPER
(Signature Homes, Inc.)

___________, 2022

In connection with the issuance, sale and delivery by the City of Sacramento (the “City”) with respect to the City of Sacramento Delta Shores Community Facilities District No. 2019‐01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022 (the “Bonds”), and pursuant to a Bond Purchase Contract (the “Bond Purchase Contract”) to be entered into between the City and Piper Sandler & Co., as underwriter (the “Underwriter”), the undersigned, in their capacity as a duly authorized officer or representative of Signature Homes, Inc., a California corporation (the “Developer”), hereby certifies, on behalf of the Developer, as follows as of the date hereof:

1. The Developer is the owner of certain property (the “Property”) located within Improvement Area No. 2 of the City of Sacramento Delta Shores Community Facilities District No. 2019‐01 (Improvements) (the “District”). The undersigned is familiar with the facts herein certified and is duly authorized and qualified to execute this certificate on behalf of the Developer and with respect to the Property.

2. Capitalized terms not defined herein have the same meaning as is set forth in the Bond Purchase Contract. As used in this certificate, the following capitalized terms have the meanings set forth below:
(a) “Actual Knowledge of the Undersigned” means the actual (as opposed to constructive) knowledge that the individual signing this certificate on behalf of the Developer currently has as of the date of this certificate or has obtained through either or both of the following: (1) interviews with such current officers and responsible employees of the Developer as the undersigned has determined are reasonably likely, in the ordinary course of their respective duties, to have knowledge of the matters set forth in this certificate; and (2) a review of documents that were reasonably available to the undersigned and that the undersigned has 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 Developer’s current business and operations. The individual signing this certificate has not contacted any individuals who are no longer employed by, or associated with, the Developer.
(b) “Developer Information” means all written information that (1) concerns the Developer and its Affiliates, the Property, ownership of the Property, the Developer’s proposed development of the Property, or the Developer’s and its Affiliates’ financing plans for carrying out the 30544.00017\34959317.7

Bond‐Purchase Contract | Page I‐2‐2

proposed development of the Property; and (2) was submitted by, or on behalf of, the employees of the Developer involved in the issuance of the Bonds to the Underwriter, the City, or Disclosure Counsel in connection with the preparation of the Preliminary Official Statement, or to the Special Tax Consultant in connection with the tables contained in the Preliminary Official Statement.
(c) “Affiliate” means, with respect to a Person, (i) any other Person directly, or indirectly through one or more intermediaries, controlling, controlled by or under common control with such Person, and (ii) for whom information, including financial information or operating data, concerning such Person referenced in clause (i) is material to an evaluation of the District and the Bonds (i.e., information relevant to the Developer’s development plans with respect to its Property and the payment of its Special Tax, or such Person’s assets or funds that would materially affect the Developer’s ability to develop its Property as described in the Preliminary Official Statement or to pay its Special Tax (to the extent the responsibility of the Developer) prior to delinquency). “Person” means an individual, a corporation, a partnership, a limited liability company, an association, a joint stock company, a trust, any unincorporated organization or a government or political subdivision thereof. For purposes hereof, the term “control” (including the terms “controlling,” “controlled by,” or “under common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. For purposes of this certificate, the term “Affiliates” shall not include M&H Realty Partners VI, L.P.
(d) “Property” means the real property located within Improvement Area No. 2 of the City of Sacramento Delta Shores Community Facilities District No. 2019‐01 (Improvements) (the “District”) held in the name of Developer.

3. The Developer is a California corporation qualified to conduct business in the State of California and is in good standing in the State of California and has all requisite right, power and authority: (i) to execute and deliver this Certificate; and (ii) to undertake all of the transactions on its part described in the Preliminary Official Statement.

4. To the Actual Knowledge of the Undersigned, all Developer Information was true, complete, and correct in all material respects when submitted or as updated and modified and remains true, complete and correct as updated and modified as of the date hereof.

5. As of the date of the Preliminary Official Statement, the statements contained in the Preliminary Official Statement under the captions “INTRODUCTION – Delta Shores, the District and Improvement Area No. 2,” “INTRODUCTION – Property Ownership and Development Status,” and “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2—Acquisition of MDR Villages by Signature Homes,” “—Infrastructure and Home Construction by Signature Homes,” and “—Signature Homes Financing Plan,” and “PROPERTY OWNERSHIP – Signature Homes,” solely as they relate to the Developer and its Affiliates, the Property, ownership of the Property, the Developer’s proposed development of the Property, or the Developer’s and its Affiliates’ financing plans for carrying out the proposed development of the Property (excluding any statements regarding any property owner or the property owned by a property owner other than the Developer and any statements that cite information from a source other than the Developer) do 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. 30544.00017\34959317.7

Bond‐Purchase Contract | Page I‐2‐3

6. No proceedings are pending (based upon service of process upon the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned, are threatened in writing in which the Developer may be adjudicated as bankrupt or discharged from any and all of its debts or obligations or granted an extension of time to pay its debts or a reorganization or readjustment of its debts.

7. No action, suit, proceeding, inquiry, or investigation, at law or in equity, before or by any court, regulatory agency, public board or public body, that in any way seeks to restrain or to enjoin the development by the Developer of the Property, is either pending against the Developer (based upon service of process upon the Developer having been accomplished) or, to the Actual Knowledge of the Undersigned, threatened in writing in any way seeking to restrain or to enjoin the development by the Developer of the Property or which is reasonably likely to materially and adversely affect the Developer’s ability to develop the Property as described in the Preliminary Official Statement or to pay the Special Taxes due with respect to the Property (to the extent the responsibility of the Developer) prior to delinquency.

8. None of the Property is currently delinquent in the payment of any ad valorem property taxes, special taxes, including the Special Taxes, or assessments.

9. To the Actual Knowledge of the Undersigned, the Developer is fully qualified by all necessary permits, licenses, and certifications to conduct its business as the business is presently being conducted and, except as may be required under blue‐sky laws or other securities laws of any state, and except for any licenses, certificates, approvals, variances, and permits that may be necessary for the construction and operation of the Developer’s development project within the District as described in the Preliminary Official Statement explicitly for the Property (the “Project” as defined herein), there is no consent, approval, authorization, or other order of, or filing with, or certification by, any regulatory authority having jurisdiction over the Developer, other than those that have been obtained and are in full force and effect, that is required for the consummation by the Developer of the actions to be consummated by the Developer with respect to the Project as described in the Preliminary Official Statement.

10. To the Actual Knowledge of the Undersigned, the Developer is not in violation of any provision of, or in default under, its bylaws or any other relevant and material agreement, lease, or contract to which the Developer is a party or is otherwise subject, the violation of or default under which could reasonably be expected to materially and adversely affect the Developer’s ability to own and develop the Property as described in the Preliminary Official Statement or to pay Special Taxes due with respect to the Property, and for which the Developer is responsible prior to delinquency.

11. The Developer covenants that, while the Bonds or any refunding obligations related thereto are outstanding, the Developer and its Affiliates that it controls will not bring any action, suit, proceeding, inquiry, or investigation at law or in equity before any court, regulatory agency, public board, or public body that in any way seeks to challenge or overturn the formation of the District, to challenge the adoption of the ordinance levying special taxes within the District, to invalidate the District or the Bonds, or 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 Developer and its Affiliates in any way from bringing any other action, suit, proceeding, inquiry or investigation at law or in equity, before any court, regulatory agency, public board or body, including, without limitation, (a) an action or suit contending that the Special Tax has not been levied in accordance with the methodologies contained 30544.00017\34959317.7

Bond‐Purchase Contract | Page I‐2‐4

in the Amended and Restated Rate and Method of Apportionment of Special Taxes pursuant to which Special Taxes are levied, (b) an action or suit with respect to the application or use of the Special Taxes levied and collected, or (c) an action or suit to enforce the obligations of the City and/or the District under the Resolution, the Indenture, the First Supplemental Indenture, any continuing disclosure certificate, or any other agreements among the Developer or its Affiliates, the City and/or the District or to which the Developer or its Affiliates is a beneficiary.

12. The Developer hereby consents to the issuance of the Bonds and acknowledges and agrees that the proceeds of the Bonds will be used as described in the Official Statement.

13. The Developer 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 Government Code Section 53341.5 in connection with the sale of the Property, or portions thereof.

14. If, between the date hereof and the Closing Date any event occurs that relates to or affects Developer, its Affiliates, the proposed development of the Property, ownership of the Property, the Developer’s development plan, the Developer’s financing plan, the Developer’s lenders, if any, or contractual arrangements of the Developer or any Affiliates of which the Developer has actual knowledge that would cause the information under the sections of the Preliminary Official Statement indicated in Section 5 above (and subject to the limitations and exclusions contained in Section 5 hereof) 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 Developer shall notify the City and the Underwriter; and if, in the opinion of counsel to the City or the Underwriter, the event requires the preparation and publication of a supplement or amendment to the Preliminary Official Statement, the Developer shall reasonably cooperate with the City and the Underwriter in the preparation of an amendment or supplement to the Preliminary Official Statement in form and substance satisfactory to counsel to the City and counsel to the Underwriter.

15. The Developer shall deliver a Closing Certificate dated the date of issuance of the Bonds at the time of issuance of the Bonds, in substantially the form attached as Exhibit J‐2 to the Bond Purchase Contract.

16. The undersigned has reviewed the contents of the Preliminary Official Statement. The undersigned has reviewed the contents of this certificate and has conferred with counsel to the Developer for the purpose of discussing the meaning of the contents of this certificate. The Developer acknowledges and understands that a variety of state and federal securities 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 Developer 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 Developer under those securities laws.

17. Neither the undersigned nor the Developer makes any representation or warranty with regard to preparation of any document required for the issuance of the Bonds or the documents' compliance with any applicable federal or state law, regulation, rule or policy.

The undersigned has executed this certificate solely in their capacity as an authorized officer or representative of the Developer and they will have no personal liability arising from or relating to this 30544.00017\34959317.7

Bond‐Purchase Contract | Page I‐2‐5

certificate. Any liability arising from or relating to this certificate may only be asserted against the Developer.

SIGNATURE HOMES, INC.,
a California corporation
By:

Name:___________________________
Its:______________________________

30544.00017\34959317.7

Bond‐Purchase Contract | Page J‐1‐1

EXHIBIT J‐1
$_______
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022

CLOSING CERTIFICATE OF DEVELOPER
(M&H Realty Partners VI, L.P.)

___________, 2022

In connection with the issuance, sale and delivery by the City of Sacramento (the “City”) with respect to the City of Sacramento Delta Shores Community Facilities District No. 2019‐01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022 (the “Bonds”), and in accordance with the Bond Purchase Contract (the “Bond Purchase Contract”) between the City and Piper Sandler & Co., as underwriter (the “Underwriter”), the undersigned, in their capacity as a duly authorized officer or representative of M&H Realty Partners VI, L.P., a California limited partnership (the “Developer”), hereby certifies, on behalf of the Developer, as follows as of the date hereof:

1. The undersigned is familiar with the facts herein certified and is duly authorized to execute this Closing Certificate of Developer (M&H Realty Partners VI, L.P.) (the “Closing Certificate”) on behalf of the Developer.

2. The Developer has duly executed the Certificate of Developer (M&H Realty Partners VI, L.P.), dated ___________, 2022 (the “Developer Certificate”).

3. Capitalized terms that are not defined in this Closing Certificate have the meanings given them in the Developer Certificate.

4. To the Actual Knowledge of the Undersigned, the representations and warranties of the Developer in the Developer Certificate are true and correct in all material respects on and as of the date of this Closing Certificate (the “Closing Date”), with the same effect as if made on the Closing Date, and the covenants of the Developer in the Developer Certificate have the same effect as if made on the Closing Date, except that all references in the Developer Certificate to the Preliminary Official Statement are deemed to be references to the final Official Statement dated ___________, 2022 (the “Official Statement”).

5. At any time after the date of this Closing Certificate and within twenty‐five (25) days after the Closing Date, if any event occurs that relates to or affects the Developer and its Affiliates, the Property, ownership of the Property, the Developer’s proposed development of the Property, or the Developer’s and its Affiliates’ financing plans for carrying out the proposed development of the Property, and if, as a result of that event, any statements in the Official Statement that are referenced in Section 4 of the Developer Certificate (and subject to the limitations and exclusions contained in Section 4 thereof) become materially untrue, then the Developer shall notify the City and the Underwriter immediately, except that there is no obligation to notify the Underwriter or 30544.00017\34959317.7

Bond‐Purchase Contract | Page J‐1‐2

the City as to the performance or completion of development of the Property as described in the Official Statement.

6. To the Actual Knowledge of the Undersigned, since the date of the Official Statement, no event has occurred that affects the statements and information in the Official Statement that are referenced in Section 4 of the Developer Certificate (and subject to the limitations and exclusions contained in Section 4 thereof) solely as they relate to the Developer and its Affiliates, the Property, ownership of the Property, the Developer’s proposed development of the Property, or the Developer’s and its Affiliates’ financing plans for carrying out the proposed development of the Property that should be disclosed in the Official Statement in order to make the statements and information in the Official Statement not misleading in any material respect.

The undersigned has executed this Closing Certificate solely in their capacity as an authorized officer or representative of the Developer and they will have no personal liability arising from or relating to this Closing Certificate. Any liability arising from or relating to this Closing Certificate may only be asserted against the Developer.

M&H REALTY PARTNERS VI, L.P.,
a California limited partnership

By:

Name:

Its:

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Bond‐Purchase Contract | Page J‐2‐1

EXHIBIT J‐2
$__________
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022

CERTIFICATE OF DEVELOPER
(SIGNATURE HOMES, INC.)

____________, 2022

In connection with the issuance, sale and delivery by the City of Sacramento (the “City”) with respect to the City of Sacramento Delta Shores Community Facilities District No. 2019‐01 (Improvements) (the “District”) Improvement Area No. 2 of the bonds captioned above (the “Bonds”), and pursuant to a Bond Purchase Contract (the “Bond Purchase Contract”) between the City and Piper Sandler & Co., as underwriter (the “Underwriter”), the undersigned, in their capacity as a duly authorized officer or representative of Signature Homes, Inc. a California corporation (the “Developer”), hereby certifies, on behalf of the Developer, as follows as of the date hereof:

1. The undersigned is familiar with the facts herein certified and is duly authorized to execute this Closing Certificate (the “Closing Certificate”) on behalf of the Developer.

2. The Developer has duly executed the Certificate of Developer (Signature Homes, Inc.), dated ________, 2022 (the “Developer Certificate”).

3. Capitalized terms that are not defined in this Closing Certificate have the meanings given them in the Developer Certificate.

4. To the Actual Knowledge of the Undersigned, the representations and warranties of the Developer in the Developer Certificate are true and correct in all material respects on and as of the date of this Closing Certificate (the “Closing Date”), with the same effect as if made on the Closing Date, except that all references in the Developer Certificate to the Preliminary Official Statement are deemed to be references to the final Official Statement dated ________, 2022 (the “Official Statement”).

5. At any time after the date of this Closing Certificate and within 25 days after the Closing Date, if any event occurs that relates to or affects the Developer and its Affiliates, the Property, ownership of the Property, the Developer’s proposed development of the Property, or the Developer’s and its Affiliates’ financing plans for carrying out the proposed development of the Property, and if, as a result of that event, any statements in the Official Statement that are referenced in Paragraph 5 of the Developer Certificate (other than the excluded statements) become materially untrue, then the Developer shall notify the City and the Underwriter immediately, except that there is no obligation to notify the Underwriter or the City as to the performance or completion of development of the Property as described in the Official Statement. 30544.00017\34959317.7

Bond‐Purchase Contract | Page J‐2‐2

6. To the Actual Knowledge of the Undersigned, since the date of the Official Statement no event has occurred that affects the statements and information in the Official Statement that are referenced in Paragraph 5 of the Developer Certificate (other than the excluded statements) solely as they relate to the Developer and its Affiliates, the Property, ownership of the Property, the Developer’s proposed development of the Property, or the Developer’s and its Affiliates’ financing plans for carrying out the proposed development of the Property that should be disclosed in the Official Statement in order to make the statements and information in the Official Statement not misleading in any material respect.

SIGNATURE HOMES, INC.,
a California corporation

By: _____________________
Name:___________________
Its: _____________________

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Bond‐Purchase Contract | Page K‐1

EXHIBIT K‐1

$___________
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022

FORM OF DEVELOPER’S COUNSEL OPINION
(M&H Realty Partners VI, L.P.)
Capitalized terms used but not defined in this exhibit have the meanings given them in the Bond Purchase Contract dated ________, 2022 (the “Contract”), between the City of Sacramento (the “City”) and Piper Sandler & Co., as underwriter (the “Underwriter”).

A. One or more letters of legal counsel that M&H Realty Partners VI, L.P., a California limited partnership (the “Developer”) has engaged in connection with the issuance of the Bonds, which may be in‐house counsel or retained outside counsel, or both (together, the “Lawyers”), dated as of the Closing Date and addressed to the City and the Underwriter, to the following effect: no information came to the attention of the Lawyers that caused them to believe that the information in the Preliminary Official Statement, dated __________, 2022, or the Final Official Statement, dated __________, 2022, or in any amendments or supplements thereto that are dated prior to the Closing Date (collectively, the Preliminary Official Statement and the Final Official Statement are referred to herein as the “Official Statement”) under the captions “INTRODUCTION – Delta Shores, the District and Improvement Area No. 2 – General,” “INTRODUCTION –Property Ownership and Development Status,” “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2” (other than under the caption “—Acquisition of MDR Villages by Signature Homes,” “—Infrastructure and Home Construction by Signature Homes” and “—Signature Homes Financing Plan” for which no certification is provided), “PROPERTY OWNERSHIP ‐ The Developer,” and "CONTINUING DISCLOSURE – Developer Continuing Disclosure" (excluding any information regarding any property owner other than the Developer or the property owned by a property owner other than the Developer and any information cited from a source other than the Developer), as of dates of the Official Statement and as of the Closing Date, contained or contain any untrue statement of a material fact or omitted 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. The Lawyers need not opine as to the following: any financial statements and other financial, statistical, economic, or engineering data or forecasts, estimates, projections, assumptions, or expressions of opinion; or any information about valuation, appraisals, market absorption, archaeological, or environmental matters.

B. A letter from the Lawyers responsible for overseeing litigation concerning the Developer, addressed to the City and the Underwriter, certifying that, except as set forth in the Official Statement, no litigation that would materially and adversely affect the Developer’s ability to do either of the following is pending against the Developer (with service of process to the Developer having been accomplished) or, to the actual knowledge of the Lawyers, is threatened in writing against the Developer: (a) to undertake the Developer’s planned acquisition, development, and sale of property it owns in the CFD as contemplated by the Official Statement; or (b) to pay special taxes or ad valorem property taxes before delinquency on the property it owns in the CFD. 30544.00017\34959317.7

Bond‐Purchase Contract | Page K‐1

C. A letter from the Lawyers, dated as of the Closing Date, that the Continuing Disclosure Certificate executed by Developer has been duly authorized, approved, executed and delivered by and on behalf of Developer, and the Continuing Disclosure Certificate is a legal, valid, and binding obligation of the Developer, enforceable against the Developer in accordance with its respective terms. 30544.00017\34959317.7

Bond‐Purchase Contract | Page K‐2‐1

EXHIBIT K‐2
$__________
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022

FORM OF DEVELOPER’S COUNSEL OPINION
(SIGNATURE HOMES, INC.)
Capitalized terms used but not defined in this exhibit have the meanings given them in the Bond Purchase Contract dated ________, 2022 (the “Contract”), between the City of Sacramento (the “City”) and Piper Sandler & Co., as underwriter (the “Underwriter”).

A. One or more letters of legal counsel that Signature Homes, Inc., a California corporation (the “Developer”) has engaged in connection with the issuance of the Bonds, which may be in‐house counsel or retained outside counsel, or both (together, the “Lawyers”), dated as of the Closing Date and addressed to the City and the Underwriter, to the following effect: no information came to the attention of the Lawyers that caused them to believe that the information in the Preliminary Official Statement, dated __________, 2022, or the Final Official Statement, dated __________, 2022, or in any amendments or supplements thereto that are dated prior to the Closing Date (collectively, the Preliminary Official Statement and the Final Official Statement are referred to herein as the “Official Statement”) under the captions “INTRODUCTION – Delta Shores, the District and Improvement Area No. 2,” “INTRODUCTION – Property Ownership and Development Status,” “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2 —Acquisition of MDR Villages by Signature Homes,” “— Infrastructure and Home Construction by Signature Homes,” and “—Signature Homes Financing Plan,” and “PROPERTY OWNERSHIP – Signature Homes,” (excluding any information regarding any property owner other than the Developer or the property owned by a property owner other than the Developer and any information cited from a source other than the Developer), as of dates of the Official Statement and as of the Closing Date, contained or contain any untrue statement of a material fact or omitted 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. The Lawyers need not opine as to the following: any financial statements and other financial, statistical, economic, or engineering data or forecasts, estimates, projections, assumptions, or expressions of opinion; or any information about valuation, appraisals, market absorption, archaeological, or environmental matters.

B. A letter from the Lawyers responsible for overseeing litigation concerning the Developer, certifying that, except as set forth in the Official Statement, no litigation that would materially and adversely affect the Developer’s ability to do either of the following is pending against the Developer (with service of process to the Developer having been accomplished) or, to the actual knowledge of the Lawyers, is threatened in writing against the Developer: (a) to undertake the Developer’s planned acquisition, development, and sale of property it owns in the CFD as contemplated by the Official Statement; or (b) to pay special taxes or ad valorem property taxes before delinquency on the property it owns in the CFD.
30544.00017\34959317.7

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Bond‐Purchase Contract | Page L‐1

EXHIBIT L
$___________
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
(IMPROVEMENTS)
IMPROVEMENT AREA NO. 2
SPECIAL TAX BONDS, SERIES 2022
FORM OF ISSUE PRICE CERTIFICATE

The undersigned, Piper Sandler & Co. (the “Piper”), hereby certifies as set forth below with respect to the sale and issuance of the above‐captioned obligations (the “Bonds”).

1. Bond Purchase Contract. On ________, 2022 (the “Sale Date”), Piper and the Issuer executed a Bond Purchase Contract (the “Purchase Agreement”) in connection with the sale of the Bonds.

Piper has not modified the Purchase Agreement since its execution on the Sale Date.

2. Sale of 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.

3. 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 Purchase Agreement, 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 third‐party distribution agreement shall contain the agreement of each broker‐dealer who is a party to the third‐party 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.

4. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “General Rule Maturities.”
(b) Hold‐the‐Offering‐Price Maturities means those Maturities of the Bonds listed in Schedule A hereto as the “Hold‐the‐Offering‐Price Maturities.”
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Bond‐Purchase Contract | Page L‐2

(c) 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 (________, 2022), 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.
(d) Issuer means the City on behalf of the City of Sacramento Delta Shores Community Facilities District No. 2019‐01.
(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 or CUSIP identification numbers, 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. (g) Related Party means any entity that shares with another entity (i) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (ii) more than 50% common ownership of their capital interests or profit interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50% common ownership of the value of the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership of the applicable stock or interests by one entity of the other). (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 [SALE 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 third‐party 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 its Certificate as to Arbitrage and with respect to compliance with the federal income tax rules affecting the Bonds, and by Orrick, Herrington & Sutcliffe 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.

30544.00017\34959317.7

Bond‐Purchase Contract | Page L‐3

PIPER SANDLER & CO.

By:
[Title]

Dated: _________________, 2022

30544.00017\34959317.7

Bond‐Purchase Contract | Page L‐4

SCHEDULE A
TO
ISSUE PRICE CERTIFICATE

Actual Sales Information as of Closing Date

Maturity/CUSIP Coupon Date Sold Time Sold Par Amount Sale Price 10% Test Used
HTOP
Rule Used

30544.00017\34959317.7

Bond‐Purchase Contract | Page L‐5

SCHEDULE B
TO
ISSUE PRICE CERTIFICATE

PRICING WIRES
30544.00017\34959317.7

Bond‐Purchase Contract | Page L‐6

EXHIBIT M

$__________________
CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019‐01
SPECIAL TAX BONDS, SERIES 2022

CERTIFICATE OF ABSORPTION CONSULTANT

John Burns Real Estate Consulting, Folsom, California (the “Absorption Consultant”), prepared a “Updated Market Absorption Analysis Related to Delta Shores Improvement Area 2” for the City of Improvement Area No. 2 of the City of Sacramento Delta Shores Community Facilities District No. 2019‐ 01 (the “CFD”), dated as of April 19, 2022 (the “Absorption Report”). The Absorption Report is described and summarized in, and is set out as Appendix J to the Preliminary Official Statement dated [POS DATE] (the “Preliminary Official Statement”), and the Official Statement dated [SALE DATE] (the “Final Official Statement”), relating to the bonds captioned above.

1. The Absorption Consultant hereby certifies as follows to the best of its knowledge and belief: (a) all information with respect to the Absorption Report in the Preliminary Official Statement and the Final Official Statement was true and correct as of the date of the Absorption Report; (b) since the date of the Absorption Report, nothing has come to the attention of the Absorption Consultant that would cause the Appraiser, as defined in the Official Statement, to believe that the value of the property appraised therein is less than the value reported in the Absorption Report; provided that, acts and events may have occurred since the date of the Absorption Report which could result in both positive and negative effects on market value of such property; and (c) that a further updated Absorption Report has not been completed as of the date of this certificate.

2. The Absorption Consultant hereby consents to the use of the Absorption Report in connection with the distribution and use of the Preliminary Official Statement and Final Official Statement.

Dated: [DATE]
JOHN BURNS REAL ESTATE CONSULTING

By: _____________________________

Stradling Yocca Carlson & Rauth
Draft dated May 24, 2022

4846-3625-7001v7/022536-0020
This Preliminary Official Statement and the information containe d herein are subject to completion or amendment. These secu rities may not be sold, nor may offers to buy them be accepted, prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the 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.

PRELIMINARY OFFICIAL STATEMENT DATED JUNE __, 2022
NEW ISSUE—BOOK-ENTRY-ONLY NO RATING
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the City, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, am ong other matters, the accuracy of certain representations and compliance with cer tain covenants, interest on the Bonds is exclude d from gross income for federal income ta x purposes under Section 103 of the Interna l Revenue Code of 1986 and is exempt from State of Ca lifornia personal income taxes. In the fu rther opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of the federal al ternative minimum tax. Bond C ounsel expresses no opinion regardin g any other tax consequences related to the ownership or disposition of, or the amount , accrual or receipt of in terest on, the Bonds. See “TAX MATTERS.”
$10,285,000*

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2 SPECIAL TAX BONDS, SERIES 2022
consisting of
$5,370,000* Non-Escrow Bonds $4,915,000 * Escrow Bonds
Dated: Delivery Date Due: September 1, as shown on the inside cover page This Official Statement de scribes bonds that are being issued by the City of Sacramento (the “City”) w ith respect to Improvemen t Area No. 2 (“Improvement Area No. 2”) of the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements), City of Sacramento, County of Sacramento, State of California (the “District”). The City of Sacramento Delta Shores Community Facilities District No. 2019-0 1 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022 (the “Bonds”) are being i ssued by the City to (a) pay the cost and expense of the acq uisition and construction of certain public facilities benefitting the deve lopment of Improvement Area No. 2; (b) fund a reserve fund securing the Bonds to the extent described herein; (c) pay costs of issuance of the Bonds; (d ) fund capitalized interest on a portion of certain non-escrow Bonds through December 1, 2022; and (e) fund an escrow fund with respect to certain escrow Bonds, which includes amount s for capitalized interest thereon through September 1, 2024, s ubject to prior release as described herein.

The Bonds are authorized to be issued pursuant to the Mello-Roos Community Faciliti es Act of 1982, as amended (Section 53311 et seq . of the Government Code of the State of Californi a), and pursuant to a Master Indenture, da ted as of June 1, 2022 as supplemented by a First Supplemental Indenture dated as of June 1, 2022, each by and between the City and U.S. Bank Trust Company, Na tional Association, as trustee (the “Trus tee”) (collectively, the “Indenture”).

The Bonds are special limited obligations of the City and are payable solely from the proceeds of Net Special Tax Revenues (as defined in this Official Statement) received from the Special Tax levied on ta xable parcels within Improvement Area No. 2 and from certain othe r funds pledged under the Indenture, all as further described in this Official St atement. The Special Tax will be levied according to the amen ded rate and method of apportionment approved by the City Council of the City and the qualified electors within Improvement Area No. 2. See “SOURCES OF PAYMENT FOR THE BONDS.” Special taxes levied in Improvement Area No. 1 and Improvement Area No. 3 of the District are not pledged to a nd are not available to pay debt service on the Bonds.

The Bonds are issuable in fully re gistered form and when issued will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). Individual purchases of the Bonds may be made in integral multiples of $5,000 and will be in book-entry form only.

Purchasers of Bonds will not receive certif icates representing their beneficial owne rship of the Bonds but will receive credit balances on the books of their respective nominees. Interest on the Bonds will be payable se miannually on each March 1 and September 1, commencing September 1, 2022. The Bonds will be transferable or exchangeable only to another nominee of DTC or as otherwise described in this Official Statement. Principal of and interest on the Bonds will be paid by the Trustee to DTC for subsequent disbursement to DTC Participants who will remit such payments to the beneficial owners of the Bonds. See “THE BONDS — General Provisions” and APPENDIX I — “BOOK-ENTRY ONLY SYSTEM.”

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY OF SACRAMENTO, THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET SPECIAL TAX REVENUES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OBLIGATIONS OF

THE CITY BUT ARE SPECIAL LIMITED OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE NET SPECIAL TAX REVENUES AND CERTAIN OTHER AMOUNTS HELD UNDER THE INDENTURE AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.

The Bonds are subject to optional redemption, extraordinary redemption from Special Tax prepayments and mandatory sinking fund redemption prior to maturity as set forth in this Official Statement. $4,444,701.37* of the Bond proceeds will be initially deposited to an Escrow Fund (defined herein) established under the Indenture and will be applied to redeem the Escrow Bonds (defined herein) maturing on September 1, 2052 unless certai n conditions set forth in the Indenture are satisfied. See “THE BONDS — Redemption” and “SOURCES OF PAYMENT FOR THE BONDS — Escrow Fund” herein.

THE BONDS ARE NOT RATED BY ANY RATING AGENCY, AND INVE STMENT IN THE BONDS INVOLVES SIGNIFICANT RISKS THAT ARE NOT APPROPRIATE FOR CERTAIN INVESTORS. CERTAI N EVENTS COULD AFFECT THE ABILITY OF THE CITY TO PAY THE PRINCIPAL OF AND INTEREST ON TH E BONDS WHEN DUE. SEE THE SECTION OF THIS OFFICIAL STATEMENT ENTITLED “SPECIAL RISK FACTORS” FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE CONSIDERED, IN ADDITION TO THE OTHER MATTERS SET FORTH HEREIN, IN EVALUATING THE INVESTMENT QUALITY OF THE BONDS.

This cover page contains certain informati on for general reference only. It is not in tended to be a summary of the security or terms of this issue.

Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision.

MATURITY SCHEDULE
(See Inside Cover Page)
The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approva l as to their validity by Orric k, Herrington & Sutcliffe LLP, Bond Counsel to the City, and subject to certain other conditions. Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California is serving as Disclosure Counsel to the City with respect to the Bonds. Certain legal matters will be passed on for the City by the Office of the City Attorney, for the Underwriter by Best Best & Krieger LLP, Riverside, California, as c ounsel to the Underwriter, for the Develop er by the Law Offices of Thatch

* Preliminary, subject to change.

4846-3625-7001v7/022536-0020
& Hooper, Sacramento, California, for Signature Homes, Inc. by Ironhorse Law Group PC, and for the Trustee by its counsel. It is anticipated that the Bonds in book-entry form will be available for delivery through the facilities of DTC on or about June 17, 2022. [PIPER LOGO]
Dated: June __, 2022

4846-3625-7001v7/022536-0020
$10,285,000*

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT NO. 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2 SPECIAL TAX BONDS, SERIES 2022

consisting of
$5,370,000* Non-Escrow Bonds $4,915,000 * Escrow Bonds

MATURITY SCHEDULE
BASE CUSIP®†: ________

SERIAL BONDS
Maturity Date
(September 1)
Principal
Amount Interest Rate Yield Price CUSIP ®†

$________ ______% Term Bonds due September 1, 20__, Yield: _____% Price: ______ CUSIP No. † ___
$________ ______% Term Bonds due September 1, 20__, Yield: _____% Price: ______ CUSIP No.† ___ $________ ______% Term Bonds due September 1, 20__, Yield: _____% Price: ______ CUSIP No.† ___

$____ ______% Term Bonds** due September 1, 20__, Yield: _____% Price: ______ CUSIP No.† _

* Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Asso ciation. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright (c) 2022 CUSIP Global Services. All rights reserved. CUSIP® da ta 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 substitut e for the CGS database. CUSIP® numbers are provided for convenience of referen ce only. None of the City, the Underwriter or their agents or counsel assumes responsibility for the accuracy of such numbers. ** Escrow Bonds.

4846-3625-7001v7/022536-0020

CITY OF SACRAMENTO

CITY COUNCIL
Darrell Steinberg, Mayor
Eric Guerra, Mayor Pro Tem, District 6
Angelique Ashby, Vice Mayor, District 1
Sean Loloee, District 2
Jeff Harris, District 3
Katie Valenzuela, District 4
Jay Schenirer, District 5
Rick Jennings II, District 7
Mai Vang, District 8
_______________________

ADMINISTRATIVE OFFICES
Howard Chan, City Manager
Michael Jasso, Assistant City Manager
Leyne Milstein, Assistant City Manager
Hector Barron, Assistant City Manager
John Colville, City Treasurer
Susana Alcala Wood, City Attorney
Mindy Cuppy, City Clerk
Emily Combs, Finance Director
_______________________

PROFESSIONAL SERVICES
Bond Counsel
Orrick, Herrington & Sutcliffe LLP
Disclosure Counsel
Stradling Yocca Carlson & Rauth, A Professional Corporation Municipal Advisor
Fieldman, Rolapp & Associates, Inc.

Irvine, California
Trustee
U.S. Bank Trust Company, National Association
San Francisco, California
Special Tax Consultant
NBS
Temecula, California
Appraiser
BBG, Inc.

Sacramento, California

Market Absorption Consultant
John Burns Real Estate Consulting
Folsom, California

4846-3625-7001v7/022536-0020
Except where otherwise indicated, all information contained in this Official Statement has been provided by the City. No dealer, broker, salesperson or other person has been authorized by the City, the Trustee or the Underwriter to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the City, the Trustee or the Underwriter. This Official Statement does not constitute an offer to sell or the solicitati on 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.

This Official Statement is not to be construed as a co ntract with the purchasers or owners of the Bonds.

Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described in this Offi cial Statement, are intended solely as such and are not to be construed as representations of fact. This Official Statement, including any supplement or amendment to this Official Statement, is intended to be deposited with the Electronic Municipal Market Access System of the Municipal Securities Rulemaking Board, which can be found at www.emma.msrb.org.

The information set forth in this Official Statement which has been obtained from third party sources is believed to be reliable, but such information is not guaran teed as to accuracy or completeness by the City. The information and expressions of opinion in this Official St atement are subject to change without notice, and neither the delivery of this Official Statement nor any sale ma de hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City or any other parties described in this Official Statement since the date of this Official Statement. A ll summaries of the Indenture or other documents are made subject to the provisions of such docu ments respectively and do not purport to be complete statements of any or all of such provisions. Reference is made by this Official Statement to such documents on file with the City for further information. While the City maintains an internet website for various purposes, none of the information on that website is incorporated by reference herein or intended to assist investors in making any investment decision or to provide any continuing information with respect to the Bonds or any other bonds or obligations of the City. Any such information that is inconsistent with the information set forth in this Official Statement should be disregarded.

The Underwriter has provided the following sentence for inclusion in this Official Statement:

The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its 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.

Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Privat e Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Excha nge Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “b udget” or other similar words. Such forward-looking statements include, but are not limited to, certain statem ents contained in the information under the caption “IMPROVEMENT AREA NO. 2” and “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2.”

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN

SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,

UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE

OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS,

PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.

IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITER MAY

OVERALLOT OR EFFECT TRAN SACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET

PRICE OF SUCH BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH ST ABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

THE BONDS HAVE NOT BEEN REGISTERED UND ER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE.

TABLE OF CONTENTS
i
4846-3625-7001v7/022536-0020
INTRODUCTION ................................................................... 1 Delta Shores, the District and Improvement Area No. 2 ...... 2 Property Ownership and Development Status ...................... 3 Forward Looking Statements ............................................... 4 Sources of Payment for the Bonds ....................................... 5 Appraisal Report .................................................................. 7 Market Absorption Report ................................................... 7 Description of the Bonds ...................................................... 8 Professionals Involved in the Offering ................................. 8 Continuing Disclosure ......................................................... 8 Bond Holders’ Risks ............................................................ 9 Other Information ................................................................ 9 THE FINANCING PLAN ........................................................ 9 Authorized Facilities and Fees ............................................. 9 Estimated Sources and Uses of Funds ................................ 10 THE BONDS ......................................................................... 10 General Provisions ............................................................. 10 Redemption ........................................................................ 11 DEBT SERVICE SCHEDULE .............................................. 14 SOURCES OF PAYMENT FOR THE BONDS .................... 16 Limited Obligations ........................................................... 16 Special Tax ........................................................................ 16 Bond Reserve Fund ............................................................ 22 Issuance of Parity Bonds .................................................... 23 Escrow Fund ...................................................................... 24 Teeter Plan ......................................................................... 26 IMPROVEMENT AREA NO. 2 ............................................ 26 General Description ........................................................... 26 Description of Authorized Facilities .................................. 28 Flood Hazard ..................................................................... 28 Proposed Adjacent Unhoused Services Facility ................. 29 Direct and Overlapping Indebtedness ................................ 29 Estimated Fiscal Year 2022-23 Tax Burden ...................... 30 Market Absorption Study ................................................... 31 Property Values .................................................................. 33 Value-To-Lien Ratios ........................................................ 35 Delinquency History .......................................................... 38 Debt Service Coverage....................................................... 38

DEVELOPMENT OF PROPERTY IN IMPROVEMENT
AREA NO. 2 .......................................................................... 41 Delta Shores, the District and Improvement Area No. 2 .... 41 Entitlements and Required Mitigation Monitoring ............. 43 Environmental Matters ....................................................... 47 Infrastructure Development ............................................... 49 Developer Financing Plan .................................................. 50 Joint Venture with Signature Homes.................................. 50 Acquisition of MDR Villages by Signature Homes ........... 51 Infrastructure and Home Construction by Signature
Homes ............................................................................ 53 Signature Homes Financing Plan ....................................... 55 PROPERTY OWNERSHIP ................................................... 57 The Developer.................................................................... 57 Signature Homes ................................................................ 59 SPECIAL RISK FACTORS ................................................... 59 Risks of Real Estate Secured Investments Generally ......... 60 Concentration of Ownership .............................................. 60 Failure to Develop Property ............................................... 60 Inability to Access Escrow Fund ........................................ 62 Limited Obligations ........................................................... 62 Insufficiency of Special Tax .............................................. 62 Increasing Mortgage Interest Rates ................................... 63 Teeter Plan Termination .................................................... 64 No Representation as to Merchant Builders ...................... 64 Natural Disasters ............................................................... 64 Hazardous Substances ....................................................... 65 Proximity to Wastewater Treatment Plant ......................... 66 Payment of the Special Tax is not a Personal
Obligation of the Property Owners ................................ 66 Property Values ................................................................. 66 Parity Taxes and Special Assessments .............................. 67 Disclosures to Future Purchasers ....................................... 67 Special Tax Collections ..................................................... 67 FDIC/Federal Government Interests in Properties ............. 68 Bankruptcy and Foreclosure .............................................. 69 No Acceleration Provision ................................................ 70 Loss of Tax Exemption ..................................................... 70 Limited Secondary Market ................................................ 70 Proposition 218 ................................................................. 71 Litigation with Respect to Community Facilities
Districts ......................................................................... 71 Ballot Initiatives ................................................................ 73 Limitations on Remedies ................................................... 73 Potential Early Redemption of Bonds from
Prepayments or Bond Proceeds ..................................... 73 Cybersecurity .................................................................... 73 CONTINUING DISCLOSURE ............................................. 74 City Continuing Disclosure ............................................... 74 Developer Continuing Disclosure ..................................... 74 TAX MATTERS ................................................................... 75 LEGAL MATTERS .............................................................. 77 ABSENCE OF LITIGATION ............................................... 77 MUNICIPAL ADVISOR ...................................................... 77 NO RATING ......................................................................... 77 UNDERWRITING ................................................................ 77 FINANCIAL INTERESTS .................................................... 78 PENDING LEGISLATION .................................................. 78 ADDITIONAL INFORMATION.......................................... 78

APPENDIX A AMENDED AND RESTATED RATE

AND METHOD OF

APPORTIONMENT OF SPECIAL
TAX ....................................................... A-1 APPENDIX B APPRAISAL REPORT ........................... B-1 APPENDIX C APPRAISAL REVIEW REPORT ........... C-1

APPENDIX D PROPOSED FORM OF OPINION OF
BOND COUNSEL ................................. D-1

APPENDIX E GENERAL INFORMATION
CONCERNING THE REGION .............. E-1

APPENDIX F SUMMARY OF CERTAIN
PROVISIONS OF THE INDENTURE ... F-1

APPENDIX G FORM OF CONTINUING

DISCLOSURE CERTIFICATE OF
THE CITY .............................................. G-1

APPENDIX H FORM OF CONTINUING

DISCLOSURE CERTIFICATES OF
DEVELOPERS ...................................... H-1
APPENDIX I BOOK-ENTRY ONLY SYSTEM ........... I-1
APPENDIX J MARKET ABSORPTION REPORT ....... J-1

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1 4846-3625-7001v7/022536-0020
$10,285,000*

INTRODUCTION
The purpose of this Official Statement, which includes the cover page, the table of contents and the appendices (collectively, the “Official Statement”), is to provide certain informat ion concerning the issuance by the City of Sacramento (the “City”) of the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements) Improvement Area No. 2 Special Tax Bonds, Series 2022 (the “Bonds”) in the aggregate principal amount of $10,285,000 *. The Bonds are being issued by the City with respect to Improvement Area No. 2 (“Improvement Area No. 2”) of the City of Sacramento Delta Shores Community Facilities District No. 2019-01 (Improvements), City of Sacramento, County of Sacramento, State of California (the “District”). The proceeds of the Bonds will be used to (a) pay the cost and expense of the acquisition and construction of certain public facili ties benefitting the development of Improvement Area No. 2; (b) fund a reserve fund securi ng the Bonds to the extent described herein; (c) pay costs of issuance of the Bonds; (d) fund capitalized inte rest on a portion of certain non-es crow Bonds through December 1, 2022; and (e) fund an escrow fund with respect to certain escrow Bonds, whic h includes amounts for capitalized interest thereon through September 1, 2024, subject to prior release as described herein. See “THE FINANCING PLAN — Estimated Sources and Uses of Funds.”
The Bonds are authorized to be issued pursuant to the Mello-Roos Community Facilities Act of 1982, as amended (Section 53311 et seq . of the Government Code of the State of California) (the “Act”), and pursuant to a Master Indenture, dated as of June 1, 20 22 ( the “Master Indenture”), as supplemented by a First Supplemental Indenture dated as of June 1, 2022 (the “First Supplemental Indenture” and, together with the Master Indenture, the Indenture”), each by and betwee n the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

The Bonds are secured under the Indenture by a pledge of and lien upon the Net Special Tax Revenues, which are the proceeds of the Special Tax levied on taxable parcels within Improvement Area No. 2, less the Priority Administrative Expenses (as such terms are defined in this Official Statement), and all amounts held in the Special Tax Fund, the Bond Redemption Fund and the Bond Reserve Fund as provided in the Indenture. See “SOURCES OF PAYMENT FOR THE BONDS.” Special taxes levied in Improvement Area No. 1 and Improvement Area No. 3 of the District ar e not pledged to and are not available to pay debt service on the Bonds.

The Bonds are being issued and delivered pursuant to the provisions of the Act and the Indenture. The Bonds are being sold pursuant to a Bond Purchase Contract between the Underwriter and the City. See “THE BONDS — General Provisions” and “UNDERWRITING.”
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 and the documents summarized or described in this Official Statement. A full review should be made of the entire Official Statement. The sale and delivery of Bond s to potential investors is made only by means of the entire Official Statement. All capitalized terms used in this Official Statement and not defined shall have the meaning set forth in APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Definitions.”

2 4846-3625-7001v7/022536-0020
Delta Shores, the District and Improvement Area No. 2
General. The property in Improvement Area No. 2 is part of an approximately 782-acre new master- planned community being marketed as “Delta Shores.” Delta Shores is located in the southern portion of the City, approximately 10 miles from downtown Sacramento . Delta Shores is bordered to the north by the developed Meadowview community, to the south by an open space “buffer zone” between the Sacramento Regional County Sanitation District’s treatment plant, to the west by the Sacramento River, and to the east by Morrison Creek and existing communities. In 2016, a new freeway interchange and extension of Cosumnes River Boulevard (a major thoroughfare bisecting the Delta Shores site) was completed, providing direct access to the site from the Interstate 5 freeway.

Delta Shores is currently entitled for up to 5,222 residential units and 1.3 million square feet of commercial and retail space, approximately 144 acres of open space and a mixed-use town center of approximately 20 acres. At buildout, Delta Shores is expected to include approximately 2,300 for-sale low and medium density single-family homes, 1,700 high-density housing units in for-rent offerings, 1.3 million square feet of retail and commercial space, two new elementary schools, a community center, approximately 144 acres of parks, a City fire station and open space. A portion of the planned retail development within Delta Shores has been completed by the Developer (as defined below). The completed portion is located adjacent to the Interstate 5 freeway and consists of approximately 900,000 square feet of retail space and associated parking facilities.

The District consists of approximately 535 acres and includes the property within the Delta Shores community with the exception of the completed retail development described above, which is not within the District. The District is divided into three improvement areas. The first phase of the residential development of Delta Shores is included within Improvement Area No. 2. Improvement Area No. 1 is located across the Interstate 5 freeway to the west of Improvement Area No. 2 and is planned for a mix of low, medium and high- density residential developments as well as parks and open space. Improvement Area No. 3 is located to the north of Improvement Area No. 2 and is planned for a mix of low, medium and high-density residential units, parks, a community center, an elementary school and open space. The property in Improvement Area No. 1 and Improvement Area No. 3 is not subject to the levy of the Special Tax and is not security for the Bonds.

Improvement Area No. 2 consists of approximately 14 6 gross acres and is bordered to the west by the existing retail development, to the north by Cosumnes River Boulevard and to the south and west by Delta Shores Circle. The development within Improvement Area No. 2 is planned for 421 market-rate for-sale homes, approximately 1,027 high-dens ity residential units which are curre ntly anticipated to be for-rent apartment units, however, such units may also be for-sale units based on current zoning. In addition, there are approximately 5.5 acres zoned for a mixed-use developm ent with approximately 125 residential units, which the Developer currently anticipates will be for-rent units under a “build -for-rent” model as further described herein. Improvement Area No. 2 is also planned to include two parks totaling approximately 32 acres, an elementary school to be owned and operated by the Sacramento City Unified School District and a wet detention basin (which is complete).

Formation and Change Proceedings. The District was formed by the City pursuant to the Act. The Act was enacted by the California legislature to provide an alternative method of financing certain public capital facilities and services, especially in developing areas of the State. Any local agency (as defined in the Act) may establish a community facilities district to provide for and finance the cost of eligible public facilities, development-related fees, an d services. Subject to approval by two-thirds of the votes cast at an election and compliance with the other provisions of the Act, a legislative body of a local agency may issue bonds for a community facilities district and may levy and collect a special tax within such district to repay such indebtedness.

Pursuant to the Act, on August 13, 2019, the City Council adopted Resolution No. 2019-0312 (the “Resolution of Intention”), stating its intention to form the District, to designate three improvement areas

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therein (Improvement Area No. 1, Improvement Area No . 2 and Improvement Area No . 3), and to authorize the levy of a special tax on the taxable property within each of the improvement areas within the District. On August 13, 2019, the City Council also adopted Resolution No. 2019-0313, stating its intention to incur bonded indebtedness in an aggregate principal amount not to exceed $18,800,000 with respect to Improvement Area No. 2 for the purpose of financing the acquisition, construction, expansion, improvement, or rehabilitation of certain public facilities to serve the area within the District and its neighboring areas. See “IMPROVEMENT AREA NO. 2 — Descri ption of Authorized Facilities.” On September 24, 2019, the City Council adopted Resolution No. 2019-0371, establishing the District and designating three improvement areas therein. On October 15, 2019, the City Council adopted Resolution No. 2019-0391, which certified the mailed ballot election held for Improvement Area No. 2 of the District at which the eligible voters approved the levy of the Special Tax in accordance with a rate and method of apportionment of special tax (the “Original Rate and Me thod”) and the issuance of bonds in an amount not to exceed $18,800,000 for Improvement Area No. 2.

On December 14, 2021, the City Co uncil adopted Resolution No. 2021-0362, pursuant to which it determined to consider: (1) replacing the Original Ra te and Method with an amended and restated rate and method of apportionment of special tax for Improvement Area No. 2 (the “Amended Rate and Method”) and (2) decreasing the amount of bonded indebtedness authorized to be incurred for Improvement Area No. 2 from $18,800,000 to $18,000,000. On February 1, 2022, the City Council adopted Resolution No. 2022-0036, pursuant to which it determined that the necessary two-th irds vote of the eligible voters within Improvement Area No. 2 in a special mailed-ballot election have been received approving: (1) the levy of the Special Tax in accordance with the Amended Rate and Method, and (2) the decrease of the amount of bonded indebtedness authorized to be incurred for Improvement Area No. 2 from $18,800,000 to $18,000,000.

An Amended Notice of Special Tax Lien was recorded in the office of the Clerk Recorder’s office of the County of Sacramento (the “County”) on February 18, 2022 as Document No. 202202180718. On February 8, 2022, the City Council adopted Ordinance No. 2022-0002 (the “Ordinance”) which authorizes the levy of the Special Tax pursuant to the Amended Rate and Method. See “SOURCES OF PAYMENT FOR THE BONDS — Special Tax — Authorization and Pledge.”
Property Ownership and Development Status
The proposed development within Improvement Area No. 2 is the first phase of the residential development component of the Delta Shores master-planned community. The master developer within the District is M&H Realty Partners VI , L.P., a California limited partners hip (the “Developer”), formed and managed by individuals of Merlone Geier Partners. The Developer has completed certain major backbone infrastructure necessary for developm ent in Improvement Area No. 2, which includes arterial roadways surrounding the property, related traffic signal improveme nts, wet utilities, dry utilities and wet storm water detention ponds to serve the entire Delta Shores community. As further described herein, the collector roadways (and associated wet and dry utilities) from which the individual project sites (referred to herein as “Villages”) within Improvement Area No. 2 are to be accessed, as well as all in-tract infrastructure remain to be constructed.

For planning purposes, the property in Improvement Area No. 2 has been divided into Villages. Four of the Villages are referred to herein as “MDR” (i.e. medium density residential) and are currently planned for a total of 421 single-family detached homes. Six of the project Villages are referred to herein as “HDR” (i.e. high-density residential) and are planned for a total of 1,027 high-density residential units, which are currently anticipated to be for-rent apartment units, however, such un its may also be for-sale units based on current zoning. In addition, one Village is zoned for a mixed-use development with approximately 125 residential units, which the Developer currently anticipates will be for-rent units under a “build-for-rent” model as further described herein.

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As of April 1, 2022, the Developer has transferred one Village (MDR 5) to “MHRP/Signature Homes, LV I, LLC” (the “Joint Venture Entity”), a joint venture entity formed with an affiliated entity of Signature Homes, Inc., a California corporation (“Signature Homes”) to be developed with 87 for-sale single-family detached homes. In addition, as of such date, the Developer has entered into agreements with Signature Homes for the purchase of the balance of the MDR Vill ages (MDR 6, MDR 7 and MDR 8) which are planned for a total of 334 for-sale single-fami ly detached homes. The Developer cu rrently expects Signature Homes to acquire the property for the first phase of development in MDR 8, which is planned for 76 of the 136 units in MDR 8, by the end of May 2022.

Pursuant to agreements between the Developer and Signature Homes, if Signature Homes acquires the property in MDR 6, MDR 7 and MDR 8, with certain exceptions as described herein, Signature Homes will be responsible for constructing the remaining infrastructure necessary to achieve buildout within MDR 6, MDR 7 and MDR 8. With respect to MDR 5, under the joint venture agreement with the Developer, Signature Homes will likewise be responsible for constructing the remaining infrastructure necessary to achieve buildout within MDR 5.

A described herein, Signature Homes Inc. and certain of its affiliated entities are referred to herein collectively, as “Signature Homes.”
The Developer has not finalized development plans with respect to the property in Improvement Area No. 2 planned for high-density residential land uses (i.e., the HDR Villages) and the mixed-use Village. The Developer may convey all or a portion of such property to third-party builders and/or enter into joint ventures to develop all or a portion of such property.

The balance of the property in Improvement Area No. 2 which is not planned for residential and mixed-used development consists of pr operty for a future elementary school site, a neighborhood park and a community park, roads and other public rights of way.

See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2” and “PROPERTY OWNERSHIP.”
Forward Looking Statements
Certain statements included or incorporated by re ference in this Official Statement constitute “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as a “plan,” “expect,” “estimate,” “project,” “budget” or similar words. Such forward-looking statements include, but are not limited to certain statements contained in the information under the captions “IMPROVEMENT AREA NO. 2,” “

DEVELOPMENT OF PROPERTY IN
IMPROVEMENT AREA NO. 2” and APPENDIX B — “APPRAISAL REPORT.”

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN

SUCH FORWARD-LOOKING STATEMENTS INVOLVES KNOWN AND UNKNOWN RISKS,

UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS,

PERFORMANCE OR ACHIEVEMENTS DESCRIBE D TO BE MATERIALLY DIFFERENT FROM ANY

FUTURE RESULTS, PERFORMANCE OR ACHIEVEM ENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE CITY DOES NOT PLAN TO ISSUE ANY UPDATES OR

REVISIONS TO THE FORWARD-LOOKING STATEMENTS SET FORTH IN THIS OFFICIAL STATEMENT.

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Sources of Payment for the Bonds
General. The Bonds and any bonds issued and se cured by and payable from Net Special Tax Revenues on a parity with the Bonds (the “Parity Bonds”), are limited obligations of the City, and the interest on and principal of and redemption premiums, if any, on the Bonds and any Parity Bonds are payable solely from Net Special Tax Revenues which are derived from th e Special Tax to be levied annually against the taxable property in Improvement Area No. 2, or, to the ex tent necessary and subject to the conditions set forth in the Indenture, from the monies on deposit in the Bond Reserve Fund. As described in this Official Statement, the Special Tax will be collected along with ad valorem property taxes on the tax bills mailed by the County. Although the Special Tax constitutes a lien on the property subject to taxation in Improvement Area No. 2, it does not constitute a personal indebtedne ss of the owners of such property. There is no assurance that such owners will be financially able to pay the annual Special Tax or that they will pay such taxes even if they are financially able to do so.

Limited Obligations. Except for Net Special Tax Revenues, no other revenues or taxes are pledged to the payment of the Bonds and any Parity Bonds. The Bonds and any Parity Bonds are not general obligations of the City but are special limited obligations of the City payable solely from the Net Special Tax Revenues and other amounts held under the Indenture, as more fully described herein.

Special Tax. As used in this Official Statement, the terms: (1) “Special Tax” means the special tax authorized to be levied and collected annually on all Taxable Land in Improvement Area No. 2 under and pursuant to the Act at the special election held within Improvement Area No. 2; (2) “Net Special Tax Revenues” means the proceeds of the Special Tax, less the Priority Administrative Expenses; and (3) “Priority Administrative Expenses” means (i) for Fiscal Year 20 21-22, $20,000, and (ii) for each subsequent Fiscal Year, an amount equal to the Priority Administrative E xpenses for the preceding Fiscal Year plus 3% of such amount. See “SOURCES OF PAYMENT FOR THE BONDS — Special Tax” and APPENDIX A — “AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” Under the Indenture, the City will pledge to pay debt service on the Bonds and any Parity Bonds from the Net Special Tax Revenues received by or on behalf of the City and any other amounts held in the Special Tax Fund, the Bond Redemption Fund, and the Bond Reserve Fund.

The Net Special Tax Revenues is the primary securi ty for the repayment of the Bonds and any Parity Bonds. In the event that the Special Tax is not paid when due, the only sources of funds available to pay the debt service on the Bonds and any Parity Bonds are amounts held by the Treasurer in the Special Tax Fund and the amounts held in the Bond Reserve Fund and the Bo nd Redemption Fund held by the Trustee under the Indenture. See “SOURCES OF PAYMENT FOR THE BONDS.”
Escrow Fund . The Indenture establishes an escrow fund (the “Escrow Fund”) into which $4,444,701.37
* of the proceeds of the Bonds will be deposited on the date of issuance of the Bonds. Until the satisfaction of certain release tests under the Indenture, amounts in the Escrow Fund will be applied to pay interest on the Bonds maturing on September 1, 2052, bearing interest at a rate of ___% per annum and to which CUSIP No. _________ has been assigned (the “Escrow Bonds”), through and including September 1, 2024. Upon satisfaction of release tests set forth in the Indenture, amounts in the Escrow Fund will be transferred to the Acquisition and Construction Fund to fi nance additional facilities, to increase the balance in the Reserve Fund, and to pay interest on the Escrow Bonds. In the event that the release tests are not satisfied, amounts remaining in the Escrow Fund will be applied to redeem the Escrow Bonds in full on September 1, 2024 (the “Escrow Bonds Mandat ory Redemption Date”). See “THE BONDS—Redemption” and “SOURCES OF PAYMENT FOR THE BONDS—Escrow Fund” he rein for additional details with respect to the Escrow Bonds and the release tests under the Indenture for amounts in the Escrow Fund.

The Bonds, other than the Escrow Bonds, are referred to herein as the “Non-Escrow Bonds.”

* Preliminary, subject to change.

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Sizing of Non-Escrow Bonds and Escrow Bonds . The Non-Escrow Bonds have been sized based on the expected Net Special Tax Revenues to be generated from the property in MDR 5 and MDR 8 at buildout.

The Escrow Bonds have been sized based on the expected Net Special Tax Revenues to be generated from the property in MDR 6 and MDR 7 at buildout. As described herein, the property in MDR 5 and the first phase of MDR 8 are expected to be developed first with development in MDR 6, MDR 7 and the second phase of MDR 8 to follow. The sizing of the Escrow Bonds and the Non-Escrow Bonds do not assume any Net Special Tax Revenue from the HDR Villages and the mixed-use Village. Notwithstanding such structuring of the Non- Escrow Bonds and the Escrow Bonds , Net Special Tax Revenues from all Taxable Property in Improvement Area No. 2 are pledged to the payment of the Bonds.

Foreclosure Covenant. The City will covenant in the Indenture to, annually on or before October 1 of each year, review the public records of the County rela ting to the collection of the Special Tax in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and (a) on the basis of such review the City will, not later than the succeeding December 1, institute foreclosure proceedings as authorized by the Act against all parcels that are delinquent in the payment of such Special Tax in such Fiscal Year by one thousand five hundred thirty dollars ($1,530) or more for Fiscal Year 2021-22, which dollar amount shall escalate by two percent (2.0%) per annum for each Fiscal Year after Fiscal Year 2021-22, in order to enforce the lien of all such delinquent installments of such Sp ecial Tax, and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale, and (b) on the further basis of such review, if the City determines that the total amount so collected is less than 95% of the total amount of the Special Tax levied in such Fiscal Year, the City will, not later than the succ eeding December 1, institute foreclosure proceedings as authorized by the Act against all parcels that are delinque nt in the payment of such Special Tax in such Fiscal Year to enforce the lien of all the delinquent installments of such Special Tax, and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale in accordance with the Act.

The City is not obligated to enforce the lien of any delinquent installment of the Special Tax for any Fiscal Year in which the City has received 100% of the amount of the installment from the County under the Teeter Plan (as defined below). Improvement Area No. 2 is currently included in the County’s Teeter Plan (as defined below). See “SOURCES OF PAYMENT FOR THE BONDS — Teeter Plan” and “SPECIAL RISK FACTORS — Teeter Plan Termination.”
See “SOURCES OF PAYMENT FOR THE BONDS — Special Tax — Foreclosure Covenant” herein and APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Covenants of the City — Foreclosure of Special Tax Liens.” There is no assurance that the property within Improvement Area No. 2 can be sold for the appraised or assessed values described in this Official Statement and in the Appraisal Report (as defined herein), or for a price suffi cient to provide monies to pay the principal of and interest on the Bonds in the event of a default in payment of the Special Tax by current or future landowners within Improvement Area No. 2. See “SPECIAL RISK FACTORS — Property Values” and APPENDIX B — “APPRAISAL REPORT.”

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY OF

SACRAMENTO, THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BO NDS. EXCEPT FOR THE NET SPECIAL TAX

REVENUES, NO OTHER REVENUES OR TAXE S ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE BONDS ARE NOT GENERAL OBLIGATIONS OF THE CITY BUT ARE SPECIAL

LIMITED OBLIGATIONS OF THE CITY PAYA BLE SOLELY FROM THE NET SPECIAL TAX

REVENUES AND CERTAIN OTHER AMOUNTS H ELD UNDER THE INDENTURE AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.

Parity Bonds and Additional Liens . Under the terms of the Indenture, the City may issue Parity Bonds secured by Net Special Tax Revenues on a parity with the Bonds if certain conditions are met. See “SOURCES OF PAYMENT FOR THE BONDS — Issuance of Parity Bonds.” Parity Bonds may be issued by means of a supplemental indenture and without any requirement for the consen t of any Holders. See

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APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Conditions for the Issuance of Bonds.” Other taxes and/or special assessments with liens equal in priority to the continuing lien of the Special Tax have been levied and may also be levied in the future on the property within Improvement Area No. 2, which could adversely affect the ability and willingness of the landowners to pay the Special Tax when due. See “SPECIAL RISK FACTORS — Parity Taxes and Special Assessments.” Appraisal Report
An MAI appraisal (the “Appraisal Report”) of the real property that is subject to the lien of the Special Tax in Improvement Area No. 2 was prepared by BBG, In c., Sacramento, California (the “Appraiser”). The Appraisal Report is dated May 19, 2022 and has a date of value of April 1, 2022 (the “Date of Value”). See APPENDIX B — “APPRAISAL REPORT.” The Appraisal Report provides an estimate of market value by ownership for the properties in Improvement Area No. 2 that are subject to the lien of the Special Tax. Based on current expectations, the development in Improvement Area No. 2 is expected to consist of 421 for- sale residential units, a mixed-use Village of approximately 125 for-rent residential units and approximately 1,027 for-rent apartment units. As of the Date of Value, the Appraiser estimates that the aggregate value of all of the Taxable Property (as defined in the Amended Rate and Method) within Improvement Area No. 2 subject to the Special Tax was not less than $35,000,000.

The Appraisal Report is based upon a variety of assumptions and limiting conditions that are described in APPENDIX B. The City makes no representations as to the accuracy of the Appraisal Report.

See “IMPROVEMENT AREA NO. 2 — Property Values ” and “—Value-to-Lien Ratios.” There is no assurance that any property within Improvement Area No. 2 can be sold for the estimated values set forth in the Appraisal Report or that any par cel can be sold for a price sufficient to provide monies to pay the Special Tax for that parcel in the event of a default in payment of the Special Tax by the landowner. See “IMPROVEMENT AREA NO. 2,” “SPECIAL RISK FACTORS — Property Values” and APPENDIX B — “APPRAISAL REPORT.”
Market Absorption Report
In order to provide informatio n with respect to the potential market demand for the proposed development within Improvement Area No. 2, the City retained John Burns Real Estate Consulting, Folsom, California (the “Market Absorption Consultant”) to conduct an absorption analysis and to prepare a report with respect thereto. The Market Absorption Consultant prepared a report dated as of April 19, 2022 (the “Market Absorption Report”). The Market Absorption Report is attached to this Official Statement as Appendix J. The Market Absorption Study assumes that Improvement Area No. 2 will be developed with 421 for-sale residential units, 1,027 for-re nt high-density for-rent apar tment units and 125 for-rent units in the mixed-use Village. However, based on current zoning, the 1,027 apartment units and the 125 units in the mixed-used Village that are currently an ticipated to be for-rent units may be deve loped into for-sale or for-rent units, or a combination thereof.

Based on the assumptions and subject to the limiting conditions set forth in the Market Absorption Study, the Market Absorption Consultant estimates th at the 421 proposed for-sale homes within Improvement Area No. 2 will be closed out in 2026 and the 1,027 fo r-rent apartment units will achieve stabilized occupancy by approximately 2029-2033. Based on the Developer’s estimate of the sale of the mixed-use Village to a builder in the fourth quarter of 202 4, the Market Absorption Consultant estimates that the 125 for-rent units planned therein will achieve stabilized occupancy in the first quarter of 2027.

The conclusions set forth in the Market Absorption Report are based upon various expected economic and real estate factors. If any of these and other factors are not achieved, the rates of absorption set forth in the Market Absorption Report could be adversely affected. See Appendix J—“MARKET ABSORPTION REPORT.”

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Description of the Bonds
The Bonds will be issued and delivered as fully registered Bonds, registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York (“DTC”), and will be available to actual purchasers of the Bonds (the “Beneficial Owners”) in integral multiples of $5,000, under the book-entry system maintained by DTC, only through brokers and dealers who are or act through DTC Participants as described in Appendix I. Beneficial Owners will not be entitled to receive physical delivery of the Bonds. In the event that the book-entry-only system described herein is no longer used with respect to the Bonds, the Bonds will be registered and transferred in accor dance with the Indenture. See APPENDIX I — “BOOK- ENTRY ONLY SYSTEM.”
Principal of, premium, if any, and interest on the Bonds are payable by the Trustee to DTC.

Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants. In the event that the book-entry only system is no longer used with respect to the Bo nds, the Beneficial Owners will become the registered owners of the Bonds and will be paid principal and interest by the Trustee, all as provided in the Indenture.

The Bonds are subject to optional redemption, extraordinary redemption, and mandatory sinking fund redemption as described herein. See “THE BONDS — Rede mption.” For more complete descriptions of the Bonds and the basic documentation pursuant to which they are being sold and delivered, see “THE BONDS” and APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE.” Professionals Involved in the Offering
U.S. Bank Trust Company, National Association, San Francisco, California, will act as Trustee under the Indenture. Piper Sandler & Co. is the underwriter (the “Underwriter”) of the Bonds. The validity of the Bonds and certain other legal matters are subject to the approving opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the City in connection with the issuance of the Bonds. Stradling Yocca Carlson & Rauth, a Professional Corporation, Newport Beach, California is serving as Disclosure Counsel to the City with respect to the Bonds. Certain legal matters will be passed on for the City by the Office of the City Attorney, for the Underwr iter by Best Best & Krie ger LLP, Riverside, Califo rnia, as counsel to the Underwriter, for the Developer by the Law Offices of Thatch & Hooper, S acramento, California, for Signature Homes by Ironhorse Law Group PC and for the Trustee by its counsel. Other professional services have been performed by BBG, Inc., Sacramento, California, as the Appraiser, John Burns Real Estate Consulting, Folsom, California as Market Absorption Consultant, Fieldman, Rolapp & Associates, Inc., Irvine, California as municipal advisor to the City and NBS, Temecula, California, as Special Tax Consultant.

For information concerning respects in which certain of the above-men tioned professionals, advisors, counsel and consultants may have a fi nancial or other interest in the o ffering of the Bonds, see “FINANCIAL INTERESTS” herein.

Continuing Disclosure
The City has agreed to provide, or cause to be provided, pursuant to Rule 15c2-12 adopted by the Securities and Exchange Commission (the “Rule”) certain financial information and operating data on an annual basis (the “City Reports”). The City has further agreed to provide, in a timely manner, notice of certain events with respect to the Bonds (the “Listed Events”). These covenants have been made in order to assist the Underwriter in complying with the Rule. The City Reports will be filed with the Electronic Municipal Market Access System (“EMMA”) of the Municipal Securities Rulemaking Board (the “MSRB”) available on the Internet at http://emma.msrb.org. Notices of Listed Events will also be filed with the MSRB. Within the last five years, the City and certain related entities have failed to comply in certain respects with prior continuing disclosure undertakings. See “CONTINUING DISCLOSURE.”

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The Underwriter does not consider the Developer or Signature Homes to be an “obligated person” with respect to the Bonds for purposes of the Rule. To assist in the marketing of the Bonds, the Developer and Signature Homes will each execute and deliver a continuing disclosure undertaking pursuant to which they will agree to provide, or cause to be provided on EMMA, updated information relating to their respective property in Improvement Area No. 2 (the “Developer Reports” and together with the City Reports, the “Reports”) on a semiannual basis, and notices of certain events.

See “CONTINUING DISCLOSURE” and APPENDIX G and APPENDIX H for a description of the specific nature of the annual reports to be filed by the City, the Developer and Signature Homes, notices of Listed Events and the forms of the continuing disclosure undertakings pursuant to which such Reports are to be made.

Bond Holders’ Risks
Certain events could affect the ability of the City to collect the Special Tax in an amount sufficient to pay the principal of and interest on the Bonds when due. See the section of this Official Statement entitled “SPECIAL RISK FACTORS” for a discussion of certain factors which should be considered, in addition to other matters set forth herein, in evaluating an inve stment in the Bonds. The Bonds are not rated by any nationally recognized rating agency. The purchase of the Bonds involves significant risks, and the Bonds may not be appropriate investments for certain investors. See “SPECIAL RISK FACTORS.” Other Information
This Official Statement speaks only as of its date, and the information contained herein is subject to change.

Brief descriptions of the Bonds and the Indenture ar e included in this Offi cial Statement. Such descriptions and information do not purport to be comprehensive or definitive. All references herein to the Indenture, the Bonds and the constitution and laws of the State as well as the proceedings of the City Council, are qualified in their entirety by references to such do cuments, laws and proceedings, and with respect to the Bonds, by reference to the Indenture. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture.

Copies of the Indenture and other documents and information are available for inspection and (upon request and payment to the City of a charge for copying, mailing and handling) for delivery from the City Treasurer’s Office at 915 I Street, Historic City Hall, 3 rd Floor, Sacramento, California 95814.

THE FINANCING PLAN
Authorized Facilities and Fees
A portion of the proceeds of the Bonds will be a pplied to finance the costs of the acquisition and construction of certain facilities authorized under the Act which include without limitation, water and storm drain improvements, roadways and tra ffic improvements, landscaping and park improvements, in addition to other improvements authorized under the Acquisiti on Agreement described below. See “IMPROVEMENT AREA NO. 2 — Description of Authorized Facilities.”

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Estimated Sources and Uses of Funds
The following table sets forth the expected sources and uses of Bond proceeds.

Sources of Funds: Non-Escrow Bonds Escrow Bonds
Principal Amount of Bonds $ __________ $ __________
[Plus/less] Original Issue [Premium/Discount]
Total Sources $ $
Uses of Funds:

Acquisition and Construction Fund $ $
Bond Redemption Fund(1)
Escrow Fund(2)
Costs of Issuance(3)
Bond Reserve Fund(4)
Total Uses $ $

(1) Amount represents capitalized interest on the Non-Escrow Bonds through December 1, 2022. (2) Amounts in the Escrow Fund will be used to pay interest on the Escrow Bonds through September 1, 2024, to the extent such funds are not disbursed from the Escrow Fund to the Ac quisition and Construction Fund and the Bond Reserve Fund.

See “SOURCES OF PAYMENT FOR THE BONDS — Escrow Fund.”
(3) Includes Underwriter’s discount, Bond Counsel, Disclosure Coun sel, Special Tax Consultant, municipal advisor and Trustee fees, appraisal costs, printing costs and other issuance costs. (4) Does not include the Reserve Requirement on the Escrow Bonds. If and when the amounts are released from the Escrow Fund to the Acquisition and Construction Fund upon satisfaction of certain conditions, a certain amount will be transferred from the Escrow Fund and be deposited in the Bond Re serve Fund of the Special Ta x Fund. See “SOURCES OF PAYMENT FOR THE BONDS — Escrow Fund.”
Source: The Underwriter.

THE BONDS
General Provisions
The Bonds will be dated as of their date of delivery and will bear interest at the rates per annum, payable semiannually on each March 1 and Septembe r 1, commencing on September 1, 2022 (each, an “Interest Payment Date”), and will mature in the amounts and on the dates, all as set forth on the inside cover page of this Official Statement. Interest on the No n-Escrow Bonds is being capi talized through December 1, 2022. Interest on the Escrow Bonds for a certain period will be paid from amounts transferred from the Escrow Fund as described under “SOURCES OF PAYMENT FOR THE BONDS — Escrow Fund.” Interest will be calculated on the basis of a 360-day year composed of twelve 30-day months. Interest on any Bond will be payable from the Interest Payment Date next preceding the date of authentication of that Bond, unless it is authenticated on a day during the period from the 16 th day of the month next preceding an
Interest Payment Date to such Interest Payment Date, both dates inclusive, in which event it shall bear interest from such Interest Payment Date, or unless it is authenticated on a day on or before the 15 th day of the month
next preceding the first Interest Payment Date, in which event it shall bear interest from its date; provided, that if at the time of authentication of any Bond interest is then in default on any Outstanding Bonds, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on the Outstanding Bonds.

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Bonds, payment shall be made at such Holder’s option by federal wire transfer of immediately available funds according to written instructions provided by such Holder to the Trustee at least 15 days before such Interest Payment Date to an account in a bank or trust company or savings bank that is a member of the Federal Reserve System and that is located in the United States of America.

Payment of the principal of and redemption premiums, if any, on the Bonds shall be made only to the person whose name appears in the registration books required to be kept by the Trustee pursuant to the Indenture as the registered owner thereof, such principa l and redemption premiums, if any, to be paid only on the surrender of the Bonds at the Prin cipal Corporate Trust Office of the Trustee at maturity or on redemption prior to maturity.

The Bonds will be issued as fully registered bonds without coupons and will be registered in the name of Cede & Co., as nominee of DTC. DTC will act as securities depository of the Bonds. Ownership interests in the Bonds may be purchased in book-entry form only in denominations of $5,000 and any integral multiple thereof. So long as DTC is the securities depository all pa yments of principal and interest on the Bonds will be made to DTC and will be paid to the Beneficial Owners in accordance with DTC’s procedures and the procedures of DTC’s Participants. See APPENDIX I — “BOOK-ENTRY ONLY SYSTEM.” Redemption
Optional Redemption . The Bonds maturing on or after September 1, 20__, are subject to optional redemption by the City before their respective stated maturity dates, as a whole or in part on any date on or after September 1, 20__, from any source of available funds other than prepayments of the Special Tax, upon mailed notice as provided in the Indenture, at the following redemption prices (expressed as a percentage of the principal amount of Bonds or portions thereof called for redemption), together with accrued interest to the date of redemption:

Redemption Dates Redemption Price
September 1, 20__, through and including August 31, 20__ 103% Septembe
r 1, 20__, through and including August 31, 20__ 102
September 1, 20__, through and including August 31, 20__ 101 September 1, 20__, and any date thereafter 100

Extraordinary Redemption from Special Tax Prepayments . The Bonds are subject to extraordinary redemption by the City before their respective stated maturity dates, as a whole or in part on any Interest Payment Date, solely from prepayments of the Special Tax, upon mailed notice as provided in the Indenture, at the following redemption prices (expressed as a percen tage of the principal amount of Bonds or portions thereof called for redemption), together with accrued interest to the date of redemption:

Redemption Dates Redemption
Price
Any Interest Payment Date from Septembe
r 1, 2022 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 the caption “SPECIAL RISK FACTORS—Potential Early Redemption of Bonds from Prepayments or Bond Proceeds” for a discussion of the potential for a lower than expected yield on the Bonds as a result of a special mandatory redemption from prepayment of the Special Tax.

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the schedule below, solely from Sinking Fund Account Payments established under the Indenture for that purpose, upon mailed notice as provided in the Indenture, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, as follows:

Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

(maturity)

The Bonds maturing on September 1, 20__, are subject to mandatory redemption by the City before their stated maturity date in part on each September 1, as set forth in the schedule below, solely from Sinking Fund Account Payments established under the Indenture for that purpose, upon mailed notice as provided in the Indenture, at a redemption price equal to the prin cipal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, as follows:

Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

(maturity)

The Bonds maturing on September 1, 20__, are subject to mandatory redemption by the City before their stated maturity date in part on each September 1, as set forth in the schedule below, solely from Sinking Fund Account Payments established under the Indenture for that purpose, upon mailed notice as provided in the Indenture, at a redemption price equal to the prin cipal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, as follows:

Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

(maturity)

The Escrow Bonds are subject to mandatory redemption by the City before their stated maturity date in part on each September 1, as set forth in the schedule below, solely from Sinking Fund Account Payments established under the Indenture for that purpose, upon mailed notice as provided in the Indenture, at a redemption price equal to the principal amount thereof to be redeemed, together with accrued interest to the date of redemption, without premium, as follows:

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Sinking Fund Redemption Date
(September 1) Sinking Fund Payments
$

(maturity)

Mandatory Redemption of Escrow Bonds from Escrow Fund . The Escrow Bonds are subject to mandatory redemption by the City and shall be redeemed by the City before their stated maturity date, in whole on the Escrow Bonds Mandatory Redemption Date (September 1, 2024) if the City has not delivered to the Trustee an Escrow Fund Release Certificate on or before the Escrow Fund Release Cut-Off Date, but solely from amounts on deposit in the Escrow Fund on the Escrow Bonds Mandatory Redemption Date, upon mailed notice as provided in the Indenture, at a redemption price equal to the principal amount thereof, together with accrued interest thereon to the Escrow Bonds Mand atory Redemption Date, without premium. See “SOURCES OF PAYMENT FOR THE BONDS — Escrow Fund.”
Selection of Bonds for Redemption . If less than all of the Bonds outstanding are to be redeemed at the option of the City at any one time, the City will select the maturity date or dates of the Bonds to be redeemed. If less than all of the Bonds of any one ma turity date are to be redeemed at any one time, the Trustee shall select the Bonds or the portions thereof of such maturity date to be redeemed in integral multiples of $5,000 in any manner that the Trustee deems appropriate.

Notice of Redemption . When Bonds are to be redeemed under the Indenture, the Trustee shall give notice of the redemption of such Bonds. The notice of redemption must state the date of the notice, the Bonds to be redeemed, the date of issue of the Bonds, the redemption date, the redemption price, the place of redemption (being the address of the Principal Corporat e Trust Office of the Trus tee), the CUSIP number (if any) of the maturity or maturities and, if less than all of any such maturity, the numbers of the Bonds of such maturity to be redeemed and, in the case of Bonds to be redeemed in part only, th e respective portions of the principal amount thereof to be rede emed. The notice must further state that interest on the Bonds to be redeemed or the portions thereof will not accrue from and after the date of redemption and that all Bonds must be surrendered for redemptio n at the Principal Corporate Trust Offi ce of the Trustee for payment of the redemption price thereof. If any Bond chosen for redemption is not redeemable in whole, the notice must state that the Bond is to be redeemed in part only and that upon presentation of the Bond for redemption there will be issued in lieu of the unredeemed portion of principal a new Bond or Bonds of the same series and maturity date of authorized denominations equal in aggregate principal amount to the unredeemed portion.

At least 30 days but no more than 90 days before the redemption date, the Trustee shall mail a copy of such notice by first-class mail, postage prepaid, to (a) th e Holders of all Bonds selected for redemption at their addresses appearing on the register maintained by the Trustee in accord ance with the Indenture, (b) the securities information services selected by the City in accordance with the Indenture, and (c) the Underwriter.

Neither the failure to receive any su ch notice nor any immaterial defect in such notice will affect the sufficiency or validity of the proceedings for redemption.

Notwithstanding anything to the contrary contained in the Indenture, with respect to any notice of optional or extraordinary redemption of Bonds, unless, upon the giving of such notice, such Bonds are deemed to have been paid within the meaning of the Indenture, such notice will state that such redemption is conditional upon the receipt by the Trustee on or prior to the date fixed for such redemption of amounts sufficient to pay the principal of, and premium, if any, and interest on, such Bonds to be redeemed, and that if such amounts are not received the notice will be of no fo rce and effect and the City will not be required to redeem such Bonds. In the event that any such notice of redemption contains such a condition and such amounts are not so received, the redemption will not be made and the Trustee will within a reasonable time thereafter give notice to the effect that such amounts were not so received and such redemption was not made,

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such notice to be given by the Trustee in the same manner, and to the same parties, as the notice of redemption was given. Such failure to redeem such Bonds shall not constitute an event of default under the Indenture.

Notwithstanding anything to the contrary contained in the Indenture, any notice of optional or extraordinary redemption of Bonds may be rescinded by written notice given to the Trustee by the City no later than five Business Days prior to the date specified for redemption. The Trustee will give notice of such rescission as soon thereafter as practicable in the same manner, and to the same parties, as notice of such redemption was given.

Effect of Redemption . If notice of redemption is given as provided in the Indenture and the money necessary for the payment of the principal of, and any redemption premiums and in terest to the redemption date on, the Bonds or portions thereof so called for rede mption is held by the Trustee, then on the redemption date the Bonds called for redemption or portions thereof will become due and payable, and from and after the redemption date interest on those Bonds or such portions thereof will cease to accrue and the Holders of such Bonds shall have no rights in respect thereof except to receive payment of the principal or such portions thereof and the redemption premiums, if any, thereon and the interest accrued thereon to the redemption date.

DEBT SERVICE SCHEDULE
The following table presents the semi-annual debt service on the Bonds (including sinking fund redemption), assuming there are no optional or extraordinary redemptions and assuming that amounts are released from the Escrow Fund to the Acquisition and Construction Fund with respect to the Escrow Bonds. It should be noted, however, that the Indenture requires redemption of the Escrow Bonds from amounts transferred from the Escrow Fund should the conditions to the release of amounts in the Escrow Fund to the Acquisition and Construction Fund not be satisfied. Interest on the Bonds, other than the Escrow Bonds, through December 1, 2022, will be paid from capitalized interest. Unless otherwise released, interest on the Escrow Bonds through September 1, 2024, will be paid from amounts transferred from the Escrow Fund.

See “SOURCES OF PAYMENT FOR THE B ONDS—Escrow Fund” and “THE BONDS— Redemption.”

[Remainder of Page Intentionally Left Blank]

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Date
Escrow Bonds
Principal
Escrow Bonds
Interest
Non-Escrow
Bonds Principal
Non-Escrow
Bonds Interest
Total
Principal Total Interest Total Debt Service

Source: The Underwriter.

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SOURCES OF PAYMENT FOR THE BONDS
Limited Obligations
The Bonds are payable from and secured by Net Special Tax Revenues and by amounts on deposit in the Special Tax Fund, the Bond Redemption Fund and th e Bond Reserve Fund. The Bonds are not secured by monies on deposit in the Expense Fund, the Rebate Fund or the Acquisition and Construction Fund established by the Indenture.

The Indenture defines the terms: (1) “Special Tax” to mean the special tax authorized to be levied and collected annually on all Taxable Land in Improvement Area No. 2 under and pursuant to the Act at the special election held within Improvement Area No. 2; (2) “Net Special Tax Revenues” to mean the proceeds of the Special Tax, less the Priority Administrative Expenses; and (3) “Priority Administrative Expenses” to mean (i) for Fiscal Year 2021-22, $20,000, a nd (ii) for each subsequent Fiscal Y ear, an amount equal to the Priority Administrative Expenses for the preceding Fiscal Year plus 3% of such amount.

See APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Definitions.” Special taxes levied in Improvement Area No. 1 and Improvement Area No. 3 of the District are not pledged to and are not available to pay debt service on the Bonds.

The City is legally authorized and has covenanted in the Indenture to cause the levy and collection of the Special Tax in an amount determined according to the Amended Rate and Method. See “SOURCES OF PAYMENT FOR THE BONDS — Special Tax” and “SPECIAL RISK FACTORS — Proposition 218” below.

The Amended Rate and Method apportions the total am ount of the Special Tax to be collected among the Taxable Property in Improvement Area No. 2. See “—Special Tax” and APPENDIX A — “AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” Although the Special Tax will be levied against Ta xable Property within Improvement Area No. 2, it does not constitute a personal indebtedness of the proper ty owners. There is no assurance that the property owners will be able to pay the Special Tax or that they will pay it even if able to do so. See “SPECIAL RISK FACTORS” herein.

NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE CITY OF

SACRAMENTO, THE STATE OF CALIFORNIA, OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE BONDS. EXCEPT FOR THE NET SPECIAL TAX REVENUES, NO OTHER REVENUES OR TAXES ARE PLEDGED TO THE PAYMENT OF THE BONDS. THE

BONDS ARE NOT GENERAL OBLIGATIONS OF THE CITY BUT ARE SPECIAL LIMITED

OBLIGATIONS OF THE CITY PAYABLE SOLELY FROM THE NET SPECIAL TAX REVENUES AND

CERTAIN OTHER AMOUNTS HELD UNDER THE INDENTURE AS MORE FULLY DESCRIBED IN THIS OFFICIAL STATEMENT.

Special Tax
Authorization and Pledge . In accordance with the provisions of the Act, the City established the District and designated various improvement areas therein, including Improvement Area No. 2, on September 24, 2019, for the purpose of financing the various publ ic improvements benefitting the proposed development within the District. Subsequent to the establishment of the District, the City undertook change proceedings pursuant to which the eligible voters approved the levy of the Special Tax in accordance with the Amended Rate and Method and the decrease of the amount of bonded indebtedness authorized to be incurred for Improvement Area No. 2 from $18,800,000 to $18,000,000 to finance the facilities.

The City will covenant in the Indenture, so long as any Bonds are Outstanding, to annually levy the Special Tax against all Taxable Land in Improvement Area No. 2 in accordance with the Amended Rate and

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Method and, subject to the limitations in the Amended Rate and Method and the Act, make provision for the collection of the Special Tax in amounts which will be sufficient, together with the money then on deposit in the Bond Redemption Fund or on deposit with the Trust ee for transfer to the Bond Redemption Fund, after making reasonable allowances for contingencies and e rrors in the estimates, to yield proceeds equal to the amounts required for compliance with the agreements , conditions, covenants and terms contained in the Indenture, and which in any event will be sufficient to pay the interest on and principal of and Sinking Fund Account Payments for and redemption premiums, if any, on the Bonds as they become due and payable and to replenish the Bond Reserve Fund and to pay all current Expenses as they become due and payable in accordance with the provisions and terms of the Indenture.

The Special Tax is collected in the same manner as ad valorem property taxes for the County and, except as otherwise provided in the Indenture or by the Act, is subject to the same penalties and the same collection procedure, sale, and lien priority in case of delinquency as is provided for ad valorem property taxes. See APPENDIX A — “AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.”
Under the Indenture, except as described below all proceeds of the Special Tax are to be deposited in the Special Tax Fund, which is being established under the Indenture and is held and maintained in trust by the City Treasurer. The City agrees in the Indenture to deposit all proceeds of the Special Tax in the Special Tax Fund when and as received and to transfer all amounts in the Special Tax Fund into the following funds in the following order of priority:
(1) to the Expense Fund in an amount equal to the Priority Administrative Expenses for the Fiscal Year,
(2) to the Bond Redemption Fund to pay debt service payments on all outstanding Bonds and any Parity Bonds,
(3) to the Bond Reserve Fund to the extent necessary to replenish the Bond Reserve Fund to the Required Bond Reserve,
(4) to the Expense Fund, to the extent Expenses were not already funded or reimbursed by the deposit of Priority Administrative Expenses in (1) above, and (5) to the Community Facilities Fund.

On or before each March 1 and September 1, the Treasurer will, from the then remaining money in the Special Tax Fund, transfer to the Trustee for deposit in the Bond Redemption Fund an amount equal to the aggregate amount of interest becoming due and payable on all Outstanding Bonds and Parity Bonds on that March 1 and September 1. On or before each September 1, the Treasurer will, from the then remaining money in the Special Tax Fund, transfer to the Trustee for deposit in the Bond Redemption Fund an amount equal to the aggregate amount of principal becoming due and payable on all Outstanding Serial Bonds on that September 1, plus the aggregate of the Sinking Fund Account Payments required by the Indenture to be made on that September 1 into the Sinking Fund Account.

All of the aforesaid payments shall be made withou t priority of any payment over any other payment, and in the event that the money in the Bond Redemption Fund on any March 1 or September 1 is not equal to the amount of interest becoming due on all Bonds and Parity Bonds on such date, or in the event that the money in the Bond Redemption Fund on any September 1 is not equal to the amount of principal of the Bonds and Parity Bonds becoming due on such date plus the amount of the Sinking Fund Account Payments becoming due on such date, as the case may be, then such money shall be applied pro rata in such proportion as such interest and principal and Sinking Fund Account Payments bear to each other.

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No deposit needs to be made into the Bond Redemption Fund if the amount of money contained in the Bond Redemption Fund is at least equal to the amount required by the Indenture to be deposited in the Bond Redemption Fund at the times and in the amounts described above.

Notwithstanding anything to the contrary in the Indenture, as soon as practicable after the receipt by the City of any prepayment of the Special Tax, the Treasurer shall (i) deposit any component thereof representing the “Future Facilities Amount” (as defined in the Amended Rate and Method) in the Acquisition and Construction Fund, (ii) deposit any component th ereof representing the “Administrative Fees and Expenses” (as defined in the Amended Rate and Method) in the Expense Fund, and (iii) transfer to the Trustee for deposit in the Bond Redemption Fund, any remaining amounts, for the extraordinary redemption of Bonds or Parity Bonds pursuant to the terms of any Supplemental Indenture.

The Special Tax levied in any fiscal year may not exceed the maximum rates authorized pursuant to the Amended Rate and Method. See APPENDIX A — “AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX” hereto . There is no assurance that the Special Tax proceeds will, in all circumstances, be adequate to pa y the principal of and interest on the Bonds when due.

See the caption “— Limitation on Special Tax Levy” below and “SPECIAL RISK FACTORS — Insufficiency of Special Tax” herein.

Amended and Restated Rate and Meth od of Apportionment of Special Tax . The City is legally authorized and will covenant to cause the levy of the Special Tax in an amount determined according to a methodology, i.e., the Amended Rate and Method which the City Council and the electors within Improvement Area No. 2 have approved. The Amended Rate and Method apportions the total amount of the Special Tax to be collected among the Taxable Property in Improvement Area No. 2 as more particularly described below.

The following is a synopsis of the provisions of the Amended Rate and Method for Improvement Area No. 2, which should be read in conjunction with the complete text of the Amended Rate and Method which is attached as APPENDIX A — “AMENDED AND RESTATED RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The definitions of the capitalized terms used under this caption “— Amended and Restated Rate and Method of Apportionment of Special Tax ” are as set forth in APPENDIX A. This section provides only a summary of the Amended Rate and Method, and is qualified by more complete and detailed information contained in the entire Amended Rate and Method attached as APPENDIX A.

Assignment to Land Use Categories. Each Fiscal Year, all Taxable Property within Improvement Area No. 2 shall be classified as Developed Property, Final Subdivision Property, Taxable Contingent Property, Tentative Map Property or Undeveloped Property.

Exemptions. No Special Tax shall be levied on up to 55.12 Acres of Non-Residential Property, Open Space Property, Property Owner Asso ciation Property, and Public Proper ty. Tax-exempt status will be assigned by the CFD Administrator in the chronological order in which property becomes Non-Residential Property, Open Space Property, Proper ty Owner Association Property, or Public Property. For the following property types in excess of the 55.12 Acres exempted above, Non-Residential Property, Open Space Property, Property Owner Association Property, or Public Property that is not exempt from the Special Tax under this section, or pursuant to the Act, shall be classified as Taxable Contingent Property. In addition, no Special Tax shall be levied on Welfare Exempt Property under the conditions set forth in the Amended Rate and Method.

See Section E of the Amended Rate and Method attached as Appendix A hereto for a detailed description of exempt property in Improvement Area No. 2.

Maximum Special Tax for Taxable Contingent Property, Tentative Map Property, and Undeveloped Property. The Maximum Special Tax for each Assessor’s Par cel of Taxable Contingent Property, Tentative Map Property and Undeveloped Property will be $10,38 4 per Acre in Fiscal Year 2022-23. The Maximum

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Special Tax for Taxable Contingent Property, Tentativ e Map Property and Undeveloped Property increases by 2% on July 1 of each year. See the Amended Rate and Method attached as APPENDIX A.

Maximum Special Tax for Developed Pr operty and Final Subdivision Property . The Maximum Special Tax for each Assessor’s Parcel of Developed Property and Final Subdivision Property shall be the greater of (1) the Assigned Special Tax, or (2) the B ackup Special Tax. The Assigned Special Tax rates for Developed Property and Final Subdivision Property are set forth in Tables 1 and 2 to the Amended Rate and Method. The Assigned Special Tax rates increase by 2% on July 1 of each year. See the Amended Rate and Method attached as APPENDIX A.

The Backup Special Tax per Village for each Assess or’s Parcel of Developed Property and Final Subdivision Property, is calculated as follows:

Backup Special Tax = Expected Revenue / Units on Developed Property and/or Units expected on Final Subdivision Property.

For each Village, by reference to Exhibit 1 to the Amended Rate and Method, should the number of Units be less than the Expected Unit s when all Assessor’s Parcels are cla ssified as Developed Property, the Backup Special Tax per Unit shall be adjusted so that the Backup Special Tax per Unit is sufficient to generate the Expected Revenue in any Fiscal Year. Each Fiscal Year, the CFD Administrator shall update Exhibit 1 to the Amended Rate and Method with the revised Units and Expected Revenue to be derived from each Village.

Notwithstanding the foregoing, once an Assessor’s Parcel is used for private residential purposes (as determined by the Act), the Backup Special Tax for th e Assessor’s Parcel cannot be increased because of future reductions in the number of Units on other Assessor’s Parcels. The increases to the Backup Special Tax by 2.0% per Fiscal Year pursuant to the Amended Rate and Method would still apply to such Assessor’s Parcel.

Changes to Land Use Class. After a Bond sale, if a Land Use Class change is proposed or identified, the following must be applied:

If the revenues calculated are higher than those reflected in Exhibit 1 or less than those calculated in Exhibit 1, but the reduction in Expected Revenues does not reduce debt service coverage below the required 110% debt service coverage, no further action is needed, and the CFD Administrator shall update Exhibit 1 to show the revised Expected Revenues.

If the revenues calculated are less than those reflected in Exhibit 1, and the CFD Administrator determines that the reduction in Expected Revenues would reduce debt service coverage below the required 110% debt service coverage the Special Tax levied on the Parcel subject to a Land Use Class change will need to be paid and one of the following shall occur: (i) The landowner requesting the Land Use Class change may make a prepayment in an amount that will ensure that the reduced Expected Revenues are sufficient to meet the required 110% debt service coverage or (ii) If a prepayment is not selected, the Assigned Special Tax on the Parcel or Parcels subject to the Land Use Class change shall be increased proportionately until the Expected Revenues are sufficient to maintain the required 110% debt service coverage. Notwithstanding the foregoing, once an Assessor’s Parcel is used for private residential purpo ses (as determined pursuant to the Act), the Maximum Special Tax for the Assessor’s Parcel cannot be increased b ecause of future Land Use Class changes for other Assessor’s Parcels.

Method of Apportionment of Special Tax . Each Fiscal Year, the CFD Administrator shall determine the Special Tax Requirement and shall levy the Special Tax until the amount of the Special Tax levied equals the Special Tax Requirement. The Special Tax shall be levied each Fiscal Year as follows:

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First: The Special Tax shall be levied Proportionately on each Assessor's Parcel of Developed Property at a rate up to 100% of the greater of th e applicable Assigned Special Tax or the applicable Backup Special Tax to satisfy the Special Tax Requirement; Second: If additional monies are needed in order to meet the Special Tax Requirement after the first step has been completed, the Special Tax shall be levied Proportionately on each Assessor’s Parcel of Final Subdivision Property at a rate of up to 100% of the greater of the applicable Assigned Special Tax or the applicable Backup Special Tax for Final Subdivision Property; Third: If additional monies are needed to satisfy the Special Tax Requirement after the first two steps have been completed, the Special Tax shall be levied Proportionately on all Tentative Map Property at a rate up to 100% of the Maximum Special Tax for Tentative Map Property; and Fourth: If additional monies are needed to satisfy the Special Tax Requirement after the first three steps have been completed, the Special Tax shall be levied Proportionately on all Undeveloped Property at a rate up to 100% of the Maximum Special Tax for Undeveloped Property; and Fifth: If additional monies are needed to satisfy th e Special Tax Requirement af ter the first four steps have been completed, then the Special Tax shall be levied Proportionately on all Taxable Contingent Property at a rate up to 100% of the Maximum Special Tax for Taxable Contingent Property.

Prepayment of Annual Special Tax . The Annual Special Tax obligation for an Assessor’s Parcel of Developed Property, Final Subdivision Property, Taxable Contingent Property, Tentative Map Property, or Undeveloped Property may be prepaid in full, or in part, provided that the terms set forth under the Amended Rate and Method are satisfied. The Prepayment Amount is calculated based on the sum of the Bond Redemption Amount, the Future Facilities Amount, the Redemption Premium, the Defeasance Amount, Administrative Fees and Expenses and less a credit for the resulting reduction in the Required Bond Reserve for the Bonds and Capitalized Interest Credit (if any), all as specified in Section I of the Amended Rate and Method attached as APPENDIX A.

Limitation on Special Tax Levy . 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 Improvement Area No. 2 by more than 10% above the amount that would have been levied in that fiscal year had there never been any such delinquencies or defaults. As a result, it is possible that the City may not be able to increase the tax levy to the Maximum Special Tax in all years. However, subject to the limitations on the City’s ability to levy the necessary amount of the Special Tax as imposed by Section 53321(d) of the Government Code, the City can levy the Special Tax on all Taxable Property to make- up all or a portion of any shortfall in the Special Tax levy, subject to the maximum Special Tax rate on such Taxable Property.

To the City’s knowledge, the appl ication of such limitation to fo r-rent apartment properties has not been subject to interpretation by the courts. A court could hold that such limitation applies, which decision could be binding on community facilities districts within the City. If such limitation were to apply, it is possible that the City may not be able to increase the tax levy to the Maximum Special Tax rate on Taxable Property with for-rent apartmen t in all years. However, subject to the limita tions on the City’s ability to levy the necessary amount of Special Tax as imposed by Section 53321(d) of the Government Code, the City can levy Special Taxes up to the Maximum Special Tax rates on all Taxable Property to make-up all or a portion of any shortfall in the Special Tax collections due to delinquencies.

Collection of Special Tax. The Special Tax is levied and collected by the Tax Collector of the County in the same manner and at the same time as ad valorem property taxes. The City may, however, collect the

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Special Tax at a different time or in a different manner if necessary to meet its financial obligations with respect to Improvement Area No. 2.

Although the Special Tax constitutes a lien on Ta xable Parcels within Improvement Area No. 2, it does not constitute a personal indebtedness of the owners of property within Improvement Area No. 2. In addition to the obligation to pay the Special Tax, properties in Improvement Area No. 2 are subject to other assessments and special taxes as set fo rth in Table 1. These other special taxes and assessments are on parity with the lien for the Special Tax. Moreover, other liens for taxes and assessments could come into existence in the future in certain situations without the consent or knowledge of the City or the landowners in Improvement Area No. 2. See “SPECIAL RISK FACTORS — Parity Taxes and Special Assessments.” There is no assurance that property owners will be financially able to pay the Special Tax or that they will pay such taxes even if financially able to do so. See “SPECIAL RISK FACTORS” below.

Foreclosure Covenant. The proceeds of delinquent amounts of the Special Tax received following a judicial foreclosure sale of parcels within Improvement Area No. 2 resulting from a landowner’s failure to pay the Special Tax when due, up to the amount of the deli nquent Special Tax lien, are included within the Special Tax revenues pledged to the payment of principal and interest on the Bonds under the Indenture, except any payment of the Special Tax on tax-defaulted parcels, including all delinquent parcels and redemption penalties, fees and costs and the proceeds collected from the sale of property pursuant to the foreclosure provisions of the Indenture, so long as the County has paid to the City the Special Tax levied for a tax-defaulted parcel pursuant to the Teeter Plan established by the County. See “— Teeter Plan” below.

Pursuant to Section 53356.1 of the Act, in the event of any delinquency in the payment of any Special Tax or receipt by the City of the Special Tax in an amou nt which is less than the Special Tax levied, the City Council of the City may order that the Special Tax be collected by a superior court action to foreclose the lien within specified time limits. In such an action, the real property subject to the unpaid amount may be sold at a judicial foreclosure sale. Under the Act, the commencement of judicial foreclosure following the nonpayment of a Special Tax is not mandatory.

However, the City will covenant in the Indenture to, annually on or before October 1 of each year, review the public records of the County relating to the collection of the Special Tax in order to determine the amount of the Special Tax collected in the prior Fiscal Year, and (a) on the basis of such review the City will, not later than the succeeding December 1, institute foreclosure proceedings as authorized by the Act against all parcels that are delinquent in the payment of such Special Tax in such Fiscal Year by one thousand five hundred thirty dollars ($1,530) or more for Fiscal Year 2021-22, which dollar amount shall escalate by two percent (2.0%) per annum for each Fiscal Year after Fiscal Year 2021-22 in order to enforce the lien of all such delinquent installments of such Special Tax, and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale, and (b) on the further basis of such review, if the City determines that the total amount so collected is less than 95% of the total amount of the Special Tax levied in such Fiscal Year, the City will, not later than the succeeding December 1, ins titute foreclosure proceedings as authorized by the Act against all parcels that are delinquent in the payment of such Special Tax in such Fiscal Year to enforce the lien of all the delinquent installments of such Special Tax, and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale in accordance with the Act.

See APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Covenants of the City — Foreclosure of Special Tax Liens.” If foreclosure is necessary and other funds (includi ng amounts in the Bond Reserve Fund) have been exhausted, debt service payments on the Bonds could be delayed until the foreclosure proceedings have ended

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with the receipt of any foreclosure sale proceeds. Judi cial foreclosure actions are subject to the normal delays associated with court cases and may be further slowed by bankruptcy actions, involv ement by agencies of the federal government and other factors beyond the control of the City. See “SPECIAL RISK FACTORS — Bankruptcy and Foreclosure.” Moreover, no assurances can be given that the real property subject to foreclosure and sale at a judicial foreclosure sale will be sold or, if sold, that the proceeds of such sale will be sufficient to pay any delinquent Special Tax installment. See “SPECIAL RISK FACTORS — Property Values.” Although the Act authorizes the City to cause such an action to be commenced and diligently pursued to completion, the Act does not impose on the City any obligation to purchase or acquire any lot or parcel of property sold at a foreclosure sale if there is no other purchaser at such sale. The Act provides that, in the case of a delinquency, the Special Tax will have the same lien priority as is provided for ad valorem property taxes.

Bond Reserve Fund
In order to secure the payment of principal of and interest on the Bonds, the City is required, upon delivery of the Bonds, to deposit in the Bond Reserve Fund an amount equal to the Required Bond Reserve and thereafter to maintain in the Bond Reserve Fund an amount equal to the Required Bond Reserve. As described below, the amount of the Required Bond Reserve at the time of issuance of the Bonds will not take into account the amount of the Escrow Bonds. If the conditions set forth in the Indenture to release amounts from the Escrow Fund to the Acquisition and Constructi on Fund are satisfied, the Required Bond Reserve will be increased as described below.

The Indenture provides that the amount to be maintained in the Bond Reserve Fund as the Required Bond Reserve, prior to the first to occur of the delivery by the City of an Escrow Fund Release Certificate to the Trustee and the Escrow Bonds Mandatory Redempti on Date (September 1, 2024), as of any date of calculation, shall be the least of (a) ten percent (10%) of the principal amount of the Outstanding Bonds other than the Escrow Bonds, or (b) Maximum Annual Debt Service with respect to the Outstanding Bonds other than the Escrow Bonds, or (c) one hundred twenty-five percent (125%) of the average Debt Service payable with respect to the Outstanding Bonds other than the Escrow Bonds in the current and in all future Bond Years, all as determined by the City under the Internal Revenue Code of 1968, as amended (the “Code”) and specified in writing to the Trustee; provided, that the Required Bond Reserve (or any portion thereof) may be satisfied by the provision of one or more policies of municipal bond insurance or surety bonds issued by a municipal bond insurer or by a letter of credit issued by a bank, the obligations insured by which insurer or issued by which bank, as the case may be, have at least one rating at the time of issuance of such policy or surety bond or letter of credit equal to “A” or higher assigned by Fitch or “A” or higher assigned by Moody’s or “A” or higher assigned by Standard & Poor’s, in each case without regard to any numerical modifier or plus or minus sign; and provided further, that the amount of the Required Bond Reserve shall not increase at any time except as described in the next paragraph or the issuance of a new Series of Parity Bonds; and provided further, that, with respect to the issuance of any issue of Parity Bonds, if the amount on deposit in the Bond Reserve Fund would have to be increased by an amount greater than ten percent (10%) of the stated principal amount of such issue of Parity Bonds (or, if the issue has more than a de minimis amount of original issue discount or premium, of the issue price of such issue of Parity Bonds) then the Required Bond Reserve shall be such lesser amount as is determined by a deposit of such 10%.

On and after the first to occur of the delivery by th e City of an Escrow Fund Release Certificate to the Trustee and the Escrow Bonds Mandatory Redemption Date (September 1, 2024), as of any date of calculation, the Required Bond Reserve shall be the least of (a) ten percent (10%) of the principal amount of the Outstanding Bonds and Parity Bonds, or (b) Maximum Annual Debt Service, or (c) one hundred twenty-five percent (125%) of the average Debt Service payable under the Indenture in the current and in all future Bond Years, all as determined by the City under the Code and specified in writing to the Trustee; provided, that the Required Bond Reserve (or any portion thereof) may be sa tisfied by the provision of one or more policies of municipal bond insurance or surety bonds issued by a municipal bond insurer or by a letter of credit issued by a bank, the obligations insured by which insurer or issued by which bank, as the case may be, have at least one

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rating at the time of issuance of such policy or surety bo nd or letter of credit equa l to “A” or higher assigned by Fitch or “A” or higher assigned by Moody’s or “A” or higher assigned by Standard & Poor’s, in each case without regard to any numerical modifier or plus or minus sign; and provided further, that the amount of the Required Bond Reserve shall not increase at any time except upon the delivery by the City of an Escrow Fund Release Certificate to the Trustee or the issuance of a new Series of Bonds; and provided further, that, with respect to the issuance of any issue of Parity Bonds, if the amount on deposit in the Bond Reserve Fund would have to be increased by an amount gr eater than ten percent (10%) of the st ated principal amount of such issue of Parity Bonds (or, if the issue has more than a de minimis amount of original issue discount or premium, of the issue price of such issue of Bonds) then the Requ ired Bond Reserve shall be such lesser amount as is determined by a deposit of such 10%.

As of the date of issuance of the Bonds, the Required Bond Reserve will be fully funded in the amount of $__________ from a portion of the proceeds of the Non-Escrow Bonds.

Subject to the limits on the maximum annual Special Tax which may be levied within Improvement Area No. 2 in accordance with the Amended Rate and Method set forth in APPENDIX A, the City will covenant to levy the Special Tax in an amount that is anticipated to be sufficient, in light of the other intended uses of the Special Tax proceeds, to maintain the balance in the Bond Reserve Fund at the Required Bond Reserve. Amounts in the Bond Reserve Fund are to be applied to (i) pay debt service on the Bonds and any Parity Bonds, to the extent other monies in the Bond Redemption Fund are insufficien t therefor; (ii) reinstate the amount available under any municipal bond insurance policy, surety bond, or letter of credit which may be issued and held in satisfaction of all or a portion of the Required Bond Reserve; and (iii) retire Bonds and any Parity Bonds in whole or in part, to the extent that the amount on deposit in the Bond Reserve Fund exceeds the Required Bond Reserve due to a redemption or defeasance of Bonds or Parity Bonds; provided that prior to the first to occur of the delivery by the City of an Escrow Fund Release Certifi cate to the Trustee and the Escrow Bonds Mandatory Redemption Date, any money in the Bond Reserve Fund shall be used and withdrawn by the Trustee solely for the purpose of pa ying the interest on or principal of the Non-Escrow Bonds in the event there is insufficient money in the Bond Redemption Fund available for this purpose. See APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Allocation of Money in the Special Tax Fund.”
Issuance of Parity Bonds
The City may issue one or more series of Parity Bonds (each a “Series”), in addition to the Bonds, which shall be payable from the Net Special Tax Revenu es under the Master Indenture on parity with the Outstanding Bonds. The Parity Bonds shall be issued by means of a Supplemental Indenture and without the consent of any Holders, upon compliance with the provis ions of the Master Indenture, which include, among others, the following specific conditions:
(a) No Event of Default under the Master Indent ure or under any Supplemental Indenture shall have occurred and shall be then continuing; and
(b) The Net Special Tax Revenues expected to be available to the City if the Special Tax were to be levied and collected at its maximum rate and amount on all Taxable Land in Improvement Area No. 2 during each Fiscal Year that any Bonds and Parity Bonds will be Outstanding, as shown by a written certificate of a special tax consultant selected by the City on file with the Trustee, would have produced a sum equal to at least 110% of the annual Debt Service during the Bond Year that begins in such Fiscal Year; provided, that the Net Special Tax Revenues expected to be available to the City from the levy of the Special Tax on any Unit (as defined in the Amended Rate and Method) of High-Density Residential Property (as defined in the Amended Rate and Method) or any Unit of Mixed-Use Residential Property (as defined in the Amended Rate and Method) shall not be used in such calculation for any Fiscal Year unless such Unit of High-Density Residential Property or Unit of Mixed-Use Residential Property is classified as Developed Property (as defined in the Amended Rate and Method) under the Amended Rate and Method as of the date of such calculation; and

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(c) The aggregate Value-to-Lien Ratio of all Taxable Land (excluding the Value of any parcels of Taxable Land then delinquent in the payment of any Special Tax) shall be at least 3:1; and, for the purposes of this subparagraph (c), the term “Value” means either the current assessed valuation of a parcel of Taxable Land or the appraised value of a parcel of Taxable Land determined by an MAI appraiser, and the term “Value-to-Lien Ratio” means the Value of all Taxable Land to the aggregate principal amount of all Bonds and Parity Bonds Outstanding and the Series of Parity Bond s proposed to be issued plus the aggregate principal amount of all other assessment bonds and bonds issued under the Act and reasonably allocable to such Taxable Property.

Notwithstanding provisions of the Indenture described in (b) and (c) above, nothing contained in the Indenture shall limit the issuance of any Series payable from the Net Special Tax Revenues as provided therein if after the issuance and delivery of such Series none of the Bonds and Parity Bonds theretofore issued under the Indenture will be Outstanding, and nothing contained in the Indenture shall limit the issuance of any Series payable from the Net Special Tax Revenues as provided therein if, after the issu ance and delivery of such Series, the Debt Service in each Bond Y ear that begins after the issuance of such Series is not increased by reason of the issuance of such Series.

See APPENDIX F — “SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE — Conditions for the Issuance of Bonds.”
Escrow Fund
The Indenture establishes the Escrow Fund which is held by the Trustee. On the date of issuance of the Bonds, $4,444,701.37
* of the proceeds of the Escrow Bonds will be deposited in the Escrow Fund. As used herein, the terms: (1) “Escrow Fu nd Release Certificate” means a Certificate of the City delivered to the Trustee pursuant to the Indenture as described in paragraphs (b) and (c) below, certifying that the Escrow Fund Release Conditions have been satisfied on or before the date of such certificate and certifying as to the other information required to be certified by the City pursuant to the Indenture as described in paragraphs (b) and (c) below, as applicable; (2) “Escrow Fund Release Conditions” means that the City has determined that a final subdivision map or final subdivision maps that create individual lots for which residential building permits may be issued without further subdivision of such property has or have been approved by the City and recorded by the developer or developers for the entire area known, as of the date of issuance of the Bonds, as MDR Village 6 and MDR Village 7, and which area is comp rised of Parcel 8 and Parcel 2 as shown on that certain Master Parcel Map of Delta Shores Phase 2 filed on November 19, 2021 in Book 245 of the parcel maps maintained by the County of Sacr amento Recorder at Page 10 and al so identified as document number 202111190728 (see “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2 — Infrastructure and Home Construction by Signature Homes — Final Subdivision Mapping ” below for a description of the general requirements for the approval of and recordation of final subdivision maps with respect to MDR 6 and MDR 7); and (3) “Escrow Fund Release Cut-Off Date” means June 1, 2024.

All money in the Escrow Fund shall be applied, set aside and deposited or transferred by the Trustee solely as follows:
(a) Unless and until the Trustee receives an Escr ow Fund Release Certificate from the City as provided in the Indenture and described in paragraphs (b ) or (c) below, the Trustee shall transfer the following amounts from the Escrow Fund to the Bond Redemption Fund on the following dates solely for the purpose of paying the interest due on the Escrow Bonds on such dates (including interest due on the Escrow Bonds upon the mandatory redemption of the Escrow Bonds on the Escrow Bonds Mandatory Redemption Date, if such mandatory redemption is required by the Indentur e as described under “THE BONDS — Redemption — Mandatory Redemption of Escrow Bonds from Escrow Fund” above):

* Preliminary, subject to change.

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Interest Payment Date Amount
September 1, 2022 $
March 1, 2023
September 1, 2023
March 1, 2024
September 1, 2024

(b) If the Trustee receives an Escrow Fund Release Certificate from the City on or before June 1, 2023, then the Trustee shall set aside and deposit or transfer the then-remaining amount on deposit in the Escrow Fund as follows:

First, the Trustee shall transfer to and deposit in the Bond Redemption Fund an amount equal to the remaining interest to become due and payable on the Escrow Bonds through and including September 1, 2023, which amount shall be certified by the City in the Escrow Fund Release Certificate and which amount shall be used solely for the purpose of paying the remaining interest to become due and payable on the Escrow Bonds through and including September 1, 2023;
Second, the Trustee shall transfer to and deposit in the Bond Reserve Fund the amount necessary to cause the amount on deposit in the Bond Reserve Fund to be equal to the Required Bond Reserve as of such date, which amount and the amount of the Required Bond Reserve as of such date shall each be certified by the City in the Escrow Fund Release Certificate delivered to the Trustee; and Third, the Trustee shall transfer any remaining amount in the Escrow Fund to the City for deposit in the Acquisition and Construction Fund and/or as otherwise directed by the City in the Escrow Fund Release Certificate in the manner provided by the Act for payment of costs of the acquisition and construction of the Facilities (or for making reimbursements to the City for such costs theretofore paid by it), including payment of costs incidental to or connected with such acquis ition and construction; or for the repayment of funds advanced to or for the District.
(c) If the Trustee receives an Escrow Fund Releas e Certificate from the City after June 1, 2023, but on or before the Escrow Fund Release Cut-Off Date, th en the Trustee shall set aside and deposit or transfer the then-remaining amount on deposit in the Escrow Fund as follows:

First, the Trustee shall transfer to and deposit in the Bond Redemption Fund an amount equal to the remaining interest to become due and payable on the Escrow Bonds through and including September 1, 2024, which amount shall be certified by the City in the Escrow Fund Release Certificate and which amount shall be used solely for the purpose of paying the remaining interest to become due and payable on the Escrow Bonds through and including September 1, 2024;
Second, the Trustee shall transfer to and deposit in the Bond Reserve Fund the amount necessary to cause the amount on deposit in the Bond Reserve Fund to be equal to the Required Bond Reserve as of such date, which amount and the amount of the Required Bond Reserve as of such date shall each be certified by the City in the Escrow Fund Release Certificate delivered to the Trustee; and Third, the Trustee shall transfer any remaining amount in the Escrow Fund to the City for deposit in the Acquisition and Construction Fund and/or as otherwise directed by the City in the Escrow Fund Release Certificate in the manner provided by the Act for payment of costs of the acquisition and construction of the Facilities (or for making reimbursements to the City for such costs theretofore paid by it), including payment of costs incidental to or connected with such acquis ition and construction; or for the repayment of funds advanced to or for the District.

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(d) If the Trustee does not receive an Escrow Fund Release Certificate from the City on or before the Escrow Fund Release Cut-Off Date, then the Truste e shall apply or transfer the then-remaining amount on deposit in the Escrow Fund as follows:

First, the Trustee shall apply the amou nt remaining in the Escrow Fund to the mandatory redemption of the Escrow Bonds in full on the Escrow Bonds Mand atory Redemption Date (September 1, 2024) pursuant to the Indenture as described under “THE BONDS — Redemption — Mandatory Redemption of Escrow Bonds from Escrow Fund” above; and
Second, the Trustee shall transfer any amount remaining in the Escrow Fund after the mandatory redemption of the Escrow Bonds in full to the City for deposit in the Acquisition and Construction Fund.

Notwithstanding anything to the contrary set forth in the Master Indenture, all interest received on any money deposited or invested in the Escrow Fund shall (s ubject to the requirements of the Master Indenture) be deposited in the Escrow Fund and applied, together with the other amounts on deposit in the Escrow Fund, as out in the Indenture and described above. After applying, setting aside, and depositing or transferring all amounts held in the Escrow Fund as described above, the Trustee shall close the Escrow Fund.

Teeter Plan
In June 1993, the Board of Supervisors of the Coun ty approved the implementation of the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”), as provided for in Section 4701 et seq. of the California Revenue and Taxation Code. Under the Teeter Plan, the County apportions secured property taxes on an accrua l basis (irrespective of actual collections) to local political subdivisions for which the County acts as the tax-levying or tax-collecting agency.

Under the Teeter Plan, the County distributes tax collections on a cash basis to taxing entities during the fiscal year and at year-end distributes 100% of any taxes delinquent as of June 30th to the taxing entities and those special assessment districts and community faci lities districts (and individual parcels within each district) that the County determines are eligible to participate in the Teeter Plan. The County may make eligibility determinations on an annual basis and may exclude a district or an individual parcel that had previously been included in the plan. Improvement Area No. 2 is currently included in the County’s Teeter Plan. The County has the discretion to determine which delinquent special taxes will be paid through the Teeter Plan on a case-by-case basis. See “SPECIAL RISK FACTORS — Teeter Plan Termination.” IMPROVEMENT AREA NO. 2
General Description
The District was formed in 2019 by the City Council under the Act to provide for the financing of public improvements to meet the needs of new development. Subsequent to the formation of the District, the City undertook change proceedings with respect to the District and the improvement areas therein, including Improvement Area No. 2, as described under “S OURCES OF PAYMENT FOR THE BONDS — Special Tax — Authorization and Pledge .” Pursuant to such formation and change proceedings, eligible electors within Improvement Area No. 2 authorized the City to incur bonded indebtedness with respect to Improvement Area No. 2 to finance certain public facilities to meet the needs of new development within Improvement Area No. 2, approved the Amended Rate and Method for Improvement Area No. 2 and authorized the levy of the Special Tax.

The property in Improvement Area No. 2 is part of an approximately 782-acre new master-planned community being marketed as “Delta Shores.” Delta S hores is located in the southern portion of the City, approximately 10 miles from downtown Sacramento. Delta Shores is bordered to the north by the developed Meadowview community, to the south by an open space “buffer zone” between the Sacramento Regional

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County Sanitation District’s treatment plant, to the west by the Sacramento River, and to the east by Morrison Creek and existing communities. In 2016, a new freeway interchange and extension of Cosumnes River Boulevard (a major thoroughfare bisecting the Delta Shores site) was completed, providing direct access to the site from the Interstate 5 freeway.

Improvement Area No. 2 consists of approximately 14 6 gross acres and is bordered to the west by the existing retail development, to the north by Cosumnes River Boulevard and to the south and west by Delta Shores Circle. The development within Improvement Area No. 2 is planned for 421 market-rate for-sale homes, approximately 1,027 high-dens ity residential units which are curre ntly anticipated to be for-rent apartment units, however, such units may also be for-sale units based on current zoning. In addition, there are approximately 5.5 acres zoned for a mixed-use developm ent with approximately 125 residential units, which the Developer currently anti cipates will be for-rent units under a “build-for-rent ” model. Build-for-rent developments generally have products more typical of medium/lower density single-family developments (e.g. no units above or below other units) but which are intended to be for-rent and not for-sale. See “PROPERTY OWNERSHIP AND THE DEVELOPMENT.”
Improvement Area No. 2 is also planned to include two parks totaling approximately 32 acres, an elementary school to be owned and operated by the Sacramento City Unified School District and a wet detention basin (which is complete).

As of April 1, 2022, the Developer has transferred one Village (MDR 5) to the Joint Venture Entity formed with an affiliated entity of Signature Homes to be developed with 87 for-sale single-family detached homes. In addition, as of such date, the Developer ha s entered into agreements with Signature Homes for the purchase of the balance of the MDR Villages (MDR 6, MDR 7 and MDR 8) which are planned for a total of 334 single-family detached homes. The Developer currently expects Signature Homes to acquire the property for the first phase of development in MDR 8, which is planned for 76 of the 136 units in MDR 8, by the end of May 2022.

The Developer has not finalized development plans with respect to the property in Improvement Area No. 2 planned for high-density residential land uses (i.e., the HDR Villages) and the mixed-use Village. The Developer may convey all or a portion of such property to third-party builders and/or enter into joint ventures to develop all or a portion of such property.

See “DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2” for a description of the development status and remaining required infrastructure necessary to complete development in Improvement Area No. 2. A detailed description of the status of the construction and ownership as of the date of the Appraisal Report is included in APPENDIX B — “APPRAISAL REPORT.”

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Water and sewer service to the property is provided by the City. Electricity is supplied by Sacramento Municipal Utility District and natural gas is supplied by Pacific Gas & Electric. Delta Shores is located within the Sacramento City Unified School District.

Description of Authorized Facilities
Acquisition Agreement . The City and the Developer are parties to an Acquisition and Shortfall Agreement, dated as of September 1, 2019 (the “Acquisition Agreement”), which provides, among other things, the means by which the Developer constructed the facilities to be acquired with the proceeds of the Bonds pursuant to certain requirements contained in the Acquisition Agreement, and which provides guidelines pursuant to which the City may acquire completed segments of the facilities with the proceeds of the Bonds. The Acquisition Agreement pertains to the acquisition of the public infrastructure constructed to serve development within the District.

Facilities. A portion of the proceeds from the sale of the Bonds will be deposited in the Acquisition and Construction Fund under the Indenture and used to pay for the costs of facilities authorized to be financed for Improvement Area No. 2, in accordance with the term s of the Indenture and the Acquisition Agreement.

As more fully detailed in the Acquisition Agreement, such facilities consist of backbone infrastructure, including without limitation water and storm drain improvements, roadways an d traffic improvements, landscaping and park improvements, in addition to other improvements authorized under the Acquisition Agreement. If the Escrow Fund Release Conditions are satisfied prior to the Escrow Fund Release Cut-Off Date, which would allow for the amounts in the Escrow Fund to be transferred to the Acquisition and Construction Fund, approximately $7.6 million of the costs of such facilities are expected to be reimbursed from Bond proceeds. If the Escrow Fund Release Condit ions are not satisfied prior to the Escrow Fund Release Cut-Off Date, the amount of proceeds of th e Bonds available to reimburse for the costs of the Facilities will be limited to the initial deposit in Acquisition and Construction Fund at the time the Bonds are issued. See “ESTIMATED SOURCES AND USES OF FUNDS.”
Flood Hazard
Development in the District is subject to federal and State requirements regarding the restoration of protection against flood hazards (e.g., levees). The Central Valley Flood Protection Act of 2008 requires that cities and counties within the California Central Valley (including the City) make certain findings with respect to flood protection before approving development agreements, tentative maps, discretionary permits, and ministerial permits for new residences. One of those fi ndings is that the local flood-management agency has made “adequate progress” on the construction of a flood-protection system that will provide an Urban Level of Flood Protection (“ULOP”) by 2025. An ULOP is the level of flood protection needed to withstand a flood event that has a 0.5% chance of occurring in a year (i.e., a 200-year flood).

The Sacramento Area Flood Control Agency (“SAFCA” ) is the local flood-management agency that serves the area within the City. In 2016, SAFCA prep ared its ULOP plan, which the City accepted in June 2016. When making the adequate-progress finding, the City has relied on annual progress reports prepared by SAFCA, which demonstrate that the project involving the strengthening of 24 miles of levees surrounding the portion of the City known as the “Natomas Basin” (t he “Levee Project”) is meeting specified development milestones toward providing an ULOP by 2025. If construction of the Levee Project is delayed so that the City is unable to make a finding of adequate progress toward an ULOP, then the City might not be able to approve either or both of the following: a discretionary permit or other discretionary entitlement for construction of a new building or construction that would result in an increase in allowed occupancy for an existing building; or a ministerial permit for construction of a new residence. The City currently does not expect any delays with respect to the Levee Project that would cause this to occur.

The Corps began construction of the Levee Project in 2017 and the Levee Project is currently estimated to be complete in 2025. To date, 18 miles have been completed and construction of the remaining

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24 miles began in 2019. The Corps will need to acquire additional land and obtain additional approvals and permits in order to complete the Levee Project.

Under FEMA’s current mapping, the property in the District is currently in a 500-year flood zone.

However, as described above, all of the City is subject to the ULOP requirement. See “SPECIAL RISK FACTORS — Natural Disasters.”
Proposed Adjacent Unhoused Services Facility
In early 2022, the City acquired an approximately 102-acre site loca ted approximately a quarter mile to the northeast of Improvement Area No. 2 for the curre ntly proposed purpose of providing services to the unhoused population within the City. In the near-term, it is currently contemplated that the site may be used for “safe parking” which allows individuals who reside in their vehicles to park on the site. If ultimately developed with facilities to serve the unhoused population, the site may be used for services with the intent to assist such individuals toward finding a permanent housing solution. However, all or a portion of the site may instead be used for another civic amenity in the event it is not used to serve the unhoused population. Given its close proximity to Improvement Area No. 2, the use of th e site for unhoused services could negatively impact the absorption rate and/or the property value in Improvement Area No. 2. The City has not approved any definitive plans for the use of such site and the development of the site for unhoused services may not occur for several years, if at all.

Direct and Overlapping Indebtedness
The ability of an owner of land within Improvement Area No. 2 to pay the Special Tax could be affected by the existence of other taxes and assessments imposed upon the property. These other taxes and assessments consist of the direct and overlapping debt in Improvement Area No. 2 and are set forth in Table 1 below (the “Debt Report”). Table 1 does not include en tities that only levy or asse ss fees, charges or special taxes for purposes other than supporting debt. The Debt Report includes the principal amount of the Bonds in addition to the Improvement Area No. 2’s allocable share of any outstanding community facilities district and assessment district bonds. The Debt Report has been derived from data assembled and reported to the City by California Municipal Statistics, Inc. an d NBS as of March 4, 2022. Neither the City nor the Underwriter have independently verified the information in the Debt Report and do not guarantee its completeness or accuracy.

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TABLE 1

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2

OVERLAPPING DEBT SUMMARY
Overlapping District
Percent
Applicable
Total
Outstanding
Bonded Debt
Los Rios Community College District General Obligation Bonds 0.008% $ 41,126 Sacramento City Unified School District General Obligation Bonds 0.045 219,400 Sacramento Area Flood Control District Consolidated Capital Assessment District No. 2 Bonds 0.009 27,893
City of Sacramento Delta Shores CFD No. 2019-01 Improvement Area No. 2 Special Tax Bonds(1) 100.000 10,285,000 *
Total $10,573,419

Total Appraised Value(2): $ 35,000,000 *
Appraised Value-to-Lien Ratio 3.31:1*

* Preliminary, subject to change.
(1) Includes the principal amount of the Escrow Bonds. See “THE BONDS — Redemption” and “SOURCES OF PAYMENT FOR THE BONDS —Escrow Fund” herein.
(2) Based on the appraised value as set forth in the Appraisal Report.

Source: California Municipal Statistics, Inc.; Underwriter; Appraiser.

Estimated Fiscal Year 2022-23 Tax Burden
The following table sets forth the estimated total tax obligation for residential units planned within the MDR Villages in Improvement Area No. 2 based on the Fisc al Year 2022-23 Special Tax levy at the Assigned Special Tax rates for Developed Property and the Fiscal Year 2021-22 tax rates for overlapping taxing entities.

The amounts charged and the effective tax rates vary for individual parcels within Improvement Area No. 2 and may increase or decrease in future years. S ee “SPECIAL RISK FACTORS — Parity Taxes and Special Assessments.”

31 4846-3625-7001v7/022536-0020
TABLE 2

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2

ESTIMATED TAX OBLIGATION

FOR SAMPLE UNITS IN MDR VILLAGES
Village MDR-5 MDR-6 MDR-7 MDR-8
Average Building Square Footage 2,700 1,779 1,883 2,247 Minimum Lot Acreage 0.09 0.04 0.04 0.07

Average Net Base Price
(1) $ 665,805.00 $ 524,000.00 $ 564,219.00 $ 612,463.00 Homeowner's Exemption (7,000.00) (7,000.00)) (7,000.00) (7,000.00) Net Expected Assessed Value $ 658,805.00 $ 517,000.00 $ 557,219.00 $ 605,463.00

Ad Valorem Tax Rate
General Purpose Ad Valorem Tax 1.0000% $ 6,588.05 $ 5,170.00 $ 5,572.19 $ 6,054.63 Los Rios Community College District GOB 0.0918 604.78 474.61 511.53 555.82 Sacramento City Unified School District GOB 0.0249 164.04 128.73 138.75 150.76 Total Ad Valorem Taxes 1.1167% $ 7,356.88 $ 5,773.34 $ 6,222.46 $ 6,761.21

Special/Direct Assessments and Taxes

SMD 2014-04 – DELTA SHORES CFD #1 $ 383.16 $ 383.16 $ 383.16 $ 383.16 SAFCA O&M ASSESSMENT #1 13.37 5.94 8.91 10.40
MAINTENANCE AREA 9 18. 92 18.92 18. 92 18.92
1-Story: SAFCA CONSOLIDATED CAP ASMT #2 247.01 162.04 172.16 205.01 2-Stories: SAFCA CONSOLIDATED CAP ASMT #2 181.53 118.89 126.50 150.52 SACTO CORE LIBRARY SERV. TAX 14.40 14.40 14.40 14.40
SACRAMENTO ADDL LIBRARY SRV TAX 37.02 37.02 37.02 37.02 CITYWIDE L & L ASSESSMENT DISTRICT 90.42 90.42 90.42 90.42 DELTA SHORES CFD NO. 2019-01 IA2 2
(2) 1,560.60 1,560.60 1560.60 1,560.60
Total Special/Direct Assessments and Taxes - 1-Story $ 2,364.90 $ 2,272.50 $ 2,285.59 $ 2,319.93 Total Special/Direct Assessments and Taxes - 2-Stories $ 2,299.42 $ 2,229.35 $ 2,239.93 $ 2,265.44

Total Estimated Annual Property Taxes - 1-Story $ 9,721.78 $ 8,045.84 $ 8,508. 05 $ 9,081.14 Total Estimated Annual Property Taxes - 2-Stories $ 9,656.30 $ 8,002.69 $ 8,462. 39 $ 9,026.65 Effective Tax Rate - 1-Story 1.4602% 1.5355% 1.5079% 1.4827% Effective Tax Rate - 2-Stories 1.4503% 1.5272% 1.4998% 1.4738%

(1) Based on the recommended pricing set forth in the Market Absorption Report. (2) Reflects the Assigned Special Tax rate for Developed Property for Fiscal Year 2022-23.

Source: Special Tax Consultant; Market Absorption Consultant; the Sacramento County Tax Collector’s Office; and SAFCA.

Market Absorption Study
General. In order to provide an independent assessment of the residential absorption potential within Improvement Area No. 2, the City engaged the Market Absorption Consultant. The Market Absorption Consultant performed a comprehensive analysis of the product mix characteristics as well as the macroeconomic and microeconomic factors that the Mark et Absorption Consultant expects to influence the absorption of the forthcoming products within Improvement Area No. 2. The Market Absorption Report dated April 19, 2022 is attached hereto as Appendix J. In the Market Absorption Re port, the Market Absorption Consultant observes that the immediate area surrounding Delta Shores and the City generally (other than Natomas Basin in the northern portion of the City) has long been constrained with respect to new residential development. Therefore, the Market Absorption Consul tant assessed the market size for the residential products in Improvement Area No. 2 mainly on County-wide and Sacramento-Roseville-Arden Arcade metropolitan statistical area-wide data. Based on the Market Absorption Consultant’s observations of the relevant market demand, the Market Absorption Consultant estimates that the for-sale residential products in Improvement Area No. 2 could achieve an absorption rate of between 3.8 to 4.0 homes per month and that the for-rent residential products in the HDR Villages could ach ieve 15 leases per month. The Market Absorption Consultant estimates that the for-rent residential units anticipated to be developed within the mixed-use Village could achieve approximately eight leases per month.

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As described above, the City purchased a site approximately a quarter mile to the northeast of Improvement Area No. 2 for the currently proposed purpose of providing services to the unhoused population within the City. The Market Absorption Report notes that it is currently uncertain as to the timing of the use of such site for unhoused services, the scope and type of such services and whether vehicular and pedestrian access to the site will be from Cosumnes River Boulevar d (which is also one of th e main arterial roadways from which Improvement Area No. 2 is accessed). The Mark et Absorption Report notes that while a negative impact on the absorption within Improvement Area No. 2 cannot be discounted, there is a possibility that the impact of the use of the site for unhoused services will be negligible in terms of buyer and renter absorption in Improvement Area No. 2. See “— Proposed Adjacent Unhoused Services Facility.” For-Sale Products. In reaching its estimated rate of absorpti on for the for-sale resi dential products in Improvement Area No. 2, the Market Absorption Consultant reviewed the assumed product, pricing, location and masterplan setting of the proposed project and took into account factors such as limited regional supply, the performance of new home comparables, and longer-term new home per project norms in the region.

The Market Absorption Consultant took into account information from the Developer and Signature Homes that the projects in MDR 5 and MDR 8 will open fo r sale in the second quarter of 2023 and that MDR 6 and MDR 7 will open for sale in the second quarter of 2024. Based on the foregoing, the Market Absorption Consultant reached the following estimates for the abso rption for the for-sale pro ducts in Improvement Area No. 2.

Village
Total No.
of Units Units Sold Per Year
2023 2024 2025 2026
MDR 5 87 30 48 9 --
MDR 6 102 -- 29 46 27
MDR 7 96 -- 29 46 21
MDR 8 136
30 48 48 10
Totals 421 60 154 149 58

For-Rent Products . The Developer has not finalized any development plans with respect to the products in the HDR Villages. However, based on the current expectation that the HDR Villages will include 1,027 apartment units, the Market Absorption Report presents two estimated absorption scenarios for the HDR Villages.

In the first scenario, the Market Absorption Consultant assumes that the first HDR Village will be sold to a builder in the second quarter of 2023 and that there would be a 15-month construction period prior to commencement of leasing. The Market Absorption Consultant estimates that 15 leases per month is achievable for each HDR Village. The Market Absorption Consultant assumes that each of the subsequent HDR Villages would be sold toward the end of the lease-up period of the prior HDR Village that is developed and that each construction period and lease-up schedule will be in line with the sequence described above for the first HDR project. Based on the foregoing, th e Market Absorption Consultant estimat es that all of the for-rent products will reach stabilized occupancy in approximately the second quarter of 2033.

In the second scenario, the Market Absorption Consultant assumes that each subsequent HDR Village to be developed is sold to a builder earlier in the lease-up period of the prior HDR Village that is developed.

Under this scenario, the Ma rket Absorption Consultant estimates that the 1,027 fo r-rent products in the HDR Villages will reach stabilized occupancy in approximately 2029. The Market Absorption Report states that this second absorption schedule is achievable but is subject to disruption in the event of a market downturn.

As noted above, the mixed-use Vill age is currently expected to be developed under a build-for-rent model. Build-for-rent units are generally units which have products more typical of medium/lower density single-family developments (e.g. no units above or below other units) but which are intended to be for-rent and

33 4846-3625-7001v7/022536-0020
not for-sale. Based on estimates by the Developer in both scenario 1 and 2, the Market Absorption Consultant assumes that the mixed-use Village will be sold to a builder in the fourth quarter 2024 and commence leasing in the first quarter of 2026 (i.e. a 15-month constructi on period). The Market Abso rption Consultant estimates that eight leases per month is achievable for the mixed- use Village, with stabilized occupancy reached in the first quarter of 2027.

As described herein, the Bonds have been sized assuming no Special Tax revenues from the HDR Villages or the mixed-used Village are needed for payment of the Bonds.

The Market Absorption Consultant identifies potential risks th at could affect the estimated absorption, including economic downturn and the impact of the COVID-19 pandemic. See “SPECIAL RISK FACTORS.” A complete copy of the Mark et Absorption Study is attached hereto as APPENDIX J.

Property Values
Assessed Value . The estimated assessed valu e of the property within Improvement Area No. 2, as shown on the County’s assessment roll for Fiscal Year 2021-22, is approximately $19,032,848 (all of which was land value). The assessed valu e of the property within Improvement Area No. 2 represents the secure assessed valuation established by the County Assessor. Assesse d values do not necessarily represent market values. Article XIIIA of the Califor nia Constitution (P roposition 13) defines “full cash value” to mean “the County assessor’s valuation of real property as shown on the 1975/76 roll under ‘full cash value,’ or, thereafter, the appraised value of real property when purchased or newly constructed or when a change in ownership has occurred after the 1975 assessment,” subject to exemptions in certain circumstances of property transfer or reconstruction. The “fu ll cash value” is subject to annual adjustment to reflect increases, not to exceed 2% for any year, or decreases in the consumer price index or comparable local data, or to reflect reductions in property value caused by damage, destructio n or other factors. Because of the general limitation to 2% per year in increases in full cash value of properties which remain in the same ownership, the County tax roll does not reflect values uniformly proportional to actual market values. There can be no assurance that the assessed valuations of the properties within Improvement Area No. 2 accurately reflect their respective market values, and the future fair market values of those properties may be lower than their current assessed valuations.

Appraisal. As described above, due to Article XIIIA of the Ca lifornia Constitution, a property’s assessed value is not necessarily indicative of its market value. In order to provide information with respect to the value of the property within Im provement Area No. 2, the City engaged BBG, Inc., the Appraiser, to prepare the Appraisal Report. The Appraiser has an “MAI” designation from the Appraisal Institute and has prepared numerous appraisals for the sale of land-secured municipal bonds. The Appraiser was selected by the City and has no material relationships with the City or the owners of the land within Improvement Area No. 2 other than the relationship represented by the engagement to prepare the Appraisal Report. The City instructed the Appraiser to prepare its analysis and report in conformity with City-approved guidelines and the Appraisal Standards for Land Secured Financings published in 1994 and revised in 2004 by the California Debt and Investment Advisory Commission. A copy of the Appraisal Report is included as APPENDIX B — “APPRAISAL REPORT.”
The purpose of the Appraisal Report was to estimate the market value by ownership of the properties in Improvement Area No. 2 subject to the lien of the Special Tax. As of the Date of Value of the Appraisal Report, the Developer owned all of the property in Improvement Area No. 2. Since the Date of Value, the property in MDR 5 has been transferred to the Joint Venture Entity formed by the Developer and an affiliated entity of Signature Homes. Subject to the contingencies, assumptions, and limiting conditions set forth in the Appraisal Report, the Appraiser concluded that, as of the Date of Value, the estimated market value (on a bulk value basis) of the property encumbered by the Special Tax within Improvement Area No. 2 was not less than

34 4846-3625-7001v7/022536-0020
$35,000,000. The estimated market value assume d that the Bonds has ju st been sold. See “ DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2.”
In estimating the value for the Taxable Property in Improvement Area No. 2, the Appraiser used a sales comparison approach and the subdivision development method. The sales comparison approach considers area bulk lot sales, with adjustments applie d accordingly relative to the appraised property. The subdivision development method is a discounted cash flow analysis that reflects anticipated home prices and costs over an absorption period, leading to an estimate of residual land/lot value. The two approaches to value are then reconciled to arrive at finished lot prices. The Appraiser then applied a discounted cash flow analysis which took into account the potential revenue from the sale of lots, the expected apportion period, development costs for the backbone infrastructure costs, holding and sales costs as well as profit expectations of a buyer for the property.

In applying the subdivision development approach to value the MDR Villages, the Appraiser utilized new retail home pricing data for competitive sub-markets in the Sacramento region. This data was obtained from third-parties (The Gregory Group) and the John Burns Company as well as from their own independent research, up thru the first quarter of 2022. The third-pa rty data as well as their own research showed that average new home prices in the applicable competitive sub-markets during the first quarter of 2022 continued to increase from the third and fourth quarters of 2021. Further, in valuing the HDR Villages, the Appraiser utilized available comparable land sales through March 2022, which also showed increases in land sales prices in multi-family sites. Based on such recent informat ion as well as from recent conversations with brokers and sellers in the applicable market, and adjusting for increases in construction costs, the Appraiser arrived at its overall conclusion of value for the Taxable Property in the District as set forth in the Appraisal Report.

As described above, the City has purchased a site approximately a quarter mile to the northeast of Improvement Area No. 2 for the currently proposed purpose of providing services to the unhoused population within the City, with a proposal to use a portion of the site as safe parking in the near-term. The Appraisal Report notes that, under a best case scenario, the impact of this proposed use to the property in Improvement No. 2 would be neutral. The Appraisal Report provides that a more likely impact is that certain future buyers and renters could be deterred if or when there is a high degree of development certainty or upon actual development of the project as envisioned. The Apprai sal Report states that th e potential impacts of such proposed use of the adjacent property was considered in reaching the conclusion of value. See “— Proposed Adjacent Unhoused Services Facility.”
Reference is made to APPENDIX B for a complete list of the assumptions and limiting conditions and a full discussion of the appraisal methodology and the basis for the Appraiser’s opinions. In the event that any of the contingencies, assumptions and limiting conditions are not actually realized, the value of the property within Improvement Area No. 2 may be less than the amount reported in the Appraisal Report. In any case, there can be no assurance that any portion of the property within Improvement Area No. 2 would actually sell for the amount indicated by the Appraisal Report.

The Appraisal Report indicates the Appraiser’s opinion as to the market value of the property in Improvement Area No. 2 as of the Date of Value and under the conditions specified in the Appraisal Report.

The Appraiser’s opinion reflects conditions prevailing in th e applicable market as of the Date of Value. The Appraiser’s opinion does not predict the future value of the subject property, and there can be no assurance that market conditions will not change adversely in the future.

It is a condition precedent to the issuance of the Bonds that the Appraiser deliver to the City a certification to the effect that nothin g has come to the attention of the Appraiser subsequent to the Date of Value of the Appraisal Report that would cause the Appr aiser to believe that the value of the property in Improvement Area No. 2 is less than the market value of Improvement Area No. 2 reported in the Appraisal Report. The Appraiser notes, however, that acts and events may have occurred since the Date of Value of the

35 4846-3625-7001v7/022536-0020
Appraisal Report which could result in both positive and negative effects on market value within Improvement Area No. 2.

Appraisal Review Report. The City engaged Smith & Associates, independent appraisers, to conduct a review of the Appraisal Report. Smith & Associates concluded in its report dated ___________, 2022 that the Appraisal Report: (i) was conducted in accordance with the Uniform Standards of Professional Appraisal Practice and CDIAC’s Appraisal Standa rds for Land Secured Financing; (ii) the data and analysis in the Appraisal Report was adequate and relevant to produce a credible appraisal; (iii) the appraisal methods and techniques used to produce the Appraisal Report were appropriate and the conclusions in the Appraisal Report are supported and reasonable; (iv) the extraordinary as sumptions and hypothetical conditions in the Appraisal Report are reasonable; and (v) the level of detail contained in the Appraisal Report is commensurate with the complexity of the valuation.

Value-To-Lien Ratios
Based on the principal amount of the Bonds, the estimated appraised value-to-lien ratio within Improvement Area No. 2, including all Taxable Property as of the Date of Value is approximately 3.31-to-1 *.

This ratio does not include overlapping debt. See “— Direct and Overlapping Indebtedness” above.

Table 3 below shows the estimated principal amount of the Bonds and overlapping debt allocable to the Taxable Property in Improvement Area No. 2 and the estimated value-to-lien ratios for various categories of parcels based upon the appraised value as set forth in the Appraisal Report and property ownership and development status as of the Date of Value. As of the Date of Value, the Developer and the Joint Venture Entity were the only property owners in Improvement Area No. 2.

Interest on the Non-Escrow Bonds have been ca pitalized through December 1, 2022 and the Non- Escrow Bonds have been sized based on the Net Special Tax revenues to be generated from the Taxable Property in MDR 5 and MDR 8 at buildout. Accordingly, in Table 3 below, the principal amount of the Escrow Bonds have been allocated to the Taxable Property in MDR 5 and MDR 8 based on the proportion of the Fiscal Year 2022-23 Maximum Special Tax rates on such property.

Interest on the Escrow Bonds have been capitalized through September 1, 2024 and the Escrow Bonds have been sized based on Net Special Tax revenues to be generated from the Taxable Property in MDR 6 and MDR 7 at buildout. Accordingly, notwithstanding the f act that the City does not expect to levy any Special Tax on Undeveloped Property in Fiscal Year 2022-23, a ll of the Escrow Bonds are shown as allocated to Taxable Property other than MDR 5 and MDR 8 in Table 3 (i.e. the Undeveloped Property).

In the City Reports provided pursuant to the City Continuing Disclosure Certificate, Table 3 will not be updated based on appraised value, but similar information will be provided based on the assessed value for the current Fiscal Year.

[Remainder of Page Intentionally Left Blank]

* Preliminary, subject to change.

36 4846-3625-7001v7/022536-0020
TABLE 3

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2

VALUE-TO-LIEN RATIOS BASED ON OWNERSHIP
Special Tax Category /
Property Owner(1)
Planned
Residential
Units(2)
Appraised
Value(3)
Estimated
Fiscal Year
2022-23
Special Tax
Levy(4)
Percentage
of
Estimated
Fiscal
Year 2022-
23 Special
Tax Levy
Fiscal Year
2022-23
Maximum
Special
Tax(5)
Percentage
of Fiscal
Year
2022-23
Maximum
Special
Tax
Allocation
of City of
Sacramento
CFD
No. 2019-01
Non-Escrow
Bonds(6)*
Allocation
of City of
Sacramento
CFD
No. 2019-01
Escrow
Bonds(7)*
Allocation
of
Overlapping
Tax and
Assessment
Debt(8)
Total Debt
Lien*
Value-
to-Lien
Ratio*
Final Subdivision Property
Joint Venture Entity(9) 87 $ 9,300,000 $ 130,433 53.4% $ 135,772 14.4% $ 2,218,974 $ 0 $ 76,637 $ 2,295,611 4.05 Developer(10) 76 3,736,749 113,942 46.6 118,606 12.5 1,938,414 0 30,793 1,969,207 1.90 Subtotal Final Subdivision Property 163 $ 13,036,749 $ 244,375 100.0% $ 254,378 26.9% $ 4,157,388 $ 0 $ 107,430 $ 4,264,818 3.06

Tentative Map Property
Developer(11) 60 $ 2,950,065 $ 0 0.0% $ 74,196 7.8% $ 1,212,612 $ 0 $ 24,310 $ 1,236,922 2.39 Subtotal Tentative Map Property 60 $ 2, 950,065 $ 0 0.0% $ 74,196 7.8% $ 1,212,612 $ 0 $ 24,310 $ 1,236,922 2.39

Undeveloped Property
Developer(12) 1,350 $ 19,013,186 $ 0 0.0% $ 617,513 65.3% $ 0 $ 4,915,000 $ 156,679 $ 5,071,679 3.75 Subtotal Undeveloped Property 1,350 $ 19, 013,186 $ 0 0.0% $ 617,513 65.3% $ 0 $ 4,915,000 $ 156,679 $ 5,071,679 3.75

Totals 1,573 $ 35,000,000 $ 244,375 100.0% $ 946,087 100.0% $ 5,370,000 $ 4,915,000 $ 288,419 $ 10,573,419 3.31

* Preliminary, subject to change.
(1) Reflects ownership status as of the Date of Value.
(2) Based on estimates set forth in the Market Absorption Report and the Appraisal Report. (3) Based on the Appraisal Report, as of the Date of Value. (4) Reflects the estimated Fiscal Year 2022-23 Special Tax levy on Final Subdivision Prope rty (MDR 5 and the first phase of develo pment in MDR 8) at the Assigned Special Tax rate for Final Subdivision Property.
(5) Reflects the Maximum Special Tax rate on Final Subdivision Property, Tentative Map Property and Undeveloped Property. (6) Principal amount of Non-Escrow Bonds on Final Subdivision Prop erty and Tentative Map Property is allocated based on the proportion of the Fiscal Year 2022-23 Maximum Special Tax rates on such property. Interest on the Non-Escrow Bonds has been capitalized through December 1, 2022. (7) Interest on the Escrow Bonds has been cap italized through September 1, 2024 and the Escrow Bonds have been sized based on Net Special Tax revenues to be generated from MDR 6 and MDR 7.
(8) Reflects overlapping general obligation an d assessment debt. Allocated based on the share of the appraised value of the Taxab le Property in Improvement Area No. 2, as set forth in the Appraisal Report. See Table 1 above.

(Footnotes continue onto following page)

37 4846-3625-7001v7/022536-0020
(Footnotes continued from following page)

(9) Reflects all Taxable Property in MDR 5. Th e Joint Venture Entity was formed by the Developer and an affiliate of Signature Homes. (10) Reflects the property within the first phase of development in MDR 8, which is planned to include 76 for-sale single-family ho mes. The Developer currently expects the Signature Homes to acquire the property for the first phase of development in MDR 8 by the end of May 2022. (11) Reflects all the property relating to the s econd phase of development in MDR 8. (12) Includes all Taxable Property in Improvement Area No. 2, other than MDR 5 and MDR 8.

Source: Special Tax Consultant; Market Absorption Consultant; Appraiser; the Underwriter and California Municipal Statistics, Inc.

38 4846-3625-7001v7/022536-0020
Delinquency History
Fiscal Year 2022-23 will be the first year of the Special Tax levy. As a result, no delinquency history with respect to the Special Tax exists.

Improvement Area No. 2 is currently included in the Co unty’s Teeter Plan and, as a result, the City expects to receive 100% of the Special Tax levy with respect to Improvement Area No. 2, without regard to the actual amount of collections. See “SECURITY FO R THE BONDS — Teeter Plan” and “SPECIAL RISK FACTORS—Teeter Plan Termination.”
Debt Service Coverage
The Non-Escrow Bonds have been sized based on the Net Special Tax Revenues from property in MDR 5 and MDR 8 at buildout, assuming there will be a total of 223 medium density residential units within such Villages at buildout. Interest on the Non-Escrow Bonds will be paid from capitalized interest through December 1, 2022.

The Escrow Bonds have been sized based on the Net Special Tax Revenues from property in MDR 6 and MDR 7 at buildout, assuming there will be a total of 198 medium density residential units within such Villages at buildout. Interest on the Escrow Bonds through no earlier than September 1, 2023 will be paid from amounts transferred from the Escrow Fund. In th e event that the Escrow Fund Release Conditions are not satisfied on or prior to the Escrow Fund Release Cut-Off Date of June 1, 2024, then amounts in the Escrow Fund will be applied to pay interest due on the Escrow Bonds through and including September 1, 2024 and to redeem the Escrow Bonds on September 1, 2024.

The Bonds have been sized assuming no Special Tax revenues from the HDR Villages and the mixed- use Village are needed for payment of the Bonds, however, pursuant to the Amended Rate and Method, the City can levy the Special Tax on the HDR Villages and the mixed-use Village if necessary to meet the Special Tax Requirement. The current expectation is that the property in MDR 5 through MDR 8 will be developed ahead of the HDR Villages and the mixed-use Village.

Table 4 below shows the estimated Special Tax revenues to be derived from each Village at full buildout. Table 5 below shows the estimated net debt service coverage on the Non-Escrow Bonds, the Escrow Bonds, and the Bonds in total, based on the assumptions described above.

[Remainder of Page Intentionally Left Blank]

39 4846-3625-7001v7/022536-0020
TABLE 4

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2

ESTIMATED SPECIAL TAX BY VILLAGE AT BUILDOUT
(FISCAL YEAR 2022-23 ASSIGNED SPECIAL TAX RATES)
Land Use
Class Village
Planned
Residential Units(1)
Assigned Special
Tax per Unit
Estimated Special
Tax Revenue(2)
2 MDR-5 87 $1,560 $135,772.20
2 MDR-6 102 1,560 159,181.20
2 MDR-7 96 1,560 149,817.60
2 MDR-8 136 1,560 212,241.60
3 HDR-6 232 255 59,160.00
3 HDR-7 187 255 47,685.00
3 HDR-8 159 255 40,545.00
3 HDR-9 217 255 55,335.00
3 HDR-10 232 255 59,160.00
4 MU-1 125
255 31,875.00
Totals 1,573 $950,772.60

(1) Based on current development plans provided by the Developer. (2) On each July 1, commencing July 1, 2022, the Expected Revenue shall be increased by an amount equal to two percent (2%) of the amount in effect for the previous Fiscal Year.

Source: Special Tax Consultant; Market Absorption Consultant.

[Remainder of Page Intentionally Left Blank]

40 4846-3625-7001v7/022536-0020
TABLE 5

CITY OF SACRAMENTO
DELTA SHORES COMMUNITY FACILITIES DISTRICT 2019-01 (IMPROVEMENTS) IMPROVEMENT AREA NO. 2
VILLAGES MDR-5, MDR-6, MDR-7, AND MDR-8
ESTIMATED NET DEBT SERVICE COVERAGE*
Non-Escrow Bonds Net Debt Service Coverage Escrow Bonds Net Debt Service Coverage Total Net Debt Service Coverage Fiscal Year
Maximum
Special
Tax(1)
Priority
Administrative
Expenses(2)
Net
Maximum
Special
Tax(2)
Net Debt
Service(3) Coverage
Fiscal
Year
Maximum
Special
Tax(4)
Net Debt
Service(5) Coverage
Fiscal
Year
Maximum
Special Tax Expenses (2)
Net
Maximum
Special Tax
Net Debt
Service Coverage
2021-22 $341,190 $20,000 $321,190 - n/a 2021-22 $302,940 - n/a 2021-22 $644,130 $20,000 $624,130 - n/a 2022-23 348,014 20,600 327,414 $223,775 1.46 2022-23 308,999 - n/a 2022-23 657,013 20,400 636,613 $223,775 2.84 2023-24 354,974 21,218 333,756 301,450 1.11 2023-24 315,179 - n/a 2023-24 670,153 20,808 649,345 301,450 2.15 2024-25 362,074 21,855 340,219 305,950 1.11 2024-25 321,482 $287,613 1.12 2024-25 683,556 21,224 662,332 593,563 1.12 2025-26 369,315 22,510 346,805 315,200 1.10 2025-26 327,912 297,325 1.10 2025-26 697,227 21,649 675,578 612,525 1.10 2026-27 376,701 23,185 353,516 318,950 1.11 2026-27 334,470 301,463 1.11 2026-27 711,172 22,082 689,090 620,413 1.11 2027-28 384,235 23,881 360,354 327,450 1.10 2027-28 341,160 305,313 1.12 2027-28 725,395 22,523 702,872 632,763 1.11 2028-29 391,920 24,597 367,323 330,450 1.11 2028-29 347,983 313,875 1.11 2028-29 739,903 22,974 716,929 644,325 1.11 2029-30 399,758 25,335 374,423 338,200 1.11 2029-30 354,942 321,863 1.10 2029-30 754,701 23,433 731,268 660,063 1.11 2030-31 407,754 26,095 381,658 345,450 1.10 2030-31 362,041 324,275 1.12 2030-31 769,795 23,902 745,893 669,725 1.11 2031-32 415,909 26,878 389,030 352,200 1.10 2031-32 369,282 331,400 1.11 2031-32 785,191 24,380 760,811 683,600 1.11 2032-33 424,227 27,685 396,542 358,450 1.11 2032-33 376,668 337,950 1.11 2032-33 800,895 24,867 776,027 696,400 1.11 2033-34 432,711 28,515 404,196 363,881 1.11 2033-34 384,201 348,925 1.10 2033-34 816,913 25,365 791,548 712,806 1.11 2034-35 441,366 29,371 411,995 373,775 1.10 2034-35 391,885 354,038 1.11 2034-35 833,251 25,872 807,379 727,813 1.11 2035-36 450,193 30,252 419,941 377,863 1.11 2035-36 399,723 358,575 1.11 2035-36 849,916 26,390 823,526 736,438 1.12 2036-37 459,197 31,159 428,037 386,413 1.11 2036-37 407,717 367,538 1.11 2036-37 866,914 26,917 839,997 753,950 1.11 2037-38 468,381 32,094 436,287 394,156 1.11 2037-38 415,872 375,638 1.11 2037-38 884,252 27,456 856,797 769,794 1.11 2038-39 477,748 33,057 444,691 401,094 1.11 2038-39 424,189 382,875 1.11 2038-39 901,938 28,005 873,933 783,969 1.11 2039-40 487,303 34,049 453,255 407,225 1.11 2039-40 432,673 389,250 1.11 2039-40 919,976 28,565 891,411 796,475 1.12 2040-41 497,049 35,070 461,979 417,550 1.11 2040-41 441,326 399,763 1.10 2040-41 938,376 29,136 909,240 817,313 1.11 2041-42 506,990 36,122 470,868 426,800 1.10 2041-42 450,153 404,125 1.11 2041-42 957,143 29,719 927,424 830,925 1.12 2042-43 517,130 37,206 479,924 434,975 1.10 2042-43 459,156 412,625 1.11 2042-43 976,286 30,313 945,973 847,600 1.12 2043-44 527,473 38,322 489,151 441,775 1.11 2043-44 468,339 424,975 1.10 2043-44 995,812 30,920 964,892 866,750 1.11 2044-45 538,022 39,472 498,551 452,475 1.10 2044-45 477,706 430,888 1.11 2044-45 1,015,728 31,538 984,190 883,363 1.11 2045-46 548,783 40,656 508,127 461,800 1.10 2045-46 487,260 440,650 1.11 2045-46 1,036,043 32,169 1,003,874 902,450 1.11 2046-47 559,758 41,876 517,883 469,750 1.10 2046-47 497,005 448,975 1.11 2046-47 1,056,764 32,812 1,023,951 918,725 1.11 2047-48 570,954 43,132 527,822 476,325 1.11 2047-48 506,945 455,863 1.11 2047-48 1,077,899 33,468 1,044,430 932,188 1.12 2048-49 582,373 44,426 537,947 486,525 1.11 2048-49 517,084 466,313 1.11 2048-49 1,099,457 34,138 1,065,319 952,838 1.12 2049-50 594,020 45,759 548,261 495,075 1.11 2049-50 527,426 475,038 1.11 2049-50 1,121,446 34,820 1,086,625 970,113 1.12 2050-51 605,900 47,131 558,769 506,975 1.10 2050-51 537,974 487,038 1.10 2050-51 1,143,875 35,517 1,108,358 994,013 1.12 2051-52
618,018 48,545 569,473 22,761 25.02 2051-52 548,734 26,726 20.53 2051-52 1,166,752 36,227 1,130,525 49,488 22.84

* Preliminary, subject to change.
(1) Non-Escrow Bonds sized based on Special Tax revenues from Villages MDR-5 and MDR-8 at buildout. (2) Interest capitalized through December 1, 2022. Reserve Fund credit applied to the final debt service amount. (3) Escrow Term Bonds si zed based on Special Tax revenues from Villages MDR-6 and MDR-7 at buildout. See “THE BONDS — Redemption” and “SOURCES OF PAYMENT FOR THE BONDS — Escrow Fund” herein.
(4) Interest capitalized through September 1, 2024. Reserve Fund credit applied to the final debt service amount. (5) Reserve Fund credits applied to the final debt service amounts.

Source: Special Tax Consultant and Piper Sandler.

41 4846-3625-7001v7/022536-0020
DEVELOPMENT OF PROPERTY IN IMPROVEMENT AREA NO. 2
The information in this section about the Developer and Signature Homes and the developments within Improvement Area No. 2 has been provided by the Developer and Signature Homes and has not been independently confirmed or verified by the Underwriter or the City. The Underwriter and the City make no representation as to the accuracy or adequacy of the information contained in this section, including, but not limited to the description of the Signature Homes purchase and sale agreements with the Developer, the Joint Venture Agreement (as such terms are defined below) and any other agreement between Signature Homes and the Developer or their respective affiliates with respect to the Delta Shores project.

The information provided in this section has been included because it may be considered relevant to an informed evaluation and analysis of the Bonds. No assurance can be given, however, that the proposed development of the property within Improvement Area No. 2 will occur in a timely manner or in the configuration or to the density described in this Official Statement, or that the Developer, Signature Homes, or any owners or affiliates thereof, or any other property owner described in this Official Statement will or will not retain ownership of its respective property within Improvement Area No. 2. Neither the Bonds nor the Special Tax represent personal obligations of any property owner within Improvement Area No. 2. The Bonds are secured by and payable solely from Net Special Tax Revenues and amounts on deposit in certain of the funds and accounts established and maintained under the Indenture. See “SPECIAL RISK FACTORS” for a discussion of certain of the risk factors that should be considered in evaluating the investment quality of the Bonds. Neither the Bonds nor the Special Tax are personal obligations of the property owners within Improvement Area No. 2 or any affiliate thereof and, in the event that a property owner defaults in the payment of its Special Tax, the City may proceed with judicial foreclosure, but has no direct recourse to the assets of such property owner or any affiliate thereof.

Delta Shores, the District and Improvement Area No. 2
Delta Shores . The property in Improvement Area No. 2 is part of an approximately 782-acre new master-planned community being developed by M&H Realty Partners VI, L.P., a California limited partnership (previously defined as the “Developer”), be ing marketed as “Delta Shores.” Delta Shores is located in the southern portion of the City, approxim ately 10 miles from downtown Sacramento. Delta Shores is bordered to the north by the developed Meadowview community, to the south by an open space “buffer zone” between the
Sacramento Regional County Sanitation District ’s treatment plant, to the west by the Sacramento River, and to the east by Morrison Creek and existing communities. See page ___ for a depiction of the location of the Delta Shores community. In 2016, a new freeway interchange and extension of Cosumnes River Boulevard (a major thoroughfare bisect ing the Delta Shores site) was completed, providing direct access to the site from the Interstate 5 freeway.

Delta Shores is currently entitled for up to 5,222 residential units and approximately 1.3 million square feet of commercial and retail space, approxim ately 144 acres of open space and a mixed-use town center of approximately 20 acres. At buildout, Delta S hores is expected to include approximately 2,300 for- sale low and medium density single -family homes, 1,700 high- density housing units in for-rent and for-sale offerings, 1.3 million square feet of retail and commercial space, two new elementary schools, a community center and approximately 144 acres of parks, a City fire station and open space.

A portion of the planned retail development within Delta Shores known as the South Regional Shopping Center has been completed by the Developer. The completed portion is located adjacent to the Interstate 5 freeway and consists of approximately 900,00 0 square feet of retail space and associated parking facilities. Current anchor tenants include Wal Mart, PetSmart, Dick’s Sporting Goods, Ross, RC Wiley, At Home, Floor & Décor and Regal Cinema. As of April 1, 2022, approximately 95% of the space within the completed retail development had been leased. The Developer has sold approximately half of the South Regional Shopping Center and it currently owns the balance of the property.

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The District. The District consists of approximately 535 acres and includes the property within the Delta Shores community with the exception of the completed retail development described above, which is not within the District. The District is divided into thr ee improvement areas. The first phase of the residential development of Delta Shores is included within Improve ment Area No. 2. Improvement Area No. 1 is located across the Interstate 5 freeway to the west of Impr ovement Area No. 2 and is planned for a mix of low, medium and high-density residential developments as we ll as parks and open space. Improvement Area No. 3 is located to the north of Improvement Area No. 2 and is planned for a mix of low, medium and high-density residential, parks, a community center, an elementary school and open space. The property in Improvement Area No. 1 and Improvement Area No. 3 is not subject to the levy of the Special Tax and is not security for the Bonds.

Improvement Area No. 2. Improvement Area No. 2 consists of approximately 146 gross acres and is bordered to the west by the existing retail development, to the north by Cosumnes River Boulevard and to the south and west by Delta Shores Circle. The development within Improvement Area No. 2 is planned for 421 single-family detached homes, approximately 1,027 high-density residential units (which may be rental units) and approximately 5.5 acres zoned for a mixed-use development with approximately 125 residential units. The Developer currently anticipate s that the residentia l component of the mixed-use V illage will be for-rent units under a “build-for-rent” model. Build-for-rent units are generally units which have products more typical of medium/lower density single-family developments (e.g. no units above or below other units) but which are intended to be for-rent and not for-sal e. Improvement Area No. 2 is also planned to include two parks totaling approximately 32 acres, an elementary school to be owned and operated by the Sacramento City Unified School District, and a wet detention basin (which is complete).

The Developer has completed certain major backbo ne infrastructure necessary for development in Improvement Area No. 2, which includes arterial roadways surrounding the property, related traffic signal improvements wet utilities, dry utilities and wet storm water detention ponds to serve the entire Delta Shores community. As further described herein, the collector roadways (and associated wet and dry utilities) from which the individual project Villages within Improvement Ar ea No. 2 are to be accessed, as well as all in-tract infrastructure remain to be constructed. As described below, Signature Homes plans to construct substantially all such remaining infrastructure. See “Infrastructure Development — Developer Completed Infrastructure.” Four of the Villages are referred to herein as “MDR” (i.e. medium density residential) and are currently planned for a total of 421 single-family detached homes. Six of the project Villages are referred to herein as “HDR” (i.e. high-density residential) and are planned for a total of 1,027 high-density residential units, which are currently anticipated to be for-rent apartment units, howeve r, such units may also be for-sale units based on current zoning. In addition, one Village is zoned for a mixed-use development with approximately 125 residential units, which the Developer curre ntly anticipates will be for-rent units under a “build-for-rent” mode l as described above. The following table su mmarizes the curre ntly anticipated development within each of the Villages in Improvement Area No. 2.

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Village
Planned
Residential Units
MDR-5(1) 87
MDR-6(2) 102
MDR-7(2) 96
MDR-8(2) 136
HDR-6 232
HDR-7 187
HDR-8 159
HDR-9 217
HDR-10 232
MU-1 125
Total 1,573

(1) Property has been transferred to the Joint Venture En tity. See “— Joint Venture with Signature Homes.” (2) Property is under contract to be sold to Signature Homes. See “— Acquisition of MDR Villages by Signature Homes.” The Developer currently expects Signature Homes to acquire the property for the first phase of development in MDR 8, which is planned for 76 of the 136 units in MDR 8, by the end of May 2022.

Source: the Developer.

The property in MDR 5 has been transferred to the Joint Venture Entity formed by the Developer and an affiliated entity of Signature Homes. The balance of the MDR Villages (MDR 6, MDR 7 and MDR 8) are subject to purchase and sale agreements between the Developer and Signature Homes. The Developer currently expects Signature Homes to acquire the property for the first phase of development in MDR 8, which is planned for 76 of the 136 units in MDR 8, by the end of May 2022.

The Developer has not yet finalized any development plans with respect to the property in Improvement Area No. 2 planned for high-density residential land uses (i.e., the HDR Villages) and the mixed- use Village. The Developer may convey all or a portion of such property to third-party builders and/or enter into joint ventures to develop all or a portion of such property.

The balance of the property in Improvement Area No. 2 which is not planned for residential development consists of property for a future elementary school site, a neighborhood park and community park, roads and other public rights of way.

For more information on the Developer and Signature Homes, see the caption “PROPERTY OWNERSHIP.”
Entitlements and Required Mitigation Monitoring
General. In 2009, the City Council approved a series of entitlements relating to the development of Delta Shores, including approval of the Delta Shores Planned Unit Development (PUD), which envisioned the project as a mix of commercial and residential devel opment, a development agreement, the original Delta Shores Public Facilities Finance Plan (the “2009 Finance Plan”), master and tentative parcel maps, and the certification of the project Environmental Impact Repo rt (“EIR”). Since the completion of the 2009 Finance Plan, development in Delta Shores commenced with the completion of the South Regional Commercial Shopping Center (as described above). In addition to the South Regional Commercial Shopping Center, major regional and backbone infrastructure components were constructed including an Interstate 5 freeway interchange, Cosumnes River Boulevard, wet detention ponds, arterial roadways, traffic signals, water, drainage sewer, electric, gas and telecommunication improvements. The Updated Delta Shores Finance Plan approved by the City Council in 2019 (the “Updated Finance Plan”) presents a strategy to finance the remaining backbone infrastructure and other public facilities serving the proposed land uses within the Delta Shores project area. The Updated Finance Plan include s updates to land use assumptions, completed and remaining backbone infrastructure and public facility costs.

44 4846-3625-7001v7/022536-0020
Located adjacent to the Delta Shor es development is an approximately 141-acre site proposed for an approximately 1,160 unit residential development known as “Stone-Beetland” (formerly known as “Stone- Boswell”). While there is no curre nt timeframe for commencement of Stone-Beetland, the expectation is that certain backbone infrastructure constructed and to be c onstructed with respect to Delta Shores will also serve the adjacent Stone-Beetland development. The U pdated Finance Plan also considers funding and reimbursement obligations associated with the Stone-B eetland site as part of an overall update to the development and infrastructure funding strategy for Delta Shores. The Updated Finance Plan includes the use of existing fee programs, the development of a new plan area fee program (the “Delta Shores Impact Fee”), implementation of a land-secured financing district (i.e. the District), and the use of other funding mechanisms.

Development Agreement. In 2009, the City and the Developer entered into a development agreement with respect to Delta Shores, as approved by the City Council by Ordinance No. 2009-002 on January 13, 2009 (the “Original Development Agreement”). Pursuant to the Original Development Agreement and together with the amendments described below (as amended, th e “Development Agreement”), the Developer is vested with the right to develop the Delta Shores project wi th up to 2,012 single-family homes, 3,210 multifamily homes (subject to adjustment as development occurs), and up to 1.3 million square feet of commercial and retail space, subject to compliance with the terms and conditions of the Development Agreement. The Development Agreement includes mitigati on measures to be satisfied and fees to be paid in order to achieve full buildout of the Delta Shores proj ect, certain of which are described below. Aside from such mitigation measures to be satisfied, payment of fees and satisfaction of certain City conditions of approval for final subdivision maps as development within Delta Shores pr ogresses, the Developer has obtained all discretionary approvals from State and federal agencies in order to complete the Delta Shores project. Sufficient capacity for water (which is provided by the City) and sewer (which is provided by the City (collection services) and the Sacramento Regional County Sanitation District (treatment services)) is available to achieve full buildout of Delta Shores. The following describes the amendments to the Original Development Agreement that have been executed and delivered:

First Amendment. After the approval of the EIR for Delta Shores (as described below under “— Environmental Review ”), a group of petitioners challenged the EIR. The City, the Developer and the petitioners entered into a settlement agreement (the “Settlement Agreement”) pursuant to which the parties agreed to amend the Original Development Agreement to include certain mitigation measures for certain parcels within Delta Shores located within 500 feet of the Interstate 5 freeway. In accordance with the Settlement Agreement, the City and the Developer entered into the First Amendment to the Original Development Agreement, dated as of October 6, 2010 (the “First Amendment”). The First Amendment provided that such mitigation measures would be re quired if a Health Risk Assessment Report prepared pursuant to the terms of the Settlement Agreement finds that the health risk posed to residents within 500 feet of the Interstate 5 freeway is elevated beyond thresholds set forth in the Settlement Agreement. Mitigation measures required include: (1) planting of certain types of trees on those affected parcels which are considered to be effective in reducing particulates; (2) installing air intakes for multi-family residential buildings as far away from the Interstate 5 freeway as possible; (3) installing air filtering systems in residential units which are designed to filter particulates; and (4) installing inoperable windows in any residential units with a view facing the Interstate 5 freeway. No parcels within Improv ement Area No. 2 are located within 500 feet of the Interstate 5 freeway. The Developer expects to comply with the foregoing mitigation measures as necessary with respect to the affected parcels within Delta Shores.

Second Amendment. The Original Developmen t Agreement required that the Developer pay Delta Shores’ fair share of costs of regional facilities, including library facilities. In addition, the Original Development Agreement required that the Developer transfer $4 million to the City for the development of a community park no later than the issuance of the 3,375
th residential building permit within Delta Shores. In 2015, the City, the Developer and certain landowners within Delta Shores (as assignees of the Developer) entered into the Second Amendment to the Original Development Agreement to: (1) provide that Delta Shore’s share of the costs of regional library facilities shall only be used to provide such services and facilities within Delta Shores; and (2) the payment of $4 million to the Ci ty for the costs of a community park may be satisfied

45 4846-3625-7001v7/022536-0020
if paid as a subcomponent of a Delta Shores Impact Fee as set forth in the Updated Finance Plan (as described below under “— Delta Shores Impact Fee”). The Developer currently expects that the $4 million amount owed with respect to the community park will be paid through the Delta Shores Impact Fee prior to the issuance of the 3,375th residential building permit within Delta Shores.

Third Amendment. In 2015, the City adopted a new City-wide affordable housing requirement which allowed previously approved projects to comply with an adopted Inclusionary Housing Plan or with the new Mixed-Income Housing Ordinance (“MIHO”). The Developer opted to comply with the MIHO to satisfy the affordable housin g requirement with respect to Delta Shores. In 2020, the City, the Developer and certain landowners within Delta Shores (as assignees of the Developer) entered into the Third Amendment to the Original Development Agreement to allow for Delta Shores to meet the City’s affordable housing requirement through the MIHO. See “— Affordable Housing Requirement” below for a description of the affordable housing requirement for Delta Shores.

Affordable Housing Requirement . The MIHO requires the approval of a “Mixed Income Housing Strategy” that obligates a developer to provide for affordable housing. The obligation can be satisfied through the payment of housing impact fees, land dedication, construction of affordable housing units, or through a combination of these options. In accordance therewith, the Developer elected to dedicate land to the Sacramento Housing and Redevelopm ent Agency (“SHRA”) consistent with the guidelines established pursuant to City Code in order to fully satisfy Delta Shores’ obligations under the MIHO. The Developer currently plans to dedicate a total of approximately 15.89 buildable acres (all of which are located outside of Improvement Area No. 2) to the SHRA (the “Affordable Housing Planning Areas”). Based on SHRA’s guidelines for land dedication under the MIHO, the 15.89 buildable acres of land identified for dedication can accommodate 429 affordable housing units, which corresponds to a total capacity of 5,921 market rate homes at Delta Shores.

Building permits may not be issued for more than 50 percent of the market rate homes within Delta Shores prior to dedication of the Affordable Housing Pl anning Areas to SHRA. When fee credits are obtained through land dedication, appropriate zoning (except site plan and design review for the affordable development proposed on the dedicated sites) are required to be in pl ace prior to recordation of the final map for the project.

Further, the final map for the projects are conditioned upon: (1) recordation of an Affordable Housing Regulatory Agreement on the dedicated site; (2) transfer of title of the dedicated site to SHRA; and (3) delivery of infrastructure necessary to accommodate the affordable housing component at the dedicated site.

Prior to dedication and SHRA taking ownership of the Affordable Housing Planning Areas, the Developer will need to construct or cause to be constructed the necessary off-site infrastru cture, including street, curb/gutter, sidewalk, sewer, water, gas, electric, and other infrastructure and stubbed to the applicable lots. Pursuant to SHRA requirements, the dedicated sites must be located within a ¼ mile of at least three of the following amenities:
• An existing or planned public elementary, middle, or high school; • An existing or planned public park or recreational facility; • An existing or planned transit stop;
• An existing or planned grocery store.

The infrastructure described above that are prerequis ites to dedicate the Affordable Housing Planning Areas to the SHRA have not yet been constructed. However, the Developer currently expects to meet the affordable housing requirements for Delta Shores prior to the time 50 percent of the building permits for the market rate homes within Delta Shores are to be issu ed. The Developer does not expect such requirements to adversely impact the projected development timing an d sale of homes within Improvement Area No. 2 as described in this Official Statement.

46 4846-3625-7001v7/022536-0020
Parks. With respect to the Delta Shores project, at the time of the entitlemen t approvals, the City required the total parkland dedication such that the number of dwelling units, multiplied by a factor, will produce five acres of parkland per each thousand population. The City requirement for parkland dedication for Delta Shores has since been reduced, such that excess pa rkland has been designated in the Delta Shores master plan. Pursuant to the Development Agreement, the total parkland dedication for Delta Shores is approximately

61.28 acres, which amount may be revised based on the type and actual number of units constructed. The large lot tentative map for the property within Improvement Area No. 2 includes a neighborhood park of approximately 6.13 acres and a community park of appr oximately 26.25 acres for a total of 32.38 acres. The Developer expects to allocate the necessary acreage within Improvement Area No. 1 and Improvement Area No. 3 to satisfy the remaining parkland dedication. The Developer has not yet transferred ownership of any property dedicated for parkland within Delta Shores to the City. The Developer expects to dedicate the 6.13 acre park acreage within Improvement Area No. 2 for pa rkland in conjunction with the development of MDR 5, MDR 6 and MDR 8 and dedicate the 26.25 acre community park acreage in conjunction with the HDR Village requirements. The Developer is not required to complete any park facility improvements on the property to be dedicated to the City as parkland.

The City’s development impact fees that are allocated to fund community/neighborhood parks will be required to be paid for each residential unit that is developed. In addition, as described under “— Development Agreement —Second Amendment,” the Developer is require d under the Development Agreement to pay $4 million to the City for the costs of a community park, which amount may be satisfied through payment of the Delta Shores Impact Fee described below under “— Delta Shores Impact Fee .” Assuming Signature Homes acquires and develops the remaining MDR Villages as curre ntly planned, Signature Homes will be required to pay such fees with respect to the MDR Villages. The future developers, if any, of the HDR Villages will be required to pay the park fees with respect to such property as development thereon commences.

Delta Shores Impact Fee . As required by the Development Agreement, the Developer caused to be prepared the Updated Finance Plan setting forth the funding sources for the required backbone infrastructure, public facilities, development fees and maintenance co sts for the Delta Shores project. The Updated Finance Plan requires a “Delta Shores Impact Fee” to be paid on a per-unit basis for the residential component of the Delta Shores project, and on a per- acre basis for any commercial component. The Delta Shores Impact Fee is to be used to fund the cost of regional infrastructure, backbone infrastructure and public facilities that are not funded by existing City impact fee programs or other s ources of revenue. Such infrastructure and facilities include roadways, sewer, storm drainage, parks, trails, open space, police and fire, transit and library costs.

The Delta Shores Impact Fee currently ranges from $11,780 to $19,754 for residential and mixed-use units and $35.11 to $37.02 per square foot for retail uses.

Similar to the payment of development impact fees to fund park improvements, assuming Signature Homes acquires and develops the remaining MDR Villages as currently planned, Signature Homes will be required to pay the Delta Shores Impact Fee with respect to the MDR Villages. The future developers, if any, of the HDR Villages will be required to pay the Delta Shores Impact Fee with respect to such property as development thereon commences.

A proposed development adjacent to Delta Shores known as “Stone-Beetland” is expected to benefit from the public infrastructure that has been and expected to be constructed for Delta Shores. As currently set forth in the City Code, the Delta Shores Impact Fee is authorized to be charged to the Stone-Beetland development to pay for its share of such infrastructure. See “— Entitlements and Required Mitigation Monitoring — General.”
School Mitigation Payments . As part of the conditions for a fi nal large-lot map for the area within Improvement Area No. 2, the Developer and the Sacramento City Unified School District (the “School District”) entered into a School Site Reserve Agreemen t (the “School Site Agreement”) pursuant to which the Developer reserved an approximately 10-acre site within Improvement Area No. 2 for an elementary school.

The School Site Agreement provides the School District with the option, but not the obligation, to purchase the

47 4846-3625-7001v7/022536-0020
intended school site. Pursuant to the School Site Agreement, the Developer is required to complete the improvements necessary to serve the school site (i.e., completed access roadways and all utilities completed to the site boundary), at which point the School District shall have two years to purchase the site from the Developer. The purchase price shall be determined at the time of purchase. The Developer currently expects that the infrastructure necessary to convey the school s ite in Improvement Area No. 2 to the School District will be complete by 2025. Pursuant to the Amended Rate and Method, the site reserved for the school is Exempt Property under the Amended Rate and Method and not currently subject to the Special Tax.

In addition to the reservation of the school site as described in the preceding paragraph, statutory school fees will be required to be paid for each resi dential unit within Improvement Area No. 2 as a condition to the issuance of building permits for such units. Assuming Signature Homes acquires and develops the remaining MDR Villages as currently planned, Signature Homes will be required to pay the statutory school fees with respect to the MDR Villages. The future develo pers, if any, of the HDR Villages will be required to pay school fees with respect to such property as development thereon commences.

Other than the reservation of the school site and the payment of statutory school fees, there are no other conditions to be satisfied with respect to the School District in order to obtain building permits and certificates of occupancy for the planned residential units within Improvement Area No. 2.

Environmental Matters
Environmental Review . The environmental review process for the Delta Shores project began in 2006 with the preparation of a draft environmental impact report. In January 2009, th e City certified the final EIR. Certain modifications in the project plan have been made since the certification of the EIR in 2009.

Since that time, as a result of certain modifications to the Delta Shores development plan, addendums to the EIR have been approved.

In 2021, a Phase 1 Environmental Site Assessment wa s prepared for the property within Improvement Area No. 2 which identified no evidence of recognized environmental conditions, historical recognized environmental conditions, or controlled recognized environmental conditions.

The Developer has satisfied all conditions of approval and has obtained all discretionary approvals from State and federal agencies in order to complete the Delta Shores project. Such approvals and permits include, among others, a Section 404 permit under the federal Clean Water Act, incidental take permits from the State and federal agencies and a Section 1602 Perm it (Lake and Streambed Alteration) from the State. All appeal periods with respect to such approvals have expi red. However, as describe d below, there are several ongoing monitoring and mitigation actions required to be complied with in connection with construction activities in the Delta Shores, including Improvement Area No. 2.

Mitigation Monitoring Plan . As required by the EIR and th e Development Agreement, there are ongoing monitoring activities required in connection with the Delta Shores development that are set forth in a mitigation monitoring plan (the “Mitigation Monitoring Plan”). The Developer currently does not expect compliance with the Mitigation Monitoring Plan to result in any significant costs increases or delays for the proposed development in Delta Shores, including Improvement Area No. 2. However, no assurances can be made that actions necessary to comply with the Mitigation Monitoring Program will not result in such costs increases and/or delays, which may be significant. Ce rtain of the ongoing mitigation requirements during the development phase within Delta Shores, including Improvement Area No. 2, are described below. Through assignment of the Development Agreement, the Develope r expects that each developer/builder of a Village will be responsible for compliance with the Mitigation Monitoring Plan as such Villages are developed.

Wetlands. The Mitigation Monitoring Plan requ ires, where feasible, the preservation of existing wetlands and establishment of a minimum of 2 50-foot buffers around wetlands with listed species or 50-foot buffers around wetlands without listed species. There are no preserved wetlands in Improvement Area

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No. 2. However, where wetlands are preserved, a Wetland Avoidance Plan (“WAP”) is required to be prepared by a qualified biologist and submitted to the City for review and approval prior to the issuance of grading permits or any groundbreaking activity.

Where avoidance of existing wetlands and drainages is not feasible, mitigation measures shall be implemented prior to the approval of grading perm its or any groundbreaking activity within 250 feet of wetlands for the project-related loss of any existing wetlands, such that there is no net loss of wetland acreage or habitat value. The required distance can be reduced to 50 feet where surveys show no special status species within wetland features. Mitigation is required to be provided prior to construction related impacts on the existing wetlands.

Preservation of Raptor Foraging Habitat: The Mitigation Monitoring Plan requires that, prior to the issuance of grading permits, an equal amount of suitable raptor foraging habitat shall be preserved at a 1:1 ratio. This requirement was satisfied for the enti re Delta Shores master plan with the placement of an offsite conservation easement in 2012. Preservation is required to occur through the purchase of credits at mitigation banks approved by the California Departme nt of Fish and Wildlife (“CDFG”), or through the purchase of conservation easement or fee title of lands with suitable foraging habitat within a 10-mile radius of the perimeter of the project site, or through any combin ation of the foregoing. A mitigation plan shall be established and submitted to the City for approval prior to the issuance of grading permits and, at a minimum, shall include confirmation of title and encumbrances, details on mitigation site location, development, maintenance and monitoring.

Surveys Required for Active Bird Nests. The Mitigation Monitoring Plan requires that, between March 1 and August 1, a qualified biologist shall conduct nest surveys within 30 days prior to any demolition/construction or ground disturbing activities that are within ¼ mile of potential nest trees. A pre- construction survey shall be submitted to CDFG and the City that includes: (1) a description of the methodology including dates of field visits, the names of survey personnel with resumes, and a list of references cited and persons contacted; and (2) a map showing the location(s) of raptor and migratory bird nests observed on the project site. If no active nests of Mi gratory Bird Treaty Act, CDFG or United States Fish and Wildlife Service-covered species are identified then no further mitigation is required.

Should active nests of protected bird species be identified in the survey, the project applicant, in consultation with the City and CDFG, shall delay construction in the vicinity of active nest sites during the breeding season (March 1 through August 1) while the nest is occupied with adults and/or young. A qualified biologist shall monitor any occupied nest to determine when the nest is no longer used. If the construction cannot be delayed, avoidance shall include the establishment of a non-disturbance buffer zone around the nest site.

Surveys Required for Nesting Migratory Birds. The Mitigation Monitoring Plan requires that, prior to any demolition/construction activities that occur between March 1 and September 15, a qualified biologist shall conduct surveys for nesting migratory birds on the project site and within a half mile of demolition/construction activities unless the City and CDFG approve a reduced survey area. Surveys shall be conducted no more than 30 days prior to the start of any site disturbance for each phase of the project. If active nests are found, measures are requir ed to be implemented to avoid impacts to nesting migratory birds, including: (1) nest trees shall not be removed unless there is no feasible way of avoiding their removal; (2) if there is no feasible alternative to removing a nest tr ee, authorization to remove shall be obtained from CDFG with the tree removal period (generally between October 1 and February 1) to be specified by CDFG; (3) no intensive disturbances (e.g., heavy equipment operatio n associated with construction, use of cranes or draglines, new rock crushing activities) or other project-related activities that could cause nest abandonment or forced fledging, shall be initiated within half mile or less, as determined by CDFG, of an active Swainson’s hawk nest or 500 feet for other nesting migratory birds, between March 1 and September 15 or until August 15 if authorization or a biological opinion is obtained from CDFG; and (4) if demolition/construction activities

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are unavoidable within the buffer zone of an active Swainson’s hawk nest site, the project applicant shall consult with the CDFG and the City, and if necessary, obtain an incidental take permit pursuant to State law.

Survey for Burrowing Owl. The Mitigation Monitoring Plan requires that, prior to the issuance of grading permits, a qualified biologist shall conduct a pre-construction burrowing owl survey in accordance with most current version of the Calif ornia Burrowing Owl Consorti um Burrowing Owl Survey Protocol and Mitigation Guidelines. Surveys shall be conducted no more than 30 days prior to the start of any demolition or construction activities. If no suitable burrows are found, no further mitigation is required. If suitable burrows are found, but no owls are found, all burrows shall be hand-excavated and collapsed prior to project construction. If nesting owls are found, no distur bance shall be allowed within 160 feet of the active nest burrow between February 1 and August 31. Outside the nesting season, and/or upon confirmation by the qualified biologist, and in consultation with CDFG, that all young have fledged and left an active nest, burrowing owls present in the burrow shall be excluded from the burrow(s) by a qualified biologist through a passive relocation as outlined in the California Burrowing Owl Consortium’s April 1993 Burrowing Owl Survey Protocol and Mitigation Guidelines. Once the burrows have been cleared, they must be hand- excavated and collapsed prior to project construction.

To offset the loss of foraging and burrow habitat on the project site, and prior to issuance of grading permits, the Developer shall preserve a minimum of 6.5 acres of foraging habitat (calculated on a 100 meter foraging radius around the burrow) in accordance with the most current California Burrowing Owl Consortium’s (April 1993) Burrowing Owl Survey Protocol and Mitigation Guidelines. The protected lands shall be adjacent to burrowing owl habitat and at a location acceptable to CDFG. Preservation shall occur through the purchase of conservation easements or fee title of lands. The Developer shall provide funding for long-term management and monitoring of the protected lands, by way of an endowment account (based on a Property Analysis Record type analysis) that is approved by CDFG. A mitigation and monitoring plan shall be submitted to CDFG and the City for approval and include details on mitigation site location, development, maintenance and monitoring. The monitoring plan shall include success criteria, remedial measures, and an annual report to the Department. This mitigation could overlap with mitigation provided for Swainson’s hawk foraging habitat as deemed appropriate by CDFG.

If destruction of occupied burrows is unavoidable, the project applicant shall coordinate with CDFG to identify existing suitable burrows located on th e protected lands site to be enhanced (enlarged or cleared of debris) or new burrows created (by installing artificial burrows).

Infrastructure Development
Developer Completed Infrastructure. The Developer completed certain major backbone infrastructure necessary for development in Improvement Area No. 2. Such infrastructure includes Cosumnes River Boulevard and Delta Shores Circle South, which are the main arterial roadways surrounding Improvement Area No, 2, as well as all related traffic signal improvements, wet utilities, dry utilities and wet storm water detention ponds to serve the entire Delta Shores community.

Remaining backbone infrastructure for which the Developer is responsible for the development within Improvement Area No. 2 includes improvements to an existing sewer pump station necessary to serve Villages MDR 6, MDR 7 and a portion of MD R 8 (totaling approxim ately $1 million), mi nor off-site traffic improvements (totaling approximately $343,000) and a regional sewer lift station and force main (totaling approximately $5.1 million). The Developer expects to enter into an agreement pursuant to which Signature Homes will cause the improvements to the existing sewer pump station to be constructed, however, the Developer will be responsible for the costs thereof. The regional sewer lift station is required to be constructed once development within Delta Shores exceeds 1.2 million gallons per day of sewer generation. The Developer does not expect to exceed such threshold until approximately 1,400 to 1,600 residential units are completed. The Developer does not expect that the requirement to construct the regional sewer lift station will impact the timing of buildout within the MDR Villages as described herein.

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Additional Infrastructure and In-Tract Infrastructure. As described under “— Infrastructure and Home Construction by Signature Homes,” assuming Signature Homes acquires MDR 6, MDR 7 and MDR 8 within Improvement Area No. 2, Signature Homes plans to construct the remaining backbone infrastructure necessary to develop such property. The Developer will not be responsible for th e construction of such infrastructure, however, because certain of the infrastructure to be constructed by Signature Homes will benefit the property owned by the Developer (i.e. all property other than the MDR Villages), the Developer and Signature Homes are currently negotiating an agreement to share in the costs of such infrastructure. The total estimated cost of such infrastructure is between $14.8 million to $17.3 million (which includes soft costs). The Developer’s share of such costs is currently estimated to be between approximately $7.8 million to $9.1. The actual amount of such costs and the Developer’s share thereof can be expected to vary based on actual construction bids received. The Developer expects to pay for its share of such infrastructure costs from internal funds. Certain of such costs are also expected to be allocated to the Joint Venture Entity. See “—Joint Venture with Signature Homes” below and “—Signature Homes Financing Plan” for additional details on the foregoing cost sharing arrangement.

Amenities. Other than park sites, which are to be de dicated to the City, no additional amenities are planned within Improvement Area No. 2.

Mapping Status. A large lot final map for the property in Improvement Area No. 2 was recorded in November 2021. Final subdivision maps have been recorded for MDR 5 and the first phase of MDR 8 (planned for 76 of the 136 units in MDR 8). Signature Homes is responsible for undertaking the process for approval and recordation of the final subdivision maps for MDR 6, MDR 7 and the second phase of MDR 8.

See “— Infrastructure and Home Construction by Signature Homes — Final Subdivision Mapping.” Developer Financing Plan
General. Through the Date of Value, the Developer has expended in excess of $80 million on backbone infrastructure and related soft costs necessary to develop the property in the District (which includes costs of infrastructure located outside of Improvement Area No. 2 but which benefits Improvement Area No. 2) and in excess of $10 million on environmental m itigation costs on the Delta Shores development as a whole. Other than the remaining costs of the improvements to the existing sewer pump station, the regional sewer lift station, the shared cost s with Signature Homes for certain infrastructure and minor traffic improvements described above under “— Developer Completed Infrastructure,” the Developer does not expect to incur any significant additional costs for infrastructure with respect to the Delta Shores development. The Developer expects to pay for such costs with internal funds. See “—Signature Homes Financing Plan” for additional details on the foregoing cost sharing arrangement.

The Developer has not finalized development plans with respect to the property in Improvement Area No. 2 planned for high-density residential land uses (i.e. the HDR Villages) and the mixed-use Village. The Developer may sell such property or enter into joint ventures to develop such property.

Joint Venture with Signature Homes
The Developer and DS-5, LLC, which is an affiliated entity of Signature Homes, established the Joint Venture Entity pursuant to that certain “Limited Liability Company Operating Agreement of MHRP/Signature Homes, JV I, LLC” (the “Joint Venture Agreement”) to develop the property in MDR 5 into 87 for-sale single- family detached homes. The members of DS-5, LLC ar e individuals of the executive team of Signature Homes, Inc. Due to their affiliation, DS-5, LLC and Signature Homes, Inc. are each referred to herein as “Signature Homes.”
Pursuant to the Joint Venture Agreement, the Developer contributed the land within MDR 5 and the Developer and Signature Homes each made initial capital contributions. Under the Joint Venture Agreement, Signature Homes is responsible to contribute for all co sts necessary to complete the planned homes and all

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related infrastructure (including soft costs). The Developer is not required to provide any additional capital contributions but may elect to do so.

As described under “Infrastructure Development— Additional Infrastructure and In-Tract Infrastructure” above and “—Signature Homes Financing Plan ,” certain costs of infrastructure to be constructed by Signature Homes will benefit property not under contract to be acquired by Signature Homes, including MDR 5, which is owned by the Joint Venture Entity. Under the cost sharing arrangement currently being negotiated by the Developer and Signature Homes, a portion of such costs is anticipated to be allocated to the Joint Venture Entity. Based on the total estimated cost of such infrastructure of between approximately $7.8 million to $9.1 million, the Joint Venture Entity’s share of such costs is currently estimated to be between approximately $1.3 million to $1.5 million. The actual amount of such costs and the Joint Venture Entity’s share thereof can be expected to vary based on actual construction bids received.

Under the Joint Venture Agreement, Signature Homes is responsible for all day-to-day management and control of the Joint Venture Entity’s business, incl uding overseeing the development of the property in MDR 5. The Joint Venture Agreement sets forth the Developer’s profit participation share which is to be paid to the Developer from proceeds of home sales. After the final sale of the home s planned for MDR 5, the Developer may elect to require that Signature Homes acquire all of the Developer’s interest in the Joint Venture Entity, at which point Signature Homes will agree to be responsible for all patent or latent defects in the project. See “— Infrastructure and Home Construction by Signature Homes.” Acquisition of MDR Villages by Signature Homes
General. As described herein, the Developer and Signature Homes have entered into agreements pursuant to which Signature Homes has agreed to acquire the property within MDR 6, MDR 7 and MDR 8, subject to closing conditions, certain of which are described below. Signature Homes plans to assign each of such purchase and sale agreements to single purpose entities to be managed by Signature Homes and owned by members of the executive team of Signature Homes. The single purpose entity which is expected to take title to the property in MDR 8, as assignee of Signatures Homes under the MDR 8 purchase and sale agreement, will be DS-8, LLC. The single purpose entities which are expected to be assignees of Signatures Homes under the purchase and sale agreements for MDR 6 and MDR 7 are expected to be formed prior to the time the closings thereunder are expected to take place. Du e to their affiliation, such single purpose entities and Signature Homes, Inc. are each referred to herein as “Signature Homes.” Signature Homes, Inc. is expected to be responsible for making the decisions relating to the development within MDR 6, MDR 7 and MDR 8.

Subject to satisfaction of closing conditions, the Developer will deliver the property in MDR 6, MDR 7 and MDR 8 in an undeveloped condition (with backbone infrastructure described above in place). Signature Homes will be responsible for grading and all remainin g infrastructure for such property, including collector roadways, traffic improvements, related wet and dry utilities and in-tract infrastructure.

Condition Precedent – Sewer Condition . A condition preced ent to Signature Homes’ obligation to acquire the property in MDR 6, MDR 7 and the second takedown of property in MDR 8 (as described below) is that the Developer has determined, and the City has ag reed, that existing sewer capacity is sufficient for the planned development within such property. Certain improv ements must be installed so that an existing sewer pump station will be able to provide sufficient sewer service for such property (referred to herein as the “Sewer Condition”). The Developer and Signature Homes expect to enter into an agreement for Signature Homes to cause the installation of such improvements. The curr ent expectation is that the improvements necessary to satisfy the Sewer Condition will be complete by the end of 2022.

MDR 8 Purchase and Sale Agreement. With respect to MDR 8, the Developer and Signature Homes have entered into an Agreement of Purchase and Sale and Joint Escrow Instructions dated as of June 24, 2021 (the “MDR 8 Agreement”) pursuant to which Signature Homes has agreed to purchase the property in MDR 8 planned for 136 for-sale single-family detached homes. Under the MDR 8 Agreement, Signature Homes is

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responsible for processing and paying all costs relating to the conditions of approval necessary to record the final subdivision maps for MDR 8, including posting all bonds related thereto. Under the MDR 8 Agreement, Signature Homes shall acquire property relating to 76 planned homes in MDR 8 within three days of satisfaction of such mapping conditions for such property (the “Initial Takedown”), as such timeframe may be extended as agreed upon by the Developer and Signatur e Homes. Signature Homes’ obligation to acquire the balance of the property in MDR 8 (the “Subsequent Takedown”) is subject to: (1) the Initial Takedown having occurred; and (2) satisfaction of the Sewer Condition.

The due diligence period under the MDR 8 Agreement has expired. Subject to the satisfaction of the mapping conditions and the Sewer Condition, Signature Homes is committed to purchasing all of the property in MDR 8. Since the effectiveness of the MDR 8 Agre ement, Signature Homes and the Developer have been working with the City to satisfy the conditions of approval necessary to record the final subdivision maps for MDR 8. There are two final subdivision maps being processed for MDR-8 which relate to the property in the Initial Takedown and the Subsequent Takedown, respectively. The final subdivision map with respect to the Initial Takedown has been satisfied, which allows for the Initial Takedown to occur. The initial takedown is expected to occur by the end of May 2022. Assuming the Sewer Condition and all other conditions of approval are satisfied, the current estimate is that the fi nal subdivision map for the property in the Subsequent Takedown will be recorded by the end of 2022, at which point the Subsequent Takedown is expected to occur.

If the Initial Takedown does not occur due to a default by Signature Homes, the Developer is entitled to retain Signature Homes’ deposit as liquidated damages. If the Initial Takedown has occurred and the Subsequent Takedown does not occur due to a default by Signature Homes, the Developer is entitled to seek specific performance of the MDR 8 Agreement. If the MDR 8 Agreement is not consummated due to a default by the Developer, Signature Homes may seek specific pe rformance of the sale of the property in MDR 8 or terminate the MDR 8 Agreement and receive a refund of its deposit.

After Signature Homes acquires the property in MDR 8, Signature Homes shall be responsible for all conditions under the Development Agreement applicable to the property in MDR 8, including the ongoing mitigation monitoring activities describe d above under “Environmental Matters — Mitigation Monitoring Plan.”
MDR 6 and MDR 7 Purchase and Sale Agreements. MDR 6 and MDR 7 are planned for 102 and 96 for-sale single-family detached homes, respectively. With respect to each of MDR 6 and MDR 7, the Developer and Signature Homes have entered into an Agreement of Purchase and Sale and Joint Escrow Instructions dated as of September 7, 2021 and September 22, 2021, respectively (the “MDR 6 Agreement” and the “MDR 7 Agreement,” respectively) pursuant to which Signature Homes has agreed to purchase the property therein. Under the MDR 6 Agreement and th e MDR 7 Agreement, Signature Homes is responsible for processing and paying all costs relating to the conditions of approval necessary to record the final subdivision maps for such property, including posting all bonds related thereto. The MDR 6 Agreement and the MDR 7 Agreement each currently provide for a closing date of October 31, 2022. However, if the Sewer Condition is not satisfied by October 31, 2022, the closing date will be automatically extended to the date which is 15 days after satisfaction of the Sewer Conditi on. As noted above, the Sewer Condition is expected to be satisfied by the end of 2022.

The due diligence period under the MDR 6 Agreement and the MDR 7 Agreement have expired.

Subject to the satisfaction of the mapping conditions and the Sewer Condition, Signature Homes is committed to purchasing all of the property in MDR 6 and MDR 7. Since the effectiveness of the MDR 6 Agreement and the MDR 7 Agreement, Signature Homes and the Develope r have been working with the City to satisfy the conditions of approval necessary to record the final subdivision maps for such property. If the closing does not occur on the scheduled closing date due to a default by a party thereto, subject to agreement to extend the closing date, the non-defaulting party may terminate the agreement.

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Under each of the MDR 6 Agreement and MDR 7 Agreement, if the closing does not occur due to a default by Signature Homes, the Developer is entitled to retain Signature Homes’ deposit as liquidated damages. Under each of the MDR 6 Agreement and MDR 7 Agreement, if the closing is not consummated due to a default by the Developer, Signature Homes may seek specific performance of the sale of the property thereunder or terminate the agreement and receive a refund of its deposits.

After Signature Homes acquires the property in MDR 6 and the MDR 7, Signature Homes shall be responsible for all conditions under the Development Agreement applicable to the property in MDR 6 and MDR 7, including the ongoing mitigation monitoring activities described above under “— Environmental Matters — Mitigation Monitoring Plan.”
Infrastructure and Home Construction by Signature Homes No assurances can be made that Signature Homes or any other current or future owner of taxable property within Improvemen t Area No. 2 will have the resources, w illingness, and ability to successfully complete development activities on the property within Improvement Area No. 2. No representation is made as to the ability (financial or otherwise) of Signature Homes or any other current or future owner of taxable property within Improvement Area No. 2 to complete development as currently planned.

Infrastructure Development Plan . As described above, under th e Joint Venture Ag reement and the purchase and sale agreements between the Developer and Signature Homes with respect to MDR 6 through 8, Signature Homes is responsible for grading and construction of all interior collector roads, the related utilities and drainage, traffic improvements, landscaping and all in-tract infrastructure necessary to bring such property to a finished lot status.

Signature Homes expects to enter in one or more agreements with the Developer pursuant to which Signature Homes will agree to mass grade all of the pr operty in Improvement Area No. 2 (other than the property planned for the community park). The expectati on is that the owners of each individual Village will undertake the final grading activities with respect to their property as development occurs. Subject to obtaining the necessary City approvals, Signature Home s expects to begin grading activities in approximately May 2022. See “Environmental Matters — Mitigation Monitoring Plan .” above for a de scription of the ongoing environmental mitigation measures which relate to grading activities.

Signature Homes expects to commence construction of the roadways necessary to access MDR 5 and MDR 8 and associated wet and dry utilities in July 2022, which would allow for the planned commencement of model home construction in January 2023. The timing of construction of the infrastructure necessary to develop MDR 6 and MDR 7 is dependent on the timing of satisfaction of certain conditions of approval necessary to record the final subdivision maps, including the Sewer Condition. As described above, the Sewer Condition is expected to be satisfied by the end of 2022.

Final Subdivision Mapping . As set forth above under “SOURCES OF PAYMENT FOR THE BONDS — Escrow Fund,” in the event the Escrow Fund Release Conditions are not satisfied by the Escrow Fund Release Cut-Off Date, as evidenced by City deli vering an Escrow Fund Release Certificate to the Trustee, a portion of the amounts in the Escrow Fund will be used to redeem the Escrow Bonds as described under “THE BONDS — Redemption — Mandatory Redemption of Escrow Bonds from Escrow Fund .” As defined in the Indenture, “Escrow Fund Release Conditi ons” means that the City has determined that a final subdivision map or final subdivision maps that create individual lots for which residential building permits may be issued without further subdivision of such property has or have been approved and recorded for the area known, as of the date of issuance of the Bonds, as MDR 6 and MDR 7, and which area is comprised of Parcel 8 and Parcel 2 as shown on that certain Master Parcel Map of Delta Shores Phase 2 filed on November 19, 2021 in Book 245 of the parcel maps maintained by the County of Sacramento Recorder at Page 10 and also identified as document number 202111190728.

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In order to obtain approval and recordation of a final subdivision map creating individual lots on which homes will be constructed (i.e. within a Village), the City requires completion of all improvements, including, but not limited to, streets, public ways, public utility facilities which are part of: (1) provisions for lot grading and drainage that are required by the California Subdivision Map Act (being Sections 66410 et. seq. of the California Government Code); (2) subdivision regulations of the City; and (3) the related tentative map and final grading plans, if any, previously approved by the City (collectively, the “Required Improvements”). As an alternative, the City may approve a final subdivision map prior to completion of the Required Improvements if the developer of the proper ty enters into a Subdivision Improvement Agreement with the City which provides, among other provisions, that: (a) the developer shall complete all Required Improvements to specifications required by the City within a certain timeframe (subject to extensions to be agreed upon); (b) the developer shall furnish to the City (1) a performance bond equal 100% of the estimated cost of the Required Improvements, securing the fa ithful performance under the Subdivision Improvement Agreement; and (2) a payment bond equal to 50% of the estimated cost of the Required Improvements, securing payment to the contractors, the subcontractors and others providing labor for the construction of the Required Improvements.

Signature Homes has entered into Subdivision Improvement Agreements with respect to MDR 5 and the first phase of MDR 8 (e.g. the Initial Takedown). The timing of the Subdivision Improvement Agreements for MDR 6, MDR 7 and the property relating to the Subsequent Takedown in MDR 8 is dependent on the timing of satisfaction of certain conditions of approv al necessary to record the final subdivision maps, including the Sewer Condition. As described above, the Sewer Condition is expected to be satisfied by the end of 2022.

The following table shows the estimated timing of the subdivision maps for the areas planned for medium density products within Improvement Area No. 2.

SMALL LOT FINAL MAP RECORDING STATUS

Project Area
Number of
Planned Units/
Parcels
Final Subdivision
Map Estimated
Recording Date
(1)
MDR 5 87 May 2022
MDR 6 102 End of 2022
MDR 7 96 End of 2022
MDR 8 (Initial Takedown) 76 May 2022
MDR 8 (Subsequent Takedown) 60 End of 2022
Total 421

(1) The timing of recordation of the final subdivision maps for MDR 6, MDR 7 and th e property relating to the Subsequent Takedown in MDR 8 is dependent on the timing of satisfactio n of certain conditions of approval, including the Sewer Condition. See “— Co ndition Precedent – Sewer Condition” above.

Source: Signature Homes.

Home Construction Plans. As described above, the property within MDR 5, which is planned for 87 for-sale single-family detached homes, has been transferre d to the Joint Venture Entity. The property in MDR 6, MDR 7 and MDR 8 (planned for a total of 334 for-sale single-family detached homes) are under contract to be acquired by Signature Homes. The following sections summarize Signature Homes’ current home development plans within MDR 5 through MDR 8. As described below, the projects in MDR 5 and MDR 8 are planned to commence first, with the projects in MDR 6 and MDR 7 to follow.

MDR 5. The property in MDR 5 is planned for 87 for-sale single-family detached homes.

The property in MDR 5 has been transferred to the Joint Venture Entity. With respect to the property in MDR 5, Signature Homes plans to complete the necessary in frastructure to commence model home construction in

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January 2023 and to commence home sales in the second quarter of 2023. Signature Homes currently estimates completing and closing all homes in MDR 5 to individual homeowners by the end of 2025.

MDR 8 – Phase 1. The property in MDR 8 is planned for 136 for-sale single-family detached homes with the project proceeding in two phases, coincidi ng with the property in the Initial Takedown and the Subsequent Takedown. With respect to the first phase, which is planned for 76 homes, Signature Homes plans to complete the necessary infrastructure to commence model home construction in January 2023 and to commence home sales in the second quarter of 2023. Signature Homes currently estimates completing and closing all 76 homes in the first phase of MDR 8 to individual homeowners by the end of 2025.

Sacramento City CouncilMay 31, 2022

Sacramento City Council
May 31, 2022